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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date Of Report (Date Of Earliest Event Reported): NOVEMBER 16, 1999
HomeBase, Inc.
(Exact Name Of Registrant As Specified In Its Charter)
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<S> <C> <C>
DELAWARE 1-10259 33-0109661
(State Or Other Jurisdiction Of (Commission File Number) (IRS Employer Identification No.)
Incorporation)
Support Center Offices
3345 Michelson Drive 92612
Irvine, California
(Address Of Principal Executive Offices) (Zip Code)
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Registrant's Telephone Number, Including Area Code: (949) 442-5000
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ITEM 5. OTHER EVENTS.
On November 16, 1999, HomeBase, Inc. ("HomeBase") issued a press release in
the form attached hereto as Exhibit 99.1. The press release reports HomeBase's
announcement of its financial results for the third quarter ended October 30,
1999, of an underwritten commitment it has obtained for a new senior secured
five-year, $250 million revolving line of credit, of a $20 million stock and
note repurchase program and of the creation of a preliminary new merchandising
concept.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
c. Exhibits
99.1 November 16, 1999 Press Release of HomeBase.
2
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Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HomeBase, Inc.
BY: /s/ John L. Price
Date: November 18, 1999 --------------------------------------
John L. Price
Vice President, General Counsel
and Secretary
3
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Exhibit 99.1
Contact: Michele Feller
HomeBase, Inc.
949-442-5448
Roger S. Pondel
Pondel/Wilkinson Group
310-207-9300
FOR IMMEDIATE RELEASE
HOMEBASE ANNOUNCES THIRD QUARTER RESULTS,
NEW $250 MILLION CREDIT FACILITY, $20 MILLION SECURITIES REPURCHASE PROGRAM
-- Company also explores new merchandising concept --
Irvine, California - November 16, 1999 - HomeBase, Inc. (NYSE:HBI)
today announced financial results for the third fiscal quarter and nine-month
period, as well as several key corporate initiatives designed to build
shareholder value.
Third Quarter, Nine Month Results
The company reported net income for the third fiscal quarter ended October
30, 1999 of $3.9 million, or $0.10 per diluted share, compared with $7.2
million, or $0.17 per diluted share, a year ago. For the nine-month period, the
company reported net income of $14.7 million, or $0.36 per diluted share, versus
net income of $21.9 million, or $0.51 per diluted share, for the corresponding
prior year period. Net sales for the quarter rose 5.3% to $379.2 million from
$360.1 million a year ago. Same store sales grew 0.5% in the third quarter,
reflecting a 3.6% annual increase in average sale to $41.49, offset partially by
a 3.1% decline in the average number of transactions. For the nine-month period,
sales advanced 5.7% to $1.2 billion, from $1.1 billion for the corresponding
prior year period. The increase in sales year to date was driven by a 1.7%
increase in same store sales and by contributions from five new stores opened
during the year, including the most recent store opening in San Diego,
California, on October 30, 1999.
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New $250 Million Credit Line
HomeBase also announced it has obtained an underwritten commitment for
a new senior secured five-year, $250 million revolving line of credit led by
BankBoston Retail Finance Inc. that will replace the company's current senior
secured $105 million credit facility. The new credit line will include fewer
financial restrictions and permit HomeBase to initiate a stock and convertible
note repurchase program.
$20 Million Stock, Note Repurchase Program
HomeBase said its board of directors has authorized the company to
repurchase, from time to time in the open market as market conditions warrant,
up to an aggregate of $20 million of HomeBase common stock and 5.25% convertible
subordinated notes due 2004. The program will become effective upon
finalization of the new credit line agreement, which is expected within the next
30 days, and will extend through December 31, 2001.
"We view the expanded credit facility as a vote of confidence for
HomeBase by one of the industry's premiere banking institutions," said Allan
Sherman, president and chief executive officer. "The securities repurchase
program reflects our belief that HomeBase stock and convertible notes are
undervalued and underscores management's confidence in the strength of the
company and its future."
Development of New Merchandising Concept
Sherman said the expanded credit line will also be used in connection with a new
business strategy that involves the creation of a new merchandising concept,
which would serve as an expansion vehicle. Deloitte Consulting, a division of
Deloitte & Touche LLP, has been retained to assist in the development and
implementation of the strategy. Columbus, Ohio-based Retail Planning Associates
has been engaged to help design the new concept. On a preliminary basis, the
company estimates the pre-tax cost to develop and execute a test of the new
concept to be between $3 million and $5 million next year.
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"We believe we have done a good job in holding our ground amidst fierce
competitive pressures," said Sherman. "However, at the same time, we recognize
that additional competitive openings will continue to put pressure on same store
sales next year and our current strategies must be augmented in order to achieve
stronger returns for our shareholders. While we remain committed to continuing
to improve our core business, the development of a new merchandising concept
signifies our determination to actively pursue new opportunities aimed toward
producing higher levels of growth and profitability."
Sherman noted that the company is in the early stages of considering a wide
variety of options and has not made any definitive decisions as to what the new
merchandising initiative will ultimately entail. The company expects to test
the new concept in the second half of next year at select locations within
HomeBase's current markets.
"In light of our decision to explore a new merchandising concept, we have
reduced our plan for new store openings next year to one to three," added
Sherman. The company had previously announced it expected to open five to six
new stores next fiscal year.
Headquartered in Irvine, California, HomeBase, Inc. operates 88 home
improvement warehouses, averaging 103,000 square feet in 10 western states.
Matters discussed in this press release include forward-looking statements
that involve risks and uncertainties that could cause results to differ
materially from those expressed. Such risks and uncertainties include, but are
not limited to, the development of a new merchandising concept; the ability to
continue to improve its core business; finalization of the new line of credit;
the ability to repurchase common stock and convertible notes in the open market;
the competitive marketplace and the factors set forth in the company's annual
report on Form 10-K for the fiscal year ended January 30, 1999 under the heading
"Risk Factors" and in the company's other filings with the Securities and
Exchange Commission.
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[Financial Tables to Follow]
HOMEBASE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
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13 Weeks Ended 39 Weeks Ended
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October 30, October 31, October 30, October 31,
1999 1998 1999 1998
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Net sales $379,167 $360,067 $1,198,127 $1,133,588
Cost of sales, including buying and occupancy
costs 296,236 280,267 936,315 879,433
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Gross profit 82,931 79,800 261,812 254,155
Selling, general and administrative expenses 75,876 66,959 232,894 215,663
Pre-opening expenses 705 804 3,707 805
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Operating income 6,350 12,037 25,211 37,687
Interest on debt and capital leases, net 234 462 1,943 2,229
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Income from continuing operations before
income taxes 6,116 11,575 23,268 35,458
Provision for income taxes 2,263 4,410 8,609 13,510
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Net income $ 3,853 $ 7,165 $ 14,659 $ 21,948
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Net income per share:
Basic $ 0.10 $ 0.19 $ 0.39 $ 0.58
Diluted $ 0.10 $ 0.17 $ 0.36 $ 0.51
Shares used in computation of net income per share:
Basic 37,875 37,879 37,877 37,834
Diluted 47,663 47,909 47,821 48,032
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HOMEBASE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
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October 30, January 30, October 31,
1999 1999 1998
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ASSETS
Current assets:
Cash and cash equivalents $ 69,307 $ 35,578 $ 49,784
Marketable securities 16,880 27,939 47,534
Accounts receivable, net 32,220 20,759 31,684
Merchandise inventories 387,330 339,650 332,403
Prepaid expenses and other current assets 18,115 26,847 32,877
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Total current assets 523,852 450,773 494,282
Property, net 258,868 256,835 256,160
Property under capital leases, net 4,869 5,198 5,308
Other assets 15,101 16,176 19,620
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Total assets $802,690 $728,982 $775,370
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LIABILITIES
Current liabilities:
Accounts payable $155,921 $103,248 $136,210
Accrued expenses and other current liabilities 93,906 85,595 96,554
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Total current liabilities 249,827 188,843 232,764
Long-term debt 100,000 100,293 100,313
Obligations under capital leases, less portion due
within one year 8,126 8,366 8,441
Other noncurrent liabilities 47,258 48,981 52,056
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Total liabilities 405,211 346,483 393,574
STOCKHOLDERS' EQUITY
Total stockholders' equity 397,479 382,499 381,796
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Total liabilities and stockholders' equity $802,690 $728,982 $775,370
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HOMEBASE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
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39 Weeks Ended
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October 30, October 31,
1999 1998
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 14,659 $ 21,948
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 21,240 20,320
Deferred income taxes 880 101
Merchandise inventories, net of accounts payable 4,993 21,873
Other 9,330 10,501
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Net cash provided by operating activities 51,102 74,743
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities (11,198) (47,070)
Sales of marketable securities 5,220 2,689
Maturities of marketable securities 17,164 2,865
Property additions (21,330) (28,510)
Property disposals 169 301
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Net cash used in investing activities (9,975) (69,725)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of long-term debt (7,009) (59)
Repayment of capital lease obligations (209) (161)
Debt issuance costs (200) (258)
Proceeds from sale and issuance of common stock 20 641
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Net cash (used in) provided by financing activities (7,398) 163
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Net increase in cash and cash equivalents 33,729 5,181
Cash and cash equivalents at beginning of year 35,578 44,603
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Cash and cash equivalents at end of period $ 69,307 $ 49,784
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Certain prior period amounts have been reclassified to conform to the
current year presentation.
2. The Company's Board of Directors approved the termination of the Waban Inc.
Retirement Plan effective July 26, 1997. In accordance with generally
accepted accounting principles, the cost to terminate the Plan was not
recognized until the Plan was settled, which occurred in the first quarter
of fiscal 1998. Accordingly, the results of operations for fiscal 1998
included an expense of approximately $1.1 million ($0.7 million, net of
taxes) related to the settlement of the Plan.
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