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 September 29, 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 October 30, 2001
- ------------------------------------ -------------------------------
Common Stock, no par value 7,276,059
D.I.Y. HOME WAREHOUSE, INC.
INDEX PAGE NO.
----- --------
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheet -
September 29, 2001 and December 30, 2000....................................... 3
Condensed Statement of Discontinued Operations -
Three and Nine Months Ended September 29, 2001
and September 30, 2000......................................................... 4
Condensed Statement of Stockholders' Equity -
Nine Months Ended September 29, 2001........................................... 5
Condensed Statement of Cash Flows -
Nine Months Ended September 29, 2001
and September 30, 2000......................................................... 6
Notes to Condensed Financial Statements........................................ 7 - 9
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Discontinued Operations........................................................ 10 - 15
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K............................................... 16 - 25
2
PART I - FINANCIAL INFORMATION
D.I.Y. HOME WAREHOUSE, INC.
CONDENSED BALANCE SHEET
September 29, December 30,
2001 2000
---- ----
Assets (Unaudited)
Current assets:
Cash and cash equivalents $4,461,529 $ 164,993
Merchandise inventories -- 16,752,775
Prepaid expenses and other assets 562,744 915,801
----------- -----------
Total current assets 5,024,273 17,833,569
----------- -----------
Property and equipment, at cost 16,990,945 36,075,556
Less accumulated depreciation and amortization 2,466,385 15,197,333
----------- -----------
Property and equipment, net 14,524,560 20,878,223
----------- -----------
Other assets 49,304 95,480
----------- -----------
Total assets $19,598,137 $38,807,272
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Current maturities of long-term debt $ -- $ 99,276
Revolving credit -- 5,068,811
Accounts payable 453,947 1,774,633
Accrued store closing costs 7,620,519 1,295,968
Accrued expenses and other 799,017 2,953,239
----------- -----------
Total current liabilities 8,873,483 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
September 29, 2001 and December 30, 2000 22,955,462 22,955,462
Retained (deficit) earnings (12,029,367) 4,861,324
Treasury stock, 357,800 shares at cost (201,441) (201,441)
----------- -----------
Total stockholders' equity 10,724,654 27,615,345
----------- -----------
Total liabilities and stockholders' equity $19,598,137 $38,807,272
=========== ===========
See accompanying notes to condensed financial statements.
3
D.I.Y. HOME WAREHOUSE, INC.
CONDENSED STATEMENT OF DISCONTINUED OPERATIONS
(Unaudited)
For the three months ended For the nine months ended
September 29, September 30, September 29, September 30,
2001 2000 2001 2000
---- ---- ---- ----
Net sales $ 8,192,424 $18,693,289 $ 41,114,415 $62,056,936
Cost of sales 9,088,659 14,947,466 34,846,089 46,071,615
----------- ----------- ------------ -----------
Gross (loss) profit (896,235) 3,745,823 6,268,326 15,985,321
Store operating, general
and administrative expenses 215,045 6,528,842 9,766,995 20,658,350
Store closing (recovery) costs, net (1,964,995) 2,278,183 13,272,310 2,278,183
----------- ----------- ------------ -----------
Operating income (loss) 853,715 (5,061,202) (16,770,979) (6,951,212)
Other income (expense), net 47,832 (173,989) (119,712) (555,144)
----------- ----------- ------------ -----------
Income (loss) before income taxes 901,547 (5,235,191) (16,890,691) (7,506,356)
Income tax provision -- 2,508,396 -- 1,607,048
----------- ----------- ------------ -----------
Net income (loss) $ 901,547 $(7,743,587) $(16,890,691) $(9,113,404)
========= =========== ============ ===========
Net income (loss) per common share,
basic and diluted $0.12 $(1.06) $(2.32) $(1.25)
===== ====== ====== ======
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.
4
D.I.Y. HOME WAREHOUSE, INC.
CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 29, 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 -- -- (16,890,691) -- (16,890,691)
--------- ---------- ------------ --------- ------------
Balances, September 29, 2001 7,276,059 $22,955,462 $(12,029,367) $(201,441) $10,724,654
========= =========== ============ ========= ===========
See accompanying notes to condensed financial statements.
5
D.I.Y. HOME WAREHOUSE, INC.
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
For the nine months ended
September 29, September 30,
2001 2000
---- ----
Cash flows from discontinued operating activities:
Net loss $(16,890,691) $ (9,113,404)
Adjustments to reconcile net loss to net cash
provided by (used in) discontinued operating activities:
Depreciation and amortization 1,062,498 1,947,215
Deferred income tax -- 1,636,875
Gain on lease assignment (3,107,086) --
Gain on sale of property from closed stores (936,062) --
Non-cash charges associated with store closings 6,142,543 1,560,719
Loss on disposal of property and equipment -- 1,748
Loss on write-off of leasehold improvements and property
and equipment from closed stores 5,329,999 684,890
Changes in assets and liabilities:
Accounts receivable, sale of inventories -- (399,513)
Merchandise inventories 16,752,775 5,301,370
Prepaid expenses and other assets 389,233 22,100
Accounts payable (1,320,686) (1,900,656)
Accrued expenses and other current liabilities (1,872,214) (504,582)
------------ ------------
Net cash provided by (used in) discontinued operating
activities 5,550,309 (763,238)
------------ ------------
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 of closing costs 936,062 --
------------ ------------
Net cash provided by (used in) investing activities 3,914,314 (33,302)
------------ ------------
Cash flows from financing activities:
Principal payments under capital lease obligations (99,276) (141,462)
Proceeds from revolving credit 1,183,711 4,848,761
Principal payments of revolving credit (6,252,522) (4,058,233)
------------ ------------
Net cash (used in) provided by financing activities (5,168,087) 649,066
------------ ------------
Net increase (decrease) in cash and cash equivalents 4,296,536 (147,474)
Cash and cash equivalents, beginning of period 164,993 309,349
------------ ------------
Cash and cash equivalents, end of period $ 4,461,529 $ 161,875
============ ============
See accompanying notes to condensed financial statements.
6
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, Arlington Road
(Akron, Ohio) 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 fourth quarter 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 September 29, 2001 and the results of discontinued
operations and cash flows for the three and nine months ended September 29, 2001
and September 30, 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 Nine Months Ended
September 29, September 30, September 29, September 30,
2001 2000 2001 2000
---- ---- ---- ----
(Unaudited) (Unaudited)
Net income (loss) applicable to common
shares $ 901,547 $ (7,743,587) $(16,890,691) $ (9,113,404)
============ ============ ============ ============
Weighted average common shares
outstanding, basic 7,276,059 7,276,059 7,276,059 7,276,059
Dilutive effect of stock options 11,013 -- -- --
------------ ------------ ------------ ------------
Weighted average common shares
outstanding, diluted 7,287,072 7,276,059 7,276,059 7,276,059
============ ============ ============ ============
Net income (loss) per common share:
Basic $ 0.12 $ (1.06) $ (2.32) $ (1.25)
============ ============ ============ ============
Diluted $ 0.12 $ (1.06) $ (2.32) $ (1.25)
============ ============ ============ ============
7
Options to purchase 697,250 shares of common stock at a weighted
average exercise price of $3.15 per share were outstanding at September 29, 2001
but were not included in the computation of diluted earnings per share for the
three months then ended because the options' exercise prices were greater than
the average market price for the common shares during the period.
Options to purchase 752,250 shares of common stock at a weighted
average exercise price of $2.95 per share were outstanding at September 29, 2001
but were not included in the computation of diluted earnings per share for the
nine months then ended because the options would have had an anti-dilutive
effect on the net loss for the period.
Options to purchase 820,500 shares of common stock at a weighted
average exercise price of $3.01 per share were outstanding at September 30, 2000
but were not included in the computation of diluted earnings per share for the
three and nine months then ended because the options would have had an
anti-dilutive effect on the net losses for both periods.
3. Store Closings
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, Arlington Road (Akron, Ohio) and Ashtabula,
Ohio and recorded a charge of $7,791,317 during the second quarter of fiscal
2001 for costs expected to be incurred in closing these stores. During the third
quarter of fiscal 2001, the Company recorded a $315,137 net reduction in store
closing costs, reflecting an adjustment to the expected closing costs accrued
during the second quarter of fiscal 2001 for the closing of these six stores.
Both the second quarter fiscal 2001 charge for store closing costs and the third
quarter fiscal 2001 reduction in store closing costs were recorded in the store
closing (recovery) costs line item in the accompanying condensed statement of
discontinued operations. At September 29, 2001, the remaining balance of the
expected costs to be incurred in closing these locations amounted to $5,566,749
and is included in the accrued store closing costs line item in the accompanying
condensed balance sheet.
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 $2,343,254 during
the second quarter of fiscal 2001 for costs expected to be incurred in closing
its corporate office. At September 29, 2001, the remaining balance of the
expected costs to be incurred in closing the corporate location amounted to
$1,659,529 and is included in the accrued store closing costs line item in the
accompanying condensed balance sheet.
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 recorded store closing costs of $4,072,494 during the second quarter
of fiscal 2001 for expenses expected to be incurred in closing the Brook Park,
Medina and Mentor, Ohio locations. On July 6, 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. As a result of
entering into the revocable license agreement, the Company recorded a $1,649,858
reduction in store closing costs during the third quarter of fiscal 2001,
representing the reversal of previously accrued occupancy costs. This reduction
in store closing costs was recorded in the store closing (recovery) costs line
item in the accompanying condensed statement of discontinued operations. At
September 29, 2001, the remaining balance of the expected costs to be incurred
in closing these locations amounted to $394,241 and is included in the accrued
store closing costs line item in the accompanying condensed balance sheet.
On August 14, 2000, the Company announced the closing of its North
Randall, Ohio and Tallmadge Avenue (Akron, Ohio) locations. In connection with
the store closures, the Company recorded a charge of $1,593,293 during the third
quarter of fiscal 2000 for costs expected to be incurred in closing both
locations, including $854,575 in net rent obligations for the North Randall
store. Additionally, the Company also recorded a $684,890 charge during the
third quarter of fiscal 2000 for the write-off of the net leasehold improvements
and property and equipment related to the closure of the North Randall and
Tallmadge Avenue (Akron, Ohio) stores. These charges were recorded in the store
closing (recovery) costs line item in the accompanying condensed statement of
discontinued operations.
8
4. Debt
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 September 29, 2001. The Company had no outstanding borrowings
under the agreement at September 29, 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.
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" ("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 September 29, 2001, there has been no income tax benefit recorded in the
accompanying condensed statement of discontinued operations for the three and
nine months ended September 29, 2001.
During the third quarter of fiscal year 2000, the Company established a
valuation allowance of $1,607,048 against its net deferred tax assets in
accordance with 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 income or implementation of
tax planning strategies. This valuation allowance was recorded in the income tax
provision line item in the accompanying condensed statement of discontinued
operations.
Additionally, during the third quarter of fiscal year 2000, the Company
reversed the $901,348 of tax benefit previously recognized during the first six
months of fiscal year 2000 for that period's net operating loss. The reversal of
the tax benefit was based on the Company's assessment that it was more likely
than not that these assets would not be utilized through future taxable income
or implementation of tax planning strategies. This charge was recorded in the
income tax provision line item in the accompanying condensed statement of
discontinued operations.
6. Subsequent Events
Subsequent to September 29, 2001, the Company's Amended Credit and
Security Agreement with a bank expired. The Company has not attempted to
renegotiate the expired revolving credit facility nor has it attempted to
negotiate a new revolving credit facility.
Subsequent to September 29, 2001, the Company entered into a Master
Exclusive Real Estate Agreement with a third-party, providing for the
third-party to act as the Company's exclusive auction agent. The auction agent
will offer for sale the Company-owned Warren, Tallmadge Avenue (Akron, Ohio),
Medina, Arlington Road (Akron, Ohio) and Ashtabula locations through a public
auction. Additionally, the auction agent has entered into similar auction
contracts with the landlords of the Company's leased Cleveland, North Randall
and Eastlake locations and will offer these properties for sale at the same
auction in which the Company-owned locations will be offered. The auction is to
be held on December 17, 2001.
9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF DISCONTINUED OPERATIONS
DISCONTINUED OPERATIONS - Three Months Ended September 29, 2001
Compared to Three Months Ended September 30, 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, Arlington Road
(Akron, Ohio) 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 fourth quarter of fiscal
year 2001.
Net sales for the third quarter ended September 29, 2001 decreased
$10,501,000 or 56.2% to $8,192,000 from $18,693,000 during the third quarter
ended September 30, 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, fewer Company stores and the reduced sales prices
associated with the final liquidation of the Company's merchandise inventories.
The Company completed the final liquidation of its merchandise inventories
during the third quarter of fiscal 2001.
The Company does not anticipate reporting any net sales during the
fourth quarter of fiscal 2001.
Gross profit (loss) as a percentage of net sales decreased to (10.9)%
during the third quarter ended September 29, 2001 from 20.0% during the third
quarter ended September 30, 2000. The decrease in the gross profit percentages
between the two periods reflects the reduced gross profit attained by the
Company during the final liquidation of its merchandise inventories in the third
quarter of fiscal 2001. The gross profit percentage for the third quarter ended
September 30, 2000 was negatively impacted by $1,241,000 of inventory markdown
costs included in cost of sales for the liquidation of the merchandise inventory
at the North Randall, Ohio and Tallmadge Avenue (Akron, Ohio) locations during
that period.
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
$6,314,000 or 96.7% to $215,000 during the third quarter ended September 29,
2001 from $6,529,000 during the third quarter ended September 30, 2000. The
decrease in total store operating, general and administrative expenses between
the two periods was due primarily to the closing of Company stores and the
recording of the current period's operating, general and administrative expenses
against the accrued store closing costs established during the second quarter of
fiscal 2001.
Due to cessation of its ordinary business operations, the Company does
not anticipate reporting any store operating, general and administrative
expenses during the fourth quarter of fiscal year 2001 as costs formerly
included in this line items will be recorded as store closing costs.
On July 6, 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. As a result of entering into the revocable
license agreement, the Company recorded a $1,650,000 reduction in store closing
costs during the third quarter of fiscal 2001, representing the reversal of
previously accrued occupancy costs. Additionally, the Company also recorded a
$315,000 net reduction in store closing costs during the third quarter of fiscal
2001, reflecting an adjustment to expected closing costs accrued during the
second quarter of fiscal 2001 for the six remaining stores closed on June 19,
2001. These
10
reductions in store closing costs were recorded in the store closing (recovery)
costs line item in the accompanying condensed statement of discontinued
operations.
On August 14, 2000, the Company announced the closing of its North
Randall, Ohio and Tallmadge Avenue (Akron, Ohio) locations. In connection with
the store closures, the Company recorded a charge of $1,593,000 during the third
quarter of fiscal 2000 for costs expected to be incurred in closing both
locations, including $855,000 in net rent obligations for the North Randall
store. Additionally, the Company also recorded a $685,000 charge during the
third quarter of fiscal 2000 for the write-off of the net leasehold improvements
and property and equipment related to the closure of the North Randall and
Tallmadge Avenue (Akron, Ohio) stores. These charges were recorded in the store
closing (recovery) costs line item in the accompanying condensed statement of
discontinued operations.
Other income (expense), net, increased $222,000 or 127.49% to $48,000
during the third quarter ended September 29, 2001 from $(174,000) during the
third quarter ended September 30, 2000. The increase in other income (expense),
net between the two periods was due to the absence of borrowings against the
Company's revolving credit facility during the current period.
During fiscal year 2000, the Company established a valuation allowance
of $2,557,000 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 September 29, 2001, there has been no income tax benefit recorded in the
accompanying condensed statement of discontinued operations for the three months
ended September 29, 2001.
During the third quarter of fiscal year 2000, the Company established a
valuation allowance of $1,607,000 against its net deferred tax assets in
accordance with 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 income or implementation of
tax planning strategies. This valuation allowance was recorded in the income tax
provision line item in the accompanying condensed statement of discontinued
operations.
Additionally, during the third quarter of fiscal year 2000, the Company
reversed the $901,000 of tax benefit previously recognized during the first six
months of fiscal year 2000 for that period's net operating loss. The reversal of
the tax benefit was based on the Company's assessment that it was more likely
than not that these assets would not be utilized through future taxable income
or implementation of tax planning strategies. This charge was recorded in the
income tax provision line item in the accompanying condensed statement of
discontinued operations.
DISCONTINUED OPERATIONS - Nine Months Ended September 29, 2001
Compared to Nine Months Ended September 30, 2000
Net sales for the first nine months ended September 29, 2001 decreased
$20,943,000 or 33.8% to $41,114,000 from $62,057,000 during the first nine
months ended September 30, 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, fewer Company stores and the reduced sales prices
associated with the final liquidation of the Company's merchandise inventories.
The Company completed the final liquidation of its merchandise inventories
during the third quarter of fiscal 2001.
Gross profit as a percentage of net sales decreased to 15.3% during the
first nine months ended September 29, 2001 from 25.8% during the first nine
months ended September 30, 2000. The gross profit percentage for the first nine
months ended September 29, 2001 reflects the reduced gross profit attained by
the Company during the
11
final liquidation of its merchandise inventories in the second and third
quarter of fiscal 2001. The gross profit percentage for the first nine months
ended September 29, 2001 was also negatively impacted by 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, Arlington Road (Akron, Ohio) and Ashtabula, Ohio stores recorded during
the second quarter of fiscal 2001. The gross profit percentage for the first
nine months ended September 30, 2000 was negatively impacted by $1,241,000 of
inventory markdown costs included in cost of sales for the liquidation of the
merchandise inventory at the North Randall, Ohio and Tallmadge Avenue (Akron,
Ohio) locations during the third quarter of fiscal 2000.
Store operating, general and administrative expenses decreased
$10,891,000 or 52.7% to $9,767,000 during the first nine months ended September
29, 2001 from $20,658,000 during the first nine months ended September 30, 2000.
The decrease in total store operating, general and administrative expenses
between the two periods was due primarily to the closing of Company stores and
the recording of operating, general and administrative expenses incurred
subsequent to the June 19, 2001 announcement against the accrued store closing
costs established during the second quarter of fiscal 2001.
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 recorded store closing costs of $4,072,000 during the second quarter
of fiscal 2001 for expenses expected to be incurred in closing the three
locations. On July 6, 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. As a result of entering into the
revocable license agreement, the Company recorded a $1,650,000 reduction in
store closing costs during the third quarter of fiscal 2001, representing the
reversal of previously accrued occupancy costs. Both the second quarter fiscal
2001 charge for store closing costs and the third quarter fiscal 2001 reduction
in store closing costs were recorded in the store closing (recovery) costs line
item in the accompanying condensed statement of discontinued operations.
The Company also recorded a $1,481,000 charge during the second quarter
of fiscal 2001 for the write-off of the net leasehold improvements and property
and equipment of the Brook Park, Medina and Mentor, Ohio stores. Partially
offsetting this write-off were proceeds of $337,000 which the Company received
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 (recovery) 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
$3,464,000. The proceeds of the lease assignment were reduced by an escrow
account receivable of $250,000, transaction costs of $97,000 and a previously
received $100,000 in option payments, resulting in actual cash proceeds of
$3,017,000. In addition, this transaction resulted in a net gain of $3,107,000
(proceeds of $3,464,000 less transaction costs of $97,000 less a $260,000
payment to terminate the sublease agreement of its subtenant). The gain was
recorded during the second quarter of fiscal 2001 in the store closing
(recovery) 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, Arlington Road (Akron, Ohio) and Ashtabula,
Ohio. The Company recorded store closing costs of $7,791,000 during the second
quarter of fiscal 2001 for expenses expected to be incurred in closing the
Cleveland, Eastlake, Elyria, Warren, Arlington Road (Akron, Ohio) and Ashtabula,
Ohio locations. During the third quarter of fiscal 2001, the Company recorded a
$315,000 net reduction in store closing costs, reflecting an adjustment to the
expected closing costs accrued during the second quarter of fiscal 2001 for the
closing of these six stores. Both the second quarter fiscal 2001 charge for
store closing costs and the third quarter fiscal 2001 reduction in store closing
costs were recorded in the store closing (recovery) costs line item in the
accompanying condensed statement of discontinued operations.
12
The Company also recorded a $3,663,000 charge during the second quarter
of fiscal 2001 for the write-off of the net leasehold improvements and property
and equipment of the Cleveland, Eastlake, Elyria, Warren, Arlington Road (Akron,
Ohio) and Ashtabula, Ohio. Based on its previous experience liquidating property
and equipment at closed stores, the Company expects to receive $670,000 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 $2,993,000. As
of September 29, 2001, the Company had received proceeds of $567,000 for the
sale of such property and equipment. The net write-off of leasehold improvements
and property and equipment was recorded during the second quarter of fiscal 2001
in the store closing (recovery) 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
$2,343,000 during the second quarter of fiscal 2001 for expenses expected to be
incurred in closing its corporate office. This charge was included in the store
closing (recovery) costs line item in the accompanying condensed statement of
discontinued operations.
On August 14, 2000, the Company announced the closing of its North
Randall, Ohio and Tallmadge Avenue (Akron, Ohio) locations. In connection with
the store closures, the Company recorded a charge of $1,593,000 during the third
quarter of fiscal 2000 for costs expected to be incurred in closing both
locations, including $855,000 in net rent obligations for the North Randall
store. Additionally, the Company also recorded a $685,000 charge during the
third quarter of fiscal 2000 for the write-off of the net leasehold improvements
and property and equipment related to the closure of the North Randall and
Tallmadge Avenue (Akron, Ohio) stores. These charges were recorded in the store
closing (recovery) costs line item in the accompanying condensed statement of
discontinued operations.
Other expense, net, decreased $435,000 or 78.4% to $120,000 during the
nine months ended September 29, 2001 from $555,000 during the nine months ended
September 30, 2000. The decrease in other expense, net between the two periods
was due to the decrease in the weighted-average borrowings outstanding against
the Company's revolving credit facility during the current period.
During fiscal year 2000, the Company established a valuation allowance
of $2,557,000 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 September 29, 2001, there has
been no income tax benefit recorded in the accompanying condensed statement of
discontinued operations for the nine months ended September 29, 2001.
During the third quarter of fiscal year 2000, the Company established a
valuation allowance of $1,607,000 against its net deferred tax assets in
accordance with 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 income or implementation of
tax planning strategies. This valuation allowance was recorded in the income tax
provision line item in the accompanying condensed statement of discontinued
operations.
Additionally, during the third quarter of fiscal year 2000, the Company
reversed the $901,000 of tax benefit previously recognized during the first six
months of fiscal year 2000 for that period's net operating loss. The reversal of
the tax benefit was based on the Company's assessment that it was more likely
than not that these assets would not be utilized through future taxable income
or implementation of tax planning strategies. This charge was recorded in the
income tax provision line item in the accompanying condensed statement of
discontinued operations.
13
LIQUIDITY AND CAPITAL RESOURCES
The Company's net cash provided by discontinued operating activities
increased $6,314,000 during the nine months ended September 29, 2001 to
$5,550,000 from a net use of cash of $763,000 during the nine months ended
September 30, 2000. The increase in the net cash provided from discontinued
operating activities between the two periods was due primarily to the
$16,753,000 cash flow impact of the change in merchandise inventories, the cash
flow impact of the $6,143,000 in non-cash charges associated with the store
closings and 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 first nine months of fiscal 2001. These sources of cash were
partially offset by the $7,777,000 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 decrease
in merchandise inventories reflects the final liquidation of the Company's
inventory during the second and third quarters of fiscal 2001.
The Company's net cash provided by investing activities increased
$3,948,000 to $3,914,000 during the nine months ended September 29, 2001 from a
net use of cash for investing activities of $33,000 during the nine months ended
September 30, 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 as well as the receipt of
$936,000 in proceeds from the sale of furniture, fixtures and equipment from the
closed stores.
The Company's net use of cash for financing activities increased
$5,817,000 to $5,168,000 during the nine months ended September 29, 2001 from
net cash provided by financing activities of $649,000 during the nine months
ended September 30, 2000. The increase in the net use of cash for financing
activities was due primarily to the $5,859,000 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 September 29, 2001. The Company had no
outstanding borrowings under the agreement at September 29, 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 September 29, 2001, the Company's Amended Credit and
Security Agreement with a bank expired. The Company has not attempted to
renegotiate the expired revolving credit facility nor has it attempted to
negotiate a new revolving credit facility.
Subsequent to September 29, 2001, the Company entered into a Master
Exclusive Real Estate Agreement with a third-party, providing for the
third-party to act as the Company's exclusive auction agent. The auction agent
will offer for sale the Company-owned Warren, Tallmadge Avenue (Akron), Medina,
Arlington Road (Akron) and Ashtabula locations through a public auction.
Additionally, the auction agent has entered into similar auction contracts with
the landlords of the Company's leased Cleveland, North Randall and Eastlake
locations and will be offer these properties for sale at the same auction in
which the Company-owned locations will be offered. The auction is to be held on
December 17, 2001.
14
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.
15
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.
16
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.
17
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.
18
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.
19
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, incorporated herein by reference to
Exhibit 10.2.14 to the Registrant's Report on Form
10-Q for the quarter ended June 30, 2001.
10.2.15 Sublease Termination Agreement between D.I.Y. Home
Warehouse, Inc. and Wal-Mart Stores East, Inc., dated
July 9, 2001, incorporated herein by reference to
Exhibit 10.2.15 to the Registrant's Report on Form
10-Q for the quarter ended June 30, 2001.
20
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.
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,
21
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.
22
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 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., incorporated
herein by reference to Exhibit 10.3.15.b to
the Registrant's Report on Form 10-Q for
the quarter ended June 30, 2001.
24
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., incorporated
herein by reference to Exhibit 10.3.15.c to
the Registrant's Report on Form 10-Q for
the quarter ended June 30, 2001.
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, incorporated herein by reference to
Exhibit 10.10 to the Registrant's Report on Form 10-Q
for the quarter ended June 30, 2001.
(b) Reports on Form 8-K:
None.
24
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: November 13, 2001 By: /s/ Todd Ayers
-------------------------
Todd Ayers
Controller
25
D.I.Y. Home Warehouse, Inc.
Exhibits to Form 10-Q for the Third Quarter Ended September 29, 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.
* 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.
* 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
* 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
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, incorporated herein by
reference to Exhibit 10.2.14 to the Registrant's
Report on Form 10-Q for the quarter ended June 30,
2001.
* 10.2.15 Sublease Termination Agreement between D.I.Y. Home
Warehouse, Inc. and Wal-Mart Stores East, Inc.,
dated July 9, 2001, incorporated herein by
reference to Exhibit 10.2.15 to the Registrant's
Report on Form 10-Q for the quarter ended June 30,
2001.
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.
* 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.
* 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., incorporated
herein by reference to Exhibit 10.3.15.b
to the Registrant's Report on Form 10-Q
for the quarter ended June 30, 2001.
* 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.,
incorporated herein by reference to
Exhibit 10.3.15.c to the Registrant's
Report on Form 10-Q for the quarter
ended June 30, 2001.
* 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,
incorporated herein by reference to Exhibit 10.10 to the
Registrant's Report on Form 10-Q for the quarter ended June
30, 2001.
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* Previously filed
** Filed herewith