-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, AJvAjAFBK3sBGkPYpYdQ9TKPlgEvV8ohldY3Enop8zx90h6H8vhBJ1Kl5jZBYpZo Z7LEUMdvqgVUOrJ3OKuKJw== 0000076744-94-000005.txt : 19940316 0000076744-94-000005.hdr.sgml : 19940316 ACCESSION NUMBER: 0000076744-94-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19940226 FILED AS OF DATE: 19940315 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PAYLESS CASHWAYS INC CENTRAL INDEX KEY: 0000076744 STANDARD INDUSTRIAL CLASSIFICATION: 5211 IRS NUMBER: 420945849 STATE OF INCORPORATION: IA FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 34 SEC FILE NUMBER: 001-08210 FILM NUMBER: 94515937 BUSINESS ADDRESS: STREET 1: TWO PERSHING SQ 2300 MAIN ST CITY: KANSAS CITY STATE: MO ZIP: 64108 BUSINESS PHONE: 816-234-6000 10-Q 1 FORM 10-Q QTR END FEB 26, 1994 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Form 10-Q (Mark One) / X / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended February 26, 1994 / / 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 1-8210 ------ PAYLESS CASHWAYS, INC. (Exact name of registrant as specified in its charter) Iowa 42-0945849 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Two Pershing Square 2300 Main, P.O. Box 419466 Kansas City, Missouri 64141-0466 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (816) 234-6000 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. Common Stock, $.01 par value, outstanding as of March 10, 1994: Voting -- 37,524,136 shares Class A Non-Voting -- 2,250,000 shares 2 PAYLESS CASHWAYS, INC. AND SUBSIDIARY PART I. FINANCIAL INFORMATION Item 1. Financial Statements CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (1) (In thousands, except per share amounts)
Thirteen Weeks Ended --------------------------------------- February 26, February 27, 1994 1993 ------------ ------------ Income Net sales $ 542,053 $ 492,843 Other income 1,256 1,272 ------------ ------------ 543,309 494,115 Costs and Expenses Cost of merchandise sold 375,281 336,262 Selling, general and administrative 137,882 130,303 Provision for depreciation and amortization 14,298 13,663 Interest 16,605 37,891 ------------ ------------ 544,066 518,119 ------------ ------------ LOSS BEFORE INCOME TAXES (757) (24,004) Federal and state income taxes (76) (2,760) ------------ ------------ NET LOSS $ (681) $ (21,244) ============ ============ Net loss per common share (3) $ (.05) $ (3.41) ============ ============ Weighted average common shares outstanding 39,628 6,571 ============ ============ See notes to condensed consolidated financial statements
3 PAYLESS CASHWAYS, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (1) (In thousands)
February 26, November 27, February 27, 1994 1993 1993 ------------ ------------ ------------ ASSETS CURRENT ASSETS Cash and cash equivalents $ 11,510 $ 3,673 $ 7,003 Trade receivables 7,800 9,890 7,364 Merchandise inventories (2) 419,869 382,403 395,529 Prepaid expenses and other current assets 19,813 17,056 10,633 Deferred income taxes 8,977 9,797 4,745 ------------ ------------ ------------ TOTAL CURRENT ASSETS 467,969 422,819 425,274 OTHER ASSETS Real estate held for sale 8,185 7,149 10,149 Cost in excess of net assets acquired, less accumulated amortization of $72,593, $69,339 and $59,576, respectively 448,073 451,327 461,090 Deferred financing costs 25,476 26,326 24,649 Other 10,647 8,861 8,241 LAND, BUILDINGS AND EQUIPMENT 756,234 749,115 711,953 Allowance for depreciation and amortization (221,838) (211,999) (182,873) ------------ ------------ ------------ 534,396 537,116 529,080 ------------ ------------ ------------ $ 1,494,746 $ 1,453,598 $ 1,458,483 ============ ============ ============ See notes to condensed consolidated financial statements
4 PAYLESS CASHWAYS, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (1) (Cont'd.) (In thousands)
February 26, November 27, February 27, 1994 1993 1993 ------------ ------------ ------------ LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Advances under bank facilities $ 60,000 $ 5,000 $ 30,000 Current portion of long-term debt 54,962 55,978 48,908 Trade accounts payable 141,731 145,265 145,807 Other current liabilities 112,050 116,293 117,452 Income taxes payable 11,025 15,141 14,647 ------------ ------------ ------------ TOTAL CURRENT LIABILITIES 379,768 337,677 356,814 LONG-TERM DEBT, less portion classified as current liability (4) 636,467 640,127 997,142 NONCURRENT LIABILITIES Deferred income taxes 65,572 64,624 66,011 Other 23,549 23,859 24,561 SHAREHOLDERS' EQUITY (5) Preferred Stock, $1.00 par value, 25,000,000 shares authorized; issued: Series A Cumulative Convertible Preferred Stock, 406,000 shares at redemption value 40,600 40,600 40,600 Common Stock, $.01 par value: Voting, 150,000,000 shares authorized, 37,491,492, 36,161,771, and 3,718,584 shares issued 375 361 37 Class A Non-Voting, 5,000,000 shares authorized, 2,250,000 shares issued 23 23 23 Class B Non-Voting, 5,000,000 shares authorized, 0, 1,125,000 and 1,125,000 shares issued -- 11 11 Additional paid-in capital 485,332 482,575 94,628 Retained deficit (136,940) (136,259) (121,344) ------------ ------------ ------------- TOTAL SHAREHOLDERS' EQUITY 389,390 387,311 13,955 ------------ ------------ ------------- $ 1,494,746 $ 1,453,598 $ 1,458,483 ============ ============ ============= See notes to condensed consolidated financial statements
5 PAYLESS CASHWAYS, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (1) (In thousands)
Thirteen Weeks Ended ---------------------------------------- February 26, February 27, 1994 1993 ------------ ------------ Cash Flows from Operating Activities Net loss $ (681) $ (21,244) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 14,298 13,663 Noncash interest 1,004 15,366 Deferred income taxes 1,769 (2,986) Other 978 (97) Changes in assets and liabilities (50,027) (11,125) ------------ ------------ NET CASH USED IN OPERATING ACTIVITIES (32,659) (6,423) Cash Flows from Investing Activities Additions to land, buildings and equipment (8,867) (7,581) Proceeds from sale of land, buildings and equipment 538 14 Increase in other assets (2,817) (952) ------------ ------------ NET CASH USED IN INVESTING ACTIVITIES (11,146) (8,519) Cash Flows from Financing Activities Retirements of long-term debt (4,676) (38,882) Increase in short-term borrowings 55,000 30,000 Sale of Common Stock under stock option plan 1,670 -- Sale of Common Stock under warrants 89 -- Other (441) (88) ------------ ------------ NET CASH PROVIDED BY (USED IN) IN FINANCING ACTIVITIES 51,642 (8,970) ------------ ------------ Net increase in cash and cash equivalents 7,837 (23,912) Cash and cash equivalents, beginning of period 3,673 30,915 ------------ ------------ Cash and cash equivalents, end of period $ 11,510 $ 7,003 ============ ============ See notes to condensed consolidated financial statements
6 PAYLESS CASHWAYS, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Thirteen weeks ended February 26, 1994 and February 27, 1993. (1) The accompanying condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q. To the extent that information and footnotes required by generally accepted accounting principles for complete financial statements are contained in or consistent with the audited consolidated financial statements incorporated by reference in the Company's Form 10-K for the year ended November 27, 1993, such information and footnotes have not been duplicated herein. In the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation of financial statements have been reflected herein. The November 27, 1993, condensed consolidated balance sheet has been derived from the audited consolidated financial statements as of that date. (2) Approximately 79% of the Company's inventories are valued using the LIFO (last-in, first-out) method. Because inventory determination under the LIFO method is only made at the end of each fiscal year based on the inventory levels and costs at that time, interim LIFO determinations must necessarily be based on management's estimates of expected year-end inventory levels and costs. Since future estimates of inventory levels and costs are subject to change, interim financial results reflect the Company's most recent estimate of the effect of inflation and are subject to final year-end LIFO inventory amounts. If the FIFO (first-in, first-out) method of inventory accounting had been used by the Company, inventories would have been $21.3 million, $20.2 million and $19.3 million higher than reported at February 26, 1994, November 27, 1993, and February 27, 1993, respectively. (3) Net loss per common share has been computed based on the weighted average number of common shares outstanding during the period plus common stock equivalents, when dilutive, consisting of shares subject to puts and calls, certain stock options and warrants. For purposes of this computation, net loss was adjusted for dividend requirements on preferred stock, changes in the redemption value of both common stock subject to puts and calls and warrants subject to puts (prior to March 15, 1993), and interest expense reduction (net of tax) applicable to the exercise of warrants and stock options, when these items were dilutive. Additional shares of common stock issuable upon the conversion of convertible preferred stock (which is not a common stock equivalent) and the exercise of performance-based stock options have been considered only when the impact is dilutive. (4) Long-term debt consisted of the following:
(In thousands) February 26, November 27, February 27, 1994 1993 1993 ------------ ------------ ------------ 1993 Credit Agreement $ 325,000 $ 325,000 $ -- 1988 Credit Agreement -- -- 145,808 Mortgage loan payable to insurance company 164,815 168,072 226,641 Senior subordinated notes - 9 1/8% 200,000 200,000 -- Senior subordinated debentures - 14 1/2% -- -- 317,868 Junior subordinated debentures - 16 1/2% -- -- 351,953 Other senior debt 1,614 3,033 3,780 ------------ ------------ ------------ 691,429 696,105 1,046,050 Less portion classified as current liability (54,962) (55,978) (48,908) ------------ ------------ ------------ $ 636,467 $ 640,127 $ 997,142 ============ ============ ============
7 PAYLESS CASHWAYS, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued Thirteen weeks ended February 26, 1994 and February 27, 1993. (5) During fiscal 1993, the Company completed a recapitalization plan (the "Recapitalization Plan") consisting of a series of transactions which were designed to increase shareholders' equity, reduce the Company's debt and interest expense, improve the Company's access to capital markets and improve the Company's operating and financial flexibility. The transactions included (i) the initial public offering of 32,200,000 shares of Common Stock, which was completed on March 15, 1993 for net proceeds of $385.4 million, (ii) the repayment on March 15, 1993 of $175.8 million of indebtedness outstanding under the Company's previously existing bank credit agreement, (iii) the prepayment on March 16, 1993 of $50 million of indebtedness outstanding under the Company's $226.6 million mortgage loan payable to an insurance company, (iv) the issuance of 9 1/8% senior subordinated notes due 2003, which was completed on April 20, 1993 for the aggregate principal amount of $200 million, (v) the repurchase on April 15 and 16, 1993 of $99.9 million aggregate principal amount of the Company's 16 1/2% junior subordinated debentures due August 1, 2008 and the redemption of the remaining $291.1 million aggregate principal amount of the junior subordinated debentures on July 30, 1993, (vi) borrowings on November 1, 1993 of $325 million under an amended and restated bank credit agreement entered into by the Company and certain banks, the 1993 Credit Agreement, and (vii) the redemption on November 1, 1993 of $332.5 million aggregate principal amount of the Company's 14 1/2% senior subordinated debentures due November 1, 2000. The 1993 Credit Agreement also provides for a revolving credit facility of $85 million which was used to provide a portion of the funds necessary to complete the Recapitalization Plan and which has been and will continue to be used to finance the working capital requirements of the Company in the ordinary course of business. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. RESULTS OF OPERATIONS Sales Net sales for the quarter ended February 26, 1994 increased 10.0% over the same period of 1993 in total and 9.1% on a comparable-store sales basis. (Comparable stores are those open one full year.) The positive sales comparisons reflect mild weather conditions in many of the Company's markets in December and January and an increase in the growth in business from both do-it-yourself and professional customers. One new store opened in late March, 1993 and another in late January, 1994. Costs and Expenses Cost of merchandise sold as a percent of sales was 69.2% and 68.2% for the first quarter of 1994 and 1993, respectively. The increase in the first quarter of 1994 was due primarily to the growth in sales to the professional customer whose merchandise purchases include a higher percentage of commodity goods at margin rates somewhat lower than the Company average and lower realized margins on lumber products. Selling, general and administrative expenses were 25.4% and 26.4% of sales for the first quarter of 1994 and 1993, respectively. The decrease in selling, general and administrative expenses as a percentage of sales was primarily due to lower personnel expenses and reduced advertising expense. The provision for depreciation and amortization increased over the first quarter of 1993 due to higher capital expenditures in fiscal 1993. The completion of the Recapitalization Plan increased the Company's funds available for capital expenditures. Interest expense for the first quarter of 1994 decreased to $16.6 million compared to $37.9 million for the same period of 1993 due primarily to the retirement of long-term debt in connection with the Recapitalization Plan. The provision for income taxes for the first quarter of 1994 was $.1 million compared to $2.8 million for 1993. The effective tax rates for both periods were different from the 35% statutory rate primarily due to the effect of goodwill amortization, which is nondeductible for income tax purposes. 8 PAYLESS CASHWAYS, INC. AND SUBSIDIARY MANAGEMENT'S DISCUSSION AND ANALYSIS - Continued RESULTS OF OPERATIONS - Continued Net Loss Net loss for the quarter ended February 26, 1994 was $.7 million compared to net loss of $21.2 million for the same period of 1993. The decrease in the net loss was primarily the result of the decreased interest expense discussed above. During 1993, the Company completed the Recapitalization Plan consisting of a series of transactions, which were designed to increase shareholders' equity, reduce the Company's debt and interest expense, improve the Company's access to capital markets and improve the Company's operating and financial flexibility. The following table presents summary unaudited historical consolidated operating data of the Company for the thirteen weeks ended February 26, 1994 and summary unaudited pro forma consolidated operating data of the Company ("Pro Forma Data") for the thirteen weeks ended February 27, 1993 which gives effect to the Recapitalization Plan as if it had occurred at the beginning of fiscal 1993. The Pro Forma Data is based upon available information and certain assumptions that management believes are reasonable. The Pro Forma Data does not purport to represent what the Company's results of operations would actually have been if the transactions had occurred at the beginning of fiscal 1993 or to project the Company's results of operations for any future period.
Historical Pro Forma Data -------------------- -------------------- Thirteen Thirteen Weeks Ended Weeks Ended February 26, 1994 February 27,1993 -------------------- -------------------- Net sales and other income $ 543,309 $ 494,115 Interest expense 16,605 18,261 Income (loss) before income taxes (757) (4,374) Net income (loss) (681) (3,949) Net income (loss) per common share $ (.05) $ (.13) Weighted average common and common equivalent shares outstanding 40,844 40,240
LIQUIDITY AND CAPITAL RESOURCES The Company's principal source of cash is from operations. Cash used in operating activities was $32.7 million for the first quarter of 1994 compared to $6.4 million for the same period of 1993. The increase in cash flow used in operations is primarily attributable to an increase in inventory. Due to seasonally lower sales in the winter months, cash flow in the first quarter represents a small amount of annual operating cash flow. Borrowings are available under a revolving credit facility to supplement cash generated by operations. At February 26, 1994, $13.7 million was available for borrowing under the revolving credit facility. At February 26, 1994, working capital was $88.2 million compared to $85.1 million and $68.5 million at November 27, 1993 and February 27, 1993, respectively. The current ratios at February 26, 1994, November 27, 1993, and February 27, 1993 were 1.23 to 1, 1.25 to 1 and 1.19 to 1, respectively. 9 PAYLESS CASHWAYS, INC. AND SUBSIDIARY MANAGEMENT'S DISCUSSION AND ANALYSIS - Continued LIQUIDITY AND CAPITAL RESOURCES - Continued The Company's primary investing activities continue to be capital expenditures for existing and new stores and distribution centers. The 1993 Credit Agreement governs the amount of capital expenditures which can be made. The Company spent approximately $8.8 million and $7.6 million for new stores, equipment and renovation of retail facilities and distribution centers during the first quarter of 1994 and 1993, respectively. In the first quarter of 1994, a new store was opened. The Company intends to finance the remaining fiscal 1994 budgeted capital expenditures of approximately $61 million consisting primarily of six new stores, a replacement store, additional equipment, and renovation of existing stores with funds generated from operations. The Company's most significant financing activity is and will continue to be the retirement of indebtedness. Although the Company's consolidated indebtedness is and will continue to be substantial, management believes that, based upon its analysis of the Company's financial condition, the cash flow generated from operations during the past 12 months and the expected results of operations in the future, cash flow from operations and borrowings under the revolving credit facility should provide sufficient liquidity to meet all cash requirements for the next 12 months without additional borrowings. 10 PAYLESS CASHWAYS, INC. AND SUBSIDIARY REVIEW BY INDEPENDENT AUDITORS The condensed consolidated financial statements of Payless Cashways, Inc. and its subsidiary for the quarters ended February 26, 1994 and February 27, 1993, have been reviewed by KPMG Peat Marwick, independent auditors. Their report is included in this filing. PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders. None. Item 6. Exhibits and Reports on Form 8-K. a. Exhibits. 4.0 Long-term debt instruments of Payless in amounts not exceeding ten percent (10%) of the total assets of Payless and its subsidiaries on a consolidated basis will be furnished to the Commission upon request. 4.1 Amended By-Laws of the Company. 11.1 Computation of per share earnings. 15.1 Letter re unaudited financial information - KPMG Peat Marwick. b. Reports on Form 8-K. No reports on Form 8-K were filed by Payless during the quarter ended February 26, 1994. 11 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. PAYLESS CASHWAYS, INC. (Registrant) Date: March 14, 1994 By s/Stephen A. Lightstone --------------------------- Stephen A. Lightstone, Senior Vice President, Finance and Chief Financial Office (Principal Financial Officer and Principal Accounting Officer) EX-4 2 EX 4.1 AMENDED BY-LAWS OF THE COMPANY 1 Exhibit 4.1 BY-LAWS OF PAYLESS CASHWAYS, INC. ARTICLE I MEETING OF SHAREHOLDERS SECTION 1. ANNUAL MEETINGS -- Annual meetings of shareholders for the election of directors, and for such other business as may be stated in the notice of the meeting, shall be held at such place, either within or without the state of incorporation of the Corporation, and at such time and date as the board of directors, by resolution, shall determine and as set forth in the notice of the meeting. If the board of directors fails so to determine the time, date and place of meeting, the annual meeting of shareholders shall be held at the principal office of the Corporation on the first Tuesday in April. If the date of the annual meeting shall fall upon a legal holiday, the meeting shall be held on the next succeeding business day. At each annual meeting, the shareholders entitled to vote shall elect a board of directors and they may transact such other corporate business as shall be stated in the notice of the meeting. SECTION 2. SPECIAL MEETINGS -- Special meetings of the shareholders for any purpose or purposes may be called by the Chairman, Vice Chairman or President or by resolution of the board of directors. SECTION 3. NOTICE OF MEETINGS -- Written notice, stating the place, date and time of the meeting, and the general nature of the business to be considered, shall be given to each shareholder entitled to vote thereat at the address as it appears on the records of the Corporation, not less than 10 nor more than 60 days before the date of the meeting. ARTICLE II DIRECTORS SECTION 1. NUMBER AND TERM -- The number of directors shall be no less than nine and no more than twelve, as determined from time to time by resolution adopted by the affirmative vote of a majority of the entire board of directors. SECTION 2. RESIGNATIONS; VACANCIES -- Any director may resign at any time. Such resignation shall be made in writing, and shall take effect at the time specified therein, and if no time be specified, at the time of its receipt by the Corporation. The acceptance of a resignation shall not be necessary to make it effective. Any vacancy occurring in the board of directors may be filled by the affirmative vote of a majority of the remaining directors though less than a quorum of the board of directors. Any directorship to be filled by reason of an increase in the number of directors may be filled by the board of directors for a term of office continuing only until the next election of directors by the shareholders. 2 SECTION 3. POWERS -- The board of directors shall exercise all of the powers of the Corporation except such as are by law, or by the Articles of Incorporation of the Corporation or by these By-Laws, conferred upon or reserved to the shareholders. SECTION 4. COMMITTEES -- The board of directors may designate one or more committees, each committee to consist of two or more directors of the Corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Any committee established in accordance with this Section 4 or the Articles of Incorporation, shall have and may exercise, to the extent permitted by the Articles of Incorporation and provided in either a resolution of the board of directors or these By-Laws, all the powers and authority of the board of directors in the management of the business and affairs of the Corporation, but no such committee shall have authority to (a) authorize distributions, (b) approve or propose shareholder action or proposals required by law to be approved by shareholders, (c) fill vacancies on the board of directors or on any of its committees, (d) amend the articles of incorporation or adopt, amend or repeal the bylaws, (e) approve a plan of merger not requiring shareholder approval, (f) authorize or approve reacquisition of shares, except according to a formula or method prescribed by the board of directors, and (g) authorize or approve the issuance or sale or contract for sale of shares, or determine the designation and relative rights, preferences, and limitations of a class or series of shares, except that the board of directors may authorize a committee or a senior executive officer of the corporation to do so within limits specifically prescribed by the board of directors. SECTION 5. MEETINGS -- Regular meetings of the directors may be held without notice at such places and times as shall be determined from time to time by resolution of the directors. Special meetings of the board may be called by the Chairman, Vice Chairman, President or by the Secretary on the written request of any director on at least two days' notice to each director (except that notice to any director may be waived by attendance or in writing by such director) and shall be held at such place or places as may be determined by the directors, or as shall be stated in the call of the meeting. SECTION 6. QUORUM -- A majority of the directors shall constitute a quorum for the transaction of business. If at any meeting of the board there shall be less than a quorum present, a majority of those present may adjourn the meeting from time to time until a quorum is obtained, and no further notice thereof need be given other than by announcement at the meeting which shall be so adjourned. The vote of the majority of the directors present at a meeting at which a quorum is present shall be the act of the board of directors unless the Articles of Incorporation or these By-Laws shall require the vote of a greater number. SECTION 7. ACTION WITHOUT MEETING -- Any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting if a written consent thereto is signed by all members of the board or of such committee, as the case may be, and such written consent is filed with the minutes of proceedings of the board or such committee. 3 ARTICLE III OFFICERS SECTION 1. OFFICERS -- The officers of the corporation shall be a Chairman of the Board, a Chief Executive Officer, a Vice Chairman of the Board, a President, one or more Vice Presidents, a Treasurer and a Secretary, all of whom shall be elected by the board of directors and shall hold office until their successors are elected and qualified. In addition, the board of directors may elect such Assistant Secretaries and Assistant Treasurers as they may deem proper. The board of directors may appoint such other officers and agents as it may deem advisable, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board of directors. SECTION 2. CHAIRMAN -- The Chairman of the Board shall preside at all meetings of the board of directors and shall have and perform such other duties as may be assigned by the board of directors. SECTION 3. VICE CHAIRMAN OF THE BOARD -- The Vice Chairman of the Board shall, at the request of the Chairman of the Board, or in the case of the Chairman's absence, perform temporarily the functions of the Chairman of the Board and shall perform such duties as may be assigned by the Chairman of the Board or by the board. SECTION 4. CHIEF EXECUTIVE OFFICER -- The Chief Executive Officer shall have general charge and management of the business of this Corporation, shall carry out such duties as are delegated by the board; shall see that all orders and resolutions of the board are carried out, shall have power to execute all contracts and agreements authorized by the board, shall make reports to the board of directors and shareholders, and shall perform such other duties as are incident to the office or are properly required by the board of directors. The Chief Executive Officer shall be responsible for the direction and supervision of all personnel within his appointive powers and shall also have the power to discipline or discharge such personnel. The Chief Executive Officer shall sit with the board of directors in deliberation upon all matters pertaining to the general business and policies of the Corporation. SECTION 5. PRESIDENT -- The President shall have the general powers and duties of supervision and management usually vested in the office of President of a corporation. Except as the board of directors shall authorize execution thereof in some other manner, the President shall execute bonds, mortgages and other contracts on behalf of the Corporation. SECTION 6. VICE PRESIDENT -- Each Vice President shall have such powers and shall perform such duties as shall be assigned to him by the board of directors. SECTION 7. TREASURER -- The Treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate account of receipts and disbursements in books belonging to the Corporation, shall deposit all moneys and other valuables in the name and to the credit of the Corporation in such depositaries as may be designated by the board of directors, shall disburse the funds of the Corporation as may be ordered by the board of directors, 4 or the Chairman, Chief Executive Officer, Vice Chairman or President, taking proper vouchers for such disbursement, and shall render to the board of directors at the regular meetings of the board of directors, or whenever they may request it, an account of all transactions as Treasurer and of the financial condition of the Corporation. If required by the board of directors, the Treasurer shall give the Corporation a bond for the faithful discharge of the Treasurer's duties in such amount and with such surety as the board shall prescribe. SECTION 8. SECRETARY -- The Secretary shall give, or cause to be given, notice of all meetings of shareholders and directors and all other notices required by law or by these By-Laws, and in case of the absence or refusal or neglect so to do, any such notice may be given by any person thereunto directed by the Chairman, Chief Executive Officer, Vice Chairman or President, or by the directors, or shareholders, upon whose request the meeting is called as provided in these By-Laws. The Secretary shall record all the proceedings of the meetings of the board of directors, any committees thereof and the shareholders of the Corporation in a book to be kept for that purpose, and shall perform such other duties as may be assigned by the board of directors or the Corporation. SECTION 9. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES -- Assistant Treasurers and Assistant Secretaries, if any, shall be elected and shall have such powers and shall perform such duties as shall be assigned to them, respectively, by the board of directors. ARTICLE IV MISCELLANEOUS SECTION 1. CERTIFICATES OF STOCK -- A certificate of stock shall be issued to each shareholder certifying the number of shares owned by such shareholder in the Corporation. SECTION 2. LOST CERTIFICATES -- A new certificate of stock may be issued in the place of any certificate theretofore issued by the Corporation, alleged to have been lost or destroyed, and the board of directors may, in its discretion, require the owner of the lost or destroyed certificate, or such owner's legal representatives, to give the Corporation a bond, in such sum as they may direct, not exceeding double the value of the stock, to indemnify the Corporation against any claim that may be made against it on account of the alleged loss of any such certificate, or the issuance of any such new certificate. SECTION 3. TRANSFER OF SHARES -- The shares of stock of the Corporation shall be transferrable only upon its books by the holders thereof in person or by their duly authorized attorneys or legal representatives, and upon such transfer the old certificates shall be surrendered to the Corporation by the delivery thereof to the person in charge of the stock and transfer books and ledgers, or to such other person as the board of directors may designate, by whom they shall be cancelled, and new certificates shall thereupon be issued. A record shall be made of each transfer and whenever a transfer shall be made for collateral security, and not absolutely, it shall be so expressed in the entry of the transfer. SECTION 4. SHAREHOLDERS RECORD DATE -- In order that the Corporation may 5 determine the shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful actions, the board of directors may fix, in advance, a record date, which shall not be more than 70 nor less than 10 days before the date of such meeting, nor more than 70 days prior to any other action. A determination of shareholders of record entitled to notice of or to vote at a meeting of shareholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for the adjourned meeting. SECTION 5. FISCAL YEAR -- The fiscal year of the Corporation shall be determined by resolution of the board of directors. In absence of a resolution by the board of directors, the fiscal year of the Corporation shall end on the last Saturday in the month of November. SECTION 6. CHECKS -- All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation shall be signed by such officer or officers, agent or agents of the Corporation, and in such manner as shall be determined from time to time by resolution of the board of directors. EX-11 3 EX 11.1 COMPUTATION OF PER SHARE EARNINGS 1 Exhibit 11.1 PAYLESS CASHWAYS, INC. AND SUBSIDIARY COMPUTATION OF PER SHARE EARNINGS (In thousands, except per share amounts)
Thirteen Weeks Ended ------------------------------------------ February 26, February 27, 1994 1993 ------------ ------------ PRIMARY Net loss $ (681) $ (21,244) Add (deduct): Preferred stock dividends (1,239) (1,145) Net loss available to common shareholders $ (1,920) $ (22,389) Weighted average common and dilutive common equivalent shares outstanding 39,628 6,571 Net loss per common share $ (.05) $ (3.41)
EX-15 4 EX 15.1 AUDITOR'S LETTER DATED 3/9/94 1 Exhibit 15.1 [Letterhead of KPMG Peat Marwick] INDEPENDENT AUDITORS' REPORT ---------------------------- The Board of Directors Payless Cashways, Inc.: We have reviewed the accompanying condensed consolidated balance sheet of Payless Cashways, Inc. and subsidiary as of February 26, 1994 and the related condensed consolidated statements of operations and cash flows for the thirteen week period then ended. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accounts. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying condensed consolidated financial statements for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of Payless Cashways, Inc. and subsidiary as of November 27, 1993 and the related consolidated statements of operations, shareholders' equity and cash flows for the fiscal year then ended (not presented herein); and in our report dated January 7, 1994, we express an unqualified opinion on those consolidated financial statements. Our report referred to a change in the method of accounting for postretirement benefits other than pensions in fiscal 1992. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of November 7, 1993 is fairly presented in all material respects, in relation to the consolidated balance sheet from which it has been derived. s/KPMG Peat Marwick Kansas City, Missouri March 9, 1994 2 [Letterhead of KPMG Peat Marwick] Payless Cashways, Inc. Kansas City, Missouri Gentlemen: With respect to the subject registration statements on Form S-8 and Form S-3, we acknowledge our awareness of the use therein of our report dated March 9, 1994 related to our review of interim financial information. Pursuant to Rule 436(c) under the Securities Act of 1933, such report is not considered a part of a registration statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of the Securities Act. s/KPMG Peat Marwick Kansas City, Missouri March 14, 1994 -----END PRIVACY-ENHANCED MESSAGE-----