-----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, OCqfbozQph25c8dGcL9Un0Ts5pY/zFvuIfwUciGKmj59ILRc+3YUKfQY4+oE+f3k DX3h01rIorwan4EL3wR29w== 0000076744-96-000011.txt : 19960710 0000076744-96-000011.hdr.sgml : 19960710 ACCESSION NUMBER: 0000076744-96-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960525 FILED AS OF DATE: 19960709 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: 96592346 BUSINESS ADDRESS: STREET 1: TWO PERSHING SQ 2300 MAIN ST CITY: KANSAS CITY STATE: MO ZIP: 64108 BUSINESS PHONE: 8162346000 10-Q 1 FORM 10-Q 5/25/96 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Form 10-Q (Mark One) / X / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended May 25, 1996 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 28, 1996: Voting -- 37,699,436 shares Non-Voting Class A -- 2,250,000 shares 2 PAYLESS CASHWAYS, INC. PART I -- FINANCIAL INFORMATION Item 1. Financial Statements. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (1)
Thirteen Weeks Ended Twenty-Six Weeks Ended -------------------------------- -------------------------------- May 25, May 27, May 25, May 27, (In thousands, except per share amounts) 1996 1995 1996 1995 ------------- ------------- -------------- ------------- Income Net sales $ 682,252 $ 711,679 $ 1,209,019 $ 1,267,897 Other income 1,521 1,517 3,118 2,861 ------------- ------------- -------------- ------------- 683,773 713,196 1,212,137 1,270,758 Costs and expenses Cost of merchandise sold 491,500 513,418 864,416 902,483 Selling, general and administrative 152,929 158,984 294,334 301,653 Provision for depreciation and amortization 13,586 15,083 26,770 29,772 Interest expense 14,606 15,573 29,958 30,846 ------------- ------------- -------------- ------------- 672,621 703,058 1,215,478 1,264,754 ------------- ------------- -------------- ------------- INCOME (LOSS) BEFORE INCOME TAXES 11,152 10,138 (3,341) 6,004 Federal and state income taxes 5,286 4,550 (1,584) 2,780 ------------- ------------- -------------- ------------- Income (loss) before equity in loss of joint venture 5,866 5,588 (1,757) 3,224 Equity in loss of joint venture -- (975) -- (2,475) ------------- ------------- -------------- ------------- NET INCOME (LOSS) $ 5,866 $ 4,613 $ (1,757) $ 749 ============= ============= ============== ============= Net income (loss) attributable to common stock $ 4,385 $ 3,245 $ (4,689) $ (1,960) ============= ============= ============== ============= Net income (loss) per common share (2) $ .11 $ .08 $ (.12) $ (.05) ============= ============= ============== ============= Weighted average common and dilutive common equivalent shares outstanding 40,063 40,092 39,933 39,896 ============= ============= ============== ============= See notes to condensed consolidated financial statements
3 CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (1)
May 25, November 25, May 27, (In thousands) 1996 1995 1995 ------------- -------------- ------------ ASSETS CURRENT ASSETS Cash and cash equivalents $ 8,001 $ 960 $ 2,705 Merchandise inventories (3) 425,999 392,604 437,305 Prepaid expenses and other current assets 26,659 29,375 20,366 Deferred income taxes 18,337 19,740 15,886 ------------- -------------- ------------ TOTAL CURRENT ASSETS 478,996 442,679 476,262 OTHER ASSETS Real estate held for sale 8,591 6,082 5,458 Cost in excess of net assets acquired, less accumulated amortization of $100,343 $95,372 and $88,863, respectively 320,208 323,819 431,803 Deferred financing costs 10,493 11,421 11,996 Other 15,982 14,925 23,697 LAND, BUILDINGS AND EQUIPMENT 812,483 826,455 847,182 Allowance for depreciation and amortization (273,202) (280,945) (256,824) ------------- -------------- ------------ TOTAL LAND, BUILDINGS AND EQUIPMENT 539,281 545,510 590,358 ------------- -------------- ------------ $ 1,373,551 $ 1,344,436 $ 1,539,574 ============= ============== ============ See notes to condensed consolidated financial statements
4 CONDENSED CONSOLIDATED BALANCE SHEETS - Continued (Unaudited) (1)
May 25, November 25, May 27, (In thousands) 1996 1995 1995 ------------- ------------- ------------- LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Current portion of long-term debt $ 15,449 $ 31,472 $ 49,173 Trade accounts payable 205,186 159,844 180,638 Other current liabilities 144,378 146,278 122,269 Income taxes payable 9,621 6,685 17,141 ------------- ------------- ------------- TOTAL CURRENT LIABILITIES 374,634 344,279 369,221 LONG-TERM DEBT, less portion classified as current liability (4) 609,060 608,627 645,789 NON-CURRENT LIABILITIES Deferred income taxes 59,385 59,994 66,137 Other 23,521 23,373 23,290 SHAREHOLDERS' EQUITY Preferred Stock, $1.00 par value, 25,000,000 shares authorized; issued: Cumulative Preferred Stock, 406,000 shares, $75.5 million aggregate liquidation preference 40,600 40,600 40,600 Common Stock, $.01 par value: Voting, 150,000,000 shares authorized, 37,699,436, 37,663,922, and 37,661,922 shares issued, respectively 376 376 377 Non-Voting Class A, 5,000,000 shares authorized, 2,250,000 shares issued 23 23 23 Additional paid-in capital 487,628 487,083 486,816 Foreign currency translation adjustment -- -- (2,058) Accumulated deficit (221,676) (219,919) (90,621) ------------- ------------- ------------- TOTAL SHAREHOLDERS' EQUITY 306,951 308,163 435,137 ------------- ------------- ------------- $ 1,373,551 $ 1,344,436 $ 1,539,574 ============= ============= ============= See notes to condensed consolidated financial statements
5 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (1)
Twenty-Six Weeks Ended ---------------------------------------------- May 25, May 27, (In thousands) 1996 1995 ------------------ ----------------- Cash Flows from Operating Activities Net income (loss) $ (1,757) $ 749 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 26,770 29,772 Non-cash interest 1,200 1,150 Equity in loss of joint venture -- 2,475 Deferred income taxes 794 (12,329) Other 1,001 569 Changes in assets and liabilities 3,966 9,789 ------------------ ----------------- NET CASH PROVIDED BY OPERATING ACTIVITIES 31,974 32,175 Cash Flows from Investing Activities Additions to land, buildings and equipment (18,118) (43,366) Proceeds from sale of land, buildings and equipment 11,968 80 Acquisition of business, excluding working capital Land, buildings and equipment (193) -- Purchase price in excess of net assets acquired (1,360) -- Investment in joint venture -- (6,207) Increase in other assets (1,057) (1,472) ------------------ ----------------- NET CASH USED IN INVESTING ACTIVITIES (8,760) (50,965) Cash Flows from Financing Activities Retirements of long-term debt (4) (23,447) (7,438) Proceeds from long-term debt 7,857 28,000 Sale of Common Stock under stock option plan 79 11 Other (662) (1,758) ------------------ ----------------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (16,173) 18,815 ------------------ ----------------- Net increase in cash and cash equivalents 7,041 25 Cash and cash equivalents, beginning of period 960 2,680 ------------------ ----------------- Cash and cash equivalents, end of period $ 8,001 $ 2,705 ================== ================= See notes to condensed consolidated financial statements
6 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Twenty-six weeks ended May 25, 1996 and May 27, 1995. (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 25, 1995, 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 25, 1995, condensed consolidated balance sheet has been derived from the audited consolidated financial statements as of that date. (2) 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. (3) Approximately 83% 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 $30.2 million, $27.5 million and $26.1 million higher than reported at May 25, 1996, November 25, 1995 and May 27, 1995, respectively. (4) Long-term debt consisted of the following:
May 25, November 25, May 27, (In thousands) 1996 1995 1995 ------------- ------------- ------------ Amended Credit Agreement $ 333,857 $ 326,000 $ 373,000 Mortgage loan payable to insurance company 115,591 138,987 146,802 Senior subordinated notes - 9-1/8% 173,655 173,655 173,655 Other senior debt 1,406 1,457 1,505 ------------- ------------- ------------ 624,509 640,099 694,962 Less portion classified as current liability (15,449) (31,472) (49,173) ------------- ------------- ------------ $ 609,060 $ 608,627 $ 645,789 ============= ============= ============
7 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 25, 1996 decreased 4.1% from the same period of 1995 in total and on a comparable-store sales basis. (Comparable stores are those open one full year.) Net sales for the first half of 1996 decreased 4.6% from the same period of 1995 in total and 5.3% on a comparable store sales basis. Sales for the second quarter reflect increased sales to professional customers while consumer sales have been adversely affected by competitive pressure. Increases in housing activity and lumber prices supported a sales trend in which each month of the second quarter improved over the preceding month, in spite of adverse weather in many of the Company's markets. Six stores were closed during the first quarter of 1996 in connection with the restructuring plan announced in the fourth quarter of 1995. Those six stores accounted for $4.9 million and $30.7 million of sales in the first half of 1996 and 1995, respectively. During the first half of 1995, the Company opened four new stores and sold two stores. COSTS AND EXPENSES Cost of merchandise sold as a percent of sales was 72.0% and 72.2% for the second quarter of 1996 and 1995, respectively. For the first half of 1996 and 1995, cost of merchandise sold as a percent of sales was 71.5% and 71.2%, respectively. The increase for the first half of 1996 was primarily due to the Company's first quarter pricing initiatives. Selling, general and administrative expenses were 22.4% and 22.3% of sales for the second quarter of 1996 and 1995, respectively. For the first half of 1996 and 1995, selling, general and administrative expenses were 24.3% and 23.8% of sales, respectively. The increase as a percent of sales for both periods of 1996 was due primarily to lower sales. The decrease in dollars for both periods of 1996 was due primarily to savings from the six closed stores. The provision for depreciation and amortization decreased from the second quarter and first half of 1995 due primarily to goodwill written-off and assets removed from service in connection with the 1995 restructuring plan. Interest expense for the second quarter and first half of 1996 decreased compared to the same periods of 1995 primarily due to lower borrowing levels in 1996. The income tax benefit for the first half of 1996 was $1.6 million compared to income tax expense of $2.8 million for the first half of 1995. 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. Such tax expense or benefit reflects management's estimates of the annual effective tax rates at the end of each quarter. NET INCOME (LOSS) Net income for the quarter ended May 25, 1996 was $5.9 million compared to $4.6 million for the same period of 1995. For the first half of 1996, net loss was $1.8 million compared to net income of $.7 million for the same period of 1995. Net income for the second quarter and first half of 1995 also reflects a loss of $1.0 million and $2.5 million, respectively, attributable to the Company's former joint venture in Mexico discussed further below. In early 1996, the Company implemented certain initiatives to improve the operating results of several underperforming stores. The Company will continue to evaluate the results of these initiatives during the next two quarters. Should the Company be unsuccessful in improving the operating results of these stores, they will be considered for closure and, if closed, could result in a substantial charge for employee severance and inventory liquidation that would likely be recorded in the fourth quarter. The Company expects to adopt Financial Accounting Standard No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets To Be Disposed Of" ("FAS 121"), in the fourth quarter of 1996. This Statement requires 8 MANAGEMENT'S DISCUSSION AND ANALYSIS - Continued the Company to record impairments of long-lived assets and associated goodwill when there is evidence that events or changes in circumstances have made recovery of an asset's carrying value unlikely. As a result of the increasingly competitive environment for building materials retailing, the Company is estimating each of its stores' future operating cash flows, including the expected impact of recent initiatives to improve the cash flows of several underperforming stores. As a part of this process, the Company is also identifying assets that may be considered impaired under FAS 121. Based upon information currently available, the Company estimates that it will record a pretax charge for asset impairments (FAS 121) and potential store closures in the range of $50 to $75 million ($35 to $55 million after tax) in the fourth quarter of 1996. The most significant portion of such charge is expected to be non-cash. In October 1995, the Financial Accounting Standards Board issued Financial Accounting Standard No. 123, "Accounting for Stock-Based Compensation" ("FAS 123"), which is effective for fiscal years beginning after December 15, 1995. As permitted by FAS 123, the Company plans to continue to account for its stock-based plans under APB No. 25, "Accounting for Stock Issued to Employees". LIQUIDITY AND CAPITAL RESOURCES The Company's principal source of cash is from operations. Cash provided by operating activities was $32.0 million for the first half of 1996 compared to $32.2 million for the same period of 1995. During the first half of 1996, the Company used cash of approximately $8.4 million in operating activities related to the execution of the 1995 restructuring plan announced in the fourth quarter of 1995. Borrowings are available under the Amended Credit Agreement to supplement cash generated by operations. At May 25, 1996, $63.8 million was potentially available for borrowing under the Amended Credit Agreement, although any such borrowing was limited by the Company's financial covenants described below. At May 25, 1996, working capital was $104.4 million compared to $98.4 million and $107.0 million at November 25, 1995 and May 27, 1995, respectively. The current ratios at May 25, 1996, November 25, 1995, and May 27, 1995 were 1.28 to 1, 1.29 to 1, and 1.29 to 1, respectively. The Company's primary investing activities are capital expenditures for strategic initiatives, renovation of existing stores, and additional equipment. The Amended Credit Agreement governs the amount of capital expenditures which can be made. The Company spent approximately $19.7 million and $43.4 million during the first half of 1996 and 1995, respectively, for strategic initiatives including the acquisition of a door and trim manufacturer during January 1996, renovation of existing stores, additional equipment and, in fiscal 1995, new stores. The Company intends to finance the remaining fiscal 1996 capital expenditures of approximately $35 million, consisting primarily of strategic initiatives, renovation of existing stores and additional equipment, with funds generated from operations. For fiscal 1996, the Company has shifted its emphasis from new store openings to initiatives that further address the needs of the professional and do-it-yourself customers. Several stores have been reoriented to concentrate on the professional customer and merchandise assortment is being added to many stores to address do-it-yourself customer demand for more choices of price, quality and style. During the first quarter of 1996, the Company sold a distribution center in connection with the 1995 restructuring plan, providing approximately $11.9 million of cash proceeds. During the first half of fiscal 1995, the Company had also invested $6.2 million in its joint venture, Total Home de Mexico, S.A. de C.V. Significant changes in the Mexican economy caused the Company to reassess its position and sell its Mexican investment to an affiliate of its former joint venture partner in October 1995. The Company's most significant financing activity is and will continue to be the retirement of indebtedness. In connection with the sale of the distribution center, discussed above, and in anticipation of selling real estate related to recently closed stores, the Company repaid approximately $16.5 million of related indebtedness during the first quarter of 1996. 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 9 expected results of operations in the future, cash flow from operations and borrowing availability under the Amended Credit Agreement should provide sufficient liquidity to meet all cash requirements for the next 12 months without additional borrowings, subject to the possible adverse impact of loan covenants described below. The Amended Credit Agreement and certain lease agreements contain covenants relating to, among other things, the maximum debt to earnings before interest, taxes, depreciation, and amortization (EBITDA) ratios and minimum interest coverage ratios. Compliance with these covenants is determined on a "rolling four-quarter" basis. In order to achieve compliance with these covenants during 1996, the Company's operating results must substantially meet management's expectations for the remainder of 1996. Management is unable to predict if it will achieve compliance with these covenants because of factors beyond its control, including economic conditions, lumber prices, competitive pressure on sales and pricing, and weather, which could cause non-compliance. Management is currently in discussions with its bank lenders for the purpose of revising the terms of the credit agreement, including the financial covenants. During the past several years the Company has been able to negotiate operating flexibility with its lenders, although future success in achieving any such renegotiations or refinancings, or the specific terms thereof, including interest rates, capital expenditure limits or borrowing capacity, cannot be assured. If the Company fails to achieve compliance with these covenants or, in the absence of such compliance, if the Company fails to amend such financial covenants on terms favorable to the Company, the Company may be in default under such covenants. If such a default occurred, it would permit acceleration of its debt under the Amended Credit Agreement which, in turn, would permit acceleration of substantially all of the Company's other long-term debt. Forward-looking statements included in this subsection of this Quarterly Report are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. There are certain important factors that could cause results to differ materially from those anticipated by some of the statements made above. Investors are cautioned that all forward-looking statements involve risks and uncertainty. In addition to the factors discussed above, among the other factors that could cause actual results to differ materially are the following: consumer spending and debt levels; interest rates; housing activity, including existing home turnover and new home construction; product mix; sale of certain real estate; growth of certain market segments; and an excess of retail space devoted to the sale of building materials. Additional information concerning those and other factors is contained in the Company's Securities and Exchange Commission filings, including but not limited to the Form 10-K, copies of which are available from the Company without charge. 10 REVIEW BY INDEPENDENT AUDITORS The condensed consolidated financial statements of Payless Cashways, Inc. for the thirteen week and twenty-six week periods ended May 25, 1996 and May 27, 1995, have been reviewed by KPMG Peat Marwick LLP, independent auditors. Their report is included in this filing. PART II -- OTHER INFORMATION Item 1. Legal Proceedings. A group of terminated employees and others have filed a lawsuit against the Company and other named defendants in the United States District Court for the Southern District of Iowa. (See the full description of the lawsuit in Item 3-Legal Proceedings contained in the Company's Form 10-K for the year ended November 25, 1995.) The lawsuit was brought in connection with a reduction in force pursuant to a January 1994 restructuring. The suit has asserted a variety of claims including federal and state securities fraud claims, alleged violations of the Racketeer Influenced and Corrupt Organizations (RICO) Act, federal and state claims of age discrimination, alleged violations of the Employment Retirement Income Security Act of 1974, and various state law claims including, but not limited to, fraudulent misrepresentation allegations. The Company filed a motion to dismiss the majority of the claims; and Rulings and an Order have been issued with respect thereto, substantially narrowing plaintiff's legal claims by dismissing some age discrimination counts, all federal securities fraud and RICO counts except one each, and all state law counts related to an alleged partnership. An Answer to the Complaint has been filed and discovery is proceeding. The plaintiffs have filed a motion for class certification and are resisting the Company's request for additional time to complete discovery with respect to such certification. No hearing date has been scheduled. The Company denies any and all claimed liability and is vigorously defending this litigation, but, given the early state of this litigation, is unable to estimate a potential range of monetary exposure, if any, to the Company or to predict the likely outcome of this matter. Item 4. Submission of Matters to a Vote of Security Holders. The Annual Meeting of Shareholders was held April 18, 1996. Shareholders approved the Payless Cashways, Inc. Deferred Compensation Plan for Directors (36,063,525 for; 917,904 against; 207,499 abstain). Shareholders also voted in favor of each of the three nominees for director: David Stanley (36,564,282 for; 624,646 withheld), Wayne B. Lyon (36,542,686 for; 646,242 withheld) and Ralph Strangis (36,419,575 for; 769,353 withheld). Previously elected and continuing to serve their terms are Harold Cohen, Scott G. Fossel, William A. Hall, George Latimer, Gary D. Rose, Louis W. Smith, Susan M. Stanton, and John H. Weitnauer, Jr. 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 May 25, 1996. 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: July 8, 1996 By: s/Stephen A. Lightstone --------------------------------------------- Stephen A. Lightstone, Senior Vice President, Finance and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) EX-11 2 EARNINGS PER SHARE CALCULATION Exhibit 11.1 PAYLESS CASHWAYS, INC. COMPUTATION OF PER SHARE EARNINGS (LOSS) - ---------------------------------------- (In thousands, except per share amounts)
Thirteen Weeks Ended Twenty-Six Weeks Ended ------------------------------ ---------------------------- May 25, May 27, May 25, May 27, 1996 1995 1996 1995 ------------ ------------ ------------ ---------- PRIMARY - ------- Net Income (Loss) $ 5,866 $ 4,613 $ (1,757) $ 749 Less: Preferred stock dividends (1,481) (1,368) (2,932) (2,709) ------------ ------------ ------------ ---------- Net income (loss) available to common shareholders $ 4,385 $ 3,245 $ (4,689) $ (1,960) ------------ ------------ ------------ ---------- Weighted average common and dilutive common equivalent shares outstanding 40,063 40,092 39,933 (1) 39,896 (1) ------------ ------------ ------------ ---------- Net income (loss) per common share $ .11 $ .08 $ (.12) (.05) ============ ============ ============ ========== FULLY DILUTED - ------------- Net Income (Loss) $ 5,866 $ 4,613 $ (1,757) $ 749 Less: Preferred stock dividends (1,481) (1,368) (2,932) (2,709) ------------ ------------ ------------ ---------- Net income (loss) available to common shareholders $ 4,385 $ 3,245 $ (4,689) $ (1,960) ------------ ------------ ------------ ---------- Weighted average common and dilutive common equivalent shares outstanding 40,079 40,092 39,933 (1) 39,896 (1) ------------ ------------ ------------ ---------- Net income (loss) per common share $ .11 $ .08 $ (.12) (.05) ============ ============ ============ ========== (1) Due to a loss being incurred for the period, dilutive common equivalent shares have not been computed as the resulting earnings per share would be antidilutive.
EX-15 3 AUDITOR'S LETTER 1 [Letterhead of KPMG Peat Marwick LLP] EXHIBIT 15.1 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 25, 1996 and May 27, 1995 and the related condensed consolidated statements of operations for the thirteen and twenty-six week periods then ended and cash flows for the 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 25, 1995 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, 1996, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of November 25, 1995 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 June 10, 1996 2 [Letterhead of KPMG Peat Marwick LLP] EXHIBIT 15.1 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, 1996 related to our review of interim financial information. Pursuant to Rule 436(c) under the Securities Act of 1933, such report is not considered a part of a registration statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of the Securities Act. s/ KPMG Peat Marwick LLP Kansas City, Missouri July 8, 1996 EX-27 4 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the May 25, 1996, financial statements and is qualified in its entirety by reference to such financial statements. 1000 6-MOS NOV-30-1996 MAY-25-1996 8001 0 0 0 425999 478996 812483 273202 1373551 374634 609060 0 40600 399 265952 1373551 1209019 1212137 864416 864416 0 0 29958 (3341) (1584) (1757) 0 0 0 (1757) (.12) 0
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