1
FORM 10-Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission File Number 0-21768
D.I.Y. Home Warehouse, Inc.
---------------------------
(Exact name of registrant as specified in its charter)
State of Ohio 38-2560752
(State of Incorporation) (I.R.S. Employer I.D. No.)
5811 Canal Road
Valley View, Ohio 44125
(216) 328-5100
(Address of principal executive offices and telephone number)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at July 31, 2001
- ------------------------------------ ----------------------------
Common Stock, no par value 7,276,059
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D.I.Y. HOME WAREHOUSE, INC.
INDEX PAGE NO.
----- --------
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheet -
June 30, 2001 and December 30, 2000............................................ 3
Condensed Statement of Discontinued Operations -
Three and Six Months Ended June 30, 2001
and July 1, 2000............................................................... 4
Condensed Statement of Stockholders' Equity -
Six Months Ended June 30, 2001................................................. 5
Condensed Statement of Cash Flows -
Six Months Ended June 30, 2001
and July 1, 2000............................................................... 6
Notes to Condensed Financial Statements........................................ 7 - 10
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Discontinued Operations........................................................ 11 - 17
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K............................................... 18 - 26
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PART I - FINANCIAL INFORMATION
D.I.Y. HOME WAREHOUSE, INC.
CONDENSED BALANCE SHEET
June 30, December 30,
2001 2000
---- ----
Assets (Unaudited)
Current assets:
Cash and cash equivalents $ 3,231,483 $ 164,993
Merchandise inventories 9,049,426 16,752,775
Prepaid expenses and other assets 1,069,342 915,801
------------ ------------
Total current assets 13,350,251 17,833,569
------------ ------------
Property and equipment, at cost 16,990,945 36,075,556
Less accumulated depreciation and amortization 2,373,027 15,197,333
------------ ------------
Property and equipment, net 14,617,918 20,878,223
------------ ------------
Other assets 49,304 95,480
------------ ------------
Total assets $ 28,017,473 $ 38,807,272
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Current maturities of long-term debt $ -- $ 99,276
Revolving credit -- 5,068,811
Accounts payable 3,478,238 1,774,633
Accrued store closing costs 12,425,799 1,295,968
Accrued expenses and other 2,290,329 2,953,239
------------ ------------
Total current liabilities 18,194,366 11,191,927
Stockholders' equity:
Preferred stock, authorized 1,000,000 shares,
none issued -- --
Common stock, no par value, 10,000,000
authorized shares, 7,633,859 shares issued as of June
30, 2001 and December 30, 2000 22,955,462 22,955,462
Retained (deficit) earnings (12,930,914) 4,861,324
Treasury stock, 357,800 shares at cost (201,441) (201,441)
------------ ------------
Total stockholders' equity 9,823,107 27,615,345
------------ ------------
Total liabilities and stockholders' equity $ 28,017,473 $ 38,807,272
============ ============
See accompanying notes to condensed financial statements.
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D.I.Y. HOME WAREHOUSE, INC.
CONDENSED STATEMENT OF DISCONTINUED OPERATIONS
(Unaudited)
For the three months ended For the six months ended
June 30, 2001 July 1, 2000 June 30, 2001 July 1, 2000
------------- ------------ ------------- ------------
Net sales $ 21,896,306 $ 26,234,256 $ 32,921,991 $ 43,363,646
Cost of sales 18,358,410 19,071,154 25,757,430 31,124,153
------------ ------------ ------------ ------------
Gross profit 3,537,896 7,163,102 7,164,561 12,239,493
Store operating, general
and administrative expenses 4,026,395 7,376,673 9,551,950 14,129,500
Store closing costs 15,237,305 -- 15,237,305 --
------------ ------------ ------------ ------------
Operating loss (15,725,804) (213,571) (17,624,694) (1,890,007)
Other expense, net 37,154 203,279 167,544 381,154
------------ ------------ ------------ ------------
Loss before income taxes (15,762,958) (416,850) (17,792,238) (2,271,161)
Income tax benefit -- (170,915) -- (901,348)
------------ ------------ ------------ ------------
Net loss $(15,762,958) $ (245,935) $(17,792,238) $ (1,369,813)
============ ============ ============ ============
Net loss per common share,
basic and diluted $ (2.17) $ (0.03) $ (2.45) $ (0.19)
============ ============ ============ ============
Weighted average common shares
outstanding, basic and diluted 7,276,059 7,276,059 7,276,059 7,276,059
============ ============ ============ ============
See accompanying notes to condensed financial statements.
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D.I.Y. HOME WAREHOUSE, INC.
CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2001
(Unaudited)
Retained Total
Common Stock Earnings Treasury Stockholders'
Shares Amount (Deficit) Stock Equity
------ ------ --------- ----- ------
Balances, December 30, 2000 7,276,059 $ 22,955,462 $ 4,861,324 $ (201,441) $ 27,615,345
Net loss -- -- (17,792,238) -- (17,792,238)
------------ ------------ ------------ ------------ ------------
Balances, June 30, 2001 7,276,059 $ 22,955,462 $(12,930,914) $ (201,441) $ 9,823,107
============ ============ ============ ============ ============
See accompanying notes to condensed financial statements.
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D.I.Y. HOME WAREHOUSE, INC.
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
For the six months ended
June 30, 2001 July 1, 2000
------------- ------------
Cash flows from discontinued operating activities:
Net loss $(17,792,238) $ (1,369,813)
Adjustments to reconcile net loss to net cash
(used in) provided by discontinued operating activities:
Depreciation and amortization 969,140 1,327,372
Deferred income tax -- 29,827
Gain on lease assignment (3,107,086) --
Gain on sale of property from closed stores (336,706) --
Non-cash charges associated with store closings 10,947,823 --
Loss on write-off of leasehold improvements and property
and equipment from closed stores 5,329,999 --
Changes in assets and liabilities:
Merchandise inventories 7,703,349 (1,713,304)
Prepaid expenses and other assets (117,365) 23,854
Accounts payable 1,703,605 (578,989)
Accrued expenses and other current liabilities (380,902) (759,981)
------------ ------------
Net cash provided by (used in) discontinued operating
activities 4,919,619 (3,041,034)
------------ ------------
Cash flows from investing activities:
Acquisition of property and equipment (38,834) (33,302)
Proceeds from lease assignment, net 3,017,086 --
Proceeds from sale of property, net 336,706 --
------------ ------------
Net cash provided by (used in) investing activities 3,314,958 (33,302)
------------ ------------
Cash flows from financing activities:
Principal payments under capital lease obligations (99,276) (93,302)
Proceeds from revolving credit 1,183,711 4,848,761
Principal payments of revolving credit (6,252,522) (1,775,488)
------------ ------------
Net cash (used in) provided by financing activities (5,168,087) 2,979,971
------------ ------------
Net increase (decrease) in cash and cash equivalents 3,066,490 (94,365)
Cash and cash equivalents, beginning of period 164,993 309,349
------------ ------------
Cash and cash equivalents, end of period $ 3,231,483 $ 214,984
============ ============
See accompanying notes to condensed financial statements.
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D.I.Y. HOME WAREHOUSE, INC.
Notes to Condensed Financial Statements
(Unaudited)
1. Basis of Presentation
On June 19, 2001, D.I.Y. Home Warehouse, Inc. (the "Company") announced
that its Board of Directors had authorized the Company to cease its ordinary
business operations and commence an orderly disposition of its remaining assets.
In conjunction with this announcement, the Company voluntarily closed its
remaining six stores in Cleveland, Eastlake, Elyria, Warren, Akron and
Ashtabula, Ohio and began liquidating its merchandise inventories, furniture and
fixtures. The Company's stockholders are expected to formally approve the
Company's plan of liquidation during a stockholders meeting to be held during
the second half of fiscal year 2001. As a result of the decision to cease its
ordinary business operations and to dispose of its assets, the Company is
treating all its activities as discontinued operations under the provisions of
the Accounting Principles Board's Opinion No. 30 "Reporting the Results of
Operations - Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions" ("APB
No. 30"). Under APB No. 30, adjustments, where appropriate, of individual assets
and liabilities to estimated net realizable values may result in only a net
write-down of stockholders' equity. See Note 3 below for a discussion of all
such adjustments recorded by the Company during the second quarter of fiscal
2001.
Upon formal stockholder approval of the plan of liquidation, the
Company expects to adopt the liquidation basis of accounting which may permit
recognition of unrealized appreciation in the fair market value of the Company's
net assets. Recognition of unrealized appreciation is not allowed under the
current discontinued operations treatment.
In the opinion of management, the accompanying unaudited condensed
financial statements contain all adjustments necessary to present fairly the
financial position as of June 30, 2001 and the results of discontinued
operations and cash flows for the three and six months ended June 30, 2001 and
July 1, 2000. The condensed financial statements should be read in conjunction
with the financial statements and notes contained in the Company's Annual Report
filed on Form 10-K.
2. Earnings Per Share
Earnings per share have been computed according to Financial Accounting
Standards Board's Statement of Financial Accounting Standards No. 128, "Earnings
Per Share" as follows:
COMPUTATION OF EARNINGS PER COMMON SHARE
(BASIC AND DILUTED)
Three Months Ended Six Months Ended
June 30, 2001 July 1, 2000 June 30, 2001 July 1, 2001
------------- ------------- ------------- ------------
(Unaudited) (Unaudited)
Net loss applicable to common shares $ (15,762,958) $ (245,935) $ (17,792,238) $(1,369,813)
============= ============= ============= ===========
Weighted average common shares
outstanding, basic 7,276,059 7,276,059 7,276,059 7,276,059
Dilutive effect of stock options -- -- -- --
------------- ------------- ------------- -----------
Weighted average common shares
outstanding, diluted 7,276,059 7,276,059 7,276,059 7,276,059
============= ============= ============= ===========
Net loss per common share:
Basic $ (2.17) $ (0.03) $ (2.45) $ (0.19)
============= ============= ============= ===========
Diluted $ (2.17) $ (0.03) $ (2.45) $ (0.19)
============= ============= ============= ===========
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Options to purchase 805,500 shares of common stock at a weighted
average exercise price of $3.00 per share were outstanding at June 30, 2001 but
were not included in the computation of diluted earnings per share for the three
and six months then ended because the options would have had an anti-dilutive
effect on the net losses for both periods.
Options to purchase 821,500 shares of common stock at a weighted
average exercise price of $3.01 per share were outstanding at July 1, 2000 but
were not included in the computation of diluted earnings per share for the three
and six months then ended because the options would have had an anti-dilutive
effect on the net losses for both periods.
3. Store Closings
On April 10, 2001, the Company announced the closing of its Brook Park,
Medina and Mentor, Ohio stores. In connection with the closing of these stores,
the Company entered into an agreement with a third-party to act as its agent in
the liquidation of the stores' merchandise inventories, which was completed
during June 2001.
The Company recorded store closing costs of $4,072,494 for expenses
expected to be incurred in closing the Brook Park, Medina and Mentor, Ohio
locations, which included $2,033,180 in net rent obligations at the Brook Park
and Mentor stores, $443,908 in payroll and payroll related expenses, $380,994 in
liquidation agent fees, $240,027 for estimated real estate taxes at the Brook
Park and Mentor stores, $235,843 for expected utility costs at the Brook Park
and Mentor stores, $160,006 in personal property taxes and $578,536 for other
closing costs. The Company did not accrue for future occupancy expenses
associated with the Medina store as of June 30, 2001. The Company is actively
marketing the lease or sale of the Company-owned Medina store, and as such, is
unable to reasonably estimate the length of time that it will be obligated for
such costs. However, the Company estimates that the vacant Medina store would
incur approximately $10,000 of occupancy costs per month. At June 30, 2001, the
remaining balance of the expected costs to be incurred in closing these
locations amounted to $2,603,312 and is included in the accrued store closing
costs line item in the accompanying condensed balance sheet.
The Company also recorded a $1,480,733 write-off of the net leasehold
improvements and property and equipment of the Brook Park, Medina and Mentor,
Ohio stores. During the second quarter of 2001, the Company received proceeds of
$336,706 from the sale of certain of these assets written off, reducing the net
write-off of leasehold improvements and property and equipment to $1,144,027.
The net write-off of leasehold improvements and property and equipment was
recorded in the store closing costs line item in the accompanying condensed
statement of discontinued operations.
In addition, the Company incurred $188,462 of inventory markdown costs
during the second quarter of fiscal 2001 related to the liquidation of the
merchandise inventories of the Brook Park, Medina and Mentor, Ohio stores. These
inventory markdown costs have been included in the cost of sales line item of
the accompanying condensed statement of discontinued operations.
Concurrent with the closing of the Mentor, Ohio location, the Company
assigned its lease interest in that store to a third-party in exchange for
$3,464,375. The proceeds of the lease assignment were reduced by an escrow
account receivable of $250,000, transaction costs of $97,289 and a previously
received $100,000 in option payments, resulting in actual cash proceeds of
$3,017,086. In addition, this transaction resulted in a net gain of $3,107,086
(proceeds of $3,464,375 less transaction costs of $97,289 less a $260,000
payment to terminate the sublease agreement of its subtenant). The gain was
recorded in the store closing costs line item in the accompanying condensed
statement of discontinued operations.
On June 19, 2001, the Company announced that its Board of Directors had
authorized the Company to cease its ordinary business operations and commence an
orderly disposition of its remaining assets. In conjunction with this
announcement, the Company voluntarily closed its remaining six stores in
Cleveland, Eastlake, Elyria, Warren, Akron and Ashtabula, Ohio. In connection
with the closing of these stores, the Company entered into an agreement with a
third-party to act as its agent in the liquidation of the merchandise
inventories located at the aforementioned stores.
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The Company recorded a charge of $7,791,317 for costs expected to be
incurred in closing the Cleveland, Eastlake, Elyria, Warren, Akron and
Ashtabula, Ohio locations, which included $3,713,411 in net rent obligations,
$1,179,716 in payroll and payroll related expenses, $578,167 for estimated real
estate taxes, $445,652 in liquidation agent fees, $350,448 for expected utility
costs, $306,857 for advertising expenses, $255,105 in personal property taxes,
$207,672 for operating lease obligations and $754,289 for other closing costs.
The Company did not accrue for future occupancy expenses associated with the
Warren, Akron and Ashtabula stores as of June 30, 2001. The Company is actively
marketing the lease or sale of the Company-owned Warren, Akron and Ashtabula
stores, and as such, is unable to reasonably estimate the length of time that it
will be obligated for such costs. However, the Company estimates that each
vacant store would incur approximately $10,000 of occupancy costs per month. At
June 30, 2001, the remaining balance of the expected costs to be incurred in
closing these locations amounted to $6,613,373 and is included in the accrued
store closing costs line item in the accompanying condensed balance sheet.
The Company also recorded a $3,663,464 write-off of the net leasehold
improvements and property and equipment of the Cleveland, Eastlake, Elyria,
Warren, Akron and Ashtabula, Ohio. Based on its previous experience liquidating
property and equipment at closed stores, the Company expects to receive $670,164
in proceeds from the sale of certain of these assets written off, reducing the
net write-off of leasehold improvements and property and equipment to
$2,993,300. The net write-off of leasehold improvements and property and
equipment was recorded in the store closing costs line item in the accompanying
condensed statement of discontinued operations.
In addition to these operating expenses, the Company recorded $151,803
of inventory markdown costs during the second quarter of fiscal 2001 related to
the liquidation of the merchandise inventories of the Cleveland, Eastlake,
Elyria, Warren, Akron and Ashtabula, Ohio stores. These inventory markdown costs
were calculated based on the Company's expected proceeds from the merchandise
inventory liquidation sales and have been included in the cost of sales line
item of the accompanying condensed statement of discontinued operations.
Besides the closure of the its six remaining stores, the cessation of
the Company's ordinary business operations will also result in the elimination
of its corporate activities. The Company recorded a charge of $2,343,253 for
costs expected to be incurred in closing its corporate office, which included
$1,579,798 in payroll and payroll related expenses, $300,000 for estimated
outside professional services, $185,802 for the net write-off of property and
equipment, $127,621 in rent obligations and $150,032 for other closing costs.
This charge was included in the store closing costs line item in the
accompanying condensed statement of discontinued operations. At June 30, 2001,
the remaining balance of the expected costs to be incurred in closing the
corporate location amounted to $2,104,404 and is included in the accrued store
closing costs line item in the accompanying condensed balance sheet.
4. Debt
During the second quarter of fiscal 2001, the Company amended its
credit and security agreement with a bank. The amendment reduced the total
revolving credit commitment amount to $5 million and replaced the financial
covenants contained in the agreement.
As a result of its voluntary closure decision as discussed in Notes 1
and 3 above, the Company violated certain of the restrictive covenants under the
amended credit and security agreement and remained in violation of such
covenants as of June 30, 2001. The Company had no outstanding borrowings under
the agreement at June 30, 2001. The Company believes that it will have
sufficient cash reserves or positive cash flows from the liquidation of
inventories and the lease, sublease or sale of real property to meet its working
capital requirements and obligations and therefore will no longer seek to borrow
funds under the agreement. As a result, the Company will not seek a waiver of
its covenant violations nor will it attempt to renegotiate its existing
revolving credit facility or negotiate a new revolving credit facility.
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5. Taxes
During fiscal year 2000, the Company established a valuation allowance
of $2,556,510 against its net deferred tax assets in accordance with the
provisions of the FASB Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes". The establishment of the valuation allowance was
based on the Company's assessment that it was more likely than not that such
assets would not be realized through future taxable earnings or implementation
of tax planning strategies. As the Company's assessment regarding the likelihood
of realizing these assets did not change as of June 30, 2001, there has been no
income tax benefit recorded in the accompanying condensed statement of
operations for the three and six months ended June 30, 2001.
6. Subsequent Events
Subsequent to June 30, 2001, the Company entered into a revocable
license agreement with the lessor of its Brook Park location, enabling the
Company to terminate its sublease agreement effective July 1, 2001 in exchange
for its payment of a $500,000 sublease termination fee. At June 30, 2001, the
Company had a remaining accrual balance of $2,398,216 for expected costs
associated with its occupancy of the Brook Park store, including $1,925,820 in
future rent obligations. As a result of entering into the revocable license
agreement, the Company will record a $1,898,216 reduction in store closing costs
in the Company's statement of discontinued operations for the quarter and nine
months ended September 29, 2001, representing the reversal of the $2,398,216
occupancy cost accrual less the $500,000 sublease termination payment.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF DISCONTINUED OPERATIONS
DISCONTINUED OPERATIONS - Three Months Ended June 30, 2001
Compared to Three Months Ended July 1, 2000
On June 19, 2001, D.I.Y. Home Warehouse, Inc. (the "Company") announced
that its Board of Directors had authorized the Company to cease its ordinary
business operations and commence an orderly disposition of its remaining assets.
In conjunction with this announcement, the Company voluntarily closed its
remaining six stores in Cleveland, Eastlake, Elyria, Warren, Akron and
Ashtabula, Ohio and began liquidating its merchandise inventories, furniture and
fixtures. Besides the closure of the its six remaining stores, the cessation of
the Company's ordinary business operations will also result in the elimination
of its corporate activities.
The Company's stockholders are expected to formally approve the
Company's plan of liquidation during a stockholders meeting to be held during
the second half of fiscal year 2001.
Net sales for the second quarter ended June 30, 2001 decreased
$4,338,000 or 16.5% to $21,897,000 from $26,235,000 during the second quarter
ended July 1, 2000. The decrease in total net sales between the two periods was
due to additional competition from national warehouse retailers in the Company's
markets and fewer Company stores. Partially offsetting the decrease in sales
associated with the additional competition and fewer Company stores was the
favorable sales impact resulting from the aforementioned inventory liquidation
sales which began on June 19, 2001 at the Company's six remaining store
locations
The Company anticipates that the merchandise inventory liquidations
sales being conducted at its remaining six locations will be completed during
August 2001 and that the net sales recorded during the third quarter of fiscal
2001 will be below the net sales recorded during the same period in the prior
year. Additionally, the Company does not anticipate reporting any net sales
during the fourth quarter of fiscal 2001.
Gross profit as a percentage of net sales decreased to 16.2% during the
second quarter ended June 30, 2001 from 27.3% during the second quarter ended
July 1, 2000. The decrease in the gross profit percentages between the two
periods reflects the reduced gross profit attained by the Company during its
current period's merchandise inventory liquidation sales as well as the $188,000
inventory net realizable value write-down related to the closure of the Brook
Park, Medina and Mentor, Ohio stores and the $152,000 inventory net realizable
value write-down associated with the closure of the Cleveland, Eastlake, Elyria,
Warren, Akron and Ashtabula, Ohio stores.
As noted above, the Company anticipates that the merchandise inventory
liquidations sales will be completed during August 2001 and that the gross
profit recorded during the third quarter of fiscal 2001 will be below the gross
profit recorded during the same period in the prior year. Additionally, the
Company does not anticipate reporting any cost of sales or gross profit during
the fourth quarter of fiscal 2001.
Store operating, general and administrative expenses decreased
$3,351,000 or 45.4% to $4,026,000 during the second quarter ended June 30, 2001
from $7,377,000 during the second quarter ended July 1, 2000. The decrease in
total store operating, general and administrative expenses between the two
periods was due primarily to the closing of Company stores.
Due to cessation of its ordinary business operations, the Company does
not anticipate reporting any store operating, general and administrative
expenses for the remainder of fiscal year 2001 as costs formerly included in
this line items will be recorded as store closing costs.
On April 10, 2001, the Company announced the closing of its Brook Park,
Medina and Mentor, Ohio stores. The Company recorded store closing costs of
$4,072,494 for expenses expected to be incurred in closing the three locations.
This charge included $2,033,180 in net rent obligations at the Brook Park and
Mentor stores, $443,908 in payroll and payroll related expenses, $380,994 in
liquidation agent fees, $240,027 for estimated real
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estate taxes at the Brook Park and Mentor stores, $235,843 for expected utility
costs at the Brook Park and Mentor stores, $160,006 in personal property taxes
and $578,536 for other store closing costs. The Company did not accrue for
future occupancy expenses associated with the Medina store as of June 30, 2001.
The Company is actively marketing the lease or sale of this Company-owned store,
and as such, is unable to reasonably estimate the length of time that it will be
obligated for such costs. However, the Company estimates that the vacant Medina
store would incur approximately $10,000 of occupancy costs per month.
The Company also recorded a $1,480,733 write-off of the net leasehold
improvements and property and equipment of the Brook Park, Medina and Mentor,
Ohio stores. During the second quarter of 2001, the Company received proceeds of
$336,706 from the sale of certain of these assets written off, reducing the net
write-off of leasehold improvements and property and equipment to $1,144,027.
The net write-off of leasehold improvements and property and equipment was
recorded in the store closing costs line item in the accompanying condensed
statement of discontinued operations.
Concurrent with the closing of the Mentor, Ohio location, the Company
assigned its lease interest in that store to a third-party in exchange for
$3,464,375. The proceeds of the lease assignment were reduced by an escrow
account receivable of $250,000, transaction costs of $97,289 and a previously
received $100,000 in option payments, resulting in actual cash proceeds of
$3,017,086. In addition, this transaction resulted in a net gain of $3,107,086
(proceeds of $3,464,375 less transaction costs of $97,289 less a $260,000
payment to terminate the sublease agreement of its subtenant). The gain was
recorded in the store closing costs line item in the accompanying condensed
statement of discontinued operations.
On June 19, 2001, the Company announced that its Board of Directors had
authorized the Company to cease its ordinary business operations and commence an
orderly disposition of its remaining assets. In conjunction with this
announcement, the Company voluntarily closed its remaining six stores in
Cleveland, Eastlake, Elyria, Warren, Akron and Ashtabula, Ohio. The Company
recorded store closing costs of $7,791,317 for expenses expected to be incurred
in closing the Cleveland, Eastlake, Elyria, Warren, Akron and Ashtabula, Ohio
locations. This charge included $3,713,411 in net rent obligations, $1,179,716
in payroll and payroll related expenses, $578,167 for estimated real estate
taxes, $445,652 in liquidation agent fees, $350,448 for expected utility costs,
$306,857 for advertising expenses, $255,105 in personal property taxes, $207,672
for operating lease obligations and $754,289 for other closing costs. The
Company did not accrue for future occupancy expenses associated with the Warren,
Akron and Ashtabula stores as of June 30, 2001. The Company is actively
marketing the lease or sale of these Company-owned stores, and as such, is
unable to reasonably estimate the length of time that it will be obligated for
such costs. However, the Company estimates that each vacant store would incur
approximately $10,000 of occupancy costs per month.
The Company also recorded a $3,663,464 write-off of the net leasehold
improvements and property and equipment of the Cleveland, Eastlake, Elyria,
Warren, Akron and Ashtabula, Ohio. Based on its previous experience liquidating
property and equipment at closed stores, the Company expects to receive $670,164
in proceeds from the sale of certain of these assets written off, reducing the
net write-off of leasehold improvements and property and equipment to
$2,993,300. The net write-off of leasehold improvements and property and
equipment was recorded in the store closing costs line item in the accompanying
condensed statement of discontinued operations.
Besides the closure of the its six remaining stores, the cessation of
the Company's ordinary business operations will also result in the elimination
of its corporate activities. The Company recorded store closing costs of
$2,343,253 for expenses expected to be incurred in closing its corporate office.
This charge included $1,579,798 in payroll and payroll related expenses,
$300,000 for estimated outside professional services, $185,802 for the net
write-off of property and equipment, $127,621 in rent obligations and $150,032
for other closing costs. This charge was included in the store closing costs
line item in the accompanying condensed statement of discontinued operations.
Other expense, net, decreased $166,000 or 81.7% to $37,000 during the
second quarter ended June 30, 2001 from $203,000 during the second quarter ended
July 1, 2000. The decrease in other expense, net between the
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two periods was due to the decrease in the weighted average borrowings
outstanding on the Company's revolving credit facility.
During fiscal year 2000, the Company established a valuation
allowance of $2,556,510 against its net deferred tax assets in accordance with
the provisions of the FASB Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" ("SFAS No. 109"). The establishment of the
valuation allowance was based on the Company's assessment that it was more
likely than not that such assets would not be realized through future taxable
earnings or implementation of tax planning strategies. As the Company's
assessment regarding the likelihood of realizing these assets did not change as
of June 30, 2001, there has been no income tax benefit recorded in the
accompanying condensed statement of operations for the three months ended June
30, 2001.
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DISCONTINUED OPERATIONS - Six Months Ended June 30, 2001
Compared to Six Months Ended July 1, 2000
Net sales for the first six months ended June 30, 2001 decreased
$10,442,000 or 24.1% to $32,922,000 from $43,364,000 during the first six months
ended July 1, 2000. The decrease in total net sales between the two periods was
due to additional competition from national warehouse retailers in the Company's
markets and fewer Company stores. Partially offsetting the decrease in sales
associated with the additional competition and fewer Company stores was the
favorable sales impact resulting from the aforementioned inventory liquidation
sales which began on June 19, 2001 at the Company's six remaining locations
Gross profit as a percentage of net sales decreased to 21.8% during the
first six months ended June 30, 2001 from 28.2% during the six months ended July
1, 2000. The decrease in the gross profit percentages between the two periods
reflects the reduced gross profit attained by the Company during its current
period's merchandise inventory liquidation sales as well as the $188,000
inventory net realizable value write-down related to the closure of the Brook
Park, Medina and Mentor, Ohio stores and the $152,000 inventory net realizable
value write-down associated with the closure of the Cleveland, Eastlake, Elyria,
Warren, Akron and Ashtabula, Ohio stores.
Store operating, general and administrative expenses decreased
$4,578,000 or 32.4% to $9,552,000 during the first six months ended June 30,
2001 from $14,130,000 during the first six months ended July 1, 2000. The
decrease in total store operating, general and administrative expenses between
the two periods was due primarily to the closing of Company stores.
On April 10, 2001, the Company announced the closing of its Brook Park,
Medina and Mentor, Ohio stores. The Company recorded store closing costs of
$4,072,494 for expenses expected to be incurred in closing the three locations.
This charge included $2,033,180 in net rent obligations at the Brook Park and
Mentor stores, $443,908 in payroll and payroll related expenses, $380,994 in
liquidation agent fees, $240,027 for estimated real estate taxes at the Brook
Park and Mentor stores, $235,843 for expected utility costs at the Brook Park
and Mentor stores, $160,006 in personal property taxes and $578,536 for other
store closing costs. The Company did not accrue for future occupancy expenses
associated with the Medina store as of June 30, 2001. The Company is actively
marketing the lease or sale of this Company-owned store, and as such, is unable
to reasonably estimate the length of time that it will be obligated for such
costs. However, the Company estimates that the vacant Medina store would incur
approximately $10,000 of occupancy costs per month.
The Company also recorded a $1,480,733 write-off of the net leasehold
improvements and property and equipment of the Brook Park, Medina and Mentor,
Ohio stores. During the second quarter of 2001, the Company received proceeds of
$336,706 from the sale of certain of these assets written off, reducing the net
write-off of leasehold improvements and property and equipment to $1,144,027.
The net write-off of leasehold improvements and property and equipment was
recorded in the store closing costs line item in the accompanying condensed
statement of discontinued operations.
Concurrent with the closing of the Mentor, Ohio location, the Company
assigned its lease interest in that store to a third-party in exchange for
$3,464,375. The proceeds of the lease assignment were reduced by an escrow
account receivable of $250,000, transaction costs of $97,289 and a previously
received $100,000 in option payments, resulting in actual cash proceeds of
$3,017,086. In addition, this transaction resulted in a net gain of $3,107,086
(proceeds of $3,464,375 less transaction costs of $97,289 less a $260,000
payment to terminate the sublease agreement of its subtenant). The gain was
recorded in the store closing costs line item in the accompanying condensed
statement of discontinued operations.
On June 19, 2001, the Company announced that its Board of Directors had
authorized the Company to cease its ordinary business operations and commence an
orderly disposition of its remaining assets. In conjunction with this
announcement, the Company voluntarily closed its remaining six stores in
Cleveland, Eastlake, Elyria, Warren, Akron and Ashtabula, Ohio. The Company
recorded store closing costs of $7,791,317 for expenses expected to be incurred
in closing the Cleveland, Eastlake, Elyria, Warren, Akron and Ashtabula, Ohio
locations.
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This charge included $3,713,411 in net rent obligations, $1,179,716 in payroll
and payroll related expenses, $578,167 for estimated real estate taxes, $445,652
in liquidation agent fees, $350,448 for expected utility costs, $306,857 for
advertising expenses, $255,105 in personal property taxes, $207,672 for
operating lease obligations and $754,289 for other closing costs. The Company
did not accrue for future occupancy expenses associated with the Warren, Akron
and Ashtabula stores as of June 30, 2001. The Company is actively marketing the
lease or sale of these Company-owned stores, and as such, is unable to
reasonably estimate the length of time that it will be obligated for such costs.
However, the Company estimates that each vacant store would incur approximately
$10,000 of occupancy costs per month.
The Company also recorded a $3,663,464 write-off of the net leasehold
improvements and property and equipment of the Cleveland, Eastlake, Elyria,
Warren, Akron and Ashtabula, Ohio. Based on its previous experience liquidating
property and equipment at closed stores, the Company expects to receive $670,164
in proceeds from the sale of certain of these assets written off, reducing the
net write-off of leasehold improvements and property and equipment to
$2,993,300. The net write-off of leasehold improvements and property and
equipment was recorded in the store closing costs line item in the accompanying
condensed statement of discontinued operations.
Besides the closure of the its six remaining stores, the cessation of
the Company's ordinary business operations will also result in the elimination
of its corporate activities. The Company recorded store closing costs of
$2,343,253 for expenses expected to be incurred in closing its corporate office.
This charge included $1,579,798 in payroll and payroll related expenses,
$300,000 for estimated outside professional services, $185,802 for the net
write-off of property and equipment, $127,621 in rent obligations and $150,032
for other closing costs. This charge was included in the store closing costs
line item in the accompanying condensed statement of discontinued operations.
Other expense, net, decreased $213,000 or 56.0% to $168,000 during the
six months ended June 30, 2001 from $381,000 during the six months ended July 1,
2000. The decrease in other expense, net between the two periods was due to the
decrease in the weighted average borrowings outstanding on the Company's
revolving credit facility.
During fiscal year 2000, the Company established a valuation
allowance of $2,556,510 against its net deferred tax assets in accordance with
the provisions of SFAS No. 109. The establishment of the valuation allowance was
based on the Company's assessment that it was more likely than not that such
assets would not be realized through future taxable earnings or implementation
of tax planning strategies. As the Company's assessment regarding the likelihood
of realizing these assets did not change as of June 30, 2001, there has been no
income tax benefit recorded in the accompanying condensed statement of
operations for the six months ended June 30, 2001.
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16
LIQUIDITY AND CAPITAL RESOURCES
The Company's net cash provided by discontinued operating activities
increased $7,961,000 during the six months ended June 30, 2001 to $4,920,000
from a net use of cash of $3,041,000 during the six months ended July 1, 2000.
The increase in the net cash provided from discontinued operating activities
between the two periods was due primarily to the $9,417,000 cash flow impact of
the change in merchandise inventories, the cash flow impact of the $10,948,000
in non-cash charges associated with the store closings, the $5,330,000 cash flow
impact of the loss on the write-off of leasehold improvements and property and
equipment for the nine stores closed during the second quarter of fiscal 2001
and the $2,283,000 cash flow impact of the increase in accounts payable. These
sources of cash were partially offset by the $16,422,000 cash flow impact of the
increase in the Company's net loss between the two periods and the $3,107,000
cash flow impact of the gain on the Company's assignment of its Mentor store
lease. The increase in accrued expenses at June 30, 2001 primarily reflects the
Company's accrual for store closing costs during the second quarter of fiscal
2001. Similarly, the decrease in merchandise inventories primarily reflects the
liquidation of inventory at nine stores during the second quarter of fiscal
2001.
The Company's net cash provided by investing activities increased
$3,348,000 to $3,315,000 during the six months ended June 30, 2001 from a net
use of cash for investing activities of $33,000 during the six months ended July
1, 2000. The increase in the net cash provided by investing activities between
the two periods was due primarily to the Company's receipt of $3,017,000 in net
cash proceeds during the second quarter of fiscal 2001 for its assignment of its
lease rights to the Mentor store.
The Company's net use of cash for financing activities increased
$8,148,000 to $5,168,000 during the six months ended June 30, 2001 from net cash
provided by financing activities of $2,980,000 during the six months ended July
1, 2000. The increase in the net use of cash for financing activities was due
primarily to the $8,142,000 cash flow impact of the reduction in net borrowings
against the revolving credit facility between the two periods. During the second
quarter of fiscal 2001, the Company utilized the cash flow generated through the
liquidation of merchandise inventories as well as the proceeds from the
assignment of its lease rights to the Mentor store to eliminate amounts
outstanding under its revolving credit facility.
During the second quarter of fiscal 2001, the Company amended its
credit and security agreement with a bank. The amendment reduced the total
revolving credit commitment amount to $5 million and replaced the financial
covenants contained in the agreement.
As a result of its voluntary closure decision discussed above, the
Company violated certain of the restrictive covenants under the amended credit
and security agreement and remained in violation of such covenants as of June
30, 2001. The Company had no outstanding borrowings under the agreement at June
30, 2001. The Company believes that it will have sufficient cash reserves or
positive cash flows from the liquidation of inventories and the lease, sublease
or sale of real property to meet its working capital requirements and
obligations and therefore will no longer seek to borrow funds under the
agreement. The Company is actively marketing the lease or sale of the
Company-owned stores. Additionally, the Company is also pursuing opportunities
to negotiate sublease or early lease termination agreements for its leased
locations. To the extent that the Company is successful in leasing or selling a
Company-owned store or is able to negotiate a sublease or early lease
termination agreement for a leased location, there is a potential to recognize a
gain on such a disposition. As a result, the Company will not seek a waiver of
its covenant violations nor will it attempt to renegotiate its existing
revolving credit facility or negotiate a new revolving credit facility.
Subsequent to June 30, 2001, the Company entered into a revocable
license agreement with the lessor of its Brook Park location, enabling the
Company to terminate its sublease agreement effective July 1, 2001 in exchange
for its payment of a $500,000 sublease termination fee. At June 30, 2001, the
Company had a remaining accrual balance of $2,398,216 for expected costs
associated with its occupancy of the Brook Park store, including $1,925,820 in
future rent obligations. As a result of entering into the revocable license
agreement, the Company will record a $1,898,216 reduction in store closing costs
in the Company's statement of discontinued operations for the quarter and nine
months ended September 29, 2001, representing the reversal of the $2,398,216
occupancy cost accrual less the $500,000 sublease termination payment.
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FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q may contain statements that are
forward-looking, as that term is defined by the Private Securities Litigation
Reform Act of 1995 or by the Securities and Exchange Commission in its rules,
regulations and releases. The Company intends that such forward-looking
statements be subject to the safe harbors created thereby. All forward-looking
statements are based on current expectations regarding important risk factors.
Accordingly, actual results may differ materially from those expressed in the
forward-looking statements and the making of such statements should not be
regarded as a representation by the Company or any other person that the results
expressed therein will be achieved. Important risk factors include, but are not
limited to, the following: general economic conditions; consumer spending and
debt levels; housing turnover; weather; impact on sales and margins from both
existing and new competition; changes in operating expenses; changes in product
mix; interest rates; changes in and the application of accounting policies and
practices; adverse results in significant litigation matters; adverse state and
federal regulations and legislation; the occurrence of extraordinary events
including events and acts of nature or accidents; and the risks described from
time to time in the Company's Securities and Exchange Commission filings.
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PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits required by Item 601 of Regulation S-K:
3.1 Articles of Incorporation of D.I.Y. Home Warehouse, Inc., as
amended, incorporated herein by reference to Exhibit 3.1 to
the Registrant's Registration Statement No. 33-60012 on Form
S-1 filed May 18, 1993.
3.2 Amended and Restated Code of Regulations of D.I.Y. Home
Warehouse, Inc., incorporated herein by reference to Exhibit
3.2 to the Registrant's Registration Statement No. 33-60012
on Form S-1 filed May 18, 1993.
10.1 Compensation and Employee Benefit Plans of the Registrant
10.1.1 D.I.Y. Home Warehouse, Inc. 1993 Long Term
Incentive Plan as Amended February 23, 1994 and
Approved by Stockholders May 25, 1994,
incorporated herein by reference to Exhibit 10.18
to the Registrant's Registration Statement No.
33-60012 on Form S-1 filed May 18, 1993.
10.1.2 Indemnification Agreement between D.I.Y. Home
Warehouse, Inc. and Clifford L. Reynolds,
incorporated herein by reference to Exhibit 10.22
to the Registrant's Registration Statement No.
33-60012 on Form S-1 filed May 18, 1993.
10.1.3 Indemnification Agreement between D.I.Y. Home
Warehouse, Inc. and R. Scott Eynon, incorporated
herein by reference to Exhibit 10.23 to the
Registrant's Registration Statement No. 33-60012
on Form S-1 filed May 18, 1993.
10.1.4 Indemnification Agreement between D.I.Y. Home
Warehouse, Inc. and Dennis C. Hoff, incorporated
herein by reference to Exhibit 10.24 to the
Registrant's Registration Statement No. 33-60012
on Form S-1 filed May 18, 1993.
10.1.5 Indemnification Agreement between D.I.Y. Home
Warehouse, Inc. and John M. Erb, incorporated
herein by reference to Exhibit 10.25 to the
Registrant's Registration Statement No. 33-60012
on Form S-1 filed May 18, 1993.
10.1.6 Indemnification Agreement between D.I.Y. Home
Warehouse, Inc. and Fred A. Erb, incorporated
herein by reference to Exhibit 10.26 to the
Registrant's Registration Statement No. 33-60012
on Form S-1 filed May 18, 1993.
10.1.7 Tax Indemnification Agreement among D.I.Y. Home
Warehouse, Inc. and Fred A. Erb, Clifford L.
Reynolds, R. Scott Eynon, Dennis C. Hoff and John
M. Erb, incorporated herein by reference to
Exhibit 10.27 to the Registrant's Registration
Statement No. 33-60012 on Form S-1 filed May 18,
1993.
10.1.8 D.I.Y. Home Warehouse, Inc.'s 401K Plan,
incorporated herein by reference to Exhibit 10.28
to the Registrant's Registration Statement No.
33-60012 on Form S-1 filed May 18, 1993.
10.1.9 1994 D.I.Y. Home Warehouse, Inc. Employee Bonus
Plan dated May 25, 1994, incorporated herein by
reference to Exhibit 10.48 to the Registrant's
Report on Form 10-K for the fiscal year ended
December 31, 1994.
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10.1.10 Amended and Restated Employment Agreement between
Clifford L. Reynolds and D.I.Y. Home Warehouse,
Inc. dated January 1, 1995, incorporated herein by
reference to Exhibit 10.1 to the Registrant's
Report on Form 10-Q for the quarter ended July 1,
1995.
10.1.10.a Amended and Restated Employment
Agreement between Clifford L. Reynolds
and D.I.Y. Home Warehouse, Inc. dated
November 21, 1996, incorporated herein
by reference to Exhibit 10.51 to the
Registrant's Report on Form 10-K for the
fiscal year ended December 28, 1996.
10.1.10.b Amended and Restated Employment
Agreement between Clifford L. Reynolds
and D.I.Y. Home Warehouse, Inc. dated
May 28, 1998, incorporated herein by
reference to Exhibit 10.4 to the
Registrant's Report on Form 10-Q for the
quarter ended July 4, 1998.
10.1.10.c Amendment No. 3 to Amended and Restated
Employment Agreement between Clifford L.
Reynolds and D.I.Y. Home Warehouse, Inc.
dated March 11, 1999, incorporated
herein by reference to Exhibit 10.69 to
the Registrant's Report on Form 10-K for
the fiscal year ended January 2, 1999.
10.1.10.d Amendment No. 4 to Amended and Restated
Employment Agreement between Clifford L.
Reynolds and D.I.Y. Home Warehouse, Inc.
dated November 30, 1999, incorporated
herein by reference to Exhibit 10.1.10.d
to the Registrant's Report on Form 10-K
for the fiscal year ended January 1,
2000.
10.1.11 Amended and Restated Employment Agreement between
R. Scott Eynon and D.I.Y. Home Warehouse, Inc.
dated January 1, 1995, incorporated herein by
reference to Exhibit 10.2 to the Registrant's
Report on Form 10-Q for the quarter ended July 1,
1995.
10.1.11.a Amended and Restated Employment
Agreement between R. Scott Eynon and
D.I.Y. Home Warehouse, Inc. dated May
28, 1998, incorporated herein by
reference to Exhibit 10.5 to the
Registrant's Report on Form 10-Q for the
quarter ended July 4, 1998.
10.1.11.b Amendment No. 2 to Amended and Restated
Employment Agreement between R. Scott
Eynon and D.I.Y. Home Warehouse, Inc.
dated March 11, 1999, incorporated
herein by reference to Exhibit 10.70 to
the Registrant's Report on Form 10-K for
the fiscal year ended January 2, 1999.
10.1.11.c Amendment No. 3 to Amended and Restated
Employment Agreement between R. Scott
Eynon and D.I.Y. Home Warehouse, Inc.
dated November 30, 1999, incorporated
herein by reference to Exhibit 10.1.11.c
to the Registrant's Report on Form 10-K
for the fiscal year ended January 1,
2000.
10.1.12 Amended and Restated Employment Agreement between
Dennis C. Hoff and D.I.Y. Home Warehouse, Inc.
dated January 1, 1995, incorporated herein by
reference to Exhibit 10.3 to the Registrant's
Report on Form 10-Q for the quarter ended July 1,
1995.
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10.1.12.a Amended and Restated Employment
Agreement between Dennis C. Hoff and
D.I.Y. Home Warehouse, Inc. dated May
28, 1998, incorporated herein by
reference to Exhibit 10.6 to the
Registrant's Report on Form 10-Q for the
quarter ended July 4, 1998.
10.1.13 Form of Non-Qualified Stock Option Agreement under
the D.I.Y. Home Warehouse, Inc. 1993 Long Term
Incentive Plan as Amended, incorporated herein by
reference to Exhibit 10.14 to the Registrant's
Report on Form 10-K for the fiscal year ended
December 30, 1995.
10.1.14 1995 D.I.Y. Home Warehouse, Inc. Employee Bonus
Plan dated May 24, 1995, incorporated herein by
reference to Exhibit 10.44 to the Registrant's
Report on Form 10-K for the fiscal year ended
December 30, 1995.
10.1.15 D.I.Y. Home Warehouse, Inc. 1996 Retainer Stock
Plan for Non-Employee Directors, incorporated
herein by reference to Exhibit 10.49 to the
Registrant's Report on Form 10-K for the fiscal
year ended December 30, 1995.
10.1.16 Employment Agreement between Eric I. Glassman and
D.I.Y. Home Warehouse, Inc. dated July 1, 1998,
incorporated herein by reference to Exhibit 10.7
to the Registrant's Report on Form 10-Q for the
quarter ended July 4, 1998.
10.1.17 Transaction Bonus Agreement between Clifford L.
Reynolds and D.I.Y. Home Warehouse, Inc. dated
July 1, 1998, incorporated herein by reference to
Exhibit 10.8 to the Registrant's Report on Form
10-Q for the quarter ended July 4, 1998.
10.1.18 Transaction Bonus Agreement between R. Scott Eynon
and D.I.Y. Home Warehouse, Inc. dated July 1,
1998, incorporated herein by reference to Exhibit
10.9 to the Registrant's Report on Form 10-Q for
the quarter ended July 4, 1998.
10.1.19 Transaction Bonus Agreement between Dennis C. Hoff
and D.I.Y. Home Warehouse, Inc. dated July 1,
1998, incorporated herein by reference to Exhibit
10.10 to the Registrant's Report on Form 10-Q for
the quarter ended July 4, 1998.
10.1.20 Transaction Bonus Agreement between Eric I.
Glassman and D.I.Y. Home Warehouse, Inc. dated
July 1, 1998, incorporated herein by reference to
Exhibit 10.11 to the Registrant's Report on Form
10-Q for the quarter ended July 4, 1998.
10.1.21 Amendment No. 1 to Amended and Restated Employment
Agreement between Eric I. Glassman and D.I.Y. Home
Warehouse, Inc. dated March 11, 1999, incorporated
herein by reference to Exhibit 10.71 to the
Registrant's Report on Form 10-K for the fiscal
year ended January 2, 1999.
10.1.22 DIY Home Warehouse, Inc. 1993 Long Term Incentive
Plan as Amended March 17, 1999 and Approved by the
Board of Directors March 17, 1999, incorporated
herein by reference to Exhibit 10.13 to the
Registrant's Report on Form 10-Q for the quarter
ended July 3, 1999.
10.2 Material Leases of the Registrant
10.2.1 Sublease between D.I.Y. Ohio Real Estate
Associates Limited Partnership and D.I.Y. Home
Warehouse, Inc., dated August 1, 1992,
incorporated herein by reference to Exhibit 10.1
to the Registrant's Registration Statement No.
33-60012 on Form S-1 filed May 18, 1993.
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10.2.2 Indenture of Lease between Smith - D.I.Y. Center
Limited Partnership and D.I.Y. Home Warehouse,
Inc., dated December 27, 1985, incorporated herein
by reference to Exhibit 10.2 to the Registrant's
Registration Statement No. 33-60012 on Form S-1
filed May 18, 1993.
10.2.3 Amendment to Lease between D.I.Y. Center
Associates (successor in interest to Smith -
D.I.Y. Center Limited Partnership) and D.I.Y. Home
Warehouse, Inc., dated July 2, 1991, incorporated
herein by reference to Exhibit 10.3 to the
Registrant's Registration Statement No. 33-60012
on Form S-1 filed May 18, 1993.
10.2.3.a Amendment to Lease between D.I.Y. Center
Associates, L.P. and D.I.Y. Home
Warehouse, Inc. dated March 21, 1995,
incorporated herein by reference to
Exhibit 10.51 to the Registrant's Report
on Form 10-K for the fiscal year ended
December 31, 1994.
10.2.4 Lease between Fred A. Erb and D.I.Y. Home
Warehouse, Inc., dated March 1, 1993, incorporated
herein by reference to Exhibit 10.4 to the
Registrant's Registration Statement No. 33-60012
on Form S-1 filed May 18, 1993.
10.2.5 Lease Agreement between West Park Limited, Inc.
and D.I.Y. Home Warehouse, Inc. dated August 2,
1991, incorporated herein by reference to Exhibit
10.5 to the Registrant's Registration Statement
No. 33-60012 on Form S-1 filed May 18, 1993.
10.2.5.a Addendum #1 to Lease Agreement between
West Park Limited, Inc. and D.I.Y. Home
Warehouse, Inc., dated September 2,
1991, incorporated herein by reference
to Exhibit 10.6 to the Registrant's
Registration Statement No. 33-60012 on
Form S-1 filed May 18, 1993.
10.2.5.b Addendum #2 to Lease Agreement between
West Park Limited, Inc. and D.I.Y. Home
Warehouse, Inc., dated September 16,
1991, incorporated herein by reference
to Exhibit 10.7 to the Registrant's
Registration Statement No. 33-60012 on
Form S-1 filed May 18, 1993.
10.2.6 Sublease between The Wholesale Club, Inc. and
D.I.Y. Home Warehouse, Inc., dated May 14, 1992,
incorporated herein by reference to Exhibit 10.8
to the Registrant's Registration Statement No.
33-60012 on Form S-1 filed May 18, 1993.
10.2.7 Sublease between The Wholesale Club, Inc. and
D.I.Y. Home Warehouse, Inc., dated November 25,
1992, incorporated herein by reference to Exhibit
10.9 to the Registrant's Registration Statement
No. 33-60012 on Form S-1 filed May 18, 1993.
10.2.8 Lease between Myron S. Viny, dba Central Valley
Properties, and D.I.Y. Home Warehouse, Inc., dated
February 26, 1993, but effective beginning May 1,
1993, incorporated herein by reference to Exhibit
10.12 to the Registrant's Registration Statement
No. 33-60012 on Form S-1 filed May 18, 1993.
10.2.8.a Modification and Supplement to lease between the
Estate of Myron S. Viny (formerly DBA Central
Valley Properties) and D.I.Y. Home Warehouse, Inc.
dated November 27, 1995, incorporated herein by
reference to Exhibit 10.12 to the Registrant's
Report on Form 10-K for the fiscal year ended
December 30, 1995.
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10.2.8.b Modification and Supplement of lease
between the Estate of Myron S. Viny
(formerly DBA Central Valley Properties)
and D.I.Y. Home Warehouse, Inc. dated
March 30, 2000, incorporated herein by
reference to Exhibit 10.2.8.b to the
Registrant's Report on Form 10-Q for the
quarter ended April 1, 2000.
10.2.9 Agreement of Lease (Boardman Facility) between DIY
Ohio Real Estate Associates Limited Partnership
and D.I.Y. Home Warehouse, Inc. dated as of
October 1, 1993, incorporated herein by reference
to Exhibit 10.38 to the Registrant's Report on
Form 10-K for the fiscal year ended January 1,
1994.
10.2.9.a Second Amendment to Agreement Lease
(Boardman facility) between D.I.Y. Home
Warehouse, Inc. and D.I.Y. Ohio Real
Estate Associated Limited Partnership
(the Landlord) and assignment of the
lease to V&V 224, Limited by the
Landlord dated October 22, 1998,
incorporated herein by reference to
Exhibit 10.9 to the Registrant's Report
on Form 10-Q for the quarter ended
October 3, 1998.
10.2.10 Lease between Elmhurst Properties, Inc. and D.I.Y.
Home Warehouse, Inc., dated May 26, 1993,
incorporated herein by reference to Exhibit 10.39
to the Registrant's Report on Form 10-K for the
fiscal year ended January 1, 1994.
10.2.11 Assignment and Assumption of Lease and Sublease
between Kmart Corporation and D.I.Y. Home
Warehouse, Inc. dated December 22, 1994,
incorporated herein by reference to Exhibit 10.49
to the Registrant's Report on Form 10-K for the
fiscal year ended December 31, 1994.
10.2.11.a Lease Cancellation Agreement between
Shidler/West Finance Partners V. Limited
Partnership and D.I.Y. Home Warehouse,
Inc. dated April 10, 2001, incorporated
herein by reference to Exhibit 10.2.11.a
to the Registrant's Report on Form 8-K
dated April 10, 2001.
10.2.11.b Termination of Lease Agreement between
D.I.Y. Home Warehouse, Inc. and Lowe's
Home Centers, Inc., dated April 10,
2001, incorporated herein by reference
to Exhibit 10.2.12.a to the Registrant's
Report on Form 8-K dated April 10, 2001.
10.2.12 Shopping Center Lease between KCHGC, Inc. and
D.I.Y. Home Warehouse, Inc. dated January 12,
1995, incorporated herein by reference to Exhibit
10.50 to the Registrant's Report on Form 10-K for
the fiscal year ended December 31, 1994.
10.2.13 Indenture of Lease between D.I.Y. Home Warehouse,
Inc. and Akron-Summit County Public Library, dated
March 8, 2001, incorporated herein by reference to
Exhibit 10.2.13 to the Registrant's Report on Form
10-K for the fiscal year ended December 30, 2000.
10.2.14 Revocable License Agreement between D.I.Y. Home
Warehouse, Inc. and Wal-Mart Stores East, Inc.,
dated July 6, 2001, filed herewith.
10.2.15 Sublease Termination Agreement between D.I.Y. Home
Warehouse, Inc. and Wal-Mart Stores East, Inc.,
dated July 9, 2001, filed herewith.
10.3 Credit Agreements of the Registrant
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10.3.1 $1,250,000 Promissory Note from D.I.Y. Home
Warehouse, Inc. to Edgemere, Inc. f/k/a Erb Lumber
Co., dated July 1, 1991, incorporated herein by
reference to Exhibit 10.29 to the Registrant's
Registration Statement No. 33-60012 on Form S-1
filed May 18, 1993.
10.3.2 Security Agreement between D.I.Y. Home Warehouse
and Erb Lumber Co., dated November 14, 1985,
incorporated herein by reference to Exhibit 10.30
to the Registrant's Registration Statement No.
33-60012 on Form S-1 filed May 18, 1993.
10.3.3 Revolving Credit Agreement and Security Agreement
dated December 7, 1994 between D.I.Y. Home
Warehouse, Inc. and National City Bank, Columbus,
and Old Kent Bank and Trust Company, incorporated
herein by reference to Exhibit 10.40 to the
Registrant's Report on Form 10-K for the fiscal
year ended December 31, 1994.
10.3.4 Loan and Co-lender Agreement and Open-End
Mortgage, Assignment of Rents and Security
Agreement dated December 23, 1994 between D.I.Y.
Home Warehouse, Inc. and National City Bank,
Columbus, and Old Kent Bank and Trust Company,
incorporated herein by reference to Exhibit 10.41
to the Registrant's Report on Form 10-K for the
fiscal year ended December 31, 1994.
10.3.4.a First Amendment to Loan and Co-Lender
Agreement dated December 22, 1995
between D.I.Y. Home Warehouse, National
City Bank, Columbus, and Old Kent Bank,
incorporated herein by reference to
Exhibit 10.41 to the Registrant's Report
on Form 10-K for the fiscal year ended
December 30, 1995
10.3.4.b Second Amendment to Loan and Co-Lender
Agreement dated December 23, 1996
between D.I.Y. Home Warehouse, Inc.,
National City Bank of Columbus and Old
Kent Bank, incorporated herein by
reference to Exhibit 10.52 to the
Registrant's Report on Form 10-K for the
fiscal year ended December 28, 1996.
10.3.4.c Third Amendment to Loan and Co-Lender
Agreement dated October 24, 1997 between
D.I.Y. Home Warehouse, Inc., National
City Bank of Columbus and Old Kent Bank,
incorporated herein by reference to
Exhibit 10.2 to the Registrant's Report
on Form 10-Q for the quarter ended
September 27, 1997.
10.3.4.d Fourth Amendment to Loan and Co-Lender
Agreement dated April 4, 1998 between
D.I.Y. Home Warehouse, Inc., National
City Bank of Columbus and Old Kent Bank,
incorporated herein by reference to
Exhibit 10.2 to the Registrant's Report
on Form 10-Q for the quarter ended July
4, 1998.
10.3.4.e Fifth Amendment to Loan and Co-Lender
Agreement dated October 28, 1998 between
D.I.Y. Home Warehouse, Inc., National
City Bank of Columbus and Old Kent Bank,
incorporated herein by reference to
Exhibit 10.4 to the Registrant's Report
on Form 10-Q for the quarter ended
October 3, 1998.
10.3.5 Line of Credit Agreement for Real Estate Loans,
Open-end Mortgage, Assignment of Rents and
Security Agreement, and Mortgage Notes between
D.I.Y. Home Warehouse, Inc. and National City
Bank, Columbus and Old Kent Bank dated April 28,
1995,
23
24
incorporated herein by reference to Exhibit 10.1
to the Registrant's Report on Form 10-Q for the
quarter ended April 1, 1995.
10.3.5.a First Amendment to Line of Credit
Agreement; Open-end Mortgage, Assignment
of Rents and Security Agreement
(Leasehold) for Trumbull County;
Open-end Mortgage, Assignment of Rents
and Security Agreement for Summit
County; Mortgage Note to National City
Bank, Columbus dated September 15, 1995;
Mortgage Note to Old Kent Bank dated
September 15, 1995, incorporated herein
by reference to Exhibit 10.1 to the
Registrant's Report on Form 10-Q for the
quarter ended September 30, 1995.
10.3.5.b Second Amendment to Line of Credit
Agreement dated December 22, 1995
between D.I.Y. Home Warehouse, National
City Bank, Columbus, and Old Kent Bank,
incorporated herein by reference to
Exhibit 10.39 to the Registrant's Report
on Form 10-K for the fiscal year ended
December 30, 1995.
10.3.5.c Third Amendment to Line of Credit
Agreement Dated December 23, 1996
between D.I.Y. Home Warehouse, Inc.,
National City Bank of Columbus and Old
Kent Bank, incorporated herein by
reference to Exhibit 10.53 to the
Registrant's Report on Form 10-K for the
fiscal year ended December 28, 1996.
10.3.5.d Fourth Amendment to Line of Credit
Agreement dated October 24, 1997 between
D.I.Y. Home Warehouse, Inc., National
City Bank of Columbus and Old Kent Bank,
incorporated herein by reference to
Exhibit 10.3 to the Registrant's Report
on Form 10-Q for the quarter ended
September 27, 1997.
10.3.5.e Fifth Amendment to Line of Credit
Agreement dated April 4, 1998 between
D.I.Y. Home Warehouse, Inc., National
City Bank of Columbus and Old Kent Bank,
incorporated herein by reference to
Exhibit 10.1 to the Registrant's Report
on Form 10-Q for the quarter ended July
4, 1998.
10.3.5.f Sixth Amendment to Line of Credit
Agreement dated October 28, 1998 between
D.I.Y. Home Warehouse, Inc., National
City Bank of Columbus and Old Kent Bank,
incorporated herein by reference to
Exhibit 10.5 to the Registrant's Report
on Form 10-Q for the quarter ended
October 3, 1998.
10.3.6 First Amendment to Security Agreement dated
December 22, 1995 between D.I.Y. Home Warehouse,
National City Bank, Columbus, and Old Kent Bank,
incorporated herein by reference to Exhibit 10.38
to the Registrant's Report on Form 10-K for the
fiscal year ended December 30, 1995.
10.3.7 First Amendment to Subordination Agreement dated
December 22, 1995 between D.I.Y. Home Warehouse,
National City Bank, Columbus, and Old Kent Bank,
and Edgemere Enterprises, Inc., incorporated
herein by reference to Exhibit 10.39 to the
Registrant's Report on Form 10-K for the fiscal
year ended December 30, 1995.
10.3.8 Partial Release of Mortgage to Open-End Mortgage
Assignment of Rents and Security Agreement for
Richland County, Stark County, Summit County,
Trumball County and
24
25
Medina County by Old Kent Bank dated October 28,
1998, incorporated herein by reference to Exhibit
10.6 to the Registrant's Report on Form 10-Q for
the quarter ended October 3, 1998.
10.3.9 Modification to Revolving Credit Agreement, Line
of Credit Agreement, and Loan and Co-lender
Agreement between D.I.Y. Home Warehouse, Inc.,
National City Bank, Columbus, and Old Kent Bank
dated February 20, 1996, incorporated herein by
reference to Exhibit 10.42 to the Registrant's
Report on Form 10-K for the fiscal year ended
December 30, 1995.
10.3.10 General Business Lease Agreement with IBM Credit
Corporation dated May 30, 1996, incorporated
herein by reference to Exhibit 10.1 to the
Registrant's Report on Form 10-Q for the quarter
ended June 29, 1996.
10.3.11 Amendment No. 1 to Open-End Mortgage, Assignment
of Rents and Security Agreement for Richland
County, Stark County, Summit County, Trumball
County and Medina County between D.I.Y. Home
Warehouse, Inc., National City Bank and Old Kent
Bank dated October 28, 1998, incorporated herein
by reference to Exhibit 10.7 to the Registrant's
Report on Form 10-Q for the quarter ended October
3, 1998.
10.3.12 First Amendment to Mortgage Note between D.I.Y.
Home Warehouse, Inc. and National City Bank dated
October 28, 1998, incorporated herein by reference
to Exhibit 10.8 to the Registrant's Report on Form
10-Q for the quarter ended October 3, 1998.
10.3.13 Second Amendment to Security Agreement dated
October 28, 1998 between D.I.Y. Home Warehouse,
Inc., National City Bank and Old Kent Bank,
incorporated herein by reference to Exhibit 10.9
to the Registrant's Report on Form 10-Q for the
quarter ended October 3, 1998.
10.3.14 Second Amendment to Subordination Agreement dated
October 28, 1998 between D.I.Y. Home Warehouse,
Inc., National City Bank and Old Kent Bank,
incorporated herein by reference to Exhibit 10.3
to the Registrant's Report on Form 10-Q for the
quarter ended October 3, 1998.
10.3.15 Credit and Security Agreement dated October 27,
1998 among D.I.Y. Home Warehouse, Inc. and the
Lenders which are signatures hereto and National
City Commercial Finance, Inc, as agent and
National City Bank as Letter of Credit Bank,
incorporated herein by reference to Exhibit 10.1
to the Registrant's Report on Form 10-Q for the
quarter ended October 3, 1998.
10.3.15.a Waiver and Amendment to Credit and
Security Agreement dated November 14,
2000 between D.I.Y. Home Warehouse, Inc.
and National City Commercial Finance,
Inc., incorporated herein by reference
to Exhibit 10.3.15.a to the Registrant's
Form 10-K for the fiscal year ended
December 30, 2000.
10.3.15.b Second Amendment to Credit and Security
Agreement dated April 3, 2001 between
D.I.Y. Home Warehouse, Inc. and National
City Commercial Finance, Inc., filed
herewith.
10.3.15.c Third Amendment to Credit and Security
Agreement dated June 1, 2001 between
D.I.Y. Home Warehouse, Inc. and National
City Commercial Finance, Inc., filed
herewith.
25
26
10.4 Real Estate Purchase Agreement (Mansfield) between DIY Ohio
Real Estate Associates Limited Partnership and D.I.Y. Home
Warehouse, Inc. dated as of March 1, 1994, incorporated
herein by reference to Exhibit 10.40 to the Registrant's
Report on Form 10-K for the fiscal year ended January 1,
1994.
10.5 Real Estate Purchase Agreement (Mansfield and Canton)
between D.I.Y. Home Warehouse, Inc. and Gabriel Brothers,
Inc. dated March 3, 1999, incorporated herein by reference
to Exhibit 10.5 to the Registrant's Report on Form 10-K for
the fiscal year ended January 1, 2000.
10.6 Sale of Merchandise Agreement (Mansfield and West Market)
between D.I.Y Home Warehouse, Inc. and Schottenstein
Bernstein Capital Group, LLC, dated June 3 1999,
incorporated herein by reference to Exhibit 10.6 to the
Registrant's Report on Form 10-K for the fiscal year ended
January 1, 2000.
10.7 Sale of Merchandise Agreement (Boardman) between D.I.Y Home
Warehouse, Inc. and Schottenstein Bernstein Capital Group,
LLC, dated June 11, 1999, incorporated herein by reference
to Exhibit 10.7 to the Registrant's Report on Form 10-K for
the fiscal year ended January 1, 2000.
10.8 Sale of Merchandise Agreement (North Randall and Tallmadge
Avenue) between D.I.Y. Home Warehouse, Inc. and
Schottenstein Bernstein Capital Group, LLC, dated August 4,
2000, incorporated herein by reference to Exhibit 10.8 to
the Registrant's Report on Form 10-Q for the quarter ended
September 30, 2000.
10.9 Agency Agreement between D.I.Y. Home Warehouse, Inc. and
Schottenstein Bernstein Capital Group, LLC, dated April 10,
2001, incorporated herein by reference to Exhibit 10.9 to
the Registrant's Report on Form 8-K dated April 10, 2001.
10.10 Consulting Agreement between D.I.Y. Home Warehouse, Inc. and
Schottenstein Bernstein Capital Group, dated June 20, 2001,
filed herewith.
(b) Reports on Form 8-K:
During the second quarter of fiscal year 2001 to which this Quarterly
Report on Form 10-Q relates, the Registrant filed the following
Current Reports on Form 8-K: (i) Current Report bearing a cover date
of April 10, 2001, reporting the closure of its Brook Park, Medina and
Mentor, Ohio stores (included as Appendix A in the Form 8-K were (1) a
pro forma condensed balance sheet as of December 30, 2000, giving
effect to (A) the closure of the Brook Park, Medina and Mentor, Ohio
stores as well as the assignment of the Company's lease rights to its
Mentor location, and (B) related pro forma adjustments, all as though
the transactions occurred at December 30, 2000; and (2) unaudited pro
forma condensed statement of operations for the fiscal year ended
December 30, 2000, giving effect to (A) the elimination of the results
of operations of the Registrant's closed stores, as described in Note
(G), and (B) related pro forma adjustments, all as though the
transactions occurred on January 2, 2000); (ii) Current Report bearing
a cover date of June 19, 2001, reporting the Board of Directors'
intention to cease the Company's ordinary business operations and
commence the orderly disposition of its remaining assets.
26
27
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
D.I.Y. HOME WAREHOUSE, INC.
(Registrant)
DATED: August 20, 2001 By: /s/ Todd Ayers
----------------------
Todd Ayers
Controller
27
28
D.I.Y. Home Warehouse, Inc.
Exhibits to Form 10-Q for the Second Quarter Ended June 30, 2001
Index to Exhibits
Where
Filed
- -----
* 3.1 Articles of Incorporation of D.I.Y. Home Warehouse, Inc., as
amended, incorporated herein by reference to Exhibit 3.1 to
the Registrant's Registration Statement No. 33-60012 on Form
S-1 filed May 18, 1993.
* 3.2 Amended and Restated Code of Regulations of D.I.Y. Home
Warehouse, Inc., incorporated herein by reference to Exhibit
3.2 to the Registrant's Registration Statement No. 33-60012 on
Form S-1 filed May 18, 1993.
10.1 Compensation and Employee Benefit Plans of the Registrant
* 10.1.1 D.I.Y. Home Warehouse, Inc. 1993 Long Term
Incentive Plan as Amended February 23, 1994 and
Approved by Stockholders May 25, 1994,
incorporated herein by reference to Exhibit 10.18
to the Registrant's Registration Statement No.
33-60012 on Form S-1 filed May 18, 1993.
* 10.1.2 Indemnification Agreement between D.I.Y. Home
Warehouse, Inc. and Clifford L. Reynolds,
incorporated herein by reference to Exhibit 10.22
to the Registrant's Registration Statement No.
33-60012 on Form S-1 filed May 18, 1993.
* 10.1.3 Indemnification Agreement between D.I.Y. Home
Warehouse, Inc. and R. Scott Eynon, incorporated
herein by reference to Exhibit 10.23 to the
Registrant's Registration Statement No. 33-60012
on Form S-1 filed May 18, 1993.
* 10.1.4 Indemnification Agreement between D.I.Y. Home
Warehouse, Inc. and Dennis C. Hoff, incorporated
herein by reference to Exhibit 10.24 to the
Registrant's Registration Statement No. 33-60012
on Form S-1 filed May 18, 1993.
* 10.1.5 Indemnification Agreement between D.I.Y. Home
Warehouse, Inc. and John M. Erb, incorporated
herein by reference to Exhibit 10.25 to the
Registrant's Registration Statement No. 33-60012
on Form S-1 filed May 18, 1993.
* 10.1.6 Indemnification Agreement between D.I.Y. Home
Warehouse, Inc. and Fred A. Erb, incorporated
herein by reference to Exhibit 10.26 to the
Registrant's Registration Statement No. 33-60012
on Form S-1 filed May 18, 1993.
* 10.1.7 Tax Indemnification Agreement among D.I.Y. Home
Warehouse, Inc. and Fred A. Erb, Clifford L.
Reynolds, R. Scott Eynon, Dennis C. Hoff and John
M. Erb, incorporated herein by reference to
Exhibit 10.27 to the Registrant's Registration
Statement No. 33-60012 on Form S-1 filed May 18,
1993.
* 10.1.8 D.I.Y. Home Warehouse, Inc.'s 401K Plan,
incorporated herein by reference to Exhibit 10.28
to the Registrant's Registration Statement No.
33-60012 on Form S-1 filed May 18, 1993.
29
* 10.1.9 1994 D.I.Y. Home Warehouse, Inc. Employee Bonus
Plan dated May 25, 1994, incorporated herein by
reference to Exhibit 10.48 to the Registrant's
Report on Form 10-K for the fiscal year ended
December 31, 1994.
* 10.1.10 Amended and Restated Employment Agreement between
Clifford L. Reynolds and D.I.Y. Home Warehouse,
Inc. dated January 1, 1995, incorporated herein by
reference to Exhibit 10.1 to the Registrant's
Report on Form 10-Q for the quarter ended July 1,
1995.
* 10.1.10.a Amended and Restated Employment
Agreement between Clifford L. Reynolds
and D.I.Y. Home Warehouse, Inc. dated
November 21, 1996, incorporated herein
by reference to Exhibit 10.51 to the
Registrant's Report on Form 10-K for the
fiscal year ended December 28, 1996.
* 10.1.10.b Amended and Restated Employment
Agreement between Clifford L. Reynolds
and D.I.Y. Home Warehouse, Inc. dated
May 28, 1998, incorporated herein by
reference to Exhibit 10.4 to the
Registrant's Report on Form 10-Q for the
quarter ended July 4, 1998.
* 10.1.10.c Amendment No. 3 to Amended and Restated
Employment Agreement between Clifford L.
Reynolds and D.I.Y. Home Warehouse, Inc.
dated March 11, 1999, incorporated
herein by reference to Exhibit 10.69 to
the Registrant's Report on Form 10-K for
the fiscal year ended January 2, 1999.
* 10.1.10.d Amendment No. 4 to Amended and Restated
Employment Agreement between Clifford L.
Reynolds and D.I.Y. Home Warehouse, Inc.
dated November 30, 1999, incorporated
herein by reference to Exhibit 10.1.10.d
to the Registrant's Report on Form 10-K
for the fiscal year ended January 1,
2000.
* 10.1.11 Amended and Restated Employment Agreement between
R. Scott Eynon and D.I.Y. Home Warehouse, Inc.
dated January 1, 1995, incorporated herein by
reference to Exhibit 10.2 to the Registrant's
Report on Form 10-Q for the quarter ended July 1,
1995.
* 10.1.11.a Amended and Restated Employment
Agreement between R. Scott Eynon and
D.I.Y. Home Warehouse, Inc. dated May
28, 1998, incorporated herein by
reference to Exhibit 10.5 to the
Registrant's Report on Form 10-Q for the
quarter ended July 4, 1998.
* 10.1.11.b Amendment No. 2 to Amended and Restated
Employment Agreement between R. Scott
Eynon and D.I.Y. Home Warehouse, Inc.
dated March 11, 1999, incorporated
herein by reference to Exhibit 10.70 to
the Registrant's Report on Form 10-K for
the fiscal year ended January 2, 1999.
* 10.1.11.c Amendment No. 3 to Amended and Restated
Employment Agreement between R. Scott
Eynon and D.I.Y. Home Warehouse, Inc.
dated November 30, 1999, incorporated
herein by reference to Exhibit 10.1.11.c
to the Registrant's Report on Form 10-k
for the fiscal year ended January 1,
2000.
30
* 10.1.12 Amended and Restated Employment Agreement between
Dennis C. Hoff and D.I.Y. Home Warehouse, Inc.
dated January 1, 1995, incorporated herein by
reference to Exhibit 10.3 to the Registrant's
Report on Form 10-Q for the quarter ended July 1,
1995.
* 10.1.12.a Amended and Restated Employment
Agreement between Dennis C. Hoff and
D.I.Y. Home Warehouse, Inc. dated May
28, 1998, incorporated herein by
reference to Exhibit 10.6 to the
Registrant's Report on Form 10-Q for the
quarter ended July 4, 1998.
* 10.1.13 Form of Non-Qualified Stock Option Agreement under
the D.I.Y. Home Warehouse, Inc. 1993 Long Term
Incentive Plan as Amended, incorporated herein by
reference to Exhibit 10.14 to the Registrant's
Report on Form 10-K for the fiscal year ended
December 30, 1995.
* 10.1.14 1995 D.I.Y. Home Warehouse, Inc. Employee Bonus
Plan dated May 24, 1995, incorporated herein by
reference to Exhibit 10.44 to the Registrant's
Report on Form 10-K for the fiscal year ended
December 30, 1995.
* 10.1.15 D.I.Y. Home Warehouse, Inc. 1996 Retainer Stock
Plan for Non-Employee Directors, incorporated
herein by reference to Exhibit 10.49 to the
Registrant's Report on Form 10-K for the fiscal
year ended December 30, 1995.
* 10.1.16 Employment Agreement between Eric I. Glassman and
D.I.Y. Home Warehouse, Inc. dated July 1, 1998,
incorporated herein by reference to Exhibit 10.7
to the Registrant's Report on Form 10-Q for the
quarter ended July 4, 1998.
* 10.1.17 Transaction Bonus Agreement between Clifford L.
Reynolds and D.I.Y. Home Warehouse, Inc. dated
July 1, 1998, incorporated herein by reference to
Exhibit 10.8 to the Registrant's Report on Form
10-Q for the quarter ended July 4, 1998.
* 10.1.18 Transaction Bonus Agreement between R. Scott Eynon
and D.I.Y. Home Warehouse, Inc. dated July 1,
1998, incorporated herein by reference to Exhibit
10.9 to the Registrant's Report on Form 10-Q for
the quarter ended July 4, 1998.
* 10.1.19 Transaction Bonus Agreement between Dennis C. Hoff
and D.I.Y. Home Warehouse, Inc. dated July 1,
1998, incorporated herein by reference to Exhibit
10.10 to the Registrant's Report on Form 10-Q for
the quarter ended July 4, 1998.
* 10.1.20 Transaction Bonus Agreement between Eric I.
Glassman and D.I.Y. Home Warehouse, Inc. dated
July 1, 1998, incorporated herein by reference to
Exhibit 10.11 to the Registrant's Report on Form
10-Q for the quarter ended July 4, 1998.
* 10.1.21 Amendment No. 1 to Amended and Restated Employment
Agreement between Eric I. Glassman and D.I.Y. Home
Warehouse, Inc. dated March 11, 1999, incorporated
herein by reference to Exhibit 10.71 to the
Registrant's Report on Form 10-K for the fiscal
year ended January 2, 1999.
* 10.1.22 DIY Home Warehouse, Inc. 1993 Long Term Incentive
Plan as Amended March 17, 1999 and Approved by the
Board of Directors March 17, 1999, incorporated
herein by reference to Exhibit 10.13 to the
Registrant's Report on Form 10-Q for the quarter
ended July 3, 1999.
10.2 Material Leases of the Registrant
31
* 10.2.1 Sublease between D.I.Y. Ohio Real Estate
Associates Limited Partnership and D.I.Y. Home
Warehouse, Inc., dated August 1, 1992,
incorporated herein by reference to Exhibit 10.1
to the Registrant's Registration Statement No.
33-60012 on Form S-1 filed May 18, 1993.
* 10.2.2 Indenture of Lease between Smith - D.I.Y. Center
Limited Partnership and D.I.Y. Home Warehouse,
Inc., dated December 27, 1985, incorporated herein
by reference to Exhibit 10.2 to the Registrant's
Registration Statement No. 33-60012 on Form S-1
filed May 18, 1993.
* 10.2.3 Amendment to Lease between D.I.Y. Center
Associates (successor in interest to Smith -
D.I.Y. Center Limited Partnership) and D.I.Y. Home
Warehouse, Inc., dated July 2, 1991, incorporated
herein by reference to Exhibit 10.3 to the
Registrant's Registration Statement No. 33-60012
on Form S-1 filed May 18, 1993.
* 10.2.3.a Amendment to Lease between D.I.Y. Center
Associates, L.P. and D.I.Y. Home
Warehouse, Inc. dated March 21, 1995,
incorporated herein by reference to
Exhibit 10.51 to the Registrant's Report
on Form 10-K for the fiscal year ended
December 31, 1994.
* 10.2.4 Lease between Fred A. Erb and D.I.Y. Home
Warehouse, Inc., dated March 1, 1993, incorporated
herein by reference to Exhibit 10.4 to the
Registrant's Registration Statement No. 33-60012
on Form S-1 filed May 18, 1993.
* 10.2.5 Lease Agreement between West Park Limited, Inc.
and D.I.Y. Home Warehouse, Inc. dated August 2,
1991, incorporated herein by reference to Exhibit
10.5 to the Registrant's Registration Statement
No. 33-60012 on Form S-1 filed May 18, 1993.
* 10.2.5.a Addendum #1 to Lease Agreement between
West Park Limited, Inc. and D.I.Y. Home
Warehouse, Inc., dated September 2,
1991, incorporated herein by reference
to Exhibit 10.6 to the Registrant's
Registration Statement No. 33-60012 on
Form S-1 filed May 18, 1993.
* 10.2.5.b Addendum #2 to Lease Agreement between
West Park Limited, Inc. and D.I.Y. Home
Warehouse, Inc., dated September 16,
1991, incorporated herein by reference
to Exhibit 10.7 to the Registrant's
Registration Statement No. 33-60012 on
Form S-1 filed May 18, 1993.
* 10.2.6 Sublease between The Wholesale Club, Inc. and
D.I.Y. Home Warehouse, Inc., dated May 14, 1992,
incorporated herein by reference to Exhibit 10.8
to the Registrant's Registration Statement No.
33-60012 on Form S-1 filed May 18, 1993.
* 10.2.7 Sublease between The Wholesale Club, Inc. and
D.I.Y. Home Warehouse, Inc., dated November 25,
1992, incorporated herein by reference to Exhibit
10.9 to the Registrant's Registration Statement
No. 33-60012 on Form S-1 filed May 18, 1993.
* 10.2.8 Lease between Myron S. Viny, dba Central Valley
Properties, and D.I.Y. Home Warehouse, Inc., dated
February 26, 1993, but effective beginning May 1,
1993, incorporated herein by reference to Exhibit
10.12 to the Registrant's Registration Statement
No. 33-60012 on Form S-1 filed May 18, 1993.
* 10.2.8.a Modification and Supplement to lease
between the Estate of Myron S. Viny
(formerly DBA Central Valley Properties)
and D.I.Y. Home
32
Warehouse, Inc. dated November 27, 1995,
incorporated herein by reference to
Exhibit 10.12 to the Registrant's Report
on Form 10-K for the fiscal year ended
December 30, 1995.
* 10.2.8.b Modification and Supplement of lease
between the Estate of Myron S. Viny
(formerly DBA Central Valley Properties)
and D.I.Y. Home Warehouse, Inc. dated
March 30, 2000, incorporated herein by
reference to Exhibit 10.2.8.b to the
Registrant's Report on Form 10-Q for the
quarter ended April 1, 2000.
* 10.2.9 Agreement of Lease (Boardman Facility) between DIY
Ohio Real Estate Associates Limited Partnership
and D.I.Y. Home Warehouse, Inc. dated as of
October 1, 1993, incorporated herein by reference
to Exhibit 10.38 to the Registrant's Report on
Form 10-K for the fiscal year ended January 1,
1994.
* 10.2.9.a Second Amendment to Agreement Lease
(Boardman facility) between D.I.Y. Home
Warehouse, Inc. and D.I.Y. Ohio Real
Estate Associated Limited Partnership
(the Landlord) and assignment of the
lease to V&V 224, Limited by the
Landlord dated October 22, 1998,
incorporated herein by reference to
Exhibit 10.9 to the Registrant's Report
on Form 10-Q for the quarter ended
October 3, 1998.
* 10.2.10 Lease between Elmhurst Properties, Inc. and D.I.Y.
Home Warehouse, Inc., dated May 26, 1993,
incorporated herein by reference to Exhibit 10.39
to the Registrant's Report on Form 10-K for the
fiscal year ended January 1, 1994.
* 10.2.11 Assignment and Assumption of Lease and Sublease
between Kmart Corporation and D.I.Y. Home
Warehouse, Inc. dated December 22, 1994,
incorporated herein by reference to Exhibit 10.49
to the Registrant's Report on Form 10-K for the
fiscal year ended December 31, 1994.
* 10.2.11.a Lease Cancellation Agreement between
Shidler/West Finance Partners V. Limited
Partnership and D.I.Y. Home Warehouse,
Inc. dated April 10, 2001, incorporated
herein by reference to Exhibit 10.2.11.a
to the Registrant's Report on Form 8-K
dated April 10, 2001.
* 10.2.11.b Termination of Lease Agreement between
D.I.Y. Home Warehouse, Inc. and Lowe's
Home Centers, Inc., dated April 10,
2001, incorporated herein by reference
to Exhibit 10.2.12.a to the Registrant's
Report on Form 8-K dated April 10, 2001.
* 10.2.12 Shopping Center Lease between KCHGC, Inc. and
D.I.Y. Home Warehouse, Inc. dated January 12,
1995, incorporated herein by reference to Exhibit
10.50 to the Registrant's Report on Form 10-K for
the fiscal year ended December 31, 1994.
* 10.2.13 Indenture of Lease between D.I.Y. Home Warehouse,
Inc. and Akron-Summit County Public Library, dated
March 8, 2001, incorporated herein by reference to
Exhibit 10.2.13 to the Registrant's Report on Form
10-K for the fiscal year ended December 30, 2000.
** 10.2.14 Revocable License Agreement between D.I.Y. Home
Warehouse, Inc. and Wal-Mart Stores East, Inc.,
dated July 6, 2001, filed herewith.
33
** 10.2.15 Sublease Termination Agreement between D.I.Y. Home
Warehouse, Inc. and Wal-Mart Stores East, Inc.,
dated July 9, 2001, filed herewith.
10.3 Credit Agreements of the Registrant
* 10.3.1 $1,250,000 Promissory Note from D.I.Y. Home
Warehouse, Inc. to Edgemere, Inc. f/k/a Erb Lumber
Co., dated July 1, 1991, incorporated herein by
reference to Exhibit 10.29 to the Registrant's
Registration Statement No. 33-60012 on Form S-1
filed May 18, 1993.
* 10.3.2 Security Agreement between D.I.Y. Home Warehouse
and Erb Lumber Co., dated November 14, 1985,
incorporated herein by reference to Exhibit 10.30
to the Registrant's Registration Statement No.
33-60012 on Form S-1 filed May 18, 1993.
* 10.3.3 Revolving Credit Agreement and Security Agreement
dated December 7, 1994 between D.I.Y. Home
Warehouse, Inc. and National City Bank, Columbus,
and Old Kent Bank and Trust Company, incorporated
herein by reference to Exhibit 10.40 to the
Registrant's Report on Form 10-K for the fiscal
year ended December 31, 1994.
* 10.3.4 Loan and Co-lender Agreement and Open-End
Mortgage, Assignment of Rents and Security
Agreement dated December 23, 1994 between D.I.Y.
Home Warehouse, Inc. and National City Bank,
Columbus, and Old Kent Bank and Trust Company,
incorporated herein by reference to Exhibit 10.41
to the Registrant's Report on Form 10-K for the
fiscal year ended December 31, 1994.
* 10.3.4.a First Amendment to Loan and Co-Lender
Agreement dated December 22, 1995
between D.I.Y. Home Warehouse, National
City Bank, Columbus, and Old Kent Bank,
incorporated herein by reference to
Exhibit 10.41 to the Registrant's Report
on Form 10-K for the fiscal year ended
December 30, 1995
* 10.3.4.b Second Amendment to Loan and Co-Lender
Agreement dated December 23, 1996
between D.I.Y. Home Warehouse, Inc.,
National City Bank of Columbus and Old
Kent Bank, incorporated herein by
reference to Exhibit 10.52 to the
Registrant's Report on Form 10-K for the
fiscal year ended December 28, 1996.
* 10.3.4.c Third Amendment to Loan and Co-Lender
Agreement dated October 24, 1997 between
D.I.Y. Home Warehouse, Inc., National
City Bank of Columbus and Old Kent Bank,
incorporated herein by reference to
Exhibit 10.2 to the Registrant's Report
on Form 10-Q for the quarter ended
September 27, 1997.
* 10.3.4.d Fourth Amendment to Loan and Co-Lender
Agreement dated April 4, 1998 between
D.I.Y. Home Warehouse, Inc., National
City Bank of Columbus and Old Kent Bank,
incorporated herein by reference to
Exhibit 10.2 to the Registrant's Report
on Form 10-Q for the quarter ended July
4, 1998.
* 10.3.4.e Fifth Amendment to Loan and Co-Lender
Agreement dated October 28, 1998 between
D.I.Y. Home Warehouse, Inc., National
City Bank of Columbus and Old Kent Bank,
incorporated herein by reference to
Exhibit 10.4 to the Registrant's Report
on Form 10-Q for the quarter ended
October 3, 1998.
34
* 10.3.5 Line of Credit Agreement for Real Estate Loans,
Open-end Mortgage, Assignment of Rents and
Security Agreement, and Mortgage Notes between
D.I.Y. Home Warehouse, Inc. and National City
Bank, Columbus and Old Kent Bank dated April 28,
1995, incorporated herein by reference to Exhibit
10.1 to the Registrant's Report on Form 10-Q for
the quarter ended April 1, 1995.
* 10.3.5.a First Amendment to Line of Credit
Agreement; Open-end Mortgage, Assignment
of Rents and Security Agreement
(Leasehold) for Trumbull County;
Open-end Mortgage, Assignment of Rents
and Security Agreement for Summit
County; Mortgage Note to National City
Bank, Columbus dated September 15, 1995;
Mortgage Note to Old Kent Bank dated
September 15, 1995, incorporated herein
by reference to Exhibit 10.1 to the
Registrant's Report on Form 10-Q for the
quarter ended September 30, 1995.
* 10.3.5.b Second Amendment to Line of Credit
Agreement dated December 22, 1995
between D.I.Y. Home Warehouse, National
City Bank, Columbus, and Old Kent Bank,
incorporated herein by reference to
Exhibit 10.39 to the Registrant's Report
on Form 10-K for the fiscal year ended
December 30, 1995.
* 10.3.5.c Third Amendment to Line of Credit
Agreement Dated December 23, 1996
between D.I.Y. Home Warehouse, Inc.,
National City Bank of Columbus and Old
Kent Bank, incorporated herein by
reference to Exhibit 10.53 to the
Registrant's Report on Form 10-K for the
fiscal year ended December 28, 1996.
* 10.3.5.d Fourth Amendment to Line of Credit
Agreement dated October 24, 1997 between
D.I.Y. Home Warehouse, Inc., National
City Bank of Columbus and Old Kent Bank,
incorporated herein by reference to
Exhibit 10.3 to the Registrant's Report
on Form 10-Q for the quarter ended
September 27, 1997.
* 10.3.5.e Fifth Amendment to Line of Credit
Agreement dated April 4, 1998 between
D.I.Y. Home Warehouse, Inc., National
City Bank of Columbus and Old Kent Bank,
incorporated herein by reference to
Exhibit 10.1 to the Registrant's Report
on Form 10-Q for the quarter ended July
4, 1998.
* 10.3.5.f Sixth Amendment to Line of Credit
Agreement dated October 28, 1998 between
D.I.Y. Home Warehouse, Inc., National
City Bank of Columbus and Old Kent Bank,
incorporated herein by reference to
Exhibit 10.5 to the Registrant's Report
on Form 10-Q for the quarter ended
October 3, 1998.
* 10.3.6 First Amendment to Security Agreement dated
December 22, 1995 between D.I.Y. Home Warehouse,
National City Bank, Columbus, and Old Kent Bank,
incorporated herein by reference to Exhibit 10.38
to the Registrant's Report on Form 10-K for the
fiscal year ended December 30, 1995.
* 10.3.7 First Amendment to Subordination Agreement dated
December 22, 1995 between D.I.Y. Home Warehouse,
National City Bank, Columbus, and Old Kent Bank,
and Edgemere Enterprises, Inc., incorporated
herein by reference to Exhibit 10.39 to the
Registrant's Report on Form 10-K for the fiscal
year ended December 30, 1995.
35
* 10.3.8 Partial Release of Mortgage to Open-End Mortgage
Assignment of Rents and Security Agreement for
Richland County, Stark County, Summit County,
Trumball County and Medina County by Old Kent Bank
dated October 28, 1998, incorporated herein by
reference to Exhibit 10.6 to the Registrant's
Report on Form 10-Q for the quarter ended October
3, 1998.
* 10.3.9 Modification to Revolving Credit Agreement, Line
of Credit Agreement, and Loan and Co-lender
Agreement between D.I.Y. Home Warehouse, Inc.,
National City Bank, Columbus, and Old Kent Bank
dated February 20, 1996, incorporated herein by
reference to Exhibit 10.42 to the Registrant's
Report on Form 10-K for the fiscal year ended
December 30, 1995.
* 10.3.10 General Business Lease Agreement with IBM Credit
Corporation dated May 30, 1996, incorporated
herein by reference to Exhibit 10.1 to the
Registrant's Report on Form 10-Q for the quarter
ended June 29, 1996.
* 10.3.11 Amendment No. 1 to Open-End Mortgage, Assignment
of Rents and Security Agreement for Richland
County, Stark County, Summit County, Trumball
County and Medina County between D.I.Y. Home
Warehouse, Inc., National City Bank and Old Kent
Bank dated October 28, 1998, incorporated herein
by reference to Exhibit 10.7 to the Registrant's
Report on Form 10-Q for the quarter ended October
3, 1998.
* 10.3.12 First Amendment to Mortgage Note between D.I.Y.
Home Warehouse, Inc. and National City Bank dated
October 28, 1998, incorporated herein by reference
to Exhibit 10.8 to the Registrant's Report on Form
10-Q for the quarter ended October 3, 1998.
* 10.3.13 Second Amendment to Security Agreement dated
October 28, 1998 between D.I.Y. Home Warehouse,
Inc., National City Bank and Old Kent Bank,
incorporated herein by reference to Exhibit 10.9
to the Registrant's Report on Form 10-Q for the
quarter ended October 3, 1998.
* 10.3.14 Second Amendment to Subordination Agreement dated
October 28, 1998 between D.I.Y. Home Warehouse,
Inc., National City Bank and Old Kent Bank,
incorporated herein by reference to Exhibit 10.3
to the Registrant's Report on Form 10-Q for the
quarter ended October 3, 1998.
* 10.3.15 Credit and Security Agreement dated October 27,
1998 among D.I.Y. Home Warehouse, Inc. and the
Lenders which are signatures hereto and National
City Commercial Finance, Inc, as agent and
National City Bank as Letter of Credit Bank,
incorporated herein by reference to Exhibit 10.1
to the Registrant's Report on Form 10-Q for the
quarter ended October 3, 1998.
* 10.3.15.a Waiver and Amendment to Credit and
Security Agreement dated November 14,
2000 between D.I.Y. Home Warehouse, Inc
and National City Commercial Finance,
Inc., incorporated herein by reference
to Exhibit 10.3.15.a to the Registrant's
Report on Form 10-K for the fiscal year
ended December 30, 2000.
** 10.3.15.b Second Amendment to Credit and Security
Agreement dated April 3, 2001 between
D.I.Y. Home Warehouse, Inc. and National
City Commercial Finance, Inc., filed
herewith.
36
** 10.3.15.c Third Amendment to Credit and Security
Agreement dated June 1, 2001 between
D.I.Y. Home Warehouse, Inc. and National
City Commercial Finance, Inc., filed
herewith.
* 10.4 Real Estate Purchase Agreement (Mansfield) between DIY Ohio Real
Estate Associates Limited Partnership and D.I.Y. Home Warehouse,
Inc. dated as of March 1, 1994, incorporated herein by reference
to Exhibit 10.40 to the Registrant's Report on Form 10-K for the
fiscal year ended January 1, 1994.
* 10.5 Real Estate Purchase Agreement (Mansfield and Canton) between
D.I.Y. Home Warehouse, Inc. and Gabriel Brothers, Inc. dated
March 3, 1999, incorporated herein by reference to Exhibit 10.5
to the Registrant's Report on Form 10-K for the fiscal year ended
January 1, 2000.
* 10.6 Sale of Merchandise Agreement (Mansfield and West Market) between
D.I.Y Home Warehouse, Inc. and Schottenstein Bernstein Capital
Group, LLC, dated June 3 1999, incorporated herein by reference
to Exhibit 10.6 to the Registrant's Report on Form 10-K for the
fiscal year ended January 1, 2000.
* 10.7 Sale of Merchandise Agreement (Boardman) between D.I.Y Home
Warehouse, Inc. and Schottenstein Bernstein Capital Group, LLC,
dated June 11, 1999, incorporated herein by reference to Exhibit
10.7 to the Registrant's Report on Form 10-K for the fiscal year
ended January 1, 2000.
* 10.8 Sale of Merchandise Agreement (North Randall and Tallmadge
Avenue) between D.I.Y. Home Warehouse, Inc. and Schottenstein
Bernstein Capital Group, LLC, dated August 4, 2000, incorporated
herein by reference to Exhibit 10.8 to the Registrant's Report on
Form 10-Q for the quarter ended September 30, 2000.
* 10.9 Agency Agreement between D.I.Y. Home Warehouse, Inc. and
Schottenstein Bernstein Capital Group, LLC, dated April 10, 2001,
incorporated herein by reference to Exhibit 10.9 to the
Registrant's Report on Form 8-K dated April 10, 2001.
** 10.10 Consulting Agreement between D.I.Y. Home Warehouse, Inc. and
Schottenstein Bernstein Capital Group, dated June 20, 2001, filed
herewith.
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* Previously filed
** Filed herewith