<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q


(Mark One)

[X]    Quarterly report pursuant to Section 13 or 15(d) of the Securities
       Exchange Act of 1934 for the quarterly period ended  July 2, 2000.


[  ]   Transition report pursuant to Section 13 or 15(d) of the Securities
       Exchange Act of 1934 for the transition period
       from _________ to_________.


Commission File Number 0-6087


                            LINDAL CEDAR HOMES, INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


                     Delaware                                91-0508250
         (State or other jurisdiction of                  (I.R.S. Employer
          incorporation or organization)                 Identification No.)


   4300 South 104th Place, Seattle, Washington                98178
--------------------------------------------------------------------------------
   (Address of principal executive offices)                (Zip code)


                                 (206) 725-0900
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirement for the past 90 days.


Yes  [X]     No  [ ]


Common stock outstanding at July 2, 2000: 4,131,327 shares at $.01 par value.



<PAGE>   2

                            LINDAL CEDAR HOMES, INC.
                                AND SUBSIDIARIES
                                      INDEX



<TABLE>
<CAPTION>
                                                                                            PAGE
                                                                                           NUMBER
                                                                                           ------
<S>                                                                                        <C>
Part I                Financial Information

         Item 1       Financial Statements
                            Condensed Consolidated Balance Sheets                             4
                            Condensed Consolidated Statements of Operations                   5
                            Condensed Consolidated Statements of Cash Flows                   6
                            Notes to Condensed Consolidated Financial Statements              7

         Item 2       Management's Discussion and Analysis of
                            Financial Condition and Results of Operations                    12

         Item 3       Quantitative and Qualitative Disclosures about Market Risk             20

         Item 4       Results of Votes of Security Holders                                   22

Part II               Other Information

         Item 1       Legal Proceedings                                                      22
         Item 6(a)    Exhibits                                                               22
         Item 6(b)    Reports on Form 8-K                                                    22

         Signatures                                                                          23
</TABLE>




                                       2
<PAGE>   3

                            LINDAL CEDAR HOMES, INC.
                                AND SUBSIDIARIES



                          PART I: FINANCIAL INFORMATION


ITEM 1 - FINANCIAL STATEMENTS



                                       3
<PAGE>   4


                            LINDAL CEDAR HOMES, INC.
                                AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                July 2, 2000, December 31, 1999 and July 4, 1999
                (Amounts in thousands, except per share amounts)


<TABLE>
<CAPTION>
                                                     JULY 2,                   JULY 4,
                                                      2000     DECEMBER 31,     1999
                                                  (UNAUDITED)      1999      (UNAUDITED)
                                                  -----------  ------------  -----------
<S>                                                 <C>             <C>          <C>
                  Assets

Current assets
    Cash, cash equivalents and investments          $  8,543        8,252        6,562
    Receivables:
        Trade                                          1,061        1,827        1,307
        Refundable federal taxes                         382           --        1,718
                                                    --------      -------      -------
                                                       1,443        1,827        3,025
        Less allowance for doubtful receivables          117          259          335
                                                    --------      -------      -------
                Net receivables                        1,326        1,568        2,690
    Inventories                                        8,146        8,098        7,286
    Promotional material                                 993          510          654
    Other current assets                                 865          650          745
                                                    --------      -------      -------
                Total current assets                  19,873       19,078       17,937

Other assets                                           1,607        1,845        1,440
Property, plant and equipment, net                    11,119       10,956       11,254
                                                    --------      -------      -------
                                                    $ 32,599       31,879       30,631
                                                    ========      =======      =======
   Liabilities and Stockholders' Equity

Current liabilities
    Current installments of long-term debt          $    219          213          191
    Accounts payable and accrued expenses              3,392        3,718        2,618
    Income taxes payable                                  --          126           15
    Customer deposits                                  5,527        4,675        5,178
                                                    --------      -------      -------
                Total current liabilities              9,138        8,732        8,002

Long-term debt, excluding current installments         4,413        4,418        4,588
Deferred income taxes                                    294          294          316

Stockholders' equity:
    Common stock                                          41           41           41
    Additional paid-in capital                        16,061       16,061       16,049
    Accumulated other comprehensive loss                (957)        (837)        (981)
    Retained earnings                                  3,609        3,170        2,616
                                                    --------      -------      -------
                Total stockholders' equity            18,754       18,435       17,725
                                                    --------      -------      -------
                                                    $ 32,599       31,879       30,631
                                                    ========      =======      =======
</TABLE>


See accompanying notes to the condensed consolidated financial statements


                                       4
<PAGE>   5

                            LINDAL CEDAR HOMES, INC.
                                AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
               For the periods ended July 2, 2000 and July 4, 1999
                (Amounts in thousands, except per share amounts)
                                   (Unaudited)



<TABLE>
<CAPTION>
                                                        SIX MONTHS ENDED         QUARTERS ENDED
                                                      -------------------      ------------------
                                                      JULY 2,     JULY 4,      JULY 2,    JULY 4,
                                                       2000        1999         2000       1999
                                                      -------     -------      ------     -------
<S>                                                   <C>          <C>         <C>         <C>
Revenue                                               $21,302      18,242      12,850      10,136
Cost of goods sold                                     16,534      13,723       9,489       7,285
                                                      -------     -------      ------     -------
        Gross profit                                    4,768       4,519       3,361       2,851

Operating expenses:
     Selling, general and administrative expenses       4,102       3,712       2,214       1,848
     Display court expenses                               266         232         177         108
                                                      -------     -------      ------     -------
        Total operating expenses                        4,368       3,944       2,391       1,956
                                                      -------     -------      ------     -------
        Operating income                                  400         575         970         895

Other income (expense):
     Rental income                                         94         111          43          59
     Interest, net                                         98         (52)         58         (12)
     Other, net                                            43         (87)         84         (47)
                                                      -------     -------      ------     -------
        Other income (expense), net                       235         (28)        185          --
                                                      -------     -------      ------     -------
        Earnings before income taxes                      635         547       1,155         895
Income tax expense                                        197          81         359         146
                                                      -------     -------      ------     -------
        Net earnings                                  $   438         466         796         749
                                                      =======     =======      ======     =======

Basic and diluted - earnings per common share         $   .11         .11         .19         .18
                                                      =======     =======      ======     =======
</TABLE>


See accompanying notes to the condensed consolidated financial statements




                                       5
<PAGE>   6

                            LINDAL CEDAR HOMES, INC.
                                AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
             For the six months ended July 2, 2000 and July 4, 1999
                             (Amounts in thousands)
                                   (Unaudited)



<TABLE>
<CAPTION>
                                                                                       JULY 2,       JULY 4,
                                                                                        2000          1999
                                                                                       -------       ------
<S>                                                                                    <C>              <C>
Cash flows from operating activities:
     Net earnings                                                                      $   438          466
     Adjustments to reconcile net earnings to net cash provided
       by (used in) operating activities:
         Depreciation and amortization                                                     736          629
         Deferred income tax benefit                                                        --           (9)
         Loss (gain) on disposal of assets                                                  (3)           1
         Change in operating assets and liabilities:
            Net trade and operating notes receivable                                       125          453
            Inventories                                                                   (119)          (8)
            Prepaid expenses and promotional materials                                    (870)         170
            Current liabilities other than current installments of long-term debt          539        1,805
            Other                                                                          (13)        (104)
                                                                                       -------       ------
                Net cash provided by operating activities                                  833        3,403

Cash flows from investing activities:
     Purchase of investments                                                            (2,997)      (3,031)
     Maturity of investments                                                             3,008           75
     Repayment of non-operating notes receivable                                           105           40
     Proceeds from sale of property, plant and equipment                                     3           --
     Purchase of property, plant and equipment                                            (590)        (248)
                                                                                       -------       ------
                Net cash used in investing activities                                     (471)      (3,164)

Cash flows from financing activities:
     Repayment of long-term debt                                                           (57)         (51)
     Proceeds from long-term debt                                                           59           35
     Repayment of current notes payable                                                     --         (266)
                                                                                       -------       ------
                Net cash provided by (used in) financing activities                          2         (282)
Effect of exchange rate changes on cash and cash equivalents                               (60)         116
                                                                                       -------       ------
                Net increase in cash and cash equivalents                                  304           73
Cash and cash equivalents at beginning of period                                         4,213        3,457
                                                                                       -------       ------
Cash and cash equivalents at end of period                                               4,517        3,530
                                                                                       =======       ======
Supplemental disclosures of cash flow information - cash paid during
   period for:
         Interest                                                                      $   151          170
         Income taxes                                                                      304           66
Non-cash investing and financing activities:
   Acquisition of model home in exchange for trade and note receivable                 $   231           --
</TABLE>


See accompanying notes to the condensed consolidated financial statements


                                       6
<PAGE>   7

                            LINDAL CEDAR HOMES, INC.
                                AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                July 2, 2000, December 31, 1999 and July 4, 1999
                (Amounts in thousands, except per share amounts)
                                   (Unaudited)




(1)   BASIS OF PRESENTATION

      The accompanying unaudited condensed consolidated financial statements
      have been prepared in accordance with generally accepted accounting
      principles, except as noted below, and include all recurring adjustments
      that are considered necessary by management to fairly state the results of
      the interim periods. The preparation of financial statements in conformity
      with generally accepted accounting principles requires management to make
      estimates and assumptions that affect the reported amounts of assets,
      liabilities, revenues and expenses and certain disclosures. Actual results
      could differ from those estimates. These consolidated financial statements
      and related notes have been prepared pursuant to the rules and regulations
      of the Securities and Exchange Commission. Accordingly, certain
      information and footnote disclosures normally included in the consolidated
      financial statements prepared in accordance with generally accepted
      accounting principles have been omitted. Due to the seasonality of the
      Company's business, the accompanying financial statements may not
      necessarily be indicative of the results to be obtained for the full year.
      This report should be read in conjunction with the Company's Annual Report
      to the Securities and Exchange Commission on Form 10-K for the year ended
      December 31, 1999.

      Certain reclassifications have been made to the prior period financial
      statements to conform with the current year presentation.


(2)   EARNINGS PER COMMON SHARE

      The following tables present basic and diluted earnings per share and
      reconciles the numerator and denominator of the basic and diluted per
      share computations:

<TABLE>
<CAPTION>
                                                                     WEIGHTED
                                                   NET EARNINGS   AVERAGE SHARES    NET EARNINGS
                                                   (NUMERATOR)     (DENOMINATOR)      PER SHARE
                                                   ------------   --------------    ------------
            <S>                                    <C>            <C>               <C>
            Quarter ended July 2, 2000:
                 Basic earnings per share              $796            4,131             .19
                 Effect of dilutive options              --               14              --
                                                       ----            -----            ----
                 Diluted earnings per share            $796            4,145             .19
                                                       ====            =====            ====

            Quarter ended July 4, 1999:
                 Basic earnings per share              $749            4,126            $.18
                 Effect of dilutive options              --               16              --
                                                       ----            -----            ----
                 Diluted earnings per share            $749            4,142            $.18
                                                       ====            =====            ====

            Six months ended July 2, 2000:
                 Basic earnings per share              $438            4,131             .11
                 Effect of dilutive options              --               20              --
                                                       ----            -----            ----
                 Diluted earnings per share            $438            4,151             .11
                                                       ====            =====            ====

            Six months ended July 4, 1999:
                 Basic earnings per share              $466            4,126            $.11
                 Effect of dilutive options              --               16              --
                                                       ----            -----            ----
                 Diluted earnings per share            $466            4,142            $.11
                                                       ====            =====            ====
</TABLE>




                                       7
<PAGE>   8

                            LINDAL CEDAR HOMES, INC.
                                AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                July 2, 2000, December 31, 1999 and July 4, 1999
                (Amounts in thousands, except per share amounts)
                                   (Unaudited)




      Options to purchase shares of common stock where the exercise price
      exceeds the average market price were excluded from the computations for
      2000 and 1999 because they would be anti-dilutive. Anti-dilutive options
      excluded from the computations are as follows:

<TABLE>
<CAPTION>
                                                            ANTI-DILUTIVE
                                                               OPTIONS
                                                            -------------
            <S>                                             <C>
            Quarter ended July 2, 2000                           412
            Quarter ended July 4, 1999                           451
            Six months ended July 2, 2000                        368
            Six months ended July 4, 1999                        451
</TABLE>


(3)   INVENTORIES

      A summary of inventories follows:

<TABLE>
<CAPTION>
                                        JULY 2,  DECEMBER 31,  JULY 4,
                                         2000        1999       1999
                                        ------   ------------  -----
            <S>                         <C>      <C>           <C>
            Raw materials               $3,557       1,822      1,550
            Work-in-process                804       2,879      2,601
            Finished goods               3,037       2,707      2,401
            Display models                 748         690        734
                                        ------       -----      -----
                                        $8,146       8,098      7,286
                                        ======       =====      =====
</TABLE>


(4)   PROPERTY, PLANT AND EQUIPMENT

      Property, plant and equipment consists of the following:

<TABLE>
<CAPTION>
                                                              JULY 2,   DECEMBER 31,   JULY 4,
                                                               2000         1999        1999
                                                              -------   ------------   ------
            <S>                                               <C>       <C>            <C>
            Building and leasehold improvements               $10,531      10,455      10,407
            Equipment                                           3,740       3,496       3,487
            Furniture and fixtures                              4,850       4,655       4,514
                                                              -------      ------      ------
                                                               19,121      18,606      18,408
            Less accumulated depreciation and amortization     10,298       9,832       9,332
                                                              -------      ------      ------
                                                                8,823       8,774       9,076
            Land                                                2,296       2,182       2,178
                                                              -------      ------      ------
                     Net property, plant and equipment        $11,119      10,956      11,254
                                                              =======      ======      ======
</TABLE>


(5)   SEGMENT INFORMATION

      The Company has two reportable segments: Homes -- United States and Homes
      -- Canada. Homes -- United States performs functions associated with
      engineering, custom design, drafting, customer service, logistics, special
      order materials and distribution planning for home sales worldwide. Homes
      -- Canada performs functions associated with inventory management



                                       8
<PAGE>   9

                            LINDAL CEDAR HOMES, INC.
                                AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                July 2, 2000, December 31, 1999 and July 4, 1999
                (Amounts in thousands, except per share amounts)
                                   (Unaudited)




of stock materials, materials staging, and home shipping for home sales
worldwide. Homes -- United States primarily sells homes, at wholesale, to
independent dealers while Homes -- Canada primarily sells homes, at wholesale,
to Homes -- United States for resale to independent dealers.

Information regarding the Company's reportable segments for the quarters and six
month periods ended July 2, 2000 and July 4, 1999 follows:


<TABLE>
<CAPTION>
                                                                                      OTHER
                                      U.S.     CANADIAN      ALL     INTERSEGMENT  RECONCILING
                                     HOMES       HOMES      OTHER    ELIMINATIONS     ITEMS    CONSOLIDATED
                                     -----     --------     -----    ------------  ----------- ------------
<S>                                  <C>       <C>          <C>      <C>           <C>         <C>
QUARTER ENDED JULY 2, 2000

Revenues from external
   customers                        $10,979         828      1,043           --         --       12,850
Intersegment revenues                 4,733      11,176      1,807      (17,716)        --           --
Gross profit                          2,740       4,211        492       (4,081)        (1)       3,361
Interest income                         124           9         --          (72)        72          133
Interest expense                         25          73         49          (72)        --           75
Depreciation and
   amortization                         264          62         85           --         16          427

QUARTER ENDED JULY 4, 1999

Revenues from external
   customers                        $ 8,478         586      1,055           --         17       10,136
Intersegment revenues                 2,677       7,918      1,422      (12,017)        --           --
Gross profit                          1,793       3,112        460       (2,522)         8        2,851
Interest income                          66           9         --          (74)        74           75
Interest expense                         35          74         52          (74)        --           87
Depreciation and
   amortization                         141          31         89           --         44          305

SIX MONTHS ENDED JULY 2, 2000

Revenues from external
   customers                        $18,349       1,027      1,926           --         --       21,302
Intersegment revenues                 7,309      18,531      3,102      (28,942)        --           --
Gross profit                          4,032       6,655        581       (6,498)        (2)       4,768
Interest income                         236          11         --         (148)       148          247
Interest expense                         48         149        100         (148)        --          149
Depreciation and
   amortization                         412          97        189           --         38          736

SIX MONTHS ENDED JULY 4, 1999

Revenues from external
   customers                        $15,547         689      1,984           --         22       18,242
Intersegment revenues                 5,081      14,497      2,649      (22,227)        --           --
Gross profit                          3,240       5,334        695       (4,755)         5        4,519
Interest income                          98          20         --         (146)       146          118
Interest expense                         61         148        103         (146)         4          170
Depreciation and
   amortization                         290          60        179           --        100          629
</TABLE>




                                       9
<PAGE>   10

                            LINDAL CEDAR HOMES, INC.
                                AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                July 2, 2000, December 31, 1999 and July 4, 1999
                (Amounts in thousands, except per share amounts)
                                   (Unaudited)




(6)   COMPREHENSIVE EARNINGS:

      Comprehensive earnings are as follows:

<TABLE>
<CAPTION>
                                                             SIX MONTHS ENDED     QUARTER ENDED
                                                            -----------------   -----------------
                                                            JULY 2,   JULY 4,   JULY 2,   JULY 4,
                                                             2000      1999      2000      1999
                                                            -------   -------   -------   -------
         <S>                                                <C>       <C>       <C>       <C>
         Net earnings                                       $ 438       466       796       749
         Other comprehensive earnings (loss) - foreign
            currency translation                             (120)      469      (163)      236
                                                            -----       ---      ----       ---
         Comprehensive earnings                             $ 318       935       633       985
                                                            =====       ===      ====       ===
</TABLE>


(7)   SHORT-TERM INVESTMENTS:

      Short-term investments consist of securities maturing within one year, and
      are classified as available-for-sale. Accordingly, these investments are
      carried at fair value. Any unrealized holding gains and losses, net of
      income taxes, are immaterial at July 2, 2000, December 31, 1999 and July
      4, 1999.


(8)   CONTINGENCIES:

      The Company is routinely involved in a number of legal proceedings and
      claims that cover a wide range of matters. In the opinion of management,
      the outcome of these matters is not expected to have any material adverse
      effect on the consolidated financial position or results of operations of
      the Company.

      On February 1, 2000, six current and former dealers brought suit against
      Lindal Cedar Homes and two of its officers and directors in the U.S.
      District Court for the Western District of Washington for damages arising
      from the Company's termination or threatened termination of their
      dealership agreements. In late 1998 and early 1999, the Company terminated
      or threatened to terminate the dealership agreements of these individuals
      on the grounds that the dealers had breached their agreements by selling
      competitive products. The dealership contract, signed by each of these
      claimants, strictly prohibits a dealer from selling competitive products.

      The complaint alleges: (a) the failure of the Company to register as a
      franchise in certain states, including Washington, (b) numerous violations
      of the Washington Franchise Investment Protection Act, and (c) illegal
      tie-in requirements in violation of the Sherman Act and Washington
      Consumer Protection Act, including treble damages. The complaint does not
      specify the damages sought. However, in a mediation which preceded the
      filing of the lawsuit, the plaintiffs claimed damages, including trebling,
      of approximately $10 million (prior to attorneys fees).

      The Company's dealer agreement provides that, following unsuccessful
      mediation, a dealer may pursue claims under the agreement only through an
      arbitration proceeding binding on the dealer and the Company.

      The Company believes that neither the Washington Franchise Investment
      Protection Act nor the Federal Sherman Act is applicable, nor were there
      any violations of either act. The Company will vigorously defend the
      lawsuit. Any amount owing as a result of this lawsuit is currently not
      estimable and as such, the Company has not accrued any amounts relating to
      these claims.

      In the second quarter of 2000, the parties to lawsuit agreed to pursue the
      claims through binding arbitration before a panel of




                                       10
<PAGE>   11

                            LINDAL CEDAR HOMES, INC.
                                AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                July 2, 2000, December 31, 1999 and July 4, 1999
                (Amounts in thousands, except per share amounts)
                                   (Unaudited)




      three arbitrators. The three arbitrators have been selected. The U.S.
      District Court for the Western District of Washington has issued an order
      staying the lawsuit pending the outcome of the arbitration.






                                       11
<PAGE>   12

                            LINDAL CEDAR HOMES, INC.
                                AND SUBSIDIARIES



ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

GENERAL

Lindal Cedar Homes, Inc. (the "Company") is primarily engaged in the manufacture
and distribution of custom cedar homes, windows and sunrooms. The Company also
re-manufactures standard dimensional cedar lumber. Cedar lumber, that meets the
Company's quality standards, is combined with manufactured and/or purchased
windows, sunrooms, and other purchased forest products and building materials
into home packages which can be shipped nationally and internationally to the
home buyer's construction site. Re-manufactured cedar lumber that is not of a
grade suitable for use in homes is sold on the open lumber market.

The primary raw material used by the Company in its re-manufacturing is western
red cedar, available in quantity only in British Columbia, Canada, Alaska and
the Pacific Northwest United States. Pressures continue to be placed on the log
market in general by harvesting restrictions in the United States and Canada,
and the Company is aware of the potential for shortages and/or fluctuations in
the price of cedar logs and cedar lumber.

Although green cedar lumber is the primary raw material used in manufacturing,
the Company purchases substantial quantities of forest products on the commodity
market to ship in its home packages. Presently, the Company does not anticipate
any serious long-term problems in securing the needed forest products in the
foreseeable future. The Company does expect that there may be occasional,
temporary shortages of cedar logs or cedar lumber and that price volatility of
cedar logs, green cedar lumber, other species of lumber and other forest
products may occur for some time. For this reason, the Company hedges a portion
of its non-cedar lumber needs using options and futures contracts. The Company
may also make selected strategic purchases, when relatively favorable prices
exist in the market, of larger quantities than it has historically. These
purchases are not expected to be in excess of anticipated needs.

On June 1, 2000, the Company's Surrey, British Columbia shipping facility was
closed for 1.5 working days by a work stoppage that was not sanctioned by the
IWA-Canada. Work resumed mid-day on June 2, 2000. The Company and the IWA-Canada
agreed to submit the matters giving rise to the work stoppage to mediation. All
matters relating to the work stoppage have been resolved through mediation. The
Company does not expect the agreements reached in mediation will have a material
adverse effect on the results of operations.

In July 2000, the Company accepted offers to sell the Seattle business park
property, as well as its rental property located in Renfrew, Ontario, Canada,
for a combined total of approximately $5.5 million cash (US$). Both of these
offers are subject to certain general contingencies. Subject to the resolution
of the contingencies, the company expects to report a net, pre-tax gain of
approximately $1.2 million from the combined transactions in the third quarter
of 2000. Net proceeds from the two sales are expected to be approximately $4.2
million (pre-tax) after the payment of encumbrances. Currently, both sales are
expected to close late in the third quarter. The combined tax consequences are
not completely known at this time. The Seattle business park sale does not
affect the company's adjacent corporate headquarters.

The Company's business is seasonal in that most deliveries have historically
been made during the period from April to October. To illustrate this, revenue
by quarter is presented below:

<TABLE>
<CAPTION>
                    1ST QUARTER    2ND QUARTER   3RD QUARTER  4TH QUARTER
                    -----------    -----------   -----------  -----------
             <S>    <C>            <C>           <C>          <C>
             2000       8,452         12,850
             1999       8,105         10,136        10,570       10,694
             1998       5,645         11,477        10,793        9,804
             1997       7,540         14,913        14,298       12,097
             1996       6,587         14,173        14,632       11,243
</TABLE>




                                       12
<PAGE>   13

NEW ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 133, as amended, Accounting for
Derivative Instruments and Hedging Activities. SFAS No. 133 establishes
accounting and reporting standards for derivative instruments embedded in other
contracts and for hedging activities. The Statement requires that entities
recognize all derivatives as either assets or liabilities on the balance sheet
and measure these derivatives at fair value. SFAS No. 133 also specifies a new
method of accounting for hedging transactions, prescribes the type of items and
transactions that may be hedged, and specifies detailed criteria to be met to
qualify for hedge accounting. This Statement is effective for financial
statements for years beginning after June 15, 2000. The Company does not expect
the adoption of this Statement to have a material impact on the consolidated
financial statements.

In June 2000, the SEC updated Staff Accounting Bulletin No. 101 (SAB 101),
"Revenue Recognition in Financial Statements." The most recent update (SAB 101B)
delays the effective date of SAB 101 to the fourth quarter of 2000. SAB 101
provides guidance on revenue recognition and the SEC staff's views on the
application of accounting principles to selected revenue recognition issues. The
Company will adopt the provisions of SAB 101 in the fourth quarter of 2000.
While we believe that SAB 101 will not have a material impact on the Company's
consolidated financial statements, there continue to be implementation questions
and supplemental issuances of interpretive guidance from the staff of the
Securities and Exchange Commission which may have future impact


YEAR 2000

The Company has not experienced any significant disruptions to its computerized
financial or operating activities resulting from Year 2000 issues. Furthermore,
the Company has no information that indicates a significant vendor or service
provider has experienced any significant disruptions to their financial or
operating activities such that they would be unable to provide goods or services
to the Company.



                                 SECOND QUARTER

NEW ORDERS

The number of new home orders decreased 23% in the second quarter of 2000
compared to the second quarter of 1999. The dollar value of new home orders
decreased 22% in the same time period. The timing of new order sales promotions
and price increases can have a significant impact on the number and value of new
home orders. Year-to-date new orders units increased 2% over the same period of
the prior year.

In the second quarter of 1999, the Company sponsored a dealer sales promotion to
increase second quarter 1999 new orders. The Company did not sponsor such a
promotion in the second quarter of 2000. Instead, to increase first quarter 2000
new orders and second quarter 2000 deliveries, the Company sponsored a new order
sales promotion in the first quarter of 2000. Combined with the effect of a
previously announced second quarter graduated 3.5% price increase, which became
fully effective on July 1, 2000, the number of new order units increased 43% and
the value of those orders increased 27% in the first quarter of 2000 over the
first quarter of 1999. Homes shipped increased 53% in units and 52% in value in
the second quarter of 2000 over the second quarter of 1999. Management
anticipated that the first quarter 2000 new order sales promotion, combined with
the second quarter price increase, would decrease the number of new home orders
in the second and third quarters of 2000 as some percentage of the new orders,
that would have otherwise been received in those quarters, would be accelerated
into the first quarter of 2000.




                                       13
<PAGE>   14

The following table illustrates the percentage change in the number and dollar
value of new orders in the second quarter of the current and each of the
preceding 2 years:

<TABLE>
<CAPTION>
                     % CHANGE IN              2000         1999         1998
                     --------------         --------     --------     --------
                     <S>                    <C>          <C>          <C>
                     Units                    -23%           28%         -6%
                     Dollar Value             -22%           31%          8%
</TABLE>

The Access and Select products represented 58% of new order units in the second
quarter of 2000 compared to 65% of new order units in the second quarter of
1999. The dollar value of the Access and Select product new orders was 46% of
the total dollar value of new orders in the second quarter of 2000 compared to
58% in the second quarter of 1999. The Select product was introduced in January
1999. Size and value of a home is a function of customer preference and may
change somewhat from period to period.

Entering the third quarter of 2000, the total backlog, stated in dollars, was
approximately $32 million and approximately equal to the backlog entering the
third quarter of 1999. Because the Company's business is seasonal, the backlog
data does not necessarily reflect the level of the Company's business on an
annual basis. While the Company expects the majority of the current backlog will
ship within the next 12 months, factors beyond the control of the Company, such
as weather conditions, customer financing, building permits, order cancellations
or customer requested delays, may affect the actual delivery date of an unknown
portion of backlog orders beyond the twelve month period.

REVENUE

The Company recognizes revenue from orders when the home package is shipped.

Revenue increased $2.71 million (27%) to $12.85 million in the second quarter of
2000 from $10.14 million in the second quarter of 1999, primarily due to the
increase in home revenue.

Revenue from homes increased $3.43 million (45%) to $11.11 million in the second
quarter of 2000 from $7.68 million in the second quarter of 1999. The number of
homes shipped increased 53% to 142 in the second quarter of 2000 from 93 in the
second quarter of 1999. Management believes the increase in home revenue is
primarily related to the increased backlog at December 31, 1999, the increase in
new orders in the first quarter of 2000 and the acceleration of some home
shipments into the second quarter of 2000 to avoid the full impact of the
previously announced price increase. Management believes that the acceleration
of some home shipments, which might have otherwise occurred in the third quarter
of 2000, may reduce third quarter home shipments.

The Access and Select products (the base price of which is 25%-30% less than the
traditional Cedar: Frame home) accounted for approximately 64% of home sales
revenue and 72% of home units shipped in the second quarter of 2000 compared to
51% of home sales revenue and 60% of the home units shipped in the second
quarter of 1999.

Revenue from sunrooms increased $50,000 (11%) to $500,000 in the second quarter
of 2000 from $450,000 in the second quarter of 1999.

Revenue from other sales decreased $770,000 (38%) to $1.24 million in the second
quarter of 2000 from $2.01 million in the second quarter of 1999. The decrease
is primarily related to the discontinuance of certain custom products previously
available for sale, a one-time material supply agreement in the second quarter
of 1999, an increase in dealer discounts applicable to certain material sales
and a decrease in service fees from canceled orders.

MATERIAL COSTS

In dollars, material costs increased $1.67 million (35%) to $6.38 million in the
second quarter of 2000 from $4.71 million in the




                                       14
<PAGE>   15

second quarter of 1999 on 49 (53%) additional home shipments. In general, the
price of cedar and other lumber and forest products utilized by the Company
remained fairly constant and in some cases decreased during the second quarter
of 2000.

As a percent of revenue, material costs were 49.6% in the second quarter of 2000
compared to 46.4% in the second quarter of 1999. The increase in material costs
as a percentage of revenue reflects the sales trend toward the Company's lower
priced Access and Select products, higher than anticipated duty refunds in the
second quarter of 1999, and decreased margins on certain material orders. Duty
refunds totaled approximately $160,000 in the second quarter of 1999.

OTHER COST OF GOODS SOLD

Non-material costs, included in the cost of goods sold, increased $530,000 (21%)
to $3.11 million in the second quarter of 2000 from $2.58 million in the second
quarter of 1999. This is primarily due to increased variable expenses related to
the increased number of homes shipped in the second quarter of 2000 compared to
the same period in 1999, increased catalog costs and to increased expenditures
related to the expansion of the Company's engineering capacity.

GROSS PROFIT

In dollars, gross profit increased $510,000 (18%) to $3.36 million in the second
quarter of 2000 from $2.85 million in the second quarter of 1999. This was
primarily due to the increased sales volume, which was partially offset by the
change in the sales mix of homes shipped, decreased margins on certain material
orders and the expansion of the Company's engineering capacity.

As a percentage of revenue, gross profit decreased to 26.2% of revenue in the
second quarter of 2000 from 28.1% of revenue for the same period in 1999.

The mix of home units shipped also impacts the dollar amount of gross profit and
gross profit as a percentage of revenue. The Access and Select products have
lower material costs than the Cedar Frame, but the dollar and percentage gross
margin is lower as well. The Access and Select products accounted for 64% of the
home revenue and 72% of home units shipped in the second quarter of 2000
compared with 51% of the home revenue and 60% of the home units shipped in the
second quarter of 1999. For all of 1999, the Access and Select products
accounted for 60% of the home units shipped and 52% of home revenue, while the
Access product accounted for 54% of the home units shipped and 46% of home
revenue in 1998. The Select product was introduced in January 1999.

OPERATING EXPENSES

Total operating expenses, including display court expenses, increased $430,000
(22%) to $2.39 million in the second quarter of 2000 from $1.96 million in the
second quarter of 1999. Operating expenses were 18.6% of revenue in the second
quarter of 2000 compared to 19.3% of revenue in the second quarter of 1999.

As a group, selling, and general and administrative expenses increased $360,000
(19%) to $2.21 million in the second quarter of 2000 from $1.85 million in the
second quarter of 1999. As a percentage of revenue, selling, and general and
administrative expenses were 17.2% in the second quarter of 2000 compared to
18.2% in the same period of 1999.

Selling expenses increased $180,000 (19%) to $1.12 million in the second quarter
of 2000 from $940,000 in the second quarter of 1999. This is primarily due to
expanded dealer recruitment and development efforts, increased advertising
levels, increased commissions and increased travel expenditures in the second
quarter of 2000 compared to the second quarter of 1999.

General and administrative expenses increased $180,000 (20%) to $1.09 million in
the second quarter of 2000 from $910,000 in the second quarter of 1999. This is
primarily due to increased payroll and related expenses, increased professional
fees, and increased supply expenditures in the second quarter of 2000 compared
to the same period of 1999.

Display court expenses increased $70,000 (64%) to $180,000 in the second quarter
of 2000 from $110,000 in the second quarter of




                                       15
<PAGE>   16

1999 primarily due to increased delivery of homes in the second quarter of 2000
compared to the same period of 1999.


OTHER INCOME (EXPENSE), NET

Other income (expense), net increased $190,000 (100%) to $190,000 in the second
quarter of 2000 from $0 in the second quarter of 1999. This is primarily due to
increased interest income ($60,000) and gains from foreign currency transactions
($130,000) from the second quarter of 1999.

INCOME TAX EXPENSE

The Company recognized an income tax expense of $360,000 (31%) in the second
quarter of 2000 compared to an income tax expense of $150,000 (16%) in the
second quarter of 1999. The overall income tax expense recognized in the second
quarter of 1999 was reduced due to the recognition of the income tax benefit
from Canadian operations not recognized in the first quarter of 1999 and the
recognition of the income tax benefit from the available carryforward of prior
year Canadian operating losses which were not previously recognized.


                                  YEAR-TO-DATE

NEW ORDERS

The number of new home orders increased 2% in the first six months of 2000
compared to the first six months of 1999. The dollar value of these new home
orders decreased 2% in the same time period. Size and value of a home is a
function of customer preference and may change somewhat from period to period.

The following table illustrates the percentage change in the number and dollar
value of new orders for the first six months of the current and each of the
preceding 2 years:

<TABLE>
<CAPTION>
                     % CHANGE IN              2000         1999         1998
                     --------------         --------     --------     --------
                     <S>                    <C>          <C>          <C>
                     Units                      2%          7%        -23%
                     Dollar Value              -2%         11%        -13%
</TABLE>

The Access and Select products represented 61% of new order units in the first
six months of 2000 and in the first six months of 1999. The dollar value of the
Access and Select products new orders was 53% of the total dollar value of new
orders in the first six months of 2000 and in the first six months of 1999.

REVENUE

Revenue increased $3.06 million (17%) to $21.3 million in the first six months
of 2000 from $18.24 million in the first six months of 1999, primarily due to
increases in home revenue.

Revenue from homes increased $4.09 million (30%) to $17.86 million in the first
six months of 2000 from $13.77 million in the first six months of 1999. The
number of houses shipped increased 34% to 226 in the first six months of 2000
from 169 in the first six months of 1999. Management believes the increase in
home revenue is primarily related to the increased backlog at December 31, 1999,
the increase in new orders in the first quarter of 2000 and the acceleration of
some home shipments into the second quarter of 2000 to avoid the full impact of
the previously announced price increase. The average revenue per home decreased
in the first six months of 2000 compared to the first six months of 1999.




                                       16
<PAGE>   17

The Access and Select products accounted for approximately 65% of home sales
revenue and 71% of home units shipped in the first six months of 2000 compared
to 46% of home sales revenue and 55% of the home units shipped in the first six
months of 1999.

Revenue from sunrooms decreased $50,000 (7%) to $670,000 in the first six months
of 2000 from $720,000 in the first six months of 1999. In early 2000, the
Company introduced its new PatioRoom, an updated sunroom product with less glass
and all the versatility of the traditional sunroom products at about two-thirds
the price of the traditional sunroom products.

Revenue from other sales decreased $980,000 (26%) to $2.77 million in the first
six months of 2000 from $3.75 million in the first six months of 1999. The
decrease is primarily related to the discontinuance in 2000 of certain custom
products previously available for sale, a one-time material supply agreement in
the first half of 1999, an increase in dealer discounts available on certain
material sales and decreases in service fees from canceled orders.


MATERIAL COSTS

In dollars, material costs increased $1.82 million (21%) to $10.49 million in
the first six months of 2000 from $8.67 million in the first six months of 1999
on 57 (34%) additional home shipments. In general, the price of cedar and other
lumber and forest products utilized by the Company have remained fairly constant
and in some cases decreased during the first six months of 2000.

As a percent of revenue, material costs were 49.3% in the first six months of
2000 compared to 47.5% in the first six months of 1999. The increase in material
costs as a percentage of revenue reflects the sales trend toward the Company's
lower priced Access and Select products, higher than anticipated duty refunds in
the second quarter of 1999 and decreased margins on certain material orders.

OTHER COST OF GOODS SOLD

Non-material costs, included in the cost of goods sold, increased $990,000 (20%)
to $6.04 million in the first six months of 2000 from $5.05 million in the first
six months of 1999. This is primarily due to increased variable expenses related
to the increased number of homes shipped in the first half of 2000 compared to
the same period in 1999 and to the expansion of the Company's engineering
capacity.

GROSS PROFIT

In dollars, gross profit increased $250,000 (6%) to $4.77 million in the first
six months of 2000 from $4.52 million in the first six months of 1999. This was
primarily due to the increased sales volume, which was partially offset by the
change in the sales mix of homes shipped, decreased margins on certain material
orders and the expansion of the Company's engineering capacity.

As a percentage of revenue, gross profit decreased to 22.4% of revenue in the
first six months of 2000 from 24.8% of revenue for the same period in 1999.

The Access and Select products accounted for 65% of the home revenue and 71% of
home units shipped in the first six months of 2000 compared with 46% of the home
revenue and 55% of the home units shipped in the same period of 1999.

OPERATING EXPENSES

Total operating expenses, including display court expenses, increased $430,000
(11%) to $4.37 million in the first six months of 2000 from $3.94 million in the
first six months of 1999.

As a group, selling, and general and administrative expenses increased $390,000
(11%) to $4.10 million in the first six months of 2000 from $3.71 million in the
first six months of 1999. As a percentage of revenue, selling and general and
administrative costs were 19.3% of revenue in the first six months of 2000
compared to 20.3% for the same period of 1999.




                                       17
<PAGE>   18

Selling expenses increased $210,000 (11%) to $2.1 million in the first six
months of 2000 from $1.89 million in the first six months of 1999. This increase
is primarily due to increased advertising, travel and dealer recruitment
expenditures in the first six months of 2000 compared to the same period of
1999.

General and administrative expenses increased $180,000 (10%) to $2 million in
the first six months of 2000 from $1.82 million in the first six months of 1999.
This is primarily due to increased payroll and related expenses, professional
fees, and supply expenditures in the first six months of 2000 compared to the
same period of 1999.

Display court expenditures increased $40,000 (17%) to $270,000 in the first six
months of 2000 from $230,000 in the first six months of 1999. This is primarily
due to increased expenditures related to increased home deliveries in the first
six months of 2000 compared to same period of 1999.

OTHER INCOME (EXPENSE), NET

Other income (expense), net changed $270,000 to $240,000 in the first six months
of 2000 from $(30,000) in the first six months of 1999. This is primarily due to
increased interest income and increased gains from foreign currency transactions
from the first six months of 1999.

INCOME TAX EXPENSE

The Company recognized an income tax expense of $200,000 (31%) in the first six
months of 2000 compared to an income tax expense of $80,000 (15%) in the first
six months of 1999. The overall income tax expense recognized in the first six
months of 1999 was reduced due to the recognition of the income tax benefit from
the available carryforward of prior year Canadian operating losses. The Company
did not recognize the income tax benefits in 1998 for prior year Canadian
operating losses due to the inability to carryback the Canadian net operating
losses and the uncertainty of utilizing the Canadian net operating losses
against future taxable Canadian income.

LIQUIDITY

The Company's policy is that all home and sunroom orders be accompanied by a
cash deposit and that units be paid in full before shipment or be shipped on a
C.O.D. basis. The majority of home and sunroom sales are prepaid. Lumber sales
are made on terms common to the industry.

The Company primarily pays its vendors within stated terms and takes advantage
of discounts for early payments whenever available. Operations and customer
deposits for home and sunroom orders are the Company's primary source of cash.

The Company maintains a $1.5 million operating line of credit with a financial
institution. The line of credit bears interest at the rate of prime plus 1% and
is secured by a pledge of specific assets. The operating line of credit expires
on March 30, 2001. The Company also maintains a letter of credit with a
financial institution securing payment of the Industrial Revenue Bonds issued in
November 1997. The letter of credit expires on November 15, 2002. The Company
does not foresee the need to borrow on its operating line of credit during 2000.

The Company continues to hedge a portion of its expected non-cedar lumber needs
for its home packages using options and futures contracts. The program's
objective is to manage well-defined commodity risks. These derivative financial
instruments are not being used for trading purposes.

CASH FLOW

OPERATING ACTIVITIES

Operations provided $830,000 in cash in the first six months of 2000 compared to
providing $3.4 million in cash in the first six months of 1999. In the first six
months of 2000, operating results provided $1.17 million in cash while changes
in operating assets used $340,000 in cash. Cash provided by operating assets was
primarily from decreases in trade and operating notes receivable and increases
in current liabilities, which were offset by cash used to increase inventory and
prepaid expenses and promotional materials. The decrease in trade and operating
notes receivable is primarily due to seasonal collections as a result of
improved dealer cash flow from increased home deliveries. The increase in
current liabilities is primarily related to the increase in inventory levels,
expenditures related to increased home shipments, increases in customer
deposits, expenditures related to the Company's new planbook and the timing of
scheduled payments in relation to period end.

In the first six months of 1999, operating results provided $1.09 in cash while
changes in operating assets provided an additional $2.31 million in cash. Cash
provided by changes in operating assets was primarily from decreases in trade
and operating notes receivable, reductions in prepaid expenses and promotional
materials and increases in current liabilities. The reductions in trade and




                                       18
<PAGE>   19

operating notes receivable was primarily related to increased seasonal
collections as a result of the improved dealer cash flow from increased home
deliveries. The increase in current liabilities is primarily related to the
increase in customer deposits and the timing of scheduled payments in relation
to period end.

The Company's current ratio was 2.17:1.0 at July 2, 2000 compared to 2.18:1.0 at
December 31, 1999.

INVESTMENT ACTIVITIES

Cash used for investment activities in the first six months of 2000 was $470,000
compared to $3.16 million in the first six months of 1999. In the first six
months of 2000, cash expenditures for property, plant and equipment totaled
$590,000 which were partially offset by cash received from the repayment of
non-operating notes receivable.

In the first six months of 1999, cash expenditures for property, plant and
equipment totaled $250,000 and net cash used to purchase short-term investments
totaled $2.96 million. These expenditures were partially offset by cash received
from the repayments of non-operating notes receivable.

In the first quarter of 2000, the Company took title to a dealer's display court
(land and model) located in British Columbia, Canada in exchange for forgiving
the mortgage it held on the property and other debt owing to the Company by the
dealer.

FINANCING ACTIVITIES

Cash provided by financing activities was $0 in the first six months of 2000
compared to using $280,000 in the first six months of 1999. In the first six
months of 2000, $60,000 of cash was used to repay long-term debt, while
long-term debt financing provided $60,000 of cash. In the first six months of
1999, $50,000 of cash was used to repay long-term debt. An additional $270,000
of cash was used to retire a note payable relating to the Company's assumption
of debt in a transaction where the Company took title to a dealer's display
court (land and model) located in Highland, Michigan.

EXCHANGE RATES

In the first six months of 2000, unfavorable changes in exchange rates had a
$60,000 negative effect on cash and cash equivalents while in the first six
months of 1999 favorable changes in exchange rates had a $120,000 positive
effect on cash and cash equivalents.


COMPARISON OF JULY 2, 2000 BALANCE SHEET TO PRIOR YEAR

CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

Cash, cash equivalents and short-term investments increased $1.98 million (30%)
to $8.54 million at July 2, 2000 from $6.56 million at July 4, 1999. This
increase is primarily due to the favorable operating results, the refund of
prior years federal taxes, and increases in customer deposits and other current
liabilities, which were partially offset by the new planbook development costs,
increases in inventory and capital expenditures.

RECEIVABLES

Net accounts receivable decreased $1.36 million (51%) to $1.33 million at July
2, 2000 from $2.69 million at July 4, 1999. This decrease is primarily due to
the reduction in refundable federal taxes reflecting the receipt of the federal
tax refunds relating to the 1997 and 1998 operating losses.

INVENTORY

Production inventories (raw materials, work-in-process and finished goods)
increased $850,000 (13%) to $7.4 million at July 2, 2000 from $6.55 million at
July 4, 1999. This increase is due to the advance purchase of selected cedar raw
material inventory.

PROMOTIONAL MATERIALS

Promotional materials increased $340,000 (52%) to $990,000 at July 2, 2000 from
$650,000 at July 4, 1999. This increase reflects the classification of a portion
of the on-hand inventory of the Company's completed new planbooks as a current
asset.




                                       19
<PAGE>   20

OTHER ASSETS

Other assets increased $170,000 (12%) to $1.61 million at July 2, 2000 from
$1.44 million at July 4, 1999. This increase is primarily related to the final
development costs of the Company's new planbook, which was offset by the
reduction in long-term notes receivable related to the note receivable exchanged
for the display court located in British Columbia, Canada, payments received on
other notes, and the reclassification of a portion of the on-hand inventory of
the Company's completed new planbooks as a current asset.

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses increased $770,000 (29%) to $3.39 million
at July 2, 2000 from $2.62 million at July 4, 1999. This increase is primarily
due to the increase in inventory levels, increased home deliveries and the
timing of scheduled payments in relation to period end.

CUSTOMER DEPOSITS

Customer deposits increased $350,000 (7%) to $5.53 million at July 2, 2000 from
$5.18 million at July 4, 1999.


CAPITAL EXPENDITURE FINANCING

Capital expenditures in 2000 will be financed from cash flow generated from
operations, leasing or debt.


ITEM 3 -  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the exposure to loss resulting from changes in interest rates,
foreign currency exchange rates, commodity prices and equity prices. The primary
market risks to which the Company is exposed are commodity lumber prices,
interest rates and foreign currency exchange rates.

The Company, from time to time, enters into futures contracts to hedge future
purchases of specific types and grades of non-cedar lumber with the objective of
reducing risk due to market fluctuations. At July 2, 2000, the Company had 35
futures contracts with broker-dealers of approximately $1.02 million maturing
through March 2001 with a net deferred loss of $180,000. Such losses in fair
value, if realized, would be offset by the lower costs of lumber purchased at
market value. At July 4, 1999, the Company had 29 futures contracts with
broker-dealers of approximately $810,000 maturing through November 1999 with a
net deferred gain of $140,000. Such gains in fair value, if realized, would be
offset by the higher costs of lumber purchased at market value.

The Company is subject to foreign currency exchange rate exposure, primarily
related to Canadian operations and the sale of homes to Canadian customers.
Historically, this exposure has had a minimal impact on the Company. Home sales
into countries other than Canada are made in U.S. dollars. At the present time,
the Company does not hedge foreign currency risk, but may hedge known
transaction exposures in the future.

The Company's exposure to changes in interest rates is minimal. Interest on
short-term investments of less than 90 days is based on market interest rates.
At July 2, 2000, the Company's investment in fixed rate instruments was
approximately $4.03 million. Of this amount approximately $3.95 million was
invested in the United States and approximately $80,000 was invested in Canada.
Interest rates on the U.S. investments range from 6.1% to 6.7% and mature from
July 26, 2000 through October 25, 2000. Interest rates on the Canadian
investments range from 4.1% to 4.2%, and mature from September 22, 2000 through
February 22, 2001. Because of the relative short-term nature of these
investments, the Company's exposure to interest rate fluctuation is greatly
reduced. At July 4, 1999, the Company's investment in fixed rate instruments was
approximately $3.03 million. Of this amount approximately $2.96 was invested in
the United States and approximately $70,000 was invested in Canada. Interest
rates on the U.S. investments ranged from 5.2% to 5.5% and matured from August
16, 1999 through October 28, 1999. Interest rates on the Canadian investments
ranged from 3.6% to 3.7% and matured from September 22, 1999 though February 24,
2000.




                                       20
<PAGE>   21

All of the Company's long-term debt is fixed rate. The Company's line of credit
is based on the prime rate. During the first six months of 2000 and throughout
all of 1999, the Company had no amounts owing on its line of credit.

OTHER MATTERS

Statements contained in this report that are not based on historical facts are
forward-looking statements subject to uncertainties and risks including but not
limited to: the consolidation of operations, trade and government actions,
changing economic conditions, trends in the housing industry, raw material and
labor costs, availability of raw materials, the ability to obtain orders and
recruit dealers, demographic influences, results of litigation and continued
acceptance of products and services.




                                       21
<PAGE>   22
                            LINDAL CEDAR HOMES, INC.
                                AND SUBSIDIARIES



ITEM 4 - RESULTS OF VOTES OF SECURITIES HOLDERS

The following matters were approved by the shareholders at the Company's Annual
Meeting of Shareholders held on May 25, 2000:


<TABLE>
<CAPTION>
   PROPOSAL                                                                                   AUTHORITY
    NUMBER              DESCRIPTION OF PROPOSAL                FOR           AGAINST      WITHHELD/ABSTAIN
   --------             -----------------------             ---------        ------       ----------------
<S>                     <C>                                 <C>              <C>          <C>
      1.         Election of Directors:
                         Robert W. Lindal                   2,340,508        94,229
                         Martin J. Lindal                   2,340,508        94,229
                         Charles T. Collins                 2,340,508        94,229
                         Charles R. Widman                  2,339,508        95,229

      2.         Ratification of KPMG, LLP as the
                 Company's independent auditors for
                 the year ending December 31, 2000          2,362,833        71,504               400
</TABLE>



PART II: OTHER INFORMATION


Item 1.  LEGAL PROCEEDINGS
(See note 8 to the financial statements)


Item 6(a)  Exhibits

The following exhibits are being filed:

           27   Financial Data Schedule for period ended July 2, 2000



Item 6(b) - REPORTS ON FORM 8-K

There were no reports on Form 8-K filed during the second quarter of 2000.




                                       22
<PAGE>   23
                            LINDAL CEDAR HOMES, INC.
                                AND SUBSIDIARIES


                                   Signature:

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



                                             LINDAL CEDAR HOMES, INC.



                                  By:         /s/ Robert W. Lindal
                                     ----------------------------------------
                                                 Robert W. Lindal
                                       Chairman and Chief Executive Officer



                                  By:           /s/ Dennis Gregg
                                     ----------------------------------------
                                                    Dennis Gregg
                                               Chief Financial Officer



DATE:
August  16, 2000




                                       23
<PAGE>   24
                            Lindal Cedar Homes, Inc.
                                  Exhibit Index

Exhibits are numbered in accordance with Item 601 of Regulation S-B



EXHIBIT
NUMBERS                            DESCRIPTION
-------                            -----------

  27          Financial Data Schedule for period ended July 2, 2000





                                       24