<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED: May 31, 1995 COMMISSION FILE NUMBER: 0-9594
EXACT NAME OF REGISTRANT AS SPECIFIED
IN ITS CHARTER: Lane Plywood, Inc.
STATE OF INCORPORATION OF ORGANIZATION: Oregon
I.R.S. EMPLOYER IDENTIFICATION NO.: 93-0411530
ADDRESS OF PRINCIPAL EXECUTIVE OFFICES: 65 N. Bertelsen Rd.
Eugene, Or. 97402
REGISTRANT'S TELEPHONE NUMBER: 503-342-5561
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 RE-
QUIREMENTS FOR THE PAST 90 DAYS. YES X NO
----- -----
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUERS'
CLASSES OF STOCK, AS OF THE LATEST PRACTICABLE DATE:
AS OF: June 15, 1995 -- 204662 Shares
<PAGE>
LANE PLYWOOD, INC.
INDEX
Page No.
--------
Part I. Financial Information
Balance Sheets 2 - 3
Statements of Income and Retained Earnings 4
Statements of Cash Flows 5
Notes to Financial Statements 6 - 8
Management Discussion and Analysis of
Financial Condition and Results of Operations 9 - 10
Part II. Other Information 11
Signature Page 12
<PAGE>
LANE PLYWOOD, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS May 31, November 30,
1995 1994
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 1,560 $1,081,608
Accounts receivable--Trade and other 1,058,138 1,658,880
Other 192,732 38,330
Less-Allowance for doubtful accounts (17,034) (17,034)
Inventories--
Plywood and veneer 1,092,894 772,254
Operating supplies 73,897 68,839
Prepaid and other current assets 63,981 195,059
Income Tax Refund 250,000 0
Deferred taxes 75,317 75,317
Timber and timberlands, held for sale 432,191 432,191
---------- ----------
Total current assets $3,223,676 $4,305,444
PROPERTY,PLANT AND EQUIPMENT, at cost:
Land 560,038 565,262
Buildings 1,548,687 1,548,687
Machinery and equipment 7,390,431 7,959,833
Construction in progress 195,317 78,700
---------- ----------
9,694,473 10,152,482
Less-Accumulated depreciation (7,355,084) (7,830,255)
---------- ----------
$2,339,389 $2,322,227
Idle equipment 122,770 122,770
---------- ----------
2,462,159 2,444,997
TIMBER AND TIMBERLANDS, at cost less
depletion 624,976 624,976
LONG-TERM DEFINED BENEFIT COSTS 0 154,622
---------- ----------
Total assets $6,310,811 $7,530,039
---------- ----------
</TABLE>
The accompanying notes are an integral part of these balance
sheets.
<PAGE>
LANE PLYWOOD, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY May 31, November 30,
1995 1994
<S> <C> <C>
CURRENT LIABILITIES:
Book overdraft $ 458,360 $ 0
Current portion of long-term debt 28,774 27,164
Short-term bank borrowing 236,122 423,508
Accounts payable -- Trade and other 1,118,319 1,234,420
Accrued liabilities --
Payroll and related benefits 480,876 404,003
Other liabilities 48,000 473,554
---------- ----------
Total current liabilities 2,370,451 2,562,649
LONG-TERM DEBT, excluding current
portion 102,967 124,428
COMMITMENTS 0 0
LONG-TERM DEFINED BENEFIT OBLIGATION 0 378,230
DEFERRED TAXES 78,196 102,196
POST RETIREMENT HEALTH BENEFITS 61,680 61,680
STOCKHOLDERS' EQUITY
Common stock,no par value, 2,000,000
shares authorized, 715,574 shares
issued 535,509 535,509
Pension liability - excess of assets 0 (285,997)
Retained earnings 3,162,008 4,051,344
---------- ----------
3,697,517 4,300,856
---------- ----------
Total liabilities and stockholders'
equity $6,310,811 $7,530,039
---------- ----------
</TABLE>
The accompanying notes are an integral part of these balance
sheets.
3
<PAGE>
LANE PLYWOOD, INC.
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
May 31, May 31, May 31, May 31,
INCOME: 1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net sales $ 9,999,021 $ 8,070,701 $ 19,470,103 $16,300,667
Cost of goods sold 9,831,516 7,816,688 18,763,174 16,153,305
--------- ---------- ----------- ----------
Gross profit 167,505 254,013 706,929 147,362
Selling, general
and administrative
expense 314,686 201,846 622,783 401,465
Pension termination
expense 1,357,676 0 1,357,676 0
--------- ---------- ----------- ----------
Operating income
(loss) (1,504,857) 52,167 (1,273,530) (254,103)
Interest income 22,943 5,454 24,315 7,529
Interest expense 18,436 30,247 30,121 54,761
--------- ---------- ----------- ----------
Income (loss) before
income taxes (1,500,350) 27,374 (1,279,336) (301,335)
Provision (benefit)
for income taxes (408,000) 50,000 (390,000) (60,000)
--------- ---------- ----------- ----------
Net (loss) (1,092,350) (22,626) (889,336) (241,335)
--------- ---------- ----------- ----------
Average shares
outstanding 204,662 204,662 204,662 204,662
Net (loss)
per share, on average
number of shares ($5.34) ($.11) ($4.35) ($1.18)
<CAPTION>
RETAINED EARNINGS: May 31, Nov. 30,
1995 1994
<S> <C> <C>
Balance-beginning of year $4,051,344 $3,513,848
Adj. due to retirement of treasury shares 0 (51,166)
Net income (loss) (889,336) 588,662
--------- ---------
Balance-end of year $3,162,008 $4,051,344
--------- ---------
</TABLE>
The accompanying notes are an integral part of these
financial statements.
4
<PAGE>
LANE PLYWOOD, INC.
STATEMENTS OF CASH FLOWS
FOR THE PERIODS ENDED
<TABLE>
<CAPTION>
MAY 31, MAY 31,
1995 1994
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (889,336) $ (241,335)
Adjustments to reconcile net income(loss)
to net cash provided from (used in) operations:
Depreciation 96,000 93,700
(Gain) on disposition of property (17,992) 0
Change in working capital:
(Increase) decrease in receivables 196,340 (12,777)
(Increase) decrease in inventories (325,698) (448,631)
(Increase) decrease in prepaids and other
current assets 131,078 44,480
Increase (decrease) in accounts payable
and accrued liabilities (412,007) (376,200)
--------- ---------
Net cash provided (used) by operating activities (1,221,615) (940,763)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property (118,701) (39,400)
Additions to timberlands 0 (1,464)
Proceeds from disposition of property 23,532 171,592
--------- ---------
Net cash provided (used) by investing activities (95,169) 130,728
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in book cash overdraft 458,360 (36,419)
Proceeds from (payment of) short-term bank borrowing (187,386) 301,118
Payment of long-term debt (21,461) (48,422)
Pension termination funding adjustments 38,389 0
Dividends paid (51,166) 0
--------- ---------
Net cash provided (used) by financing activities 236,736 216,277
--------- ---------
(Decrease) in cash and cash equivalents (1,080,048) (593,758)
Cash and cash equivalents:
Beginning of year 1,081,608 1,199,345
--------- ---------
End of period $ 1,560 $ 605,587
--------- ---------
CASH PAID DURING THE YEAR FOR:
Interest $ 30,121 $ 47,232
Income taxes (net of tax refund received) 122,000 217,706
</TABLE>
The accompanying notes are an integral part of these
financial statements.
5
<PAGE>
LANE PLYWOOD, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. PRINCIPLES OF INTERIM STATEMENTS:
The interim financial statements have been prepared by the Company without
audit and are subject to year-end adjustment. Certain information and footnote
disclosure normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted pursuant
to rules and regulations of the Securities and Exchange Commission. In the
opinion of the Company, the accompanying unaudited financial statements contain
all adjustments necessary to present fairly the position of the Company as of
May 31, 1995 and November 30, 1994 and results of operations and cash flows for
the six months ended May 31, 1995. It is suggested that these interim statements
be read in conjunction with the financial statements and notes thereto in the
1994 annual report on form 10-K.
2. INCENTIVE PROFIT SHARING PLAN:
The Company has an incentive profit sharing plan which provides for bonus
payments to eligible employees. The total bonus distribution to eligible
employees is based on 30% of income before income taxes, adjusted for the
effect of major gains or losses on dispositions of assets, if any, and adjusted
for the effect of inventory costs determined under the LIFO method in excess of
a base provision equal to the sum of 5% of stockholders' equity and 10% of
long-term debt at the beginning of the fiscal year.
During the period of March 1, 1981 to July 31, 1983, wage and salary rates
for all employees were either reduced or restored dependent upon the Company's
financial position. An accumulation of lost earnings during this period was
maintained and will be paid out of 20% of the profits earned in accordance with
the incentive profit sharing plan. The amounts of this special class of payments
were accrued in the amounts of $0 in 1995, $77,491 in 1994 and $44,638 in 1993.
At May 31, 1995, the accumulated amount of earnings eligible for future
restoration totaled $868,262. The remaining 10% of profits earned in accordance
with the incentive profit sharing plan are distributed to all eligible
employees, independent of the wage restoration portion. The amount of bonus
accrued for 1995, 1994, and 1993 was $0, $38,745 and $22,319, respectively.
6
<PAGE>
3. NOTES PAYABLE AND LONG-TERM DEBT:
At May 31, 1995, long-term debt consisted of the following:
<TABLE>
<CAPTION>
May 31, Nov. 30,
1995 1994
<S> <C> <C>
Purchase contract at 8.03% due in
1999, $1,666.08 monthly payment
including interest until 1999,
collateralized by certain assets 69,408 76,452
Purchase contract at 8% due in
1999,$18,802 annual payment plus
interest collateralized by certain
assets 62,333 75,140
------- -------
135,298 151,592
Less-current portion 28,774 27,164
------- -------
$102,967 $124,428
------- -------
</TABLE>
Under a short-term line of credit with the bank, collateralized by
accounts receivable, inventory, and machinery, the Company may borrow up to a
maximum of $2,000,000 with interest at the bank's variable basic rate (9.0% at
May 31, 1995) plus 1% with April 30, 1995 expiration date which has been
extended to June 30, 1995. At May 31, 1995, $236,122 of the line of credit was
used.
The loan agreement pertaining to the short-term line of credit with the
bank contains, among other things, certain requirements as to the maintenance of
the working capital, net worth, and debt to net worth, and restrictions as to
the level of capital and lease expenditures, the incurrence of debt, investments
and payment of dividends. Under the most restrictive requirements, the company
must maintain $3,600,000 of stockholders' equity and $775,000 working capital
after allowances for accounting entries relating to the defined benefit pension
plan. At May 31, 1995, the Company was in compliance with all loan requirements.
4. DEFINED BENEFIT PENSION PLAN:
The Company terminated the defined benefit retirement plan effective March
15, 1995 and is in the process of filing the IRS and PBGC forms necessary to
effectuate the termination of the plan. This process may take up to a year to
complete the termination process.
The Company funded the termination of the defined benefit retirement plan
on April 20, 1995 when interest rates and asset levels reached a level at which
the Company could make up the cash difference necessary to purchase annuities
for all participants in the plan. Due to the change in the Mortality Tables
being used to
7
<PAGE>
project longevity and a drop in the treasury interest rates after the November
30, 1994 statement, the amount necessary to fully fund the cash difference paid
by the Company was $1,262,157. Transamerica Life Insurance Company is in the
process of preparing information for all participants in the Plan.
5. OTHER:
The results of operations for the six month periods ended May 31, 1995 and
May 31, 1994 are not necessarily indicative of the results to be expected for
the full year.
8
<PAGE>
LANE PLYWOOD, INC.
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATION
LIQUIDITY AND CAPITAL RESOURCES:
The Company's working capital (defined as current assets less current
liabilities) decreased $889,570 during the six months ending May 31, 1995,
compared to a decrease of $65,328 during the six months ending May 31, 1994.
Lower cash, higher book overdraft, and lower accounts payable, offset by higher
inventories and higher income tax refund were the primary contributors to this
decrease in working capital. The decrease in cash and the increase in book
overdraft were primarily the result of the Company using cash and its book
overdraft to fully fund the benefit liabilities of the Company's defined benefit
pension plan (see #4, Notes to Financial Statements) and to make capital
expenditures. The lower level of receivables reflect lower veneer and plywood
sales during May, 1995. The lower level of accounts payable are indicative of a
reduction in veneer prices. Increased inventories, particularly veneer
inventories, are the result of a slightly higher level of veneer buying by the
Company before prices started to rise again.
Capital expenditures of $116,600 during the six months ending May 31,
1995, include $75,400 for the conversion of the fuel source of the #4 dryer from
wood to natural gas, $19,300 for press platens, $8,300 for replacing the
telephone system wiring, and $13,000 for venting the #2 dryer. All capital
expenditures in the six months ending May 31, 1995, were paid through the
Company's cash account.
As of May 31, 1995, money market investment funds at Fidelity Investments,
Franklin Templeton Funds, and the Benham Group had been in place for over a
year; from January, 1992, to April, 1995, these accounts had a cumulative
average balance of approximately $600,000. Additionally, the Company
maintained a short-term investment account at Bank of America for investment of
excess funds; this account allowed the Company to readily transfer funds back
into the regular checking account as needed. All of the funds held in these
investment accounts were used in April, 1995, to make the payment to fully fund
the Company's defined benefit pension plan.
On April 20, 1995, an additional $400,000 was added to the line of credit
at Bank of America. Of the $2,000,000 line of credit, $236,122 was in use at
May 31, 1995. The Company is in the process of renewing its line of credit at
Bank of America which currently is scheduled to expire on June 30, 1995. The
Company
9
<PAGE>
expects to renew the line of credit through April 30, 1996, at a comparable
level of borrowing with similar terms. Additionally, the Company is negotiating
a $1,000,000 short-term finance package with Bank of America to increase the
Company's cash reserve, which was significantly depleted upon the funding of the
defined benefit pension plan. This short-term finance package will be repaid
from the harvest of some of the Company's timber assets.
RESULTS OF OPERATION:
Operating results for the six month period ended May 31, 1995 reflect a
loss before taxes of $1,279,338 compared to a loss before taxes of $301,336 for
the six month period ended May 31, 1994. This change in operations is primarily
due to the expense of terminating the defined benefit pension plan in April,
1995, and relatively soft market for plywood and LVL veneer products during May,
1995.
For the six month period ending May 31, 1995, plywood sales volume,
measured in 3/8 footage, increased 17%, compared to plywood sales, 3/8 footage,
for the six months ending May 31, 1994; this increase is primarily due to an
increased production schedule. Comparing the same six month periods, the
average selling price of plywood, per thousand 3/8 footage, increased by 7%.
Comparing the six month period ending May 31, 1995, to the six months ending May
31, 1994, the margin of average plywood sales prices compared to the average
cost of veneer used increased 29%. The primary factor contributing to this
increase is an increase in plywood prices and a decrease in veneer prices.
Comparing the six months ending May 31, 1995, with the same period one
year earlier, veneer average cost decreased 5%; however, the Company increased
the volume of veneer, measured in 3/8 footage, purchased by 13%. Veneer prices
began rising in May, 1995, the last month of this reporting period. The primary
contributor to the rise in veneer prices is the lack of availability of face
veneer. Dry veneer sales volume, measured in 3/8 footage, for the six month
period ending May 31, 1995, decreased 12% compared to dry veneer sales, measured
in 3/8 footage, during the same period one year earlier, and the average selling
price per thousand 3/8 footage decreased 2%. This reduction is due to the
slower LVL market.
Timber supply in the industry continues to be a problem for the Company;
lower availability of logs continues to cause increased prices for veneer that
the Company purchases from outside sources. The Company maintains a wide-range
purchasing program from numerous vendors to keep veneer sources available. The
Company is currently expanding the sources and volume of purchases of foreign
veneer to use as face material.
10
<PAGE>
LANE PLYWOOD, INC.
PART II
Item 4. Submission of Matters to a Vote of Security Holders. The annual
meeting of shareholders was held on April 22, 1995, in Junction City, Oregon.
Elections of directors were submitted to shareholders as described in the
Company's Proxy Statement dated April 10, 1995, and were voted upon at the
meeting. Following is a tabulation with respect to each nominee for director.
Director, Position 1: Paul F. Ehinger 135,157
Keith Wright 32,127
Janis M. Johnson 886
Director, Position 2: Gary R. Jensen 137,604
Wayne Gregory 30,975
Mr. Ehinger and Mr. Jensen were both reelected as directors at the meeting. In
addition to Mr. Ehinger and Mr. Jensen, the following are the names of each
other director whose term of office continued after the meeting:
James E. Gent
Francis D. Bales
John W. Revell
Paul W. Jensen
Carl M. Jensen
Item 9. Exhibits and Reports on Form 8-K
a. Reports on Form 8-K
No reports on Form 8-K were filed during the quarter for
which this report is filed.
11
<PAGE>
SIGNATURES
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.
Date _______________ LANE PLYWOOD, INC.
________________________________________
Janis M. Johnson, Secretary-Treasurer
(principal accounting financial officer)
________________________________________
Carl R. Wiley, President
(principal executive officer)
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-30-1994
<PERIOD-END> MAY-31-1995
<CASH> 1,560
<SECURITIES> 0
<RECEIVABLES> 1,058,138
<ALLOWANCES> 17,034
<INVENTORY> 1,166,791
<CURRENT-ASSETS> 3,223,676
<PP&E> 9,694,473
<DEPRECIATION> 7,355,084
<TOTAL-ASSETS> 6,310,811
<CURRENT-LIABILITIES> 2,370,451
<BONDS> 0
<COMMON> 535,509
0
0
<OTHER-SE> 3,162,008
<TOTAL-LIABILITY-AND-EQUITY> 6,310,811
<SALES> 9,999,021
<TOTAL-REVENUES> 10,021,964
<CGS> 9,831,516
<TOTAL-COSTS> 314,688
<OTHER-EXPENSES> 1,357,676
<LOSS-PROVISION> 17,034
<INTEREST-EXPENSE> 18,436
<INCOME-PRETAX> (1,500,350)
<INCOME-TAX> 408,000
<INCOME-CONTINUING> (1,092,350)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,092,350)
<EPS-PRIMARY> (5.34)
<EPS-DILUTED> (5.34)
</TABLE>
