<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended July 2, 1995
---------------
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period
from to
--------------- ---------------
Commission File Number 0-6087
LINDAL CEDAR HOMES, INC.
(Exact name of registrant as specified in its charter)
Delaware 91-0508250
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4300 South 104th Place, Seattle, Washington 98178
(Address of principal executive offices)
(Zip code)
(206) 725-0900
(Registrant's telephone number, including area code)
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
----- -----
Common stock outstanding at August 1, 1995: 4,041,912 shares at $.01 par
value.
<PAGE> 2
LINDAL CEDAR HOMES, INC.
AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page Number
-----------
<S> <C> <C>
Part I. Financial Information
Item 1 Financial Statements
Consolidated Balance Sheets 4
Consolidated Statements of Earnings 5
Consolidated Statements of Cash Flows 6
Notes to Consolidated Financial Statements 8
Item 2 Management's Discussion and Analysis of Financial Condition and 14
Results of Operations
Part II. Other Information
Item 4 Results of Votes of Securities Holders 16
Item 6(b) Reports on Form 8-K 16
Signatures 17
</TABLE>
2
<PAGE> 3
LINDAL CEDAR HOMES, INC.
AND SUBSIDIARIES
PART I: FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
3
<PAGE> 4
LINDAL CEDAR HOMES, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
July 2, 1995 and December 31, 1994
(Dollar amounts in thousands, except per share amounts)
<TABLE>
<CAPTION>
1995 1994
------- ------
Assets (unaudited)
<S> <C> <C>
Current assets:
Cash $ 2,470 3,219
Short-term investments 1,606 475
Receivables:
Trade 2,474 2,042
Current installments of long-term notes receivable 87 46
Refundable income taxes - 59
------- ------
2,561 2,147
Less allowance for doubtful receivables 208 203
------- ------
Net receivables 2,353 1,944
Inventories 9,954 8,488
Prepaid expenses 2,255 1,415
Deferred income taxes 109 103
------- ------
Total current assets 18,747 15,644
Long-term notes receivable, excluding current installments 690 601
Investment in and advances to affiliate - 340
Property, plant and equipment, at cost, less accumulated depreciation and amortization 10,074 9,679
Other assets, at cost, less accumulated amortization 548 650
------- ------
$30,059 26,914
======= ======
Liabilities and Stockholders' Equity
Current liabilities:
Current installments of long-term debt 62 59
Accounts payable - trade 3,441 2,255
Accrued salaries and wages 431 472
Other accrued expenses 590 577
Income taxes payable 455 -
Customer deposits 4,552 3,882
------- ------
Total current liabilities 9,531 7,245
Long-term debt, excluding current installments 1,832 1,864
Deferred income taxes 90 107
Stockholders' equity:
Common stock of $.01 par value. Authorized 10,000,000 shares; issued and
outstanding 4,041,912 shares in 1995 and 4,030,873 shares in 1994 40 40
Additional paid-in capital 15,799 15,778
Cumulative translation adjustment (702) (810)
Retained earnings 3,469 2,690
------- ------
Total stockholders' equity 18,606 17,698
------- ------
$30,059 26,914
======= ======
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
LINDAL CEDAR HOMES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
For the periods ended July 2, 1995 and July 3, 1994
(Dollar amounts in thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended Quarters Ended
-------------------------------- -----------------------------
July 2, 1995 July 3, 1994 July 2, 1995 July 3, 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenue $20,577 18,597 13,947 11,521
Cost of goods sold 15,411 14,241 9,636 8,332
------- ------ ------ ------
Gross profit 5,166 4,356 4,311 3,189
Operating expenses:
Selling, general and administrative expenses 4,516 4,024 2,330 2,035
Display court expenses 352 236 175 149
------- ------ ------ ------
Total operating expenses 4,868 4,260 2,505 2,184
------- ------ ------ ------
Operating income 298 96 1,806 1,005
Other income (expense):
Equity in earnings of affiliate 891 - 386 -
Rental income 140 90 76 40
Interest income 112 31 78 18
Interest expense (96) (102) (48) (52)
Gain on disposal of property and equipment, net 5 63 5 63
------- ------ ------ ------
Other income, net 1,052 82 497 69
------- ------ ------ ------
Earnings before income tax expense 1,350 178 2,303 1,074
Income tax expense 571 37 874 343
------- ------ ------ ------
Net earnings $ 779 141 1,429 731
======= ====== ====== ======
Net earnings per common share $ .19 .03 .35 .18
======= ====== ====== ======
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 6
LINDAL CEDAR HOMES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the periods ended July 2, 1995 and July 3, 1994
(In thousands)
(unaudited)
<TABLE>
<CAPTION>
1995 1994
-------- -------
<S> <C> <C>
Increase (Decrease) in Cash and Cash Equivalents
------------------------------------------------
Cash flows from operating activities:
Cash received from customers $ 20,928 19,298
Cash paid to suppliers and employees (20,730) (19,789)
Interest received 103 19
Interest paid (96) (102)
Income taxes paid 371 (295)
Cash paid for litigation settlement, including associated legal fees (94) (66)
-------- -------
Net cash provided by (used in) operating activities 482 (935)
Cash flows from investing activities:
Cash received for repayment of notes (not related to the sale of homes) 10 95
Additions to plant and equipment (785) (436)
Purchase of short-term cash investments (1,424) -
Liquidation of short-term cash investments 294 1,676
Disbursements for loans (not related to the sale of homes) (136) (115)
Proceeds from sale of property, plant and equipment 2 200
Additions to other assets - (144)
Investment in affiliate 792 -
-------- -------
Net cash provided by (used in) investing activities (1,247) 1,276
Cash flows from financing activities:
Proceeds from exercise of stock options 21 7
Repayment of long-term debt (27) (45)
Addition to long-term debt - 36
-------- -------
Net cash used in financing activities (6) (2)
Effect of exchange rates on cash and cash equivalents 22 3
-------- -------
Net increase (decrease) in cash and cash equivalents (749) 342
Cash and cash equivalents at beginning of period 3,219 1,362
-------- -------
Cash and cash equivalents at end of period $ 2,470 1,704
======== =======
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE> 7
LINDAL CEDAR HOMES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS, Continued
(In thousands)
(unaudited)
<TABLE>
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
Reconciliation of net earnings to net cash provided by (used in) operating activities:
Net earnings $ 779 141
Adjustments to reconcile net earnings to net cash provided by (used in) operating
activities:
Depreciation and amortization of plant and equipment 426 392
Amortization of other assets 102 1
Amortization of display homes 139 82
Gain on disposal of property and equipment (5) (63)
Changes in certain assets and liabilities:
Increase in net receivables (414) (522)
Increase in inventories exclusive of amortization of display models (1,547) (1,729)
Increase in prepaid expenses related to operating activities (845) (638)
Increase in current liabilities other than current portion of long-term debt 1,876 1,311
Increase (decrease) in deferred income taxes (22) 81
(Increase) decrease on notes receivable related to operating activities (7) 9
------- -------
Total adjustments (297) (1,076)
------- -------
Net cash provided by (used in)
operating activities $ 482 (935)
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
7
<PAGE> 8
LINDAL CEDAR HOMES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 2, 1995, December 31, 1994 and July 3, 1994
(Dollar amounts in thousands, except per share amounts)
(1) BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles,
except as noted below, and include all recurring adjustments that are
considered necessary by management to fairly state the results of the
interim periods. These consolidated financial statements and related
notes have been prepared pursuant to the rules and regulations of the
Securities and Exchange Commission. Accordingly, certain information and
footnote disclosures normally included in the consolidated financial
statements prepared in accordance with generally accepted accounting
principles have been omitted. Due to the seasonality of the Company's
business, the accompanying consolidated financial statements may not
necessarily be indicative of the results to be obtained for the full
year. This report should be read in conjunction with the Company's
Annual Report to the Securities and Exchange Commission on Form 10-K for
the year ended December 31, 1994.
(2) EARNINGS PER COMMON SHARE
There was no difference between primary and fully diluted earnings per
share for all periods presented. The number of shares used to compute
primary and fully diluted earnings per share was 4,078,790 for the second
quarter of 1995 and 4,060,086 for the second quarter of 1994, 4,073,777
and 4,080,594 for the first six months of 1995 and 4,067,063 and
4,067,578 for the first six months of 1994.
(3) INVENTORIES
A summary of inventories follows (in thousands):
<TABLE>
<CAPTION>
July 2, December 31,
1995 1994
------- -------
<S> <C> <C>
Raw materials $ 2,659 2,634
Work-in-process 2,241 1,389
Finished goods 3,521 2,886
Display homes 1,533 1,579
------- -------
$ 9,954 8,488
======= =======
</TABLE>
(continued)
8
<PAGE> 9
LINDAL CEDAR HOMES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands, except per share amounts)
(4) INVESTMENT IN AFFILIATE
As discussed in the Company's December 31, 1994 Form 10-K, the British
Columbia Ministry of Forests awarded the Company the rights to harvest
and sell approximately 50,000 cubic meters of timber between 1994 and
1997. The Company entered into an agreement with an unaffiliated company
who is providing services related to planning, management of timber
harvesting and marketing of the logs. A new corporation, in which the
Company and the unaffiliated company each own 50%, was formed in 1994.
The investment in this affiliate is accounted for under the equity
method. Any asset or equity distributions from the affiliate will be
made in accordance with the respective ownership interests.
Contributions to the affiliate were for working capital requirements.
The harvesting of the timber began during the fourth quarter of 1994.
The sale of harvested logs began in the first quarter of 1995 and was
essentially completed in the second quarter of 1995.
Summarized financial information of the equity affiliate was as follows
(in thousands):
Condensed Statements of Operations/Information
<TABLE>
<CAPTION>
Six months ended Quarter ended
July 2, 1995 July 2, 1995
---------------- -------------
<S> <C> <C>
Revenue $6,580 3,149
Earnings before income taxes 2,420 1,409
Net earnings 1,370 776
</TABLE>
(5) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following (in thousands):
<TABLE>
<CAPTION>
July 2, 1995 December 31, 1994
------------ -----------------
<S> <C> <C>
Building and leasehold improvements $ 7,520 7,445
Equipment 4,517 4,192
Furniture and fixtures 2,741 2,383
------- ------
14,778 14,020
Less accumulated depreciation and amortization 8,569 8,135
------- ------
6,209 5,885
Land 3,865 3,794
------- ------
Net property, plant and equipment $10,074 9,679
======= ======
</TABLE>
(continued)
9
<PAGE> 10
LINDAL CEDAR HOMES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands, except per share amounts)
(6) LONG-TERM DEBT
Long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
July 2, 1995 December 31, 1994
------------ -----------------
<S> <C> <C>
First mortgage note payable, due in monthly $1,251 1,272
installments of $13, including interest at 9.5%;
final payment due 2009
First mortgage note payable, due in monthly 608 616
installments of $7, including interest at 11%;
final payment due 2010
Other 35 35
------ -----
Total long-term debt 1,894 1,923
Less current installments 62 59
------ -----
Long-term debt, excluding current $1,832 1,864
installments ====== =====
</TABLE>
At December 31, 1994, certain properties, having an aggregate net book
value of approximately $4,552, are pledged as collateral on the above
long-term debt.
At July 2, 1995, the Company had $2,864 of unsecured lines of credit with
banks to be drawn upon as needed, with interest at 1/2% above the prime
rate.
(7) OUTSTANDING STOCK OPTIONS
(A) EMPLOYEE STOCK OPTION PLANS
The Company has provided for the granting of stock options to key
employees under two plans: the 1984 Incentive Stock Option Plan
(the 1984 Plan) and the 1988 Combined Incentive Stock Option and
Nonqualified Stock Option Plan (the 1988 Plan). Both plans are
administered by the Stock Option Committee of the Board of
Directors (Committee).
Under the terms of the 1984 Plan, incentive options to purchase
shares of the Company's common stock are granted at a price equal
to the market price of the stock at the date of grant. The 1984
Plan expired on December 21, 1994 and no future options will be
granted under this plan.
Under the terms of the 1988 Plan, both incentive and nonqualified
options to purchase shares of the Company's common stock may be
granted. Options granted under this plan may be designated as
incentive or nonqualified at the discretion of the Committee. The
exercise price of the options granted under this plan is set at the
time of grant, but may not be less than the fair market value of
the Company's stock at the date of grant.
(continued)
10
<PAGE> 11
LINDAL CEDAR HOMES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands, except per share amounts)
At August 1, 1995, there were options outstanding under both plans
to purchase 328,062 shares of stock at per share prices ranging
from $2.16 to $5.38. Of these 328,062 options, 242,462 were
currently exercisable at an average exercise price of $4.07 per
share. From January 1, 1995 to August 1, 1995, options to purchase
11,039 shares were exercised at per share prices ranging from $.92
to $2.94 and options to purchase 1,894 shares were relinquished.
(B) DIRECTORS AND DISTRIBUTORS STOCK OPTION PLAN
The Company has provided for the granting of stock options to
nonemployee directors and distributors who serve on the Top
Distributor Advisory Council (Council).
At the annual meeting of shareholders on May 25, 1995, an amendment
was approved to the Directors and Distributors Stock Option Plan
(Plan) to increase the number of options granted to nonemployee
directors and to increase the number of shares that may be issued
under the Plan. Under the amendment, nonemployee directors, when
first elected to the Board of Directors, would receive an initial
grant of options to purchase 10,000 shares of the Company's common
stock at the fair market value upon that date. Each of the
nonemployee directors in office when the amendment was approved
received a grant of options to purchase 10,000 shares at the fair
market value on the date the amendment was approved, $3.75 per
share. The amendment further provided that, commencing October 1,
1995 and on each October 1st thereafter, options would be granted
to nonemployee members of the Board of Directors to purchase 5,000
shares of the Company's common stock at the fair market value on
that date. The amendment to the Plan also increased the number of
shares reserved for issuance under the Plan from 110,000 to
210,000. The vesting of options granted under the Plan was not
amended.
At August 1, 1995, there were options outstanding to purchase
58,934 shares at per share prices of $6.36, $6.00 and $3.75. Of
these 58,934 options to purchase shares, 7,695 were currently
exercisable at per share prices of $6.00 and $6.36. No options
have been exercised.
Each distributor who serves on the Council on February 1 is granted
options to purchase 100 shares of common stock for each year of
service on the Council. Pursuant to an amendment to the plan
ratified by the shareholders on May 26, 1994, the exercise price of
the options granted for 1995 and future years will be the market
price of the Company's stock on the first business day of October
preceding the year in which the options are granted. At August 1,
1995, there were options outstanding to purchase 13,910 shares of
stock at per share prices of $6.36, $5.00 and $3.50. Of these
13,910 options to purchase shares, 5,586 were currently exercisable
at per share prices of $6.36, $5.00 and $3.50. From January 1,
1995 to August 1, 1995, options to purchase 4,400 shares were
granted at a per share price of $3.50. No options have been
exercised.
(continued)
11
<PAGE> 12
LINDAL CEDAR HOMES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands, except per share amounts)
(C) OTHER GRANTS
On June 30, 1995, the Executive Committee of the Board of Directors
granted options to purchase 10,000 shares to Robert McLennaghan for
consulting services to the Company. The per share exercise price
of the options was the fair market value on the date of grant,
$3.75. The options were immediately exercisable and have a term of
10 years. These options were not granted under any plan.
Mr. McLennaghan is the husband of Bonnie McLennaghan, who is the
daughter of Sir Walter Lindal and the sister of Robert Lindal,
Douglas Lindal and Martin Lindal.
(8) INCOME TAXES
Income tax expense (benefit) was allocated as follows (in thousands):
<TABLE>
<CAPTION>
Six Months Ended Quarters Ended
---------------------------- ----------------------------
July 2, 1995 July 3, 1994 July 2, 1995 July 3, 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Current:
U.S. Federal $184 (21) 591 330
Canadian 398 (23) 311 (21)
State 10 - 10 -
---- --- --- ---
592 (44) 912 309
Deferred:
U.S. Federal (16) 85 (35) 34
Canadian (5) (4) (3) -
---- --- --- ---
(21) 81 (38) 34
---- --- --- ---
$571 37 874 343
==== === === ===
</TABLE>
The Company's consolidated Canadian subsidiary had a pretax loss,
excluding the earnings of the affiliate, of approximately $117 in the
first six months of 1995 compared to pretax earnings of approximately $4
in the first six months of 1994.
(continued)
12
<PAGE> 13
LINDAL CEDAR HOMES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands, except per share amounts)
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities were as
follows (in thousands):
<TABLE>
<CAPTION>
July 2, December 31,
1995 1994
------- ------------
<S> <C> <C>
Deferred tax assets:
Receivables, due to the allowance for doubtful receivables $ 72 68
Uniform inventory capitalization for tax purposes 16 15
Accrued expenses, deductible in different years for tax 21 20
Foreign tax credit carryforward available through 1995 6 6
---- ---
Total gross deferred tax assets 115 109
Less valuation allowance 6 6
---- ---
Net deferred tax assets 109 103
Deferred tax liabilities - property, plant and equipment,
principally due to differences in basis of assets and
depreciation 90 107
---- ---
Net deferred tax liabilities $ 19 (4)
==== ===
</TABLE>
(9) OTHER FINANCIAL INFORMATION
The Company's business is seasonal in that most deliveries have
historically been made during the period from April to October. To
illustrate this, revenue by quarter is presented below (in thousands):
<TABLE>
<CAPTION>
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
1995
Revenue $6,630 13,947
1994
Revenue 7,076 11,521 10,979 9,957
1993
Revenue 7,171 12,776 12,965 9,084
1992
Revenue 5,565 12,478 11,738 8,802
1991
Revenue 7,201 9,910 10,361 9,814
</TABLE>
13
<PAGE> 14
LINDAL CEDAR HOMES, INC.
AND SUBSIDIARIES
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND THE RESULTS OF OPERATIONS
SECOND QUARTER
RESULTS OF OPERATIONS
Revenue increased $2.4 million (21%) from the second quarter of 1994 to the
second quarter of 1995 primarily due to home and sunroom sales.
Home and sunroom revenue increased $2.5 million (26%) from $9.6 million in the
second quarter of 1994 to $12.1 million in the second quarter of 1995. The
number of home units shipped increased 21% from 129 units in the second quarter
of 1994 to 156 units in the second quarter of 1995. An increased backlog
entering the second quarter of 1995 and a more traditional flow of new orders
in the first quarter, compared to 1994, was responsible for the increase in
home and sunroom sales. The total backlog, stated in dollars, was 63% higher
entering the second quarter of 1995 than it was entering the second quarter of
1994. The average revenue per home unit shipped increased 11% from
approximately $66,100 in the second quarter of 1994 to approximately $73,700 in
the second quarter of 1995. The size and value of a home unit is a function of
customer preference and may change somewhat from period to period.
The dollar value and the number of new orders decreased 10% from the second
quarter of 1994 to the second quarter of 1995.
The gross profit percentage (gross profit/revenue) increased from 28% in the
second quarter of 1994 to 31% in the second quarter of 1995. Increased home
sales, price increases and relatively stable costs for building materials were
primarily responsible for the increase in the gross profit percentage.
Operating expenses increased $321,000 (15%) from the second quarter of 1994 to
the second quarter of 1995. Salaries and related benefits increased $166,000
(19%). In the second quarter of 1994, $30,000 of costs associated with the
planbook that was released in August 1994 were capitalized. There was no such
capitalization in 1995. Also, profit sharing expense increased due to
increased earnings. Settlement and related legal expenses associated with
various matters incidental to the business of the Company increased $65,000 due
to the settlement of several matters. Amortization of deferred marketing costs
primarily associated with the current planbook totaled $50,000. There was no
such amortization in the second quarter of 1994. Commission expense decreased
$83,000 (35%) primarily due to the phase out of the manufacturer's
representative program, which has been replaced by the expanded regional sales
management structure.
In March 1994, the Company obtained the rights to harvest approximately 50,000
cubic meters of timber in the Province of British Columbia. The harvesting of
the timber began in the fourth quarter of 1994. In the second quarter of 1995,
the sale of the harvested timber was substantially complete. Against the
$705,000 of earnings of the affiliate in the second quarter of 1995, charges of
$140,000 for profit sharing and $179,000 for estimated additional expenses were
recorded. The affiliate will have some activity in the third quarter of 1995.
14
<PAGE> 15
YEAR-TO-DATE
RESULTS OF OPERATIONS
Revenue increased $2.0 million (11%) from 1994 to 1995 due to increased home
and sunroom sales.
Home and sunroom revenue increased $1.7 million (11%) from $15.0 million in
1994 to $16.7 million in 1995. The number of home units shipped increased 7%
from 204 in 1994 to 218 in 1995. The average revenue per home unit shipped
increased 8% from approximately $66,900 in 1994 to approximately $72,000 in
1995 due primarily to price increases.
The dollar value of new orders increased 3% from 1994 to 1995. The number of
new orders decreased 1%. Entering the third quarter of 1995, the total
backlog, stated in dollars, was 49% higher than it was entering the third
quarter of 1994.
The gross profit percentage increased from 23% in 1994 to 25% in 1995 due
primarily to price increases and relatively stable costs for building
materials.
Operating expenses increased $608,000 (14%) from 1994 to 1995. Salaries and
related benefits increased $278,000 (16%). In 1994, $66,000 of costs
associated with the planbook that was released in August 1994 were capitalized.
There was no such capitalization in 1995. Also, profit sharing expense
increased due to the increased earnings. Display court expenses increased
$116,000 (49%) primarily due to the growth in the number of display models.
Amortization of deferred marketing costs, primarily associated with the current
planbook, totaled $102,000. There was no such amortization in 1994.
Advertising increased $58,000 (8%). Commissions decreased $97,000 (26%)
primarily due to reduced payments to manufacturer's representatives.
The earnings of the affiliate totaled $891,000 for the first six months of
1995. Against the $1,210,000 of earnings, charges of $140,000 for profit
sharing and $179,000 for estimated additional expenses were recorded. The
affiliate will have some activity in the third quarter of 1995.
LIQUIDITY
Trade accounts receivable, inventories, trade accounts payable and customer
deposits increased $432,000 (21%), $1.5 million (17%), $1.2 million (53%) and
$670,000 (17%), respectively, from December 31, 1994 to July 2, 1995 due to
seasonal factors. Prepaid expenses increased $840,000 (59%) from December 31,
1994 to July 2, 1995 primarily due to increased inventory of the current
planbook.
The Company continues to hedge a portion of its expected lumber and plywood
needs using options and futures contracts. Using this process, the Company
believes that it can help protect its margins from the potential volatility in
the lumber and plywood markets.
15
<PAGE> 16
LINDAL CEDAR HOMES, INC.
AND SUBSIDIARIES
PART II: OTHER INFORMATION
ITEM 4 - RESULTS OF VOTES OF SECURITIES HOLDERS
The following matters were approved by the shareholders at the Company's annual
meeting of shareholders held on May 25, 1995:
<TABLE>
<CAPTION>
Authority
Withheld/
Description of Proposal For Against Abstain
----------------------- --------- ------- -------
<S> <C> <C> <C>
1. To amend the Company's by-laws to provide for 2,092,316 270,683 685,424
two classes of directors.
2. Election of Directors
Sir Walter Lindal 2,873,223 175,200 -
Robert W. Lindal 2,873,223 175,200 -
Douglas F. Lindal 2,873,223 175,200 -
Martin J. Lindal 2,873,223 175,200 -
Everett G. Martin 2,873,223 175,200 -
Rick L. Stanley 2,873,223 175,200 -
Harry A. Pryde 2,873,223 175,200 -
Daniel B. Ward 2,873,223 175,200 -
Charles R. Widman 2,873,223 175,200 -
William M. Weisfield 2,873,223 175,200 -
3. To amend the Company's Directors and Distributors 2,928,564 78,329 41,530
Stock Option Plan, to increase the number of
options to be granted to nonemployee Directors and
to increase the number of shares that may be issued
under the Plan.
4. To elect the independent auditors to examine the 3,024,376 14,453 9,594
consolidated financial statements of the Company
for the year ending December 31, 1995
</TABLE>
ITEM 6(B) - REPORTS ON FORM 8-K
There were no reports on Form 8-K filed during the second quarter of 1995.
16
<PAGE> 17
LINDAL CEDAR HOMES, INC.
AND SUBSIDIARIES
SIGNATURE:
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LINDAL CEDAR HOMES, INC.
By: /S/ Robert W. Lindal
----------------------------------
Robert W. Lindal
Chairman and CEO
By: /S/ John F. Dacy
----------------------------------
John F. Dacy
Vice President Finance & Treasurer
(Chief Accounting Officer)
DATE:
August 16, 1995
17
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