<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 October 1, 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 October 26, 1995: 4,046,906 shares
at $.01 par value.
1 of 17
<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
Results of Operations 14
Part II. Other Information
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
October 1, 1985 and December 31, 1994
(Dollar amounts in thousands, except per share amounts)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
1995 1994
- -------------------------------------------------------------------------------------------------------------------
Assets (unaudited)
<S> <C> <C>
Current assets:
Cash $ 2,008 3,219
Short-term investments 2,101 475
Receivables:
Trade 2,352 2,042
Current installments of long-term notes receivable 105 46
Refundable income taxes - 59
------- ------
2,457 2,147
Less allowance for doubtful receivables 232 203
------- ------
Net receivables 2,225 1,944
Inventories 9,113 8,488
Prepaid expenses 2,008 1,415
Deferred income taxes 118 103
------- ------
Total current assets 17,573 15,644
Long-term notes receivable, excluding current installments 848 601
Investment in and advances to affiliate - 340
Property, plant and equipment, at cost, less accumulated depreciation and
amortization 10,219 9,679
Other assets, at cost, less accumulated amortization 659 650
------- ------
$29,299 26,914
------- ------
Liabilities and Stockholders' Equity
Current liabilities:
Current installments of long-term debt 47 59
Accounts payable - trade 2,139 2,255
Accrued salaries and wages 490 472
Other accrued expenses 653 577
Income taxes payable 454 -
Customer deposits 4,907 3,882
------- ------
Total current liabilities 8,690 7,245
Long-term debt, excluding current installments 1,228 1,864
Deferred income taxes 83 107
Stockholders' equity:
Common stock of $.01 par value. Authorized 10,000,000 shares; issued and
outstanding 4,046,906 shares in 1995 and 4,030,873 shares in 1994 40 40
Additional paid-in capital 15,811 15,778
Cumulative translation adjustment (623) (810)
Retained earnings 4,070 2,690
------- ------
Total stockholders' equity 19,298 17,698
- -------------------------------------------------------------------------------------------------------------------
$29,299 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 October 1, 1995 and October 2, 1994
(Dollar amounts in thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Nine Months Ended Quarters Ended
------------------------ -----------------------
October 1, October 2, October 1, October 2,
1995 1994 1995 1994
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue $ 32,113 29,576 11,536 10,979
Cost of goods sold 23,826 22,279 8,415 8,038
--------------------------------------------------
Gross profit 8,287 7,297 3,121 2,941
Operating expenses:
Selling, general and administrative 6,738 6,292 2,222 2,268
expenses
Display court expenses 550 384 198 148
--------------------------------------------------
Total operating expenses 7,288 6,676 2,420 2,416
--------------------------------------------------
Operating income 999 621 701 525
Other income (expense):
Equity in earnings of affiliate 891 -- -- --
Rental income 232 135 92 45
Interest income 285 59 173 28
Interest expense (168) (153) (72) (51)
Gain on disposal of property and
equipment, net 1 65 (4) 2
--------------------------------------------------
Other income, net 1,241 106 189 24
--------------------------------------------------
Earnings before income tax expense 2,240 727 890 549
Income tax expense 860 191 289 154
--------------------------------------------------
Net earnings $ 1,380 536 601 395
--------------------------------------------------
Net earnings per common share $ .34 .13 .15 .10
- -----------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 6
LINDAL CEDAR HOMES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine months ended October 1, 1995 and October 2, 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 $ 33,016 30,070
Cash paid to suppliers and employees (31,320) (28,639)
Interest received 243 44
Interest paid (174) (154)
Income tax expense (378) (68)
Cash paid for litigation settlement, including associated legal fees (126) (105)
----------------------
Net cash provided by operating activities 1,261 1,148
Cash flows from investing activities:
Cash received for repayment of notes (not related to the sale of homes) 11 110
Additions to plant and equipment (1,102) (555)
Purchase of short-term cash investments (3,323) (280)
Liquidation of short-term cash investments 1,699 1,676
Disbursements for loans (not related to the sale of homes) (243) (219)
Proceeds from sale of property and equipment 2 200
Additions to other assets (169) (158)
Investment in affiliate 1,245 (65)
----------------------
Net cash provided by (used in) investing activities (1,880) 709
Cash flows from financing activities:
Proceeds from exercise of stock options 33 7
Repayment of long-term debt (43) (67)
Retirement of long-term debt (604) --
Addition to long-term debt -- 36
----------------------
Net cash used in financing activities (614) (24)
Effect of exchange rates on cash and cash equivalents 22 (5)
----------------------
Net increase (decrease) in cash and cash equivalents (1,211) 1,828
Cash and cash equivalents at beginning of period 3,219 1,362
- -------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 2,008 3,190
- -------------------------------------------------------------------------------------------------------
</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 operating activities:
Net earnings $ 1,380 536
Adjustments to reconcile net earnings to net cash provided by operating
activities:
Depreciation and amortization of plant and equipment 631 577
Amortization of other assets 152 18
Amortization of display homes 199 131
Gain on disposal of property and equipment (1) (65)
Equity in earnings of affiliate (891) --
Changes in certain assets and liabilities:
Increase in net receivables (255) (728)
Increase in inventories exclusive of amortization of display models (720) (1,015)
Increase in prepaid expenses related to operating activities (604) (136)
Increase in current liabilities other than current portion of
long-term debt 1,485 1,674
Increase (decrease) in deferred income taxes (39) 119
(Increase) decrease in notes receivable related to operating
activities (76) 37
- ----------------------------------------------------------------------------------------------------------
Total adjustments (119) 612
- ----------------------------------------------------------------------------------------------------------
Net cash provided by operating activities $ 1,261 1,148
- ----------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
7
<PAGE> 8
LINDAL CEDAR HOMES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 1, 1995, December 31, 1994 and October 2, 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
Earnings per share are computed based on the weighted average number of
common shares and common share equivalents outstanding. When dilutive,
stock options are included as common share equivalents using the treasury
stock method.
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 4,084,872 and 4,101,544
for the third quarter of 1995 and 4,043,542 and 4,047,356 for the third
quarter of 1994, 4,077,475 and 4,087,577 for the first nine months of 1995
and 4,059,223 and 4,060,838 for the first nine months of 1994.
(3) INVENTORIES
A summary of inventories follows (in thousands):
<TABLE>
<CAPTION>
October 1, December 31,
1995 1994
-------------------
<S> <C> <C>
Raw materials $2,674 2,634
Work-in-process 1,996 1,389
Finished goods 2,968 2,886
Display homes 1,475 1,579
-------------------
$9,113 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
provided 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 are 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>
Nine months ended Quarter ended
October 1, 1995 October 1, 1995
---------------------------------------
<S> <C> <C>
Revenue $6,580 --
Earnings before income taxes 2,420 --
Net earnings 1,370 --
</TABLE>
(5) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following (in thousands):
<TABLE>
<CAPTION>
October 1, December 31,
1995 1994
---------- ------------
<S> <C> <C>
Building and leasehold improvements $ 7,594 $ 7,445
Equipment 4,642 4,192
Furniture and fixtures 2,922 2,383
------- -------
15,158 14,020
Less accumulated depreciation and amortization 8,841 8,135
------- -------
6,317 5,885
Land 3,902 3,794
------- -------
Net property, plant and equipment $10,219 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>
October 1, December 31,
1995 1994
----------------------
<S> <C> <C>
First mortgage note payable, due in monthly installments of
$13, including interest at 9.5%; final payment due 2009 $1,240 1,272
First mortgage note payable, due in monthly installments of
$7, including interest at 11%; final payment due 2010 -- 616
Other 35 35
----------------------
Total long-term debt 1,275 1,923
Less current installments 47 59
----------------------
Long-term debt, excluding current installments $1,228 1,864
----------------------
</TABLE>
At December 31, 1994, certain properties, having an aggregate net book
value of approximately $4,552, were pledged as collateral on the above
long-term debt.
At October 1, 1995, the Company had $2,870 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 were 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 October 26, 1995, there were options outstanding under both plans
to purchase 323,068 shares of stock at per share prices ranging from
$2.16 to $5.38. Of these 323,068 options, 259,370 were currently
exercisable at an average exercise price of $4.12 per share. From
January 1, 1995 to October 26, 1995, options to purchase 16,033
shares were exercised at per share prices ranging from $.92 to $3.91
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.
Pursuant to this amendment, on October 2, 1995 options to purchase
25,000 shares were granted at a per share price of $4.25.
At October 26, 1995, there were options outstanding to purchase
83,934 shares at per share prices ranging from $3.75 to $6.36. Of
these 83,934 options to purchase shares, 7,695 were currently
exercisable at per share prices of $6.00 and $6.36. No options have
been exercised.
(Continued)
11
<PAGE> 12
LINDAL CEDAR HOMES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands, except per share amounts)
- --------------------------------------------------------------------------------
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 October 26,
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
October 26, 1995, options to purchase 4,400 shares were granted at a
per share price of $3.50. No options have been exercised.
(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>
Nine Months Ended Quarters Ended
-------------------------- --------------------------
October 1, October 2, October 1, October 2,
1995 1994 1995 1994
--------------------------------------------------------
<S> <C> <C> <C> <C>
Current:
U.S. Federal $ 585 220 401 241
Canadian 296 (149) (102) (126)
State 17 -- 7 --
----------------------------------------------------
898 71 306 115
Deferred:
U.S. Federal (36) 124 (20) 39
Canadian (2) (4) 3 --
----------------------------------------------------
(38) 120 (17) 39
----------------------------------------------------
$ 860 191 289 154
----------------------------------------------------
</TABLE>
The Company's consolidated Canadian subsidiary had a pretax loss,
excluding the earnings of the affiliate, of approximately $280,000 in the
first nine months of 1994 and $342,000 in the first nine months of 1995.
(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>
October 1, December 31,
1995 1994
--------------------------
<S> <C> <C>
Deferred tax assets:
Receivables, due to the allowance for doubtful receivables $ 80 68
Uniform inventory capitalization for tax purposes 15 15
Accrued expenses, deductible in different years for tax 23 20
Foreign tax credit carryforward available through 1995 6 6
-------------------
Total gross deferred tax assets 124 109
Less valuation allowance 6 6
-------------------
Net deferred tax assets 118 103
Deferred tax liabilities - property, plant and equipment,
principally due to differences in basis of assets and
depreciation 83 107
-------------------
Net deferred tax liabilities $ 35 (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 of
dollars):
<TABLE>
<CAPTION>
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
-------------------------------------------------------------
<S> <C> <C> <C> <C>
1995
----
Revenue $ 6,630 13,947 11,536
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
THIRD QUARTER
RESULTS OF OPERATIONS
Revenue increased $557,000 (5%) from the third quarter of 1994 to the third
quarter of 1995 primarily due to home and sunroom sales.
Home and sunroom revenue increased $900,000 (11%) from $8.3 million in the third
quarter of 1994 to $9.2 million in the third quarter of 1995. The number of
home units shipped increased 13% from 104 units in the third quarter of 1994 to
118 units in the third quarter of 1995. The average revenue per home unit
shipped decreased 2% from approximately $71,500 in the third quarter of 1994 to
approximately $70,200 in the third 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 of new orders decreased 14% from the third quarter of 1994 to
the third quarter of 1995. The number of new orders decreased 18% from the
third quarter of 1994 to the third quarter of 1995.
The gross profit percentage (gross profit/revenue) was 27% in the third quarters
of both 1994 and 1995. In the third quarters of 1994 and 1995, the cost of
goods sold was reduced by $160,000 and $189,000, respectively, for U.S.
government refunds of duty on Canadian lumber. With these credits removed from
the cost of goods sold, the gross profit percentage was 25% in the third
quarters of both 1994 and 1995.
Selling, general and administrative expenses decreased $46,000 (2%) from the
third quarter of 1994 to the third quarter of 1995. Commission expense
decreased $72,000 (31%) due to the phase out of the manufacturer's
representative program, which was replaced by the current regional management
structure. Bad debt expense increased $46,000 from the third quarter of 1994 to
the third quarter of 1995 due to the 1994 reversal of previously accrued
amounts.
Display court expenses increased $50,000 (34%) from the third quarter of 1994 to
the third quarter of 1995 primarily due to commission expense.
YEAR-TO-DATE
RESULTS OF OPERATIONS
Revenue increased $2.5 million (9%) from 1994 to 1995 due to home and sunroom
sales.
Home and sunroom revenue increased $2.6 million (11%) from $23.3 million in 1994
to $25.9 million in 1995. The number of home units shipped increased 9% from
308 in 1994 to 336 in 1995. The average revenue per home unit shipped increased
4% from approximately $68,500 in 1994 to approximately $71,400 in 1995.
14
<PAGE> 15
The dollar value of new orders decreased 3% from 1994 to 1995. The number of
new orders decreased 7%. Entering the fourth quarter of 1995, the total
backlog, stated in dollars, was 27% higher than it was entering the fourth
quarter of 1994.
The gross profit percentage increased from 25% in 1994 to 26% in 1995.
Selling, general and administrative expenses increased $446,000 (7%) from 1994
to 1995. Salaries and related benefits increased $269,000 (10%). Amortization
of deferred marketing costs, primarily associated with the current planbook,
increased $134,000 (744%). Amortization of these costs began in September 1994.
Bad debt expense increased $77,000 due to the 1994 reversal of previously
accrued amounts. Commission expense decreased $166,000 (30%) primarily due to
reduced payments to manufacturer's representatives.
Display court expenses increased $166,000 (43%) due primarily to the growth in
the number of models.
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 by an affiliated company. In the
second quarter of 1995, the sale of the harvested timber was substantially
complete. There was no significant activity in the third quarter of 1995. What
is expected to be the final accounting for the venture is currently underway.
Interest income increased $226,000 (383%) primarily due to interest paid by the
U.S. government on duty that it refunded.
LIQUIDITY
Trade accounts receivable, inventories and customer deposits increased $310,000
(15%), $625,000 (7%) and $1.0 million (26%), respectively, from December 31,
1994 to October 1, 1995 due to seasonal factors. Prepaid expenses increased
$593,000 (42%) from December 31, 1994 to October 1, 1995 primarily due to
increased inventory of the current planbook.
Long-term debt decreased $636,000 (34%) from December 31, 1995 to October 1,
1995 due primarily to the September 1995 pay-off of a mortgage that was due in
2010 with a rate of interest of 11%. At December 31, 1994, the mortgage had a
balance owing of $616,000.
Interest expense for the third quarter of 1995 includes approximately $16,000
related to costs associated with paying-off the mortgage.
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 6(b) - REPORTS ON FORM 8-K
THERE WERE NO REPORTS ON FORM 8-K FILED DURING THE THIRD 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:
November 15, 1995
17
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> OCT-01-1995
<CASH> 4,109
<SECURITIES> 0
<RECEIVABLES> 2,352
<ALLOWANCES> 232
<INVENTORY> 9,113
<CURRENT-ASSETS> 17,573
<PP&E> 19,060
<DEPRECIATION> 8,841
<TOTAL-ASSETS> 29,299
<CURRENT-LIABILITIES> 8,690
<BONDS> 1,228
<COMMON> 40
0
0
<OTHER-SE> 19,258
<TOTAL-LIABILITY-AND-EQUITY> 29,299
<SALES> 32,113
<TOTAL-REVENUES> 32,113
<CGS> 23,826
<TOTAL-COSTS> 23,826
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 57
<INTEREST-EXPENSE> 168
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