<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED NOVEMBER 30, 1995
COMMISSION FILE NO. 0-9594
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LANE PLYWOOD, INC.
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(Exact name of registrant as specified in its charter)
OREGON 93-0411530
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
Registrant's address, 65 NO. BERTELSEN RD., EUGENE, OREGON 97402
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Registrant's telephone number, including area code (541) 342-5561
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Securities to be registered pursuant to Section 12(b) of the Act:
(None)
Securities to be registered pursuant to Section 12(g) of the Act:
COMMON STOCK, NO PAR VALUE
--------------------------
(Title of class)
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
----- -----
There is no established trading market for the stock, therefore the aggregate
market value of the stock cannot presently be determined.
The number of shares outstanding of the registrant's common stock as of FEBRUARY
15, 1996 is 204,662.
DOCUMENTS INCORPORATED BY REFERENCE
-----------------------------------
The following documents are incorporated by reference into Parts II, III and IV
of this 10-K Report to the extent stated herein.
Lane Plywood, Inc. Annual Report to Stockholders for the
year ended November 30, 1995.
Lane Plywood, Inc. Proxy Statement dated February 29, 1996, to be filed
not later than 120 days after the end of the fiscal year.
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CROSS REFERENCE SHEET
Item Page
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PART I
1. Business 1-4
2. Properties 4-5
3. Legal Proceedings 5
4. Submission of Matters to a Vote of
Security Holders 5
PART II
5. Market for Registrant's Common Stock and
Related Stockholder Matters 5
6. Selected Financial Data 6
7. Management's Discussion and Analysis of
Financial Condition and Results of Operations 6
8. Financial Statements and Supplementary Data 6
9. Disagreements on Accounting and Financial
Disclosure 6
PART III
10. Directors and Executive Officers of the Registrant 6
11. Executive Compensation 6
12. Security Ownership of Certain Beneficial Owners
and Management 6
13. Certain Relationships and Related Transactions 6
<PAGE>
CROSS REFERENCE SHEET
Item Page
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PART IV
14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K 7
Signatures 10
* * * * * * * * * * * * * * * * * * * * *
<PAGE>
PART I
ITEM 1. BUSINESS
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General Development of Business
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Lane Plywood, Inc.(Lane), an Oregon Corporation, was incorporated
February 29, 1952. Operations consisted of a leased peeling plant and a plywood
mill. In 1971, when the lease of the peeling plant expired, Lane assumed
operation of the peeling plant and added a chipping operation. In 1975, Lane
acquired Zip-o-Log Veneer, Inc. which added a sawmill, another peeling plant and
chipping operation. The sawmill operated for five years at limited levels and
was dismantled in 1981. Lane's 4' peeling plant and barker was sold at auction
in 1991. In 1992, Lane shut down the 8' peeling plant and in 1993 started
dismantling that operation. In 1994, Lane discontinued the chipping operation.
The Directors of the Company have executed an Agreement and Plan of
merger for the sale of all of Lane's shares of common stock. The merger must be
approved by the shareholders. The shareholder vote is scheduled to occur at the
annual meeting, which is tentatively scheduled for March 30, 1996.
Narrative Description of Business
---------------------------------
Lane is in the business of producing softwood plywood at its 92-acre plant
site in Eugene, Oregon. Lane is an integrated producer of softwood plywood at
one location. This business includes the following activities:
o Purchasing veneer to satisfy veneer needs.
o Manufacturing and selling plywood from purchased veneers.
o Selling green or dry veneer.
o Custom drying and composing veneer.
o Selling plywood manufacturing by-products such as plytrim.
o Operating a plywood reload operation on Company premises.
(i) The principal product produced and sold by Lane during the past five
years was softwood plywood. Other products include the by-products, described
above, derived from producing plywood. Other than dry veneer sales to the
laminated veneer lumber (LVL) market which in 1995 accounted for 13% of sales,
no other single product contributed as much as 15% or more of revenue in any of
the last three fiscal years.
Lane's market for plywood is scattered throughout the 48 contiguous states
and Hawaii. Lane's one-person sales staff handles all of the sales by telephone
from the Eugene, Oregon office. Customers include brokers and large distribution
warehouses. Lane has both rail and truck shipping facilities. Most sales are
made in rail carload or truckload lots. The major by-product, which is plytrim,
is sold to a mill in Oregon.
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ITEM 1. BUSINESS (CONTINUED)
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(ii) Nearly all of Lane's plywood products are classified as commodities
and are manufactured to product standards under a voluntary product standards
program administered by the National Bureau of Standards. Lane is developing
siding products from a variety of domestic and foreign veneers to enhance the
sales mix and is trying to develop the market for snowboard and ski blanks.
(iii) Since 1974, when Lane purchased its first tree farm, Lane acquired
2105 acres of timber-growing land. However, the tree-growing land acquired will
never supply a significant volume of logs to satisfy the Company's need for raw
material.
Lane, like most other wood products plants in the area, has been highly
dependent upon the Federal government for its raw material supply. The Federal
government, under the Forest Service and Bureau of Land Management, maintains a
limited timber sale program which supplies many of the producers of veneer upon
which Lane depends.
Environmental and wildlife concerns have had a direct impact upon the
availability of timber for harvest. The Federal Forest Service is still in the
process of revising their harvesting plan for the future and it looks like the
outcome may be a further reduction of timber available for harvest.
Veneer from outside sources is available at increasingly higher prices due
to timber shortages in the region. The Company buys veneer from many suppliers
and is expanding the number of suppliers and types of veneer purchased from both
foreign and domestic suppliers. The Company has long term relationships with
many of the veneer suppliers in the area and plans to continue those
relationships.
(iv) Patents, trademarks, licenses, franchises and concessions are not
especially important in manufacturing or selling any of Lane's products. Lane
has coined, but not registered as a trademark, the names "Laneply" and "Golden
Cypress" for identifying siding products being marketed.
(v) The plywood industry is somewhat seasonal because of construction
slow-downs in some consuming areas caused by unfavorable weather. However,
seasonal demand is nearly offset by production curtailments resulting from
unfavorable winter weather in some other producing areas.
Housing starts impact the demand for plywood. Housing starts made a rebound
in 1994 due to lower interest rates and an improving economy, but shortages of
raw materials and plant closures have begun to be reflected in higher plywood
prices and had an adverse impact in 1995. About 70% of Lane's production is
sanded plywood used primarily for commercial building. The remaining production
is used in the housing market. Lane is affected by housing starts, but not to
the extent housing starts affect mills producing entirely for that market.
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ITEM 1. BUSINESS (CONTINUED)
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(vi) Lane does not carry inventories in order to meet delivery
requirements of customers. Lane's plywood inventory normally comprises work in
process and finished plywood in the shipping process or being accumulated for a
carload. This procedure is typical of most plywood producers unless such
producers also operate distribution centers. To prevent plywood production
interruptions, Lane maintains a two to three week supply of veneer inventory.
Lane does not give customers the right to return merchandise nor does Lane
provide extended payment terms to customers. All plywood customers are invoiced
immediately after the plywood has been shipped; and all plywood shipments
require payment within 10 days after date of invoice, with a 2% discount allowed
if paid in 10 days.
(vii) In the past year Lane had two customers to whom sales averaged in
excess of 10% of total revenue. See Note 7 in Notes to Financial Statements.
Most of these sales were based upon a written agreement. All sales to these
customers are commodity items which are sold in the marketplace at approximately
the same price.
(viii) By design, Lane does not maintain a material backlog of orders.
Lane's backlog will seldom exceed 10 days production.
(ix) Lane does not have any material portion of its business which may be
subject to renegotiation of profits or termination of contracts or subcontracts
at the election of the government.
(x) Because of the heavy concentration of softwood production in the
state of Oregon and in other northwestern states, most of Oregon's production
is sold in the Southwest or east of the Rockies. Historically, softwood
plywood mills in Oregon and Washington supplied the bulk of the plywood used
in the entire United States. However, many new mills have been built in the
South and are producing southern pine plywood which competes with the western
Douglas fir plywood produced by Lane.
Southern pine mills produce over half of the nation's softwood plywood and
have the advantage of lower raw material and labor costs than western mills.
Most important of all, they are close to the big midwestern and eastern markets
once dominated by the western mills. As shipping costs rise, western mills
become less competitive with the southern mills in those markets. Some
customers still prefer Douglas fir plywood over southern pine plywood; however,
as both products are manufactured and sold under similar product standards,
price is the primary consideration in making a sale. Consequently, the
relatively high-cost western mills are at a definite disadvantage. New products
such as waferboard and oriented strand board are competing effectively with
plywood.
Although there are some softwood plywood producers who operate more than
one plant, no one producer or small group of producers dominates the market.
(xi) Not applicable.
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ITEM 1. BUSINESS (CONTINUED)
- -----------------------------
(xii) Lane's business is subject to Federal and state pollution control
regulations which have required, and are expected to continue to require,
additional operating expenses and capital expenditures. Lane operations are
substantially in compliance with existing regulations. Lane continues to improve
the quality of air and water discharge from the plant, including improved dust
control and ventilation. Lane has installed pollution controls which have
improved Lane's pollution control program to meet the latest standard
requirements.
(xiii) At November 30, 1995 Lane employed approximately 208 people.
Financial Information about Foreign and Domestic Operations and Export Sales
- ----------------------------------------------------------------------------
Lane has never conducted any foreign operations or directly exported any of
its products. During 1995, Lane created a wholly owned subsidiary, Lane
International Marketing, Inc., for potential future foreign operations. It
remained inactive through the end of fiscal year 1995.
ITEM 2. PROPERTIES
Lane's entire plywood manufacturing and related plant facilities are
located on a 92-acre industrial site in Eugene, Oregon. Plant facilities
include the following:
o A plywood "layup plant" with production capacity
of approximately 630,000 3/8 feet of plywood per day.
This facility includes one 30-opening press, one 20-opening
press, 4 veneer dryers, edge gluing equipment, veneer patching
equipment, a polyurethane panel patching line, a high speed
sander and sort system, and rail and truck shipping facilities.
This segment of the operation operates at approximately 65%
of utilization rate.
o Two boilers, which provide heat for the plywood
presses, veneer dryers, and building heat. Bark, other
wood waste and natural gas supply fuel for the boilers.
o Various plant buildings, storage warehouses, shops and
office buildings.
o Railroad sidings for shipping plywood.
o Paved areas for veneer storage.
As of November 30, 1995, all of the machinery and equipment in the
above-described facilities were encumbered to collateralize a line of credit
payable to a bank.
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ITEM 2. PROPERTIES(CONTINUED)
- ------------------------------
In addition to the plywood plant facilities, Lane owns 7 separate parcels
of land operated as tree farms. These tree farms are all located in Oregon in
Klamath, Lane and Douglas counties and are cut-over areas that have been or are
being reforested. Presently the tree farms are not used for production. One of
the tree farms is encumbered by a purchase contract expiring in 1999 and another
has been pledged as collateral for a short term loan expiring in 1996. The
Company may consider selling all of the tree farms as a package.
ITEM 3. LEGAL PROCEEDINGS
- --------------------------
Lane is not involved in any legal proceedings, other than ordinary routine
claims incidental to the business, none of which is considered material.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- -----------------------------------------------------------
No matter was submitted to a vote of security holders through the
solicitation of proxies or otherwise during the quarter ended November 30, 1995.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
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Market Information
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As of February 29, 1996, there is no active or organized trading market for
any of Lane's stock.
Holders
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As of February 29, 1996, there were approximately 400 shareholders of
record.
Dividends
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Lane's last dividend was a twenty-five cent ($.25) per share cash dividend
declared November 17, 1994. This dividend was paid on January 15, 1995 to all
stockholders of record as of November 30, 1994. No dividend was paid in the
prior two years.
The Company's loan agreement with the bank limits annual dividends to a
maximum of 25% of annual net profits, after tax. Also see Liquidity in MD&A and
Stockholders' Equity footnote #6 in the Financial Statement of the Annual Report
to Stockholders.
Due to the possible merger, the structure of the stockholders will change
and any future dividends are uncertain.
-5-
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ITEM 6. SELECTED FINANCIAL DATA
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The information required by this item is incorporated by reference to the
Annual Report to Stockholders for the year ended November 30, 1995.
ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
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OF OPERATIONS
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The information required by this item is incorporated by reference to the
Annual Report to Stockholders for the year ended November 30, 1995.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
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The information required by this item is incorporated by reference to the
Annual Report to Stockholders for the year ended November 30, 1995, pages 1
through 14.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
- ------------------------------------------------------------
There were no disagreements on accounting and financial disclosure for the
three years ended November 30, 1995, 1994 and 1993.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
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The information required by this item is incorporated by reference to
the Proxy Statement dated February 29, 1996 and is set forth under the captions
(or caption), "Election of Directors" and "Management and Compensation of
Directors and Officers". The proxy is to be filed with the Commission within 120
days after the end of Lane's fiscal year-end November 30, 1995.
ITEM 11. EXECUTIVE COMPENSATION
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The information required by this item is incorporated by reference to
the Proxy Statement dated February 29, 1996 and is set forth under the captions
(or caption), "Management and Compensation of Directors and Officers".
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- ------------------------------------------------------------------------
The information required by this item is incorporated by reference to
the Proxy Statement dated February 29, 1996 and is set forth under the captions
(or caption), "Beneficial Ownership of Common Stock".
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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The information required by this item is incorporated by reference to
the Proxy Statement dated February 29, 1996 and is set forth under the captions
(or caption), "Management and Compensation of Directors and Officers" and
"Certain Transactions with Management.
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<PAGE>
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
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(a) The following documents are filed as part of this Report on Form 10-K:
(1) Financial Statements
The following Financial Statements and Report of Independent
Accountants are incorporated by reference from the 1995 Annual
Report to Stockholders filed as part of this report:
Page in Financial Statement Section of the Annual Report
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Balance Sheets 2
Statements of Income and Retained
Earnings 3
Statements of Cash Flows 4
Notes to Financial Statements 5-14
Report of Independent Public Accountants
on Financial Statements 1
(2) Financial Statement Schedules
Report of Independent Public Accountants on Schedule at page 9
The following financial statement schedule is filed as part of
this report and should be read in conjunction with the financial
statements and related notes thereto of Lane:
Schedule II - Valuation and Qualifying Accounts at page 8
Schedules not included above have been omitted because they
are not applicable or the required information is shown in
the financial statements or notes thereto.
(3) Exhibits
(2) Agreement and Plan of Merger
This Agreement is incorporated by reference to the Proxy
Statement dated February 29, 1996, Appendix A.
(3) Restated Articles of Incorporation and Bylaws of
Lane Plywood, Inc.
(11) Statement Regarding Computation of Per Share Earnings
(13) Annual Report to Stockholders
(27) Financial data schedule
(b) Reports on 8-K
The registrant has filed no reports on Form 8-K during
the period covered by this report.
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<PAGE>
LANE PLYWOOD, INC.
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED NOVEMBER 30, 1995
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
BALANCE AT ADDITIONS DEDUCTION
BEGINNING OF CHARGED TO FROM BALANCE AT
CLASSIFICATION PERIOD COSTS & EXPENSES ALLOWANCE END OF PERIOD
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ALLOWANCE FOR DOUBTFUL ACCOUNTS:
1993 $30,000 $30,000
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1994 $30,000 ($12,966) $17,034
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1995 $17,034 $17,034
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-8-
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULES
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
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To the Board of Directors and Stockholders of
Lane Plywood, Inc.:
Our report on the financial statements of Lane Plywood, Inc. has been
incorporated by reference in this Form 10-K from page 1 of the 1995 Annual
Report to the Stockholders of Lane Plywood, Inc. In connection with our audit
of such financial statements, we have also audited the related financial
statement schedule II listed in the index on page 2 of this Form 10-K.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information required to be
included therein.
/S/ COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Eugene, Oregon,
January 5, 1996.
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<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 on the 15th day
February 1996.
LANE PLYWOOD, INC.
BY /S/ Gary R. Jensen
------------------
Gary R. Jensen
Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons in the capacities
indicated on February 15, 1996.
Signature Title
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As Officers or Directors of
Lane Plywood, Inc.
/S/ Carl R. Wiley President and General Manager
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Carl R. Wiley
/S/ Janis M. Johnson Vice-President and Secretary-
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Janis M. Johnson Treasurer
/S/ Gary R. Jensen Director and Chairman
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Gary R. Jensen of the Board
/S/ Paul W. Jensen Director
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Paul W. Jensen
/S/ Paul F. Ehinger Director
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Paul F. Ehinger
/S/ John W. Revell Director
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John W. Revell
/S/ Francis D. Bales Director
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Francis D. Bales
/S/ Carl M. Jensen Director
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Carl M. Jensen
/S/ James E. Gent Director
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James E. Gent
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<PAGE>
EXHIBIT 3
RESTATED
ARTICLES OF INCORPORATION
OF
LANE PLYWOOD, INC.
Pursuant to the provisions of the Oregon Business Corporation Act, the
undersigned corporation adopts the following Restated Articles of Incorporation.
ARTICLE I
The name of the corporation is Lane Plywood, Inc., and its duration shall
be perpetual.
ARTICLE II
The purposes for which the corporation is organized are:
(a) To acquire by purchase, gift, exchange, condemnation or otherwise,
real and personal property of every kind and description within and without the
State of Oregon, suitable, necessary, useful or advisable in carrying on the
business and carrying out the purposes of this corporation; to own and hold the
same; to convey, sell, assign, transfer, lease, mortgage, pledge, exchange, give
away, or otherwise dispose of any such property.
(b) To produce, manufacture, buy or otherwise acquire, lease, deal in,
sell or otherwise dispose of all kinds of logs, lumber and wood products, and
plywood and plywood products, and the by-products thereof, of every kind,
character, form and description whatsoever, at wholesale and retail.
(c) To conduct logging operations and do and perform every act and thing
incidental thereto, and to buy and sell, manufacture, patent and market mill and
manufacturing equipment and machinery of all kinds.
(d) To engage in the general plywood, lumber, timber and milling business
and allied interests, together with building of such railroads, logging roads
and other things necessary in the full and complete operation thereof.
(e) To own, lease, let, manage, and control water, water power and ways,
flumes, and mill sites.
(f) To acquire the goodwill, rights, property, and assets of all kinds,
and to undertake the whole or any part of the liability of any person, firm,
association, or corporation, on such terms and conditions as may be agreed on,
and to pay for the same in cash, stock, bonds, or other securities of a
corporation or otherwise.
<PAGE>
(g) To conduct its business in other states and foreign countries. To have
one or more offices out of this state, and to hold, purchase, mortgage and
convey real or personal property in or out of this state.
(h) To purchase, own, and operate stores and commissaries and retail
outlets, and to purchase, own, and operate subsidiary businesses that may be
beneficial to the general purposes of this corporation.
(i) To promote and assist financially or otherwise corporations, firms,
individuals and others and to the extent permissible by law to give any guaranty
in connection therewith for the payment of money or for the performance of any
other undertaking or obligation.
(j) To enter into, make, perform and carry out contracts of any kind for
any lawful purpose with any corporation, firm, individual and others.
(k) To borrow money and for money borrowed or in payment for property
acquired, or for any other purpose, to issue bonds, debentures, notes and other
obligations, and to secure them by the mortgage or pledge of deed of trust upon
or other hypothecation of any or all of the property, real or personal, of this
corporation; to loan money and to take and receive bonds, promissory notes and
other evidence of indebtedness and security therefor.
(l) To acquire, by purchase, subscription or otherwise, hold and own,
deal in, sell, exchange, pledge or otherwise encumber and dispose of all forms
of securities, including stock, bonds, debentures, notes, mortgages, evidences
of indebtedness and commercial paper, acceptances, certificates of indebtedness
and certificates of interest issued or created in any and all parts of the world
by corporations, firms, individuals, governments, states, municipalities and
other political subdivisions or others, and irrespective of their form or
designation, and to issue in exchange therefor or in payment thereof in the
manner provided by law, its own stocks, bonds, debentures or other obligations
or securities; to exercise any and all rights, powers and privileges of
individual ownership of any and all such securities, including the right to vote
thereon and consent and otherwise act with respect thereto.
(m) To use its unreserved and unrestricted earned surplus from time to
time in the purchase or acquisition of its own capital stock, subject to the
provisions of the Oregon Business Corporation Act.
(n) In general to carry on any other lawful business whatever in
connection with the foregoing or which is calculated, directly or indirectly to
promote the interest of the corporation or to enhance the value of its property.
<PAGE>
(o) To engage in any lawful activity for which corporations may be
organized under chapter 57, ORS, the Oregon Business Corporation Act.
ARTICLE III
The aggregate number of shares which the corporation shall have authority
to issue is 2,000,000 shares of Common Stock, without par value. When these
Restated Articles of Incorporation become effective, each previously authorized
and outstanding share of Common Stock, par value $50 per share, of the
corporation shall be changed into, and shall constitute, 75 shares of Common
Stock, without par value, of the corporation, without the necessity for further
action of any kind.
ARTICLE IV
No shareholder of the corporation shall have any pre-emptive or other first
right to acquire any treasury shares or any additional issue of shares of stock
or other securities of the corporation, either presently authorized or to be
authorized.
ARTICLE V
Any directorship to be filled by reason of an increase in the number of
directors of the corporation may be filled by the affirmative vote of a majority
of the number of directors fixed by the bylaws prior to such increase, provided
that not more than two such directorships may be filled by the directors during
any one period between annual meetings of the shareholders of the corporation.
Any such directorship not so filled by the directors shall be filled by election
at the next annual meeting of shareholders or at a special meeting of
shareholders called for that purpose. During the term of the loan agreement
dated August 4, 1986 between the corporation and Key Bank, the number of
directors shall be seven. In nominating directors for the term of such loan
agreement, the Board of Directors shall act to ensure that at all times the
President or the Chairman of the Board of the corporation is a member of the
Board of Directors and that at least two directors are persons with extensive
business and executive experience who are not employees of the corporation.
ARTICLE VI
Any contract or other transaction between the corporation and one or more
of is directors, or between the corporation and another party in which one or
more of its directors are interested shall be valid notwithstanding the presence
or participation of such director or directors in a meeting of the board of
directors which acts upon or in reference to such contract or transaction, if
the fact of such interest shall be disclosed or known to the board of directors
and it shall authorize and approve such contract or transaction by a vote of a
majority of the disinterested
<PAGE>
directors present and entitled to vote. Such interested director or directors
may be counted in determining whether a quorum is present at any such meeting,
but shall not be entitled to vote on such contract or transaction and shall not
be counted in determining the majority necessary to carry such vote. This
Article shall not invalidate any contract or other transaction which would
otherwise be valid under applicable law.
ARTICLE VII
The Corporation may indemnify to the fullest extent permitted by law any
person who is made or threatened to be made a party to, witness in, or otherwise
involved in, any action, suit or proceeding, whether civil, criminal,
administrative, investigative, or otherwise (including an action, suit or
proceeding by or in the right of the corporation) by reason of the fact that the
person is or was a director, officer, employee or agent of the corporation or
any of its subsidiaries, or a fiduciary within the meaning of the Employee
Retirement Income Security Act of 1974 with respect to any employee benefit plan
of the corporation or any of its subsidiaries, or serves or served at the
request of the corporation as a director, officer, employee or agent or as a
fiduciary of an employee benefit plan, of another corporation, partnership,
joint venture, trust or other enterprise. Any indemnification provided pursuant
to this Article VII shall not be exclusive of any rights to which the person
indemnified may otherwise be entitled under any provision of articles of
incorporation, bylaws, agreement, statute, policy of insurance, vote of
shareholders or board of directors, or otherwise.
ARTICLE VIII
The stated capital of the corporation at the time of the adoption of these
Restated Articles of Incorporation is $250,000.
ARTICLE IX
These Restated Articles of Incorporation supersede the heretofore existing
articles of incorporation and all amendments thereto.
ARTICLE X
To the fullest extent permitted by law, no director of the corporation
shall be personally liable to the corporation or its shareholders for monetary
damages for conduct as a director. Without limiting the generality of the
foregoing, if the Oregon Revised Statutes are amended after the Article X
becomes effective, to authorize corporate action further eliminating or limiting
the personal liability of directors of the corporation, then the liability of
directors of the corporation shall be eliminated or limited to the fullest
extent permitted by the
<PAGE>
Oregon Revised Statutes, as so amended. No amendment or repeal of this Article
X, nor the adoption of any provision of these Articles of Incorporation
inconsistent with this Article X, nor a change in the law, shall adversely
affect any right or protection that is based upon this paragraph and pertains to
conduct that occurred prior to the time of such amendment, repeal, adoption or
change. No change in the law shall reduce or eliminate the rights and
protections set forth in this paragraph unless the change in the law
specifically requires such reduction or elimination.
LANE PLYWOOD, INC.
BY /s/ Gary Stiltner
--------------------------------------
ITS PRESIDENT
Gary Stiltner
BY /s/ Janis M. Johnson
--------------------------------------
ITS SECRETARY
Janis M. Johnson
DATED: 1/28/89
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<PAGE>
LANE PLYWOOD, INC.
RESTATED BYLAWS
ARTICLE 1
SHAREHOLDERS: MEETINGS AND VOTING
Section 1. PLACE OF MEETINGS
Meetings of the shareholders of Lane Plywood, Inc. (The
"Corporation") shall be held at the principal office of the
Corporation, or any other place, either within or without the state
of Oregon, selected by the Board of Directors.
Section 2. ANNUAL MEETINGS
(a) The annual meeting of the shareholders shall be held on
the fourth Saturday in January of each year, if not a legal
holiday, and if a legal holiday then on the next succeeding
Saturday, at 1:30 p.m. or at such other time as may be prescribed
by the Board of Directors and specified in the notice of the
meeting. The Board of Directors shall have the discretion to
designate a different annual meeting date for any year, provided
that the date so designated is within 60 days of the date specified
in the preceding sentence. At the annual meeting, the shareholders
shall elect by vote a Board of Directors, consider reports of the
affairs of the Corporation and transact such other business as may
properly be brought before the meeting.
(b) If the annual meeting is not held within the earlier of
six months after the end of the Corporation's fiscal year or 15
months after its last annual meeting, the circuit court of the
county where the Corporation's principal office is located, or, if
the principal office is not in Oregon, where the registered office
of the Corporation is or was last located, may summarily order a
meeting to be held upon the application of any shareholder of the
Corporation entitled to participate in an annual meeting.
Section 3. SPECIAL MEETINGS
(a) The Corporation shall hold a special meeting of
shareholders upon the call of the Chairman of the Board, the
President or the Board of Directors, or if the holders of at least
10 percent of all votes entitled to be cast on any issue proposed
to be considered at the proposed special meeting sign, date and
deliver to the Secretary of the Corporation one or more written
demands for the meeting describing the purpose or purposes for
which it is to be held.
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(b) The circuit court of the county where the Corporation's
principal office is located, or, if the principal office is not in
Oregon, where the registered office of the Corporation is or was
last located, may summarily order a special meeting to be held upon
the application of a shareholder of the Corporation who signed a
valid demand for a special meeting if notice of the special meeting
was not given within 30 days after the date the demand was
delivered to the Corporation's Secretary or if the special meeting
was not held in accordance with the notice.
Section 4. NOTICE OF MEETINGS
(a) The Corporation shall notify shareholders in writing of
the date, time and place of each annual and special shareholders
meeting not earlier than 60 days nor less than ten days before the
meeting date. Except as otherwise required by applicable law or the
Articles of Incorporation, the Corporation is required to give
notice only to shareholders entitled to vote at the meeting. Such
notice is effective when mailed if it is mailed postage prepaid and
is correctly addressed to the shareholder's address shown in the
Corporation's current record of shareholders. Except as otherwise
required by applicable law or by the Articles of Incorporation,
notice of an annual meeting need not include a description of the
purpose or purposes for which the meeting is called. Notice of a
special meeting shall include a description of the purpose or
purposes for which the meeting is called.
(b) If an annual or special shareholders meeting is adjourned
to a different date, time or place, notice need not be given of the
new date, time or place, if the new date, time or place is
announced at the meeting before adjournment. If a new record date
for the adjourned meeting is fixed, or is required by law to be
fixed, notice of the adjourned meeting shall be given to persons
who are shareholders as of the new record date. A determination of
shareholders entitled to notice of or to vote at a shareholders
meeting is effective for any adjournment of the meeting unless the
Board of Directors fixes a new record date, which it must do if the
meeting is adjourned to a date more than 120 days after the date
fixed for the original meeting.
(c) A shareholder's attendance at a meeting waives objection
to (i) lack of notice or defective notice of the meeting, unless
the shareholder at the beginning of the meeting objects to holding
the meeting or transacting business at the meeting; and (ii)
consideration of a particular matter at the meeting that is not
within the purpose or purposes described in the meeting notice,
unless the shareholder objects to considering the matter when it is
presented.
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(d) A shareholder may at any time waive any notice required
by law, the Articles of Incorporation or these Bylaws. Except as
otherwise provided in paragraph (c) of Section 4 of this Article 1,
the waiver must be in writing, be signed by the shareholder
entitled to the notice, and be delivered to the Corporation for
inclusion in the minutes or filing with the corporate records.
Section 5. QUORUM AND VOTING REQUIREMENTS FOR VOTING GROUPS
(a) Shares entitled to vote as a separate voting group may
take action on a matter at a meeting only if a quorum of those
shares exists with respect to that matter. Unless otherwise
required by law, a majority of the votes entitled to be cast on the
matter by the voting group constitutes a quorum of that voting
group for action on that matter. Once a share is represented for
any purpose at a meeting, it is deemed present for quorum purposes
for the remainder of the meeting and for any adjournment of that
meeting unless a new record date is or must be set for that
adjourned meeting.
(b) In the absence of a quorum, a majority of those present in
person or represented by proxy may adjourn the meeting from time to
time until a quorum exists. Any business that might have been
transacted at the original meeting may be transacted at the
adjourned meeting if a quorum exists.
Section 6. VOTING RIGHTS
(a) The persons entitled to receive notice of and to vote at
any shareholders meeting shall be determined from the records of
the Corporation on the close of business on the day before the
mailing of the notice or on such other date not more than 70 nor
less than 10 days before such meeting as may be fixed in advance by
the Board of Directors.
(b) Except as otherwise provided in the Articles of
Incorporation or by applicable law, each outstanding share,
regardless of class, is entitled to one vote on each matter voted
on at a shareholders meeting. Only shares are entitled to vote.
(c) Except as otherwise provided in the Articles of
Incorporation or by applicable law, if a quorum exists, action on a
matter, other than the election of directors, by a voting group
shall be approved if the votes cast within the voting group
favoring the action exceed the votes cast with the voting group
opposing the action.
(d) Except as otherwise provided in the Articles of
Incorporation, directors shall be elected by a plurality of the
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votes cast by holders of the shares entitled to vote in the
election at a meeting at which a quorum is present.
Section 7. VOTING OF SHARES BY CERTAIN HOLDERS
(a) If the name signed on a vote, consent, waiver or proxy
appointment corresponds to the name of a shareholder, the
Corporation, if acting in good faith, is entitled to accept the
vote, consent, waiver or proxy appointment and give it effect as
the act of the shareholder. If the name signed on a vote,
consent, waiver or proxy appointment does not correspond to the
name of its shareholder, the Corporation, if acting in good faith,
is nevertheless entitled to accept the vote, consent, waiver or
proxy appointment and give it effect as the act of the shareholder
if:
(i) The shareholder is an entity and the name signed
purports to be that of an officer of agent of the entity;
(ii) The name signed purports to be that of an
administrator, executor, guardian or conservator representing the
shareholder and, if the Corporation requests, evidence of fiduciary
status acceptable to the Corporation has been presented with
respect to the vote, consent, waiver or proxy appointment;
(iii) The name signed purports to be that of a receiver
or trustee in bankruptcy of the shareholder and, if the Corporation
requests, evidence of this status acceptable to the Corporation has
been presented with respect to the vote, consent, waiver or proxy
appointment;
(iv) The name signed purports to be that of a pledge,
beneficial owner or attorney-in-fact of the shareholder and, if the
Corporation requests, evidence acceptable to the Corporation of the
signatory's authority to sign for the shareholder has been
presented with respect to the vote, consent, waiver or proxy
appointment; or
(v) Two or more persons are the shareholder as co-tenants
or fiduciaries and the name signed purports to be the name of at
least one of the co-owners and the person signing appears to be
acting on behalf of all co-owners.
(b) Shares of the Corporation are not entitled to be voted if
(i) they are owned, directly or indirectly, by another domestic or
foreign corporation, and (ii) the Corporation owns, directly or
indirectly, a majority of the shares entitled to be voted for the
directors of such other corporation. This paragraph does not limit
the power of a corporation to vote any
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shares, including its own shares, held by it in a fiduciary
capacity.
(c) Any redeemable shares that the Corporation may issue are
not entitled to be voted after notice of redemption is mailed to
the holders and a sum sufficient to redeem the shares has been
deposited with a bank, trust company or other financial institution
under an irrevocable obligation to pay the holders the redemption
price on surrender of the shares.
Section 8. PROXIES
A shareholder may vote shares either in person or by proxy. A
shareholder may appoint a proxy to vote or otherwise act for the
shareholder by signing an appointment form, either personally or by
the shareholder's attorney-in-fact. An appointment of a proxy is
effective when received by the Secretary or other officer or agent
of the Corporation authorized to tabulate votes. An appointment is
valid for 11 months unless a longer period is expressly provided in
the appointment form. An appointment of a proxy is revocable by the
shareholder unless the appointment form conspicuously states that
it is irrevocable and the appointment is coupled with an interest.
Section 9. SHAREHOLDER LISTS
(a) After fixing a record date for a meeting, the Corporation
shall prepare an alphabetical list of the names of all of its
shareholders who are entitled to notice of the meeting. The list
shall be arranged by voting group, and within each voting group, by
class or series of shares and show the address of and the number of
shares held by each shareholder.
(b) The shareholder list shall be available for inspection by
any shareholder, beginning two business days after notice of the
meeting for which the list was prepared is given and continuing
through the meeting. Such list shall be kept on file at the
Corporation's principal office or at a place identified in the
meeting notice in the city where the meeting will be held. A
shareholder, or the shareholder's agent or attorney, shall be
entitled on written demand to inspect and, subject to the
requirements of law, to copy the list during regular business hours
and at the shareholder's expense during the period it is available
for inspection.
(c) The Corporation shall make the shareholder list available
at the meeting, and any shareholder, or the shareholder's agent or
attorney, is entitled to inspect the list at any time during the
meeting or any adjournment.
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(d) Refusal or failure to prepare or make available the
shareholder list does not affect the validity of action taken
at the meeting.
ARTICLE 2
DIRECTORS
Section 1. POWERS
The Corporation shall have a Board of Directors. All corporate
powers shall be exercised by or under the authority of, and the
business and affairs of the Corporation shall be managed under the
direction of, the Board of Directors, subject to any limitation set
forth in the Articles of Incorporation.
Section 2. NUMBER AND QUALIFICATIONS
The Board of Directors shall consist of seven members, until
the number has been changed by the Board of Directors by amendment
of these Bylaws. Any decrease in the number of directors designated
by the Board of Directors shall not shorten an incumbent director's
term. The Board of Directors shall nominate a slate of directors
for election by shareholders at the annual meeting of the
shareholders. In nominating directors and filling vacancies of the
Board of Directors, the Board of Directors shall act to ensure
that at all times the President or the Chairman of the Board of the
Corporation is a member of the Board of Directors and that at least
two directors are persons with extensive business and executive
experience who are not employees of the Corporation. Directors need
not be residents of the state of Oregon or shareholders of the
Corporation, unless required by the Articles of Incorporation.
Section 3. ELECTION AND TENURE OF OFFICE
The directors shall be divided into three classes, and the
directors in each class shall serve for terms of three years. Class
1 shall consist of three directors. Classes 2 and 3 shall each
consist of two directors. One director in Class 1 and one director
in Class 2 must be persons with extensive business experience who
are not employees of the Corporation. For the election to be held
at the annual meeting of shareholders in 1989, directors shall be
elected for positions in Class 2. For the election to be held at
the annual meeting of shareholders in 1990, directors shall be
elected for positions in Class 3. For the election to be held at
the annual meeting of shareholders in 1991, directors shall be
elected for positions in Class 1. Thereafter, directors shall be
elected at each annual meeting of the shareholders for positions in
the class in which the
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directors' terms have expired. In every case, a director holding
office shall continue to hold such office until the director's
successor has been elected and qualified.
Section 4. VACANCIES
(a) A vacancy in the Board of Directors shall exist upon the
death, resignation or removal of any director or upon an increase
in the number of directors.
(b) Except as otherwise provided by the Articles of
Incorporation, if a vacancy occurs on the Board of Directors:
(i) The shareholders may fill the vacancy, provided that
the Board of Directors has not already done so: or
(ii) The Board of Directors may fill the vacancy,
provided the shareholders have not already done so. If the
directors remaining in office constitute fewer than a quorum of the
Board, they may fill the vacancy by the affirmative vote of a
majority of all the directors remaining in office.
(c) A vacancy that will occur at a specific later date, by
reason of a resignation effective at the later date or otherwise,
may be filled before the vacancy occurs, but the new director may
not take office until the vacancy occurs.
Section 5. RESIGNATION OF DIRECTORS
A director may resign at any time by delivering written notice
to the Board of Directors, its chairperson or the Corporation.
Unless the notice specifies a later effective date, a resignation
is effective at the earliest of the following: (a) when received;
(b) five days after its deposit in the United States mail, as
evidenced by the postmark, if mailed postage prepaid and correctly
addressed; or (c) on the date shown on the return receipt, if sent
by registered or certified mail, return receipt requested and the
receipt is signed by or on behalf of the addressee. Once delivered,
a notice of resignation is irrevocable unless revocation is
permitted by the Board of Directors.
Section 6. REMOVAL OF DIRECTORS
The shareholders may remove one or more directors with or
without cause unless the Articles of Incorporation provide that the
directors may be removed only for cause. A director may be removed
by the shareholders only at a meeting called for the purpose of
removing the director and the meeting notice must
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state that the purpose, or one of the purposes, of the meeting is
removal of the director.
Section 7. MEETINGS
(a) The Board of Directors may hold regular or special
meetings in or out of the state of Oregon.
(b) Annual meetings of the Board of Directors shall be held
without notice immediately following the adjournment of the annual
meetings of the shareholders.
(c) Except as otherwise provided by the Articles of
Incorporation, regular meetings of the Board of Directors may be
held without notice of the date, time, place or purpose of the
meeting. The Board of Directors may fix, by resolution, the time
and place for holding of regular meetings.
(d) Special meetings of the Board of Directors for any
purpose or purposes may be called at any time by the Chairman of
the Board, the President or any two directors. The person or
persons who call a special meeting of the Board of Directors may
fix the time and place of the special meeting.
Section 8. NOTICE OF SPECIAL MEETINGS
(a) Unless the Articles of Incorporation provide for a
longer or shorter period, special meetings of the Board of
Directors shall be preceded by at least two days' notice of the
date, time and place of the meeting. The notice need not describe
the purpose of the special meeting unless required by the Articles
of Incorporation. The notice shall be given orally, either in
person or by telephone, or shall be delivered in writing, either
personally, by mail or by telegram. If in writing, such notice is
effective at the earliest of the following: when (i) received;
(ii) five days after its deposit in the United States mail, as
evidenced by the postmark, if it is mailed postage prepaid and is
correctly addressed to the director's address shown in the
Corporation's records; or (iii) on the date shown on the return
receipt, if sent by registered or certified mail, return receipt
requested, and the receipt is signed by or on behalf of the
addressee. If given orally, such notice is effective when
communicated.
(b) A director's attendance at or participation in a meeting
waives any required notice to the director of the meeting unless
the director at the beginning of the meeting, or promptly upon the
director's arrival, objects to holding the meeting or transacting
business at the meeting and does not thereafter vote for or assent
to action taken at the meeting.
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(c) A director may at any time waive any notice required by
law, the Articles of Incorporation or these Bylaws. Except as
otherwise provided in paragraph (b) of Section 8 of this Article 2,
the waiver shall be in writing, shall be signed by the director
entitled to the notice, shall specify the meeting for which notice
is waived and shall be filed with the minutes or appropriate
records.
(d) Notice of the time and place of holding an adjourned
meeting need not be given if such time and place are fixed at the
meeting adjourned.
Section 9. QUORUM AND VOTE
(a) Except as otherwise required by the Articles of
Incorporation, a majority of the directors in office shall
constitute a quorum for the transaction of business. A majority of
the directors present, in the absence of a quorum, may adjourn from
time to time but may not transact any business.
(b) If a quorum is present when a vote is taken, the
affirmative vote of a majority of directors present is the act of
the Board of Directors unless the Articles of Incorporation requite
the vote of a greater number of directors.
(c) A director of the Corporation who is present at a meeting
of the Board of Directors, or is present at a meeting of a
committee of the Board of Directors, when corporate action is
taken, is deemed to have assented to the action taken unless (i)
the director objects at the beginning of the meeting, or promptly
upon the director's arrival, to holding the meeting or transacting
business at the meeting, (ii) the director's dissent or abstention
from the action taken is entered in the minutes of the meeting, or
(iii) the director delivers written notice of dissent or abstention
to the presiding officer of the meeting before its adjournment or
to the Corporation immediately after adjournment of the meeting.
The right of dissent or abstention is not available to a director
who votes in favor of the action taken.
Section 10. COMPENSATION
The Board of Directors may, by resolution, provide that the
directors be paid their expenses, if any, of attendance at each
meeting of the Board of Directors, and provide that the directors
be paid a fixed sum for attendance at each meeting of the Board of
Directors or a stated salary as director. No such payment shall
preclude any director from serving the Corporation in any other
capacity and receiving compensation for that service.
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ARTICLE 3
COMMITTEES
Section 1. APPOINTMENT
Subject to applicable law, the provisions of the Articles of
Incorporation and these Bylaws, the Board of Directors may appoint
such committees as may be necessary from time to time, consisting
of such number of its members and shall have such powers as the
Board may designate. Each such committee shall have two or more
members, who serve at the pleasure of the Board of Directors. The
Board of Directors shall have the power, at any time, to increase
or decrease the number of members of each committee, to fill
vacancies thereon, to change any member thereof and to change the
functions or terminate the existence thereof. No member of any
committee shall continue to be a member thereof after such member
ceases to be a director of the Corporation.
Section 2. ACTIONS OF COMMITTEES; GOVERNING PROCEDURES
All actions of a committee shall be reflected in minutes to be
kept of such meetings and reported to the Board of Directors at the
next succeeding meeting thereof. The provisions of Article 2 of
these Bylaws governing meetings, notice and waiver of notice, and
quorum and voting requirements of the board of Directors apply to
committees and their members as well. The Board of Directors may
vote to the members of any committee a reasonable fee as
compensation for attendance at meetings of the committee.
Section 3. EXECUTIVE COMMITTEE
An executive committee may be appointed by the Board of
Directors pursuant to the foregoing paragraphs. When appointed, the
executive committee shall have the power to exercise all authority
of the Board of Directors, except that the executive committee may
not:
(i) Authorize distributions;
(ii) Approve or propose to shareholders actions that are
required by law to be approved by shareholders;
(iii) Fill vacancies on the Board of Directors or on
any of its committees;
(iv) Amend the Articles of Incorporation;
(v) Adopt, amend or repeal the Bylaws;
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(vi) Approve a plan of merger not requiring shareholder
approval;
(vii) Authorize or approve a reacquisition of shares,
except according to a formula or method prescribed by the Board of
Directors; or
(viii) 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 the limits specifically prescribed by the Board of
Directors.
ARTICLE 4
OFFICERS
Section 1. DESIGNATION; ELECTION
(a) The officers of the Corporation shall be a Chairman of the
Board, President, one or more Vice Presidents, Secretary, Treasurer
and such other officers and assistant officers as the Board of
Directors shall from time to time appoint, none of whom need be
members of the Board of Directors. The officers shall be elected
by, and hold office at the pleasure of, the Board of Directors. A
duly appointed officer may appoint one or more officers or
assistant officers if such appointment is authorized by the Board
of Directors. The same individual may simultaneously hold more than
one office in the Corporation.
(b) A vacancy in any office because of death, resignation,
removal or any other cause shall be filled in the manner prescribed
in these Bylaws for regular appointments to such office.
Section 2. COMPENSATION AND TERM OF OFFICE
(a) The compensation and term of office of all the officers
of the Corporation shall be fixed by the Board of Directors. No
officer of the Corporation shall be prevented from receiving
compensation by reason of the fact that the officer is also a
director of the Corporation.
(b) The Board of Directors may remove any officer at any
time, either with or without cause.
(c) Any officer may resign at any time by giving written
notice to the Board of Directors, the President or the
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Secretary of the Corporation. Unless the notice specifies a later
effective date, a resignation is effective at the earliest of the
following: (i) when received; (ii) five days after its deposit in
the United States mail, as evidenced by the postmark, if mailed
postage prepaid and correctly addressed; or (iii) on the date shown
on the return receipt, if sent by registered or certified mail,
return receipt requested and the receipt is signed by or on behalf
of the addressee. Once delivered, a notice of resignation is
irrevocable unless revocation is permitted by the Board of
Directors. If a resignation is made effective at a later date and
the Corporation accepts the future effective date, the Board of
directors may fill the pending vacancy before the effective date,
if the Board of Directors provides that the successor shall not
take office until the effective date.
(d) This section shall not affect the rights of the
Corporation or any officer under any express contract of
employment.
Section 3. CHAIRMAN OF THE BOARD
The Chairman of the Board, if and when elected, shall preside
at all meetings of the Board of Directors and at meetings of the
shareholders and shall perform such other duties as may be
prescribed from time to time by the Board of Directors.
Section 4. PRESIDENT
The President shall be the chief executive officer of the
Corporation and shall, subject to the control of the Board of
Directors, have general supervision, direction and control of the
business and affairs of the Corporation. In the absence of the
Chairman of the Board, the President shall perform the duties and
responsibilities of the Chairman of the Board. The President shall
be ex offiicio a member of all the standing committees of the Board
of Directors (including the executive committee, if any), shall
have the general powers and duties of management usually vested in
the office of president of a corporation and shall have such other
powers and duties as may be prescribed by the board of directors or
these bylaws.
Section 5. VICE PRESIDENTS
In the absence or disability of the President, the President's
duties and powers shall be performed and exercised by a Vice
President (or, in the event there be more than one Vice President,
the Vice Presidents in the order designated at the time of their
election, or, in the absence of any designation, then in the order
of their election) and, when so acting, shall
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have all the powers and be subject to all the restrictions upon
the President. Any Vice President shall perform such other duties
as may be prescribed by the Board of Directors.
Section 6. SECRETARY
(a) The Secretary shall keep or cause to be kept at the
principal office, or such other place as the Board of Directors may
order, a book of minutes of all meetings of directors and
shareholders showing the time and place of the meeting, whether the
meeting was regular or special and, if a special meeting, how
authorized, the notice given, the names of those present at
directors meetings, the number of shares present or represented at
shareholders meetings and the proceedings thereof.
(b) The Secretary shall keep or cause to be kept, at the
principal office or at the office of the Corporation's transfer
agent, a share register, or a duplicate share register, showing the
names of the shareholders and their addresses, the number and
classes of shares held by each, the number and date of the
certificates issued for such shares and the number and date of
cancellation of certificates surrendered for cancellation.
(c) The Secretary shall give or cause to be given such notice
of the meetings of the shareholders and of the Board of Directors
as is required by these Bylaws. If the Corporation elects to have a
seal, the Secretary shall keep the seal and affix it to all
documents requiring a seal. The Secretary shall have such other
powers and perform such other duties as may be prescribed by the
Board of Directors or these Bylaws.
Section 7. TREASURER
The Treasurer shall be the chief financial and accounting
officer of the Corporation. The Treasurer shall keep correct and
complete records of accounts showing the financial condition of the
Corporation. The Treasurer shall be the legal custodian of all
moneys, notes, securities and other valuables that may from time to
time come into the possession of the Corporation, shall deposit and
withdraw funds of the Corporation in such depositories as may be
authorized by the Board of Directors. The Treasurer shall perform
other duties as may be prescribed by the Board of Directors.
Section 8. ASSISTANTS
The Board of Directors may appoint or authorize the
appointment of assistants to the Secretary or Treasurer, or both.
Such assistants may exercise the powers of the Secretary or
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Treasurer, as the case may be, and shall perform such duties as are
prescribed by the Board of Directors.
ARTICLE 5
CORPORATE RECORDS AND REPORTS - INSPECTION
Section 1. RECORDS
The Corporation shall maintain all records required by law.
All such records shall be kept at its principal office, registered
office or at any other place designated by the President or as
otherwise provided by applicable law.
Section 2. INSPECTION OF RECORDS
The records of the Corporation shall be open to inspection by
the shareholders or the shareholders' agents or attorneys in the
manner and to the extent required by applicable law.
Section 3. CHECKS, DRAFTS, ETC.
All checks, drafts or other orders for payment of money, notes
or other evidences of indebtedness, issued in the name of or
payable to the Corporation, shall be signed or endorsed by such
person or persons and in such manner as may be determined from time
to time by resolution of the Board of Directors.
Section 4. EXECUTION OF DOCUMENTS
The Board of Directors may, except as otherwise provided in
these Bylaws, authorize any officer or agent of the Corporation to
enter into any contract or execute any instrument in the name of
and on behalf of the Corporation. Such authority may be general or
confined to specific instances. Unless so authorized by the Board
of Directors, or unless inherent in the authority vested in the
office under the provisions of these Bylaws, no officer, agent or
employee of the Corporation shall have any power or authority to
bind the Corporation by any contract or engagement, or to pledge
its credit, or to render it liable for any purpose or for any
amount.
ARTICLE 6
CERTIFICATES AND TRANSFER OF SHARES
Section 1. CERTIFICATES FOR SHARES
(a) Certificates for shares shall be in such form as the Board
of Directors may designate, shall designate the name
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of the Corporation and state law under which the Corporation is
organized, shall state the name of the person to whom the shares
represented by the certificate are issued, and shall state the
number and class of shares and the designation of the series, if
any, the certificate represents. If the corporation is authorized
to issue different classes of shares or different series within a
class, the designations, relative rights, preferences and
limitations applicable to each class, the variations in rights,
preferences and limitations determined for each series and the
authority of the Board of Directors to determine variations for
future series shall be summarized on the front or back of each
certificate, or each certificate may state conspicuously on its
front or back that the Corporation shall furnish shareholders with
this information on request in writing and without charge.
(b) Each certificate for shares shall be signed, either
manually or in facsimile, by (i) the President or a Vice President
and (ii) the Secretary or an Assistant Secretary of the
Corporation. The certificates may bear the corporate seal or its
facsimile.
(c) If any officer who has signed a share certificate, either
manually or in facsimile, no longer holds office when the
certificate is issued, the certificate shall nevertheless be valid.
(d) The Corporation shall not issue certificates for
fractional shares.
Section 2. TRANSFER ON THE BOOKS
Upon surrender to the Corporation of a certificate for shares
duly endorsed or accompanied by proper evidence of succession,
assignment or authority to transfer, and subject to any limitations
on transfer appearing on the certificate or in the Corporation's
stock transfer records, the Corporation shall issue a new
certificate to the person entitled thereto, cancel the old
certificate and record the transaction upon its books.
Section 3. LOST, STOLEN OR DESTROYED CERTIFICATES
In the event a certificate is represented to be lost, stolen
or destroyed, a new certificate shall be issued in place thereof
upon such proof of the loss, theft or destruction and upon the
giving of such bond or other indemnity as may be required by the
Board of Directors.
15
<PAGE>
Section 4. TRANSFER AGENTS AND REGISTRARS
The Board of Directors may from time to time appoint one or
more transfer agents and one or more registrars for the shares of
the Corporation who will have such powers and duties as the Board
of Directors may specify.
Section 5. CLOSING STOCK TRANSFER BOOKS
The Board of Directors may close the transfer books for a
period not exceeding 70 days preceding any annual or special
meeting of the shareholders or the day appointed for the payment of
a dividend.
ARTICLE 7
GENERAL PROVISIONS
Section 1. SEAL
If the Corporation elects to have a corporate seal, the seal
shall be circular in form and shall have inscribed thereon the name
of the Corporation and the state of its incorporation.
Section 2. FISCAL YEAR
The fiscal year of the Corporation shall begin on December 1
and end on November 30 of each year.
Section 3. AMENDMENT OF BYLAWS
(a) Except as otherwise provided by applicable law or by the
Articles of Incorporation, the Board of Directors may amend or
repeal these Bylaws unless:
(i) The Articles of Incorporation or applicable law
reserve this power exclusively to the shareholders in whole or in
part; or
(ii) The shareholders in amending or repealing a
particular Bylaw provide expressly that the Board of Directors may
not amend or repeal that Bylaw.
(b) The Corporation's shareholders may amend or repeal these
Bylaws even though these Bylaws may also be amended or repealed by
the Board of Directors.
(c) Whenever an amendment or new Bylaw is adopted, it shall
be copied in the minute book with the original Bylaws in the
appropriate place. If any Bylaw is repealed, the fact of
16
<PAGE>
repeal and the date on which the repeal occurred shall be stated in
such book and place.
Section 3. ACTION WITHOUT A MEETING
(a) Action required or permitted by law to be taken at a
shareholders meeting may be taken without a meeting if the action
is taken by all the shareholders entitled to vote on the action.
The action shall be evidenced by one or more written consents
describing the action taken, signed by all the shareholders
entitled to vote on the action and delivered to the Corporation for
inclusion in the minutes or filing with the corporate records.
Action taken under this Section 3 is effective when the last
shareholder signs the consent, unless the consent specifies an
earlier or later effective date. If not otherwise determined by
law, the record date for determining shareholders entitled to take
action without a meeting is the date the first shareholder signs
the consent. A consent signed under this Section 3 has the effect
of a meeting vote and may be described as such a document.
(b) Except as otherwise provided by the Articles of
Incorporation or these Bylaws, action required or permitted by law
to be taken at a meeting of the Board of Directors, or at a
meeting of a committee of the Board of Directors, may be taken
without a meeting if the action is taken by all members of the
Board. The action shall be evidenced by one or more written
consents describing the action taken, signed by each director and
included in the minutes or filed with the corporate records
reflecting the action taken. Action taken under this section is,
effective when the last director signs the consent, unless the
consent specifies an earlier or later effective date. A consent
signed under this section has the effect of a meeting vote and may
be described as such in any document.
Section 4. TELEPHONIC MEETINGS
Except as otherwise provided by the Articles of Incorporation,
the Board of Directors may permit any or all directors to
participate in a regular or special meeting by, or conduct the
meeting through, use of any means of communication by which all
directors participating may simultaneously hear each other during
the meeting. A director participating in a meeting by this means
shall be deemed to be present in person at the meeting.
17
<PAGE>
ARTICLE 8
INDEMNIFICATION
Section 1. DIRECTORS AND OFFICERS
The Corporation shall indemnify to the fullest extent
permitted by law, any person who is made, or threatened to be made,
a party to or witness in, or is otherwise involved in, any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative, investigative, or
otherwise (including any action, suit or proceeding by or in the
right of the Corporation) by reason of the fact that:
(i) the person is or was a director or officer of the
Corporation or any of its subsidiaries;
(ii) the person is or was serving as a fiduciary within
the meaning of the Employee Retirement Income Security Act of 1974
with respect to any employee benefit plan of the Corporation or any
of its subsidiaries; or
(iii) the person is or was serving, at the request of
the Corporation or any of its subsidiaries, as a director or
officer, or as a fiduciary of an employee benefit plan, of another
corporation, partnership, joint venture, trust or other enterprise.
Section 2. EMPLOYEES AND OTHER AGENTS
The Corporation may indemnify its employees and other agents
to the fullest extent permitted by law.
Section 3. ADVANCES OF EXPENSES
(a) The expenses incurred by a director or officer in
connection with any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative,
investigative, or otherwise, which the director or officer is made
or threatened to be made a party to or witness in, or is otherwise
involved in, shall be paid by the Corporation in advance upon
written request of the director or officer, if the director of
officer:
(i) furnishes the Corporation a written affirmation of
his or her good faith belief that he or she is entitled to be
indemnified by the Corporation; and
(ii) furnishes the Corporation a written undertaking to
repay such advance to the extent that is ultimately determined by a
court that he or she is not entitled
18
<PAGE>
to be indemnified by the Corporation. Such advances shall be made
without regard to the person's ability to repay such expenses and
without regard to the person's ultimate entitlement to
indemnification under this Article or otherwise.
Section 4. NONEXCLUSIVITY OF RIGHTS
The rights conferred on any person by this Article 8 shall be
in addition to any rights to which a person may otherwise be
entitled under any articles of incorporation, bylaw, agreement,
statute, policy of insurance, vote of shareholder or Board of
Directors, or otherwise.
Section 5. SURVIVAL OF RIGHTS
The rights conferred on any person by this Article 8 shall
continue as to a person who has ceased to be a director, officer,
employee or agent of the Corporation; and shall inure to the
benefit of the heirs, executors and administrators of such person.
Section 6. AMENDMENTS
Any repeal of this Article 8 shall be prospective only and no
repeal or modification of this Article 8 shall adversely affect any
right or protection that is based upon this Article 8 and pertains
to an act or omission that occurred prior to the time of such
repeal or modification.
ARTICLE 9
LIMITATION OF DIRECTOR LIABILITY
To the fullest extent permitted by law, no director of the
Corporation shall be personally liable to the Corporation or its
shareholders for monetary damages for conduct as a director.
Without limiting the generality of the foregoing, if the Oregon
Revised Statutes are amended, after this Article 9 becomes
effective, to authorize corporate action further eliminating or
limiting the personal liability of directors of the Corporation,
then the liability of directors of the Corporation shall be
eliminated or limited to the fullest extent permitted by the Oregon
Revised Statutes, as so amended. No amendment or repeal of this
Article 9, nor the adoption of any provision of these Bylaws
inconsistent with this Article 9, nor a change in the law, shall
adversely affect any right or protection that is based upon this
Article 9 and pertains to conduct that occurred prior to the time
of such amendment, repeal, adoption or change. No change in the
law shall reduce or eliminate the rights and protections set
19
<PAGE>
forth in this Article 9 unless the change in the law specifically
requires such reduction or elimination.
ARTICLE 10
TRANSACTIONS BETWEEN CORPORATION AND
INTERESTED DIRECTORS
Section 1. VALIDITY OF TRANSACTION
(a) No transaction involving the Corporation shall be
voidable by the Corporation solely because of a director's direct
or indirect interest in the transaction if:
(i) The material facts of the transaction and the
director's interest were disclosed or known to the Board of
Directors or a committee of the Board of Directors, and the Board
of Directors or committee authorized, approved or ratified the
transaction;
(ii) The material facts of the transaction and the
director's interest were disclosed or known to the shareholders
entitled to vote and a majority of those shareholders authorized,
approved or ratified the transaction; or
(iii) The transaction was fair to the Corporation.
(b) This Article 10 shall not invalidate any contract,
transaction or determination that would otherwise be valid under
applicable law.
Section 2. INDIRECT INTEREST
Solely for purposes of this Article 10, a director of the
Corporation has an indirect interest in a transaction; if:
(a) Another entity in which the director has a material
financial interest or in which the director is a general partner is
a party to the transaction; or
(b) Another entity of which the director is a director,
officer or trustee is a party to the transaction and the
transaction is or should be considered by the Board of Directors.
Section 3. AUTHORIZATION BY BOARD
For purposes of Section 1 of this Article 10, a transaction in
which a director has an interest is authorized,
20
<PAGE>
approved or ratified by the Board of Directors if it receives the
affirmative vote of a majority of the directors on the Board of
Directors, or on the committee, who have no direct or indirect
interest in the transaction. A transaction may not be authorized,
approved or ratified under this Article 10 by a single director. If
a majority of the directors who have no direct or indirect interest
in the transaction vote to authorize, approve or ratify the
transaction, a quorum shall be present for the purpose of taking
action under this Article 10. The presence of, or a vote cast by, a
director with a direct or indirect interest in the transaction
shall not affect the validity of any action taken under Section 1
of this Article 10 by the Board of directors or a committee
thereof, if the transaction is otherwise authorized, approved or
ratified as provided in Section 1 of this Article 10.
Section 4. AUTHORIZATION BY SHAREHOLDERS
For purposes of Section 1 of this Article 10, a transaction in
which a director has an interest is authorized, approved or
ratified if it receives the vote of a majority of the shares
entitled to be counted under this Article 10, voting as a single
voting group. Shares owned by or voted under the control of a
director who has a direct or indirect interest in the transaction,
and shares owned by or voted under the control of any entity
described in paragraph (a) of Section 2 of this Article 10 may be
counted in a vote of shareholders to determine whether to
authorize, approve or ratify a transaction by vote of the
shareholders under Section 1 of this Article 10. A majority of the
shares, whether or not present, that are entitled to be counted in
a vote on the transaction under this Article 10 constitutes a
quorum for the purpose of taking action under this Article 10.
Adopted: December 19, 1988
<PAGE>
EXHIBIT 11
LANE PLYWOOD, INC.
------------------
COMPUTATION OF NET INCOME PER SHARE
-----------------------------------
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Shares issued at beginning
of period 204,662 204,662 204,662
Common shares outstanding 204,662 204,662 204,662
Net income $(335,382) $ 624,162 $ 449,654
Net income per common share $(1.64) $ 3.05 $2.20
</TABLE>
<PAGE>
ANNUAL REPORT
TO THE STOCKHOLDERS OF
LANE PLYWOOD, INC.
FOR THE YEAR ENDED NOVEMBER 30, 1995
DIRECTORS
JAMES E. GENT
PAUL F. EHINGER
FRANCIS D. BALES
CARL M. JENSEN
JOHN W. REVELL
GARY R. JENSEN
PAUL W. JENSEN
OFFICERS
CARL R. WILEY, PRESIDENT
JANIS M. JOHNSON, VICE-PRESIDENT/SECRETARY-TREASURER
AUDITORS
COOPERS & LYBRAND L.L.P.
<PAGE>
LANE PLYWOOD, INC.
_______
<PAGE>
C O N T E N T S
_______
Page(s)
-------
MESSAGE TO STOCKHOLDERS FROM THE CHAIRMAN OF THE
BOARD AND PRESIDENT i
DESCRIPTION OF BUSINESS OPERATIONS ii
DIRECTORS OF THE COMPANY iii
STOCK AND DIVIDEND HISTORY iv
FINANCIAL TABLE OF CONTENTS
Five-Year Summary of Selected Financial Data v
Management's Discussion and Analysis vi-x
Report of Independent Accountants 1
Financial Statements:
Balance Sheets 2
Statements of Operations 3
Statements of Cash Flows 4
Notes to Financial Statements 5-14
LANE PLYWOOD, INC.
<PAGE>
ANNUAL REPORT TO STOCKHOLDERS
MESSAGE TO STOCKHOLDERS
FROM THE CHAIRMAN OF THE BOARD AND PRESIDENT
February 1, 1996
Fiscal year operations ending November 30, 1995 resulted in a loss, after
provision for taxes, of $335,382.
A review of events impacting Lane Plywood during 1995 brings out the unique
character of Lane's net loss. Conditions during 1995 were not normal. The year
began with a proxy fight for two Board seats and a controversial offer to buy
the Company for $24.50 per share. The Board of Directors, as a result of this
confrontation, shifted corporate direction from one of operations to one of
seeking a buyer for the group. Lane began incurring costs that had nothing to
do with operations. Significant funds were spent addressing the legal and
accounting fees related to securities filings and review of offers to purchase
the Company, as well as cleaning up past Company obligations. By far, the most
significant impact on Lane's financial statements came from the Company's
actions that terminated and funded, in full, the old defined benefit plan. This
action added expenses to the 1995 Income Statement totaling $1,357,676. On the
other side of the Income Statement in October, the Company sold to the State of
Oregon, Department of Transportation 7+ acres for a gain of $319,557. By year
end, stockholders had been notified of a tentative offer to merge Lane Plywood
into a new corporation for a price of $49 per share. Point, 1995 was anything
but normal.
Operationally, the Company continued to make gains. If the unusual expenses and
gains had not occurred, Lane would have continued the trend of past years and
reported a net profit. Lane's plywood business was relatively stable throughout
'95. We were able to purchase ample supplies of veneer and experienced no
shortages. Product development and raw materials continue to be critical areas,
but management has made positive gains in both fields. Today it is not uncommon
to see our employees using veneers with names likes: TEPA, ULMO, TAUARI,
CYPRESS, and YELLOW POPLAR.
Change has been part of life in Lane for many years now. Fortunately for all of
us, in Lane Plywood, we have been able to cope with and survive our changing
times. On behalf of Lane Plywood, we would like to say thanks, to all those
employees and stockholders who have given that little something extra to help us
endure these changing times.
Respectively yours,
/S/ GARY R. JENSEN
- ------------------------------
Gary R. Jensen
Chairman of the Board
/S/ CARL WILEY
- ---------------------------------
Carl Wiley
President
LANE PLYWOOD, INC. i
<PAGE>
DESCRIPTION OF BUSINESS OPERATIONS
PLYWOOD OPERATIONS
The Corporation produces softwood plywood at its 92 acre plant site in Eugene,
Oregon. Its business includes purchasing veneer to satisfy veneer needs,
manufacturing and selling plywood from the purchase of veneer, selling green or
dry veneer, custom drying and composing veneer, selling plywood manufacturing
byproducts, and operating a plywood reload operation.
The principal product manufactured and sold by the Corporation is softwood
plywood. Other products include the byproducts and veneers described above.
Sales of dry veneer used in the laminated veneer lumber market accounted for 16%
of 1994 sales and 13% of 1995 sales. No other product contributed as much as
15% to revenue in any of the last three fiscal years. The Corporation's market
for plywood is scattered throughout the 48 contiguous states and Hawaii. Sales
are handled by a one-person sales staff from the Eugene mill. Customers include
brokers and large distribution warehouses. Except for minor local brokers,
sales are made in rail carload or truckload lots, both of which are made from
the mill's shipping facility. The major manufacturing byproduct, ply trim, is
sold to a mill in Oregon.
Nearly all of the Corporation's plywood products are classified as commodities
and are manufactured to voluntary product standards administered by the National
Bureau of Standards. The Corporation has no material new products in the
development stage. However, the Corporation has been working to find niche
noncommodity markets. In 1995, it started to sell plywood blanks to snowboard
manufacturers to serve as the core for the snowboards. Sales in fiscal 1995 of
this product amounted to approximately $80,000.
TREE FARMS
The Corporation purchased its first tree farm in 1974, and has since added
additional timberland to bring its total acreage to 2,105. The Corporation does
not anticipate that it can satisfy its raw material needs from these tree farms.
The tree farms consist of seven separate parcels, all located in Klamath, Lane
and Douglas Counties in Oregon. They consist primarily of cut over acres that
have been or are being reforested. None of the timberland is presently being
used for production, although thinning operations have produced some revenue.
In fiscal 1995, the revenue from thinning was $47,800; in 1994 it was $59,500;
and in 1993 it was $662,794.
LANE PLYWOOD, INC. ii
<PAGE>
DIRECTORS OF THE COMPANY
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DIRECTOR CURRENT TERM
NAME AND AGE AND EMPLOYER SINCE EXPIRES
------------ ---------------------------- ---------- ------------
<S> <C> <C> <C>
Francis D. Bales, age 58 Sander Operator 1987 1995
Lane Plywood, Inc.
65 N. Bertelsen Road
Eugene, Oregon 97402
Paul F. Ehinger, age 72 Forest Industry Consultant 1986 1998
Paul F. Ehinger & Associates
1200 High Street, Suite 22
Eugene, Oregon 97401
James E. Gent, age 66 Veneer Grader 1979 1997
Lane Plywood, Inc.
65 N. Bertelsen Road
Eugene, Oregon 97402
Carl M. Jensen, age 63 Retired 1989 1996
c/o Lane Plywood, Inc.
65 N. Bertelsen Road
Eugene, Oregon 97402
Gary R. Jensen, age 49 Resource Manager 1988 1998
Lane Plywood, Inc.
65 N. Bertelsen Road
Eugene, Oregon 97402
Paul W. Jensen, age 65 Retired 1991 1997
c/o Lane Plywood, Inc.
65 N. Bertelsen Road
Eugene, Oregon 97402
John W. Revell, age 42 Bank Administrator 1987 1997
Liberty Federal Bank, S.B.
899 Pearl Street
Eugene, Oregon 97401
</TABLE>
LANE PLYWOOD, INC. iii
<PAGE>
STOCK AND DIVIDEND HISTORY
There is no market for Lane common stock. The Corporation has approximately 400
shareholders and Lane common stock trades infrequently. Management of the
Corporation does not request or track information about the price at which stock
changes hands through private transactions. Therefore, the Corporation is
unable to report on historic prices of Lane common stock.
The Board of Directors paid a dividend of $.25 per share on January 15, 1995 to
holders of Lane common stock of record as of November 30, 1994. No other
dividends have been declared or paid during the previous two years.
LANE PLYWOOD, INC. iv
<PAGE>
FIVE-YEAR SUMMARY OF SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
FOR THE YEARS ENDED NOVEMBER 30
-----------------------------------------------------------------------------------------------
1995 (a) 1994 (b)(d) 1993 (c)(d) 1992 (c)(d) 1991
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS
Net sales $ 39,621,899 $ 37,772,648 $ 36,776,328 $ 33,862,168 $ 27,202,211
Operating income (loss) 545,940 804,405 756,398 240,913 (411,269)
Income (loss) before
cumulative effect (335,382) 438,562 449,654 104,571 (389,207)
Cumulative effect on prior
years of change in
accounting principle
for income taxes 185,600
Net income (loss) (335,382) 624,162 449,654 104,571 (389,207)
- ----------------------------------------------------------------------------------------------------------------------------------
PER SHARE DATA
Income (loss) before
cumulative effect $(1.64) $2.14 $2.20 $ .51 $(1.90)
Cumulative effect on prior
years of change in
accounting principle
for income taxes .91
Net income (loss) (1.64) 3.05 2.20 .51 (1.90)
Cash dividends declared
per share .25
- ----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL POSITION
Current assets $ 3,268,653 $ 4,305,444 $ 4,027,152 $ 3,911,464 $ 3,434,973
Current liabilities 1,664,412 2,562,649 2,613,508 2,748,302 1,910,675
Working capital 1,604,241 1,742,795 1,413,644 1,163,162 1,524,298
Total assets 6,258,732 7,530,039 7,449,220 7,217,906 6,169,672
Long-term debt, excludes
current portion 95,021 124,428 418,273 503,401 518,484
- ----------------------------------------------------------------------------------------------------------------------------------
EQUITY
Shareholders' equity $ 4,286,971 $ 4,336,356 $ 3,314,590 $ 3,406,801 $ 3,495,130
Book value per share $20.95 $21.19 $16.20 $16.65 $17.08
Weighted average shares
outstanding 204,662 204,662 204,662 204,662 204,662
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Includes loss on settlement of pension plan of $1,357,676 and gain on sale
of land of $319,557.
(b) Includes additional expense of $61,680 from application of SFAS No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions";
and the cumulative effect (income increase) of $185,600 from SFAS No. 109,
"Accounting for Income Taxes". The amount of the cumulative effect has
been restated from the amount that was previously reported. See footnote 4
to the financial statements.
(c) Operating income includes gain on sale of timber contracts of $200,515 in
1993 and $631,200 in 1992.
(d) Reflects the adoption of SFAS No. 87, "Employers Accounting for Pensions".
The impact was to reduce shareholders' equity by $192,900, $734,767 and
$285,997 in 1992, 1993 and 1994, respectively.
LANE PLYWOOD, INC. v
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
November 30, 1995
GENERAL
The following discussion and analysis provide information which management
believes is relevant to an assessment and understanding of the Company's results
of operations and financial condition. The discussion should be read in
conjunction with the financial statements and notes thereto.
The following discussions concerning veneer and plywood refer to the qualitative
measures based on 3/8 thousand feet (3/8 mft) which is a common industry
standard measurement. Measure pertaining to timber relates to thousand board
feet (mbf).
RESULTS OF OPERATIONS
FISCAL 1995 COMPARED WITH FISCAL 1994
In April 1995, the Company decided to terminate the defined benefit pension plan
since long-term interest rates were favorable to do so. This termination
required a cash payout of $1,262,157 and resulted in a settlement loss recorded
in 1995 in the amount of $1,357,676. This payment was the primary cause of the
net loss in fiscal 1995 of $335,382.
Also in 1995, the Company sold 7.2 acres of land at the mill site to the State
of Oregon Department of Transportation for $342,500 for a gain of $308,750.
Another strip of land equivalent to .4 acres (20' x 100') to be used as an
easement by a neighboring owner was sold for $16,032 for a gain of $10,807.
Dispositions of other assets resulted in a gain of $13,797 for 1995.
The plywood market fluctuated monthly during 1995, with average selling prices
of $315 to $321 being the highs per month and $287 to $303 being the lows. The
average plywood selling price for the fiscal year was $308. Plywood average
selling prices increased 3% and volume increased 1% in 1995 over 1994. The
increase in average selling prices generally reflects the change in the product
mix, which is heavier to sanded plywood and siding materials. The sales volume
increase came despite the Company's continuing decision to reduce production
rather than produce sheathing, which has increasingly been replaced by
alternate products.
Housing starts dropped compared to the prior year, even with lower mortgage
interest rates. The Company's production consisted of about 70% in sanded
plywood, which was used for commercial building, and the 30% balance as
sheathing, which was affected by housing starts. In 1994, sanded plywood was
60% of the Company's production. The plywood plant has operated on a reduced
production schedule, with the exception of periodic rebounds, since the end of
October 1990.
The Company used outside veneer sources for all veneer needs. Monthly average
purchased veneer prices fluctuated erratically from a high of $181 to a low of
$161 during 1995, ending the fiscal year with an overall average purchase price
of $173. Purchased veneer volume increased 4% and average veneer purchase
prices decreased 3% in 1995, compared to 1994. Some sizes and grades have been
more difficult to acquire in 1995.
LANE PLYWOOD, INC. vi
<PAGE>
The market for selling dry veneer graded-on-line to Laminated Veneer Lumber
(LVL) manufacturers was mixed in 1995. This operation resulted in revenue of
$5,300,000 for 1995 on the sales of 22,000 mft of dry veneer at an average
sales price of $245, compared to $5,900,000 on sales of 23,400 mft at an
average sales price of $252 for 1994.
In 1995, thinning operations on the Allen and Mahr Lane tree farms produced
gross revenue of $47,800 from 174 mbf of timber logged. In 1994, a thinning
operation of the Allen tree farm produced gross revenue of $59,500 from 92 mbf
of timber logged.
During 1995, the number of employees increased from 200 at year end 1994 to 208
at year end 1995. Interest expense decreased in fiscal 1995 from fiscal 1994
due to reduced average borrowing on the Company's short-term line of credit due
in part from additional funds received from income tax refunds and the sale of
property.
Federal, state and local laws and regulations establishing standards and
requirements for environmental protection have increased in number and scope in
recent years. The Company cannot predict the future impact of such standards
and requirements which are subject to change and can be applied retrospectively.
The Company continues to monitor these laws and regulations and, to the best of
its knowledge, believes it was in substantial compliance with such laws and
regulations. As of November 30, 1995, the Company has accrued $85,000 for soil
remediation in connection with underground storage tanks removed in 1991, based
in part on advice from its environmental consultants. The Company is aware of
other potential environmental issues arising out of situations at certain of its
properties for which there may be future costs incurred for environmental study
and remediation. The Company is not currently obligated to incur such costs
and, the Company did not contribute to the environmental issue. Management
believes that others will be responsible for any such costs and costs, if any,
related to these issues will not be material to the financial position of the
Company. The Company is not aware of any additional sites for which the Company
has potential environmental liability.
The Directors of the Company have executed an Agreement and Plan of Merger for
the cash sale of all of Lane Plywood, Inc.'s shares of common stock for $49 per
share. The merger must be approved by the shareholders. The shareholder vote
is scheduled to occur at the annual shareholders' meeting, which is tentatively
scheduled for March 30, 1996.
FISCAL 1994 COMPARED WITH FISCAL 1993
Plywood average selling prices increased 3% and volume decreased 3% in 1994 over
1993. The plywood market stayed fairly even during 1994, with a slight rebound
for the last fiscal quarter of 1994 with the increased prices generally
reflecting the change in the product mix, which was heavier to sanded plywood.
The lower sales volume was still indicative of the Company's decision to reduce
production rather than produce sheathing, since sheathing has increasingly been
replaced by alternative products.
Housing starts picked up during the year with the lower mortgage interest rates.
The Company produced about 60% of its production as sanded plywood, which was
used for commercial building, and the 40% balance as sheathing, which was
affected by housing starts. The plywood plant has operated on a reduced
production schedule, with the exception of periodic rebounds, since the end of
October 1990.
LANE PLYWOOD, INC. vii
<PAGE>
The Company used outside veneer sources for most veneer needs, but some sizes
and grades were much harder to get. Prices stayed fairly level after the first
quarter of 1994. Purchased veneer volume decreased 2% and average veneer
purchase price decreased 2% in 1994, compared to 1993.
The market for selling dry veneer graded-on-line to Laminated Veneer Lumber
(LVL) manufacturers was mixed in 1994. This operation resulted in revenue of
$5,890,000 for 1994 on the sales of 23,339 mft of dry veneer at an average
sales price of $252, compared to $4,343,000 on sales of 16,659 mft at an
average sales price of $261 for 1993.
In 1994, a thinning operation of the Allen tree farm produced gross revenue of
$59,500 from 92 mbf of logging. In 1993, thinning operations on three of the
Company's tree farms, with the majority of volume from the Red Hill tree farm,
produced gross revenue of $662,794 from 928 mbf of logging. In 1993, the
Company realized additional revenue of $200,515 from the completion of logging
two U.S. Forest Service timber contracts sold to a third party.
During 1994, employee count decreased from 201 at year end 1993 to 200 at 1994
fiscal year end. Interest expense decreased in fiscal 1994 from fiscal 1993
because the long-term loan held at Key Bank was paid in full.
The Company adopted Financial Accounting Standards Board Statement No. 106,
"Accounting for Postretirement Benefits Other than Pensions", and Statement No.
109, "Accounting for Income Taxes", effective December 1, 1993. The net effect
of these changes was a decrease of net income by $41,000, after tax, for
Statement No. 106 and an increase of net income by $185,600 for Statement No.
109.
IMPACT OF INFLATION
Should the inflation rate stay consistent with the past three years, inflation
will have a negligible affect on the Company. An increase to a double digit
rate of inflation would increase the value of the Company's plant site property,
timber and timberland holdings, but would deal a blow to the plywood plant. The
primary impact would be the reduction of commercial and real estate development
in a higher inflation period with increased interest rates. Higher interest
rates would also affect the Company's line of credit borrowing and other
financing which may be needed.
FACTORS AFFECTING FUTURE OPERATING RESULTS
Future operating results may be affected by further reductions in availability
of raw materials domestically. As more companies expand their search for
resources in foreign markets, those prices can be expected to increase
accordingly. Capital projects, such as the installation of a lay-up line and
veneer composer, may be required to improve the Company's utilization of the
resources we are getting. The increased use of second growth timber products
for peeling has reduced significantly the quality of veneer products, so capital
improvements toward upgrading the veneer will be beneficial as well. Other
options include finding sources of better quality veneer, which will probably be
from foreign timber operations.
At the Annual Meeting of the Stockholders being held on March 30, 1996, the
stockholders will be asked to vote on a merger agreement with Pioneer Merger,
Inc. If this merger agreement is
LANE PLYWOOD, INC. viii
<PAGE>
approved, the new ownership will have their own ideas about capital
improvements and expansion of markets.
LIQUIDITY AND CAPITAL RESOURCES
The Company has in place an operating line of credit for $2,000,000, of which
there was no balance outstanding at November 30, 1995. The line of credit is
renewable in April of each year, and the Company believes the renewal of the
line at similar levels and terms will be granted by the bank. In June 1995,
the Company applied for a short-term loan for $1,000,000 at Bank of America,
with essentially the same terms as the line of credit and secured by the Red
Hill tree farm. The Company anticipated using this short-term financing for
capital improvements, but none of the loan was ever used. The loan will expire
in April 1996. In 1994, the Company had available an operating line of credit
of $2,000,000 with $423,508 outstanding at November 30, 1994.
The Company has a money market account with a balance of $658,000 at November
30, 1995. The balance in investment accounts in 1994 was $600,000. During
April 1995, money market funds held by the Company plus $400,000 from the line
of credit were used to provide a cash payment of $1,262,157 to terminate the
defined benefit pension plan held at Transamerica Insurance Company.
Due to the cash payment required to terminate the defined benefit pension plan,
there was no income to pay dividends and, therefore, no dividends were declared
in fiscal year 1995. On November 17, 1994, the Company declared a dividend of
$.25 per share for all shareholders of record on November 30, 1994, which was
paid on January 15, 1995. No dividends were declared in the prior two years.
The Company's loan agreement with the bank limits annual dividends to a maximum
of 25% of annual net profits, after taxes.
Net cash provided by (used in) operating activities was $(206,184), $599,544 and
$544,699 in 1995, 1994 and 1993, respectively. Negative cash flows in 1995 were
principally due to the payment in settlement of the pension obligation, less
cash provided from a reduction in receviables of $586,624. Accounts receivable
were lower by $586,624 as of November 30, 1995 compared to November 30, 1994
primarily due to a 22% decrease in sales footage and an 11% decrease in average
selling prices during November 1995. Accounts payable were lower by $304,989 as
of November 30, 1995 compared to November 30, 1994 due to a 27% reduction in the
cost of manufacturing materials and a 17% reduction of purchased veneer during
November 1995. Cash flows in 1994 were primarily provided by net income of
$588,662. Cash flows in 1993 were provided primarily by the net income of
$449,654.
Net cash (used in) financing activities was $(406,655), $(697,521) and
$(277,613) for 1995, 1994 and 1993, respectively. In 1995, the use of $423,508
to pay down short-term bank debt was the primary use of cash in financing. In
1994, the Company changed from Key Bank of Oregon to Bank of America, and all
loans to Key Bank were paid in full; the only remaining debt consisted of a loan
from Oregon Business Development Fund for financing the purchase and
installation of pollution control devices and a loan from Douglas County Bank
for financing the purchase of the Allen tree farm in 1979. In 1994, the use of
$348,938 to pay down long-term debt and $297,813 to pay down short-term debt was
the primary use of cash. In 1993, the net cash used in financing resulted from
the use of funds of $397,878 for a reduction in the book overdraft and a
$384,465 reduction of long-term debt, less the proceeds from short-term
financing of $505,180. Subsequent to fiscal year end 1995, the Company paid off
the loan to the Oregon Business Development Fund in the amount of $61,000.
LANE PLYWOOD, INC. ix
<PAGE>
Net cash provided by (used in) investing activities was $189,520, $(19,760) and
$(179,307) for 1995, 1994 and 1993, respectively. In 1995, the primary use of
cash for investing was for capital improvements of $187,112 offset by $376,632
received from the sale of assets. Capital improvements in 1995 included $77,104
to complete the conversion of the #4 dryer to gas, $50,810 for asset repairs and
upgrades, and $59,199 for miscellaneous, rolling stock and safety improvements.
In 1995, all capital improvements were paid from operations and from the line of
credit. The primary use of cash for investing in 1994 was $197,560 in capital
improvements, partially offset by proceeds of $177,800 from the disposition of
property. In 1994, capital improvements were paid from the line of credit. The
use of $421,000 cash for investing in 1993 was partially offset by proceeds of
$242,000 from the disposition of property. In 1993, capital improvements of
$365,000 were paid from the line of credit.
Projected capital improvements approved for the 1996 fiscal year include the
installation of a lay-up line at $2,000,000. The lay-up line was first approved
in 1994, and has been deferred pending the outcome of the merger vote. Should
the lay-up line actually be started in 1996, financing would come from a long-
term loan or lease arrangement.
LANE PLYWOOD, INC. x
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and Board of Directors
Lane Plywood, Inc.:
We have audited the accompanying balance sheets of Lane Plywood, Inc. as of
November 30, 1995 and 1994, and the related statements of operations and
retained earnings, and cash flows for each of the three fiscal years in the
period ended November 30, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Lane Plywood, Inc. as of
November 30, 1995 and 1994, and the results of its operations and its cash flows
for each of the three fiscal years in the period ended November 30, 1995 in
conformity with generally accepted accounting principles.
As discussed in Note 1 to the financial statements, the Company changed its
method of accounting for income taxes and postretirement benefits other than
pensions in 1994. The provision for income taxes and cumulative effect for the
change in accounting method recorded in 1994 have been restated in 1995 as
described in Note 4.
COOPERS & LYBRAND L.L.P.
/s/ Coopers & Lybrand L.L.P.
Eugene, Oregon
January 5, 1996
LANE PLYWOOD, INC. 1
<PAGE>
BALANCE SHEETS
November 30, 1995 and 1994
<TABLE>
<CAPTION>
1994
1995 (Note 4)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 658,289 $1,081,608
Accounts receivable:
Trade 1,108,399 1,658,880
Other 2,187 38,330
Less allowance for doubtful accounts (17,034) (17,034)
Inventories 896,324 841,093
Prepaid and other current assets 58,693 195,059
Timber and timberlands, held for sale 432,191 432,191
Deferred tax assets 129,604 75,317
---------- ----------
Total current assets 3,268,653 4,305,444
Property, plant and equipment, net 2,374,914 2,444,997
Timber and timberlands, at cost less depletion 615,165 624,976
Long-term defined benefit costs 0 154,622
---------- ----------
Total assets $6,258,732 $7,530,039
---------- ----------
---------- ----------
LIABILITIES
Current liabilities:
Book overdraft $ 95,202
Current portion of long-term debt 29,388 $ 27,164
Short-term bank borrowing 423,508
Accounts payable, trade and other 796,903 1,234,420
Accrued liabilities:
Payroll and related benefits 486,492 404,003
Income taxes payable 169,208 84,915
Other liabilities 87,219 172,639
Defined benefit obligation 0 216,000
---------- ----------
Total current liabilities 1,664,412 2,562,649
Long-term debt, net of current portion 95,021 124,428
Long-term defined benefit obligation 378,230
Deferred taxes 61,604 66,696
Postretirement health benefits 150,724 61,680
---------- ----------
Total liabilities 1,971,761 3,193,683
---------- ----------
Contingencies (Notes 9 and 11)
STOCKHOLDERS' EQUITY
Common stock, no par value; 2,000,000 shares authorized,
204,662 shares issued and outstanding in each year 535,509 535,509
Pension liability, excess of assets (285,997)
Retained earnings 3,751,462 4,086,844
---------- ----------
Total stockholders' equity 4,286,971 4,336,356
---------- ----------
Total liabilities and stockholders' equity $6,258,732 $7,530,039
---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
LANE PLYWOOD, INC. 2
<PAGE>
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
for the fiscal years ended November 30, 1995, 1994 and 1993
<TABLE>
<CAPTION>
1995 1994 1993
(Note 4)
<S> <C> <C> <C>
Net sales $39,621,899 $37,772,648 $36,776,328
Cost of goods sold 38,027,294 36,327,036 35,560,305
----------- ----------- -----------
Gross profit 1,594,605 1,445,612 1,216,023
Gain on sale of equipment 13,797 162,244 186,990
Gain on sale of timber contracts 200,515
Selling, general and administrative expenses (1,062,462) (803,451) (847,130)
----------- ----------- -----------
Operating income 545,940 804,405 756,398
Loss on settlement of pension plan (1,357,676)
Gain on sale of land 319,557
Interest income 33,730 5,742 44,144
Interest expense (81,325) (114,553) (115,888)
----------- ----------- -----------
Income (loss) before income taxes
and cumulative effect of change
in accounting principle (539,774) 695,594 684,654
Provision (benefit) for income taxes (204,392) 257,032 235,000
----------- ----------- -----------
Income (loss) before cumulative effect
of change in accounting principle (335,382) 438,562 449,654
Cumulative effect of change in accounting
principle for income taxes (Note 4) 0 185,600 0
----------- ----------- -----------
Net income (loss) (335,382) 624,162 449,654
----------- ----------- -----------
Retained earnings, beginning of year:
As previously reported 4,051,344 3,513,848 6,023,994
Adjustment (Note 4) 35,500 0 0
----------- ----------- -----------
As restated 4,086,844 3,513,848 6,023,994
----------- ----------- -----------
Dividend declared ($.25 per share) (51,166)
-----------
Retirement of treasury shares (Note 6) (2,959,800)
-----------
Retained earnings, end of year $ 3,751,462 $ 4,086,844 $ 3,513,848
----------- ----------- -----------
----------- ----------- -----------
Average shares outstanding 204,662 204,662 204,662
Income (loss) per share before cumulative
effect of change in accounting principle $(1.64) $2.14 $2.20
Accounting change .00 .91 .00
------ ----- -----
Net income (loss) per share, on
average number of shares $(1.64) $3.05 $2.20
------ ----- -----
------ ----- -----
</TABLE>
The accompanying notes are an integral part of these financial statements.
LANE PLYWOOD, INC. 3
<PAGE>
STATEMENTS OF CASH FLOWS
for the fiscal years ended November 30, 1995, 1994 and 1993
<TABLE>
<CAPTION>
1994
1995 (Note 4) 1993
<S> <C> <C> <C>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS:
Cash flows from operating activities:
Net income (loss) $ (335,382) $ 624,162 $ 449,654
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation 213,917 193,690 221,998
Depletion of timber 9,811 27,632 93,679
Gain on sale of property (333,354) (162,549) (186,990)
Change in assets and liabilities:
(Increase) decrease in:
Receivables 586,624 (298,641) (165,739)
Inventories (55,231) 91,291 (48,420)
Prepaids and other current assets (127,248) (70,070) 103,276
Increase (decrease) in:
Accounts payable and accrued liabilities (304,989) 120,653 57,241
Deferred accruals 139,668 73,376 20,000
----------- ----------- -----------
Net cash provided by (used in) operating
activities (206,184) 599,544 544,699
----------- ----------- -----------
Cash flows from investing activities:
Additions to property (187,112) (197,560) (420,987)
Proceeds from disposition of property 376,632 177,800 241,680
----------- ----------- -----------
Net cash provided by (used in) investing
activities 189,520 (19,760) (179,307)
----------- ----------- -----------
Cash flows from financing activities:
Dividends paid (51,166)
Increase (decrease) in book cash overdraft 95,202 (50,770) (397,878)
Proceeds from (payment of) short-term bank
borrowing (423,508) (297,813) 505,180
Payment of long-term debt (27,183) (348,938) (384,465)
----------- ----------- -----------
Net cash used in financing activities (406,655) (697,521) (277,163)
----------- ----------- -----------
Net increase (decrease) in cash and cash equivalents (423,319) (117,737) 88,229
Cash and cash equivalents, beginning of year 1,081,608 1,199,345 1,111,116
----------- ----------- -----------
Cash and cash equivalents, end of year $ 658,289 $ 1,081,608 $ 1,199,345
----------- ----------- -----------
----------- ----------- -----------
SUPPLEMENTARY DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ 82,218 $ 114,553 $ 116,624
Income taxes, net of tax refund received (286,382) 171,616 42,394
SUMMARY OF NONCASH FINANCING ACTIVITIES:
Dividends declared but not paid $ 51,166
</TABLE>
The accompanying notes are an integral part of these financial statements.
LANE PLYWOOD, INC. 4
<PAGE>
NOTES TO FINANCIAL STATEMENTS
November 30, 1995, 1994 and 1993
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
a. DESCRIPTION OF THE COMPANY: Lane Plywood, Inc. (the Company)
manufactures plywood for sale and dries green veneer for both internal
use in plywood manufacturing and external sales. Green veneer used in
manufacturing and sold is purchased on the open market.
The accompanying financial statements include the accounts of the
Company and its wholly-owned subsidiary, Lane International Marketing,
Inc., which is an inactive company.
b. CASH AND CASH EQUIVALENTS: Cash and cash equivalents include highly
liquid investments with original maturities of three months or less.
Cash equivalents consist of money market accounts with high quality
institutions primarily on the West Coast. At times balances may exceed
amounts insured by the Federal Deposit Insurance Corporation .
c. ACCOUNTS RECEIVABLE: Trade accounts receivable is composed of
uncollateralized receivables from customers throughout the United
States. The Company performs ongoing credit evaluations of its
customers and maintains allowances for potential bad debts. In prior
years, the Company has experienced negligible bad debts.
d. INVENTORIES: Inventories are valued at the lower of cost or market,
with cost being determined on the last-in, first-out (LIFO) method for
substantially all inventories of the Company. The Company values its
LIFO increments using its earliest acquisition costs.
e. DEPRECIATION AND CAPITALIZATION POLICIES: Property, plant and
equipment are depreciated using both straight-line and accelerated
methods. Expenses for maintenance, repairs and minor improvements and
additions are charged to expense as incurred. Major improvements and
additions are added to the asset accounts. When property is sold or
retired, the cost and accumulated depreciation are removed from the
accounts and the resulting gain or loss is recorded in income.
ESTIMATED
USEFUL LIVES
Land improvements 5 to 10 years
Buildings 10 to 20 years
Machinery and equipment 3 to 10 years
Continued
LANE PLYWOOD, INC. 5
<PAGE>
NOTES TO FINANCIAL STATEMENTS, Continued
November 30, 1995, 1994 and 1993
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued:
f. TIMBER AND TIMBERLANDS: Timber and timberlands consist of the cost
paid for tracts of timber net of accumulated depletion for timber
harvested. Some of the timber tracts are currently being held for sale
and are classified as current assets, and the remaining are being held
for future growth and are classified as long-term assets.
g. ENVIRONMENTAL EXPENDITURES: Expenditures that relate to current
operations are expensed or capitalized, as appropriate. Expenditures
that relate to an existing condition caused by past operations, and
which do not contribute to future revenues, are expensed. Liabilities
are recorded when remedial efforts are probable and the costs can be
reasonably estimated.
h. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS: The Company provides
certain health care benefits for retired employees. Effective December
1, 1993, the Company adopted the Statement of Financial Accounting
Standards (SFAS) No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions". The Company previously expensed the
cost of these benefits as claims were incurred.
i. INCOME TAXES: Effective December 1, 1993, the Company adopted the
Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting
for Income Taxes". This Statement supersedes Accounting Principles
Board (APB) Statement No. 11, "Accounting for Income Taxes". APB No.
11 required that income taxes be recognized during the year in which
transactions enter into the determination of financial statement
income, with deferred taxes being provided for timing differences.
SFAS No. 109 requires the use of an asset and liability method of
accounting for income taxes, which results in deferred income taxes
being provided on temporary differences resulting from reporting
transactions in different periods for financial reporting and income
tax purposes.
j. EARNINGS PER SHARE: Earnings per share are based upon the Company's
average number of shares of common stock outstanding during the year.
k. RECLASSIFICATIONS: Certain prior-year amounts have been reclassified
to conform with the current-year presentation, which has no impact on
net income or cash flows as previously reported.
LANE PLYWOOD, INC. 6
<PAGE>
NOTES TO FINANCIAL STATEMENTS, Continued
November 30, 1995, 1994 and 1993
2. INVENTORIES:
Inventories at November 30 consist of the following:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Plywood $ 692,659 $ 492,840
Veneer 629,424 791,842
LIFO provision (488,260) (512,428)
--------- ---------
833,823 772,254
Operating supplies 62,501 68,839
--------- ---------
896,324 841,093
--------- ---------
--------- ---------
</TABLE>
If the first-in, first-out method had been used instead of LIFO, the
valuation assigned to total inventories would have been $1,384,584 and
$1,353,521 at November 30, 1995 and 1994, respectively. In 1994, certain
inventories were reduced, resulting in the liquidation of LIFO layers
carried at lower costs prevailing in prior years as compared with the
current cost of inventory. The effect of these inventory liquidations was
to reduce cost of goods sold by approximately $54,576 or $.27 per share.
3. PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment at November 30, at cost, consist of the
following:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Land $ 526,488 $ 565,262
Buildings 1,543,065 1,548,687
Machinery and equipment 8,140,732 7,959,833
Construction in progress 16,068 78,700
----------- -----------
10,226,353 10,152,482
Less accumulated depreciation (7,970,295) (7,830,255)
----------- -----------
2,256,058 2,322,227
----------- -----------
Idle equipment 118,856 122,770
----------- -----------
2,374,914 2,444,997
----------- -----------
----------- -----------
</TABLE>
Continued
LANE PLYWOOD, INC. 7
<PAGE>
NOTES TO FINANCIAL STATEMENTS, Continued
November 30, 1995, 1994 and 1993
3. PROPERTY, PLANT AND EQUIPMENT, Continued:
The Company is holding certain assets as idle assets that are no longer
used in the production process. These assets have been used primarily for
the log hauling and veneer production operation that the Company suspended
in 1992 and late 1991. At November 30, the idle assets consist of the
following:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Assets, at historical cost $ 3,441,412 $ 3,441,412
Accumulated depreciation (3,322,556) (3,318,642)
----------- -----------
Net book value $ 118,856 $ 122,770
----------- -----------
----------- -----------
</TABLE>
The Company believes in the event any of these assets are sold there will
be no material loss on their disposition.
4. TAXES ON INCOME:
The provision (benefit) for income taxes consists of the following at
November 30:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Federal:
Current $(145,013) $135,053 $215,000
Deferred (24,951) 80,075 20,000
State - deferred (34,428) 41,904 0
--------- -------- --------
$(204,392) $257,032 $235,000
--------- -------- --------
--------- -------- --------
</TABLE>
Upon adoption of SFAS No. 109 on December 1, 1993, the Company recorded the
cumulative effect of the change in accounting. The amount of cumulative
effect benefit previously recorded in 1994 of $55,000 has been restated to
$185,600 ($.91 per share), and the deferred tax component of the 1994
provision for income taxes was increased by $95,100 to properly reflect the
cumulative effect of the adoption of SFAS No. 109. The effect of the
restatement was to decrease 1994 income before cumulative effect of change
in accounting principle from $533,662 to $438,562 ($2.61 per share to $2.14
per share), and to increase 1994 net income by $35,500 from $588,662 to
$624,162 ($2.88 per share to $3.05 per share).
The components of deferred tax provision in 1993 were depreciation of
$60,000, less deferred workers' compensation of $40,000.
Continued
LANE PLYWOOD, INC. 8
<PAGE>
NOTES TO FINANCIAL STATEMENTS, Continued
November 30, 1995, 1994 and 1993
4. TAXES ON INCOME, Continued:
The difference between the statutory federal income tax rate and the
Company's effective rate is summarized as follows:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Federal (34.0)% 34.0% 34.0%
State (6.4) 6.0
Other differences, net 2.6 (3.0) .3
----- ---- ----
(37.8)% 37.0% 34.3%
----- ---- ----
----- ---- ----
</TABLE>
The Company has approximately $985,000 of state net operating loss (NOL)
carryforwards which can be used to reduce future state taxable income,
which expire through 2006.
The components of the net deferred tax asset/liability at November 30, 1995
and 1994 are as follows:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Assets:
Vacation accrual $ 63,200 59,000
Postretirement benefits other than pensions 57,300 23,500
Workers' compensation accrual 43,800 32,000
Reforestation reserve 17,000
Environmental liability 32,300
State net operating loss carryforward 61,000 35,500
Other 17,400 33,621
-------- --------
275,000 200,621
-------- --------
Liabilities:
Excess tax over book depreciation 207,000 168,000
Pension payments 0 24,000
-------- --------
207,000 192,000
-------- --------
Net deferred tax asset $ 68,000 $ 8,621
-------- --------
-------- --------
Balance sheet classification:
Current deferred income taxes $129,604 $ 75,317
Deferred income taxes 61,604 66,696
-------- --------
Net deferred tax asset $ 68,000 $ 8,621
-------- --------
-------- --------
</TABLE>
The Company has recognized a deferred tax asset related to the State net
operating loss carryforward. If the Company consummates the merger as
described in Note 12, this asset may not be realized.
LANE PLYWOOD, INC. 9
<PAGE>
NOTES TO FINANCIAL STATEMENTS, Continued
November 30, 1995, 1994 and 1993
5. NOTES PAYABLE AND LONG-TERM DEBT:
At November 30, long-term debt consisted of the following:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Purchase contract at 8.03%, due in 1999, $1,666
monthly payment including interest, collateralized
by certain assets $ 62,076 $76,452
Purchase contract at 8%, due in 1999, $18,802 annual
payment plus interest, collateralized by certain assets 62,333 75,140
-------- --------
124,409 151,592
Less current portion 29,388 27,164
-------- --------
$ 95,021 $124,428
-------- --------
-------- --------
</TABLE>
Subsequent to fiscal 1996, repayment of principal on the above indebtedness
is as follows:
<TABLE>
<CAPTION>
<S> <C>
1997 $31,793
1998 34,390
1999 28,838
-------
$95,021
-------
-------
</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 (8.75% at
November 30, 1995; average interest rate of 9.79%) plus 1% with April 30,
1996 expiration. During fiscal year 1995, the maximum borrowing under this
line was $824,798 and the average borrowing equaled $371,728. There was no
principal outstanding at November 30, 1995. The bank charges the line of
credit to cover checks presented which exceed the Company's cash on deposit.
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 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 cash dividends. At November
30, 1995, the Company is in compliance with all loan requirements. 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.
The Company has an additional short-term line of credit, collateralized by
certain real property, which was not used during 1995. Under this
agreement, the Company may borrow up to a maximum of $1,000,000, with
interest at the bank's variable basic rate plus 1%, with an April 30,
1996 expiration. At November 30, 1995, there was no principal outstanding.
LANE PLYWOOD, INC. 10
<PAGE>
NOTES TO FINANCIAL STATEMENTS, Continued
November 30, 1995, 1994 and 1993
6. STOCKHOLDERS' EQUITY:
The Company's loan agreement with the bank includes a limitation on the
payment of dividends. In 1995, the maximum dividend allowed was 25% of
annual net profits, after taxes.
Pursuant to Oregon law, shares of common stock reacquired by a corporation
constitute unissued shares. Accordingly, during the year ended November
30, 1993, the Company retired 510,912 shares held in treasury that were
accounted for as treasury shares at cost.
7. SALES TO CUSTOMERS:
Five customers account for most of the sales throughout the United States.
Receivables resulting from sales are uncollateralized. Sales included net
sales to a customer in the amounts $16,686,925, $16,706,383 and $19,054,472
for the years ended 1995, 1994 and 1993, respectively. Another customer
accounted for net sales of $1,504,176, $1,771,410 and $4,279,621 in 1995,
1994 and 1993, respectively. In the opinion of management, the loss of any
customer would not materially affect the Company's net income. The
Company's products are commodity items and are sold at prevailing market
rates; therefore, these customers could be replaced.
8. PENSION PLANS:
The Company has a defined contribution plan which covers all its employees
and through April 11, 1995 had a noncontributory defined benefit plan. On
December 31, 1987, the defined benefit plan was suspended and all future
benefits were frozen. In April 1995, the Company entered into an agreement
to transfer sufficient assets to Transamerica Life Insurance Co. and
purchased annuities to fully settle the defined benefit plan and to relieve
the Company of any further obligation.
A pre-tax loss of $1,357,676 was recognized on settlement of the defined
benefit plan in 1995 pursuant to Statement of Financial Accounting
Standards (SFAS) No. 88, "Employers' Accounting for Settlements and
Curtailments of Defined Benefit Pension Plans and for Termination
Benefits". The amount of the loss on settlement varied from the estimate
of the loss available to the Company on January 5, 1995, when the Board
adopted a resolution to terminate the plan primarily because of a change in
interest rates.
Continued
LANE PLYWOOD, INC. 11
<PAGE>
NOTES TO FINANCIAL STATEMENTS, Continued
November 30, 1995, 1994 and 1993
8. PENSION PLANS, Continued:
Subject to applicable limitations prescribed under the Internal Revenue
Code, participants may elect to make salary reduction 401(k) contributions
to the defined contribution plan of up to 15% of their compensation. In
addition, the Company may, but is not required, to make contributions to
the defined contribution plan for any year.
Company contributions to the defined contribution plan are made and
allocated based upon each participant's compensation. As defined in the
contribution plan, "compensation" means a participant's straight-time pay,
plus two-thirds of overtime, holiday and vacation pay, plus any salary
reduction contribution made by the participant to the plan. Company
contributions to the defined contribution plan were $285,802, $269,458 and
$256,259 in 1995, 1994 and 1993, respectively. In 1994 and 1993, the
Company funded the defined benefit plan in accordance with the
recommendations of the plan's actuary. Total expense under these plans,
including the settlement loss incurred by the retirement of the defined
benefit plan, was $1,643,478 in 1995, $384,759 in 1994 and $337,690 in 1993.
9. 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
(see Note 1) 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 March 1, 1981 to July 31, 1983, wages and salary rates
for all employees were either reduced or restored dependent upon the
Company's financial position. An accumulation of the net earnings
reduction due to the reduced wage and salary rates during this period was
maintained for this group of employees and, as provided in the incentive
profit sharing plan, were to be paid out of 20% of the future profits when
realized and as defined in the incentive profit sharing plan. There were
no payments due under the plan for 1995. The amount of payments due for
1994 and 1993 under the terms of the plan for this class of employees was
$77,491 and $44,638, respectively. At November 30, 1995, the accumulated
amount of earnings eligible for future payment, contingent upon future
profits as defined by the plan, totaled $868,262. The remaining 10% of
profits earned in accordance with the incentive profit sharing plan are
distributed to all eligible employees. There were no bonus wages accrued
in 1995; bonus wages were accrued in the amount of $38,745 in 1994 and
$22,319 in 1993.
LANE PLYWOOD, INC. 12
<PAGE>
NOTES TO FINANCIAL STATEMENTS, Continued
November 30, 1995, 1994 and 1993
10. POSTRETIREMENT BENEFIT PLANS OTHER THAN PENSIONS:
As discussed in Note 1, effective December 1, 1993, the Company adopted
SFAS No. 106.
Accumulated postretirement benefit obligation as of November 30:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Retirees $ 22,900 $ 14,558
Fully eligible plan participants 10,782 8,047
Other active plan participants 482,290 424,615
-------- --------
Accumulated postretirement benefit obligation
(the plan is not funded) 515,972 447,220
Unrecognized net transition obligation 365,248 385,540
-------- --------
Postretirement benefit obligation included in the
balance sheet at November 30 $150,724 $ 61,680
-------- --------
-------- --------
</TABLE>
Net periodic postretirement benefit cost for the year ended November 30
consisted of the following components:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Service cost $ 49,546 $ 26,895
Interest cost 33,542 32,467
Amortization of transition obligation 20,292 20,292
-------- --------
Net periodic postretirement benefit expense $103,380 $ 79,654
-------- --------
-------- --------
</TABLE>
The assumed health care cost trend rate used in measuring the accumulated
postretirement benefit obligations was 9% until 2001 and 5% thereafter in
1995 (10% until 1999 and 6% thereafter in 1994). A one percentage point
increase in the assumed health care cost trend for each year would increase
the accumulated postretirement benefit obligation as of November 30, 1995
and net postretirement health care cost by approximately 10.5%. The
assumed discount rate used in determining the accumulated postretirement
benefit obligation was 7.5% in 1995 and 8.5% in 1994. Postretirement
health care benefits paid on behalf of retired employees were $14,336 in
1995, $17,974 in 1994 and $22,067 in 1993.
LANE PLYWOOD, INC. 13
<PAGE>
NOTES TO FINANCIAL STATEMENTS, Continued
November 30, 1995, 1994 and 1993
11. CONTINGENCIES:
a. RETROSPECTIVE RATED INSURANCE: The Company purchases insurance
policies subject to retrospective adjustments for workers' compensation
costs. At November 30, 1995, management has accrued all costs
estimated as payable under these policies. The Company's maximum
retrospective premium exposure is approximately $450,000.
b. CLAIMS AND OTHER LEGAL PROCEEDINGS: The Company is involved in claims
incurred in the normal course of business. In the opinion of
management, the ultimate outcome of these claims will not have a
material effect on the Company's results of operations.
c. ENVIRONMENTAL ISSUES: Federal, state and local laws and regulations
establishing standards and requirements for protection have increased
in number and scope in recent years. The Company cannot predict the
future impact of such standards and requirements, which are subject to
change and can be retroactive. The Company continues to monitor the
status of these laws and regulations. Such monitoring involves the
review of past and current operations and properties. To the best of
its knowledge, the Company believes it is in substantial compliance
with such current laws and regulations.
As of November 30, 1995, the Company has made an accrual based on the
current estimate to bring the Company in compliance with existing
environmental laws and regulations with respect to an environmental
matter. Based in part on advice from its experts, management has
estimated that future costs will be approximately $85,000, and the
Company has accrued this amount as the best estimate of the future
costs. The Company is aware of other potential environmental issues
arising out of situations existing on or in certain of its properties,
at which there may be future costs incurred for environment study and
remediation. Management's opinion is that the Company is not currently
obligated to incur such costs, and the Company did not contribute to
the environmental issue. Management believes that others will be
responsible for any such costs and costs, if any, related to these
issues will not be material to the financial position of the Company.
However, the potential future environmental costs may increase due to
such factors as: the identification of additional contaminated areas;
advances in technology; and changes in environmental laws and
regulations and their applications.
12. SUBSEQUENT EVENT
The Directors of the Company have executed an Agreement and Plan of Merger
for the sale of all of Lane Plywood, Inc.'s shares of common stock. The
merger must be approved by the shareholders. The shareholder vote is
scheduled to occur at the annual shareholders' meeting, which is
tentatively scheduled for March 30, 1996.
LANE PLYWOOD, INC. 14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<RESTATED>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1994
<PERIOD-END> NOV-30-1995
<CASH> 658,289
<SECURITIES> 0
<RECEIVABLES> 1,110,586
<ALLOWANCES> 17,034
<INVENTORY> 896,324
<CURRENT-ASSETS> 3,268,653
<PP&E> 2,374,914
<DEPRECIATION> 11,292,851
<TOTAL-ASSETS> 6,258,732
<CURRENT-LIABILITIES> 1,664,412
<BONDS> 0
0
0
<COMMON> 535,509
<OTHER-SE> 3,751,462
<TOTAL-LIABILITY-AND-EQUITY> 6,258,732
<SALES> 39,621,899
<TOTAL-REVENUES> 39,988,983
<CGS> 38,027,294
<TOTAL-COSTS> 38,027,294
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 81,325
<INCOME-PRETAX> (539,774)
<INCOME-TAX> 204,392
<INCOME-CONTINUING> (335,382)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (335,382)
<EPS-PRIMARY> (1.64)
<EPS-DILUTED> (1.64)
</TABLE>
