<PAGE> 1
FORM 10-Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the quarterly period ended June 29, 1996
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 June 29, 1996
- --------------------------- ------------------------------
Common Stock, no par value 7,625,000
Total pages: 12
Index to exhibits: 13
<PAGE> 2
D.I.Y. HOME WAREHOUSE, INC.
INDEX
<TABLE>
<CAPTION>
PAGE NO.
--------
PART I FINANCIAL INFORMATION
<S> <C> <C>
Item 1. Financial Statements
Condensed Balance Sheet -
June 29, 1996 and December 30,
1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Condensed Statement of Income -
Three and Six Months Ended June 29,
1996 and July 1, 1995 . . . . . . . . . . . . . . . . . . . . 4
Condensed Statement of
Shareholders' Equity - Six
Months Ended June 29, 1996. . . . . . . . . . . .. . . . . . . 5
Condensed Statement of Cash Flows -
Six Months Ended June 29,
1996 and July 1, 1995 . . . . . . . . .. . . . . . . . . . . . 6
Notes to Condensed Financial
Statements. . . . . . . . . .. . . . . . . . . . . . . . . . . 7 - 8
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations. . . . . . . . . . . . . . . . . . . 9 - 11
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . 12
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
D.I.Y. HOME WAREHOUSE, INC.
CONDENSED BALANCE SHEET
<TABLE>
<CAPTION>
June 29, 1996 December 30,1995
------------- ----------------
Assets (Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,102,397 $ 1,468,897
Accounts receivable, trade 74,678 97,584
Merchandise inventories 44,771,896 39,928,793
Deferred income taxes 685,312 685,312
Prepaid expenses and other assets 690,421 662,991
----------- -----------
Total current assets 47,324,704 42,843,577
----------- -----------
Property and equipment, at cost 49,323,728 46,956,706
Less accumulated depreciation and
amortization 8,573,253 6,985,653
----------- -----------
Property and equipment, net 40,750,475 39,971,053
-----------
Other assets 628,677 685,180
----------- -----------
Total assets $88,703,856 $83,499,810
=========== ===========
Liabilities and Shareholders' Equity
Current liabilities:
Note payable, affiliate $ 900,000 $ 900,000
Current maturities of long-term debt 816,326 552,670
Accounts payable 15,953,526 13,067,899
Accrued expenses and other 6,090,442 5,025,712
----------- -----------
Total current liabilities 23,760,294 19,546,281
----------- -----------
Revolving credit 11,500,000 13,300,000
Long-term debt 16,984,392 16,115,153
Deferred income taxes 1,099,016 1,099,016
Shareholders' equity:
Preferred stock, authorized 1,000,000
shares, none issued -- --
Common stock, no par value, authorized
10,000,000 shares, 7,625,000 shares
outstanding 22,912,521 22,912,521
Retained earnings 12,447,633 10,526,839
----------- -----------
Total shareholders' equity 35,360,154 33,439,360
----------- -----------
Total liabilities and
shareholders' equity $88,703,856 $83,499,810
----------- -----------
</TABLE>
See accompanying notes to condensed financial statements.
3
<PAGE> 4
D.I.Y. HOME WAREHOUSE, INC.
CONDENSED STATEMENT OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
JUNE 29, JULY 1, JUNE 29, JULY 1,
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales $ 68,168,668 $ 58,411,111 $107,312,573 $ 88,668,916
Cost of sales 51,282,094 42,118,502 79,660,896 63,188,850
------------ ------------ ------------ ------------
Gross profit 16,886,574 16,292,609 27,651,677 25,480,066
Store operating, general
and administrative
expenses 12,822,932 11,645,598 23,193,444 19,093,478
Store preopening costs -- 638,802 -- 1,285,560
------------ ------------ ------------ ------------
Operating income 4,063,642 4,008,209 4,458,233 5,101,028
Other expense, net 623,668 455,708 1,199,581 725,765
------------ ------------ ------------ ------------
Income before income taxes 3,439,974 3,552,501 3,258,652 4,375,263
Income taxes 1,410,389 1,417,499 1,337,858 1,737,010
------------ ------------ ------------ ------------
Net income $ 2,029,585 $ 2,135,002 $ 1,920,794 $ 2,638,253
============ ============ ============ ============
Earnings per share $ 0.27 $ 0.28 $ 0.25 $ 0.35
============ ============ ============ ============
Weighted average
common shares outstanding 7,625,000 7,625,000 7,625,000 7,625,000
============ ============ ============ ============
</TABLE>
See accompanying notes to condensed financial statements.
4
<PAGE> 5
D.I.Y. HOME WAREHOUSE, INC.
CONDENSED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 29, 1996
(Unaudited)
<TABLE>
<CAPTION>
Common Stock Total
------------------ Retained Shareholders'
Shares Amount Earnings Equity
------ ------ -------- ------
<S> <C> <C> <C> <C>
Balances at December
30, 1995, as previous-
ly reported 7,625,000 $22,912,521 $10,252,424 $33,164,945
Adjustment for the
cumulative effect of the
change in accounting for
merchandise inventories 274,415 274,415
----------- ----------- ----------- -----------
Balances at December 30,
1995, as adjusted 7,625,000 22,912,521 10,526,839 33,439,360
Net income 1,920,794 1,920,794
----------- ----------- ----------- -----------
Balances, June 29, 1996 7,625,000 $22,912,521 $12,447,633 $35,360,154
=========== =========== =========== ===========
</TABLE>
See accompanying notes to condensed financial statements.
5
<PAGE> 6
D.I.Y. HOME WAREHOUSE, INC.
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the six months ended
June 29, July 1,
1996 1995
------------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,920,794 $ 2,638,253
Adjustments to reconcile net
income to net cash provided by
(used in) operating activities:
Depreciation and amortization 1,587,600 952,024
Changes in operating assets and
liabilities:
Accounts receivable, trade 22,906 (174,205)
Merchandise inventories (4,843,103) (12,418,841)
Prepaid expenses and other assets 29,073 (160,087)
Accounts payable 2,885,627 15,280,086
Accrued expenses and other current
liabilities 1,064,730 1,525,924
------------ ------------
Net cash provided by
operating activities 2,667,627 7,643,154
------------ ------------
Cash flows from investing activities:
Acquisition of property and equipment (906,595) (12,404,066)
------------ ------------
Net cash used in investing
activities (906,595) (12,404,066)
------------ ------------
Cash flows from financing activities:
Principal payments under capital
lease obligations (35,905) --
Principal payments, note payable -- (687,176)
Proceeds from revolving credit 4,000,000 2,500,000
Principal payments of revolving credit (5,800,000) --
Proceeds from long-term debt -- 3,375,000
Principal payments of long-term debt (291,627) (113,021)
------------ ------------
Net cash (used in) provided by
financing activities (2,127,532) 5,074,803
------------ ------------
Net (decrease) increase in cash and cash
equivalents (366,500) 313,891
Cash and cash equivalents, beginning of
period 1,468,897 937,477
------------ ------------
Cash and cash equivalents, end of period $ 1,102,397 $ 1,251,368
============ ============
</TABLE>
Supplemental schedule of non-cash investing and financing activities: Capital
lease obligations of $1,460,427 were incurred when the Company entered into
leases for vehicles and computer hardware and software in 1996.
See accompanying notes to condensed financial statements.
6
<PAGE> 7
D.I.Y. HOME WAREHOUSE, INC.
Notes to Condensed Financial Statements
(Unaudited)
1. Basis of Presentation:
In the opinion of management, the accompanying unaudited condensed
financial statements contain all adjustments (consisting of only normal
recurring adjustments) necessary to present fairly the financial position as of
June 29, 1996 and the results of operations and cash flows for the three and six
months ended June 29, 1996 and July 1, 1995. 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. The results of operations for
any interim period should not necessarily be considered indicative of the
results of operations for the full year.
2. Summary of Significant Accounting Policies:
During the first quarter of 1996, the Company changed its method of
accounting for merchandise inventories from the last-in, first-out (LIFO) method
to the first-in, first-out (FIFO) method. As required by generally accepted
accounting principles, the Company has retroactively adjusted prior years'
financial statements for this change. The new method of accounting for inventory
was adopted in recognition of industry practice and to provide for a better
matching of costs and revenues. The Internal Revenue Service granted permission
to the Company to change to the FIFO method of inventory valuation for income
tax purposes. The effect of the change in accounting method had no effect on net
income or earnings per share as previously reported for the three or six months
ended July 1, 1995.
The Company will restate each of its 1995 quarters as well as its 1995
and 1994 annual results to provide retroactive application of the effect of the
accounting change. Had the Company not changed its method of inventory costing,
the impact on net income and earnings per share for the three and six months
ended June 29, 1996 would not have been material.
3. Earnings Per Share:
Earnings per share are computed using the weighted average number of
shares of common stock outstanding for the periods. Earnings per share have not
been adjusted for the effect of stock options as the dilutive effect would be
less than three percent for each period.
4. Stock Options:
The Company has a Long Term Incentive Plan (the Plan) which reserves
shares of the Company's authorized common stock for issuance. On May 22, 1996,
the Company's shareholders authorized an increase of the number of shares
authorized for issuance under the Plan from 850,000 shares to 1,350,000 shares.
7
<PAGE> 8
Options granted under the Plan vest over five years at the rate of 20% each year
and expire no more than ten years from the date of grant. A summary of activity
under the Plan for the six months ended June 29, 1996 is as follows:
<TABLE>
<CAPTION>
Average Option
Shares Subject Price
to Options Per Share
---------- ---------
<S> <C> <C>
Outstanding December 30, 1995 673,000 $ 10.18
Granted 158,000 $ 4.62
Canceled (10,000) $ 7.14
-------- --------
Outstanding June 29, 1996 821,000 $ 9.15
======== ========
</TABLE>
At June 29, 1996, 174,800 options were exercisable and 529,000 shares were
available for future grant. The Company does not expect to adopt the recognition
provisions of recently issued SFAS No. 123, Accounting for Stock-Based
Compensation. Disclosures required by new accounting standard will be included
in future financial statements pursuant to the effective date criteria.
6. Income Taxes:
A reconciliation of the Statutory federal income tax rate to the
Company's effective income tax rate follows:
<TABLE>
<CAPTION>
Three months ended Six Months ended
June 29, July 1, June 29, July 1,
1996 1995 1996 1995
------ ------ ------ ------
<S> <C> <C> <C> <C>
Statutory federal income tax rate 34.0% 34.0% 34.0% 34.0
State and local income taxes,
net of federal benefit 7.0 6.0 7.0 6.0
Tax credits and other -- (0.1) -- (0.3)
------ ------ ------ ------
Effective income tax rate 41.0% 39.9% 41.0% 39.7
====== ====== ====== ======
</TABLE>
8
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
OPERATIONS - Three Months Ended June 29,
1996 Compared to Three Months Ended July 1, 1995
Net sales increased by $9.8 million, or 17%, to $68.2 million in the
second quarter of fiscal 1996, from $58.4 million in the second quarter of
fiscal 1995. This increase in net sales was attributable primarily to the full
period sales in 1996 for the five DIY locations which were opened in 1995. DIY
posted comparable store sale increases in each month of the quarter resulting in
a quarterly increase of 4%. However, sales were below expectations due to
adverse weather conditions in April, May and the first two weeks of June which
significantly delayed the spring lawn and garden shopping season. Further, the
Company's sales were adversely affected in April and May by the liquidation of a
competitor, Handy Andy, which had ten competing stores in the Company's markets.
Gross profit increased by $594,000, or 4%, to $16.9 million in the
second quarter of fiscal 1996 from $16.3 million in the second quarter of fiscal
1995. As a percentage of net sales, gross profit decreased to 24.8% in the
quarter ended June 29, 1996 compared to 27.9% in the comparable quarter of
fiscal 1995, due primarily to vendor discounts received in 1995 on the initial
inventory for new stores. No such discounts were realized in the second quarter
of fiscal 1996 as there were no new store openings in the period.
Store operating, general and administrative expenses were $12.8 million
for the quarter ended June 29, 1996 compared to $11.6 million for the quarter
ended July 1, 1995. As a percentage of net sales, operating expenses decreased
to 18.8% in the second quarter of fiscal 1996 compared to 19.9% in the second
quarter of fiscal 1995 due to emphasis on cost-leveraging and improvements in
operating strategies.
There were no store preopening costs in the second quarter of fiscal
1996, as there were no new stores under development during this period. Store
preopening costs were $638,802 in the second quarter of fiscal 1995 relative to
three stores opened during this period.
Other expense, net, increased from $455,708 in the quarter ended July
1, 1995 to $623,668 in the quarter ended June 29, 1996 due to interest expense
incurred on higher levels of debt outstanding in the second quarter of 1996.
9
<PAGE> 10
OPERATIONS - Six Months Ended June 29,
1996 Compared to Six Months Ended July 1, 1996
Net sales for the six months ended June 29, 1996 were $107.3 million, a
21% increase over net sales of $88.7 million for the six months ended July 1,
1995. Comparable store sales increased 1% reflecting reduced sales in the first
quarter due to severe winter weather and adverse weather during April, May and
the first two weeks of June which significantly delayed the spring lawn and
garden shopping season. Further, the Company's sales were adversely affected in
April and May by the liquidation of a competitor, Handy Andy, which had ten
competing stores in the Company's markets.
Gross profit for the six months ended June 29, 1996 was $27.7 million
compared to gross profit of $25.5 for the six months ended July 1, 1995. Gross
profit, as a percentage of net sales, decreased from 28.7% in the first six
months of fiscal 1995 to 25.8% in the comparable 1996 six month period. The
decline in gross margin is due primarily to vendor discounts received in 1995 on
the initial inventory orders for four new stores opened during the first half of
1995. No such discounts were realized in the first six months of fiscal 1996 as
there were no new store openings.
Store operating expenses were 21.6% of net sales in the first half of
fiscal 1996 consistent with 21.5% of net sales in the first half of fiscal 1995,
as the sales softness in the spring of 1996 impacted the Company's ability to
leverage expenses.
There were no store preopening costs for the six months ended June 29,
1996 as there were no new stores under development during this period. Store
preopening costs were $1,285,560 for the six months ended July 1, 1995 relative
to four stores opened during this period.
Other expense, net, increased from $725,765 in the first six months of
1995 to $1,199,581 in the first six months of 1996 due to interest expense
incurred on higher levels of debt outstanding.
LIQUIDITY AND CAPITAL RESOURCES
During the six months ended June 29, 1996, operating activities
provided net cash of $2.7 million. The primary source of cash from operations
was $3.5 million from net income plus depreciation and amortization. The primary
use of cash was $4.8 million to fund increased merchandise inventory levels at
existing stores for seasonal requirements, partially offset by an increase of
$2.9 million and $1.1 million in accounts payable and accrued expenses and
other, respectively. During the six months ended July 1, 1995, operating
activities provided net cash of $7.6 million. The primary source of cash from
operations was $3.6 million from net income plus depreciation and amortization.
The primary use of cash was $12.4 million to finance increases in merchandise
inventories resulting from new store openings in the first half of 1995 and
seasonal increases, offset by a $15.3 million increase in accounts payable and a
$1.5 million increase in accrued expenses and other current liabilities.
10
<PAGE> 11
Net cash used in investing activities was approximately $900,000 and
$12.4 million during the six months ended June 29, 1996 and July 1, 1995,
respectively, due to remodeling initiatives in the Company's older stores in the
first six months of 1996 and the acquisition of property and equipment related
to new store expansion in the first six months of fiscal 1995.
Net cash used in financing activities during the six months ended June
29, 1996 totaled $2.1 million, as a result of repayments to the Company's
revolving credit facility of $1.8 million and principal payments of debt and
capital lease obligations of $300,000. Net cash provided by financing activities
in the six months ended July 1, 1995 totaled $5.1 million, due primarily to $2.5
million and $3.4 million from revolving credit borrowings and mortgage loans,
respectively.
During the first quarter of fiscal 1996, the Company changed its method
of accounting for inventories from the last-in, first-out (LIFO) method to the
first-in, first-out (FIFO) method. As required by generally accepted accounting
principles, the Company has retroactively adjusted prior years' financial
statements for this change.
The Company entered into capital lease obligations of $815,988 for
computer hardware and software and $644,439 for trucks in the second and first
quarters of 1996, respectively.
Management believes cash on hand, cash from operations and cash
available through the Company's financing agreements will be sufficient to meet
short-term and long-term working capital requirements.
11
<PAGE> 12
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits:
A list of the exhibits required by Item 601 of Regulation S-K to
be filed as a part of this Form 10-Q is shown on the "Exhibit
Index" filed herewith.
(b) Reports on Form 8-K:
None
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
D.I.Y. HOME WAREHOUSE, INC.
(Registrant)
DATED: August 9, 1996
By: /s/ Marilyn A. Eisele
-------------------------------------
Vice President - Administration
and Finance, Chief Financial Officer
12
<PAGE> 13
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
- ------ ----------------------
10 Material Contracts:
-------------------
10.1 General Business Lease Agreement with IBM
Credit Corporation dated May 30, 1996
11 Earnings Per Share:
-------------------
11.1 Computation of Earnings Per Share
27 Financial Data Schedule:
------------------------
27.1 Financial Data Schedule for the quarter ended
June 29, 1996
13
<PAGE> 1
EXHIBIT 10.1
GENERAL BUSINESS LEASE AGREEMENT
[Logo] IBM Credit Corporation FAX NUMBER: 800-426-9299
Agreement No: G00266385 Quote Letter No: Q0128972401
Date Prepared: 05/30/96 Attachment No: Q0128972401
Program Name: General Business Lease Lessor Cust No: 4694568
B/O No: QZY
CUSTOMER INSTALLED AT LOCATION
Customer No: 2517288 Reference No:
Company Name: DYI HOME WAREHOUSE INC Company Name: DYI HOME WAREHOUSE INC
Address: 5811 CANNAL RD Address: 5811 CANNAL RD
CLEVELAND, OH 44125-3435 CLEVELAND, OH 44125-3435
Tel. No.: 216-328-5100 Tel. No.: 216-328-5100
Attn: Marilyn Eisele Attn: Marilyn Eisele
<TABLE>
<CAPTION>
FOR THESE RATES TO BE VALID, THIS AGREEMENT MUST BE SIGNED AND RECEIVED BY US BY: 06/29/96.
- --------------------------------------------------------------------------------------------------------------------
Trans. Maint. (A) (B) Single (C = AXB)
Description - Leased Item (Machine, Model), Financed Item Code Includ. QTY Unit Price Price
- --------------------------------------------------------- ------ ------- --- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
BAYH-24P BAYSTACK 24 PORT ETHERNE B$ 5 1,549.00 7,745.00
BA14-001 ASN 16M DRAM BASE UNIT B$ 1 4,665.00 4,665.00
BA15-001 BAY NTWRKS MULTI-CHANNEL B$ 1 14,445.00 14,445.00
BA16-001 BAY NTWRKS DUAL ETHERNET B$ 1 3,000.00 3,000.00
BA17-610 XILOGICS ANNEX 6100 B$ 1 20,995.00 20,995.00
(Additional Items may be listed on a Continuation Sheet) Page Total 50,850.00
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
(D) Total Amount Financed (E) Term in Months (F) Interim Rent (G) Payment Frequency (H) Payment Amount
(All Pages) Applies: Taxes May Apply
Monthly
815,988.00 60 NO in Arrears 16,778.00
- --------------------------------------------------------------------------------------------------------------------
Required if Checked (I) Security Deposit (J) End of Lease (EOL) (K) Commencement by:
Designation 06/96
Direct Debit / / FM / /
Security Deposit x $1 x (L) Rent Commencement
Guaranty / / 163,197.60 % / / Date:
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(*) In the State of Texas the interest rate charges will not exceed the
stated interest rate.
THIS AGREEMENT CONTAINS THE TERMS F 0R THIS TRANSACTION. BY SIGNING BELOW,
BOTH PARTIES ACKNOWLEDGE THAT THEY HAVE READ AND UNDERSTAND THIS AGREEMENT AND
AGREE TO TERMS CONTAINED ON THIS PAGE AND THE FOLLOWING PAGES. FURTHER, YOU
AGREE THAT THESE TERMS SUPERSEDE ALL PROPOSALS OR PRIOR AGREEMENTS, ORAL OR
WRITTEN, AND ALL OTHER COMMUNICATIONS BETWEEN BOTH PARTIES. DELIVERY OF AN
EXECUTED COUNTERPART OF THIS AGREEMENT BY FACSIMILE OR ANY OTHER RELIABLE
MEANS SHALL BE DEEMED TO BE AS EFFECTIVE FOR ALL PURPOSES AS DELIVERY OF THE
MANUALLY EXECUTED COUNTERPART. YOU UNDERSTAND THAT WE MAY MAINTAIN A COPY OF
THIS AGREEMENT IN ELECTRONIC FORM AND AGREE THAT A COPY PRODUCED FROM THE
ELECTRONIC FORM OR BY ANY OTHER RELIABLE MEANS (FOR EXAMPLE, PHOTOCOPY OR
FACSIMILE) SHALL IN ALL RESPECTED BE CONSIDERED EQUIVALENT TO AN ORIGINAL.
Accepted by:
IBM CREDIT CORPORATION DIY HOME WAREHOUSE INC
------------------------------
For or as Lessor: CUSTOMER
By: By: /s/ Marilyn A. Eisele
- --------------------------------- ---------------------------------
Authorized Signature Authorized Signature
Marilyn A. Eisele 06/03/96
- --------------------------------- ----------------------------------
Name (Type or Print) Date Name (Type or Print) Date
GUARANTY
To induce us to enter into this Agreement the undersigned jointly and
severally ("Guarantor(s)") unconditionally guarantees the prompt payment when
due of all the Customer's obligations to us under the Lease. We shall not be
required to proceed against the Customer or the Leased Item or enforce any
other remedy before proceeding against the Guarantor(s). The Guarantor(s)
agrees to pay all attorney's fees and other expenses incurred by us by reason
of default by the Customer or the Guarantor(s). The Guarantor(s) waives notice
of acceptance hereof and all other notices or demands of any kind to which the
Guarantor(s) may be entitled. The Guarantor(s) consents to any extensions or
modifications of the the Customer's obligations and release and/or compromise
of any obligations to the Customer or any other obligors or guarantors without
in any way releasing the Guarantor(s) from its obligations hereunder. This
guaranty shall bind the heirs, administrators, representatives, successors,
and assigns of the Guarantor(s), and may be enforced by or for the benefit of
any assignee of ours. THE GUARANTOR(S) CONSENTS TO THE JURISDICTION OF ANY
FEDERAL OR STATE COURT, LOCATED IN THE STATE OF NEW YORK, WITH RESPECT TO ANY
LEGAL ACTION COMMENCED HEREUNDER. THE GUARANTOR(S) EXPRESSLY WAIVES ANY RIGHTS
TO A TRIAL BY JURY.
X X
-------------------------------- --------------------------------
Guarantor Signature Date Guarantor Signature Date
<PAGE> 2
GENERAL BUSINESS LEASE AGREEMENT
(Continuation Form)
[Logo] IBM Credit Corporation
Agreement No: G00266385 Quote Letter No: Q0128972401
Date Prepared: 05/30/96 Attachment No: Q0128972401
Program Name: General Business Lease Lessor Cust No: 4694568
B/O No: QZY
CUSTOMER INSTALLED AT LOCATION
Customer No: 2517288 Reference No:
Company Name: DYI HOME WAREHOUSE INC Company Name: DYI HOME WAREHOUSE INC
Address: 5811 CANNAL RD Address: 5811 CANNAL RD
CLEVELAND, OH 44125-3435 CLEVELAND, OH 44125-3435
Tel. No.: 216-328-5100 Tel. No.: 216-328-5100
Attn: Marilyn Eisele Attn: Marilyn Eisele
<TABLE>
<CAPTION>
FOR THESE RATES TO BE VALID, THIS AGREEMENT MUST BE SIGNED AND RECEIVED BY US BY: 06/29/96.
- ---------------------------------------------------------------------------------------------------------------------
Trans. Maint. (A) (B) Single (C = AXB)
Description - Leased Item (Machine, Model), Financed Item Code Includ. QTY Unit Price Price
- --------------------------------------------------------- ------ ------- --- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
BA18-001 ANH 8 PORT ETHERNET B$ 16 2,946.00 47,136.00
C128-001 2.1GB SCSI DISK B$ 1 4,083.00 4,083.00
C450-001 PROLIANT 450OX 586/64MB B$ 1 2,799.00 2,799.00
R011-001 SPORTSER 28.8 EXT. MODEM B$ 16 1,894.00 30,304.00
5716-JS1 JOB SCHEDULER FOR OS/400 s 1 3,189.00 3,189.00
5716-PT1 PERFORMANCE TOOLS OS/400 s 1 3,144.00 3,144.00
5716-PW1 APP DEV TOOLSET OS/400 V s 1 4,877.00 4,877.00
5716-RG1 INT LANG ENV (R) RPG OS/ s I 4,502.00 4,502.00
5716-SS1 OPERATING SYSTEM/400 (R) s 1 32,288.00 32,288.00
5716-XA1 CLIENT ACCESS FOR OS/400 s 1 10,129.00 10,129.00
5798-TAZ TCP/IP FILE SRVR SUP OS/ s 1 660.00 660.00
6542-301 B$ 43 403.00 17,329.00
6586-37T P75 85OHF,16MB,WIN 95 B$ 27 1,919.00 51,813.00
6887-MAG B$ 16 6,044.00 96,704.00
9406-500 'LIC' SYSTEM UNIT B$ 1 109,947.00 109,947.00
9994-002 FINANCING OF NON-IBM SW T 1 316,185.00 316,185.00
9995-007 SYSTEM SERVICES AMENDMENT s 1 30,049.00 30,049.00
Page Total 765,138.00
</TABLE>
Z 125-5136-00 (04/94)
<PAGE> 3
SUPP NO.: G00266385 ADDITIONAL TERMS PAGE 3 OF 4
1. OUR OFFERINGS. Under this General Business Lease Agreement ("Agreement") we
will lease machines and finance charges listed on the face of this Agreement.
You agree to keep these Items (as specified on the face of this Agreement) free
from encumbrances of any kind, except those established by us under this
Agreement. For licensed Programs, we finance the one-time charge for the
Program license.
2. THE TRANSACTION. Each leased or financed line-item listed on the face of this
Agreement (each a "Transaction") is initiated and effective when you sign and we
accept this Agreement. When you sign this Agreement, you assign to us the
exclusive right to purchase the specified Leased Item (as specified on the face
of this Agreement) from the Supplier under the terms of the Supplier's
purchase agreement. Upon installation of the Item, you will provide us a
certificate of acceptance. At our option, the receipt of Supplier's notification
may satisfy our requirement to receive the certificate of acceptance and you
shall become fully obligated to make payments under this Agreement for the Item
at that time without having to execute any additional documents. If you fail to
provide such certificate of acceptance or we are not notified by Supplier of the
installation of the Item, we shall have no obligation to purchase, lease or
finance the Items for which such document or notification are requested. You
shall reimburse us, on demand, any sums we may have paid the Supplier and any
expenses we may have incurred in connection with such Item or Items. When we
receive and approve the certificate of acceptance or Supplier's notification, we
will pay Supplier for the Item, unless otherwise notified by you. After we pay
the Supplier for the Items, you retain all other rights, obligations and
limitations under Supplier's purchase or license agreement in effect at the
time we accept this Agreement.
3. TERM AND PAYMENT. The monthly payment amount is specified in Section "H" on
the face of this Agreement ("Payment Amount"). The Transaction will begin on the
date the item is installed or accepted by you whichever comes first
("Transaction Commencement Date"). Rent shall commence on the Rent Commencement
Date. If Section "F" indicating if Interim Rent Appilies is marked "NO" on the
face of this Agreement, the Rent Commencement Date shall be the Transaction
Commencement Date, unless otherwise indicated in Section "L" on the face of this
Agreement. If section "F" is marked "YES" the Rent Commencement Date shall be
the first day of the first full payment period following the Transaction
Commencement Date and you shall pay Interim rent for the period of time between
the Transaction Commencement Date and the rent Commencement Date, unless
otherwise indicated in section "L" on the face of this Agreement. The Interim
rent shall be based on the Payment Amount prorated based on a 30-day month. The
Interim rent shall be billed and due as specified on the first invoice. The
Initial term of the Transaction ("Term") begins on the Rent Commencement Date
and continues for the number of months in Section "E" on the face of this
Agreement.
4. PAYMENT PROTECTION. The Payment Amount stated in Section "H" on the face of
this Agreement is fixed, as long as the Transaction Commencement Date occurs
within the month stated in Section "K" on the face of this Agreement and your
Supplier does not change any Single Unit Price indicated in Section "B" on the
face of this Agreement. If your Supplier changes any Single Unit Price, we will
adjust the Single Unit Price, the Price in Section "C" and the Payment Amount in
Section "H" on the face of this Agreement.
5. DELINQUENT PAYMENTS. If you do not make a payment by its due date, you must
pay us a late charge ("Late Charge") on demand. The Late Charge is an additional
2% of the Payment Amount due or the maximum allowed by law, whichever is less.
The Late Charge will accrue on a cumulative basis until the outstanding payments
and the Late Charges are paid in full.
6. MAXIMUM RATE. It is the parties' intent to enter into a lease. If, however, a
court of competent jurisdiction determines that a Transaction is subject to
usury laws, it is the parties' intention to comply with such laws. Accordingly,
it is agreed that in no event shall any Transaction require the payment or
permit the collection of interest in excess of the maximum amount permitted by
applicable law. If any such excess interest is contracted for, charged or
received, then neither you nor any other party liable for payments under this
Agreement shall be obligated to pay such interest in excess of the maximum
amount of interest permitted by applicable law.
7. YOUR OBLIGATION TO PAY. Once effective, the Transaction cannot be canceled.
Your obligation to pay all amounts specified in this Agreement is absolute and
unconditional until fully satisfied and will not be affected by any right of
off-set or defense of any kind whatsoever. If an Item is unsatisfactory for any
reason, you will make any claims you may have solely against the Supplier under
the terms of the Supplier's purchase agreement. Once all payments due and
payable under this Agreement have been made, your obligations under this
Agreement will be satisfied.
8. SECURITY DEPOSIT. Any Security Deposit specified in "I" on the face of this
Agreement shall be held as security until you have satisfied all of your
obligations under this Agreement. We may, at our discretion, apply any Security
Deposit to cure any payment default by you under this Agreement.
9. DIRECT DEBIT AUTHORIZATION. You authorize us to initiate orders for the
payment of money ("Debit Entries") from your deposit account, the same account
on which the Security Deposit check is drawn or which is indicated on an
attached voided check, for all payments under this Agreement. You agree that
this account is and during the Term of the Lease will be maintained for business
purposes, and not for personal, family or household purposes. You agree to
notify us in writing at least sixty (60) days prior to any changes in account
information affecting the processing of Debit Entries. Both parties agree to be
bound by the National Automated Clearing House Association rules relating to
Corporate Trade Payment Entries in the administration of these Debit Entries.
Each Debit Entry amount will be the total amount from an invoice rendered at the
beginning of the calendar month plus any prior Late Charges. The Debit Entry
will be initiated on the last business day of the calendar month invoiced.
10. OWNERSHIP. All Leased Items and their associated Parts are our personal
property and you will not allow them to become a fixture or realty.
11. INSPECTION AND MARKING. Upon our request, you will permit us to inspect the
Items, their Parts, and their maintenance records. According to our
instructions, you must affix to any Leased Item any identifying labels, tags,
or plates we supply.
12. SELECTION AND USE. You are responsible for the selection of, use of, and
results obtained from, any Item. YOU REPRESENT AND WARRANT THAT THE ITEM WILL BE
USED SOLELY FOR BUSINESS OR COMMERCIAL PURPOSES AND NOT FOR PERSONAL, FAMILY,
CONSUMER OR HOUSEHOLD PURPOSES.
13. DELIVERY AND INSTALLATION. You are responsible for all of the following: a)
arranging for delivery and installation of the item; b) any delivery and
installation charges; c) inspecting the Item when delivered; d) notifying the
Supplier if any Item is not in good condition or does not correspond to
specifications; e) providing reasonable assistance to identify and correct any
defect or discrepancy; f) complying with all laws, ordinances, rules and
regulations relating to the possession, use, modification or maintenance of the
Item; and g) cooperating with us in the preparation and filing of any protective
UCC-1 financing statements evidencing our interest in the Leased Item.
14. TRANSFER OF WARRANTIES FOR LEASED ITEMS. For Leased Items, we will transfer
to you the benefit of any applicable warranties and patent and copyright
protection available under the Supplier's agreement. If you are not in default
under this Agreement, we warrant that neither we nor anyone acting or claiming
through us, by assignment or otherwise, will interfere with our quiet enjoyment
of the use of the Leased Items. EXCEPT FOR OUR WARRANTY OF QUIET ENJOYMENT, WE
MAKE NO WARRANTY, EXPRESS OR IMPLIED, ABOUT ANY MATTER, INCLUDING, BUT NOT
LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE. AS TO LESSOR, YOU LEASE THE LEASED ITEM AND TAKE ANY PROGRAM
IN AN "AS IS, WHERE IS" CONDITION. IN NO EVENT WILL WE HAVE ANY LIABILITY FOR,
NOR WILL YOU HAVE ANY REMEDY AGAINST US FOR, CONSEQUENTIAL DAMAGES, ANY LOSS OF
PROFITS OR SAVINGS, LOSS OF USE, OR ANY OTHER COMMERCIAL LOSS.
15. MAINTENANCE. You will keep and operate each Item according to the
manufacturer's specifications or recommendations. You will keep the Items in
good repair and operating condition, ordinary wear and tear excepted. For any
Transactions that include maintenance coverage (indicated under the column
headed "Maint. Includ." on the face of this Agreement), we will arrange for
basic maintenance service on the Item. Coverage will begin at the end of the
manufacturer's warranty period and discontinue at the end of the initial Term.
The cost will be included in the Payment Amount. Coverage beyond the basic
maintenance will be your responsibility. All Parts installed in connection with
warranty and maintenance services will become our property.
16. LEASED ITEM MODIFICATIONS AND ALTERATIONS. You may alter or modify any
Leased Item only with prior written notification to us. Any Lessor-owned Parts
you remove shall remain our property and you are not permitted to make such
Parts available for sale, transfer, exchange or other disposition without our
prior written consent. Before you return a Leased Item to us, you must restore
the Leased Item to its original, unaltered or unmodified condition. At your
expense, you must remove any Alteration or Modification that we do not own, and
restore any original Parts that you have removed. If we consent to a disposition
of the removed Parts, the restoration must be with Parts we own or supply, or
those supplied by a source approved by us. All Alterations and Modifications not
removed when a Leased Item is returned to us shall become our property, without
charge, free of encumbrances. You shall have no further interest in such
Alteration or Modification or its proceeds.
17. ASSIGNMENT, SUBLEASE AND RELOCATION. You are not permitted to assign,
transfer, sublease or otherwise dispose of this Agreement, any Transaction or
any Item, in whole or in part. Any attempt to do so is void. You may relocate
any Item anywhere in the United States except Arkansas, with prior notice to us.
We may assign or grant a security interest(s) in this Agreement, any Transaction
or any item, in whole or in part. Any claims you have under this Agreement may
be brought only against us, and not against our assignees.
18. END OF LEASE TRANSACTION OPTIONS. To effect an end of lease option, you
must give us one (1) month prior written notice of your desired end of lease
option. If you do not notify us of your end of lease option, or if you elect to
conclude the Transaction and a Leased Item is not returned to us within twelve
(12) days following the end of the Term, the Transaction will automatically
extend as described in Section 19 below. If you are not in default under this
Agreement, you may choose any one of the following options:
RENEW THE TRANSACTION. You may renew a Transaction with an EOL Designation (as
indicated in Section "J" on the face of the Agreement) of "FM" one or more
times, up to six (6) years from the expiration of the initial Term. The Payment
Amount will be determined using the Fair Market Rental Value of the Leased Item
projected as of the current Transaction expiration date. You may renew a
Transaction with an EOL Designation of a prestated percentage for a renewal Term
of one (1) year. The Payment Amount will be one-half (1/2) of the EOL
Designation percentage multiplied by the Single Unit Price for the Leased Item.
The renewal will be paid annually and due in advance.
PURCHASE THE LEASED ITEM. You may purchase a Leased Item at the end of the Term.
For a Leased Item with an EOL Designation of "FM", the purchase price will be
determined using the projected Fair Market Sales Value as of the Transaction
expiration date. For a Leased Item with an EOL Designation of a prestated
percentage, the purchase price will be the prestated percentage multiplied by
the Single Unit Price for the Leased Item. For a Leased Item with an EOL
Designation of "$1", the purchase price will be one dollar ($1). You will pay
any applicable taxes, Payment Amounts due through the day before the date of
purchase, any other amounts due, and you will prepay all Financed Items listed
on the face of this Agreement. Upon our receipt of all amounts due under this
Agreement, we will transfer to you our right, title, and interest in and to such
Leased Item on an "As Is, Where Is" basis. We will warrant the title
Z125-5135-05 (09/95)
<PAGE> 4
SUPP NO.: G00266385 ADDITIONAL TERMS PAGE 4 OF 4
free and clear only of all encumbrances created by us. Upon your written request
we will provide to you a bill of sale.
CONCLUDE THE TRANSACTION. You may end the Transaction on its expiration date.
You will have the Leased Items packed and available for pickup within two (2)
business days of such expiration date.
19. LEASE TRANSACTION EXTENSION. If you are not in default under this Agreement,
the Lease Transaction will automatically extend unless you notify us of your
choice of an end of lease option at least one (1) month prior to the end of the
Term or if you elect to conclude the Transaction and the Leased Item is not
returned to us within twelve (12) days following the end of the Term. The
extension will be under the same terms and conditions then in effect, except
that for Leased Items with an EOL Designation of "FM", the Payment Amount will
not be less than the Fair Market Rental Value. The extension will continue until
terminated by either party with one (1) month's prior written notice or six (6)
years after the expiration of the initial Term, whichever comes first.
20. RETURN OF A LEASED ITEM. Unless otherwise agreed, you will be responsible
for all of the following: a) arranging for the deinstallation and return of a
Leased Item, freight prepaid, to a location we specify in the continental United
States; b) the cost to qualify any Leased Item for the manufacturer's machine
maintenance service, if available, or the cost to return any Leased Item to good
repair and operating condition if the manufacturer does not offer machine
maintenance service; and c) the cost of any Part or accessory that is not
returned.
21. RISK OF DAMAGE, LOSS OR THEFT. We will pay for, and maintain insurance
covering verified theft of, or damage to, the Leased Items ("Casualty Loss").
The deductible will be $5,000 per incident per location. In the event of a
Casualty Loss, you will promptly notify us. If the Casualty Loss occurs before
the Transaction Commencement Date, the Transaction will terminate without
penalty. If the Casualty Loss occurs on of after the Transaction Commencement
Date and we determine that the Leased Item can be economically repaired, you
will have it repaired and we will reimburse you the reasonable cost of the
repair, less the deductible. If the Leased Item can not be economically
repaired, you will pay us the lesser of $5,000 or the Fair Market Sales Value of
the Leased Item immediately before the Casualty Loss occurred. The Transaction
will terminate effective as of the date of the Casualty Loss. At the expiration
of the Transaction Term, if you claim a loss or theft of a Leased Item but have
no police or fire department report to substantiate the loss or theft, we will
consider it an end of lease purchase. You will pay the full purchase price as of
the end of the Term. The insurance and $5,000 deductible will not apply.
22. TAXES AND ADDITIONAL CHARGES. You will pay, as additional Payment Amount,
all taxes and charges levied by any government body in connection with any
Transaction. If requested by us or required by a government body, you will make
these payments directly to the government body and upon request, you will
provide us with proof of payment. If you do not, we reserve the right to make
the payment, whereupon you will reimburse us for the tax or charge and all
related costs. You will not be responsible for taxes based on our net income on
any Item.
23. INDEMNITY. This Agreement is a net lease. You indemnify us for any action,
liability, claim, damage, and expense ("Claim") regarding any matter arising out
of the Transaction, including reasonable legal and collection fees and expenses.
You agree that, upon notice from us of the Claim, you shall assume full
responsibility for the defense the Claim. You shall not be responsible for any
Claim that results only from our sole negligence or willful misconduct. Your
payment shall be in an amount such that after we pay any required taxes,
including taxes on or measured by our net income, the balance will equal the
Claim. The obligations under this Section will survive the expiration or
termination of the Transaction.
24. LIABILITY INSURANCE. You will obtain and maintain liability insurance and
name us as additional insured and loss payee. We shall credit any insurance
benefits paid to us against your obligations under this Agreement. Upon our
request, you will provide us proof of insurance.
25. SUBSTITUTE PERFORMANCE. If you do not maintain liability insurance, pay
taxes and charges as required under this Agreement or discharge any encumbrance
created by you on any Item, we reserve the right to substitute performance. You
will pay us the cost thereof, as additional Payment Amount, together with all
fees and expenses we incur rendering substitute performance on your behalf.
26. AUTHORIZATION TO SIGN FINANCING STATEMENTS. You authorize us to act as your
agent and attorney-in-fact for the limited purpose of preparing, executing in
your name, and filing on your behalf, financing statements or other documents
covering the Transaction for the purpose of evidencing our interest in an Item.
27. EVENTS OF DEFAULT. You will be in default if: a) you do not pay any amount
due under this Agreement within seven (7) days after its due date; b) you
encumber, pledge, sell, assign, transfer, or dispose of this Agreement, any
Transaction or any Lease Item or its Parts; c) you fail to maintain insurance as
required under this Agreement; d) you or any Guarantor of your obligations under
this Agreement make any misrepresentation in a credit application you give us;
e) you make an assignment for the benefit of creditors; f) a trustee or receiver
is appointed for you or for a substantial part of your property, with or without
your consent; g) any petition or proceeding is filed by or against you under any
bankruptcy, insolvency, or similar law; h) you or any Guarantor of your
obligations under this Agreement cease doing business; or i) you or any
Guarantor of your obligations under this Agreement breach any other provision
of this Agreement or of any guaranty of your obligations under this Agreement,
or any other agreement with us, and that breach continues for fifteen (15)
days after we send you written notice.
28. REMEDIES. If you are in default, we may do one or more of the following:
a) declare the Transaction to be in default and all amounts that are due or will
be due under this Agreement to be immediately due and payable; b) terminate the
Transaction; c) recover from you all amounts that are or will be due; d) attempt
to satisfy amounts due with any Security Deposit or any other collateral
pledged as security; e) repossess or render unusable any or all Items and retain
all payments made as partial compensation for their use and depreciation; f)
require you, at your expense, to assemble and ship any Item to a location we
specify; g) require you to pay an amount equal to then current Payment Amount
prorated based on a 30-day month, for each day any Item is not returned after
the twelfth (12th) day following our request for the Item's return; h) recover
from you all attorney's fees and legal expenses incurred in exercising any of
our rights under this Agreement. If we repossess a Modification, you are
responsible for restoring the remaining machine, at your expense, to good
working order. Upon repossession or return of an Item following a default, we
will dispose of it in a commercially reasonable manner. We will apply the net
proceeds of such a disposition to the unpaid amounts due under the Transaction,
after deducting the following from the proceeds of the disposition: a) in case
of a sale, the estimated Fair Market Sales Value of the Leased Item as of the
scheduled expiration of the Transaction; b) in case of a subsequent lease, the
rental amounts due for any period beyond the scheduled expiration of the
Transaction; and c) our expenses for the repossession and disposition,
including reasonable attorney's fees and expenses. You will pay us any
deficiency between the net proceeds and the unpaid amounts due. We will retain
any excess net proceeds. We may pursue any other remedy available at law or in
equity.
29. INVALID OR UNENFORCEABLE PROVISIONS; NO WAIVER. If any provision of this
Agreement is held to be invalid or unenforceable, all other provisions remain in
effect. If we fail to require full performance or if we waive any provision in
this Agreement, that shall not prevent us from requiring full performance of all
provisions in the future.
30. CHANGES. You authorize us to complete any identification information for any
listed Item on the face of this Agreement without further authorization from
you. You also authorize us to modify the Single Unit Price, Price and Payment
Amount on the face of this Agreement if your Supplier changes its price to you
for any Item. For any other changes to this Agreement to be valid, both parties
must mutually agree in writing.
31. NOTICES. All notices, consents, and approvals from us will be given by us or
by IBM. They will be delivered personally or mailed to the address specified
on the face of this Agreement or in your monthly billing statement. Notices and
requests from you to us must be submitted to the inquiry at address on your
periodic invoice.
32. YOUR ADDITIONAL REPRESENTATIONS. You represent and convenant that you and
any Guarantor of your obligations under this Agreement are, for Financed Items
located in: a) Ohio, Maryland, Mississippi, Virginia, or West Virginia, a
corporation as defined by the applicable state law; b) Pennsylvania, a business
corporation as defined by Pennsylvania laws; and c) Alabama or Wisconsin, not
purchasing the Financed Item for agricultural purposes.
33. GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. BOTH PARTIES TO THIS
AGREEMENT WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING,
COUNTERCLAIM OR ON ANY MATTER ARISING OUT OF, IN CONNECTION WITH, OR RELATED TO
THIS AGREEMENT.
34. DEFINITIONS.
ALTERATION is any change made to an Item that deviates from the manufacturer's
design.
DEDUCTIONS are the maximum Accelerated Cost Recovery System deductions for
5-year property and/or deductions for interest expense incurred to finance the
purchase of Leased Items, as defined under the Internal Revenue Code of 1986,
as amended.
FAIR MARKET RENTAL VALUE is the value that would be obtained in an arm's length
transaction between an informed and willing lessee and lessor under no
compulsion to lease.
FAIR MARKET SALES VALUE is the value that would be obtained in an arm's length
transaction between an informed and willing buyer and seller under no compulsion
to buy or sell.
FINANCED ITEM is any item you finance with us under the terms of this Agreement
and is listed on the face of this Agreement with a Trans. Code of S or T.
IBM is International Business Machines Corporation.
ITEM is a Leased or Financed Item.
LEASED ITEM is any item you lease from us under the terms of this Agreement and
is listed on the face of this Agreement with a Trans. Code of B, B', B+, B$, C,
C', C+, C$ or L.
MODIFICATION is any manufacturer's field installable upgrade, feature, or
accessory added to any Leased Item or Financed Item.
PART is any portion or integral element of a Leased Item.
PROGRAM is the following, including features and any whole or partial copies: a)
machine-readable instructions; b) a collection of machine-readable data, such
as a data base; and c) related materials, including documentation and listings,
in any form. The term "Program" includes any Program we finance under this
Agreement.
SUPPLIER is the provider of the Item.
YOU, YOUR or LESSEE refer to you, our Customer.
WE, US, OUR or LESSOR refer to: a) IBM Credit Corporation ("IBM Credit"), its
subsidiaries or affiliates; b) a partnership in which IBM Credit is a partner;
c) a business enterprise for which IBM Credit is an agent; or d) a corporation
affiliated with or which files a consolidated or combined tax return with IBM
Credit.
Z125-5135-05 (09/95)
<PAGE> 1
EXHIBIT 11.1
D.I.Y. HOME WAREHOUSE INC.
FORM 10-Q
COMPUTATION OF EARNINGS PER COMMON SHARE
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 29, July 1, June 29, July 1,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Income applicable to common shares $2,029,585 $2,135,002 $1,920,794 $2,638,253
========== ========== ========== ==========
Weighted average common shares
outstanding for the period 7,625,000 7,625,000 7,625,000 7,625,000
Dilutive effect of exercise of stock
options -- -- -- --
---------- ---------- ---------- ----------
Weighted average common shares,
assuming issuance of the above
securities 7,625,000 7,625,000 7,625,000 7,625,000
========== ========== ========== ==========
Earnings per common share:
Primary $ 0.27 $ 0.28 $ 0.25 $ 0.35
Full diluted $ -- $ -- $ -- $ --
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-START> DEC-31-1995
<PERIOD-END> JUN-29-1996
<CASH> 1,102
<SECURITIES> 0
<RECEIVABLES> 75
<ALLOWANCES> 0
<INVENTORY> 44,772
<CURRENT-ASSETS> 47,325
<PP&E> 49,324
<DEPRECIATION> 8,573
<TOTAL-ASSETS> 88,704
<CURRENT-LIABILITIES> 23,760
<BONDS> 28,484
<COMMON> 22,913
0
0
<OTHER-SE> 12,448
<TOTAL-LIABILITY-AND-EQUITY> 88,704
<SALES> 88,669
<TOTAL-REVENUES> 88,669
<CGS> 63,189
<TOTAL-COSTS> 63,189
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,338
<INCOME-PRETAX> 4,375
<INCOME-TAX> 1,737
<INCOME-CONTINUING> 2,638
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,638
<EPS-PRIMARY> 0.35
<EPS-DILUTED> 0.35
</TABLE>
