WTD INDUSTRIES, INC.
United States 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 Commission file number
April 30, 1994 0-16158
WTD INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Oregon 93-0832150
(State of Incorporation) (I.R.S. Employer Identification No.)
10260 S.W. Greenburg Road, Suite 900, Portland, Oregon 97223
(Address of principal executive offices)
Registrant's telephone number, including area code: (503) 246-3440
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, no par value (Title of Class)
- - - ------------------------------------------------------------------
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. _______
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 twelve 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 _____
State the aggregate market value of the voting stock held by
non-affiliates of the registrant, as of June 30, 1994: $26,328,028.
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Section 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the
distributions of securities under a plan confirmed by a court.
Yes __X__ No _____
Indicate the number of shares outstanding of each of the
registrant's classes of Common Stock, as of June 30, 1994: Common
Stock, no par value: 11,077,074.
FORM 10-K TABLE OF CONTENTS
Item No. Page No.
Part I
1. Business 3
2. Properties 7
3. Legal Proceedings 7
4. Submission of Matters to a Vote of Security Holders 8
Part II
5. Market for the Registrant's Common Stock and
Related Stockholder Matters 9
6. Selected Financial Data 11
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 13
8. Financial Statements and Supplementary Data 18
9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 18
Part III
10. Directors and Executive Officers of the Registrant 19
11. Executive Compensation 22
12. Security Ownership of Certain Beneficial Owners
and Management 25
13. Certain Relationships and Related Transactions 25
Part IV
14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K
(a)(1) Financial statements 26
(a)(2) Financial statement schedules 26
(a)(3) Exhibit Index 27
(b) Reports on Form 8-K 29
PART I
Item 1. BUSINESS
WTD Industries, Inc. is a forest products company organized in
Oregon in 1983, whose subsidiaries manufacture softwood and
hardwood lumber, veneer and by-products. WTD Industries, Inc. and
its subsidiaries are hereinafter referred to as "WTD" or the
"Company." The Company markets its products primarily in the
United States and Canada through its subsidiary and sales agent,
TreeSource, Inc.
The Company and its subsidiaries filed for protection under
Chapter 11 of the Federal Bankruptcy Code in late January 1991
following extreme adverse conditions in the forest products
industry in 1990. WTD emerged from bankruptcy on November 30,
1992 pursuant to the Company's court-approved Second Amended Joint
Plan of Reorganization ("Plan") under which it continues to
operate.
PRODUCTS AND MARKETS
Softwood Lumber
The Company manufactures a wide variety of softwood lumber
products, predominantly from green (unseasoned) Douglas fir,
hemlock, and white fir. The Company produces softwood studs in
several species, generally as 2x4 or 2x6 lumber in lengths of 8 to
10 feet. The Company also makes dimension softwood lumber in a
wide range of widths and thicknesses in lengths from 6 to 26 feet.
Softwood lumber accounted for 83% of net sales in fiscal 1994, 78%
in fiscal 1993, and 77% in 1992.
The Company sells softwood lumber to a large number of
customers, primarily distribution centers and wholesalers.
Softwood lumber is used in a variety of applications, including
residential and commercial construction, packaging, and industrial
uses.
Other Products
The Company produces a small quantity of hardwood lumber in
sizes targeted principally for the furniture and cabinet
industries. The Company also has the capacity to produce softwood
veneer, a raw wood, thin-layer product which is peeled from logs
and sold for use in plywood and laminated veneer lumber. Wood
chips, a by-product of the manufacturing process, are sold
principally to pulp and paper manufacturers. Wood chips and other
by-products accounted for 11% of net sales in fiscal 1994, 13% in
fiscal 1993, and 16% in fiscal 1992.
Distribution and Marketing
The Company markets, distributes, and arranges transportation
for its lumber products through its wholly owned subsidiary and
sales agent, TreeSource, Inc. Through TreeSource, the production
capabilities of individual mills are coordinated to meet a broad
range of customer needs. TreeSource sells primarily through
telephone contacts from its office in Portland, Oregon.
Shipments of wood products are generally made by rail or truck
directly from the mill. The Company also makes regular shipments
by barge from certain of its mills with access to port facilities
to destinations in Southern California and Hawaii. Exports,
principally to Canada, do not represent a material portion of the
Company's net sales.
The Company does not attempt to accumulate a large backlog of
orders. WTD's general practice is to maintain an order file
representing about two to four weeks' production. The filling of
orders for certain items, however, may require a substantially
longer period of time. The dollar value of the Company's backlog
of orders at April 30, 1994, was $7.2 million compared to $8.9
million at April 30, 1993. Backlog on any particular date may not
be indicative of the Company's average backlog, or of net sales or
the backlog for any succeeding period.
No single customer accounted for more than 10% of the
Company's net sales during fiscal 1994. The loss of any one
customer would not, in management's opinion, have a material
adverse impact on the Company and its subsidiaries taken as a
whole.
Timber Supply
The Company generally purchases timber and logs in sufficient
quantities to match the current operating requirements of its
mills. Management attempts to maintain log inventories equal to an
average of three to four weeks' operating requirements except where
seasonal or weather factors necessitate larger volumes. The goals
of the Company's procurement strategy are to limit the speculative
aspects of timber purchasing and to maintain the Company's
adaptability to changing lumber market conditions.
The Company relies mainly on open market log purchases to
supply its raw material needs. It also purchases timber-cutting
contracts ("timber contracts"), primarily at public timber sales,
and has historically obtained logs to a minor extent from its own
fee timberlands. As of April 30, 1994, the Company owned a small
amount of fee timberlands in the vicinity of various mills. The
following table shows the percentages of logs supplied by open
market purchases, timber contracts and fee timberlands, and total
log footage required:
Year Ended Open Timber Fee Log
April 30, Market Contracts Timber Requirements
1990 69% 25% 6% 766,000 MBF
1991 75% 19% 6% 408,000 MBF
1992 88% 8% 4% 338,000 MBF
1993 90% 6% 4% 306,000 MBF
1994 94% 5% 1% 305,100 MBF
MBF - Thousand Board Feet
The availability and cost of timber and logs have been, and
should continue to be, influenced by a variety of factors,
including demand by competitors and exporters, the environmental
and harvest policies of federal and state agencies, and, in the
long term, the level of reforestation. For further discussion of
current industry conditions relating to timber supply, see the
section entitled "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
Employees
The Company and its subsidiaries had approximately 1,250
employees at June 30, 1994. The Company believes that its
relations with employees are good. The Company provides its
employees with health insurance, paid holidays and vacation time,
and maintains an IRC 401(k) retirement savings plan.
Environmental Regulation
The Company is subject to federal, state and local waste
disposal and pollution control regulations, including air, water
and noise pollution, which have required, and are expected to
continue to require, additional operating and capital expenditures.
The Company believes that it is in substantial compliance with all
existing regulations and orders. During fiscal 1994, the Company
incurred expenditures of approximately $600,000 for waste disposal
and pollution control. Anticipated expenditures for fiscal 1995
are projected to be about $500,000. Expenditures of about $800,000
are anticipated for fiscal 1996, principally for compliance with
storm water discharge regulations. It should be noted that various
governmental agencies are considering regulations regarding log
yard management and disposal of log yard waste. The final
regulations may require material expenditures in the future.
Industry Conditions
The United States lumber industry is highly sensitive to the
condition of the nation's economy and tends to experience poor
financial results during general economic downturns. In addition,
sales tend to increase in the spring and summer months and decline
during the fall and winter months in response to seasonal building
construction cycles. However, in the last two fiscal years,
relatively strong lumber demand occurred in the winter months and
relatively weak demand occurred during the spring months.
Management believes this situation has occurred because lumber
buyers, concerned about supply in light of public timber harvest
restrictions, have made defensive purchases before the traditional
spring buying period. In addition, demand in the spring of 1994
was muted by the severe winter conditions in the midwestern and
eastern portions of the U.S. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" for
further discussion.
Competition
The wood products industry is highly competitive and includes
a large number of companies manufacturing relatively standardized
products. The principal means of competition in the lumber
industry are pricing, product quality, and the ability to satisfy
customer needs promptly. The Company feels it competes effectively
based on the foregoing factors. Some of WTD's competitors are
large, integrated companies with substantially greater total
resources than those of the Company. Some of these competitors
have a significant base of low-cost fee timberlands and timber
contracts. The Company could be at a disadvantage to such
competitors since it relies on the open log market to supply the
bulk of its raw materials requirements. See the sections entitled
"Timber Supply" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
Item 2. PROPERTIES
<TABLE>
MANUFACTURING FACILITIES (1)
<CAPTION>
Thousand Board Feet
------------------------
Fiscal Est. Annual
1994 Production
Production Capacity
---------- ----------
<S> <C> <C>
Softwood Lumber
- - - ---------------
Burke Lumber Co., West Burke, Vermont 46,000 46,000
Central Point Lumber Co., Central Point, Oregon (2) 39,000 110,000
Glide Lumber Products Co., Glide, Oregon 99,000 125,000
Morton Forest Products Co., Morton, Washington 54,000 90,000
North Powder Lumber Co., North Powder, Oregon 54,500 90,000
Pacific Softwoods Co., Philomath, Oregon 39,700 80,000
Philomath Forest Products Co., Philomath, Oregon 131,700 245,000
Sedro-Woolley Lumber Co., Sedro-Woolley, Washington 40,700 140,000
Spanaway Lumber Co., Tacoma, Washington (2) 47,300 85,000
Trask River Lumber Co., Tillamook, Oregon (2) 45,500 120,000
Tumwater Lumber Co., Tumwater, Washington (2) 44,200 70,000
Hardwood Lumber
- - - ---------------
Pacific Hardwoods-South Bend Co., South Bend, Washington (2) 18,900 19,000
Veneer
- - - ------
Morton Forest Products Co., Morton, Washington -0- 100,000 (3)
<FN>
(1) The machinery and equipment of all facilities are subject to the security interest of
certain lenders.
(2) These subsidiaries lease all or a substantial portion of the real property on which the
mill is located pursuant to ground leases.
(3) The production at this facility is expressed in thousand square feet, 3/8" basis.
</TABLE>
During its Chapter 11 proceedings and subsequently, the
Company disposed of most of the assets of 18 facilities. The
Company continues to own real property from certain former mill
sites in California and Oregon.
Item 3. LEGAL PROCEEDINGS
On or about January 30, 1991, WTD Industries, Inc. and each of
its subsidiaries (see Exhibit 21 for list) filed a voluntary
petition for reorganization under Chapter 11 of the Bankruptcy
Code. The proceeding was filed in the United States Bankruptcy
Court for the Western District of Washington in Seattle (the
"Bankruptcy Court"). The jointly administered proceeding is
entitled: "In re Sedro-Woolley Lumber Co., WTD Industries, Inc.,
TreeSource, Inc., et al.", Case Numbers 91-00707 through 91-00721,
91-00736 through 91-00741, 91-00752 through 91-00756, 91-00773
through 91-00778, and 91-01140 through 91-01149. The Company's
Second Amended Joint Plan of Reorganization was confirmed by the
Bankruptcy Court on November 23, 1992, effective November 30, 1992.
A lawsuit was filed in the Superior Court of the State of
Washington in and for the County of Thurston on March 4, 1987,
against Cascade West Forest Products, Inc., now operating as
Tumwater Lumber Co. ("Tumwater"), following its acquisition by the
Company through a stock purchase from the sole remaining
shareholder. The plaintiff, the former majority shareholder of
Tumwater, has alleged that the selling shareholder and Tumwater
breached certain fiduciary obligations to the plaintiff and
committed fraud in connection with the plaintiff's sale of his
Tumwater stock to Tumwater. The plaintiff seeks damages in an
unspecified amount and placement of the shares of Tumwater stock
previously redeemed by Tumwater into escrow pending resolution of
the dispute. The selling shareholder has agreed to indemnify the
Company against any liability arising out of the lawsuit.
Plaintiff has filed a claim with the Bankruptcy Court and the
Company has objected to the claim. A hearing on the objection has
been stayed pending resolution of the State Court action as to
other parties. Summary judgment against plaintiff has been granted
as to most of plaintiff's claims. The matter now is pending before
the Washington Court of Appeals.
On November 30, 1990, the Company received a tax assessment
from the State of Washington for Business and Occupation (B&O)
taxes in the amount of approximately $900,000, including interest
and penalties. The Company contested the assessment in the
Bankruptcy Court and by order dated May 19, 1994, the State was
awarded a claim in the amount of $82,868.58, which will be paid
pursuant to the terms of the Company's Plan of Reorganization. The
order allowing the claim became a final order on May 29, 1994 and
is no longer subject to appeal.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
Principal Market
Registrant's Common Stock is traded in the over-the-counter
market. Quotations are reported on the National Market System of
the National Association of Securities Dealers (NASD). The
Company's stock trades under the NASDAQ symbol WTDI. The number of
holders of record of WTD Industries, Inc. Common Stock at June 30,
1994 was 753. The Company estimates that the total number of its
direct and beneficial shareholders is approximately 5,000.
Stock Price and Dividend Information
Until March 18, 1994, WTD Common Stock was reported in the
NASDAQ small cap issues section of the NASD. Since March 18, 1994,
the Common Stock of WTD has been included in the NASDAQ National
Market System.
The following tables show the stock price range or the price
quotes, as applicable, for the two years ended April 30, 1994:
Stock Quotes
Fiscal Year Ended Bid Ask
April 30, 1994 Low High Low High
First Quarter $1.625 $2.750 $1.750 $2.875
Second Quarter $1.625 $2.125 $1.750 $2.250
Third Quarter $1.625 $2.625 $1.875 $2.750
Fourth Quarter (1) $2.375 $3.875 $2.625 $4.125
(1) Quotes reported for the period February 1, 1994 through
March 17, 1994.
Fiscal Year Ended Stock Price Range
April 30, 1994 Low High
Fourth Quarter (2) $2.875 $4.750
(2) Prices reported for the period March 18, 1994 through
April 30, 1994.
Stock Quotes
Fiscal Year Ended Bid Ask
April 30, 1993 Low High Low High
First Quarter $0.625 $1.875 $1.000 $2.125
Second Quarter $0.625 $1.250 $0.875 $1.500
Third Quarter $0.438 $1.875 $0.563 $2.000
Fourth Quarter $1.438 $2.750 $1.563 $3.000
The share prices shown are those published by the NASD and
represent prices between dealers. They do not include retail
markups, markdowns, or commission and, in the case of bid and ask
quotes, may not represent actual transactions. Prior to the
October 1986 public offering, there was no public trading market
for the Common Stock. The prices shown are not adjusted for the
four-for-ten reverse split effective December 11, 1992.
WTD does not pay any cash dividends on its Common Stock. The
Company's various debt instruments restrict the payment of
dividends. See Notes 5 and 7 to Consolidated Financial Statements.
Item 6. SELECTED FINANCIAL DATA
<TABLE>
WTD Industries, Inc.
Five-Year Selected Financial Data
(In thousands, except per-share information and ratios)
<CAPTION>
Year Ended April 30,
---------------------------------------------------------
1994 1993 1992 1991 1990
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Summary of Operations:
Net Sales $278,115 $246,887 $213,896 $243,931 $459,901
Cost of sales 253,732 227,040 195,386 250,468 414,931
--------- --------- --------- --------- ---------
Gross profit (loss) 24,383 19,847 18,510 (6,537) 44,970
Selling, general and administrative
expenses 12,423 12,615 12,047 20,957 29,660
Reorganization charges (credits) (2,487) 563 3,272 58,000 --
Restructuring charges -- -- -- -- 8,297
--------- --------- --------- --------- ---------
Operating income (loss) 14,447 6,669 3,191 (85,494) 7,013
Interest expense (6,541) (2,864) (235) (10,197) (11,349)
Other income 418 151 36 589 1,704
--------- --------- --------- --------- ---------
Income (loss) before
income taxes 8,324 3,956 2,992 (95,102) (2,632)
Provision for income taxes (benefit) 2,024 1,543 1,167 (9,950) (1,145)
--------- --------- --------- --------- ---------
Income (loss) before
extraordinary items 6,300 2,413 1,825 (85,152) (1,487)
Extraordinary items -- 21,345 1,167 -- --
--------- --------- --------- --------- ---------
Net income (loss) $6,300 $23,758 $2,992 ($85,152) ($1,487)
========= ========= ========= ========= =========
Earnings (loss) per share, primary
- - - - before extraordinary items $0.41 $0.29 $0.73 ($34.17) ($0.59)
- - - - extraordinary items -- $3.46 $0.47 -- --
- - - - net income (loss) $0.41 $3.75 $1.20 ($34.17) ($0.59)
Average shares outstanding (1) 11,433 6,166 2,492 2,492 2,520
Earnings (loss) per share,
assuming full dilution
- - - - before extraordinary items $0.41 $0.28 $0.73 ($34.17) ($0.59)
- - - - extraordinary items -- $3.43 $0.47 -- --
- - - - net income (loss) $0.41 $3.71 $1.20 ($34.17) ($0.59)
Average shares and equivalents (1) 11,519 6,231 2,492 2,492 2,520
Cash dividends per common share -- -- -- -- --
Period End Balances:
Working capital $44,796 $39,255 $46,162 $35,069 $43,153
Total assets 97,100 100,039 113,561 106,038 220,930
Long-term debt (excluding
current maturities) (3) 60,587 64,184 519 7,457 89,519
Senior Subordinated Debentures
due 1997 -- -- -- -- 22,000
Liabilities subject to
compromise (2)(3) -- -- 134,351 126,935 --
Stockholders' equity (deficit) 18,512 13,684 (43,553) (46,545) 38,607
Selected Financial Ratios:
Net income (loss) to average:
Total assets 6.4% 22.2% 2.7% -52.1% -0.7%
Stockholders' equity (deficit) 39.1% NM NM NM -3.7%
Average stockholders' equity
to average total assets 16.3% NM NM NM 19.5%
<FN>
(1) Restated to reflect effect of four-for-ten reverse split as of November 30, 1992.
(2) Including Senior Subordinated Debentures Due 1997.
(3) During fiscal year 1992, the Company reclassified certain debt obligations between fully secured
debt and liabilities subject to compromise.
NM Not Meaningful
</TABLE>
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
REORGANIZATION
The Company and each of its subsidiaries filed for protection
under Chapter 11 of the Federal Bankruptcy Code on or about January
30, 1991, in the U.S. Bankruptcy Court for the Western District of
Washington (the "Bankruptcy Court"). On November 23, 1992, WTD's
Second Amended Joint Plan of Reorganization (the "Plan") was
confirmed by the Bankruptcy Court. Distributions under the Plan
commenced November 30, 1992 (the "Effective Date"). An
extraordinary gain on debt restructure of $19.8 million, less a tax
provision of $7.7 million, was recognized in fiscal 1993 as a
result of the distributions.
As of April 30, 1994, the Company had sold substantially all
of the facilities that were curtailed at the onset of the Chapter
11 proceedings. The Company intends to dispose of its remaining
idle assets, primarily consisting of real estate, as promptly as
possible.
RESULTS OF OPERATIONS
Overview
On a quarter-to-quarter basis, the Company's financial results
have and will vary widely, due to seasonal fluctuations and market
factors affecting the demand for logs, lumber and other wood
products. Therefore, past results for any given year or quarter
are not necessarily indicative of future results.
The industry is subject to fluctuations in sales and earnings
due to such factors as industry production in relation to product
demand and variations in interest rates and housing starts.
Currency fluctuations affect the forest products industry when
exchange rates spur log exports and drive up domestic log prices,
and when a relatively strong U.S. dollar encourages imports of
lumber from competing countries.
The industry is also affected by weather conditions and
changing timber management policies. Fire danger and excessively
dry or wet conditions temporarily reduce logging activity and may
increase open market log prices. Timber management policies of
various governmental agencies change from time to time,
periodically causing actual or perceived shortages in some areas.
These policies change because of environmental concerns, public
agency budget issues and a variety of other reasons.
It is generally WTD's practice to curtail production at
facilities from time to time due to conditions which temporarily
impair log flow or when imbalances between log costs and product
prices cause the cost of operation to exceed the cost of shutdown.
Management believes that WTD's labor practices and compensation
systems, as well as a relatively low capital cost in relation to
production capacity, give it the flexibility to curtail operations
and resume production as conditions warrant. The Company may also
permanently close facilities that are determined to lack future
profit potential under expected operating conditions.
Raw Materials
Raw materials comprise the majority of the cost of products
sold by the Company. The Company depends principally on open
market log purchases for its raw materials needs. WTD's log
inventory policy is to maintain, where possible, a supply equal to
three to four weeks of production.
During the 1980's, public timber accounted for a significant
portion of the supply used by the forest products industry in the
Pacific Northwest. On June 22, 1990, the northern spotted owl was
listed by the U.S. Fish and Wildlife Service as a threatened
species in Oregon, Washington and Northern California. This
required the U.S. Forest Service (USFS) and Bureau of Land
Management (BLM) to develop plans to protect the owl's habitat,
primarily in old-growth timber, by limiting timber harvests on
public lands in the Pacific Northwest. This decision resulted from
many years of controversy and litigation surrounding the harvest of
"old-growth" timber in Oregon, Washington and Northern California.
Since that time, new controversies surrounding ecosystem management
and species such as the marbled murrelet and various strains of
wild salmon have caused the USFS and BLM to further limit timber
harvests.
The USFS and BLM have proposed new policies regarding logging
on public lands that would reduce public timber harvests to 20% to
30% of the 1980's harvest levels. However, implementation of the
USFS and BLM plans have been delayed by industry and
preservationist litigation. This will extend the period before
implementation can occur, and may require significant changes to
the proposed rules.
During fiscal years 1992, 1993 and 1994, the Company operated
most of its mills on a one-shift basis, typically using logs
purchased on the open market from industrial and non-industrial
private land owners. The ability to maintain the present level of
operations at the Company's mills depend on a continuing supply of
logs from these private sources. The Company's ability to increase
production above present levels would be enhanced by an increased
availability of timber from public lands in the Northwest.
The sharp reduction in available timber in the Pacific
Northwest has contributed to increased open market log costs. The
Company has generally been able to obtain sufficient raw materials
for its mills from private sources at prices which ensure a gross
margin. However, management anticipates that uncertainty
associated with timber supply issues, combined with a continued
lack of public timber sale activity, may contribute to further log
price volatility. The Company expects that log and lumber markets
will continue to experience rapid changes in values due to actual
and perceived market conditions throughout fiscal 1995, sometimes
resulting in inconsistent relationships between log prices and
lumber prices. These changes could result in large swings in the
gross margin on lumber produced. The long term impact of this
issue cannot be predicted at this time.
Yearly Comparisons
The following table compares certain income and expense items
as a percentage of net sales, and the period-to-period percentage
change for each item:
<TABLE>
<CAPTION>
Income and Expense Items as a Percentage
Percentage of Net Sales Increase (Decrease)
--------------------------------------------- ---------------------------
Year Ended April 30, 1994 1993
--------------------------------------------- vs vs
1994 1993 1992 1993 1992
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net sales 100.0 % 100.0 % 100.0 % 12.6 % 15.4 %
Cost of sales 91.2 92.0 91.3 11.8 16.2
---------- ---------- ----------
Gross profit 8.8 8.0 8.7 22.9 7.2
Selling, general and
administrative expenses 4.5 5.1 5.6 (1.5) 4.7
Reorganization charges (credits) (0.9) 0.2 1.5 NM NM
---------- ---------- ----------
Operating income 5.2 2.7 1.5 116.6 109.0
Interest expense (2.4) (1.2) (0.1) 128.4 1,118.7
Miscellaneous 0.2 0.1 -- 176.8 319.4
---------- ---------- ----------
Income before income taxes 3.0 1.6 1.4 110.4 32.2
Provision for income taxes 0.7 0.6 0.5 31.2 32.2
---------- ---------- ----------
Income before extraordinary items 2.3 1.0 0.9 161.1 32.2
Extraordinary items -- 8.6 0.5 NM NM
---------- ---------- ----------
Net income 2.3 % 9.6 % 1.4 % (73.5)% 694.1 %
========== ========== ==========
<FN>
NM - Not Meaningful
Note: Percentages may not add precisely due to rounding
</TABLE>
Comparison of 1994 to 1993
Net sales for the year ended April 30, 1994 increased by $31.2
million (13 percent) from the year ended April 30, 1993. This
increase was mainly the result of a 23 percent increase in lumber
prices and a 2 percent increase in lumber production, partially
offset by a 10 percent decline in chip production. The chip
production decrease from the prior year resulted from improved raw
materials utilization and less whole log chipping activity.
Gross profit in fiscal 1994 was 8.8 percent of sales versus
8.0 percent of sales in fiscal 1993. Lumber prices received by the
Company during fiscal 1994 were, on average, 23 percent higher than
in fiscal 1993, while log costs were, on average, 28 percent higher
than in the prior year. The Company was able to offset some of the
increase in log prices by improving its raw materials utilization
by 2 percent.
Selling, general and administrative (SG&A) expenses in the
year ended April 30, 1994 decreased by $0.2 million (1.5 percent)
from those of a year earlier. This decrease was the result of
ongoing efforts to reduce overhead expenses. SG&A expenses were
4.5 percent of sales in fiscal 1994 versus 5.1 percent of sales in
fiscal 1993.
Reorganization credits in fiscal 1994 primarily reflect gains
recognized on the sale of idle assets. Reorganization charges in
fiscal 1993 primarily reflect professional fees related to the
Chapter 11 proceedings, net of interest income on restricted cash
and changes in reserve accounts. See Note 2 to Consolidated
Financial Statements.
Interest expense in the year ended April 30, 1994 was $3.7
million above that incurred in the year ended April 30, 1993. In
accordance with AICPA Statement of Position 90-7, the Company did
not accrue interest between January 30, 1991 and November 30, 1992
on unsecured and under-secured instruments. Interest expense in
fiscal 1993 would have been approximately $3.9 million higher if
interest had been accrued for the entire fiscal year under the
terms of the obligations issued pursuant to the Plan.
The Company's tax provision in fiscal 1994 was 24 percent of
pretax income, pursuant to the provisions of SFAS Number 109. In
accordance with APB 11, the Company in fiscal 1993 recorded a tax
provision at statutory rates and an offsetting extraordinary credit
due to net operating loss carryforward utilization. See Note 6 to
Consolidated Financial Statements.
In fiscal 1993 the Company recognized an extraordinary gain
(before tax effect) on debt restructure of $19.8 million. See Note
2 to Consolidated Financial Statements.
Comparison of 1993 to 1992
Net sales for the year ended April 30, 1993 increased by $33.0
million (15 percent) from the year ended April 30, 1992. This
increase was mainly the result of a 20 percent increase in lumber
prices, partially offset by a 4 percent decline in lumber
production, an 11 percent decline in chip production, and a 10
percent decline in veneer production. The production decreases
from the prior year were principally caused by reductions in log
flow at the Company's Philomath operation and less whole log
chipping activity.
Gross profit in fiscal 1993 was 8.0 percent of sales versus 8.7
percent of sales in fiscal 1992. Lumber prices received by the
Company during fiscal 1993 were, on average, 20 percent higher than
in fiscal 1992, while log costs were, on average, 25 percent higher
than in the prior year. The Company was able to offset some of the
increase in log prices by improving its raw materials utilization
by 4 percent.
SG&A expenses in the year ended April 30, 1993 increased by
$0.6 million (5 percent) from those of a year earlier. This
increase was mainly due to increased payroll expense. SG&A
expenses were 5.1 percent of sales in fiscal 1993 versus 5.6
percent of sales in fiscal 1992.
Reorganization charges in fiscal 1993 and 1992 primarily
reflect professional fees related to the Chapter 11 proceedings,
net of interest income on restricted cash and changes in reserve
accounts. See Note 2 to Consolidated Financial Statements.
Interest expense in the year ended April 30, 1993 was $2.6
million above that incurred in the year ended April 30, 1992. In
accordance with AICPA Statement of Position 90-7, the Company did
not accrue interest between January 30, 1991 and November 30, 1992
on unsecured and under-secured instruments. Interest expense in
fiscal 1992 and 1993 would have been approximately $6.7 million and
$3.9 million higher, respectively, if interest had been accrued for
all of each fiscal year under the terms of the obligations issued
pursuant to the Plan.
The Company had no effective tax provision or benefit in the
years ended April 30, 1992 or 1993. In accordance with APB 11, the
Company recorded a tax provision at statutory rates and an
offsetting extraordinary income credit due to net operating loss
carryforward utilization. See Note 6 to Consolidated Financial
Statements.
In fiscal 1993 the Company recognized an extraordinary gain
(before tax effect) on debt restructure of $19.8 million. This
gain was the result of distributions made to settle the Company's
prepetition claims pursuant to the Plan.
LIQUIDITY AND CAPITAL RESOURCES
At April 30, 1994, the Company had net working capital of
$44.8 million, or $5.5 million more than at April 30, 1993. The
working capital increase was primarily the result of profitable
operations and the sale of certain of the Company's idle
facilities, offset by capital spending, principal payments on long-
term debt, deposits made to secure various long-term obligations,
and dividends paid on the Company's Series A preferred stock.
Cash and cash equivalents increased by $6.0 million during the
year ended April 30, 1994, to $8.1 million at year-end.
Approximately $14.5 million of cash was provided by operations,
while another $2.0 million was provided by the sale of idle assets.
About $4.2 million was used to repay various debt obligations, and
$0.9 million was deposited to secure various long-term obligations.
The Company also paid $1.6 million in dividends to its holders of
Series A preferred stock.
During fiscal 1994, the Company spent $4.1 million for capital
improvements to its facilities. Capital spending for the year
ending April 30, 1995 is currently projected to be approximately $7
million. The Company had no material commitments for capital
additions at April 30, 1994.
The Company does not have a credit facility for working
capital and therefore relies on cash provided by its operations to
fund its working capital needs. There is no assurance that such
cash will be sufficient to fund the Company's operations.
Substantially all of the Company's assets are pledged to secure
various debt obligations.
The Company's Credit and Security Agreement dated as of
November 30, 1992 contains certain covenants, including the
maintenance of prescribed levels of tangible net worth and adjusted
cumulative operating income (as defined). See Note 5 to
Consolidated Financial Statements. At April 30, 1994 the Company's
tangible net worth was $17.5 million compared to $8 million
required by the covenant. At that same date, the Company's
adjusted cumulative operating income was $21.0 million, compared to
$10 million required. The required level of tangible net worth
increases to $10 million for the period from May 1, 1994 through
April 30, 1995 and $15 million through April 30, 1998. The
required level of adjusted cumulative operating income increases to
$20 million at August 1, 1994 and $33 million at August 1, 1995.
During the year ended April 30, 1994, the Company's adjusted
cumulative operating income increased by $14.7 million despite net
income of only $6.3 million.
The Company has no floating rate debt, but the dividend rate
on its Series A preferred stock varies based on Bank of America's
prime rate in effect at the time the dividends are declared. Based
on the prime rate in effect at June 30, 1994, annual preferred
dividends would increase by $340,000 from the amount incurred in
the year ended April 30, 1994.
Employers Insurance of Wausau has advised WTD that it will not
continue its timber bonding agreement with the Company, but will
honor its existing bonds. The Company is seeking alternate bonding
sources and is currently providing cash deposits in lieu of
bonding.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary data required by
this item are listed in Item 14 of Part IV of this report which
begins at page 26.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The directors and executive officers of the Company are:
Name Age Position
H. Raymond Bingham 48 Director
Scott Christie 45 Director
Bruce L. Engel 53 Director and President
L. Robert Hoffman 41 Vice President
Howard E. Leppla 67 Director
David J. Loftus 52 Treasurer
K. Stanley Martin 52 Director, Vice President-Finance
and Chief Financial Officer
Robert J. Riecke 44 Director, Vice President-Administration
and General Counsel
James R. Wilson 44 Vice President-Timber
William H. Wright 59 Director
The composition of the Board of Directors of the Company is
determined by Article XII of the Company's Second Amended Joint
Plan of Reorganization. The Plan provides that from the Effective
Date of the Plan until the Company's 1995 annual meeting of
shareholders, the Board of Directors of the Company shall consist
of seven individuals, six of whom served as directors prior to the
Effective Date, and the seventh to be named by certain creditors of
the Company. Mr. Howard E. Leppla was named as director by these
creditors. At its annual meeting in calendar year 1995, three
Board seats of the Company will be filled by election of the
shareholders, including the seat held by Mr. Leppla. At its annual
meeting during calendar year 1996, the remaining four Board seats
will be filled by election of the shareholders. Except for the
seat held by Mr. Leppla, no determination has been made to date as
to which individuals will stand for election in 1995 and which will
stand in 1996. In the event the Company fails to make a certain
number of scheduled dividend payments or if a certain financial
ratio covenant violation has occurred and is continuing on its
Series A preferred stock, holders of such stock may, under the
circumstances and in the manner provided in the Company's Fourth
Restated Articles of Incorporation, elect a majority of the Board
of Directors by replacing incumbent Board members or increasing the
size of the Board.
H. Raymond Bingham has been a director of the Company since
1988. He is currently executive vice president-chief financial
officer of Cadence Design Systems, Inc., a manufacturer of
electronic design software. Mr. Bingham was formerly executive
vice president and chief financial officer of Red Lion Hotels and
Inns, a Vancouver, Washington based hotel chain, a position he held
until 1993. Mr. Bingham was also formerly managing director of
Agrico Overseas Investment Company where he was in charge of
development of industrial projects.
Scott Christie has been a director of the Company since 1988.
Mr. Christie is currently general partner of Christie Capital
Management. From 1987 until 1994, Mr. Christie was engaged as an
investment advisor for his own account and the account of other
individuals. From 1983 until 1987 Mr. Christie was senior vice
president of Kidder, Peabody & Co. Incorporated, an investment
banking firm. Mr. Christie headed Kidder, Peabody's underwriting
team for the Company's initial public offering and 1987 debenture
offering.
Bruce L. Engel, the Company's founder, has been president and
a director of the Company since its inception. Mr. Engel, a
graduate of the University of Chicago Law School, practiced
business and corporate law, including representation of clients in
the wood products industry, from 1964 to 1984. Mr. Engel became
engaged in sawmill operations in 1981 with the acquisition of a
mill in Glide, Oregon, now owned by a subsidiary of the Company.
Mr. Engel is involved in various other businesses. Mr. Engel is
president and a director of Encore Group, Inc. Mr. Engel is a
former executive officer of Kimber of Oregon, Inc., a company which
filed a petition under Chapter 7 of the U.S. Bankruptcy Code in
January 1991.
L. Robert Hoffman is vice president of the Company, a position
held since January 1988. Mr. Hoffman is responsible for financial
reporting and other accounting matters for the Company. From 1985
to 1988, Mr. Hoffman was an assistant vice president specializing
in acquisitions and business development for PacifiCorp's
international telecommunications subsidiaries. From 1984 to 1985,
he was manager of corporate planning for PacifiCorp and from 1983
to 1984 was director of financial services for Nerco, Inc., a
company engaged in mining and resource development operations. Mr.
Hoffman's earlier experience includes logging and manufacturing
management responsibilities for Simpson Timber Company.
Howard E. Leppla has been a director of the Company since
November of 1992. Mr. Leppla's principal occupation is as a
private investor. From 1986 until 1989 Mr. Leppla was president
and chief executive officer of E T Railcar Corporation. Mr. Leppla
was also formerly owner and general agent of Keystone Insurance
Agency of Minneapolis, specializing in machinery and equipment
coverage, installation coverage, surety bonds and as a risk
management consultant.
David J. Loftus was appointed treasurer of the Company in
October 1993 and continues to serve as vice president-finance of
TreeSource, the Company's marketing subsidiary, a position he has
held since May 1986. As treasurer, Mr. Loftus is primarily
responsible for cash management matters and credit and banking
relationships. For the eight years prior to joining TreeSource,
Mr. Loftus served as the assistant treasurer for a publicly traded
company with operations in the forest products industry.
K. Stanley Martin is vice president-finance of the Company, a
position held since September 1983, and has been chief financial
officer since April 1991. Mr. Martin has been a director of the
Company since January 1994. Mr. Martin is responsible for all
financial affairs of the Company. For the eleven years prior to
1983, Mr. Martin served as a financial officer for publicly-traded
companies having all or a substantial portion of their operations
in the forest products industry. Mr. Martin is a certified public
accountant.
Robert J. Riecke became vice president-administration of the
Company in May 1989, has been general counsel of the Company since
January 1987, assistant secretary from March 1983 until January
1994, and a director of the Company since March 1986. Mr. Riecke
was named corporate secretary in January 1994. Mr. Riecke has
primary responsibility for the Company's legal, risk management,
environmental compliance, investor relations, and human resources
functions. From 1976 through 1986, Mr. Riecke was in private law
practice. Since 1983, Mr. Riecke has devoted much of his
professional endeavors to legal matters relating to the Company and
its subsidiaries. Mr. Riecke is a graduate of the University of
Illinois School of Law.
James R. Wilson was appointed vice president-timber of the
Company in October 1993. Mr. Wilson has primary responsibility for
the Company's timber supply program. Prior to his present
position, Mr. Wilson served at both mill and corporate levels of
WTD Industries commencing in February 1992. Prior to 1992, Mr.
Wilson served as general manager of Estacada Lumber Company, a
division of RSG Forest Products. From 1973 to 1984, Mr. Wilson was
involved in all phases of the wood products industry with Crown
Zellerbach Corporation.
William H. Wright has been a director of the Company since
April of 1992. Mr. Wright has held a variety of management
positions in the forest products industry since 1957. He is
currently president of Heartwood Consulting Service, which advises
forest products clients. From 1989 until 1994 he was president and
chief executive officer of Dee Forest Products Inc., a manufacturer
of hardboard and related products. From 1984 to 1989 Mr. Wright
was general manager of Stevenson Co-Ply Inc., a manufacturer of
veneer and plywood.
Reporting of Securities Transactions
Under the federal securities laws, officers and directors of
the Company and persons holding more than 10 percent of the
Company's Common Stock are required to report, within specified
monthly and annual due dates, their initial ownership in the
Company's Common Stock and all subsequent acquisitions,
dispositions or other transfers of beneficial interests therein, if
and to the extent reportable events occur which require reporting
by such due dates. The Company is required to describe in this
section whether, to its knowledge, any person required to file such
a report may have failed to do so in a timely manner. In this
regard, the Company has identified the following persons who may
have failed to timely file required reports:
David J. Loftus initial filing on Form 3
five days late
James R. Wilson initial filing on Form 3
five days late
Item 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table shows the cash and non-cash compensation
paid by the Company for the last three fiscal years to the chief
executive officer and the four other most highly compensated
executive officers.
<TABLE>
<CAPTION>
Annual Compensation
------------------
Name and Principal Position Year Salary Bonus
- - - --------------------------- ---- ------ ------
<S> <C> <C> <C>
Bruce L. Engel 1994 $300,000 $151,936
President 1993 $300,000 $100,553
1992 $270,000 $66,057
L. Robert Hoffman 1994 $77,000 $38,997
Vice President 1993 $72,042 $32,449
1992 $69,417 $16,788
David J. Loftus 1994 $76,667 $45,152
Treasurer 1993 $69,500 $34,564
1992 $65,725 $26,781
K. Stanley Martin 1994 $104,250 $51,659
Vice President-Finance and 1993 $89,958 $39,216
Chief Financial Officer 1992 $84,292 $20,385
Robert J. Riecke 1994 $132,000 $66,853
Vice President-Administration 1993 $123,500 $48,484
and General Counsel 1992 $119,000 $28,779
</TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
No executive officer named above received option grants during
the fiscal year ended April 30, 1994.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table provides information on option exercises
for the last fiscal year by the named executive officers and the
value of such officers' unexercised options as of April 30, 1994:
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised
Options at In-the-Money Options
April 30, 1994 at April 30, 1994
Shares -------------------- --------------------
Acquired Exercis- Unexer- Exercis- Unexer-
Name or Exercised able cisable able cisable
-------- ------------ ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Bruce L. Engel -- 153,600 230,400 $192,210 $288,315
L. Robert Hoffman -- 23,600 11,400 $45,575 $17,813
David J. Loftus 1,000 3,000 -- $6,319 --
K. Stanley Martin -- 20,400 11,400 $38,835 $17,813
Robert J. Riecke -- 23,600 11,400 $45,575 $17,813
</TABLE>
Benefits
The Company maintains an IRC Section 401(k) retirement savings
plan under which employees, including executive officers, are
permitted to make salary deferral contributions. Executive
officers are not entitled to employer matching contributions
pursuant to this plan. The Company pays the costs of
administration of the retirement savings plan.
Compensation of Directors
Each of the Company's outside directors is paid an annual
retainer of $15,000 for attending up to six Board meetings,
including committee meetings, plus $750 for each additional meeting
attended and $225 for each telephone conference meeting attended or
written consent minutes executed. Directors who are also employees
of the Company do not receive additional compensation for their
services as directors. Pursuant to the Company's Stock Option
Plan, directors who are not employees of the Company each received
initial option grants with respect to 35,000 shares of the
Company's Common Stock and are entitled to receive option grants
with respect to 10,000 shares in subsequent fiscal years to a
maximum aggregate of 80,000 shares. Each director was granted
options with respect to 10,000 shares in fiscal 1994.
Executive Bonuses
Monthly discretionary bonuses are paid to the Company's
executive officers, as well as other management and administrative
employees, pursuant to the Company's profit sharing bonus plan.
The bonuses are based upon net pretax profits and are generally
allocated according to base salary level. Bonuses paid to
executive officers for services rendered to the Company during the
year ended April 30, 1994 are included in the amounts shown in the
"Summary Compensation Table."
Stock Option Plan
In July 1986 the Company adopted a Stock Option Plan ("Option
Plan"). The Option Plan was amended by the Company's Chapter 11
Plan of Reorganization to (a) increase to 1,245,900 the number of
shares available for grant, (b) provide for the grant of
nonqualified stock options, as well as incentive stock options, (c)
permit nonemployee agents, consultants, and independent contractors
to participate in the Option Plan and (d) provide automatic initial
and annual option grants in defined amounts to the Company's non-
employee directors. The purpose of the Option Plan is to motivate
special achievement by the Company's officers and key employees by
encouraging them to acquire an equity interest in the Company.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Board of Directors is
composed of Mr. Bingham, Mr. Christie, and Mr. Wright. The
Compensation Committee determines compensation for executive
officers, including executive officers who are directors. It also
administers the Company's Option Plan.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table shows beneficial ownership of the
Company's Common Stock by each director, shareholders known to the
Company to beneficially own more than 5 percent of the Common
Stock, by the executive officers named in the Summary Compensation
Table, and all directors and officers as a group. Except as
otherwise specifically noted, each person noted below has sole
investment and voting power with respect to shares indicated.
<TABLE>
<CAPTION>
Amount and Nature
Name and Address of Beneficial Owner of Beneficial Ownership (1) Percent
- - - ------------------------------------ ----------------------- --------
<S> <C> <C>
INVISTA Capital Management, Inc., a
subsidiary of Principal Mutual Life
Insurance Company
1500 Hub Tower
699 Walnut
Des Moines, Iowa 50309 828,111 7.5%
</TABLE>
<TABLE>
<CAPTION>
Amount and Nature
Name of Directors and Executive Officers of Beneficial Ownership (2)(3) Percent
- - - ---------------------------------------- ----------------------- --------
<S> <C> <C>
H. Raymond Bingham 55,000 0.5%
Scott Christie 45,400 0.4%
Bruce L. Engel (4) 565,440 5.0%
L. Robert Hoffman 23,600 0.2%
Howard E. Leppla (5) 645,509 5.8%
David J. Loftus 4,000 --
K. Stanley Martin 21,400 0.2%
Robert J. Riecke 23,600 0.2%
William H. Wright 33,750 0.3%
All directors and executive officers as a
group (10 persons) 1,419,799 12.4%
<FN>
(1) As determined by reference to the beneficial owner's most recent 13 D or G filing.
(2) Beneficial Ownership is calculated as of June 30, 1994.
(3) Includes shares reserved for issuance under options exercisable within 60 days of June 30,
1994 as follows: Mr. Bingham 45,000; Mr. Christie 45,000; Mr. Engel 153,600; Mr. Hoffman
23,600; Mr. Leppla 22,500; Mr. Loftus 3,000; Mr. Martin 20,400; Mr. Riecke 23,600;
and Mr. Wright 33,750.
(4) Mr. Engel shares with his spouse Teri E. Engel voting and investment power as to 411,840
shares beneficially owned. See Note 3 for details of individual option rights. Certain of
Mr. Engel's shares are pledged to third parties in connection with certain personal
obligations.
(5) Mr. Leppla shares with his spouse Mary Leppla voting and investment power as to 623,009
shares beneficially owned.
</TABLE>
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
(a) (1) Financial Statements Page
The following consolidated financial statements
of the Registrant and its subsidiaries are contained in
this report:
Report of Independent Certified Public Accountants 31
Consolidated Statements of Income for the Years
Ended April 30, 1994, 1993 and 1992 32
Consolidated Balance Sheets at April 30, 1994 and 1993 33
Consolidated Statements of Cash Flows for the Years
Ended April 30, 1994, 1993 and 1992 35
Consolidated Statement of Changes in Stockholders'
Equity for the Years Ended April 30, 1994,
1993 and 1992 36
Notes to Consolidated Financial Statements 37
(a) (2) Financial Statement Schedules
The following financial statement schedules should be read in
conjunction with the consolidated financial statements and notes
thereto.
Report of Independent Certified Public Accountants
on Financial Statement Schedules 48
Schedule V - Property, Plant and Equipment 49
Schedule VI - Accumulated Depreciation of
Property, Plant and Equipment 50
Schedule VIII - Valuation and Qualifying
Reserves 51
Schedule IX - Short-Term Borrowings 52
Schedule X - Supplementary Income Statement
Information 53
All other schedules called for under Regulation S-X are not
submitted because they are not applicable or not required or
because the required information is not material or is included in
the financial statements or notes thereto.
(a) (3) Exhibit Index Page
2.1 Final form of Registrant's Second Amended
Joint Plan of Reorganization dated October 5,
1992, filed with the United States Bankruptcy
Court for the Western District of Washington. (1)
3.1 Fourth Restated Articles of Incorporation of the
Registrant adopted November 27, 1992. (1)
3.2 Second Restated Bylaws of the Registrant
effective November 27, 1992. (9)
4.2 Credit and Security Agreement dated as of
November 30, 1992, between Registrant and
Principal Mutual Life Insurance Company,
Aetna Life Insurance Company, The North-
western Mutual Life Insurance Company,
Chemical Bank, Seattle-First National Bank,
and Bank of America Oregon. (2)
4.3 Indenture dated as of November 30, 1992,
between Registrant and State Street Bank and
Trust Company, as Trustee, with respect to 8%
Senior Subordinated Notes due 2005. (3)
10.1 Amended and Restated 1986 Stock Option Plan
dated December 30, 1992. (4)
10.1.2 Form of Stock Option Agreement for directors
of Registrant. (9)
10.1.3 Form of Stock Option Agreement for executive
officers of the Registrant. (9)
10.2 General Indemnity Agreement dated March 29,
1984, among the Registrant, Bruce L. Engel
("Engel"), Teri E. Engel and Employers
Insurance of Wausau ("Wausau") and other
related parties and an Agreement dated
June 25, 1986, among Wausau, the Registrant,
Engel and other related parties. (5)
10.2.1 Letter dated November 18, 1986, from Wausau to
the Registrant and General Agreement of Indemnity
dated January 19, 1987, among Wausau, the Reg-
istrant, Bruce L. Engel and Teri E. Engel. (6)
10.3 Form of Indemnification Agreement for directors,
officers and certain employees effective January
30, 1991. (9)
10.4 Description of Management Profit-Sharing Bonus
Plan. (5)
10.61 WTD Industries, Inc. Retirement Savings Plan
and Trust dated as of May 1, 1989. (7)
10.62 Amendment No. 1 to WTD Industries, Inc. Retirement
Savings Plan and Trust Effective May 1, 1989. (8)
10.63 Amendment No. 2 to WTD Industries, Inc. Retirement
Savings Plan and Trust adopted May 30, 1991. (8)
10.64 Amendment No. 3 to WTD Industries, Inc. Retirement
Savings Plan and Trust adopted June 26, 1992. (8)
10.65 Amendment No. 4 to WTD Industries, Inc. Retirement
Savings Plan and Trust adopted April 30, 1993. (9)
11 Computation of Registrant's Net Income
Per Common Share 54
12.2 Computation of Registrant's Net Income
(Loss) to Average Total Assets. 55
12.3 Computation of Registrant's Net Income
(Loss) to Average Stockholders' Equity
(Deficit). 56
12.4 Computation of Registrant's Average Stock-
holders' Equity (Deficit) to Average Total
Assets. 57
21 Subsidiaries of the Registrant (list updated
as of June 30, 1994). 58
23 Consent of Independent Certified Public
Accountants. 59
(1) Incorporated by reference to the exhibit of like number
to the Registrant's report on Form 8-K dated November 23, 1992.
(2) Incorporated by reference to the exhibit of like number
to the Registrant's quarterly report on Form 10-Q for the quarter
ended October 31, 1992, dated December 14, 1992, previously filed
with the Commission.
(3) Incorporated by reference to the exhibit of like number
to the Registrant's quarterly report on Form 10-Q for the quarter
ended January 31, 1993, dated March 15, 1993, previously filed with
the Commission.
(4) Incorporated by reference to exhibit 6.0 to the
Registrant's Registration Statement on Form S-8 (No. 33-62714)
filed with the Commission on May 14, 1993.
(5) Incorporated by reference to the exhibit of like number
to the Registrant's Registration Statement on Form S-1 (No. 33-
7389) filed with the Commission on July 21, 1986, as amended by
Amendment Nos. 1 through 3 thereto filed with the Commission on
September 3, 1986, October 14, 1986 and October 24, 1986,
respectively.
(6) Incorporated by reference to the exhibit of like number
to the Registrant's Registration Statement on Form S-1 (No. 33-
12644) filed with the Commission on March 16, 1987, as amended by
Amendment Nos. 1 and 2 thereto filed with the Commission on April
1, 1987 and April 24, 1987, respectively.
(7) Incorporated by reference to the exhibit of like number
to the Registrant's annual report on Form 10-K for the year ended
April 30, 1989, previously filed with the Commission.
(8) Incorporated by reference to the exhibit of like number
to the Registrant's annual report on Form 10-K for the year ended
April 30, 1992, previously filed with the Commission.
(9) Incorporated by reference to the exhibit of like number
to the Registrant's annual report on Form 10-K for the year ended
April 30, 1993, previously filed with the Commission.
Except for instruments already filed as exhibits to this Form
10-K, the Registrant agrees to furnish the Commission upon request
a copy of each instrument with respect to long-term debt of the
Registrant and its consolidated subsidiaries, the amount of which
does not exceed 10% of the total assets of the Registrant and its
subsidiaries on a consolidated basis.
Other exhibits listed in Item 601 of Regulation S-K are not
applicable.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
April 30, 1994.
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.
WTD Industries, Inc.
(Registrant)
By: s/ Bruce L. Engel
Bruce L. Engel
President
July 15, 1994
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
s/ Bruce L. Engel s/ K. S. Martin
Bruce L. Engel K. Stanley Martin
President (Principal Executive Officer) Vice President-Finance
and Director (Principal Financial
and Accounting
Officer) and Director
s/ H. Raymond Bingham s/ Scott Christie
H. Raymond Bingham, Director Scott Christie, Director
s/ Howard E. Leppla s/ William H. Wright
Howard E. Leppla, Director William H. Wright, Director
s/ Robert J. Riecke
Robert J. Riecke
Vice President-Administration and
Director
Each of the above signatures is affixed as of July 15, 1994.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders
WTD Industries, Inc.
We have audited the accompanying consolidated balance sheets of WTD
Industries, Inc. and subsidiaries (the "Company") as of April 30,
1994 and 1993, and the related consolidated statements of income,
cash flows and changes in stockholders' equity, for each of the
years in the three-year period ended April 30, 1994. 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 audits 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 consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of WTD Industries, Inc. and subsidiaries as of April 30,
1994 and 1993, and the results of their operations and their cash
flows for each of the years in the three-year period ended April
30, 1994, in conformity with generally accepted accounting
principles.
/s/ Moss Adams
-----------------------------------
MOSS ADAMS
Beaverton, Oregon
June 10, 1994
<TABLE>
WTD INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per-Share Data)
<CAPTION>
YEAR ENDED APRIL 30,
-----------------------------------------------------------
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
NET SALES $ 278,115 $ 246,887 $ 213,896
COST OF SALES 253,732 227,040 195,386
---------- ---------- ----------
GROSS PROFIT 24,383 19,847 18,510
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 12,423 12,615 12,047
REORGANIZATION CHARGES (CREDITS) (2,487) 563 3,272
---------- ---------- ----------
OPERATING INCOME 14,447 6,669 3,191
OTHER INCOME (EXPENSE)
Interest (6,541) (2,864) (235)
Miscellaneous 418 151 36
---------- ---------- ----------
(6,123) (2,713) (199)
---------- ---------- ----------
INCOME BEFORE INCOME TAXES 8,324 3,956 2,992
PROVISION FOR INCOME TAXES 2,024 1,543 1,167
---------- ---------- ----------
INCOME BEFORE
EXTRAORDINARY ITEMS 6,300 2,413 1,825
EXTRAORDINARY ITEMS
Gain on debt restructure, net of
tax provision of $7,700 -- 12,102 --
Tax benefit of NOL carryforward -- 9,243 1,167
---------- ---------- ----------
-- 21,345 1,167
---------- ---------- ----------
NET INCOME 6,300 23,758 2,992
PREFERRED DIVIDENDS 1,616 647 --
---------- ---------- ----------
NET INCOME APPLICABLE TO
COMMON SHAREHOLDERS $ 4,684 $ 23,111 $ 2,992
========== ========== ==========
NET INCOME PER
COMMON SHARE-PRIMARY
Income before
extraordinary items $0.41 $0.29 $0.73
Extraordinary items -- 3.46 0.47
-------- -------- --------
$0.41 $3.75 $1.20
======== ======== ========
NET INCOME PER
COMMON SHARE-FULLY DILUTED
Income before
extraordinary items $0.41 $0.28 $0.73
Extraordinary items -- 3.43 0.47
-------- -------- --------
$0.41 $3.71 $1.20
======== ======== ========
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<TABLE>
WTD INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(In Thousands)
<CAPTION>
APRIL 30,
----------------------------------
1994 1993
---------- ----------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 8,101 $ 2,124
Accounts receivable, net 8,634 19,583
Inventories 26,796 18,322
Prepaid expenses 3,145 2,399
Deferred tax asset 2,197 --
Timber, timberlands and
timber-related assets 11,743 18,998
---------- ----------
Total current assets 60,616 61,426
NOTES AND ACCOUNTS RECEIVABLE 121 161
TIMBER AND TIMBERLANDS 845 847
PROPERTY, PLANT AND EQUIPMENT, at cost
Land 2,602 2,572
Buildings and improvements 10,067 9,953
Machinery and equipment 60,148 59,553
---------- ----------
72,817 72,078
Less accumulated depreciation 42,001 37,839
---------- ----------
30,816 34,239
Construction in progress 1,361 493
---------- ----------
32,177 34,732
IDLE ASSETS 350 974
Less costs of disposal 82 574
---------- ----------
268 400
OTHER ASSETS 3,073 2,473
---------- ----------
$ 97,100 $ 100,039
========== ==========
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<TABLE>
WTD INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
(In Thousands, Except Share Information)
<CAPTION>
APRIL 30,
----------------------------------
1994 1993
---------- ----------
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 3,361 $ 7,390
Accrued expenses 7,656 8,549
Reserve for disputed and unallowed
pre-petition claims 290 1,204
Income taxes payable 283 --
Timber contracts payable 2,292 2,695
Current maturities of long-term debt 1,938 2,333
---------- ----------
Total current liabilities 15,820 22,171
DEFERRED INCOME TAXES PAYABLE 2,181 --
LONG-TERM DEBT, less current maturities 60,587 64,184
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, no par value;
10,000,000 shares authorized:
Series A 20,654 20,581
Series B 333 5,756
Common Stock, no par value 28,617 23,123
Additional paid-in capital 15 15
Retained deficit (31,107) (35,791)
---------- ----------
18,512 13,684
---------- ----------
$ 97,100 $ 100,039
========== ==========
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<TABLE>
WTD INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
<CAPTION>
YEAR ENDED APRIL 30,
---------------------------------------------------------
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES:
Net income $ 6,300 $ 23,758 $ 2,992
Adjustments to reconcile net income to
cash provided by (used for) operations:
Depreciation, depletion and amortization 8,146 13,124 8,178
Deferred income tax (16) -- --
Reorganization charges (2,487) 563 898
Gain on debt restructure, before
income tax provision -- (19,802) --
Accounts receivable 10,949 (4,795) (5,404)
Inventories (8,474) 2,974 (8,963)
Prepaid expenses (746) 208 1,285
Income tax refund receivable -- -- 6,317
Timber, timberlands and
timber-related assets - current 5,691 (7,975) (3,472)
Accruals and payables (5,196) (6,449) 6,409
Income taxes payable 283 -- --
---------- ---------- ----------
Cash provided by operating activities 14,450 1,606 8,240
---------- ---------- ----------
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES:
Notes and accounts receivable (1) 63 10
Net reductions of (additions to) timber
and timberlands 13 (155) (1,137)
Acquisition of property, plant and equipment (4,066) (5,319) (3,410)
Proceeds from sale of securities -- -- 8
Cost of holding idle facilities (125) (996) (2,860)
Proceeds from sale of idle facilities 2,013 4,819 5,324
Other investing activities 281 207 552
---------- ---------- ----------
Cash used for investing activities (1,885) (1,381) (1,513)
---------- ---------- ----------
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES:
Proceeds from long-term borrowings -- -- 142
Principal payments on long-term debt (4,190) (9,646) (369)
Other assets (853) (33) (696)
Restricted cash -- 7,606 (5,453)
Dividends paid on preferred stock (1,616) (776) --
Issuance of Common Stock 71 10 --
---------- ---------- ----------
Cash used for financing activities (6,588) (2,839) (6,376)
---------- ---------- ----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 5,977 (2,614) 351
CASH BALANCE AT BEGINNING OF YEAR 2,124 4,738 4,387
---------- ---------- ----------
CASH BALANCE AT END OF YEAR $ 8,101 $ 2,124 $ 4,738
========== ========== ==========
CASH PAID (REFUNDED) DURING THE YEAR FOR:
Interest $7,229 $2,628 $87
Income taxes $1,742 -- ($6,317)
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<TABLE>
WTD INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(In Thousands)
<CAPTION
SERIES A SERIES B
PREFERRED STOCK PREFERRED STOCK COMMON STOCK ADDITIONAL RETAINED STOCKHOLDERS'
---------------- ---------------- ----------------- PAID-IN EARNINGS EQUITY
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL (DEFICIT) (DEFICIT)
------ --------- ------ --------- ------- --------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at April 30, 1991 -- -- -- -- 6,229 $15,205 $15 ($61,765) ($46,545)
Net income -- -- -- -- -- -- -- 2,992 2,992
------ --------- ------ --------- ------- --------- ---------- ----------- ------------
Balance at April 30, 1992 -- -- -- -- 6,229 15,205 15 (58,773) (43,553)
Four-for-ten reverse split -- -- -- -- (3,737) -- -- -- --
Shares issued pursuant
to reorganization plan 269 20,581 197 10,730 1,869 2,934 -- -- 34,245
Shares converted -- -- (91) (4,974) 3,176 4,974 -- -- --
Stock options exercised -- -- -- -- 11 10 -- -- 10
Dividends paid -- -- -- -- -- -- -- (776) (776)
Net income -- -- -- -- -- -- -- 23,758 23,758
------ --------- ------ --------- ------- --------- ---------- ----------- ------------
Balance at April 30, 1993 269 20,581 106 5,756 7,548 23,123 15 (35,791) 13,684
Shares issued pursuant
to reorganization plan 1 73 -- -- -- -- -- -- 73
Shares converted -- -- (100) (5,423) 3,464 5,423 -- -- --
Stock options exercised -- -- -- -- 49 71 -- -- 71
Dividends paid -- -- -- -- -- -- -- (1,616) (1,616)
Net income -- -- -- -- -- -- -- 6,300 6,300
------ --------- ------ --------- ------- --------- ---------- ----------- ------------
Balance at April 30, 1994 270 $20,654 6 $333 11,061 $28,617 $15 ($31,107) $18,512
====== ========= ====== ========= ====== ========= ========= ========= ============
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
WTD INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation and operations - The consolidated
financial statements include the accounts of WTD Industries, Inc.
and its wholly owned subsidiaries (hereinafter "WTD" or "the
Company"). All significant intercompany accounts and transactions
have been eliminated.
Temporary cash investments and trade receivables potentially
subject the Company to concentrations of credit risk. The Company
places its temporary cash investments with high credit-quality
financial institutions, and by policy limits the amount of credit
exposure to any one institution. The Company reviews a customer's
credit history before extending credit and consistently evaluates
its accounts receivable. Concentrations of credit risk on trade
receivables are limited due to the Company's large number of
customers and their widely varying locations. Generally, the
Company does not require collateral or other security to support
its trade receivables.
The Company is engaged in one industry segment, the
manufacture and sale of wood products. Sales are predominantly in
the United States; export sales are not material. During the year
ended April 30, 1994, WTD had no sales to any one customer in
excess of 10 percent of net sales. During the year ended April 30,
1993, the Company had sales to one major customer of $32,162,000,
or 13 percent of net sales. The loss of any one customer would
not, in the opinion of management, have a material adverse impact
on the financial results of the Company.
WTD has from time to time utilized futures contracts to
minimize the Company's exposure to adverse movements in the log and
lumber markets. This activity has not been significant in the past
and the Company had no material futures position at April 30, 1994.
Cash and cash equivalents - Financial instruments with a
maturity of three months or less are considered to be cash
equivalents.
Accounts receivable - Trade accounts receivable are shown net
of allowances for doubtful accounts and discounts of $658,000 and
$639,000 at April 30, 1994 and 1993, respectively.
Inventories - Inventories are valued at the lower of cost or
market. Cost is determined using the average cost and first-in,
first-out (FIFO) methods. A summary of inventory by principal
product classification follows (in thousands):
APRIL 30,
1994 1993
-------- --------
Logs $ 11,777 $ 7,569
Lumber 13,818 9,515
Supplies 1,201 1,238
-------- --------
$ 26,796 $ 18,322
======== ========
At April 30, 1994 and 1993, $3,094,000 and $4,671,000,
respectively, of log inventory was valued at market, which
represented reductions of $19,000 and $878,000, respectively, from
cost. At both April 30, 1994 and 1993, all lumber inventory was
valued at market, which represented reductions of $2,511,000 and
$3,184,000, respectively, from cost.
Property, plant and equipment - Property, plant and equipment
of the Company's facilities are stated at cost. For financial
reporting purposes, the Company uses the units-of-production method
for computing depreciation over the estimated useful lives of
assets, ranging from ten to thirty years for buildings and
improvements, and three to ten years for machinery and equipment.
Idle assets - Property, plant and equipment of the Company's
idle facilities are carried at their estimated net realizable
values, including a reserve for estimated holding and disposal
costs.
Timber and timberlands - Timber and timberlands are stated at
the lower of aggregate cost or estimated disposal value, less the
amortized cost of timber harvested. The portion of the cost
attributable to standing timber is charged against income as timber
is cut, at rates determined periodically based on the relationship
between unamortized timber value and the estimated volume of
recoverable timber. The costs of roads and land improvements are
capitalized and amortized over their economic lives. The Company
classifies timber and timber-related assets as current or long-term
assets based upon expected harvest and disposal plans.
Timber-cutting contracts - The Company purchases timber under
various types of contracts. Certain contracts, for which the total
purchase price is fixed, are recorded as assets along with the
related liability at the date acquired. The remaining contracts,
for which the total purchase price depends on the volume of timber
removed, are considered to be commitments (as discussed in Note 9)
and are not recorded until the timber is removed.
Income taxes - Income taxes are provided for transactions in
the year in which they are reflected in earnings, even though they
may be reported for tax purposes in a different year. The
resulting difference between taxes charged to operations and taxes
paid is reported as deferred income taxes. Tax credits are
recognized in the year utilized, using the flow-through method.
Effective May 1, 1993, the Company adopted Statement of Financial
Accounting Standard Number 109 "Accounting for Income Taxes". No
gain or loss was recorded as a result of implementing this
pronouncement. (See Note 6.)
Net income per common share - This computation is based on net
income less preferred dividends for the period, divided by the
weighted average number of shares of Common Stock and equivalents
assumed to be outstanding during the period. Anti-dilutive Common
Stock equivalents are excluded from the calculations. Net income
per common share for the year ended April 30, 1992 has been
restated to reflect a four-for-ten "reverse" common stock split
which occurred on November 30, 1992. For purposes of primary
earnings per share, weighted average shares of 11,433,000,
6,166,000 and 2,492,000 were used for the years ended April 30,
1994, 1993 and 1992, respectively. For purposes of fully diluted
earnings per share, weighted average shares of 11,519,000,
6,231,000 and 2,492,000 were used for the years ended April 30,
1994, 1993 and 1992, respectively. The weighted average number of
common shares and equivalents for both primary and fully diluted
purposes in the years ended April 30, 1994 and 1993 includes
213,000 and 2,367,000 shares, respectively, assumed from the
potential conversion of Series B preferred stock.
NOTE 2 - REORGANIZATION CHARGES (CREDITS)
On or about January 30, 1991, the Company and each of its
subsidiaries filed for protection under Chapter 11 of the Federal
Bankruptcy Code. On November 23, 1992, the U.S. Bankruptcy Court
for the Western District of Washington (the "Bankruptcy Court")
confirmed the Company's Second Amended Joint Plan of Reorganization
(the "Plan"), effective November 30, 1992 (the "Effective Date").
Under the Plan, the Company discharged substantially all of its
outstanding prepetition liabilities through cash payments,
abandonment of assets, and issuance of replacement debt, Series A
and Series B preferred stock and new Common Stock. The Company
also recorded a $19.8 million ($12.1 million net of income tax
provision) extraordinary gain on debt restructure as a result of
the Plan. Existing common shareholders retained 2.5 million
shares, or approximately 57 percent of the outstanding common
shareholder interest after recognition of a four-for-ten "reverse"
common stock split and issuance of 1,868,800 shares of new Common
Stock. The interest of the original common shareholders will be
further reduced to 22 percent if all Series B preferred stock were
converted into common shares (see Note 7).
In fiscal 1991, the Company reduced the scope of its
operations. To reflect this event, management reduced the value of
assets associated with eighteen of the Company's facilities to
estimated net realizable value and established certain reserves for
expenses related to the cost of holding and disposing of such
facilities. This resulted in reorganization charges of $58 million
in fiscal 1991. In fiscal years 1992, 1993 and 1994, the Company
sold idle assets and settled obligations at amounts which varied
from their original estimated net realizable amounts.
Reorganization charges in fiscal years 1992 and 1993 principally
reflect changes made to these estimated amounts, net gains recorded
on the disposal of certain idle assets, and professional fees
associated with the bankruptcy proceedings. Reorganization credits
in fiscal 1994 primarily related to gains recognized on the sale of
idle facilities at amounts in excess of their originally estimated
net realizable values. The Company's remaining idle assets are
valued at amounts which management believes approximate their
current net realizable values.
NOTE 3 - TIMBER, TIMBERLANDS AND TIMBER-RELATED ASSETS
The following summarizes the components of timber, timberlands
and timber-related assets (in thousands):
APRIL 30,
1994 1993
-------- --------
Timber held under contract $ 6,730 $ 8,721
Timber, timberlands and timber deposits 4,936 10,094
Logging roads (at amortized cost) 77 183
-------- --------
$ 11,743 $ 18,998
======== ========
Timber and timberlands, long-term $ 845 $ 847
======== ========
Timber held under contract is comprised of various public and
private timber contracts representing approximately 19 million
board feet (MMBF) at April 30, 1994 and 33 MMBF at April 30, 1993.
Outstanding obligations relating to these contracts at April 30,
1994 and 1993, were $2,292,000 and $2,695,000, respectively.
NOTE 4 - ACCRUED EXPENSES
The following is a summary of the components of accrued
expenses (in thousands):
APRIL 30,
1994 1993
-------- --------
Payroll and related items $ 5,442 $ 5,135
Freight payable 868 1,124
Other 1,346 2,290
-------- --------
$ 7,656 $ 8,549
======== ========
NOTE 5 - LONG-TERM DEBT
Long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
APRIL 30,
-----------------------
1994 1993
----------- -----------
<S> <C> <C>
Senior secured debt, bearing interest at 10%; principal
payable in quarterly installments of $400 beginning
March 15, 1995, then quarterly installments of $1,000
beginning March 15, 1999, and a final payment in
December 2004; secured by substantially all assets of
the Company not otherwise encumbered. $56,894 $58,556
Secured notes, interest at rates from 8.8% to 11%;
payable on various dates; secured by various assets. 1,931 3,085
Priority notes, payments of $217 annually over two year
term and then payments of $17 annually over the
following two years, plus interest at 8.3%; senior to all
other unsecured obligations. 468 610
Unsecured Senior Subordinated Notes, net of discount
of $624 ($945 at April 30, 1993); 8% coupon, effective
interest rate of 13.3%; semi-annual interest payments
each June 30 and December 31; principal due in full
June 30, 2005. 1,435 2,055
Other unsecured debt, net of discount of $592 ($904 at
April 30, 1993); payable in equal annual installments of
$478; non-interest bearing; effective interest rate of
12.3%. 1,797 2,211
----------- -----------
$62,525 $66,517
Less current maturities (1,938) (2,333)
----------- -----------
$60,587 $64,184
=========== ===========
</TABLE>
The Company's debt agreements include covenants for
maintaining specified levels of income, cash flow, working capital,
and collateral coverage. These agreements also impose certain
restrictions and limitations on capital expenditures, investments,
dividend payments, new indebtedness, and transactions with
officers, directors, shareholders and affiliates. Included in
these covenants is the requirement to maintain tangible net worth
of $8 million at April 30, 1994, and adjusted cumulative operating
income (as defined) of $10 million. At April 30, 1994, the
Company's tangible net worth and adjusted cumulative operating
income were $17.5 million and $21.0 million, respectively. These
debt covenants contain escalation provisions in fiscal 1995 and
over the term of the agreement. At May 1, 1994, the tangible net
worth covenant increases to $10 million. The adjusted cumulative
operating income covenant increases to $20 million at August 1,
1994, and $33 million at August 1, 1995. During the year ended
April 30, 1994, the Company's adjusted cumulative operating income
increased by $14.7 million despite net income of only $6.3 million.
In accordance with the Company's agreements associated with
its senior secured debt, mandatory additional prepayments are
required if the Company's cumulative operating income exceeds
certain specified amounts. No such prepayment will be required for
the year ended April 30, 1994.
Future minimum repayments under the terms of the debt are as
follows (in thousands):
1995 $ 1,938
1996 2,958
1997 1,961
1998 2,003
1999 2,695
thereafter 50,970
--------
$ 62,525
========
NOTE 6 - PROVISION FOR INCOME TAXES
Effective May 1, 1993, the Company adopted Statement of
Financial Accounting Standard (SFAS) Number 109, "Accounting for
Income Taxes." This statement mandates the asset and liability
approach to determining income tax provision or benefit. Deferred
income tax benefits and liabilities are recognized for the tax
consequences of temporary differences in the carrying value of
assets and liabilities for financial reporting and income tax
purposes. The cumulative effect of adopting SFAS Number 109 as of
May 1, 1993 was not material. The Company's prior year financial
statements have not been restated for the provisions of this
pronouncement. The federal and state income tax provision consists
of the following (in thousands):
YEAR ENDED APRIL 30,
--------------------------------
1994 1993 1992
-------- -------- --------
Income before income taxes $ 8,324 $ 3,956 $ 2,992
Income tax provision:
Federal $ 1,984 $ 1,345 $ 1,017
State 40 198 150
-------- -------- --------
$ 2,024 $ 1,543 $ 1,167
======== ======== ========
Current $ 2,040 $ -- $ --
Deferred (16) -- --
-------- -------- --------
$ 2,024 $ -- $ --
======== ======== ========
The fiscal 1993 and 1992 tax provisions were calculated at
statutory rates and the estimated benefits of net operating loss
(NOL) carryforwards were recognized as extraordinary items. The
tax benefit of NOL carryforwards in fiscal 1993 includes $7.7
million associated with the extraordinary gain on debt restructure.
The income tax provision in fiscal 1993 and 1992 differs from
the amount computed by applying the federal statutory rate
principally as a result of state income taxes. The income tax
provision in fiscal 1994 differs from the amount computed by
applying the federal statutory rate principally as a result of
recognizing the tax benefits of NOL carryforwards.
SFAS Number 109 requires that all current deferred tax assets
and liabilities be grouped and reported as one amount and that all
noncurrent deferred tax assets and liabilities be grouped and
reported as one amount. Classification as current or noncurrent
is based upon the classification of the related asset or liability
for financial reporting. For deferred tax amounts that do not
relate to an asset or liability for financial reporting,
classification is to be based upon the expected utilization. At
April 30, 1994, deferred tax assets and liabilities were comprised
of the following (in thousands):
Current Deferred Tax Assets:
Non-deductible accruals $ 1,953
Reserves for doubtful accounts and discounts 244
Tax benefit of net operating loss carryforward 11,028
Valuation allowance against tax benefit of net
operating loss carryforward (11,028)
--------
2,197
Non-Current Deferred Tax Liabilities:
Differences in depreciation and capitalization
of assets for financial reporting and tax
purposes (2,181)
--------
Net deferred tax asset $ 16
========
The Company has NOL carryforwards of approximately $27 million
for regular federal income tax, $25 million for alternative minimum
tax and $28 million for state tax purposes. These net operating
losses will expire in 2006 and 2007. As a result of the Company's
reorganization as discussed in Note 2, the amount of NOL which can
be utilized is limited to approximately $3.3 million in fiscal 1994
and $2.3 million in each succeeding year. While management
believes that some or all of the NOL carryforwards will be utilized
in future periods, the volatility of the Company's operating
environment and a desire to be conservative in the adoption of SFAS
Number 109 has resulted in the recognition of a valuation allowance
for the full amount of the future benefit associated with NOL
carryforwards.
NOTE 7 - STOCKHOLDERS' EQUITY
Stockholders' equity at April 30, 1994 consists of the
following:
Series A preferred stock, $100 per share liquidation
preference; 500,000 shares authorized; 269,636 shares issued and
outstanding, limited voting rights; cumulative dividends payable
quarterly in advance at the prime rate, with a minimum rate of 6%
and a maximum rate of 9%; convertible into Common Stock at $7.50
per share after April 30, 1999; redeemable at original issue price
plus any accrued dividends at the option of the Board of Directors,
in the form of cash or in exchange for senior unsecured debt with
12% coupon. The holders of the Series A preferred stock will be
granted voting control of the Company's Board of Directors in the
event the Company misses three consecutive quarterly dividend
payments, four quarterly dividend payments within twenty-four
months or a total of eight quarterly dividend payments.
Series B preferred stock, $100 per share liquidation
preference; 500,000 shares authorized; 6,111 shares issued and
outstanding; limited voting rights; convertible into 212,693
shares of Common Stock; dividends payable only if paid on the
Company's Common Stock; redeemable at original issue price plus
accrued dividends at the option of the Board of Directors after all
Series A preferred stock has been redeemed.
Common Stock, no par value; 40,000,000 shares authorized;
11,061,074 shares issued and outstanding. Before giving effect to
any shares that might be issued pursuant to the management
incentive stock option plan or conversion of any Series A preferred
stock, the total number of common shares would increase to
11,273,767 shares if the remaining outstanding Series B preferred
stock is converted to Common Stock.
NOTE 8 - STOCK OPTIONS, WARRANTS AND EMPLOYEE BENEFIT PLANS
All then-outstanding options under the Company's Stock Option
Plan ("Option Plan") were canceled effective October 1, 1992.
Effective December 30, 1992, the Option Plan was amended and
restated, and new options were granted. Non-qualified stock
options may be granted to directors, independent contractors,
consultants, and employees, and incentive stock options may be
granted to employees, to acquire up to 1,245,900 shares of Common
Stock. Options may be granted for a term not to exceed 10 years
and are not transferable other than by will or the laws of descent
and distribution. The Option Plan terminates on July 11, 1996, or
such earlier time as the Board of Directors may determine. The
Option Plan provides for incremental vesting based upon the
optionee's period of service with the Company and is administered
by the Compensation Committee of the Board of Directors.
Following is a summary of the activity with respect to the
Option Plan for the year ended April 30, 1994:
<TABLE>
<CAPTION>
Non-Employee
Employee Stock Options Stock Options
----------------------- -----------------------
Option Number of Option Number of
Price Shares Price Shares
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Shares under option at April 30, 1993 $.95625
to $3.00 646,200 $1.50 140,000
Options granted May 3, 1993 $3.00 119,600 $3.00 40,000
Options exercised $.95625
to $1.50 (60,800) --
Options cancelled $.95625
to $3.00 (54,600) --
----------- -----------
Shares under option at April 30, 1994 650,400 180,000
=========== ===========
Shares exercisable at April 30, 1994 306,120 146,250
=========== ===========
</TABLE>
Options for 354,700 shares remain available for grant. The
balance of the options will have an exercise price of the greater
of $3.00 per share or an amount per share determined by the Plan
Administrator, but not less than 85 percent of the fair market
value of the Company's Common Stock on the date of grant.
The Company maintains a weekly discretionary bonus program for
its mill workers based on the performance of each production shift
at individual mills. The bonus program for mill workers is
designed to reward productivity, safety and regular attendance.
The Company also has a monthly discretionary profit sharing bonus
program for management and administrative employees. Profit
sharing bonuses are based on net pre-tax profits and are generally
allocated according to base salary level. Amounts paid under all
bonus programs were approximately $8,500,000, $7,400,000, and
$7,800,000 in fiscal years 1994, 1993 and 1992, respectively.
The Company maintains a 401(k) Retirement Savings Plan. Under
the plan, eligible participants may contribute 2 percent to 20
percent of their compensation. The Company matches contributions
of employees participating in the Production/Safety/Attendance
Bonus program on a monthly basis in an amount as determined from
time to time by the Board of Directors. Salaried employees are not
generally entitled to matching contributions. During the years
ended April 30, 1994, 1993 and 1992 the Company incurred expenses
for matching contributions and plan administration of $391,000;
$402,000; and $338,000; respectively. Company contributions to
this plan are funded on a current basis.
NOTE 9 - COMMITMENTS AND CONTINGENCIES
(a) Timber commitments - At April 30, 1994, the Company had
contracts to purchase approximately 26 MMBF of timber from the U.S.
Forest Service and others for an estimated stumpage cost of $9.3
million. Deposits were made on these contracts and additional
payments are required as timber is removed. The Company intends to
harvest the remaining timber under these contracts prior to April
30, 1995.
(b) Leases - At April 30, 1994, the Company had future
minimum rental commitments for new or assumed operating leases as
follows: 1995 - $950,000; 1996 - $779,000; 1997 - $317,000; 1998
- - - - $253,000; 1999 - $245,000; thereafter - $292,000.
Total rental expense for all leases was $1,131,000, $1,199,000
and $1,219,000 for the years ended April 30, 1994, 1993 and 1992,
respectively. Actual rental expense includes short-term rentals
and leases shorter than one year, which are not included in the
commitments.
(c) Litigation - On November 30, 1990, the Company received
a tax assessment from the State of Washington for Business and
Occupation (B&O) taxes in the amount of approximately $900,000,
including interest and penalties. The tax was assessed against
TreeSource, Inc., a wholly owned subsidiary which acts as the
Company's sales agent, based on sales made by TreeSource on behalf
of the Company's Washington mills. B&O taxes were in fact paid by
the Company's Washington mills on their sales. On May 19, 1994,
the Court ordered that TreeSource's liability under this assessment
was approximately $83,000. This liability is fully reflected in
the Company's financial statements, and will be discharged pursuant
to the Company's Plan of Reorganization.
Certain claims arising from the Company's reorganization have
not been settled. A reserve of $290,000 was included as a current
liability at April 30, 1994 to reflect the aggregate estimated
liability of such claims.
The Company is involved in other litigation primarily arising
in the normal course of its business. In the opinion of
management, the Company's liability, if any, under such pending
litigation will not have a material impact upon the Company's
consolidated financial condition or results of operations.
NOTE 10 - NON-CASH INVESTING AND FINANCING ACTIVITIES
In the year ended April 30, 1992, WTD abandoned one of its
idle facilities and certain machinery to the secured lenders of
such assets. At the same time, the Company offset corresponding
claims for debt and accrued interest of approximately $688,000.
In connection with the Company's reorganization, certain of
the Company's liabilities were discharged in fiscal 1993 through
the issuance of various debt and equity securities with a market
value of $101.1 million.
These transactions affected the financial position of the
Company but did not directly affect its cash flow during the
periods presented.
NOTE 11 - UNAUDITED QUARTERLY FINANCIAL INFORMATION
The following quarterly information for the years ended April
30, 1994 and 1993 is unaudited but includes all adjustments (which
consist of normal recurring adjustments) which management considers
necessary for a fair presentation of such information (in
thousands, except per-share amounts):
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30, 1994
-----------------------------------------------------------
QUARTER
------------------------------------------------
FIRST SECOND THIRD FOURTH TOTAL
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net sales $53,859 $65,885 $85,673 $72,698 $278,115
Gross Profit 1,297 6,873 11,203 5,010 24,383
Net income (loss) ($1,619) $2,494 $3,974 $1,451 $6,300
Net income (loss) per common share ($0.23) $0.18 $0.31 $0.09 $0.41
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30, 1993
-----------------------------------------------------------
QUARTER
------------------------------------------------
FIRST SECOND THIRD FOURTH TOTAL
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net sales $63,628 $57,186 $49,706 $76,367 $246,887
Gross Profit 2,320 4,103 4,530 8,894 19,847
Income (loss) before extraordinary
items (1,191) 574 1,101 1,929 2,413
Net income (loss) ($1,191) $574 $20,990 $3,385 $23,758
Net income (loss) per common share
Before extraordinary items ($0.48) $0.23 $0.10 $0.13 $0.29
Extraordinary items -- -- 2.35 0.13 3.46
------ ------ ------ ------ ------
($0.48) $0.23 $2.45 $0.26 $3.75
====== ====== ====== ====== ======
</TABLE>
Net income (loss) per common share for the quarters ended July
31 and October 31, 1992 have been restated to reflect the four-for-
ten "reverse" split of the Company's Common Stock outstanding
immediately prior to the issuance of new Common Stock to discharge
certain prepetition claims on November 30, 1992.
In the quarter ended January 31, 1993, the Company recorded an
extraordinary gain on debt restructure of $12.1 million, net of a
tax provision of $7.7 million.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULES
To the Shareholders
WTD Industries, Inc.
In connection with our audit of the consolidated financial
statements included in WTD Industries, Inc. 1994 Form 10-K, we have
also audited the financial statement schedules listed in the index
beginning on Page 26 of this Form 10-K. Our audit of the
consolidated financial statements was made for the purpose of
forming an opinion on those statements taken as a whole. The
financial statement schedules are presented for purposes of
complying with the Securities and Exchange Commission's rules and
are not part of the basic financial statements. These financial
statement schedules have been subjected to the auditing procedures
applied in our audit of the basic financial statements and, in our
opinion, fairly state in all material respects the financial data
required to be set forth therein in relation to the basic financial
statements taken as a whole.
/s/ Moss Adams
-----------------------------------
MOSS ADAMS
Beaverton, Oregon
June 10, 1994
<TABLE>
WTD INDUSTRIES, INC. AND SUBSIDIARIES SCHEDULE V
PROPERTY, PLANT AND EQUIPMENT
YEARS ENDED APRIL 30, 1994, 1993 AND 1992
(In Thousands)
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
Balance at Other Changes Balance
Beginning Additions -------------------------- at End
Classification of Year at Cost (1) Retirements Additions Deductions of Year
-------------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
1992:
Timber and Timberlands
- - - ---------------------- $189 (5)
Timber and timber-related assets $335 $145 -- $2,021 (3) 2,130 (2) $182
Timberlands 353 -- 8 189 (5) -- 534
------- ------- ------- ------- ------- -------
$688 $145 $8 $2,210 $2,319 $716
======= ======= ======= ======= ======= =======
Property, Plant and Equipment
- - - -----------------------------
Land $2,734 -- $2 -- -- $2,732
Buildings and improvements 9,201 138 320 -- 11 (5) 9,008
Machinery and equipment 55,605 1,994 1,118 3 (5) 11 (5) 56,473
Construction in progress 315 1,278 50 -- 5 (5) 1,538
------- ------- ------- ------- ------- -------
$67,855 $3,410 $1,490 $3 $27 $69,751
======= ======= ======= ======= ======= =======
1993:
Timber and Timberlands
- - - ----------------------
Timber and timber-related assets $182 -- $25 -- $37 (5) $120
Timberlands 534 156 -- 37 (5) -- 727
------- ------- ------- ------- ------- -------
$716 $156 $25 $37 $37 $847
======= ======= ======= ======= ======= =======
Property, Plant and Equipment
- - - -----------------------------
$110 (4)
Land $2,732 -- -- -- 50 (5) $2,572
Buildings and improvements 9,008 764 3 541 (5) 357 (4) 9,953
1,895 (4)
Machinery and equipment 56,473 5,711 511 -- 225 (5) 59,553
Construction in progress 1,538 (1,156) 5 122 (5) 6 (4) 493
------- ------- ------- ------- ------- -------
$69,751 $5,319 $519 $663 $2,643 $72,571
======= ======= ======= ======= ======= =======
1994:
Timber and Timberlands
- - - ----------------------
Timber and timber-related assets $120 -- -- -- -- $120
Timberlands 727 -- 2 -- -- 725
------- ------- ------- ------- ------- -------
$847 -- $2 -- -- $845
======= ======= ======= ======= ======= =======
Property, Plant and Equipment
- - - -----------------------------
Land $2,572 $30 -- -- -- $2,602
Buildings and improvements 9,953 353 239 -- -- 10,067
Machinery and equipment 59,553 3,137 2,212 -- 330 (5) 60,148
Construction in progress 493 546 8 330 (5) -- 1,361
------- ------- ------- ------- ------- -------
$72,571 $4,066 $2,459 $330 $330 $74,178
======= ======= ======= ======= ======= =======
<FN>
(1) Acquired from third parties for cash or the assumption of debt, and includes transfers of construction
in progress outstanding at end of prior period which were completed during the current period.
(2) Cost basis of timber harvested, including portions associated with current portion of timber and timber-related items.
(3) Cost basis of timber harvested, which cost was classified as a current asset.
(4) Reduction in carrying value of certain assets to net realizable value and reclassification to idle assets.
(5) Reclassification between accounts.
</TABLE>
<TABLE>
WTD INDUSTRIES, INC. AND SUBSIDIARIES SCHEDULE VI
ACCUMULATED DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT
YEARS ENDED APRIL 30, 1994, 1993 AND 1992
(In Thousands)
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
--------------------------
Additions
Balance at Charged to Other Changes Balance
Beginning Costs and -------------------------- at End
Description of Year Expenses (1) Retirements Additions Deductions of Year
-------------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
1992:
Buildings and improvements $2,425 $522 $124 $684 (3) -- $3,507
Machinery and equipment 24,905 5,188 705 -- 684 (3) 28,704
------- ------- ------- ------- ------- -------
$27,330 $5,710 $829 $684 $684 $32,211
======= ======= ======= ======= ======= =======
Depreciation, amortization and cost of
timber harvested:
Depreciation charged to reserves per
above $5,710
Cost basis of timber harvested credited
directly to asset accounts 2,130
Amortization of other assets 338
-------
$8,178
=======
1993:
Buildings and improvements $3,507 $557 $2 $173 (3) $84 (2) $4,151
278 (3)
Machinery and equipment 28,704 5,777 314 -- 201 (2) 33,688
------- ------- ------- ------- ------- -------
$32,211 $6,334 $316 $173 $563 $37,839
======= ======= ======= ======= ======= =======
Depreciation, amortization and cost of
timber harvested:
Depreciation charged to reserves per
above $6,334
Cost basis of timber harvested credited
directly to asset accounts 6,531
Amortization of other assets 259
-------
$13,124
=======
1994:
Buildings and improvements $4,151 $565 $239 $3 (3) $448 (3) $4,032
Machinery and equipment 33,688 5,775 1,944 450 (3) -- 37,969
------- ------- ------- ------- ------- -------
$37,839 $6,340 $2,183 $453 $448 $42,001
======= ======= ======= ======= ======= =======
Depreciation, amortization and cost of
timber harvested:
Depreciation charged to reserves per
above $6,340
Cost basis of timber harvested credited
directly to asset accounts 1,553
Amortization of other assets 253
-------
$8,146
=======
(1) Provisions for depreciation have been computed using straight-line and units of production methods
over estimated useful lives of assets, generally ranging from 10 to 30 years for buildings and 3 to 10
years for machinery and equipment.
(2) Accumulated depreciation on assets written down to estimated net realizable value and reclassified as
idle assets.
(3) Reclassification between accounts.
</TABLE>
<TABLE>
WTD INDUSTRIES, INC. AND SUBSIDIARIES SCHEDULE VIII
VALUATION AND QUALIFYING RESERVES
YEARS ENDED APRIL 30, 1994, 1993 AND 1992
(In Thousands)
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
ADDITIONS
-----------------------
Balance at Charged to Charged to Balance at
Beginning Costs and Other End of
Description of Year Expenses Accounts Deductions (1) Year
----------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts -
deducted from accounts receivable
in the balance sheet
1992 $435 -- -- $128 $307
1993 $307 $268 -- $71 $504
1994 $504 $458 -- $378 $584
Allowance for discounts -
deducted from accounts receivable
in the balance sheet
1992 $76 $1,812 -- $1,787 $101
1993 $101 $2,135 -- $2,101 $135
1994 $135 $2,520 -- $2,581 $74
<FN>
(1) Uncollected receivables written off, net of recoveries, and discounts taken by customers.
</TABLE>
<TABLE>
WTD INDUSTRIES, INC. AND SUBSIDIARIES SCHEDULE IX
SHORT-TERM BORROWINGS
YEARS ENDED APRIL 30, 1994, 1993 AND 1992
(In Thousands)
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
Weighted Maximum Weighted
Average Amount Average Amount Average
Category of Aggregate Balance at Interest Rate Outstanding Outstanding Interest Rate
Short-Term Borrowings End of Year at Year-End During Year During Year During the Year
--------------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
1992:
Financial Institutions $7,986 7.0% $7,986 $7,986 (1)
1993:
Financial Institutions -- -- $7,986 $7,986 (1),(2)
1994:
Financial Institutions -- -- -- -- --
Average borrowings and interest rates determined using amounts outstanding at end of each month.
(1) Under the bankruptcy code, no interest was paid or accrued during the year for this obligation.
(2) This obligation was discharged on November 30, 1992 pursuant to the Company's Plan of Reorganization.
</TABLE>
<TABLE>
WTD INDUSTRIES, INC. AND SUBSIDIARIES
SUPPLEMENTARY INCOME STATEMENT INFORMATION SCHEDULE X
YEARS ENDED APRIL 30, 1994, 1993 AND 1992
(In Thousands)
<CAPTION>
COLUMN A COLUMN B
Charged to Costs and Expenses
In Year Ended April 30,
---------------------------------
Item 1994 1993 1992
------- ------- ------- -------
<S> <C> <C> <C>
Maintenance and repairs $8,759 $8,597 $7,839
<FN>
There were no material costs for (1) depreciation and amortization of intangible assets, pre-operating
costs and similar deferrals, (2) advertising, (3) taxes other than payroll and income taxes, or (4) royalties,
for the years ended April 30, 1994, 1993 and 1992.
</TABLE>
<TABLE>
Exhibit 11
WTD INDUSTRIES, INC. AND SUBSIDIARIES
COMPUTATION OF REGISTRANT'S NET INCOME PER COMMON SHARE
(In Thousands, Except Per-Share Data)
<CAPTION>
YEAR ENDED APRIL 30,
-----------------------------------------------------------
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
INCOME BEFORE EXTRAORDINARY ITEMS $ 6,300 $ 2,413 $ 1,825
EXTRAORDINARY ITEMS -- 21,345 1,167
---------- ---------- ----------
NET INCOME 6,300 23,758 2,992
PREFERRED DIVIDENDS 1,616 647 --
---------- ---------- ----------
NET INCOME APPLICABLE TO
COMMON SHAREHOLDERS $ 4,684 $ 23,111 $ 2,992
========== ========== ==========
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES (1) 9,477 3,744 2,492
ADDITIONAL SHARES ASSUMED FROM:
Conversion of Series B
preferred stock 1,770 2,367 --
Exercise of stock options 186 55 --
---------- ---------- ----------
AVERAGE NUMBER OF SHARES AND
EQUIVALENTS OUTSTANDING
- PRIMARY BASIS 11,433 6,166 2,492
ADDITIONAL SHARES ASSUMED FROM
EXERCISE OF STOCK OPTIONS 86 65 --
---------- ---------- ----------
AVERAGE NUMBER OF SHARES AND
EQUIVALENTS OUTSTANDING
- ASSUMING FULL DILUTION 11,519 6,231 2,492
========== ========== ==========
NET INCOME PER COMMON SHARE
- PRIMARY BASIS
Before extraordinary items $0.41 $0.29 $0.73
Extraordinary items 0.00 3.46 0.47
---------- ---------- ----------
$0.41 $3.75 $1.20
========== ========== ==========
NET INCOME PER COMMON SHARE
- ASSUMING FULL DILUTION
Before extraordinary items $0.41 $0.28 $0.73
Extraordinary items 0.00 3.43 0.47
---------- ---------- ----------
$0.41 $3.71 $1.20
========== ========== ==========
<FN>
(1) Adjusted for four-for-ten "reverse" common stock split on November 30, 1992.
</TABLE>
<TABLE>
Exhibit 12.2
WTD INDUSTRIES, INC. AND SUBSIDIARIES
COMPUTATION OF REGISTRANT'S NET INCOME (LOSS)
TO AVERAGE TOTAL ASSETS
(In Thousands, Except Ratios)
<CAPTION>
YEAR ENDED APRIL 30,
-----------------------------------------------------------
1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
NET INCOME (LOSS) $ 6,300 $ 23,758 $ 2,992 $ (85,152)$ (1,487)
========== ========== ========== ========== ==========
AVERAGE TOTAL ASSETS
Beginning of period $ 100,039 $ 113,561 $ 106,038 $ 220,930 $ 184,900
End of period 97,100 100,039 113,561 106,038 220,930
Average $ 98,570 $ 106,800 $ 109,800 $ 163,484 $ 202,915
========== ========== ========== ========== ==========
RATIO OF NET INCOME (LOSS) TO
AVERAGE TOTAL ASSETS 6.4 % 22.2 % 2.7 % (52.1)% (0.7)%
</TABLE>
<TABLE>
Exhibit 12.3
WTD INDUSTRIES, INC. AND SUBSIDIARIES
COMPUTATION OF REGISTRANT'S NET INCOME (LOSS)
TO AVERAGE STOCKHOLDERS' EQUITY (DEFICIT)
(In Thousands, Except Ratios)
<CAPTION>
YEAR ENDED APRIL 30,
-----------------------------------------------------------
1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
NET INCOME (LOSS) $ 6,300 $ 23,758 $ 2,992 $ (85,152)$ (1,487)
========== ========== ========== ========== ==========
AVERAGE STOCKHOLDERS' EQUITY
(DEFICIT)
Beginning of period $ 13,684 $ (43,553)$ (46,545)$ 38,607 $ 40,724
End of period 18,512 13,684 (43,553) (46,545) 38,607
Average $ 16,098 $ (14,935)$ (45,049)$ (3,969)$ 39,666
========== ========== ========== ========== ==========
RATIO OF NET INCOME (LOSS) TO
AVERAGE STOCKHOLDERS'
EQUITY (DEFICIT) 39.1 % NM NM NM (3.7)%
<FN>
NM - Not meaningful
</TABLE>
<TABLE>
Exhibit 12.4
WTD INDUSTRIES, INC. AND SUBSIDIARIES
COMPUTATION OF REGISTRANT'S AVERAGE STOCKHOLDERS'
EQUITY (DEFICIT) TO AVERAGE TOTAL ASSETS
(In Thousands, Except Ratios)
<CAPTION>
YEAR ENDED APRIL 30,
-----------------------------------------------------------
1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
AVERAGE STOCKHOLDERS' EQUITY
(DEFICIT)
Beginning of period $ 13,684 $ (43,553)$ (46,545)$ 38,607 $ 40,724
End of period 18,512 13,684 (43,553) (46,545) 38,607
Average $ 16,098 $ (14,935)$ (45,049)$ (3,969)$ 39,666
========== ========== ========== ========== ==========
AVERAGE TOTAL ASSETS
Beginning of period $ 100,039 $ 113,561 $ 106,038 $ 220,930 $ 184,900
End of period 97,100 100,039 113,561 106,038 220,930
Average $ 98,570 $ 106,800 $ 109,800 $ 163,484 $ 202,915
========== ========== ========== ========== ==========
RATIO OF AVERAGE STOCKHOLDERS'
EQUITY (DEFICIT) TO AVERAGE
TOTAL ASSETS 16.3 % NM NM NM 19.5 %
<FN>
NM - Not meaningful
</TABLE>
Exhibit 21
WTD Industries, Inc.
Subsidiaries of the Registrant
As of June 30, 1994
Grouped by State of Incorporation
Oregon
Alturas Lumber Co.
Burke Lumber Co.
Central Point Lumber Co.
Cottage Grove Lumber Co.
Crater Lake Lumber Co.
Custer Lumber Co.
Eugene Wood Products Co.
Glide Lumber Products Co.
Goshen Veneer Co.
Halsey Veneer Co.
Judith Gap Lumber Co.
Junction City Lumber Co.
Midway Forest Products Co.
North American Enterprises, Inc.
North Powder Lumber Co.
Pacific Softwoods Co.
Philomath Forest Products Co.
Port Westward Pulp Co.
Riverside Lumber Co.
Silverton Forest Products Co.
Trask River Lumber Co.
TreeSource, Inc.
Union Forest Products Co.
Union Rail Enterprises, Inc.
Western Timber Co.
Whitehall Plywood, Inc.
Washington
Cle Elum Lake Veneer Co.
Graham Plywood Co.
Morton Forest Products Co.
Olympia Forest Products Co.
Orient Lumber Co.
Pacific Hardwoods-Aberdeen Co.
Pacific Hardwoods-South Bend Co.
Sedro-Woolley Lumber Co.
Spanaway Lumber Co.
Tumwater Lumber Co.
Valley Wood Products Co.
Montana
Columbia Falls Forest Products, Inc.
Exhibit 23
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in the Registration
Statement on Form S-8 and Form S-3 pertaining to the WTD
Industries, Inc. Amended and Restated 1986 Stock Option Plan with
respect to the financial statements and financial statement
schedules of WTD Industries, Inc., which appear in the WTD
Industries, Inc. Annual Report on Form 10-K for the year ended
April 30, 1994, filed with the Securities and Exchange Commission.
/s/ Moss Adams
-----------------------------------
MOSS ADAMS
Beaverton, Oregon
June 10, 1994
