-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SSwV4VfBOlMqdaFaxXi6Gyo4KN3D62uA+VtbRbmSZQ7sjMCKn44+BRwnMHXbu3vg JlcT+iDg4gmVvqAhHJ7fgw== 0000076744-95-000007.txt : 19951002 0000076744-95-000007.hdr.sgml : 19951002 ACCESSION NUMBER: 0000076744-95-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19940826 FILED AS OF DATE: 19950928 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PAYLESS CASHWAYS INC CENTRAL INDEX KEY: 0000076744 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-LUMBER & OTHER BUILDING MATERIALS DEALERS [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: 95577105 BUSINESS ADDRESS: STREET 1: TWO PERSHING SQ 2300 MAIN ST CITY: KANSAS CITY STATE: MO ZIP: 64108 BUSINESS PHONE: 8162346000 10-Q 1 8/26/95 FORM 10-Q 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 August 26, 1995 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 September 15, 1995: Voting -- 37,663,922 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 Thirty-Nine Weeks Ended ------------------------------------- ---------------------------------- August 26, August 27, August 26, August 27, 1995 1994 1995 1994 --------------- --------------- --------------- --------------- Income Net sales $ 737,237 $ 744,112 $ 2,005,134 $ 2,020,380 Other income (7) 1,357 2,008 4,218 5,975 --------------- --------------- --------------- --------------- 738,594 746,120 2,009,352 2,026,355 Costs and expenses Cost of merchandise sold 530,402 530,402 1,432,885 1,424,342 Selling, general and administrative 159,272 149,569 460,925 443,809 Provision for depreciation and amortization 15,567 15,116 45,339 43,979 Interest expense 15,247 16,348 46,093 49,416 --------------- --------------- --------------- --------------- 720,488 711,435 1,985,242 1,961,546 --------------- --------------- --------------- --------------- INCOME BEFORE INCOME TAXES 18,106 34,685 24,110 64,809 Federal and state income taxes 8,985 15,635 11,765 29,040 --------------- --------------- --------------- --------------- Income before equity in loss of joint venture and extraordinary item 9,121 19,050 12,345 35,769 Equity in loss of joint venture (5) (975) (705) (3,450) (1,149) --------------- --------------- --------------- --------------- Income before extraordinary item 8,146 18,345 8,895 34,620 Extraordinary item: early extinguishment of debt (4) -- 288 -- 343 --------------- --------------- --------------- --------------- NET INCOME $ 8,146 $ 18,633 $ 8,895 $ 34,963 =============== =============== =============== =============== Income per common share before extraordinary item $ .17 $ .42 $ .12 $ .76 Extraordinary item: early extinguishment of debt (4) -- .01 -- .01 -- --- -- --- Net income per common share (3) $ .17 $ .43 $ .12 $ .77 =============== =============== =============== =============== Weighted average common and dilutive common equivalent shares outstanding 40,116 40,320 39,969 40,321 =============== =============== =============== =============== See notes to condensed consolidated financial statements
3 CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (1)
August 26, November 26, August 27, (In thousands) 1995 1994 1994 ------------- --------------- -------------- ASSETS CURRENT ASSETS Cash and cash equivalents $ 4,496 $ 2,680 $ 12,040 Trade receivables -- 5,127 6,524 Merchandise inventories (2) 406,808 406,066 406,738 Prepaid expenses and other current assets 27,444 26,448 28,840 Deferred income taxes 16,265 9,549 7,364 ------------- --------------- -------------- TOTAL CURRENT ASSETS 455,013 449,870 461,506 OTHER ASSETS Real estate held for sale 5,458 5,498 6,710 Cost in excess of net assets acquired, less accumulated amortization of $92,118, $82,355 and $79,101, respectively 428,548 438,311 441,565 Deferred financing costs 11,405 11,199 23,810 Other 23,785 17,706 14,728 LAND, BUILDINGS AND EQUIPMENT 847,952 810,825 790,230 Allowance for depreciation and amortization (261,041) (237,527) (234,767) ------------- --------------- -------------- TOTAL LAND, BUILDINGS AND EQUIPMENT 586,911 573,298 555,463 ------------- --------------- -------------- $ 1,511,120 $ 1,495,882 $ 1,503,782S ============= =============== ============== See notes to condensed consolidated financial statements
4 CONDENSED CONSOLIDATED BALANCE SHEETS - Continued (Unaudited) (1)
August 26, November 26, August 27, (In thousands) 1995 1994 1994 ------------- --------------- -------------- LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Current portion of long-term debt $ 18,627 $ 20,269 $ 58,033 Advances under bank facilities -- -- 20,000 Trade accounts payable 160,178 151,059 152,634 Other current liabilities 136,362 128,031 131,372 Income taxes payable 22,280 11,383 17,988 ------------- --------------- -------------- TOTAL CURRENT LIABILITIES 337,447 310,742 380,027 LONG-TERM DEBT, less portion classified as current liability (4) 641,458 654,131 605,423 NON-CURRENT LIABILITIES Deferred income taxes 65,810 72,129 68,765 Other 23,461 23,015 23,034 SHAREHOLDERS' EQUITY Preferred Stock, $1.00 par value, 25,000,000 shares authorized; issued: Cumulative Preferred Stock, 406,000 shares, $71.2 million aggregate liquidation preference 40,600 40,600 40,600 Common Stock, $.01 par value: Voting, 150,000,000 shares authorized, 37,663,922, 37,624,222, and 37,624,222 shares issued, respectively 377 376 376 Non-Voting Class A, 5,000,000 shares authorized, 2,250,000 shares issued 23 23 23 Additional paid-in capital 487,008 486,326 486,830 Foreign currency translation adjustment (2,589) (90) -- Accumulated deficit (82,475) (91,370) (101,296) ------------- --------------- -------------- TOTAL SHAREHOLDERS' EQUITY 442,944 435,865 426,533 ------------- --------------- -------------- COMMITMENTS (6) $ 1,511,120 $ 1,495,882 $ 1,503,782 ============= =============== ============== See notes to condensed consolidated financial statements
5 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (1)
(In thousands) Thirty-Nine Weeks Ended ----------------------------------------------------- August 26, August 27, 1995 1994 ------------------ ----------------- Cash Flows from Operating Activities Net income $ 8,895 $ 34,963 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 45,339 43,979 Non-cash interest 1,750 3,442 Gain on early extinguishment of debt -- (343) Equity in loss of joint venture 3,450 1,149 Deferred income taxes (13,035) 6,574 Other 887 1,873 Changes in assets and liabilities 33,164 (7,841) ------------------ ----------------- NET CASH PROVIDED BY OPERATING ACTIVITIES 80,450 83,796 Cash Flows from Investing Activities Additions to land, buildings and equipment (53,726) 52,598) Proceeds from sale of land, buildings and equipment 394 1,224 Investment in joint venture (9,254) (3,431) Increase in other assets (19) (4,616) ------------------ ----------------- NET CASH USED IN INVESTING ACTIVITIES (62,605) (59,421) Cash Flows from Financing Activities Proceeds from long-term debt -- 21,307 Retirements of long-term debt (4) (14,315) (53,033) Increase in short-term borrowings -- 15,000 Sale of Common Stock under stock option plan 16 2,517 Sale of Common Stock under warrants -- 89 Other (1,730) (1,888) ------------------ ----------------- NET CASH USED IN FINANCING ACTIVITIES (16,029) (16,008) ------------------ ----------------- Net increase in cash and cash equivalents 1,816 8,367 Cash and cash equivalents, beginning of period 2,680 3,673 ------------------ ----------------- Cash and cash equivalents, end of period $ 4,496 $ 12,040 ================== ================= See notes to condensed consolidated financial statements
6 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Thirty-nine weeks ended August 26, 1995 and August 27, 1994. (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 26, 1994, 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 26, 1994, condensed consolidated balance sheet has been derived from the audited consolidated financial statements as of that date. Certain reclassifications have been made to prior period amounts to conform with the 1995 presentation. (2) Approximately 81% 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 $27.9 million, $23.3 million and $24.4 million higher than reported at August 26, 1995, November 26, 1994, and August 27, 1994, respectively. (3) Net income 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 was adjusted for dividend requirements on preferred stock. (4) Long-term debt consisted of the following:
August 26, November 26, August 27, (In thousands) 1995 1994 1994 ------------- -------------- ------------- 1994 Credit Agreement $ 342,000 $ 345,000 $ -- 1993 Credit Agreement -- -- 304,546 1994 Multi-Draw Credit Agreement -- -- 21,306 Mortgage loan payable to insurance company 142,949 154,195 158,025 Senior subordinated notes - 9-1/8% 173,655 173,655 178,000 Other senior debt 1,481 1,550 1,579 ------------- -------------- ------------- 660,085 674,400 663,456 Less portion classified as current liability (18,627) (20,269) (58,033) ------------- -------------- ------------- $ 641,458 $ 654,131 $ 605,423 ============= ============== =============
During the first quarter of 1995, the Company entered into an interest rate cap with an affiliate of an investment banking firm, limiting to 8% LIBOR the interest rates on $100 million of its floating rate debt. The cost of this agreement is included in deferred financing costs and is being amortized over the three-year period of the agreement. As of August 27, 1994, the Company had borrowed $21.3 million under the 1994 Multi-Draw Credit Agreement to repurchase and retire $22 million aggregate principal amount of 9-1/8% Senior Subordinated Notes, resulting in an extraordinary gain of $0.3 million, net of tax, for the quarter ended August 27, 1994. (5) The Company is a 49% investor in Total Home de Mexico, S.A. de C.V., a joint venture with a Mexican company, Alfa, S.A. de C.V. Total Home has opened two stores in Mexico. The joint venture owners continue to assess long-range plans as the next several quarters are expected to be difficult for the Mexican economy. The Company accounts for this investment on the equity method. 7 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued (6) In 1995, the Company has entered into an agreement providing for the operating lease of two of each of its 1994 and 1995 new stores, and up to two 1996 new stores. The Company will have the option to purchase the stores at the end of the lease terms. In the event the Company chooses not to exercise this option, it is obligated to arrange the sale of the stores to an unrelated party and is required to pay the lessor any difference between the net sales proceeds and the lessor's net investment in the stores, subject to certain limitations. (7) In July, 1993, two of the Company's retail facilities were severely damaged by the midwestern floods. Settlement proceeds in excess of the book value of $2.8 million, related to the flood-damaged real estate, fixtures and equipment, have been reflected as other income in the accompanying consolidated statements of operations for the thirteen weeks and the thirty-nine weeks ended August 27, 1994. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. RESULTS OF OPERATIONS Income Net sales for the quarter ended August 26, 1995 decreased 0.9% over the same period of 1994 in total and 4.1% on a comparable-store sales basis. (Comparable stores are those open one full year.) Net sales for the first three quarters of 1995 decreased 0.8% from the same period of 1994 in total and 3.6% on a comparable store sales basis. Sales for both periods of 1995 were negatively impacted by a slower housing environment, deflated lumber costs and, in a number of markets, an excess of retail space devoted to the sale of building materials. During each of the first three quarters of 1995 and 1994, the Company opened five new stores. Two stores were sold during the first quarter of 1995. Included in other income for the third quarter and first three quarters of 1994 were gains of $0.9 million and $2.8 million, respectively, from flood-related settlements. Costs and Expenses Cost of merchandise sold as a percent of sales was 72.0% and 71.3% for the third quarter of 1995 and 1994, respectively. For the first three quarters of 1995 and 1994, cost of merchandise sold as a percent of sales was 71.5% and 70.5%, respectively. The increase for both periods was primarily due to the Company's pricing initiatives. Selling, general and administrative expenses were 21.6% and 20.1% of sales for the third quarter of 1995 and 1994, respectively. For the first three quarters of 1995 and 1994, selling, general and administrative expenses were 22.9% and 22.0% of sales, respectively. The primary reason for the dollar increase for the quarter and the first three quarters was costs associated with new stores. The provision for depreciation and amortization increased over the third quarter and first three quarters of 1994 due to increased capital expenditures over the past two years. Interest expense for the third quarter and first three quarters of 1995 decreased to $15.2 million and $46.1 million compared to $16.3 million and $49.4 million, respectively, for the same periods of 1994. The income tax expense for the first three quarters of 1995 was $11.8 million compared to $29.0 million for the first three quarters of 1994. The effective tax rates for both periods were different from the 35% statutory rate primarily due to the effect of goodwill amortization, which is non-deductible for income tax purposes. 8 MANAGEMENT'S DISCUSSION AND ANALYSIS - Continued Net Income Net income for the quarter ended August 26, 1995 was $8.1 million compared to $18.6 million for the same period of 1994. For the first three quarters of 1995 net income was $8.9 million compared to $35.0 million for the same period of 1994. The decrease in net income for both periods was primarily the result of decreased comparable store sales and pricing initiatives. Net income for the first three quarters of 1995 and 1994 also reflects a $3.5 million and $1.1 million loss, respectively, attributable to start-up costs for Total Home, the Company's joint venture in Mexico. LIQUIDITY AND CAPITAL RESOURCES The Company's principal source of cash is from operations. Cash provided by operating activities was $80.5 million for the first three quarters of 1995 compared to $83.8 million for the same period of 1994. The primary reason for the decrease in cash from operating activities was lower sales and gross margins. Borrowings are available under the 1994 Credit Agreement to supplement cash generated by operations. At August 26, 1995, $63.7 million was available for borrowing under the 1994 Credit Agreement. At August 26, 1995, working capital was $117.6 million compared to $139.1 million and $81.5 million at November 26, 1994 and August 27, 1994, respectively. The current ratios at August 26, 1995, November 26, 1994, and August 27, 1994 were 1.35 to 1, 1.45 to 1, and 1.21 to 1, respectively. The Company's primary investing activities continue to be capital expenditures for existing and new stores and distribution centers. The 1994 Credit Agreement governs the amount of capital expenditures which can be made. The Company spent approximately $53.7 million and $52.6 million for new stores, equipment and renovation of retail facilities and distribution centers during the first three quarters of 1995 and 1994, respectively. During each of the first three quarters of 1995 and 1994, five new stores were opened. A sixth store has opened in the fourth quarter of 1995. The Company intends to finance the remaining fiscal 1995 capital expenditures of approximately $12 million, consisting primarily of new stores, additional equipment, and renovation of existing stores, with funds generated from operations. The Company has entered into an agreement providing for the operating lease of two of each of its 1994 and 1995 new stores and up to two of its 1996 new stores. The Company intends to make additional investments as a result of the completion of a strategic review begun in the first quarter of 1995. Some of the expanded assortment offered in the Company's newest stores will be added to other selected stores which may increase the Company's average inventory by approximately $10 million. It is also anticipated that some facilities will be dedicated to the high volume professional and commercial accounts whose business is not traditionally retail store-based. Based on current plans, these strategic initiatives, to be tested during 1996, are expected to result in a 1996 capital investment of approximately $10 million. The Company also invested $9.3 million and $3.4 million in its joint venture, Total Home de Mexico, S.A. de C.V., during the first three quarters of 1995 and 1994, respectively. Total Home opened its first store in Monterrey, Mexico, in December, 1994 and a second store in Mexico City in June, 1995. A loss of $4 to $5 million attributable to the Company's share of the start-up cost of Total Home is expected to be incurred in 1995. The joint venture owners continue to assess long-range plans as the next several quarters are expected to be difficult for the Mexican economy. At August 26, 1995 the carrying value of the Company's investment in the joint venture was approximately $7.8 million, net of a cumulative foreign currency translation adjustment of approximately $2.6 million, which is recorded as a direct reduction of shareholders' equity. The Company continues to assess the impact the changes in the Mexican economy may have on the recoverability of its investment in the joint venture. 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 borrowing availability under the 1994 Credit Agreement should provide sufficient liquidity to meet all cash requirements for the next 12 months without additional borrowings. During the second quarter of 1995, the 1994 Credit Agreement was amended which resulted in the modification of certain financial covenants contained therein. The permitted levels of capital expenditures and investments in the Mexican joint venture were reduced. In addition, the interest coverage and debt to capitalization covenants were relaxed. As a result, the Company has reduced its planned fiscal 1995 capital expenditures from approximately $82.5 million to approximately $65 to $70 million. 9 REVIEW BY INDEPENDENT AUDITORS The condensed consolidated financial statements of Payless Cashways, Inc. and its subsidiary for the thirteen and thirty-nine week periods ended August 26, 1995 and August 27, 1994, have been reviewed by KPMG Peat Marwick LLP, 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 subsidiary on a consolidated basis will be furnished to the Commission upon request. 11.1 Computation of per share earnings. 15.1 Letter re unaudited financial information - KPMG Peat Marwick LLP. 27.1 Financial data schedule. b. Reports on Form 8-K. No reports on Form 8-K were filed by Payless during the quarter ended August 26, 1995. 10 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: September 26, 1995 By s/Stephen A. Lightstone Stephen A. Lightstone, Senior Vice President, Financial and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) EX-11 2 EPS CALCULATION 1 Exhibit 11.1 PAYLESS CASHWAYS, INC. AND SUBSIDIARY COMPUTATION OF PER SHARE EARNINGS - --------------------------------------- (In thousands, except per share amounts)
Thirteen Weeks Ended Thirty-Nine Weeks Ended -------------------------------- -------------------------------- August 26, August 27, August 26, August 27, 1995 1994 1995 1994 ------------ ------------ ------------ ------------ PRIMARY - ------- Net income before extraordinary item $ 8,146 $ 18,345 $ 8,895 $ 34,620 Less: Preferred stock dividends (1,395) (1,289) (4,104) (3,792) ---------- ---------- ---------- ---------- Income before extraordinary item available to common shareholders 6,751 17,056 4,791 30,828 Extraordinary item: early extinguishment of debt -- 288 -- 343 ---------- ---------- ---------- ---------- Net income available to common shareholders $ 6,751 $ 17,344 $ 4,791 $ 31,171 ---------- ---------- ---------- ---------- Weighted average common and dilutive common equivalent shares outstanding 40,116 40,320 39,969 40,321 ---------- ---------- ---------- ---------- Income per common share before extraordinary item $ .17 $ .42 $ .12 $ .76 Extraordinary item per common share -- .01 -- .01 ---------- ---------- ---------- ---------- Net income per common share $ .17 $ .43 $ .12 $ .77 ========== ========== ========== ========== FULLY DILUTED - ------------- Net income before extraordinary item $ 8,146 $ 18,345 $ 8,895 $ 34,620 Less: Preferred stock dividends (1,395) (1,289) (4,104) (3,792) ---------- ---------- ---------- ---------- Income before extraordinary item available to common shareholders 6,751 17,056 4,791 30,828 Extraordinary item: early extinguishment of debt -- 288 -- 343 ---------- ---------- ---------- ---------- Net income available to common shareholders $ 6,751 $ 17,344 $ 4,791 $ 31,171 ---------- ---------- ---------- ---------- Weighted average common and dilutive common equivalent shares outstanding 40,116 40,320 39,969 40,321 ---------- ---------- ---------- ---------- Income per common share before extraordinary item $ .17 $ .42 $ .12 $ .76 Extraordinary item per common share -- .01 -- .01 ---------- ---------- ---------- ---------- Net income per common share $ .17 $ .43 $ .12 $ .77 ========== ========== ========== ==========
EX-15 3 AUDITOR'S REPORT 1 EXHIBIT 15.1 - ------------ [Letterhead of KPMG Peat Marwick LLP] 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 August 26, 1995 and August 27, 1994 and the related condensed consolidated statements of operations for the thirteen and thirty-nine week periods then ended and cash flows for the thirty-nine week periods then ended. These condensed consolidated 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 as 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 26, 1994 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 9, 1995, we expressed an unqualified opinion on those consolidated financial statements. Our report referred to a change in the method of accounting for post-retirement benefits other than pensions in fiscal 1992. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of November 26, 1994 is fairly presented, in all material respects, in relation to the consolidated balance sheet from which it has been derived. s/ KPMG Peat Marwick LLP Kansas City, Missouri September 12, 1995 2 EXHIBIT 15.1 - ------------ [Letterhead of KPMG Peat Marwick LLP] 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 September 12, 1995 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 LLP Kansas City, Missouri September 27, 1995 EX-27 4 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the August 26, 1995, financial statements and is qualified in its entirety by reference to such financial statements. 1000 9-MOS NOV-25-1995 AUG-26-1995 4496 0 0 0 406808 455013 847952 (261041) 1511120 337447 641458 400 0 40600 401944 1511120 2005134 2009352 1432885 1432885 0 0 46093 24110 11765 8895 0 0 0 8895 .12 0
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