<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, 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)


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



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 October 1, 2000: 4,136,622 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                        19


Part II               Other Information

         Item 1       Legal Proceedings                                                                 20
         Item 6(a)    Exhibits                                                                          20
         Item 6(b)    Reports on Form 8-K                                                               20

         Signatures                                                                                     21
</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
                      October 1, 2000 and December 31, 1999
                (Amounts in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                           OCTOBER 1,
                                                             2000        DECEMBER 31,
                                                          (UNAUDITED)       1999
                                                           --------       --------
<S>                                                       <C>            <C>
                          Assets

Current assets
    Cash, cash equivalents and short-term investments      $ 12,979          8,252
    Receivables:
        Trade                                                 1,325          1,827
        Refundable federal taxes                                268             --
                                                           --------       --------

                                                              1,593          1,827
        Less allowance for doubtful receivables                  78            259
                                                           --------       --------

           Net receivables                                    1,515          1,568
    Inventories                                               7,608          8,098
    Promotional material                                      1,002            510
    Other current assets                                        688            650
                                                           --------       --------

           Total current assets                              23,792         19,078

Other assets                                                  1,379          1,845
Property, plant and equipment, net                            7,477         10,956
                                                           --------       --------

                                                           $ 32,648         31,879
                                                           ========       ========

           Liabilities and Stockholders' Equity

Current liabilities
    Current installments of long-term debt                 $    138            213
    Accounts payable and accrued expenses                     3,444          3,718
    Income taxes payable                                        174            126
    Customer deposits                                         5,622          4,675
                                                           --------       --------

           Total current liabilities                          9,378          8,732

Long-term debt, excluding current installments                3,492          4,418
Deferred income taxes                                           295            294

Stockholders' equity:
    Common stock                                                 41             41
    Additional paid-in capital                               16,061         16,061
    Accumulated other comprehensive loss                     (1,112)          (837)
    Retained earnings                                         4,493          3,170
                                                           --------       --------

           Total stockholders' equity                        19,483         18,435
                                                           --------       --------

                                                           $ 32,648         31,879
                                                           ========       ========
</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 October 1, 2000 and October 3, 1999
                (Amounts in thousands, except per share amounts)
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                         NINE MONTHS ENDED           QUARTERS ENDED
                                                      ----------------------     -----------------------
                                                      OCTOBER 1,   OCTOBER 3,    OCTOBER 1,    OCTOBER 3,
                                                         2000         1999         2000           1999
                                                      ---------    ---------     ---------     ---------
<S>                                                   <C>          <C>           <C>           <C>
Revenue                                                $32,560       28,812        11,258        10,570
Cost of goods sold                                      25,455       21,668         8,921         7,945
                                                       -------      -------       -------       -------

        Gross profit                                     7,105        7,144         2,337         2,625

Operating expenses:
    Selling, general and administrative expenses         6,113        5,725         2,012         2,014
    Display court expenses                                 411          363           145           130
                                                       -------      -------       -------       -------

        Total operating expenses                         6,524        6,088         2,157         2,144

    Net gain from disposition and impairment of
    operating assets                                     1,025           --         1,025            --
                                                       -------      -------       -------       -------

        Operating income                                 1,606        1,056         1,205           481

Other income (expense), net:
     Rental income                                         113          170            18            59
     Interest, net                                         174          (16)           76            36
     Gain from sale of assets                               18           26            16            27
     Other, net                                              7          (53)          (33)           33
                                                       -------      -------       -------       -------

        Other income, net                                  312          127            77           155
                                                       -------      -------       -------       -------

        Earnings before income taxes                     1,918        1,183         1,282           636

Income tax expense                                         595          230           397           149
                                                       -------      -------       -------       -------

        Net earnings                                   $ 1,323          953           885           487
                                                       =======      =======       =======       =======


Basic and diluted  - earnings per common share         $   .32          .23           .21           .12
                                                       =======      =======       =======       =======
</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 nine-months ended October 1, 2000 and October 3, 1999
                          (Dollar amounts in thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                             OCTOBER 1,    OCTOBER 3,
                                                                                               2000           1999
                                                                                             --------      ---------
<S>                                                                                          <C>           <C>
Cash flows from operating activities:
     Net earnings                                                                            $  1,323            953
     Adjustments to reconcile net earnings to net cash provided by
        operating activities:
           Depreciation and amortization                                                          866          1,018
           Deferred income tax expense (benefit)                                                   51           (213)
           Net gain on disposal and impairment of assets                                       (1,043)           (26)
           Compensation expense related to restricted stock                                        --              9
           Change in operating assets and liabilities:
                  Net trade and operating notes receivable                                        (34)         1,145
                  Inventories                                                                     310           (432)
                  Prepaid expenses and promotional materials                                     (295)           250
                  Current liabilities other than current installments of long-term debt           743          2,511
                  Other                                                                          (140)          (326)
                                                                                             --------       --------

                        Net cash provided by operating activities                               1,781          4,889

Cash flows from investing activities:
     Purchase of investments                                                                  (12,846)        (5,899)
     Maturity of investments                                                                    8,930          1,974
     Repayment of non-operating notes receivable                                                  118            152
     Purchase of property, plant and equipment                                                   (875)          (332)
     Proceeds from sale of property, plant and equipment                                        4,665             31
                                                                                             --------       --------

                         Net cash used in investing activities                                     (8)        (4,074)

Cash flows from financing activities:
    Repayment of long-term debt                                                                (1,060)           (83)
    Proceeds from long-term debt                                                                   59             35
    Repayment of current notes payable                                                             --           (266)
                                                                                             --------       --------

                         Net cash used in financing activities                                 (1,001)          (314)
Effect of exchange rate changes on cash and cash equivalents                                       43            140
                                                                                             --------       --------

                         Net increase in cash and cash equivalents                                815            641
Cash and cash equivalents at beginning of period                                                4,213          3,457
                                                                                             --------       --------

Cash and cash equivalents at end of period                                                      5,028          4,098
                                                                                             ========       ========

Supplemental disclosures of cash flow information - cash paid (received)
   during period for:
         Interest                                                                            $    168            191
         Income taxes                                                                             495            (99)

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
                     October 1, 2000 and December 31, 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 weather related 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 October 1, 2000:
     Basic earnings per share                 $  885             4,132               .21
     Effect of dilutive options                   --                13                --
                                              ------            ------            ------
     Diluted earnings per share               $  885             4,145               .21
                                              ======            ======            ======

Quarter ended October 3, 1999:
     Basic earnings per share                 $  487             4,126            $  .12
     Effect of dilutive options                   --                25                --
                                              ------            ------            ------
     Diluted earnings per share               $  487             4,151            $  .12
                                              ======            ======            ======

Nine-months ended October 1, 2000:
     Basic earnings per share                 $1,323             4,131               .32
     Effect of dilutive options                   --                18                --
                                              ------            ------            ------
     Diluted earnings per share               $1,323             4,149               .32
                                              ======            ======            ======

Nine-months ended October 3, 1999:
     Basic earnings per share                 $  953             4,126            $  .23
     Effect of dilutive options                   --                19                --
                                              ------            ------            ------
     Diluted earnings per share               $  953             4,145            $  .23
                                              ======            ======            ======
</TABLE>



                                       7
<PAGE>   8



                            LINDAL CEDAR HOMES, INC.
                                AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                     October 1, 2000 and December 31, 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 October 1, 2000                423
Quarter ended October 3, 1999                404
Nine-months ended October 1, 2000            359
Nine-months ended October 3, 1999            404
</TABLE>


(3)     INVENTORIES

        A summary of inventories follows:

<TABLE>
<CAPTION>
                          OCTOBER 1,       DECEMBER 31,
                            2000              1999
                           ------            ------
<S>                       <C>              <C>
Raw materials              $2,828             1,822
Work-in-process             1,216             2,879
Finished goods              3,151             2,707
Display models                413               690
                           ------            ------
                           $7,608             8,098
                           ======            ======
</TABLE>


(4)     PROPERTY, PLANT AND EQUIPMENT

        Property, plant and equipment consists of the following:

<TABLE>
<CAPTION>
                                                         OCTOBER 1,        DECEMBER 31,
                                                           2000                1999
                                                          -------            -------
<S>                                                      <C>               <C>
Building and leasehold improvements                       $ 7,048             10,455
Equipment                                                   3,813              3,496
Furniture and fixtures                                      4,890              4,655
                                                          -------            -------
                                                           15,751             18,606
Less accumulated depreciation and amortization              9,522              9,832
                                                          -------            -------
                                                            6,229              8,774
Land                                                        1,248              2,182
                                                          -------            -------
         Net property, plant and equipment                $ 7,477             10,956
                                                          =======            =======
</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 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.



                                       8
<PAGE>   9


                            LINDAL CEDAR HOMES, INC.
                                AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                     October 1, 2000 and December 31, 1999
                (Amounts in thousands, except per share amounts)
                                   (Unaudited)

Information regarding the Company's reportable segments for the quarters and
nine month periods ended October 1, 2000 and October 3, 1999 follows:

<TABLE>
<CAPTION>
                                                                                                      OTHER
                                                                                                      RECON-
                                              U.S.       CANADIAN                   INTERSEGMENT      CILING
                                             HOMES         HOMES        ALL OTHER   ELIMINATIONS      ITEMS       CONSOLIDATED
                                           --------      --------       --------    ------------     --------     ------------
<S>                                        <C>           <C>            <C>         <C>              <C>          <C>
QUARTER ENDED OCTOBER 1, 2000

Revenues from external
    customers                                 9,212           967          1,079            --             --        $11,258
Intersegment revenues                         3,468         9,307          1,683       (14,458)            --             --
Gross profit                                  1,389         3,660            308        (3,019)            (1)         2,337
Interest income                                 143             5             --           (75)            75            148
Interest expense                                 20            76             51           (75)            --             72
Depreciation and amortization                     8            14             95            --             12            129
Gain on disposition and impairment of
    operating assets                          1,476          (451)            --            --             --          1,025

QUARTER ENDED OCTOBER 3, 1999

Revenues from external
    customers                                 8,586           885          1,099            --             --        $10,570
Intersegment revenues                         3,583         8,146          1,575       (13,304)            --             --
Gross profit                                  2,487         2,946            447        (3,251)            (4)         2,625
Interest income                                 102             5             --           (73)            73            107
Interest expense                                 18            73             53           (73)            --             71
Depreciation and amortization                   262            37            125            --            (35)           389
Gain on disposition and impairment of
    operating assets                             --            --             --            --             --             --

NINE-MONTHS ENDED OCTOBER 1, 2000

Revenues from external
   customers                                 27,562         1,993          3,005            --             --        $32,560
Intersegment revenues                        10,777        27,838          4,785       (43,400)            --             --
Gross profit                                  5,421        10,315            889        (9,517)            (3)         7,105
Interest income                                 380            15             --          (223)           223            395
Interest expense                                 67           225            152          (223)            --            221
Depreciation and amortization                   421           111            283            --             51            866
Gain on disposition and impairment of
    operating assets                          1,476          (451)            --            --             --          1,025

NINE-MONTHS ENDED OCTOBER 3, 1999

Revenues from external
    customers                                24,133         1,574          3,083            --             22        $28,812
Intersegment revenues                         8,664        22,643          4,224       (35,531)            --             --
Gross profit                                  5,727         8,280          1,142        (8,006)             1          7,144
Interest income                                 200            25             --          (219)           219            225
Interest expense                                 79           222            156          (219)             3            241
Depreciation and amortization                   552            97            304            --             65          1,018
Gain on disposition and impairment of
    operating assets                             --            --             --            --             --             --
</TABLE>



                                       9
<PAGE>   10

                            LINDAL CEDAR HOMES, INC.
                                AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                     October 1, 2000 and December 31, 1999
                (Amounts in thousands, except per share amounts)
                                   (Unaudited)

(6)     COMPREHENSIVE EARNINGS

        Comprehensive earnings are as follows:

<TABLE>
<CAPTION>
                                                               NINE-MONTHS ENDED            QUARTER ENDED
                                                            -----------------------    -----------------------
                                                            OCTOBER 1,    OCTOBER 3,   OCTOBER 1,    OCTOBER 3,
                                                              2000          1999         2000          1999
                                                            ---------     ---------    ---------     ----------
<S>                                                         <C>           <C>          <C>           <C>
Net earnings                                                 $ 1,323           953          885           487
Other comprehensive earnings (loss) - foreign currency
    translation                                                 (275)          399         (155)          (70)
                                                             -------       -------      -------       -------

Comprehensive earnings                                       $ 1,048         1,352          730           417
                                                             =======       =======      =======       =======
</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 October 1, 2000 and December 31,
        1999.

(8)     IMPAIRMENT OF ASSET HELD FOR SALE

        Statement of Financial Accounting Standards (SFAS) No. 121, Accounting
        for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
        Disposed Of, requires that long-lived assets and certain identifiable
        intangibles to be disposed of be reported at the lower of carrying
        amount or fair value less cost to sell.

        In the third quarter, the Company decided to sell its rental property
        located in Renfrew, Ontario, Canada and accepted an offer on the
        property. The offer was subject to certain general contingencies, which
        were resolved during the quarter. The Company expects the sale of the
        Renfrew rental property to close in the fourth quarter. Based on the
        accepted offer price, the Company expects to incur a loss from the sale
        of the Renfrew facility. As a result, management recorded a $451,000
        write down in the carrying value of the Renfrew rental property to its
        fair value less estimated cost to sell in the third quarter which is
        recorded as part of the net gain from the disposition and impairment of
        operating assets.

(9)     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



                                       10
<PAGE>   11


                            LINDAL CEDAR HOMES, INC.
                                AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                     October 1, 2000 and December 31, 1999
                (Amounts in thousands, except per share amounts)
                                   (Unaudited)

        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 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. Binding arbitration
        is currently scheduled for late in the first quarter of 2001.



                                       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.

In the third quarter, the Company decided to sell its Seattle business park
property, as well as its rental property located in Renfrew , Ontario, Canada
and accepted offers on both properties. Both offers were subject to certain
general contingencies, which were resolved during the quarter. The sale of the
Seattle Business park property closed on September 21, 2000. The Company expects
the sale of the Renfrew rental property to close in the fourth quarter. The
Company expects to incur a loss from the sale of the Renfrew rental property and
a $451,000 write down in the value of the Renfrew rental property to its fair
value less estimated cost to sell was recorded in the third quarter of 2000 as
part of the Company's net gain from disposition and impairment of operating
assets. The sale of the Seattle business park property does not affect the
Company's corporate headquarters, which are located adjacent to the business
park property.

Additionally in the third quarter, the Company discontinued manufacturing of a
non-significant product line in favor of manufacturing the solid cedar timbers
utilized in the Company's Solid Cedar line of homes. Management believes that
manufacturing these timbers internally will enhance the quality, provide better
inventory control and improve margins on the Solid Cedar homes. The Company
incurred a $150,000 charge in the third quarter related to the write down of the
assets of the discontinued product line, which is recorded in cost of goods
sold.

The Company's business is seasonally weather related 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            11,258               N/A

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, as amended, 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.


                                  THIRD QUARTER


NEW ORDERS

The dollar value of new orders received decreased 8% in the third quarter of
2000 compared to the third quarter of 1999. The number of new order units
decreased 21% in the same time period. Management believes the decrease in the
number and value of new orders is primarily due to the first quarter sale
promotion, which accelerated many new orders, which might otherwise have
occurred in the third quarter, into the first and second quarters. 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 in the third quarter of the current and each of the
preceding 2 years:

<TABLE>
<CAPTION>
% CHANGE IN             2000           1999           1998
-----------             ----           ----           ----
<S>                     <C>            <C>            <C>
Units                   -21%            16%             7%
Dollar Value             -8%            12%             7%
</TABLE>

The Access and Select products (the base price of which is 25%-30% less than the
traditional Cedar: Frame home) represented 62% of new order units in the third
quarter of 2000 compared to 58% of new order units in the third quarter of 1999.
The dollar value of the Access and Select product new orders was 51% of the
total dollar value of new orders in the third quarter of 2000 compared to 53% in
the third quarter of 1999. The Select product was introduced in January 1999.

In the third quarter of this year, the Company modified the way it calculates
order backlog. It is not possible to accurately determine the effect this change
would have had on the backlog in prior periods other than the prior period
backlogs would have been somewhat lower using the present method. Entering the
fourth quarter of 2000, the total backlog, stated in dollars, was approximately
$32 million (revised method) compared to approximately $33 million (prior
method) entering the fourth quarter of 1999. Because the



                                       13
<PAGE>   14

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

Revenue increased $690,000 (7%) to $11.26 million in the third quarter of 2000
from $10.57 million in the third quarter of 1999, primarily due to an increase
in home revenue.

Revenue from homes increased $790,000 (9%) to $9.35 million in the third quarter
of 2000 from $8.56 million in the third quarter of 1999. The number of homes
shipped decreased 3% to 113 in the third quarter of 2000 from 116 in the third
quarter of 1999. Management believes the increase in home revenue combined with
the decrease in the number of units shipped is primarily related to an increase
in the average size of the homes shipped and the effect of the second quarter
3.5% price increase, which was fully effective in the third quarter. Further,
the decrease in the number of home units shipped in the third quarter primarily
resulted from the acceleration of some home shipments, that would otherwise have
occurred in the third quarter, into the second quarter to avoid the full impact
of the price increase. The size and value of a home is a function of customer
preference.

The Access and Select products accounted for approximately 56% of home sales
revenue and 68% of home units shipped in the third quarter of 2000 compared to
51% of home sales revenue and 60% of the home units shipped in the third quarter
of 1999.

Revenue from sunrooms decreased $10,000 (3%) to $370,000 in the third quarter of
2000 from $380,000 in the third quarter of 1999.

Revenue from other sales decreased $100,000 (6%) to $1.53 million in third
quarter of 2000 from $1.63 million in the third quarter of 1999. This was
largely due to decreases in material and wood re-manufacturing sales, which were
partially offset by increased window sales.

MATERIAL COSTS

In dollars, material costs increased $470,000 (9%) to $5.61 million in the third
quarter of 2000 from $5.14 million in the third quarter of 1999 on 3 (3%) fewer
home shipments. Management believes this is related to an increase in the
average size of homes shipped in the third quarter of 2000 compared to the same
period of 1999 and that the cost of certain materials contained in the Company's
products have increased from the year ago period.

As a percent of revenue, material costs were 49.8% in the third quarter of 2000
compared to 48.6% in the third 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, decreased margins on certain material orders
and increases in the cost of certain materials contained in the Company's
products.

OTHER COST OF GOODS SOLD

Non-material costs, included in the cost of goods sold, increased $510,000 (18%)
to $3.31 million in the third quarter of 2000 from $2.8 million in the third
quarter of 1999. This is primarily due to increased plant labor and related
costs, increased catalog costs, increased expenditures related to the expansion
of the Company's engineering capacity and the $150,000 charge for the write down
of assets related to a discontinued product line.

GROSS PROFIT

In dollars, gross profit decreased $290,000 (11%) to $2.34 million in the third
quarter of 2000 from $2.63 million in the third quarter of 1999. This was
primarily due to the increased cost of certain materials contained in the
Company's products, the change in the sales mix of homes shipped, decreased
margins on certain material orders, the expansion of the Company's engineering
capacity and the charge for the write down of assets related to the discontinued
product line.



                                       14
<PAGE>   15

As a percentage of revenue, gross profit decreased to 20.8% of revenue in the
third quarter of 2000 from 24.8% of revenue for the same period in 1999.
Exclusive of the charge for the discontinued product line, gross profit was
22.1% of revenue in the third quarter of 2000.

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 generally the dollar and
percentage gross margin is lower as well. The Access and Select products
accounted for 56% of home revenue and 68% of home units shipped in the third
quarter of 2000 compared with 51% of the home revenue and 60% of the home units
shipped in the third quarter of 1999. For all of 1999, the Access and Select
products accounted for 52% of the home revenue and 60% of home units shipped.

OPERATING EXPENSES

Total operating expenses, including display court expenses, increased $20,000
(1%) to $2.16 million in the third quarter of 2000 from $2.14 million in the
third quarter of 1999. Operating expenses were 19.2% of revenue in the third
quarter of 2000 compared to 20.3% of revenue in the third quarter of 1999.

As a group, selling, and general and administrative expenses remained unchanged
at $2.01 million in the third quarter of 2000 and in the year ago period.
Selling, general and administrative costs were 17.9% of revenue in the third
quarter of 2000 compared to 19% of revenue in the year ago period.

Selling expenses decreased $70,000 (7%) to $1.01 million in the third quarter of
2000 from $1.08 million in the third quarter of 1999. This is largely due to
reduced new dealer acquisition expenditures and decreased training costs.

General and administrative expenses increased $60,000 (6%) to $1.0 million in
the third quarter of 2000 from $940,000 in the third quarter of 1999. This
increase is primarily due to increased professional fees.

Display court expenses increased $20,000 (15%) to $150,000 in the third quarter
of 2000 from $130,000 in the third quarter of 1999 primarily due to increased
delivery of homes in the third quarter of 2000 compared to the same period of
1999.


OTHER INCOME (EXPENSE), NET

Other income (expense), net decreased $80,000 (50%) to $80,000 in the third
quarter of 2000 from $160,000 in the third quarter of 1999. Interest income
increased $40,000, which was offset by a $40,000 decrease in rental income, an
unfavorable $70,000 change in loss from foreign currency transactions, and an
unfavorable $10,000 change in loss from sale of other assets.


INCOME TAX EXPENSE

The Company recognized an income tax expense of $400,000 (31%) in the third
quarter of 2000 compared to an income tax expense of $150,000 (24%) in the third
quarter of 1999. The overall income tax expense recognized in the third quarter
of 1999 was reduced due to the effect of Canadian tax rates that differ from
U.S. tax rates.



                                       15
<PAGE>   16

                                  YEAR-TO-DATE

NEW ORDERS

The dollar value of new orders received decreased 5% in the first nine months of
2000 compared to the first nine months of 1999. The number of new order units
decreased 7% in the same time period. The following table illustrates the
percentage change in the number and dollar value of new orders for the first
nine months of the current and each of the preceding 2 years:

<TABLE>
<CAPTION>
% CHANGE IN            2000           1999            1998
-----------            ----           ----            ----
<S>                    <C>            <C>             <C>
Units                   -7%            10%            -14%
Dollar Value            -5%            12%             -6%
</TABLE>

The Access and Select products represented 62% of new order units in the first
nine months of 2000 compared to 60% of new order units in the first nine months
of 1999. The dollar value of the Access product new orders was 53% of the total
dollar value of new orders in the first nine months of 2000 compared to 52% in
the first nine months of 1999.


REVENUE

Revenue increased $3.75 million (13%) to $32.56 million in the first nine months
of 2000 from $28.81 million in the first nine months of 1999, primarily due to
increased home revenue.

Revenue from homes increased $4.89 million (22%) to $27.22 million in the first
nine months of 2000 from $22.33 million in the first nine months of 1999. The
number of houses shipped increased 19% to 339 in the first nine months of 2000
from 285 in the first nine months of 1999. Management believes the increase in
home revenue is primarily related to the increased backlog at December 31, 1999
and strong new orders in the first six months of 2000, and to a lesser extent
the price increase, which became fully effective in the third quarter of 2000.
The average revenue per home increased slightly in the first nine months of 2000
compared to the same period of 1999.

The Access and Select products accounted for approximately 61% of home sales
revenue and 70% of home units shipped in the first nine months of 2000 compared
to 48% of home sales revenue and 57% of the home units shipped in the first nine
months of 1999.

Revenue from sunrooms decreased $60,000 (6%) to $1.04 million in the first nine
months of 2000 from $1.10 million in the first nine 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, primarily material sales, decreased $1.08 million
(20%) to $4.3 million in the first nine months of 2000 from $5.38 million in the
first nine 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 nine months 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 $2.37 million (17%) to $16.18 million in
the first nine months of 2000 from $13.81 million in the first nine months of
1999 on 54 (19%) additional home shipments. This increase is primarily related
to the additional homes shipped, the increased cost for certain materials
contained in the Company's products, higher duty costs, and, to a lesser extent,
the sales trend toward the Company's lower priced Access and Select product
lines. The Company had larger than expected duty refunds in the first nine
months of 1999.

As a percent of revenue, material costs were 49.7% in the first nine months of
2000 compared to 47.9% in the first nine 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, increased duty costs,
decreased margins on certain material orders and increased costs on certain
materials contained in the Company's products.



                                       16
<PAGE>   17

OTHER COST OF GOODS SOLD

Non-material costs, included in the cost of goods sold, increased $1.41 million
(18%) to $9.27 million in the first nine months of 2000 from $7.86 million in
the first nine months of 1999. This is primarily due to increased variable
expenses related to the increased number of homes shipped in the first nine
months of 2000, the expansion of the Company's engineering capacity, the
$150,000 charge for the write down of assets related to the discontinued product
line and increased catalog costs.

GROSS PROFIT

In dollars, gross profit decreased $30,000 (0%) to $7.11 million in the first
nine months of 2000 from $7.14 million in the first nine months of 1999. This
was primarily due to the increased sales volume, which was fully offset by the
decreased gross profit from the change in the mix of homes shipped, increased
cost of certain materials contained in the Company's products, increased
variable expenses related to the increased sales volume, decreased margins on
certain material orders, expansion of the Company's engineering capacity,
increased catalog costs and the charge for the write down of assets related to a
discontinued product line.

As a percentage of revenue, gross profit decreased to 21.8% of revenue in the
first nine months of 2000 from 24.8% of revenue for the same period in 1999.
Exclusive of the write down of assets related to a discontinued product line,
gross profit was 22.3% of revenue in the first nine months of 2000.

The Access and Select products accounted for approximately 61% of home sales
revenue and 70% of home units shipped in the first nine months of 2000 compared
to 48% of home sales revenue and 57% of the home units shipped in the first nine
months of 1999.

OPERATING EXPENSES

Total operating expenses, including display court expenses, increased $430,000
(7%) to $6.52 million in the first nine months of 2000 from $6.09 million in the
first nine months of 1999. Operating expenses were 20% of revenue in the first
nine months of 2000 compared to 21.1% of revenue in the same period of 1999.

As a group, selling, and general and administrative expenses increased $380,000
(7%) to $6.11 million in the first nine months of 2000 from $5.73 million in the
first six months of 1999. As a percentage of revenue, selling and general and
administrative costs were 18.8% of revenue in the first nine months of 2000
compared to 19.9% for the same period of 1999.

Selling expenses increased $150,000 (5%) to $3.11 million in the first nine
months of 2000 from $2.96 million in the first nine months of 1999. This
increase is primarily due to increased advertising and professional fees in the
first nine months of 2000 compared to the same period of 1999.

General and administrative expenses increased $250,000 (9%) to $3.01 million in
the first nine months of 2000 from $2.76 million in the first nine months of
1999. This is primarily due to increased payroll and related expenses and
professional fees in the first nine months of 2000 compared to the same period
of 1999.

Display court expenditures increased $50,000 (14%) to $410,000 in the first nine
months of 2000 from $360,000 in the first nine months of 1999. This is primarily
due to increased expenditures related to increased home deliveries in the first
nine months of 2000 compared to same period of 1999.

OTHER INCOME (EXPENSE), NET

Other income (expense), net increased $180,000 (139%) to $310,000 in the first
nine months of 2000 from $130,000 in same period of 1999. This was primarily due
to the favorable changes in net interest income of $190,000 and gains from
foreign currency transactions of $60,000 which were offset by a $60,000 decrease
in rental income.

INCOME TAX EXPENSE

The Company recognized an income tax expense of $600,000 (31%) in the first nine
months of 2000 compared to an income tax expense of $230,000 (19%) in the first
nine months of 1999. The overall income tax expense recognized in the first nine
months of



                                       17
<PAGE>   18

1999 was reduced due to the recognition of the income tax benefit from the
available carryforward of prior year Canadian operating losses and the effect of
Canadian tax rates that differ from U.S. tax rates. The Company did not
recognize the income tax benefits in 1998 for 1998 and 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 $1.78 million in cash in the first nine months of 2000
compared to providing $4.89 million in cash in the first nine months of 1999. In
the first nine months of 2000, operating results provided $1.2 million in cash
and changes in operating assets and liabilities provided an additional $580,000
in cash. Cash provided by changes in operating assets and liabilities was
primarily from decreases in inventory and increases in current liabilities,
which were offset by cash used to increase prepaid expenses and promotional
materials, net trade and operating notes receivable and other operating assets.
The increase in trade and operating notes receivable is primarily due to several
homes being shipped COD near the end of the third quarter. The increase in
current liabilities is primarily related to increases in customer deposits,
which was partially offset by a decrease in accounts payable and accrued
expenses.

In the first nine months of 1999, operating results provided $1.74 million in
cash while changes in operating assets and liabilities provided an additional
$3.15 million in cash. Cash provided by changes in operating assets and
liabilities was primarily from decreases in trade and operating notes
receivable, reductions in prepaid expenses and promotional materials and
increases in current liabilities, which were partially offset by increases in
inventory and other operating assets. The reductions in trade and operating
notes receivable was primarily related to increased seasonal collections as a
result of the improved dealer cash flow from increased home deliveries and the
receipt of a portion of refundable federal taxes relating to the 1997 and 1998
losses. The increase in current liabilities is primarily related to an increase
in customer deposits, the increase in inventory and the timing of scheduled
payments in relation to period end.

The Company's current ratio was 2.54:1.0 at October 1, 2000 compared to 2.18:1.0
at December 31, 1999.

INVESTING ACTIVITIES

Cash used in investing activities in the first nine months of 2000 was $10,000
compared to $4.07 million in the first nine months of 1999. In the first nine
months of 2000 proceeds from the sale of property, plant and equipment,
principally the sales of the Seattle business park and land and display model in
Highland Michigan, provided $4.67 million in cash and payments of non-operating
notes receivable provided $120,000 in cash. These amounts were offset by $3.92
million of cash used to purchase additional short-term investments and $880,000
of cash used to purchase property, plant and equipment.



                                       18
<PAGE>   19

In the first nine months of 1999, cash expenditures for property, plant and
equipment totaled $330,000 and net cash used to purchase short-term investments
totaled $3.93 million. These expenditures were partially offset by cash received
from the repayments of non-operating notes receivable of $150,000 and proceeds
from the sale of property, plant and equipment of $30,000.

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 used in financing activities was $1.0 million in the first nine months of
2000 compared to $310,000 in the first nine months of 1999. In the first nine
months of 2000 $1.06 million of cash was used to repay long-term debt,
principally the debt on the Seattle business park, while long-term debt
financing provided $60,000 of cash.

In the first nine months of 1999, $80,000 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. Proceeds from long-term debt financing provided $40,000 in cash.

EXCHANGE RATES

In the first nine months of 2000, favorable changes in exchange rates had a
$40,000 positive effect on cash and cash equivalents and in the first nine
months of 1999 favorable changes in exchange rates had a $140,000 positive
effect on cash and cash equivalents.

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 October 1, 2000, the Company had 41
futures contracts with broker-dealers of approximately $1.3 million maturing
through September 2001 with a net deferred loss of $160,000. Such losses in fair
value, if realized, would be offset by the lower costs of lumber purchased at
market value. At October 3, 1999, the Company had 29 futures contracts with
broker-dealers of approximately $990,000 maturing through July 2000 with a net
deferred loss of $40,000. Such losses in fair value, if realized, would be
offset by the lower 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 October 1, 2000, the Company's investment in fixed rate instruments was
approximately $7.95 million. Of this amount approximately $7.88 million was
invested in the United States and approximately $70,000 was invested in Canada.
Interest rates on the U.S. investments range from 6.6% to 6.7% and mature from
October 25, 2000 through January 12, 2001. Interest rates on the Canadian
investments range from 4.2% to 4.7%, and mature from February 22, 2001 through
March 26, 2001. Because of the relative short-term nature of these investments,
the Company's exposure to interest rate fluctuation is greatly reduced. At
October 3, 1999, the Company's investment in fixed rate instruments was
approximately $4.0 million. Of this amount approximately $3.93 million was
invested in the United States and approximately $70,000 was invested in Canada.
Interest rates on the U.S. investments ranged from 5.5% to 5.9% and matured from
October 28, 1999 through February 16, 2000. Interest rates on the Canadian
investments ranged from 3.6% to 3.7% and matured from February 24, 2000 though
March 23, 2000.



                                       19
<PAGE>   20

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 nine 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 and continued acceptance of products and
services.



                           PART II: OTHER INFORMATION


Item 1. LEGAL PROCEEDINGS

        (See note 9 to the financial statements)




Item 6(a). EXHIBITS

        The following exhibits are being filed:

        27      Financial Data Schedule for period ended October 1, 2000



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

        There was one report on Form 8K filed on October 6, 2000



                                       20
<PAGE>   21

                            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:
November 15, 2000



                                       21
<PAGE>   22

                            Lindal Cedar Homes, Inc.
                                  Exhibit Index

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

<TABLE>
<CAPTION>
 EXHIBIT
 NUMBERS       DESCRIPTION
 -------       -----------
<S>            <C>
   27          Financial Data Schedule for period ended October 1, 2000
</TABLE>