SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended July 31, 1996
-------------
[X] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition from to
------- -------
Commission file number 0-16158
WTD Industries, Inc.
--------------------
(Exact name of Registrant as specified in its charter)
Oregon 93-0832150
------ ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10260 S.W. Greenburg Road, Suite 900, Portland, Oregon 97223
------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (503)246-3440
-------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark whether the Registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes X No
--- ---
The number of shares outstanding of Registrant's Common Stock, no par
value, at August 31, 1996 was 11,077,074.
<PAGE>
WTD INDUSTRIES, INC.
INDEX
Page
Number
PART I. Financial Information (Unaudited)
Item 1. Financial Statements
Consolidated Statements of Operations -
Three Months Ended July 31, 1996 and 1995 3
Consolidated Balance Sheets -
July 31, 1996 and April 30, 1996 4
Consolidated Statements of Cash Flows -
Three Months Ended July 31, 1996 and 1995 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations 11
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K 14
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WTD INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per-Share Amounts)
(Unaudited)
THREE MONTHS ENDED JULY 31,
----------------------------
1996 1995
--------- ---------
NET SALES $ 66,973 $ 38,798
COST OF SALES 59,311 38,201
--------- ---------
GROSS PROFIT 7,662 597
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 3,083 2,438
--------- ---------
OPERATING INCOME (LOSS) 4,579 (1,841)
OTHER INCOME (EXPENSE)
Interest Expense (1,297) (1,364)
Miscellaneous 95 108
--------- ---------
(1,202) (1,256)
--------- ---------
INCOME (LOSS) BEFORE INCOME TAXES 3,377 (3,097)
PROVISION FOR INCOME TAXES (BENEFIT) 1,283 (1,177)
---------- ----------
NET INCOME (LOSS) 2,094 (1,920)
PREFERRED DIVIDENDS 557 608
---------- ----------
NET INCOME (LOSS) APPLICABLE
TO COMMON SHAREHOLDERS $ 1,537 $ (2,528)
========== ===========
NET INCOME (LOSS) PER COMMON SHARE
PRIMARY $0.14 ($0.23)
======= =======
FULLY DILUTED $0.14 ($0.23)
======= =======
The accompanying notes are an integral part of these
consolidated financial statements.
3
<PAGE>
WTD INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(In Thousands)
JULY 31, APRIL 30,
1996 1996
----------- -----------
CURRENT ASSETS (Unaudited)
Cash and cash equivalents $ 3,355 $ 4,576
Accounts receivable, net 12,725 10,190
Inventories 19,411 13,891
Prepaid expenses 1,936 1,568
Income tax refund receivable 1,230 2,135
Deferred tax asset 1,017 1,112
Assets held for sale 737 737
Timber, timberlands and timber-related assets 4,939 6,243
----------- -----------
Total current assets 45,350 40,452
NOTES AND ACCOUNTS RECEIVABLE 142 164
TIMBER AND TIMBERLANDS 629 679
PROPERTY, PLANT AND EQUIPMENT, at cost
Land 2,943 2,943
Buildings and improvements 11,085 11,085
Machinery and equipment 68,649 68,313
----------- -----------
82,677 82,341
Less accumulated depreciation 52,845 51,391
----------- -----------
29,832 30,950
Construction in progress 544 339
----------- -----------
30,376 31,289
DEFERRED TAX ASSET 2,200 3,388
OTHER ASSETS 1,377 1,424
----------- -----------
$ 80,074 $ 77,396
=========== ===========
The accompanying notes are an integral part of these
consolidated financial statements.
4
<PAGE>
WTD INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
(In Thousands, Except Share Information)
JULY 31, APRIL 30,
1996 1996
----------- -----------
CURRENT LIABILITIES (Unaudited)
Accounts payable $ 8,003 $ 5,791
Accrued expenses 6,831 6,198
Timber contracts payable 904 2,252
Current maturities of long-term debt 1,808 1,159
----------- -----------
Total current liabilities 17,546 15,400
LONG-TERM DEBT, less current maturities 49,305 50,310
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, 10,000,000 shares authorized
Series A, 270,079 shares outstanding 20,688 20,688
Series B, 6,111 shares outstanding 333 333
Common stock, no par value, 40,000,000 shares
authorized, 11,077,074 issued and outstanding 28,641 28,641
Additional paid-in capital 15 15
Retained deficit (36,454) (37,991)
----------- -----------
13,223 11,686
----------- -----------
$ 80,074 $ 77,396
=========== ===========
The accompanying notes are an integral part of these
consolidated financial statements.
5
<PAGE>
WTD INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
THREE MONTHS ENDED
JULY 31,
-------------------
1996 1995
--------- ---------
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES:
Net income (loss) $ 2,094 $ (1,920)
Adjustments to reconcile net income (loss) to
cash provided by operating activities:
Depreciation, depletion and amortization 1,506 1,102
Deferred income tax 1,283 (1,034)
Accounts receivable (2,535) 1,975
Inventories (5,520) 3,163
Prepaid expenses (368) 624
Timber, timberlands and timber-related assets - current 1,336 1,875
Payables and accruals 1,523 (1,596)
Income taxes 905 503
--------- ---------
Cash provided by operating activities 224 4,692
--------- ---------
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES:
Net reductions of (additions to) timber and timberlands 50 (6)
Acquisition of property, plant and equipment (562) (565)
Other investing activities 22 3
--------- ---------
Cash used for investing activities (490) (568)
--------- ---------
CASH USED FOR FINANCING ACTIVITIES:
Principal payments on long-term debt (382) (437)
Other assets (16) --
Dividends paid on preferred stock (557) (608)
--------- ---------
Cash used for financing activities (955) (1,045)
--------- ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (1,221) 3,079
CASH BALANCE AT BEGINNING OF PERIOD 4,576 6,023
--------- ----------
CASH BALANCE AT END OF PERIOD $ 3,355 $ 9,102
========= =========
CASH PAID (REFUNDED) DURING THE PERIOD FOR:
Interest $1,295 $87
Income taxes ($905) ($646)
The accompanying notes are an integral part of these
consolidated financial statements.
6
<PAGE>
WTD INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - SUMMARY OF FINANCIAL STATEMENT PRESENTATION
In the opinion of management, the consolidated financial statements of WTD
Industries, Inc. and subsidiaries ("WTD" or "the Company") presented herein
include all adjustments, which are solely of a normal recurring nature,
necessary for a fair presentation of the financial position, results of
operations and cash flows for the interim periods presented. Certain
reclassifications have been made to the prior period results and balances to
conform to the current period classifications. The financial statements should
be read with reference to "Management's Discussion and Analysis of Financial
Condition and Results of Operations" contained in this report, and the "Notes to
Consolidated Financial Statements" set forth in the Company's Annual Report on
Form 10-K for the year ended April 30, 1996, filed with the Securities and
Exchange Commission. The results of operations for the current interim periods
are not necessarily indicative of the results to be expected for the current
year.
NOTE 2 - INVENTORIES
Inventories are valued at the lower of cost or market. The amounts included
in inventories at July 31, 1996 and April 30, 1996 are as follows (in
thousands):
July 31, April 30,
1996 1996
------- --------
Logs $10,723 $ 5,899
Lumber 7,440 6,786
Supplies 1,248 1,206
------- --------
$19,411 $13,891
======= ========
NOTE 3 - LONG-TERM DEBT
The Company's primary debt agreement includes certain covenants, including
the maintenance of specified levels of adjusted cumulative operating income (as
defined), tangible net worth, working capital, collateral coverage (as defined)
and total liabilities ratio (as defined). This agreement also imposes certain
restrictions and limitations on capital expenditures, investments, dividend
payments, new indebtedness, and transactions with officers, directors,
shareholders and affiliates. This debt agreement was most recently amended as of
May 1, 1996, with respect to certain affirmative financial performance covenants
and payment terms.
7
<PAGE>
NOTE 3 - LONG-TERM DEBT (Continued)
At July 31, 1996 the Company's tangible net worth was $12.8 million,
compared to $9 million required by the covenant. At that same date, the
Company's working capital was $27.8 million, compared to $22.5 million required
by the covenant. Also, at July 31, 1996, the Company's adjusted cumulative
operating income was $26.8 million, compared to $22.5 million required. The
collateral coverage ratio at July 31, 1996 was 70%, compared to a 60% minimum
required level. The total liabilities ratio was 83.5% at July 31, 1996, compared
to a maximum allowed of 87%. The required level of tangible net worth increases
to $10 million at July 1, 1997, $12 million at May 1, 1998 and $14.5 million at
May 1, 1999. The required level of working capital increases to $25 million on
July 1, 1997. The required level of adjusted cumulative operating income
increases to $25 million at January 1, 1997, $27.5 million at July 1, 1997, $40
million at May 1, 1998, $52.5 million at May 1, 1999 and $67.5 million at May 1,
2000. The minimum required collateral coverage ratio increases to 65% at May 1,
1998. The maximum allowed total liabilities ratio increases to 89% at November
1, 1996, drops to 87% at July 1, 1997 and drops to 85% at May 1, 1998. During
the quarter ended July 31, 1996, the Company's adjusted cumulative operating
income increased by $5.6 million while showing income before taxes of $3.4
million.
In addition, this agreement requires prepayments if the Company's
cumulative operating income exceeds certain specified amounts. No such
prepayment was required for the year ended April 30, 1996. In connection with
the May 1, 1996 amendment, the Company has agreed to an additional prepayment
computed at 30% of quarterly net income. The first prepayment due under this
provision will be approximately $630,000 in September 1996.
NOTE 4 - STOCKHOLDERS' EQUITY AND COMMON SHARES OUTSTANDING
Stockholders' equity at July 31, 1996 consists of the following:
Series A preferred stock, $100 per share liquidation preference; 500,000
shares authorized; 270,079 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 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.
8
<PAGE>
NOTE 4 - STOCKHOLDERS' EQUITY AND COMMON SHARES OUTSTANDING
(Continued)
Common stock, no par value; 40,000,000 shares authorized; 11,077,074
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 11,289,767 shares if remaining Series B
preferred stock outstanding at July 31, 1996 is converted to common
stock.
NOTE 5 - NET INCOME (LOSS) PER SHARE
The calculations of net income (loss) per share for the three-month periods
ended July 31, 1996 and 1995 are summarized below (in thousands, except
per-share data):
Three Months Ended
July 31,
---------------------
1996 1995
--------- ---------
Net income (loss) applicable to common shareholders $ 1,537 $ (2,528)
========= =========
Weighted average shares outstanding 11,077 11,077
Additional shares assumed from:
- Conversion of Series B preferred stock 213 --
- Exercise of stock options 8 --
--------- ---------
Average number of shares and equivalents outstanding
- Primary basis 11,298 11,077
Additional shares assumed from exercise of stock options 14 --
--------- ---------
Average number of shares and equivalents outstanding
- Fully diluted 11,312 11,077
========= =========
Net income (loss) per common share
- Primary $ 0.14 $ (0.23)
========= =========
- Fully diluted $ 0.14 $ (0.23)
========= =========
NOTE 6 - INCOME TAXES
The income tax provision (benefit) is based on the estimated effective
annual tax rate for each fiscal year. The provision (benefit) includes
anticipated current income taxes payable or refundable, the tax effect of
anticipated differences between the financial reporting and tax basis of assets
and liabilities, and the expected utilization of net operating loss (NOL)
carryforwards.
9
<PAGE>
NOTE 6 - INCOME TAXES (Continued)
The federal and state income tax provision (benefit) consists of the
following (in thousands):
Three Months Ended
July 31,
---------------------
1996 1995
--------- ---------
Income (loss) before income taxes $ 3,377 $ (3,097)
========= =========
Income tax provision (benefit):
Federal $ 1,148 $ (1,053)
State 135 (124)
--------- ---------
$ 1,283 $ (1,177)
========= =========
Current $ 95 $ (143)
Deferred 1,188 (1,034)
--------- ---------
$ 1,283 $ (1,177)
========= =========
Deferred tax assets reduced during the quarter ended July 31, 1996,
principally the result of recording utilization of the tax benefit from NOL
carryforwards.
Management has assessed the likelihood of utilizing the recorded deferred
tax asset related to its NOL carryforwards, including its operating history, the
cyclical nature of the industry in which the Company operates, current economic
conditions and the potential outcome of any I.R.S. audits. Based upon the above
factors, management believes that a valuation allowance of approximately $2.9
million is necessary. No change to this reserve was considered necessary during
the quarter ended July 31, 1996.
NOTE 7 - COMMITMENTS AND CONTINGENCIES
The Company is involved in various 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 would not have a material
adverse impact upon the Company's consolidated financial condition or results of
operations.
The Company is subject to various federal, state and local regulations
regarding waste disposal and pollution control. Various governmental agencies
have enacted, or are considering regulations, regarding log yard management and
disposal of log yard waste that may require material expenditures in the future.
Management believes that the Company will be able to comply with any final
regulations in this area without a material adverse impact on its consolidated
financial condition or results of operations.
10
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
On a quarter-to-quarter basis, the Company's financial results have varied
widely, and will continue to vary, due to seasonal fluctuations and market
factors affecting the demand for logs, lumber and other wood products. 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 industry when
exchange rates spur log exports and drive up domestic log prices, and when a
relatively strong U.S. dollar encourages lumber imports 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 governmental agencies change from time to time,
causing actual or feared shortages in some areas periodically. These policies
change because of environmental concerns, public agency budget issues, and a
variety of other reasons. Therefore, past results for any given year or quarter
are not necessarily indicative of future results.
It is generally the Company'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 its labor practices and
compensation systems, as well as a relatively low capital cost in relation to
production capacity, give it the flexibility to efficiently curtail operations
and resume production as conditions warrant.
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.
Low lumber prices, combined with relatively high log prices, created losses
for the Company during each quarter of fiscal year 1996. In response to the
generally weak market conditions, the Company curtailed production at selected
mills and reduced the level of operations at various times during the year. By
the end of the fiscal year, lumber prices had increased and operating conditions
had improved enough to allow the Company to run substantially all of its mills
on a full one-shift operation in March and April, 1996. Operating conditions
continued to improve during the quarter ended July 31, 1996. Although chip and
other by-product prices continued weak, lumber demand continued strong and
lumber prices improved during the quarter. Log prices were relatively stable
during the quarter, allowing the Company to enjoy favorable margin conditions.
The Company was able to work additional hours at many of its mills, thereby
improving profitability. There can be no assurance that the margins recently
experienced by the Company will continue or improve.
11
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
The following table sets forth the percentages which certain expenses and
income (loss) items bear to net sales, and the period-to-period percentage
change in each item.
Percentage
Increase (Decrease)
Three Months
Income and Expense Items as Ended
a Percentage of Net Sales
Three Months ended July 31, 7/31/96
--------------------------- to
1996 1995 7/31/95
----------- ----------- -------
Net sales 100.0% 100.0% 72.6%
Cost of sales 88.6 98.5 55.3
----------- -----------
Gross profit 11.4 1.5 1183.4
Selling, general and
administrative expenses 4.6 6.3 26.5
----------- -----------
Operating income (loss) 6.8 (4.7) NM
Interest expense (1.9) (3.5) (4.9)
Miscellaneous 0.1 0.3 (12.0)
----------- -----------
Income (loss) before income taxes 5.0 (8.0) NM
Provision for income taxes (benefit) 1.9 (3.0) NM
----------- -----------
Net income (loss) 3.1% (4.9)% NM
=========== ===========
Note: Percentages may not add precisely due to rounding.
NM: Not meaningful.
Comparison of Three Months Ended July 31, 1996 and 1995
Net sales for the three months ended July 31, 1996 increased $28.2 million
(73%) from the three months ended July 31, 1995. This was principally caused by
a 67% increase in lumber shipments, a 68% increase in chip deliveries and a 20%
increase in lumber prices, partially offset by a 62% decrease in chip prices.
The increased lumber and chip deliveries reflect increased production resulting
from a strong lumber market in the current quarter and a weak market in the
first quarter of fiscal 1996.
Gross profit for the quarter ended July 31, 1996 was 11.4% of net sales,
compared to 1.5% of sales for the quarter ended July 31, 1995. Lumber prices
increased by 20% from the quarter ended July 31, 1995, while the Company's log
costs declined by 4%. The Company increased production during the first quarter
of fiscal 1997 in response to the stronger lumber prices and demand. Unit
manufacturing costs declined by nearly 10% from the quarter ended July 31, 1995
as a result of the higher, more efficient production levels and continued focus
on cost control.
12
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
Selling, general and administrative (S, G & A) expenses in the three months
ended July 31, 1996 increased by $0.6 million (26%) from the three months ended
July 31, 1995. This increase reflects higher profit-sharing bonus payments
stemming from higher pretax profits, partially offset by the Company's continued
focus on cost control.
In the quarter ended July 31, 1996, the Company's tax provision equals 38%
of its pretax profit. In the quarter ended July 31, 1995, the Company's tax
credit equaled 38% of its pretax loss. See Note 6 to Consolidated Financial
Statements.
Liquidity and Capital Resources
The Company relies on cash provided by its operations to fund its working
capital needs. There can be no assurance that such cash will be sufficient to
fund the Company's future operations. Substantially all of the Company's assets
are pledged as security for its various debt obligations.
During the three months ended July 31, 1996, the Company's cash and cash
equivalents decreased by $1.2 million, to $3.4 million at July 31. The decrease
was principally caused by increases in log and lumber inventory and accounts
receivable, capital spending, scheduled principal repayments and dividend
payments on the Company's Series A preferred stock, partially offset by
operating profits and income tax refunds.
Working capital increased by $2.8 million during the first three months of
fiscal 1997, to $27.8 million at July 31. This was principally the result of
profitable operations, partially offset by capital spending, principal payments
on long-term debt and dividend payments.
Capital spending in the first three months of fiscal 1997 was $0.6 million.
Capital spending for the balance of the fiscal year is currently forecast to be
approximately $3.5 million. The Company had no material commitments for capital
spending at July 31, 1996.
The Company's Credit and Security Agreement dated as of November 30, 1992
contains certain covenants, including the maintenance of prescribed levels of
collateral coverage (as defined), tangible net worth, working capital, adjusted
cumulative operating income (as defined) and total liabilities ratio (as
defined). This debt agreement was most recently amended as of May 1, 1996, with
respect to certain affirmative financial performance covenants and payment
terms. See Note 3 to Consolidated Financial Statements.
Management's Discussion and Analysis of Financial Condition and Results of
Operations contain "forward-looking" information (as defined in the Private
Securities Litigation Reform Act of 1995) that involve risks and uncertainties,
including, but not limited to, the effect of general economic conditions,
increased interest rates, the impact of competitive products and pricing,
availability and cost of raw materials, inadequate cash reserves, labor strikes,
environmental regulations, changes in the Company's ability to use its net
operating loss carryforward and the risk factors listed from time to time in the
Company's SEC reports, including, but not limited to, the report on Form 10-K
for the fiscal year ended April 30, 1996 (Part II, Item 7, Management's
Discussion and Analysis of Financial Condition and Results of Operations).
13
<PAGE>
WTD INDUSTRIES, INC.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The Index to Exhibits is located on page 16.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the three months ended
July 31, 1996.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has 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
By: /s/ K. Stanley Martin
---------------------
K. Stanley Martin
Vice President-Finance
September 5, 1996
15
<PAGE>
WTD INDUSTRIES, INC.
INDEX TO EXHIBITS
Sequential
Number
System
Page
Number
3.1 Fourth Restated Articles of Incorporation of Registrant adopted
effective November 27, 1992(1)
3.2 Second Restated Bylaws of the Registrant adopted effective
November 27, 1992(2)
19 Other reports furnished to securities holders with respect to the 17
quarter ended July 31, 1996: President's letter excerpted from
Interim Report to Shareholders for the first quarter of fiscal 1997
27 Financial Data Schedule(3)
----------
(1)Incorporated by reference to the exhibit of like number to the
Registrant's report of Form 8-K dated November 23, 1992, previously
filed with the Commission.
(2)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.
(3)This schedule has been submitted in the electronic form prescribed by
EDGAR.
----------
All other required Exhibits are listed in the Company's Annual Report of
Form 10-K for the year ended April 30, 1996.
16
<PAGE>
Report from the President Exhibit 19
Dear WTD Shareholders:
I am pleased to report that our first quarter of the new fiscal year
produced net income of $2,094,000 or $.14 per share compared with a net loss of
$1,920,000 or $.23 per share for the same period in 1995. First quarter net
sales were $67.0 million, compared to $38.8 million for the comparable period
last year.
Lumber prices and demand are up significantly over last year at this time.
Lumber demand in Southern California and the Northeast has been particularly
strong. Additionally, we have benefited from favorable log cost and
availability. Wood chip demand and prices, however, remain weak.
Our first quarter reflects the best operating results in over two years.
The sound overall economy and higher than expected housing starts, assisted by
reasonable interest rates, have given strength to the lumber market. We are
taking advantage of the favorable operating conditions by using more of our
production capacity. At some locations we have gone to two shifts or extended
workdays.
Under the amended terms of our senior secured debt and based on our level
of profitability during our first quarter, the Company is required to make an
additional debt payment of approximately $630,000 in September.
We announced during our first quarter that the Company has reached an
agreement in principle to sell our sawmill facility in Vermont. The prospective
purchaser is a large pulp and paper company having major involvement in the
sawmilling industry.
Completion of the transaction is subject to the parties reaching a
definitive agreement, approval by each company's Board of Directors, approval of
the transaction by the Company's secured lenders and completion by purchaser of
its due diligence investigation.
We hope to have a definitive agreement by September 15, 1996.
Proceeds from the sale will be used to reduce WTD's senior secured debt.
Sale of the facility will allow us to focus exclusively on the Pacific
Northwest.
We are in the planning stage of capital projects to expand our drying
facilities for hemlock and other whitewood species. Due to the decline of log
export activity for those species, we see an opportunity to further increase our
presence in the kiln-dried hemlock lumber market.
We have appreciated the support of our shareholders and lenders during our
recent difficult period. We are enjoying the ability to take advantage of
current opportunities.
Bruce L. Engel
President
17
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
REGISTRANT'S REPORT ON FORM 10-Q FOR THE PERIOD ENDED JULY 31, 1996
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Apr-30-1997
<PERIOD-START> May-01-1996
<PERIOD-END> Jul-31-1996
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0
21,021
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<EPS-PRIMARY> .14
<EPS-DILUTED> .14
</TABLE>
