~ PUBLIC COMPANY PROFILE: NATIONAL HOME CENTERS INC. ~

OUTSTANDING SHARES: (as of April 6,1998): 7,142,251

COMPANY MARKET VALUE (based on Aug. 26 stock price of $1.0625): $7,588,642

EXECUTIVE COMPENSATION

NametttOther Annual tAll Other

YeartSalarytBonustCompensationtCompensation

Dwain A. Newman, chairman/CEO

1997t$80,000t0t0t$16,944

1996t80,000t0t0t15,087

1995t80,000t0t0t12,773

Danny R. Funderburg, president/COO

1997t101,440t0t0t497

1996t101,440t0t0t745

1995t99,533t40,000t0t648

Larry C. Chumley, president/contractor division

1997t80,000t0t0t584

1996t80,000t0t0t584

1995t79,167t50,000t0t578

OFFICERS & DIRECTORS

Name ofttClass A tPercenttValue on

beneficial ownertTitletcommon stocktof classtAugust 26

Dwain A. Newmantchairman/CEOt4,493,030t62.9t$4,777,032

Danny R. Funderburgtpresident/COOt108,579t1.5t115,365

Larry C. Chumleytpresident/t36,179t*t38,440

tcontractor division

Roger A. HolmantSVP/purchasing/t29,562t*t31,410

tmarketingt

Brent A. HanbytEVP/CFOt18,546t*t19,705

David W. Truetzeltdirectort500t*t531

Richard D. Denisontdirectort5,000t*t5,313

*Less than 1 percent.

Management Analysis of Financial Condition & Operations

Over the last year, the company has experienced increased competition in its markets from other national and/or regional chains that are seeking to gain or retain market share by reducing prices. This has continued to place pressure on all of the company’s stores and their respective sales, gross margins and operating income.

During 1997, the company announced plans to restructure its operations, which included closing several stores. During 1997, the company closed stores in Conway and Rogers. During the first quarter of 1998, the company closed two additional stores in Little Rock and Fayetteville.

In addition, management has announced plans to reduce the home center portion of the Russellville stores and plans to sell the west Rogers store. Closing those stores will eliminate the continued losses those stores have incurred and will provide cash as a result of selling the related assets, including real estate.

The company’s working capital at April 30 decreased to $3.7 million from $4 million at Jan. 31 due to a decrease in inventories. Accounts payable have also decreased as a result of the lower inventory purchases and current installments of long-term debt have decreased due to early retirement of debt.

The company’s primary capital needs are to finance operations. During the three months ended April 30, operating activities provided net cash of $400,000.

Primary sources of cash from operating activities included about $1.8 million from decreases in inventories. The net loss for the period, adjusted for depreciation and amortization, uses about $1.1 million in cash.