-----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, rDoK0ZP6k7F8nsQspqKElu+Ycly/8iSv9i+oIidzjzc3/4xU8YQdLPWNfOzF9m5v gqxpjPgg12X2z+26/VLiNQ== 0000076744-94-000006.txt : 19940702 0000076744-94-000006.hdr.sgml : 19940702 ACCESSION NUMBER: 0000076744-94-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19940528 FILED AS OF DATE: 19940627 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: 1934 Act SEC FILE NUMBER: 001-08210 FILM NUMBER: 94535963 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 5/28/94 1 UNITED STATES 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 May 28, 1994 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 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 June 21, 1994: Voting -- 37,619,183 shares Class A Non-Voting -- 2,250,000 shares 2 PART I. FINANCIAL INFORMATION Item 1. Financial Statements CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (1) (In thousands, except per share amounts)
Thirteen Weeks Ended Twenty-Six Weeks Ended ----------------------------- ------------------------------ May 28, May 29, May 28, May 29, 1994 1993 1994 1993 ------------ ------------ ------------ ------------- Income Net sales $ 734,215 $ 698,786 $ 1,276,268 $ 1,191,629 Other income (7) 2,711 1,344 3,967 2,616 ------------ ------------ ------------ -------------- 736,926 700,130 1,280,235 1,194,245 Costs and expenses Cost of merchandise sold 518,659 493,909 893,940 830,171 Selling, general and administrative 156,358 149,279 294,240 279,582 Provision for depreciation and amortization 14,565 13,935 28,863 27,598 Interest 16,463 34,950 33,068 72,841 ------------ ------------ ------------ -------------- 706,045 692,073 1,250,111 1,210,192 ------------ ------------ ------------ -------------- INCOME (LOSS) BEFORE INCOME TAXES 30,881 8,057 30,124 (15,947) Federal and state income taxes 13,481 927 13,405 (1,833) ------------ ------------ ------------ -------------- Income (loss) before equity in loss of joint venture and extraordinary item 17,400 7,130 16,719 (14,114) Equity in loss of joint venture (6) (444) -- (444) -- ------------ ------------ ------------ -------------- Income (loss) before extraordinary item 16,956 7,130 16,275 (14,114) Extraordinary item: early extinguishment of debt (4) and (5) 55 (9,111) 55 (9,111) ------------ ------------ ------------ -------------- NET INCOME (LOSS) $ 17,011 $ (1,981) $ 16,330 $ (23,225) ============ ============ ============ ============== Income (loss) per common share before equity in loss of joint venture and extraordinary item $ .39 $ .17 $ .35 $ (.81) Equity in loss of joint venture (6) (.01) -- (.01) -- ------------ ------------ ------------ -------------- Income (loss) per common share before extraordinary item .38 .17 .34 (.81) Extraordinary item: early extinguishment of debt (4) and (5) -- (.27) -- (.45) ------------ ------------ ------------ -------------- Net income (loss) per common share (3) $ .38 $ (.09) $ .34 $ (1.26) ============ ============ ============ ============== Weighted average common and dilutive common equivalent shares outstanding 41,013 34,953 40,321 20,264 ============ ============ ============ ============== See notes to condensed consolidated financial statements
3 PAYLESS CASHWAYS, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (1) (In thousands)
May 28, November 27, May 29, 1994 1993 1993 -------------- -------------- -------------- ASSETS CURRENT ASSETS Cash and cash equivalents $ 17,455 $ 3,673 $ 264,425 Trade receivables 9,054 9,890 9,562 Merchandise inventories (2) 430,898 382,403 435,846 Prepaid expenses and other current assets 26,479 17,056 15,241 Deferred income taxes 8,222 9,797 5,840 -------------- -------------- -------------- TOTAL CURRENT ASSETS 492,108 422,819 730,914 OTHER ASSETS Real estate held for sale 7,040 7,149 10,149 Cost in excess of net assets acquired, less accumulated amortization of $75,847, $69,339 and $62,830, respectively 444,819 451,327 457,836 Deferred financing costs 25,256 26,326 37,701 Other 13,306 8,861 9,145 LAND, BUILDINGS AND EQUIPMENT 771,391 749,115 732,045 Allowance for depreciation and amortization (225,145) (211,999) (192,577) -------------- -------------- -------------- 546,246 537,116 539,468 -------------- -------------- -------------- $ 1,528,775 $ 1,453,598 $ 1,785,213 -------------- -------------- -------------- See notes to condensed consolidated financial statements
4 PAYLESS CASHWAYS, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (1) (Cont'd.) (In thousands)
May 28, November 27, May 29, 1994 1993 1993 ----------- ----------- ----------- LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Advances under bank facilities $ 50,000 $ 5,000 $ 30,000 Current portion of long-term debt 57,629 55,978 288,190 Trade accounts payable 177,617 145,265 171,604 Other current liabilities 118,065 116,293 112,484 Income taxes payable 18,183 15,141 13,418 ----------- ----------- ----------- TOTAL CURRENT LIABILITIES 421,494 337,677 615,696 LONG-TERM DEBT, less portion classified as current liability (4) 609,841 640,127 681,201 NONCURRENT LIABILITIES Deferred income taxes 66,707 64,624 65,217 Other 23,454 23,859 24,388 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, 37,568,198, 36,161,771, and 36,046,197 shares issued 376 361 360 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 486,209 482,575 481,041 Retained deficit (119,929) (136,259) (123,324) ----------- ----------- ------------ TOTAL SHAREHOLDERS' EQUITY 407,279 387,311 398,711 ----------- ----------- ------------ $1,528,775 $1,453,598 $1,785,213 =========== =========== =========== See notes to condensed consolidated financial statements
5 PAYLESS CASHWAYS, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (1) (In thousands)
Twenty-Six Weeks Ended --------------------------------------- May 28, May 29, 1994 1993 ----------- ------------ Cash Flows from Operating Activities Net income (loss) $ 16,330 $ (23,225) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 28,863 27,598 Noncash interest 2,295 29,790 (Gain) loss on early extinguishment of debt (55) 9,111 Deferred income taxes 3,658 (4,875) Other 1,733 (211) Changes in assets and liabilities (19,939) (35,016) ----------- ------------- NET CASH PROVIDED BY OPERATING ACTIVITIES 32,885 3,172 Cash Flows from Investing Activities Additions to land, buildings and equipment (32,160) (28,736) Proceeds from sale of land, buildings and equipment 1,207 100 Increase in other assets (5,476) (1,856) ----------- ------------- NET CASH USED IN INVESTING ACTIVITIES (36,429) (30,492) Cash Flows from Financing Activities Proceeds from long-term debt 2,864 200,000 Retirements of long-term debt and related penalties (4) and (5) (31,337) (335,778) Increase in short-term borrowings 45,000 30,000 Fees and financing costs paid in connection with debt refinancing (5) -- (19,984) Sale of Common Stock (5) -- 385,656 Sale of Common Stock under stock option plan 2,383 1,080 Sale of Common Stock under warrants 89 -- Other (1,673) (144) ----------- ------------ NET CASH PROVIDED BY FINANCING ACTIVITIES 17,326 260,830 ----------- ------------ Net increase in cash and cash equivalents 13,782 233,510 Cash and cash equivalents, beginning of period 3,673 30,915 ----------- ------------ Cash and cash equivalents, end of period $ 17,455 $ 264,425 =========== ============ See notes to condensed consolidated financial statements
6 PAYLESS CASHWAYS, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Twenty-six weeks ended May 28, 1994 and May 29, 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 $22.8 million, $20.2 million and $20.9 million higher than reported at May 28, 1994, November 27, 1993, and May 29, 1993, respectively. (3) Net income (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 certain stock options and warrants. For purposes of this computation, net income (loss) was adjusted for dividend requirements on preferred stock. Additional shares of common stock issuable upon the conversion of convertible preferred stock (which is not a common stock equivalent) has been considered only when the impact is dilutive. (4) Long-term debt consisted of the following:
May 28, November 27, May 29, (In thousands) 1994 1993 1993 ---------- ------------- ------------ 1994 Credit Agreement $ 2,864 $ -- $ -- 1993 Credit Agreement 304,546 325,000 -- Mortgage loan payable to insurance company 161,467 168,072 174,322 Senior subordinated notes - 9 1/8% 197,000 200,000 200,000 Senior subordinated debentures - 14 1/2% -- -- 318,141 Junior subordinated debentures - 16 1/2% -- -- 273,173 Other senior debt 1,593 3,033 3,755 ---------- ------------- ------------ 667,470 696,105 969,391 Less portion classified as current liability (57,629) (55,978) (288,190) ---------- ------------- ------------ $ 609,841 $ 640,127 $ 681,201 ========== ============= ============
During the thirteen weeks ended May 28, 1994, the Company borrowed $2.9 million under the 1994 Credit Agreement to repurchase and retire $3 million aggregate principal amount of 9-1/8% Senior Subordinated Notes. The 1994 Credit Agreement is a $25 million multiple draw term loan agreement dated May 6, 1994, which terminates December 31, 1994, proceeds from which must be used to purchase or redeem Senior Subordinated Notes at a price less than their par value. The 1994 Credit Agreement is unsecured, bears interest at fluctuating rates based on either an alternate base rate or LIBOR, and requires principal payment on November 25, 2000, or upon earlier receipt of proceeds from the issuance of additional shares of the Company's stock. The Junior Subordinated Debentures principal amount of $273.2 million was classified as current as of May 29, 1993, because the Company was holding $255.0 million of cash for their July 30, 1993, redemption. 7 PAYLESS CASHWAYS, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued Twenty-six weeks ended May 28, 1994 and May 29, 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. (6) The Company is a 49% investor in a joint venture with a Mexican company, Alfa, S.A. de C.V., which plans to open stores in Mexico. The Company accounts for this investment on the equity method. (7) In July, 1993, two of the Company's retail facilities were severely damaged by the midwestern floods. Settlement proceeds in excess of net book value of $1.9 million related to the flood-damaged real estate have been reflected in the accompanying 1994 consolidated statements of operations as other income. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. RESULTS OF OPERATIONS INCOME Net sales for the quarter ended May 28, 1994 increased 5.1% over the same period of 1993 in total and 4.2% on a comparable-store sales basis. (Comparable stores are those open one full year.) Net sales for the first half of 1994 increased 7.1% over the same period of 1993 in total and 6.2% on a comparable-store sales basis. One new store opened in the first half of 1993 and three new stores opened in the first half of 1994. Included in other income for the second quarter and first half of 1994 was a $1.9 million gain related to the settlement on flood-damaged real estate. COSTS AND EXPENSES Cost of merchandise sold as a percent of sales was 70.6% and 70.7% for the second quarter of 1994 and 1993, respectively. For the first half of 1994 and 1993, cost of merchandise sold as a percent of sales was 70.0% and 69.7%, respectively. Selling, general and administrative expenses were 21.3% and 21.4% of sales for the second quarter of 1994 and 1993, respectively. For the first half of 1994 and 1993, selling, general and administrative expenses were 23.1% and 23.5% of sales, respectively. The provision for depreciation and amortization increased over the second quarter of 1993 due to higher capital expenditures in fiscal 1993 and the first half of 1994. The completion of the Recapitalization Plan increased the Company's funds available for capital expenditures. 8 PAYLESS CASHWAYS, INC. AND SUBSIDIARY MANAGEMENT'S DISCUSSION AND ANALYSIS - Continued RESULTS OF OPERATIONS - Continued Interest expense for the second quarter and the first half of 1994 decreased to $16.5 million and $33.1 million compared to $35.0 million and $72.8 million, respectively, for the same periods 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 half of 1994 was $13.4 million compared to a tax benefit of $1.8 million for the first half of 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. NET INCOME (LOSS) Net income for the quarter ended May 28, 1994 was $17.0 million compared to net loss of $2.0 million for the same period of 1993. For the first half of 1994 net income was $16.3 million compared to a $23.2 million net loss for the same period of 1993. The improved results for both periods were primarily due to the decreased interest expense discussed above. In addition, the 1993 net loss reflected a $9.1 million extraordinary charge, net of tax, in connection with the early retirement of debt related to the 1993 Recapitalization Plan. Net income for the 1994 periods also reflects the $1.9 million settlement gain described above, the $.4 million equity in the loss of the Mexican joint venture between the Company and Alfa, S.A. de C.V. and extraordinary income of $.1 million, net of tax, in connection with the early retirement of $3.0 million aggregate principal amount of 9-1/8% senior subordinated notes. 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 and twenty-six weeks ended May 28, 1994 and summary unaudited pro forma consolidated operating data of the Company ("Pro Forma Data") for the thirteen and twenty-six weeks ended May 29, 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 Historical Pro Forma Data ----------------------------- ------------------------------ Thirteen Thirteen Twenty-Six Twenty-Six Weeks Ended Weeks Ended Weeks Ended Weeks Ended May 28, 1994 May 29, 1993 May 28,1994 May 29, 1993 ------------ ------------- ----------- ------------- Net sales and other income $ 736,926 $ 700,130 $ 1,280,235 $ 1,194,245 Interest expense 16,463 17,843 33,068 36,104 Income before income taxes 30,881 25,164 30,124 20,790 Income before extraordinary item 16,956 14,491 16,275 10,542 Income before extraordinary item per common share $ .38 $ .33 $ .34 $ .20 Weighted average common and dilutive common equivalent shares outstanding 41,013 40,240 40,321 40,240
9 PAYLESS CASHWAYS, INC. AND SUBSIDIARY MANAGEMENT'S DISCUSSION AND ANALYSIS - Continued LIQUIDITY AND CAPITAL RESOURCES The Company's principal source of cash is from operations. Cash provided by operating activities was $32.9 million for the first half of 1994 compared to $3.2 million for the same period of 1993. The increase in cash flow provided by operations is primarily attributable to improved operating results reflecting lower interest expense following the completion of the Recapitalization Plan. Borrowings are available under a revolving credit facility to supplement cash generated by operations. At May 28, 1994, $23.7 million was available for borrowing under the revolving credit facility. At May 28, 1994, working capital was $70.6 million compared to $85.1 million and $115.2 million at November 27, 1993 and May 29, 1993, respectively. The current ratios at May 28, 1994, November 27, 1993, and May 29, 1993 were 1.17 to 1, 1.25 to 1 and 1.19 to 1, respectively. 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 $32.2 million and $28.7 million for new stores, equipment and renovation of retail facilities and distribution centers during the first half of 1994 and 1993, respectively. During the first half of 1994, three new stores were opened. The Company intends to finance the remaining fiscal 1994 budgeted capital expenditures of approximately $38 million, consisting primarily of three 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 May 28, 1994 and May 29, 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. The Annual Meeting of Shareholders was held April 21, 1994. Shareholders owning 31,534,056 or more shares voted in favor of each of the four nominees for director: Harold Cohen, Scott G. Fossel, George Latimer, and Susan M. Stanton. Previously elected and continuing to serve their terms are David Stanley, Larry P. Kunz, Gary D. Rose, Wayne B. Lyon, Ralph Strangis, John H. Weitnauer, Jr. and William A. Hall. 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. 4.2 Sixth Amendment and Waiver dated May 6, 1994, to the 1993 Credit Agreement, dated as of March 8, 1993, among Payless, the Banks listed on the signature pages thereof and Canadian Imperial Bank of Commerce, New York Agency, as Administrative Agent. 10.1 First Amendment to the Payless Cashways, Inc. Supplemental Death Benefit Plan, dated June 16, 1994. 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 May 28, 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: June 24, 1994 By s/Stephen A. Lightstone _____________________________________________ Stephen A. Lightstone, Senior Vice President, Finance and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) EX-4 2 AMENDED BY-LAWS 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 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. 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 4. 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 5. 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 6. 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, 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 4 the Treasurer's duties in such amount and with such surety as the board shall prescribe. SECTION 7. 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 8. 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 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 5 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-4 3 6TH AMEND 1993 CR AGREEMENT 1 Exhibit 4.2 SIXTH AMENDMENT AND WAIVER TO THE CREDIT AGREEMENT AND FIRST AMENDMENT AND - - - - - -------------------------------------------------------------------------- WAIVER TO THE STANDBY LETTER OF CREDIT AGREEMENT - - - - - ------------------------------------------------ SIXTH AMENDMENT AND WAIVER, dated as of May 6, 1994 (this "Sixth Amendment and Waiver"), to the Amended and Restated Credit Agreement, dated as of March 8, 1993 (as heretofore amended, the "Credit Agreement"), among Payless Cashways, Inc., an Iowa corporation (the "Borrower"), the banks and other financial institutions parties thereto (the "Banks"), Canadian Imperial Bank of Commerce, New York Agency ("CIBC"), as Administrative Agent (in such capacity, the "Administrative Agent") and as Collateral Agent (in such capacity, the "Collateral Agent"), CIBC, The Bank of Nova Scotia and NationsBank of Texas, N.A., as Managing Agents (in such capacity, the "Managing Agents") and Bank of America National Trust and Savings Association, as Co-Agent (in such capacity, the "Co-Agent"); and FIRST AMENDMENT AND WAIVER, dated as of May 6, 1994 (this "First Amendment and Waiver"), to the Standby Letter of Credit Issuance and Reimbursement Agreement, dated as of February 14, 1994 (the "Standby Letter of Credit Agreement"), among the Borrower, the banks and other financial institutions parties thereto (the "Standby Letter of Credit Banks") and CIBC, as Issuing Bank (in such capacity, the "Issuing Bank"). W I T N E S S E T H: ------------------- WHEREAS, the Borrower, the Banks, the Administrative Agent, the Collateral Agent, the Letter of Credit Bank, the Managing Agents and the Co- Agent are parties to the Credit Agreement, and the Issuing Bank and the Standby Letter of Credit Banks are parties to the Standby Letter of Credit Agreement; WHEREAS, certain provisions of the Credit Agreement are incorporated by reference into the Standby Letter of Credit Agreement; WHEREAS, the Borrower has requested that the Banks amend the Credit Agreement and the Standby Letter of Credit Banks amend the Standby Letter of Credit Agreement in the manner set forth below; and WHEREAS, the Banks and the Standby Letter of Credit Banks are willing to accede to the requests of the Borrower upon the terms and subject to the conditions set forth herein; NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the Borrower, the Banks, the Administrative Agent, the Collateral Agent, the Letter of Credit Bank, the Managing Agents, the Co- Agent, the Issuing Bank and the Standby Letter of Credit Banks hereby agree as follows: 2 SECTION I. DEFINED TERMS ------------- Unless otherwise defined herein, terms defined in the Credit Agreement or the Standby Letter of Credit Agreement and used herein are so used as so defined. SECTION II. AMENDMENTS TO THE CREDIT AGREEMENT ---------------------------------- 1. Definitions. (a) Section 1.01 of the Credit Agreement is hereby amended by inserting the following terms in their alphabetic locations: "`1994 Credit Agreement' means the Multiple Draw Term Loan Agreement dated as of May 6, 1994 among the Borrower, the banks parties thereto and CIBC, as Agent. `Senior Subordinated Notes Repurchase Program' means the purchases by the Borrower, for an aggregate purchase price of up to $25 million, of the Senior Subordinated Notes with the proceeds of the loans under the 1994 Credit Agreement." 2. Restricted Payments. Section 7.07 of the Credit Agreement is hereby amended by (a) deleting the punctuation mark "." at the end of clause (vii) and substituting "; and" in its place, and (b) inserting as clause (viii) directly after clause (vii) the words "purchases under the Senior Subordinated Notes Repurchase Program; provided, that the price paid by the Borrower for any Senior Subordinated Note repurchased pursuant to such program shall not exceed the par value thereof; and provided, further that all Senior Subordinated Notes so purchased shall be permanently retired substantially simultaneously with such purchase." 3. Debt. Section 7.08 of the Credit Agreement is hereby amended by (a) inserting the words "or clause (xi)" directly after the words "through (ix)" in clause (x), (b) deleting the deleting the punctuation mark "." at the end of clause (x) and substituting "; and" in its place, and (c) inserting as clause (xi) directly after clause (x) the words "up to $25,000,000 principal amount of Debt incurred under the 1994 Credit Agreement, but not the increase, refunding or extension or acceleration of maturity thereof in whole or in part." 4. Investments. Section 7.09 of the Credit Agreement is hereby amended by (a) deleting the punctuation mark "." at the end of clause (x) and substituting "; and" in its place, and (b) inserting as clause (xi) directly after clause (x) the words "the purchase of the Senior Subordinated Notes to the extent permitted under Section 7.07(viii) hereof." 3 5. Interest Rate Protection Transactions. Section 7.14 of the Credit Agreement is hereby amended by inserting directly after the words "Debt for Borrowed Money" the words "(other than, (i) up to $20,000,000 aggregate principal amount of Revolving Loans for any one or more periods of 15 consecutive Domestic Business Days, each of which periods shall include the last day of any fiscal quarter of the Borrower, and (ii) until December 31, 1994, Debt under the 1994 Credit Agreement)". 6. No Negative Pledges. Section 7.15 of the Credit Agreement is hereby amended by inserting directly before clause (a) the words "(other than the 1994 Credit Agreement, the Standby Letter of Credit Agreement, the Prudential Loan Agreement and the documents executed in connection therewith)". 7. Interest Rate Protection on Bank Debt. Section 7.29 of the Credit Agreement is hereby amended by deleting such section in its entirety and substituting the following therefor: "The Borrower shall continue to maintain, so long as any Term Loan shall be in effect, interest rate protection arrangements pursuant to which not less than 50% of the aggregate principal amount of the Borrower's Debt for Borrowed Money (other than (i) up to $20,000,000 aggregate principal amount of Revolving Loans for any one or more periods of 15 consecutive Domestic Business Days, each of which periods shall include the last day of any fiscal quarter of the Borrower, and (ii) until December 31, 1994, Debt under the 1994 Credit Agreement) shall effectively bear interest for a period of time and at a fixed rate satisfactory to the Administrative Agent." SECTION III. WAIVERS OF THE CREDIT AGREEMENT ------------------------------- 1. Mandatory Termination or Reduction of Commitments and Mandatory Prepayments. The Banks and the Standby Letter of Credit Banks hereby waive any Default or Event of Default under Section 2.07(b) of the Credit Agreement resulting from the failure to prepay the Loans with the Net Cash Proceeds from the issuance of Debt under the 1994 Credit Agreement. SECTION IV. AMENDMENTS TO THE STANDBY LETTER OF CREDIT AGREEMENT ---------------------------------------------------- The Standby Letter of Credit Agreement is hereby deemed amended to the extent necessary to reflect the amendments to the Credit Agreement contained in Section II hereof. 4 SECTION V. CONDITIONS PRECEDENT -------------------- The amendments and waivers contained in this Sixth Amendment and Waiver to the Credit Agreement and First Amendment and Waiver to the Standby Letter of Credit Agreement shall become effective on and as of the date on which the following conditions precedent are satisfied: 1. Amendment. The Administrative Agent and the Issuing Bank shall have received counterparts of this Sixth Amendment and Waiver to the Credit Agreement and First Amendment and Waiver to the Standby Letter of Credit Agreement duly executed by the Borrower and the Required Banks. 2. Consents of Other Parties. The Borrower shall have obtained all consents required to be obtained from any Person in connection with the execution, delivery and performance of this Sixth Amendment and Waiver to the Credit Agreement and First Amendment and Waiver to the Standby Letter of Credit Agreement, including, without limitation, any consent required to be obtained from Prudential or the Merchandise Letter of Credit Bank. The Administrative Agent and the Issuing Bank shall have received copies of all such consents. 3. Consent of Guarantor. Somerville shall have executed this Sixth Amendment and Waiver to the Credit Agreement and First Amendment and Waiver to the Standby Letter of Credit Agreement, in the appropriate space below the caption "Consent of Guarantor" on the signature pages hereto. 4. Corporate Proceedings, Etc. The Administrative Agent and the Issuing Bank shall have received all documents they may reasonably request relating to the corporate authority for and the validity of this Sixth Amendment and Waiver to the Credit Agreement and First Amendment and Waiver to the Standby Letter of Credit Agreement, and any other matters relevant hereto (including, without limitation, certified resolutions), all in form and substance satisfactory to the Administrative Agent and the Issuing Bank. SECTION VI. MISCELLANEOUS ------------- 1. Representations and Warranties. The Borrower hereby confirms, reaffirms and restates the representations and warranties set forth in Section 6 of the Credit Agreement and Section 5 of the Standby Letter of Credit Agreement, provided that all references in said Sections 6 and 5 to the "Agreement" shall be deemed to be references to the Credit Agreement and the Standby Letter of Credit Agreement, respectively, as amended by 5 this Sixth Amendment and Waiver to the Credit Agreement and First Amendment and Waiver to the Standby Letter of Credit Agreement. 2. Limited Effect. This Sixth Amendment and Waiver to the Credit Agreement and First Amendment and Waiver to the Standby Letter of Credit Agreement is limited precisely as written and shall not be deemed (a) to be a consent to any modification or amendment of any other term or condition of the Credit Agreement, the Standby Letter of Credit Agreement or of any other term or condition of the instruments or agreements referred to therein or (b) to prejudice any other right or rights that the Administrative Agent, the Collateral Agent, the Managing Agents, the Co-Agent, any Bank, the Issuing Bank or any Standby Letter of Credit Bank may now have or may have in the future under or in connection with the Credit Agreement, the Standby Letter of Credit Agreement or the agreements referred to therein. Except as expressly amended and modified by this Sixth Amendment and Waiver to the Credit Agreement and First Amendment and Waiver to the Standby Letter of Credit Agreement, all of the provisions and covenants of the Credit Agreement and the Standby Letter of Credit Agreement are and shall continue to remain in full force and effect in accordance with the terms thereof. 3. Counterparts. This Sixth Amendment and Waiver to the Credit Agreement and First Amendment and Waiver to the Standby Letter of Credit Agreement may be executed by one or more of the parties hereto in any number of separate counterparts and all of said counterparts taken together shall be deemed to constitute one and the same instrument. 4. GOVERNING LAW. THIS SIXTH AMENDMENT AND WAIVER TO THE CREDIT AGREEMENT AND FIRST AMENDMENT AND WAIVER TO THE STANDBY LETTER OF CREDIT AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. 5. Expenses. The Borrower agrees to pay or reimburse CIBC, in its capacity as Administrative Agent and Issuing Bank, for all its reasonable out- of-pocket costs and expenses incurred in connection with the preparation and execution of this Sixth Amendment and Waiver to the Credit Agreement and First Amendment and Waiver to the Standby Letter of Credit Agreement, including, without limitation, the reasonable fees and disbursements of counsel to CIBC in its capacity as Administrative Agent and Issuing Bank. The Borrower expressly acknowledges and further agrees that nothing in the preceding sentence shall be construed to limit in any way the provisions of Section 10.03 of the Credit Agreement or Section 9.03 of the Standby Letter of Credit Agreement. 6 IN WITNESS WHEREOF, the parties hereto have caused this Sixth Amendment and Waiver to the Credit Agreement and First Amendment and Waiver to the Standby Letter of Credit Agreement to be executed and delivered by their proper and duly authorized officers as of the day and year first above written. PAYLESS CASHWAYS, INC. By: S/ Stephen A. Lightstone ------------------------------ Title: Sr. Vice President- Finance BANKS PARTIES TO THE CREDIT AGREEMENT: CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK AGENCY, as Administrative Agent, Collateral Agent, Managing Agent and Letter of Credit Bank By: S/ David McGowan ------------------------------ Title: Authorized Signatory THE BANK OF NOVA SCOTIA, as Managing Agent and Bank By: S/ F.C.H. Ashby ------------------------------ Title: Sr. Mgr. Loan Operations NATIONSBANK OF TEXAS, N.A., as Managing Agent and Bank By: S/ Susan Ray ------------------------------ Title: Vice President BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Co-Agent and Bank By: S/ Burton Queen ------------------------------ Title: Vice President 7 CIBC INC. By: S/ David McGowan ------------------------------ Title: Vice President ABN AMRO BANK N.V. By: S/ Patricia M. Luken ------------------------------ Title: Vice President By: S/ John W. Stanger ------------------------------ Title: Vice President BANCA COMMERCIALE ITALIANA By: ------------------------------ Title: By: ------------------------------ Title: BANK OF MONTREAL By: S/ Calvin R. Myers ------------------------------ Title: Managing Director THE BANK OF NEW YORK By: S/ David S. Stueber ------------------------------ Title: Vice President BOATMEN'S FIRST NATIONAL BANK OF KANSAS CITY By: S/ Thomas J. Butkus ------------------------------ Title: Vice President 8 BANQUE PARIBAS By: S/ Robert E. Taubenheim ------------------------------ Title: Group Vice President By: S/ Peter Toal ------------------------------ Title: Regional General Manager DAI-ICHI KANGYO BANK LTD., CHICAGO BRANCH By: ------------------------------ Title: FIRST BANK NATIONAL ASSOCIATION By: S/ Merri B. Bernhardson ------------------------------ Title: Vice President THE FUJI BANK, LIMITED, CHICAGO BRANCH By: S/ Hidekazu Seo ------------------------------ Title: Joint General Manager THE INDUSTRIAL BANK OF JAPAN, LTD. By: S/ Hiroaki Nakamura ------------------------------ Title: Joint General Manager THE MITSUBISHI BANK, LTD. By: S/ Hiroaki Fuchida ------------------------------ Title: Vice President, Manager MITSUI NEVITT CAPITAL CORPORATION By: S/ Jerry Parisi ------------------------------ Title: Vice President 9 MITSUBISHI TRUST AND BANKING CORPORATION By: S/ Masaaki Yamagishi ------------------------------ Title: Chief Manager NATIONAL CITY BANK By: S/ J. Runk, Jr. ------------------------------ Title: Account Representative PILGRIM PRIME RATE TRUST By: S/ Michael Hatley ------------------------------ Title: Assistant Portfolio Mgr. THE SUMITOMO BANK, LTD. By: ------------------------------ Title: UNION BANK By: S/ Cecilia M. Valente ------------------------------ Title: Vice President UNITED STATES NATIONAL BANK OF OREGON By: S/ Blake R. Howells ------------------------------ Title: Vice President VAN KAMPEN MERRITT PRIME RATE INCOME TRUST By: S/ Jeffrey W. Maillet ------------------------------ Title: Vice Pres. & Portfolio Mgr. 10 BANKS PARTIES TO THE STANDBY LETTER OF CREDIT AGREEMENT: CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK AGENCY, as Issuing Bank By: S/ David McGowan ------------------------------ Title: Authorized Signatory THE BANK OF NOVA SCOTIA By: S/ F.C.H. Ashby ------------------------------ Title: Sr. Mgr. Loan Operations NATIONSBANK OF TEXAS, N.A. By: S/ Susan Ray ------------------------------ Title: Vice President BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION By: S/ Burton Queen ------------------------------ Title: Vice President CIBC INC. By: S/ David McGowan ------------------------------ Title: Vice President ABN AMRO BANK N.V. By: S/ Patricia M. Luken ------------------------------ Title: Vice President By: S/ John W. Stanger ------------------------------ Title: Vice President 11 BANCA COMMERCIALE ITALIANA By: ------------------------------ Title: By: ------------------------------ Title: BANK OF MONTREAL By: S/ Calvin R. Myers ------------------------------ Title: Managing Director THE BANK OF NEW YORK By: S/ David S. Stueber ------------------------------ Title: Vice President BOATMEN'S FIRST NATIONAL BANK OF KANSAS CITY By: S/ Thomas J. Butkus ------------------------------ Title: Vice President BANQUE PARIBAS By: S/ Robet E. Taubenheim ------------------------------ Title: Group Vice President By: S/ Peter Toal ------------------------------ Title: Regional General Manager DAI-ICHI KANGYO BANK LTD., CHICAGO BRANCH By: ------------------------------ Title: FIRST BANK NATIONAL ASSOCIATION By: S/ Merri B. Bernhardson ------------------------------ Title: Vice President 12 THE FUJI BANK, LIMITED, CHICAGO BRANCH By: S/ Hidekazu Seo ------------------------------ Title: Joint General Manager THE INDUSTRIAL BANK OF JAPAN, LTD. By: S/ Hiroaki Nakamura ------------------------------ Title: Joint General Manager THE MITSUBISHI BANK, LTD. By: S/ Hiroaki Fuchida ------------------------------ Title: Vice President, Manager MITSUI NEVITT CAPITAL CORPORATION By: S/ Jerry Parisi ------------------------------ Title: Vice President MITSUBISHI TRUST AND BANKING CORPORATION By: S/ Masaaki Yamagishi ------------------------------ Title: Chief Manager NATIONAL CITY BANK By: S/ J. Runk, Jr. ------------------------------ Title: Account Representative THE SUMITOMO BANK, LTD. By: ------------------------------ Title: 13 UNION BANK By: S/ Cecilia M. Valente ------------------------------ Title: Vice President UNITED STATES NATIONAL BANK OF OREGON By: S/ Blake R. Howells ------------------------------ Title: Vice President 14 CONSENT OF GUARANTOR The undersigned, pursuant to the Amended and Restated Guarantee, dated as of March 15, 1993, made by the undersigned in favor of Canadian Imperial Bank of Commerce, New York Agency, as Collateral Agent for the Banks, hereby consents to the provisions of the above Sixth Amendment and Waiver to the Credit Agreement and First Amendment and Waiver to the Standby Letter of Credit Agreement and agrees that the Amended and Restated Guarantee remains in full force and effect after giving effect to the above Sixth Amendment and Waiver to the Credit Agreement and First Amendment and Waiver to the Standby Letter of Credit Agreement. SOMERVILLE LUMBER AND SUPPLY CO., INC. By: S/ Stephen A. Lightstone ------------------------------ Title: Treasurer EX-10 4 1ST AMEND SUPPL DEATH BENEFIT PLAN Exhibit 10.1 FIRST AMENDMENT TO THE PAYLESS CASHWAYS, INC. SUPPLEMENTAL DEATH BENEFIT PLAN FIRST AMENDMENT, dated as of June 16 , 1994, (the "First Amendment") to The Payless Cashways, Inc. Supplemental Death Benefit Plan, effective as of January 1, 1988 (the "Plan"). WHEREAS, Payless Cashways, Inc. (the "Company") established the Plan for the purpose of providing certain death benefits to eligible employees in addition to those available pursuant to the Company's then existing death benefits plan and in recognition of the contribution to the Company by eligible employees; and WHEREAS, the Company desires to amend the Plan in order to allow for the transfer of interests under the Plan; NOW, THEREFORE, the Plan is amended as follows: 1. Section 5.6 of the Plan is hereby amended by deleting the Section in its entirety and substituting the following Section 5.6 therefor: "5.6 Transferability of Interests. The interests of the Participants ---------------------------- and beneficiaries under the Plan are not subject to the claims of creditors and may not be voluntarily or involuntarily transferred, assigned, alienated, or encumbered; provided, however, that upon the prior written notice to and approval by the Company, a Participant may transfer interests in the Plan. The interests of any transferee shall be subject to all terms and conditions of the Plan." 2. Except as expressly amended by this First Amendment, all the provisions of the Plan shall continue to remain in full force and effect in accordance with the terms thereof. IN WITNESS WHEREOF, PAYLESS CASHWAYS, INC. has caused this Instrument to be executed by its duly authorized officers on this 16th day of June, 1994, effective as of the 16th day of June, 1994. PAYLESS CASHWAYS, INC. By: S/ E.J. Holland, Jr. -------------------------- E. J. Holland, Jr. Senior Vice President- Human Resources ATTEST: s/ Linda J. French - - - - - --------------------------- Linda J. French, Secretary EX-11 5 COMPUTATION OF EPS 1 PAYLESS CASHWAYS, INC. AND SUBSIDIARY Exhibit 11.1 COMPUTATION OF PER SHARE EARNINGS - - - - - --------------------------------- (In thousands, except per share amounts)
Thirteen Weeks Ended Twenty-Six Weeks Ended ----------------------- ------------------------- May 28, May 29, May 28, May 29, 1994 1993 1994 1993 ------- ------- ------- ------- PRIMARY - - - - - ------- Income (loss) before equity in loss of joint venture and extraordinary item $ 17,400 $ 7,130 $ 16,719 $ (14,114) Add (deduct): Preferred stock dividends (1,264) (1,167) (2,503) (2,312) ----------- ---------- ----------- ------------ Income before equity in loss of joint venture and extraordinary item available to common shareholders $ 16,136 $ 5,963 $ 14,216 $ (16,426) Weighted average common and dilutive common equivalent shares outstanding 41,013 34,953 40,321 20,264 ----------- ---------- ----------- ------------ Income (loss) per common share before equity in loss of joint venture and extraordinary item $ .39 $ .17 $ .35 $ (.81) =========== ========== =========== ============ Equity in loss of joint venture (444) -- (444) -- ----------- ---------- ----------- ------------ Income (loss) before extraordinary item available to common shareholders $ 15,692 $ 5,963 $ 13,772 $ (16,426) Extraordinary item: early extinguishment of debt 55 (9,111) 55 (9,111) ----------- ---------- ----------- ------------ Net income (loss) available to common shareholders $ 15,747 $ (3,148) $ 13,827 $ (25,537) Weighted average common and dilutive common equivalent shares outstanding 41,013 33,958 40,321 20,264 ----------- ---------- ----------- ------------ Equity in loss of joint venture (.01) -- (.01) -- ----------- ---------- ----------- ------------ Income (loss) per common share before extraordinary item $ .38 $ .17 $ .34 $ (.81) Extraordinary item per common share -- (.27) -- (.45) ----------- ---------- ----------- ------------ Net income (loss) per common share $ .38 $ (.09) $ .34 $ (1.26) =========== ========== =========== ============
EX-15 6 AUDITOR'S REPORT 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 sheets of Payless Cashways, Inc. and subsidiary as of May 28, 1994 and May 29, 1993 and the related condensed consolidated statements of operations and cash flows for the thirteen and twenty-six week periods then ended. These financial statements are the responsibility of the Company's management. We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. 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 reviews, 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 expressed an unqualified opinion on these 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 27, 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 June 10, 1994 2 EXHIBIT 15.1 [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 June 10, 1994 related to our review of interim financial information. Pursuant to Rule 436(c) under the Securities Act of 1993, 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 June 27, 1994 -----END PRIVACY-ENHANCED MESSAGE-----