UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------
FORM 10-Q
QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended Commission File Number
April 29, 2000 1-10259
HomeBase, Inc.
(Exact name of Registrant as specified in its charter)
DELAWARE 33-0109661
(State or other jurisdiction of incorporation or (I.R.S. Employer
organization) Identification No.)
3345 Michelson Drive
Irvine, CA 92612
(Address of principal executive offices) (Zip Code)
(949) 442-5000
(Registrant's telephone number, including area code)
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
At May 27, 2000, there were 37,599,898 shares outstanding, excluding 270,400
shares held in treasury.
<PAGE>
Part I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
HOMEBASE, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
13 Weeks Ended
----------------------------------------------------------------- ------- --------- --------------- ----------------
April 29, May 1,
2000 1999
----------------------------------------------------------------- ------- --------- --------------- ----------------
<S> <C> <C>
Net sales $ 365,767 $ 365,293
Cost of sales, including buying and occupancy costs 292,058 286,996
----------------------------------------------------------------- ------- --------- --------------- ----------------
Gross profit 73,709 78,297
Selling, general and administrative expenses 79,247 74,579
Pre-opening expenses - 1,569
Store closures and other charges (4,000) -
----------------------------------------------------------------- ------- --------- --------------- ----------------
Operating income (loss) (1,538) 2,149
Interest on debt and capital leases, net 1,133 1,071
----------------------------------------------------------------- ------- --------- --------------- ----------------
Income (loss) from operations before income taxes (2,671) 1,078
Provision (benefit) for income taxes (988) 425
----------------------------------------------------------------- ------- --------- --------------- ----------------
Income (loss) before extraordinary gain (1,683) 653
Extraordinary gain on early extinguishment of debt, net of tax 576 -
----------------------------------------------------------------- ------- --------- --------------- ----------------
Net income (loss) $ (1,107) $ 653
================================================================= ======= ========= =============== ================
Basic net income (loss) per share:
Income (loss) before extraordinary gain $ (0.05) $ 0.02
Extraordinary gain 0.02 -
----------------------------------------------------------------- ------- --------- --------------- ----------------
Net income (loss) $ (0.03) $ 0.02
================================================================= ======= ========= =============== ================
Diluted net income (loss) per share:
Income (loss) before extraordinary gain $ (0.05) $ 0.02
Extraordinary gain 0.02 -
----------------------------------------------------------------- ------- --------- --------------- ----------------
Net income (loss) $ (0.03) $ 0.02
================================================================= ======= ========= =============== ================
Weighted average common and common equivalent shares used in computation of net
income (loss) per share:
Basic 37,604 37,878
Diluted 37,604 37,954
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
HOMEBASE, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
(Unaudited)
<TABLE>
<CAPTION>
----------------------------------------------------------------- ---------------- ----------------- ---------------
April 29, January 29, May 1,
2000 2000 1999
----------------------------------------------------------------- ---------------- ----------------- ---------------
ASSETS
Current assets:
<S> <C> <C> <C>
Cash and cash equivalents $ 53,394 $ 26,747 $ 55,356
Marketable securities 12,023 15,020 17,959
Accounts receivable (net of allowance for doubtful
accounts of $66, $39 and $235, respectively) 23,144 29,439 25,459
Merchandise inventories 393,073 371,060 377,496
Current deferred income taxes 5,423 5,676 9,627
Prepaid expenses and other current assets 8,497 4,507 17,537
----------------------------------------------------------------- ---------------- ----------------- ---------------
Total current assets 495,554 452,449 503,434
Property and equipment, net 252,912 257,726 259,819
Property under capital leases, net 4,649 4,759 5,088
Deferred income taxes 6,920 6,856 10,338
Other assets 5,601 5,952 5,655
----------------------------------------------------------------- ---------------- ----------------- ---------------
Total assets $ 765,636 $ 727,742 $ 784,334
================================================================= ================ ================= ===============
LIABILITIES
Current liabilities:
Accounts payable $ 152,785 $ 108,823 $ 148,419
Restructuring reserve 1,133 1,771 2,241
Accrued expenses and other current liabilities 77,164 73,195 81,470
Accrued income taxes 413 635 5,583
Current installments of long-term debt - - 6,637
Obligations under capital leases due within one year 338 327 294
----------------------------------------------------------------- ---------------- ----------------- ---------------
Total current liabilities 231,833 184,751 244,644
Long-term debt 90,182 92,382 100,000
Obligations under capital leases, less portion due
within one year 7,951 8,040 8,289
Noncurrent restructuring reserve 5,164 5,003 3,289
Other noncurrent liabilities 36,792 42,880 44,854
----------------------------------------------------------------- ---------------- ----------------- ---------------
Total liabilities 371,922 333,056 401,076
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, par value $.01 per share; 190,000,000
shares authorized; 37,873,548, 37,874,798 and
37,876,636 shares issued and outstanding, respectively 379 379 379
Additional paid-in capital 374,722 374,728 374,695
Retained earnings 19,712 20,819 8,844
Common stock in treasury at cost, 270,400 shares (818) (818) -
Unearned compensation (233) (348) (667)
Unrealized holding gains (losses) (48) (74) 7
----------------------------------------------------------------- ---------------- ----------------- ---------------
Total stockholders' equity 393,714 394,686 383,258
----------------------------------------------------------------- ---------------- ----------------- ---------------
Total liabilities and stockholders' equity $ 765,636 $ 727,742 $ 784,334
================================================================= ================ ================= ===============
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
HOMEBASE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
13 Weeks Ended
------------------------------------------------------------------------- ------- ----------------------------------
April 29, May 1,
2000 1999
------------------------------------------------------------------------- ------- ---------------- -----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income (loss) $ (1,107) $ 653
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation and amortization 8,224 6,896
Extraordinary gain on early extinguishment of debt (914) -
Loss on property disposals 113 2
Amortization of discount on marketable securities 23 (199)
Other non-cash items 109 97
Deferred income taxes 189 43
Increase (decrease) in cash due to changes in:
Accounts receivable 6,295 (4,700)
Merchandise inventories (22,013) (37,846)
Prepaid expenses and other current assets (3,990) (493)
Other assets 85 107
Accounts payable 43,962 45,171
Restructuring reserve (477) (223)
Accrued expenses and other current liabilities 4,008 4,861
Accrued income taxes (222) 4,905
Other noncurrent liabilities (6,088) (265)
------------------------------------------------------------------------- ------- ---------------- -----------------
Net cash provided by operating activities 28,197 19,009
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities - (3,500)
Sales of marketable securities 3,000 5,000
Maturities of marketable securities - 8,664
Property additions (3,177) (8,968)
Property disposals - 1
------------------------------------------------------------------------- ------- ---------------- -----------------
Net cash (used in) provided by investing activities (177) 1,197
CASH FLOWS FROM FINANCING ACTIVITIES:
Early extinguishment of long-term debt (1,271) -
Repayment of long-term debt - (372)
Repayment of capital lease obligations (78) (67)
Debt issuance costs (24) -
Proceeds from sale and issuance of common stock - 11
------------------------------------------------------------------------- ------- ---------------- -----------------
Net cash used in financing activities (1,373) (428)
------------------------------------------------------------------------- ------- ---------------- -----------------
Net increase in cash and cash equivalents 26,647 19,778
Cash and cash equivalents at beginning of year 26,747 35,578
------------------------------------------------------------------------- ------- ---------------- -----------------
Cash and cash equivalents at end of period $ 53,394 $ 55,356
========================================================================= ======= ================ =================
Supplemental cash flow information:
Interest paid $ 2,951 $ 2,946
Taxes paid (refunds received), net 108 (4,582)
Non-cash financing and investing activities:
Tax benefit of employee stock options $ - $ 13
========================================================================= ======= ================ =================
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
HOMEBASE, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
---------------------------- ------------------ ----------- ------------- ----------- ------------------- ----------- --------------
Unrealized
Common Stock Additional Holding Treasury Stock Total
------------------ Paid-In Unearned Gains ------------------- Retained Stockholders'
Shares Amount Capital Compensation (Losses) Shares Amount Earnings Equity
---------------------------- -------- --------- ----------- ------------- ----------- -------- ---------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, January 30, 1999 37,879 $ 379 $ 374,705 $ (798) $ 22 - $ - $ 8,191 $ 382,499
Net income - - - - - - - 653 653
Unrealized holding losses - - - - (15) - - (15)
Exercise of stock options 3 - 11 - - - - - 11
Income tax benefit of
stock options - - 13 - - - - - 13
Amortization of
restricted stock grants - - - 114 - - - - 114
Cancellation of
restricted stock grants (5) - (34) 17 - - - - (17)
---------------------------- -------- --------- ----------- ------------- ----------- -------- ---------- ----------- --------------
Balance, May 1, 1999 37,877 $ 379 $ 374,695 $ (667) $ 7 - $ - $ 8,844 $ 383,258
============================ ======== ========= =========== ============= =========== ======== ========== =========== ==============
---------------------------- ------------------ ----------- ------------- ----------- ------------------- ----------- --------------
Unrealized
Common Stock Additional Holding Treasury Stock Total
------------------ Paid-In Unearned Gains ------------------- Retained Stockholders'
Shares Amount Capital Compensation (Losses) Shares Amount Earnings Equity
---------------------------- -------- --------- ----------- ------------- ----------- -------- ---------- ----------- --------------
Balance, January 29, 2000 37,875 $ 379 $ 374,728 $ (348) $ (74) (270) $ (818) $ 20,819 $ 394,686
Net loss - - - - - (1,107) (1,107)
Unrealized holding losses - - - - 26 - 26
Amortization of
restricted stock grants - - - 110 - - - 110
Cancellation of
restricted stock grants (1) - (6) 5 - - - (1)
---------------------------- -------- --------- ----------- ------------- ----------- --------- ---------- ---------- --------------
Balance, April 29, 2000 37,874 $ 379 $ 374,722 $ (233) $ (48) (270) $ (818) $ 19,712 $ 393,714
============================ ======== ========= =========== ============= =========== ========= ========== ========== ==============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE>
HOMEBASE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Basis of Presentation
The accompanying interim consolidated financial statements are unaudited and
have been prepared in accordance with the instructions to Form 10-Q and Article
10 of Regulation S-X. In the opinion of management, all adjustments (consisting
of normal and recurring accruals) considered necessary for a fair statement of
the results have been included. These interim consolidated financial statements
should be read in conjunction with the consolidated financial statements and
related notes contained in the Annual Report on Form 10-K for the fiscal year
ended January 29, 2000. The January 29, 2000 balances reported herein are
derived from the audited consolidated financial statements included in the
Annual Report on Form 10-K for the fiscal year ended January 29, 2000.
The results for the interim periods are not necessarily indicative of results
for the full fiscal year because, among other things, the Company's business is
subject to seasonal influences. Sales and earnings for the Company have
typically been higher in the second and third quarters of the fiscal year, which
include the most active seasons for home improvement sales, and lower in the
first and fourth quarters.
The fiscal years ending January 27, 2001 and January 29, 2000 are referred to
herein as "fiscal 2000" and "fiscal 1999", respectively. The 13 weeks ended
April 29, 2000 and May 1, 1999 are referred to herein as the "first quarter of
fiscal 2000" and the "first quarter of fiscal 1999", respectively.
The consolidated financial statements of the Company include the financial
statements of the Company's subsidiaries, all of which are wholly owned.
Note 2 - Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make certain estimates and
assumptions that affect the reported amounts of assets and liabilities (e.g.,
co-operative advertising and rebate reserves, self-insurance reserves, store
closure and restructuring reserves, and inventory reserves), disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Note 3 - Reclassifications
Certain prior period amounts have been reclassified to conform to the current
year presentation.
Note 4 - Interest on Debt and Capital Leases
Interest on debt and capital leases in the consolidated statements of income is
presented net of interest and investment income of $0.8 million for the first
quarter of both fiscal 2000 and fiscal 1999.
Note 5 - Net Income Per Share
The following is a reconciliation of the numerator and the denominator used in
the calculation of net income per share:
<TABLE>
<CAPTION>
13 Weeks Ended
-------------------------------------------------------------- --- ---- ---------------- -----------------
April 29, May 1,
(In thousands) 2000 1999
-------------------------------------------------------------- --- ---- ---------------- -----------------
Numerator:
<S> <C> <C>
Income (loss) from operations before extraordinary gain $ (1,683) $ 653
Extraordinary gain 576 -
-------------------------------------------------------------- --- ---- ---------------- -----------------
Numerator for basic net income per share (1,107) 653
Effect of dilutive securities:
5.25% convertible subordinated notes - -
-------------------------------------------------------------- --- ---- ---------------- -----------------
Numerator for diluted net income per share $ (1,107) $ 653
============================================================== === ==== ================ =================
13 Weeks Ended
-------------------------------------------------------------- --- ---- ---------------- -----------------
April 29, May 1,
(In thousands) 2000 1999
-------------------------------------------------------------- --- ---- ---------------- -----------------
Denominator:
Denominator for basic net income per share - weighted
average shares 37,604 37,878
Effect of dilutive securities:
Employee stock options - 76
Assumed conversion of 5.25% convertible subordinated
notes - -
-------------------------------------------------------------- --- ---- ---------------- -----------------
Denominator for diluted net income per share - weighted
average shares 37,604 37,954
============================================================== === ==== ================ =================
</TABLE>
Note 6 - Supplemental Balance Sheet Information
Property and equipment consists of the following:
<TABLE>
<CAPTION>
----------------------------------------------------- ----------------- ---------------- -----------------
April 29, January 29, May 1,
(In thousands) 2000 2000 1999
----------------------------------------------------- ----------------- ---------------- -----------------
<S> <C> <C> <C>
Land and buildings $ 157,958 $ 157,932 $ 157,774
Leasehold improvements 72,725 72,795 70,670
Furniture, fixtures and equipment 172,908 170,316 156,716
----------------------------------------------------- ----------------- ---------------- -----------------
403,591 401,043 385,160
Accumulated depreciation (150,679) (143,317) (125,341)
----------------------------------------------------- ----------------- ---------------- -----------------
Property and equipment, net $ 252,912 $ 257,726 $ 259,819
===================================================== ================= ================ =================
</TABLE>
Property under capital leases consists of the following:
<TABLE>
<CAPTION>
------------------------------------------------- ----------------- ------------------ -------------------
April 29, January 29, May 1,
(In thousands) 2000 2000 1999
------------------------------------------------- ----------------- ------------------ -------------------
<S> <C> <C> <C>
Property under capital leases $ 9,696 $ 9,696 $ 9,696
Accumulated depreciation (5,047) (4,937) (4,608)
------------------------------------------------- ----------------- ------------------ -------------------
Property under capital leases, net $ 4,649 $ 4,759 $ 5,088
================================================= ================= ================== ===================
</TABLE>
Note 7 - Restructuring Reserve and Store Closures and Other Charges Reserve
<TABLE>
<CAPTION>
------------------------------------------------------------------- ------------------ -------------------
Fiscal 1997
Fiscal 1993 Store Closures
Restructuring and Other Charges
(In thousands) Reserve Reserve
------------------------------------------------------------------- ------------------ -------------------
<S> <C> <C>
Balance January 29, 2000 $ 6,774 $ 11,171
Cash expenditures incurred during the period (457) (1) (2,140) (2)
Reserve re-evaluation adjustment (20) (4,000) (5)
------------------------------------------------------------------- ------------------ -------------------
Period Ended April 29, 2000 $ 6,297 (3) $ 5,031 (4)
=================================================================== ================== ===================
</TABLE>
(1) Cash expenditures during the 13 weeks ended April 29, 2000 consisted
primarily of lease obligations on closed facilities and other related
operating costs.
(2) Cash expenditures during the 13 weeks ended April 29, 2000 included $1.7
million in lease termination costs related to a previously closed store as
well as lease obligations on closed facilities.
(3) The ending balance consists primarily of lease obligations on closed
facilities, which extend through 2006.
(4) The ending balance consists primarily of lease obligations on closed
facilities, which extend through 2002.
(5) Reversal of reserves for a closed store which will be reopened as a House 2
HomeTM new concept store and another store for which a favorable lease
termination was negotiated.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Organization and Presentation
The fiscal years ending January 27, 2001 and January 29, 2000 are referred to
herein as "fiscal 2000" and "fiscal 1999", respectively. The 13 weeks ended
April 29, 2000 and May 1, 1999 are referred to herein as the "first quarter of
fiscal 2000" and the "first quarter of fiscal 1999," respectively.
The following table presents the results of operations for the periods indicated
as a percentage of net sales.
<TABLE>
<CAPTION>
13 Weeks Ended
------------------------------------------------------ -------------------------
April 29, May 1,
2000 1999
------------------------------------------------------ ------------ ------------
<S> <C> <C>
Net sales 100.0 % 100.0 %
Cost of sales, including buying and occupancy costs 79.8 78.6
------------------------------------------------------ ------------ ------------
Gross profit 20.2 21.4
Selling, general and administrative expenses 21.7 20.4
Pre-opening expenses - 0.4
Store closures and other charges (1.1) -
------------------------------------------------------ ------------ ------------
Operating income (loss) (0.4) 0.6
Interest on debt and capital leases, net 0.3 0.3
------------------------------------------------------ ------------ ------------
Income (loss) from operations before income taxes (0.7) 0.3
Provision (benefit) for income taxes (0.2) 0.1
------------------------------------------------------ ------------ ------------
Income (loss) before extraordinary gain (0.5) 0.2
Extraordinary gain on early extinguishment of debt 0.2 -
------------------------------------------------------ ------------ ------------
Net income (loss) (0.3) % 0.2 %
====================================================== ============ ============
</TABLE>
Net Sales
Net sales for the first quarter of fiscal 2000 increased 0.1% to $365.8 million
from $365.3 million in the first quarter of fiscal 1999. There were 88 stores in
operation in the first quarter of fiscal 2000 versus 85 open at the end of the
first quarter of fiscal 1999. Comparable store sales declined 4.2%, driven by a
decline in the number of transactions which more than offset an increase in the
average transaction.
Gross Profit
Gross profit was 20.2% of net sales in the first quarter of fiscal 2000 compared
to 21.4% in the first quarter of fiscal 1999. The decrease was primarily the
result of a pre-tax charge of $1.9 million (equal to 0.5% of sales) for
inventory liquidation at four stores slated to be converted into House 2 HomeTM
stores.
Selling, General and Administrative Expenses
Selling, general and administrative expenses ("SG&A") increased to 21.7% of net
sales for the first quarter of fiscal 2000 from 20.4% of net sales for the first
quarter of fiscal 1999. The increase was attributable to expenditures related to
the House 2 HomeTM concept including consulting fees, accelerated depreciation
of store fixtures at the four locations being converted, and incremental
staffing for buyers and administrative support working on House 2 HomeTM, as
well as severance costs related to the retirement of the Company's former
President and CEO.
Pre-opening Expenses
Pre-opening expenses for the first quarter of fiscal 2000 were zero. The
expenses incurred during the first quarter of fiscal 1999 are attributable to
one store which opened in March 1999 and three other stores opened in May 1999.
Interest on Debt and Capital Leases
Interest on debt and capital leases, net, was $1.1 million for the first quarter
of both fiscal 2000 and fiscal 1999. Interest on debt and capital leases is
presented net of interest and investment income of $0.8 million for the first
quarter of both fiscal 2000 and fiscal 1999.
Provision for Income Taxes
The income tax rate was 37.0% for the 13 weeks ended April 29, 2000 compared
with 39.4% in the comparable prior year period. The rate in fiscal 2000 reflects
the realization of certain federal income tax credits.
Net Income (Loss)
Net loss for the first quarter of fiscal 2000 was $1.1 million, or $0.03 per
diluted share, compared with net income of $0.7 million, or $0.02 per diluted
share, in the comparable prior year period. Net loss for the first quarter of
fiscal 2000 reflects a $4.0 million pre-tax credit ($2.5 million after taxes)
related to the reversal of reserves on two previously closed stores, one which
will be reopened as a House 2 HomeTM store and the other where a favorable lease
termination was negotiated. In addition, the Company realized an extraordinary
after-tax gain of $0.6 million associated with its previously announced
securities repurchase program.
Liquidity and Capital Resources
Cash flows from operating activities provide the Company with a significant
source of liquidity. At April 29, 2000, the Company had $65.4 million in cash,
cash equivalents and marketable securities. At that date, there were no
borrowings under the Company's $250 million revolving credit facility. Letters
of credit outstanding as of April 29, 2000 were $12.6 million.
On November 16, 1999, the Company announced several important initiatives to
build shareholder value. These included a securities repurchase program as well
as an initiative to develop a new retail concept, subsequently named House 2
HomeTM, that could serve as an expansion vehicle. It is envisioned that House 2
HomeTM could provide to the Company an opportunity to have a stronger position
within some of the existing key categories in which the Company now operates, as
well as allow for entry into new, related businesses in which the Company does
not currently participate. A five-store test of House 2 HomeTM is expected to
commence in the second half of fiscal 2000. Liquidation sales are underway and
should be completed by early July, at which time they will be closed for remodel
construction. The Company estimates the cost of developing and testing the new
concept to be between $7 million and $8 million, net of tax, during fiscal 2000.
As announced in November 1999, the board of directors authorized the Company to
spend up to $20 million to repurchase HomeBase common stock and 5.25%
convertible subordinated notes periodically in the open market, as market
conditions warrant. Through April 29, 2000, the Company had repurchased 270,400
shares of common stock at an average price of approximately $3.00 per share, and
$9.8 million in face value of convertible notes for $5.8 million. The repurchase
program will extend through December 31, 2001.
Restructuring Reserve and Store Closures and Other Charges Reserve
As of January 29, 2000, $6.8 million of the fiscal 1993 restructuring charge
remained accrued on the Company's consolidated balance sheet. During the 13
weeks ended April 29, 2000, the Company incurred cash expenditures of $0.5
million primarily related to lease obligations on closed facilities. As of April
29, 2000, $6.3 million remained accrued on the Company's consolidated balance
sheet, consisting primarily of lease obligations on closed facilities, which
extend through 2006.
As of January 29, 2000, $11.2 million of the fiscal 1997 store closures and
other charges reserve remained accrued on the Company's consolidated balance
sheet. During the 13 weeks ended April 29, 2000, the Company incurred cash
expenditures of $2.2 million primarily related to lease obligations on closed
facilities and lease termination costs related to a previously closed store. In
addition, the Company reversed $4.0 million of reserves for a closed store which
will be reopened as a House 2 HomeTM new concept store and another store for
which a favorable lease termination was negotiated. As of April 29, 2000, $5.0
million remained accrued on the Company's consolidated balance sheet, consisting
primarily of lease obligations on closed facilities, which extend through 2002.
================================================================================
Forward-Looking Information
--------------------------------------------------------------------------------
This report on Form 10-Q contains "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. When used in this
report, the words "believe," "estimate," "expect," "anticipate," "plans," and
similar expressions are intended to identify forward-looking statements. For
this purpose any matters discussed in this document 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 retail concept; the ability to
improve HomeBase's core business; general economic conditions prevailing in the
Company's markets; the competitive marketplace and the factors set forth in the
Company's annual report on Form 10-K for the fiscal year ended January 29, 2000
under the heading "Risk Factors" and in the Company's other filings with the
Securities and Exchange Commission.
================================================================================
<PAGE>
Part II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
10.37 Change of Control Agreement, dated as of May 31, 2000, with
Herbert J. Zarkin
10.38 Form of Indemnification Agreement, dated as of May 31, 2000,
with directors and executive officers
27 Financial Data Schedule
b) Reports on Form 8-K
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HomeBase, Inc.
Date: June 7, 2000 /s/ HERBERT J. ZARKIN
---------------------------- --------------------------------
Herbert J. Zarkin
Chairman of the Board, President
and Chief Executive Officer
Date: June 7, 2000 /s/ WILLIAM B. LANGSDORF
---------------------------- --------------------------------
William B. Langsdorf
Executive Vice President
and Chief Financial Officer
(Principal Financial and
Accounting Officer)
