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


                                   FORM 10-Q


(Mark One)
/X/ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended October 1, 1995

/ / Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period from         to
                                           --------   --------

Commission File Number 0-6087


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


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


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


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


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

Yes  X   No 
    ---     ---
Common stock outstanding at October 26, 1995:  4,046,906 shares
at $.01 par value.


                                    1 of 17


<PAGE>   2


                            LINDAL CEDAR HOMES, INC.
                                AND SUBSIDIARIES


                                     INDEX


<TABLE>
<CAPTION>
                                                                                                 Page Number
<S>               <C>                                                                            <C>
Part I.           Financial Information

     Item 1       Financial Statements
                       Consolidated Balance Sheets                                                     4
                       Consolidated Statements of Earnings                                             5
                       Consolidated Statements of Cash Flows                                           6
                       Notes to Consolidated Financial Statements                                      8

     Item 2       Management's Discussion and Analysis of Financial Condition and 
                       Results of Operations                                                          14

Part II.          Other Information

     Item 6(b)    Reports on Form 8-K                                                                 16

     Signatures                                                                                       17
                                                                                                           
</TABLE>

                                       2


<PAGE>   3





                            LINDAL CEDAR HOMES, INC.
                                AND SUBSIDIARIES

                         PART I:  FINANCIAL INFORMATION




Item 1 - Financial Statements

 




                                      3





<PAGE>   4

                            LINDAL CEDAR HOMES, INC.
                                AND SUBSIDIARIES

                          Consolidated Balance Sheets

                     October 1, 1985 and December 31, 1994

            (Dollar amounts in thousands, except per share amounts)

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
                                                                                                 1995         1994
-------------------------------------------------------------------------------------------------------------------


                                           Assets                                             (unaudited)
<S>                                                                                           <C>            <C>
Current assets:
     Cash                                                                                      $ 2,008        3,219
     Short-term investments                                                                      2,101          475
     Receivables:
       Trade                                                                                     2,352        2,042
       Current installments of long-term notes receivable                                          105           46
       Refundable income taxes                                                                       -           59
                                                                                               -------       ------
                                                                                                 2,457        2,147
       Less allowance for doubtful receivables                                                     232          203
                                                                                               -------       ------
                      Net receivables                                                            2,225        1,944
     Inventories                                                                                 9,113        8,488
     Prepaid expenses                                                                            2,008        1,415
     Deferred income taxes                                                                         118          103
                                                                                               -------       ------
                      Total current assets                                                      17,573       15,644
Long-term notes receivable, excluding current installments                                         848          601
Investment in and advances to affiliate                                                              -          340
Property, plant and equipment, at cost, less accumulated depreciation and 
     amortization                                                                               10,219        9,679
Other assets, at cost, less accumulated amortization                                               659          650
                                                                                               -------       ------
                                                                                               $29,299       26,914
                                                                                               -------       ------
                            Liabilities and Stockholders' Equity

Current liabilities:
     Current installments of long-term debt                                                         47           59
     Accounts payable - trade                                                                    2,139        2,255
     Accrued salaries and wages                                                                    490          472
     Other accrued expenses                                                                        653          577
     Income taxes payable                                                                          454            -
     Customer deposits                                                                           4,907        3,882
                                                                                               -------       ------
                      Total current liabilities                                                  8,690        7,245

Long-term debt, excluding current installments                                                   1,228        1,864

Deferred income taxes                                                                               83          107

Stockholders' equity:
     Common stock of $.01 par value.  Authorized 10,000,000 shares; issued and 
          outstanding 4,046,906 shares in 1995 and 4,030,873 shares in 1994                         40           40
     Additional paid-in capital                                                                 15,811       15,778
     Cumulative translation adjustment                                                            (623)        (810)
     Retained earnings                                                                           4,070        2,690
                                                                                               -------       ------
                      Total stockholders' equity                                                19,298       17,698
-------------------------------------------------------------------------------------------------------------------
                                                                                               $29,299       26,914
-------------------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes to consolidated financial statements.

                                       4
<PAGE>   5

                            LINDAL CEDAR HOMES, INC.
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF EARNINGS

           For the periods ended October 1, 1995 and October 2, 1994

            (Dollar amounts in thousands, except per share amounts)

                                  (unaudited)


<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
                                                     Nine Months Ended           Quarters Ended
                                                  ------------------------    -----------------------
                                                  October 1,    October 2,    October 1,   October 2,
                                                      1995         1994         1995         1994
-----------------------------------------------------------------------------------------------------
<S>                                               <C>           <C>           <C>          <C>
Revenue                                            $ 32,113       29,576       11,536       10,979
Cost of goods sold                                   23,826       22,279        8,415        8,038
                                                   --------------------------------------------------
            Gross profit                              8,287        7,297        3,121        2,941

Operating expenses:
     Selling, general and administrative              6,738        6,292        2,222        2,268
      expenses
     Display court expenses                             550          384          198          148
                                                   --------------------------------------------------
            Total operating expenses                  7,288        6,676        2,420        2,416
                                                   --------------------------------------------------
            Operating income                            999          621          701          525

Other income (expense):
     Equity in earnings of affiliate                    891         --           --           --   
     Rental income                                      232          135           92           45
     Interest income                                    285           59          173           28
     Interest expense                                  (168)        (153)         (72)         (51)
     Gain on disposal of property and                     
      equipment, net                                      1           65           (4)           2
                                                   --------------------------------------------------
            Other income, net                         1,241          106          189           24
                                                   --------------------------------------------------

            Earnings before income tax expense        2,240          727          890          549
Income tax expense                                      860          191          289          154
                                                   --------------------------------------------------
            Net earnings                           $  1,380          536          601          395
                                                   --------------------------------------------------

Net earnings per common share                      $    .34          .13          .15          .10
-----------------------------------------------------------------------------------------------------
</TABLE>


See accompanying notes to consolidated financial statements.

                                       5

<PAGE>   6

                            LINDAL CEDAR HOMES, INC.
                                AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

         For the nine months ended October 1, 1995 and October 2, 1994

                                 (In thousands)

                                  (unaudited)

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
                                                                                   1995         1994
-------------------------------------------------------------------------------------------------------
<S>                                                                              <C>            <C>   
Increase (Decrease) in Cash and Cash Equivalents
Cash flows from operating activities:
     Cash received from customers                                                $ 33,016       30,070
     Cash paid to suppliers and employees                                         (31,320)     (28,639)
     Interest received                                                                243           44
     Interest paid                                                                   (174)        (154)
     Income tax expense                                                              (378)         (68)
     Cash paid for litigation settlement, including associated legal fees            (126)        (105)
                                                                                 ----------------------
                      Net cash provided by operating activities                     1,261        1,148

Cash flows from investing activities:
     Cash received for repayment of notes (not related to the sale of homes)           11          110
     Additions to plant and equipment                                              (1,102)        (555)
     Purchase of short-term cash investments                                       (3,323)        (280)
     Liquidation of short-term cash investments                                     1,699        1,676
     Disbursements for loans (not related to the sale of homes)                      (243)        (219)
     Proceeds from sale of property and equipment                                       2          200
     Additions to other assets                                                       (169)        (158)
     Investment in affiliate                                                        1,245          (65)
                                                                                 ----------------------
                      Net cash provided by (used in) investing activities          (1,880)         709

Cash flows from financing activities:
     Proceeds from exercise of stock options                                           33            7
     Repayment of long-term debt                                                      (43)         (67)
     Retirement of long-term debt                                                    (604)        --
     Addition to long-term debt                                                      --             36
                                                                                 ----------------------
                      Net cash used in financing activities                          (614)         (24)
Effect of exchange rates on cash and cash equivalents                                  22           (5)
                                                                                 ----------------------
                      Net increase (decrease) in cash and cash equivalents         (1,211)       1,828
Cash and cash equivalents at beginning of period                                    3,219        1,362
-------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period                                       $  2,008        3,190
-------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes to consolidated financial statements.

                                       6

<PAGE>   7

                            LINDAL CEDAR HOMES, INC.
                                AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED

                                 (In thousands)

                                  (unaudited)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
                                                                                        1995        1994
----------------------------------------------------------------------------------------------------------
<S>                                                                                   <C>          <C>
Reconciliation of net earnings to net cash provided by operating activities:
     Net earnings                                                                     $ 1,380         536

     Adjustments to reconcile net earnings to net cash provided by operating
       activities:
          Depreciation and amortization of plant and equipment                            631         577
          Amortization of other assets                                                    152          18
          Amortization of display homes                                                   199         131
          Gain on disposal of property and equipment                                       (1)        (65)
          Equity in earnings of affiliate                                                (891)        --
          Changes in certain assets and liabilities:
              Increase in net receivables                                                (255)       (728)
              Increase in inventories exclusive of amortization of display models        (720)     (1,015)
              Increase in prepaid expenses related to operating activities               (604)       (136)
              Increase in current liabilities other than current portion of             
                 long-term debt                                                         1,485       1,674
              Increase (decrease) in deferred income taxes                                (39)        119
              (Increase) decrease in notes receivable related to operating                
                 activities                                                               (76)         37
----------------------------------------------------------------------------------------------------------
                      Total adjustments                                                  (119)        612
----------------------------------------------------------------------------------------------------------
                      Net cash provided by operating activities                       $ 1,261       1,148
----------------------------------------------------------------------------------------------------------
</TABLE>



See accompanying notes to consolidated financial statements.

                                       7
<PAGE>   8

                            LINDAL CEDAR HOMES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

             October 1, 1995, December 31, 1994 and October 2, 1994

            (Dollar amounts in thousands, except per share amounts)

--------------------------------------------------------------------------------

(1)   BASIS OF PRESENTATION

      The accompanying unaudited consolidated financial statements have been
      prepared in accordance with generally accepted accounting principles,
      except as noted below, and include all recurring adjustments that are
      considered necessary by management to fairly state the results of the
      interim periods. These consolidated financial statements and related notes
      have been prepared pursuant to the rules and regulations of the Securities
      and Exchange Commission. Accordingly, certain information and footnote
      disclosures normally included in the consolidated financial statements
      prepared in accordance with generally accepted accounting principles have
      been omitted. Due to the seasonality of the Company's business, the
      accompanying consolidated financial statements may not necessarily be
      indicative of the results to be obtained for the full year. This report
      should be read in conjunction with the Company's Annual Report to the
      Securities and Exchange Commission on Form 10-K for the year ended
      December 31, 1994.

(2)   EARNINGS PER COMMON SHARE

      Earnings per share are computed based on the weighted average number of
      common shares and common share equivalents outstanding. When dilutive,
      stock options are included as common share equivalents using the treasury
      stock method.

      There was no difference between primary and fully diluted earnings per
      share for all periods presented. The number of shares used to compute
      primary and fully diluted earnings per share was 4,084,872 and 4,101,544
      for the third quarter of 1995 and 4,043,542 and 4,047,356 for the third
      quarter of 1994, 4,077,475 and 4,087,577 for the first nine months of 1995
      and 4,059,223 and 4,060,838 for the first nine months of 1994.

(3)   INVENTORIES

      A summary of inventories follows (in thousands):

<TABLE>
<CAPTION>
                                             October 1,   December 31,
                                                1995          1994
                                               -------------------
<S>                                          <C>          <C>
              Raw materials                    $2,674        2,634
              Work-in-process                   1,996        1,389
              Finished goods                    2,968        2,886
              Display homes                     1,475        1,579
                                               -------------------
                                               $9,113        8,488
                                               -------------------
</TABLE>

                                                                     (Continued)

                                       8
<PAGE>   9

                            LINDAL CEDAR HOMES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


            (Dollar amounts in thousands, except per share amounts)

--------------------------------------------------------------------------------

(4)   INVESTMENT IN AFFILIATE

      As discussed in the Company's December 31, 1994 Form 10-K, the British
      Columbia Ministry of Forests awarded the Company the rights to harvest and
      sell approximately 50,000 cubic meters of timber between 1994 and 1997.
      The Company entered into an agreement with an unaffiliated company who
      provided services related to planning, management of timber harvesting and
      marketing of the logs. A new corporation, in which the Company and the
      unaffiliated company each own 50%, was formed in 1994. The investment in
      this affiliate is accounted for under the equity method. Any asset or
      equity distributions from the affiliate are made in accordance with the
      respective ownership interests. Contributions to the affiliate were for
      working capital requirements. The harvesting of the timber began during
      the fourth quarter of 1994. The sale of harvested logs began in the first
      quarter of 1995 and was essentially completed in the second quarter of
      1995.

      Summarized financial information of the equity affiliate was as follows
      (in thousands):

                 Condensed Statements of Operations/Information

<TABLE>
<CAPTION>
                                              Nine months ended        Quarter ended
                                               October 1, 1995        October 1, 1995
                                              ---------------------------------------
<S>                                           <C>                     <C>
              Revenue                               $6,580                   --
              Earnings before income taxes           2,420                   --
              Net earnings                           1,370                   --
</TABLE>                                           

(5)   PROPERTY, PLANT AND EQUIPMENT

      Property, plant and equipment consists of the following (in thousands):

<TABLE>
<CAPTION>
                                                        October 1,     December 31,
                                                           1995             1994
                                                        ----------     ------------
<S>                                                      <C>             <C>
Building and leasehold improvements                      $ 7,594         $ 7,445
Equipment                                                  4,642           4,192
Furniture and fixtures                                     2,922           2,383
                                                         -------         -------
                                                          15,158          14,020

Less accumulated depreciation and amortization             8,841           8,135
                                                         -------         -------  
                                                           6,317           5,885
Land                                                       3,902           3,794
                                                         -------         ------- 
          Net property, plant and equipment              $10,219           9,679
                                                         =======         ======= 
</TABLE>

                                                                     (Continued)

                                       9
<PAGE>   10



                            LINDAL CEDAR HOMES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


            (Dollar amounts in thousands, except per share amounts)

--------------------------------------------------------------------------------

(6)   LONG-TERM DEBT
      Long-term debt consists of the following (in thousands):

<TABLE>
<CAPTION>
                                                                             October 1,    December 31,
                                                                                1995           1994
                                                                               ----------------------
<S>                                                                          <C>           <C>
      First mortgage note payable, due in monthly installments of
              $13, including interest at 9.5%; final payment due 2009          $1,240          1,272
      First mortgage note payable, due in monthly installments of
              $7, including interest at 11%; final payment due 2010              --              616
      Other                                                                        35             35
                                                                               ----------------------
                Total long-term debt                                            1,275          1,923

      Less current installments                                                    47             59
                                                                               ----------------------
                Long-term debt, excluding current installments                 $1,228          1,864
                                                                               ----------------------
</TABLE>

      At December 31, 1994, certain properties, having an aggregate net book
      value of approximately $4,552, were pledged as collateral on the above
      long-term debt.

      At October 1, 1995, the Company had $2,870 of unsecured lines of credit
      with banks to be drawn upon as needed, with interest at 1/2% above the
      prime rate.

(7)   OUTSTANDING STOCK OPTIONS

      (a)   EMPLOYEE STOCK OPTION PLANS

            The Company has provided for the granting of stock options to key
            employees under two plans: the 1984 Incentive Stock Option Plan (the
            1984 Plan) and the 1988 Combined Incentive Stock Option and
            Nonqualified Stock Option Plan (the 1988 Plan). Both plans are
            administered by the Stock Option Committee of the Board of Directors
            (Committee).

            Under the terms of the 1984 Plan, incentive options to purchase
            shares of the Company's common stock were granted at a price equal
            to the market price of the stock at the date of grant. The 1984 Plan
            expired on December 21, 1994 and no future options will be granted
            under this plan.

            Under the terms of the 1988 Plan, both incentive and nonqualified
            options to purchase shares of the Company's common stock may be
            granted. Options granted under this plan may be designated as
            incentive or nonqualified at the discretion of the Committee. The
            exercise price of the options granted under this plan is set at the
            time of grant, but may not be less than the fair market value of the
            Company's stock at the date of grant.


                                                                     (Continued)

                                       10
<PAGE>   11



                            LINDAL CEDAR HOMES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


            (Dollar amounts in thousands, except per share amounts)

--------------------------------------------------------------------------------

            At October 26, 1995, there were options outstanding under both plans
            to purchase 323,068 shares of stock at per share prices ranging from
            $2.16 to $5.38. Of these 323,068 options, 259,370 were currently
            exercisable at an average exercise price of $4.12 per share. From
            January 1, 1995 to October 26, 1995, options to purchase 16,033
            shares were exercised at per share prices ranging from $.92 to $3.91
            and options to purchase 1,894 shares were relinquished.

      (b)   DIRECTORS AND DISTRIBUTORS STOCK OPTION PLAN

            The Company has provided for the granting of stock options to
            nonemployee directors and distributors who serve on the Top
            Distributor Advisory Council (Council).

            At the annual meeting of shareholders on May 25, 1995, an amendment
            was approved to the Directors and Distributors Stock Option Plan
            (Plan) to increase the number of options granted to nonemployee
            directors and to increase the number of shares that may be issued
            under the Plan. Under the amendment, nonemployee directors, when
            first elected to the Board of Directors, would receive an initial
            grant of options to purchase 10,000 shares of the Company's common
            stock at the fair market value upon that date. Each of the
            nonemployee directors in office when the amendment was approved
            received a grant of options to purchase 10,000 shares at the fair
            market value on the date the amendment was approved, $3.75 per
            share. The amendment further provided that, commencing October 1,
            1995 and on each October 1st thereafter, options would be granted to
            nonemployee members of the Board of Directors to purchase 5,000
            shares of the Company's common stock at the fair market value on
            that date. The amendment to the Plan also increased the number of
            shares reserved for issuance under the Plan from 110,000 to 210,000.
            The vesting of options granted under the Plan was not amended.

            Pursuant to this amendment, on October 2, 1995 options to purchase
            25,000 shares were granted at a per share price of $4.25.

            At October 26, 1995, there were options outstanding to purchase
            83,934 shares at per share prices ranging from $3.75 to $6.36. Of
            these 83,934 options to purchase shares, 7,695 were currently
            exercisable at per share prices of $6.00 and $6.36. No options have
            been exercised.


                                                                     (Continued)


                                       11
<PAGE>   12


                            LINDAL CEDAR HOMES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


            (Dollar amounts in thousands, except per share amounts)

--------------------------------------------------------------------------------

            Each distributor who serves on the Council on February 1 is granted
            options to purchase 100 shares of common stock for each year of
            service on the Council. Pursuant to an amendment to the plan
            ratified by the shareholders on May 26, 1994, the exercise price of
            the options granted for 1995 and future years will be the market
            price of the Company's stock on the first business day of October
            preceding the year in which the options are granted. At October 26,
            1995, there were options outstanding to purchase 13,910 shares of
            stock at per share prices of $6.36, $5.00 and $3.50. Of these 13,910
            options to purchase shares, 5,586 were currently exercisable at per
            share prices of $6.36, $5.00 and $3.50. From January 1, 1995 to
            October 26, 1995, options to purchase 4,400 shares were granted at a
            per share price of $3.50. No options have been exercised.

      (c)   OTHER GRANTS

            On June 30, 1995, the Executive Committee of the Board of Directors
            granted options to purchase 10,000 shares to Robert McLennaghan for
            consulting services to the Company. The per share exercise price of
            the options was the fair market value on the date of grant, $3.75.
            The options were immediately exercisable and have a term of 10
            years. These options were not granted under any plan.

            Mr. McLennaghan is the husband of Bonnie McLennaghan, who is the
            daughter of Sir Walter Lindal and the sister of Robert Lindal,
            Douglas Lindal and Martin Lindal.

(8)   INCOME TAXES

      Income tax expense (benefit) was allocated as follows (in thousands):

<TABLE>
<CAPTION>
                                      Nine Months Ended               Quarters Ended
                                  --------------------------    --------------------------
                                  October 1,      October 2,    October 1,      October 2,
                                    1995            1994           1995           1994
                                  --------------------------------------------------------
<S>                               <C>             <C>           <C>             <C>
            Current:
               U.S. Federal          $ 585            220            401            241
               Canadian                296           (149)          (102)          (126)
               State                    17           --                7           --
                                    ----------------------------------------------------
                                       898             71            306            115
            Deferred:
               U.S. Federal            (36)           124            (20)            39
               Canadian                 (2)            (4)             3           --
                                    ----------------------------------------------------
                                       (38)           120            (17)            39
                                    ----------------------------------------------------
                                     $ 860            191            289            154
                                    ----------------------------------------------------
</TABLE>

      The Company's consolidated Canadian subsidiary had a pretax loss,
      excluding the earnings of the affiliate, of approximately $280,000 in the
      first nine months of 1994 and $342,000 in the first nine months of 1995.


                                                                     (Continued)


                                       12
<PAGE>   13



                            LINDAL CEDAR HOMES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



            (Dollar amounts in thousands, except per share amounts)

--------------------------------------------------------------------------------

      The tax effects of temporary differences that give rise to significant
      portions of the deferred tax assets and deferred tax liabilities were as
      follows (in thousands):

<TABLE>
<CAPTION>
                                                                            October 1,    December 31,
                                                                              1995           1994
                                                                            --------------------------
<S>                                                                         <C>            <C>
      Deferred tax assets:
            Receivables, due to the allowance for doubtful receivables          $ 80            68
            Uniform inventory capitalization for tax purposes                     15            15
            Accrued expenses, deductible in different years for tax               23            20
            Foreign tax credit carryforward available through 1995                 6             6
                                                                                -------------------
                       Total gross deferred tax assets                           124           109

       Less valuation allowance                                                    6             6
                                                                                -------------------
                       Net deferred tax assets                                   118           103

      Deferred tax liabilities - property, plant and equipment,
          principally due to differences in basis of assets and
          depreciation                                                            83           107
                                                                                -------------------
                       Net deferred tax liabilities                             $ 35            (4)
                                                                                -------------------
</TABLE>

(9)   OTHER FINANCIAL INFORMATION

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

<TABLE>
<CAPTION>
                            1st Quarter       2nd Quarter      3rd Quarter    4th Quarter
                            -------------------------------------------------------------
<S>                         <C>               <C>              <C>            <C>
         1995
         ----
Revenue                     $  6,630             13,947           11,536

         1994
         ----
Revenue                        7,076             11,521           10,979           9,957

         1993
         ----
Revenue                        7,171             12,776           12,965           9,084

         1992
         ----
Revenue                        5,565             12,478           11,738           8,802

         1991
         ----
Revenue                        7,201              9,910           10,361           9,814
</TABLE>



                                       13
<PAGE>   14


                            LINDAL CEDAR HOMES, INC.
                                AND SUBSIDIARIES

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

                                 THIRD QUARTER

RESULTS OF OPERATIONS

Revenue increased $557,000 (5%) from the third quarter of 1994 to the third
quarter of 1995 primarily due to home and sunroom sales.

Home and sunroom revenue increased $900,000 (11%) from $8.3 million in the third
quarter of 1994 to $9.2 million in the third quarter of 1995.  The number of
home units shipped increased 13% from 104 units in the third quarter of 1994 to
118 units in the third quarter of 1995.  The average revenue per home unit
shipped decreased 2% from approximately $71,500 in the third quarter of 1994 to
approximately $70,200 in the third quarter of 1995.  The size and value of a
home unit is a function of customer preference and may change somewhat from
period to period.

The dollar value of new orders decreased 14% from the third quarter of 1994 to
the third quarter of 1995.  The number of new orders decreased 18% from the
third quarter of 1994 to the third quarter of 1995.

The gross profit percentage (gross profit/revenue) was 27% in the third quarters
of both 1994 and 1995.  In the third quarters of 1994 and 1995, the cost of
goods sold was reduced by $160,000 and $189,000, respectively, for U.S.
government refunds of duty on Canadian lumber.  With these credits removed from
the cost of goods sold, the gross profit percentage was 25% in the third
quarters of both 1994 and 1995.

Selling, general and administrative expenses decreased $46,000 (2%) from the
third quarter of 1994 to the third quarter of 1995.  Commission expense
decreased $72,000 (31%) due to the phase out of the manufacturer's
representative program, which was replaced by the current regional management
structure.  Bad debt expense increased $46,000 from the third quarter of 1994 to
the third quarter of 1995 due to the 1994 reversal of previously accrued
amounts.

Display court expenses increased $50,000 (34%) from the third quarter of 1994 to
the third quarter of 1995 primarily due to commission expense.

                                  YEAR-TO-DATE

RESULTS OF OPERATIONS

Revenue increased $2.5 million (9%) from 1994 to 1995 due to home and sunroom
sales.

Home and sunroom revenue increased $2.6 million (11%) from $23.3 million in 1994
to $25.9 million in 1995.  The number of home units shipped increased 9% from
308 in 1994 to 336 in 1995.  The average revenue per home unit shipped increased
4% from approximately $68,500 in 1994 to approximately $71,400 in 1995.


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<PAGE>   15

The dollar value of new orders decreased 3% from 1994 to 1995.  The number of
new orders decreased 7%.  Entering the fourth quarter of 1995, the total
backlog, stated in dollars, was 27% higher than it was entering the fourth
quarter of 1994.

The gross profit percentage increased from 25% in 1994 to 26% in 1995.

Selling, general and administrative expenses increased $446,000 (7%) from 1994
to 1995.  Salaries and related benefits increased $269,000 (10%).  Amortization
of deferred marketing costs, primarily associated with the current planbook,
increased $134,000 (744%).  Amortization of these costs began in September 1994.
Bad debt expense increased $77,000 due to the 1994 reversal of previously
accrued amounts.  Commission expense decreased $166,000 (30%) primarily due to
reduced payments to manufacturer's representatives.

Display court expenses increased $166,000 (43%) due primarily to the growth in
the number of models.

In March 1994, the Company obtained the rights to harvest approximately 50,000
cubic meters of timber in the Province of British Columbia.  The harvesting of
the timber began in the fourth quarter of 1994 by an affiliated company.  In the
second quarter of 1995, the sale of the harvested timber was substantially
complete.  There was no significant activity in the third quarter of 1995. What
is expected to be the final accounting for the venture is currently underway.

Interest income increased $226,000 (383%) primarily due to interest paid by the
U.S. government on duty that it refunded.

LIQUIDITY

Trade accounts receivable, inventories and customer deposits increased $310,000
(15%), $625,000 (7%) and $1.0 million (26%), respectively, from December 31,
1994 to October 1, 1995 due to seasonal factors.  Prepaid expenses increased
$593,000 (42%) from December 31, 1994 to October 1, 1995 primarily due to
increased inventory of the current planbook.

Long-term debt decreased $636,000 (34%) from December 31, 1995 to October 1,
1995 due primarily to the September 1995 pay-off of a mortgage that was due in
2010 with a rate of interest of 11%.  At December 31, 1994, the mortgage had a
balance owing of $616,000.

Interest expense for the third quarter of 1995 includes approximately $16,000
related to costs associated with paying-off the mortgage.

The Company continues to hedge a portion of its expected lumber and plywood
needs using options and futures contracts.  Using this process, the Company
believes that it can help protect its margins from the potential volatility in
the lumber and plywood markets.


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<PAGE>   16


                            LINDAL CEDAR HOMES, INC.
                                AND SUBSIDIARIES


                          PART II:  OTHER INFORMATION



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

THERE WERE NO REPORTS ON FORM 8-K FILED DURING THE THIRD QUARTER OF 1995.


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<PAGE>   17



                            LINDAL CEDAR HOMES, INC.
                                AND SUBSIDIARIES


SIGNATURE:

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


                                               LINDAL CEDAR HOMES, INC.


                                      By:       /S/ Robert W. Lindal
                                         ---------------------------------------
                                                    Robert W. Lindal
                                                    Chairman and CEO


                                      By:         /S/ John F. Dacy
                                         ---------------------------------------
                                                      John F. Dacy
                                           Vice President Finance & Treasurer
                                                (Chief Accounting Officer)


DATE:

November 15, 1995


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