<PAGE> 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
<PAGE> 2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (1)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Thirteen Weeks Ended Twenty-Six Weeks Ended
----------------------------- ------------------------------
May 28, May 29, May 28, May 29,
1994 1993 1994 1993
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
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
============ ============ ============ ==============
<FN>
See notes to condensed consolidated financial statements
</TABLE>
<PAGE> 3
PAYLESS CASHWAYS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (1)
(In thousands)
<TABLE>
<CAPTION>
May 28, November 27, May 29,
1994 1993 1993
-------------- -------------- --------------
<S> <C> <C> <C>
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
-------------- -------------- --------------
<FN>
See notes to condensed consolidated financial statements
</TABLE>
<PAGE> 4
PAYLESS CASHWAYS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (1) (Cont'd.)
(In thousands)
<TABLE>
<CAPTION>
May 28, November 27, May 29,
1994 1993 1993
----------- ----------- -----------
<S> <C> <C> <C>
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
=========== =========== ===========
<FN>
See notes to condensed consolidated financial statements
</TABLE>
<PAGE> 5
PAYLESS CASHWAYS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (1)
(In thousands)
<TABLE>
<CAPTION>
Twenty-Six Weeks Ended
---------------------------------------
May 28, May 29,
1994 1993
----------- ------------
<S> <C> <C>
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
=========== ============
<FN>
See notes to condensed consolidated financial statements
</TABLE>
<PAGE> 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:
<TABLE>
<CAPTION>
May 28, November 27, May 29,
(In thousands) 1994 1993 1993
---------- ------------- ------------
<S> <C> <C> <C>
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
========== ============= ============
</TABLE>
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.
<PAGE> 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.
<PAGE> 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.
<TABLE>
<CAPTION>
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
------------ ------------- ----------- -------------
<S> <C> <C> <C> <C>
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
</TABLE>
<PAGE> 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.
<PAGE> 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.
<PAGE> 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)
<PAGE> 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.
<PAGE> 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.
<PAGE> 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
<PAGE> 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
<PAGE> 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.
<PAGE> 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:
<PAGE> 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."
<PAGE> 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.
<PAGE> 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
<PAGE> 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.
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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.
<PAGE> 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
<PAGE> 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
<PAGE> 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:
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 1
PAYLESS CASHWAYS, INC. AND SUBSIDIARY Exhibit 11.1
COMPUTATION OF PER SHARE EARNINGS
- - - - - ---------------------------------
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Thirteen Weeks Ended Twenty-Six Weeks Ended
----------------------- -------------------------
May 28, May 29, May 28, May 29,
1994 1993 1994 1993
------- ------- ------- -------
<S> <C> <C> <C> <C>
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)
=========== ========== =========== ============
</TABLE>
<PAGE> 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
<PAGE> 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
