Back to GetFilings.com

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-K

FOR ANNUAL AND TRANSITION REPORTS

PURSUANT TO SECTIONS 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: March 1, 2003

For the transition period from                      to                      .

Commission File Number: 0-24390

WOODWORKERS WAREHOUSE, INC.

(Exact name of Registrant as Specified in Its Charter)

(781) 853-0900

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.01 par value

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 by check mark if disclosure of delinquent filers pursuant to Rule 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to the Form 10-K. ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes ¨ No x

State the aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant and indicate the number of shares outstanding of each of the registrant’s shares of common stock, as of the last business day of the registrant’s most recently completed second fiscal quarter: Shares of the registrant’s outstanding common stock were issued pursuant to the First Amended Joint Reorganization Plan of Trend-Lines, Inc. (the predecessor of the registrant) and the Official Committee of Unsecured Creditors on November 1, 2002 and there were no issued and outstanding shares of the registrant’s common stock as of the last business of the registrant’s most recently completed second fiscal quarter. As of March 1, 2003, 5,633,006 shares of the

registrant’s common stock, par value $0.01 per share, were issued and outstanding. The company has reserved 6,986 shares common stock for issuance to former creditors of Trend-Lines, Inc. whose bankruptcy claims have not yet been settled. As of the date of this report on Form 10-K, there is no established public trading market for the registrant’s common stock and an aggregate market value cannot be calculated at this time.

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes x No ¨

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive proxy statement for its 2003 annual meeting of stockholders, which will be filed in accordance with Rule 14a-101 of the Exchange Act, are hereby incorporated by reference into Items 10, 11, 12, and 13 of Part III of this report on Form 10-K.

CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS

This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties and are based on the beliefs and assumptions of management of Woodworkers Warehouse, Inc., based on information currently available to management. The use of words such as “believes,” “expects,” “anticipates,” “intends,” “plans,” “estimates,” “should,” “likely” or similar expressions, indicates a forward-looking statement.

Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. Future results may differ materially from those expressed in the forward-looking statements. Many of the factors that will determine these results are beyond the ability of Woodworkers Warehouse, Inc. to control or predict. Stockholders are cautioned not to put undue reliance on any forward-looking statements. For those statements, Woodworkers Warehouse, Inc. claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

For a discussion of some of the factors that may cause actual results to differ materially from those suggested by the forward-looking statements, please read carefully the information under “Cautionary Statements” beginning on page 19.

The identification in this document of factors that may affect future performance and the accuracy of forward-looking statements is meant to be illustrative and by no means exhaustive. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty.

2

ITEM 1. BUSINESS

Introduction

We are Woodworkers Warehouse, Inc. (“we,” “us” or the “Company”). On October 29, 2001 (the “Effective Date”), we emerged from Chapter 11 bankruptcy following a reorganization which included the sale of certain non-core businesses and a merger with our predecessor and parent company, Trend-Lines, Inc. (the “Merger”), in which we were the surviving entity. Our business is now focused on our Woodworkers Warehouse stores and catalogs.

Bankruptcy Reorganization

On August 11, 2000, Trend-Lines, Inc. filed petitions in the United States Bankruptcy Court for the District of Massachusetts (the “Bankruptcy Court”) under Chapter 11 of the United States Bankruptcy Code. The First Amended Joint Reorganization Plan of Trend-Lines, Inc. and the Official Committee of Unsecured Creditors, as modified by the Joint Motion to Approve Nonmaterial Modification to the First Amended Joint Reorganization Plan of Trend-Lines, Inc. and the Official Committee of Unsecured Creditors (the “Plan”) was confirmed by the Bankruptcy Court on October 17, 2001. On the Effective Date, all of Trend-Lines Inc.’s shares of Class A Common Stock, Class B Common Stock, preferred stock, treasury stock, and outstanding stock options were cancelled. Under the Plan, we issued shares of our new common stock, par value $0.01 per share (“Common Stock”) to certain former unsecured creditors of Trend-Lines, Inc. and to certain members of our management. The Bankruptcy Court has not yet issued a final decree, and such decree is delayed by, among other things, the fact that we have not yet been able to pay a $2.0 million cash settlement to the former unsecured creditors of Trend-Lines, Inc.

Treatment of Claims Under the Plan

The following is a summary of the treatment of the different classes of creditor claims under the Plan. This description is qualified in its entirety by the Plan, a complete copy of which is filed as an exhibit to our report on Form 8-K, as filed with the Securities and Exchange Commission (“SEC”) on October 31, 2001.

Class 1: Bank of America Bank Credit Facility

On October 29, 2001, we paid the outstanding balance of Trend-Lines, Inc.’s debtor-in-possession financing in connection with our entering into a new $30 million senior secured revolving credit facility with Bank of America as Agent.

Class 2: Other Secured Claims

These secured claims consisted of various vendors from whom we leased furniture, fixtures and equipment for retail stores and corporate offices. These creditors received (a) some or all of the collateral securing their respective leases, (b) cash in an amount equal to the proceeds received from the sale of such collateral or (c) such other treatment as was agreed upon by Trend-Lines, the creditors committee and the respective holders. If the value of the collateral securing a Class 2 claim was less than the total amount of the claim, the difference was treated as a Class 5 general unsecured claim (see description below).

Class 3: Other Priority Claims

These were claims other than administrative, professional fee or priority tax claims entitled to priority treatment pursuant to Section 507(a) of the Bankruptcy Code. All of the administrative and professional fee claims and most of the priority tax claims were paid in Fiscal 2001.

Class 4: Convenience Claims

These were unsecured claims that were equal to or less than $2,000 or were reduced to $2,000 pursuant to the election by the claim holder. Each holder of a Class 4 claim received a cash payment in an amount equal to 25% of such claim.

Class 5: General Unsecured Claims

These were pre-petition trade claims, reclamation claims and other general unsecured claims and were deemed to be impaired by the Plan. Each holder of a Class 5 claim was entitled to receive in full satisfaction of such allowed claims, its pro rata share, based on the principal amount of each holder’s claim, of (a) $2,000,000 on January 15, 2002 and (b) 5,280,000 shares of new Common Stock on October 29, 2001. After consultation with claimants representing a majority of the dollar value of these claims,

3

we deferred payment of the $2,000,000. As of the date hereof, we have not made any cash payments to settle the Class 5 claims because of restrictions under our credit facility.

Class 6: Common Stock Equity Interest and Claims

On the Effective Date, all former common stock equity interests of Trend-Lines, Inc. were extinguished and the certificates and all other documents representing such common stock equity interests were deemed cancelled and of no force or effect. The holders of the common stock equity interests of Trend-Lines, Inc. did not receive or retain any interest or property under the Plan.

History

We are a specialty retailer of power and hand tools and accessories, primarily for use in woodworking and light construction. Our principal executive offices are currently located at 126 Oxford Street, Lynn, Massachusetts, 01901 and our telephone number is (781) 853-0900.

In 1983, Trend-Lines, Inc. began mailing catalogs and opened a Woodworkers Warehouse outlet in its distribution center. The first Woodworkers Warehouse retail store was opened in 1986. As of March 1, 2003, we operated 95 Woodworkers Warehouse stores. Our stores are located in the New England and Mid-Atlantic regions. In 1999, we also began selling our merchandise on our web site, www.woodworkerswarehouse.com.

Pursuant to the Plan, Trend-Lines, Inc. disposed of its Golf Day retail stores, Golf Day mail order catalog and GolfDay.com web site during the third and fourth quarters of the fiscal year ended February 24, 2001 (“Fiscal 2000”) and did not operate any Golf Day stores in the fiscal year ended February 23, 2002 (“Fiscal 2001”).

Payments to Bank of America

From the date Trend-Lines, Inc. filed its petition in bankruptcy through our emergence from bankruptcy, we paid Bank of America a total of $39,343,753, comprised of the following:

Upon emerging from bankruptcy, we entered into a $30 million senior secured credit facility with Bank of America as Agent, which matures on October 30, 2003 (the “Credit Facility”). For a description of the Credit Facility, see “Liquidity and Capital Resources,” page 16.

The Woodworking Industry

According to a “Woodworking in America”^TM survey sponsored in 1998 by the American Woodworker Magazine (the “Woodworking Survey”), approximately 11% of the United States adult population, or nearly 20.5 million people at that time, were involved in woodworking activities, spending more than $7.8 billion annually on equipment and accessories used specifically for woodworking projects. Major items in this category included: power tools; wood finishes; hand tools; blades, bits and cutters; glue and adhesives; abrasives; sharpening equipment; books; and other equipment and supplies. Approximately 43% of the total amount or $3.3 billion was used to purchase power tools.

Woodworkers range from home workshop enthusiasts to professionals involved in a wide variety of activities, including home construction and remodeling, cabinet and furniture making and other woodworking projects. Advanced woodworkers participate in activities that require a high skill level, such as cabinet making, architectural woodworking, furniture making, millwork and veneering. According to the Woodworking Survey, the typical woodworker has been involved in woodworking for an average of approximately 15 years and the typical woodworker has spent an average of more than six hours per week in their workshop. Further, as interest and/or skill levels increase, a wider variety and selection of merchandise and availability of hard-to-find items and well-known brand name products become more important to the woodworking customer.

Current Business Strategy

Our business strategy is primarily focused on our stores (our catalog business was approximately 3% of our total Fiscal 2002 sales — see Note 15 of our consolidated financial statements included in this report commencing at page F-1). We are seeking to enhance our position as a leading specialty retailer of power and hand tools and accessories and to achieve future growth. The key elements of our business strategy are as follows:

4

Selected openings of retail store operations. We intend to focus our retail store openings in existing markets or markets in close proximity to those in which we currently operate to take advantage of our centralized distribution system and current marketing programs. We opened one new store and closed four underperforming stores in the 53 weeks ended March 1, 2003 (“Fiscal 2002”) and we closed one additional underperforming store in April 2003. Although we anticipate opening and relocating stores in the future, we can make no assurances as to when or if we will open or relocate any such stores. Under the terms of the Credit Facility, we are limited to only opening stores to the extent they replace closed stores.

Complementary catalog and web operations. We continue to actively pursue catalog and web sales. Our name recognition combined with the customer base and market knowledge that have resulted from our catalog and web operations may facilitate future expansion of our retail stores. We may use catalog and web sales information to, among other things, help identify new store markets and assist in determining the appropriate product mix for our retail stores.

Cost-effective operations. We strive to have low costs of operations. We implemented many expense-reduction initiatives in Fiscal 2002 and we continue to improve our operating efficiency. We believe these steps have allowed us to put competitively-priced products on the market.

Low prices and matching product/price guarantee. Our competitive pricing strategy primarily features special sales and promotions in our store flyers mailed to our customers generally on a monthly basis as well as competitive everyday prices on most items. We also offer a guarantee to match competitor prices on the same product.

Expert customer service. We train our employees to explain and demonstrate the use and operation of our merchandise to customers and to develop good salesmanship. Their skills are developed through on-the-job training combined with the use of Company-developed manuals. Sales personnel attend in-house training sessions conducted by experienced sales people or manufacturers’ representatives and receive sales, product and other information in periodic meetings with managers.

Convenience. We strive to maximize convenience to our store customers by providing ample parking and fast in-and-out service. Customers can also order products from our store flyers by calling a toll-free number and on the Internet by visiting our web site.

Products and Merchandising

We offer our customers breadth and depth of product selection, including many hard-to-find items, high-quality brand name and private-label merchandise, competitive promotional prices, everyday low prices on certain items, a matching product/price guarantee, expert customer service, and convenience. With this strategy we believe we are able to compete successfully against major home centers, mass merchandisers, hardware stores and other sellers of our merchandise.

Our stores primarily carry woodworking machinery, portable power and hand tools and accessories. We select products based on quality, value, durability, historic product demand, safety and customer appeal. We also offer a tool repair service that we outsource to a third-party service company. We constantly monitor our customers’ product preferences through inventory and sales data, including data provided by our catalog and web operations.

Our stores, catalogs and web site serve a wide range of woodworking tool customers, from home workshop enthusiasts to professionals. Our customers are seeking hand and power tools to help them with a wide variety of activities, including home construction and remodeling, cabinet and furniture making and other woodworking projects. Our customers are generally experienced in woodworking and carpentry and desire high quality and performance brand name tools.

Business Segments

Retail Store Operations

We design our stores to be destination stores and maximize convenience to our customers by providing ample parking and fast in-and-out service. As of March 1, 2003, we operated 95 stores located in the following states: 24 in New York, 11 in Pennsylvania, 17 in Massachusetts, 12 in New Jersey, 11 in New Hampshire, seven in Connecticut, seven in Maine, three in Delaware, two in Rhode Island, and one in Vermont. Most of our stores are located in strip malls.

Catalog Operations

Prior to Fiscal 2000, Trend-Lines, Inc. produced four versions of each of the Trend-Lines and Golf Day catalogs annually. After Trend-Lines, Inc. filed for bankruptcy in Fiscal 2000, it produced one version of the Trend-Lines and Golf Day catalog and mailed approximately 8 million copies of the Trend-Lines catalog and approximately 5 million copies of the Golf Day catalog. In

5

Fiscal 2001, we produced one Woodworkers Warehouse catalog and mailed it to 1.2 million customers. In Fiscal 2002, we mailed smaller versions of our catalog to fewer customers several times in an attempt to reduce costs and expenses while targeting catalog mailings to persons most likely to purchase our products based on previous purchase experience.

We mail catalogs to persons on our mailing list, persons who have requested them, and persons on lists which we rent from or exchange with compatible companies. We prospect for new customers by testing new mailing lists, media and other programs to cost-effectively increase the size of our proprietary customer mailing list. We also strive to generate more incremental revenue from existing customers. We analyze what we sell at our retail stores and in our catalog, and based on this analysis and through our stock status system we monitor the mix of products to maximize profitability and satisfy our customers’ needs. We design our mailings in-house with desk top publishing equipment.

We employ a sophisticated call management distribution system via our incoming toll-free “800” numbers. This system distributes catalog orders and customer inquiries to trained customer service representatives and provides detailed call reporting and analysis. Currently, we use an outside call center to receive and transmit catalog orders and phone orders from our store flyers. We also provide technical assistance to our customers on a toll-call basis. We usually ship catalog orders within 48 hours after receipt and offer express delivery at additional cost to the customer.

For financial information on each of our business segments for the last two fiscal years, please refer to Note 15 of our consolidated financial statements at pages F-26 and F-27.

E-Commerce

Our woodworkerswarehouse.com web site augments our store and catalog operations. We accept orders from our web site and integrate them directly into our fulfillment system for shipment. These sales do not currently constitute a material portion of our revenues.

Marketing and Advertising

We promote retail store sales primarily through direct-mail flyers, store “events,” demonstrations and promotions, Woodworkers Warehouse proprietary credit card offers and point-of-sale materials posted and distributed in our stores. Our stores conduct monthly events such as sidewalk sales, woodworking clinics and vendor-sponsored promotions. We promote catalog sales by catalog mailings.

We measure the results of all of our marketing and advertising programs to determine future programs and expenditures.

Suppliers

Our business relies on major vendors with well-known brand names, as well as smaller specialty vendors. In Fiscal 2002, 29% of our purchases were made with one vendor. We have, from time to time, extended our payment terms with certain of our vendors (see “Overview,” at page 13), including the vendor referred to above. Based upon our cash projections, we expect that we will need to further extend payment terms with these key vendors at certain times during our fiscal year ending February 28, 2004 (“Fiscal 2003”). Notwithstanding these payment extensions, we believe our vendor relationships are satisfactory.

In Fiscal 2002, we purchased approximately 7% of our products from overseas vendors. Tool products sold under our private labels are purchased from overseas vendors, a majority of which are from Taiwan and, to a lesser extent, Korea, China, England, Hong Kong, Sweden, Japan and Germany. This portion of our business is subject to the risks generally associated with conducting business abroad, including adverse fluctuations in currency rates, changes in import duties or quotas, the imposition of taxes or other charges on imports, and disruptions or delays in shipment or transportation. To date, these factors have not had a material adverse impact on our operations.

Product Distribution

Our distribution center (DC) is a 99,000 square-foot center in Amesbury, Massachusetts. Our DC serves all of our retail stores and our catalog and web business. The location of our DC allows us to maintain and restock our store inventories promptly and efficiently, typically once per week.

Management Information Systems

Our management information systems, primarily based in our headquarters, consist of a full range of retail, financial and merchandising systems and include inventory distribution and control, order fulfillment and inventory replenishment, staffing, sales

6

and marketing analyses and financial and merchandise reporting. We have an in-store point-of-sale (POS) computer system which provides transactional data to management on a daily basis. We track store sales and forecast inventory requirements, and automatically replenish merchandise to each of our stores. Our inventory control system allows us to consider store sales through the close of business of the previous day when processing weekly store replenishment. We are making additional enhancements to our inventory replenishment software in Fiscal 2003 to improve the accuracy and timeliness of the allocation of inventory to our stores.

We also have a management information system which supports our catalog and web-based sales by assisting with our plans for merchandise purchases and subsequent sales and delivery to our customers’ homes. This system allows us to manage our catalog and customer Internet database. By tracking and analyzing this database we can focus our catalog mailings on persons most likely to purchase our product, analyze merchandise trends and buying patterns, and track the effectiveness of customer promotional merchandising.

Competition

We experience competition in all aspects of our business operations, including competition for customers, locations and products. Our primary competitors include: home improvement stores; electrical, plumbing and building materials supply houses; lumber yards; local, regional and national hardware stores; and mail-order specialty catalogs and websites. Our business is highly competitive and we may face new types of competitors if we enter new markets or lines of business.

Many competitors are substantially larger and have greater financial and other resources than we do. The entrance of new competitors or the expansion of operations by existing competitors in our market areas could have a material adverse effect on our results of operations. We do not expect there to be any new large-scale specialty competitors in the near future due to the nature of our business.

We believe we can compete effectively on the basis of our promotional prices and everyday low prices on certain items, selection and service, all of which allow us to attract customers to our stores. We believe we differentiate ourselves from most of our competitors through knowledgeable customer service and the breadth and depth of our brand-name product selection.

Seasonality

The specialty retail industry is seasonal in nature, with a high proportion of sales and operating income generated in the November and December holiday season. As a result, our operating results are significantly affected by the holiday selling season and other seasonal factors, such as adverse weather conditions during peak months for sales.

Registered Trademarks and Service Marks

We have registered the Woodworkers Warehouse trademark. We intend to continue to register, when we deem it appropriate, trademarks, trade names and service marks that are important to our business.

Regulatory Matters

Our catalog business is subject to the Merchandise Mail Order Rule and related regulations promulgated by the Federal Trade Commission, which prohibit unfair methods of competition and unfair or deceptive acts or practices in connection with mail order sales, and require sellers of mail order merchandise to conform to certain rules of conduct with respect to shipping dates and shipping delays. Management believes we are in compliance with such regulations.

Research and Development

We incurred no expenses related to research and development activities during Fiscal 2002, 2001 and 2000.

Employees

We rely on many part-time, flex-time and seasonal employees to meet our needs. As of March 1, 2003, we employed 589 non-union persons, of whom 401 were full-time and 188 were part-time. We consider our employee relations to be satisfactory.

7

ITEM 2. PROPERTIES

We sold our owned facility located in Seabrook, New Hampshire for approximately $700,000 in Fiscal 2002 and leased back a portion of the premises for a store we currently operate at that location. The net proceeds from the sale were utilized to pay down the Credit Facility.

On June 29, 2001, we sold the lease governing our then principal executive offices and distribution center in Revere, Massachusetts for $4,500,000 and the assumption of certain related outstanding obligations. The Revere space totaled approximately 286,000 square feet.

At the same time as the sale of the Revere facility lease, we entered into a lease for our new distribution center in Amesbury, Massachusetts, and a lease for our new corporate headquarters in Lynn, Massachusetts. The Fiscal 2003 annualized rent, square footage and term expiration dates of these leases, excluding lease renewal options, are set forth in the following table.

As of March 1, 2003, we operated 95 stores, all of which are leased. We closed four underperforming stores in Fiscal 2002 and an additional underperforming store in April 2003 as a result of our decision not to renew the lease. One underperforming store is currently scheduled to be relocated and another to be closed later in Fiscal 2003. Our typical store lease provides for an initial term of five to ten years, with renewal options permitting us to extend the term. In each case we pay fixed annual rent. Most of our leases provide for an increase in annual fixed rental payments during the lease term and allow us to terminate the lease before the end of the term without penalty if we provide proper notice. Most leases require us to pay real estate taxes, maintenance and repair costs, insurance, utilities and, in shopping center locations, our portion of common area operating costs. As of March 1, 2003, our leases, excluding lease renewal options, were scheduled to expire as follows:

We are in the process of negotiating rent reductions for a significant number of our store leases and have succeeded in reducing future rents by approximately 10% in about 15% of our stores as of May 16, 2003. In most of these cases we are not modifying other provisions of the leases.

ITEM 3. LEGAL PROCEEDINGS

Our predecessor, Trend-Lines, Inc. filed a petition in the Bankruptcy Court on August 11, 2000. The Plan was confirmed by the Bankruptcy Court on October 17, 2001 and the Plan’s Effective Date was October 29, 2001. On the Effective Date, we emerged from bankruptcy as the surviving entity of the Merger (see “Introduction,” at page 3). A final decree has not been entered by the Bankruptcy Court at this time, and such a decree is delayed by, among other things, the fact that we have not been able to make the required $2 million payment to the former unsecured creditors of Trend-Lines, Inc.

Management believes that except for the bankruptcy, any other legal actions that are pending against the Company have arisen in the ordinary course of business and that the liability which may result from any such action would not have a material adverse impact on our consolidated financial statements.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

8

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Pursuant to the Plan, on November 1, 2002, we issued 5,273,006 shares of our Common Stock to the former unsecured creditors of Trend-Lines, Inc. These shares were deemed to have been issued as of the Effective Date. We have reserved 6,986 shares of Common Stock for issuance to former creditors of Trend-Lines, Inc. whose bankruptcy claims have not yet been settled. In addition, on November 1, 2002 we issued 360,000 shares of Common Stock to certain executive officers in accordance with the terms of employment agreements that were approved under the Plan.

On December 16, 2002, Porter-Cable Corporation rejected delivery of the 1,180,480 shares of Common Stock that it was entitled to receive as an unsecured creditor under the Plan and has disclaimed beneficial ownership of such shares. Pursuant to the provisions of the Plan, these shares were deemed “undeliverable distributions” and are being held by our transfer agent and voted at the direction of our board of directors until such shares are retired in November 2003.

Market Information

Our Common Stock is not currently listed on any exchange nor is it quoted by any automated quotation system. Since our emergence from bankruptcy in October 2001, there has been no public trading market for our Common Stock.

The market information described below is related to the Class A Common Stock of our predecessor, Trend-Lines, Inc., whose Class A Common Stock was included in the Nasdaq National Market under the symbol “TRND” until September 12, 2000, when it was delisted. The below listed price information for periods before September 12, 2000 are as reported by the Nasdaq National Market and the price information after September 12, 2000 was quoted by a dealer participating in the over-the-counter market (these prices may reflect inter-dealer prices, without retail mark-up, mark down or commissions and may not reflect actual transactions).

The market information in the table below is not related to our Common Stock and it should not be read to be indicative of the future performance of our Common Stock.

Holders

As of March 1, 2003, there were 5,633,006 shares of Common Stock issued and outstanding (including the 1,180,480 shares of Common Stock being held by our transfer agent discussed above) and approximately 675 stockholders of record.

Dividends

We have never declared or paid any dividends. In addition, the Credit Facility restricts our ability to pay cash dividends. We do not anticipate paying any cash dividends in the foreseeable future.

9

Equity Compensation Plan Information as of March 1, 2003

Effective November 27, 2001, we established a long term incentive plan (“Incentive Plan”) which provides for grants of stock options, stock appreciation rights and restricted stock. We have reserved 1,500,000 shares of Common Stock for awards under the Incentive Plan. Under the Incentive Plan, stock options are granted at 100% of the fair market value of the Common Stock on the date of the grant. As of the Effective Date, the fair market value of our Common Stock was determined to be $0.26 per share based upon a valuation performed by an independent third party in conjunction with our emergence from bankruptcy. Options granted under the Incentive Plan generally vest over a three year term with 33% vesting on each anniversary of the grant date. All vested options are exercisable for a period of ten years from the date of grant.

Equity Compensation Plan Table

The following table contains information about the shares of Common Stock underlying options granted under the Incentive Plan as of March 1, 2003.

10

ITEM 6. SELECTED FINANCIAL DATA

We emerged from Chapter 11 bankruptcy on October 29, 2001 following a reorganization which included the sale of certain non-core businesses. For financial reporting purposes, October 27, 2001 was considered the emergence date as it was a period-end date and activity for the two days was immaterial. For financial reporting purposes, Fiscal 2001 was segregated into two periods: the four months ended February 23, 2002 and the eight months ended October 27, 2001. For purposes of Items 6 and 7 of this report, Trend-Lines, Inc. is referred to as the “Predecessor” with respect to periods prior to the Effective Date and Woodworkers Warehouse, Inc. is referred to as the “Successor” with respect to periods as of and after the Effective Date. Upon our emergence from bankruptcy, we adopted fresh start accounting. The financial statements were prepared in accordance with the American Institute of Certified Public Accountants Statement of Position 90-7: “Financial Reporting by Entities in Reorganization Under the Bankruptcy Code” (“SOP 90-7”). SOP 90-7 required us to use the purchase method of accounting and therefore we recorded the assets and assumed liabilities of the reorganized company at fair value as of October 27, 2001. Accordingly, the accompanying balance sheets as of March 1, 2003 and February 23, 2002 are not comparable in certain material respects to such balance sheet as of any prior period since the balance sheets as of those dates are that of a reorganized entity.

The following table sets forth certain financial data with respect to the Successor and Predecessor for each of the last five fiscal years (in 000’s except for share and per share amounts).