UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549





FORM 10-Q



xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934



For the Quarterly Period Ended May 31, 2003



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: 0-19954



JEWETT-CAMERON TRADING COMPANY, LTD.

(Exact name of registrant as specified in its charter)



BRITISH COLUMBIA

NONE

(State or other jurisdiction of  incorporation or organization)

(IRS Employer Identification Number)



32275 N.W. Hillcrest, North Plains, Oregon 97133

(Address of Principal Executive Offices)



Registrants telephone number, including area code: (503) 647-0110



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 since May 16, 1992 and (2) has been subject to the above filing requirements for the past 90 days.



Yes X  No ___



APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:



Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.



Yes ___ No ___



APPLICABLE ONLY TO CORPORATE ISSUERS



The number of shares outstanding of the Registrants common stock as of May 31, 2003 was

1,538,408 Shares

Jewett-Cameron Trading Company Ltd.

FORM 10-Q



For the Quarter Ended May 31, 2003



INDEX





|                                                                                                                                                                                           | Page
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ----
|PART I - FINANCIAL INFORMATION                                                                                                                                                             | 2   
|                                                                                                                                                                                           |     
|Item 1.
Financial Statements:                                                                                                                                                              | 2   
|Consolidated Balance Sheets at May 31, 2003 and August 31, 2002                                                                                                                            | 4   
|Consolidated Statements of Operations as of the Three Month Period Ended May 31, 2003 and May 31, 2002 and the Nine Month Period Ended May 31, 2003 and May 31, 2002                       | 6   
|Consolidated Schedules of General and Administrative Expenses for the Three Month Period Ended May 31, 2003 and May 31, 2002 and the Nine Month Period Ended May 31, 2003 and May 31, 2002 | 7   
|Consolidated Statements of Cash Flows as of the Three Month Period Ended May 31, 2003 and May 31, 2002 and for the Nine Month Period Ended May 31, 2003 and May 31, 2002.                  | 8   
|Consolidated Statements of Stockholders Equity                                                                                                                                            | 9   
|Notes to the Consolidated Financial Statements                                                                                                                                             | 10  
|                                                                                                                                                                                           |     
|Item 2  Management Discussion and Analysis of Financial Condition and Results of Operations                                                                                               | 24  
|                                                                                                                                                                                           |     
|Item 3  Quantitative and Qualitative Disclosure About Market Risk                                                                                                                         | 29  
|                                                                                                                                                                                           |     
|Item 4  Controls and Procedures                                                                                                                                                           | 29  
|                                                                                                                                                                                           |     
|PART 2  OTHER INFORMATION                                                                                                                                                                 | 30  
|                                                                                                                                                                                           |     
|Signatures                                                                                                                                                                                 | 30  
|                                                                                                                                                                                           |     
|Certifications                                                                                                                                                                             | 31  
|                                                                                                                                                                                           |     
|Exhibits - - 99.1 and 99.2  Certifications Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                       |     













PART 1  FINANCIAL INFORMATION



Item 1. Financial Statements



























JEWETT-CAMERON TRADING COMPANY LTD.





CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

(Unaudited - Prepared by Management)





MAY 31, 2003



JEWETT-CAMERON TRADING COMPANY LTD.

CONSOLIDATED BALANCE SHEETS

(Expressed in U.S. dollars)



|                                                                               | May 31,
2003 | August 31,
2002
|------------------------------------------------------------------------------ | ------------ | ---------------
|                                                                               | (Unaudited)  |                
|                                                                               |              |                
|                                                                               |              |                
|                                                                               |              |                
|ASSETS                                                                         |              |                
|                                                                               |              |                
|                                                                               |              |                
|Current                                                                        |              |                
|Cash and cash equivalents                                                      | $
236,652    | $
469,991      
|Accounts receivable, net of allowance of $100,000 (August 31, 2002 - $310,000) | 6,321,918    | 6,098,733      
|Inventory (Note 3)                                                             | 9,883,690    | 4,696,783      
|Prepaid expenses                                                               | 271,437      | 102,423        
|                                                                               |              |                
|Total current assets                                                           | 16,713,697   | 11,367,930     
|                                                                               |              |                
|Capital assets(Note 4)                                                         | 2,703,490    | 2,861,850      
|                                                                               |              |                
|Deferred income taxes (Note 5)                                                 | 176,000      | 171,900        
|                                                                               |              |                
|Total assets                                                                   | $
19,593,187 | $
14,401,680   











- Continued -









































The accompanying notes are an integral part of these consolidated financial statements.

JEWETT-CAMERON TRADING COMPANY LTD.

CONSOLIDATED BALANCE SHEETS

(Expressed in U.S. dollars)



|                                                                        | May 31,
2003                                | August 31,
2002
|----------------------------------------------------------------------- | ------------------------------------------- | ---------------
|                                                                        | (Unaudited)                                 |                
|                                                                        |                                             |                
|                                                                        |                                             |                
|                                                                        |                                             |                
|Continued                                                               |                                             |                
|                                                                        |                                             |                
|                                                                        |                                             |                
|                                                                        |                                             |                
|LIABILITIES AND STOCKHOLDERS EQUITY                                    |                                             |                
|                                                                        |                                             |                
|                                                                        |                                             |                
|Current                                                                 |                                             |                
|Bank indebtedness (Note 6)                                              | $
7,464,853                                 | $
2,965,639    
|Accounts payable and accrued liabilities                                | 1,328,273                                   | 4,018,760      
|                                                                        |                                             |                
|Total current liabilities                                               | 8,793,126                                   | 6,984,399      
|                                                                        |                                             |                
|Notes payable (Note 7)                                                  | 2,889,560                                   | -              
|                                                                        |                                             |                
|                                                                        | 11,682,686                                  | 6,984,399      
|                                                                        |                                             |                
|Contingent liabilities and commitments (Note 11)                        |                                             |                
|                                                                        |                                             |                
|Stockholders equity                                                    |                                             |                
|Capital stock (Note 8)                                                  |                                             |                
|Authorized                                                              |                                             |                
|20,000,000                                                              | common shares, without par value            |                
|10,000,000                                                              | preferred shares, without par value         |                
|                                                                        |                                             |                
|Issued                                                                  |                                             |                
|1,538,408                                                               | common shares (August 31, 2002  1,508,493) | 1,871,340      
|                                                                        |                                             |                
|Additional paid-in capital                                              | 583,211                                     | 602,587        
|Retained earnings                                                       | 5,768,421                                   | 5,365,515      
|                                                                        |                                             |                
|                                                                        | 8,222,972                                   | 7,674,553      
|Less:  Treasury stock  76,550 common shares (August 31, 2002  67,050) | (312,471)                                   | (257,272)      
|                                                                        |                                             |                
|                                                                        | 7,910,501                                   | 7,417,281      
|                                                                        |                                             |                
|Total liabilities and stockholders' equity                              | $
19,593,187                                | $
14,401,680   











The accompanying notes are an integral part of these consolidated financial statements.

JEWETT-CAMERON TRADING COMPANY LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Expressed in U.S. dollars)

(Unaudited - Prepared by Management)



|                                                      | Three Month
Period Ended
May 31,
2003 | Three Month
Period Ended
May 31,
2002 | Nine Month
Period Ended
May 31,
2003 | Nine Month
Period Ended
May 31,
2002
|----------------------------------------------------- | ------------------------------------- | ------------------------------------- | ------------------------------------ | ------------------------------------
|                                                      |                                       |                                       |                                      |                                     
|                                                      |                                       |                                       |                                      |                                     
|                                                      |                                       |                                       |                                      |                                     
|SALES                                                 | $
14,998,178                          | $
19,597,409                          | $
40,497,696                         | $
27,118,392                        
|                                                      |                                       |                                       |                                      |                                     
|COST OF SALES                                         | 12,855,622                            | 16,937,851                            | 34,405,165                           | 22,538,306                          
|                                                      |                                       |                                       |                                      |                                     
|GROSS PROFIT                                          | 2,142,556                             | 2,659,558                             | 6,092,531                            | 4,580,086                           
|                                                      |                                       |                                       |                                      |                                     
|OPERATING EXPENSES                                    |                                       |                                       |                                      |                                     
|General and administrative Schedule                  | 1,713,558                             | 2,180,886                             | 5,247,664                            | 3,808,059                           
|                                                      |                                       |                                       |                                      |                                     
|Income from operations                                | 428,998                               | 478,672                               | 844,867                              | 772,027                             
|                                                      |                                       |                                       |                                      |                                     
|                                                      |                                       |                                       |                                      |                                     
|OTHER ITEMS                                           |                                       |                                       |                                      |                                     
|Interest and other income                             | 1,400                                 | -                                     | 1,590                                | 491                                 
|Interest expense                                      | (109,574)                             | (18,645)                              | (211,250)                            | (20,360)                            
|                                                      |                                       |                                       |                                      |                                     
|                                                      | (108,174)                             | (18,645)                              | (209,660)                            | (19,869)                            
|                                                      |                                       |                                       |                                      |                                     
|                                                      |                                       |                                       |                                      |                                     
|Income before income taxes                            | 320,824                               | 460,027                               | 635,207                              | 752,158                             
|                                                      |                                       |                                       |                                      |                                     
|                                                      |                                       |                                       |                                      |                                     
|Income tax expense                                    | (105,101)                             | (133,600)                             | (232,301)                            | (260,600)                           
|                                                      |                                       |                                       |                                      |                                     
|                                                      |                                       |                                       |                                      |                                     
|Net income for the period                             | $
215,723                             | $
326,427                             | $
402,906                            | $
491,558                           
|                                                      |                                       |                                       |                                      |                                     
|                                                      |                                       |                                       |                                      |                                     
|Basic earnings per share                              | $
0.15                                | $
0.23                                | $
0.28                               | $
0.34                              
|                                                      |                                       |                                       |                                      |                                     
|                                                      |                                       |                                       |                                      |                                     
|Diluted earnings per share                            | $
0.14                                | $
0.21                                | $
0.27                               | $
0.32                              
|                                                      |                                       |                                       |                                      |                                     
|                                                      |                                       |                                       |                                      |                                     
|Weighted average number of common shares
outstanding: |                                       |                                       |                                      |                                     
|Basic                                                 | 1,461,298                             | 1,447,629                             | 1,455,304                            | 1,449,923                           
|Diluted                                               | 1,508,841                             | 1,526,880                             | 1,506,151                            | 1,524,718                           





The accompanying notes are an integral part of these consolidated financial statements.

JEWETT-CAMERON TRADING COMPANY LTD.

CONSOLIDATED SCHEDULES OF GENERAL AND ADMINISTRATIVE EXPENSES

(Expressed in U.S. dollars)

(Unaudited - Prepared by Management)



|                                      | Three Month
Period Ended
May 31,
2003 | Three Month
Period Ended
May 31,
2002 | Nine Month
Period Ended
May 31,
2003 | Nine Month
Period Ended
May 31,
2002
|------------------------------------- | ------------------------------------- | ------------------------------------- | ------------------------------------ | ------------------------------------
|                                      |                                       |                                       |                                      |                                     
|                                      |                                       |                                       |                                      |                                     
|                                      |                                       |                                       |                                      |                                     
|Bad debt recovery                     | $
(99,094)                            | $
-                                   | $
(208,620)                          | $
(2,949)                           
|                                      |                                       |                                       |                                      |                                     
|Depreciation                          | 83,183                                | 78,807                                | 241,684                              | 202,269                             
|                                      |                                       |                                       |                                      |                                     
|Foreign exchange (gain) loss          | (2,197)                               | 28                                    | (2,060)                              | (787)                               
|                                      |                                       |                                       |                                      |                                     
|Insurance                             | 35,329                                | 92,221                                | 115,785                              | 149,761                             
|                                      |                                       |                                       |                                      |                                     
|Office and miscellaneous              | 89,844                                | 142,604                               | 301,186                              | 248,198                             
|                                      |                                       |                                       |                                      |                                     
|Professional fees                     | 50,387                                | 57,891                                | 166,446                              | 106,145                             
|                                      |                                       |                                       |                                      |                                     
|Rent                                  | 51,571                                | 41,313                                | 143,475                              | 41,313                              
|                                      |                                       |                                       |                                      |                                     
|Repairs and maintenance               | 6,011                                 | 14,234                                | 12,323                               | 31,368                              
|                                      |                                       |                                       |                                      |                                     
|Telephone and utilities               | 43,571                                | 43,424                                | 134,898                              | 101,163                             
|                                      |                                       |                                       |                                      |                                     
|Travel, entertainment and advertising | 109,683                               | 72,566                                | 257,748                              | 165,525                             
|                                      |                                       |                                       |                                      |                                     
|Warehouse expenses and supplies       | 157,106                               | 97,696                                | 486,677                              | 215,387                             
|                                      |                                       |                                       |                                      |                                     
|Wages and employee benefits           | 1,188,164                             | 1,540,102                             | 3,598,122                            | 2,550,666                           
|                                      |                                       |                                       |                                      |                                     
|                                      | $
1,713,558                           | $
2,180,886                           | $
5,247,664                          | $
3,808,059                         































The accompanying notes are an integral part of these consolidated financial statements.

JEWETT-CAMERON TRADING COMPANY LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in U.S. dollars)

(Unaudited - Prepared by Management)



|                                                                | Three Month
Period Ended
May 31,
2003 | Three Month
Period Ended
May 31,
2002 | Nine Month
Period Ended
May 31,
2003 | Nine Month
Period Ended
May 31,
2002
|--------------------------------------------------------------- | ------------------------------------- | ------------------------------------- | ------------------------------------ | ------------------------------------
|                                                                |                                       |                                       |                                      |                                     
|                                                                |                                       |                                       |                                      |                                     
|                                                                |                                       |                                       |                                      |                                     
|CASH FLOWS FROM OPERATING ACTIVITIES                            |                                       |                                       |                                      |                                     
|Net income                                                      | $
215,723                             | $
326,427                             | $
402,906                            | $
491,558                           
|Items not involving an outlay of cash:                          |                                       |                                       |                                      |                                     
|Bad debt recovery                                               | (99,094)                              | -                                     | (208,620)                            | -                                   
|Depreciation                                                    | 83,183                                | 78,808                                | 241,684                              | 202,269                             
|Deferred income tax                                             | (131,300)                             | -                                     | (4,100)                              | 23,000                              
|Stock-based compensation expense (recovery)                     | (8,512)                               | -                                     | (19,376)                             | 20,340                              
|                                                                |                                       |                                       |                                      |                                     
|Changes in non-cash working capital items:                      |                                       |                                       |                                      |                                     
|Increase in accounts receivable                                 | (548,258)                             | (5,547,402)                           | (14,565)                             | (4,944,100)                         
|(Increase) decrease in inventory                                | 1,257,274                             | (154,037)                             | (2,297,347)                          | (1,204,559)                         
|Increase in prepaid expenses                                    | (58,476)                              | 34,446                                | (169,014)                            | (100,402)                           
|Increase (decrease) in accounts payable
and accrued liabilities | (1,048,706)                           | 3,513,726                             | (2,690,487)                          | 3,298,823                           
|                                                                |                                       |                                       |                                      |                                     
|Net cash used in operating activities                           | (338,166)                             | (1,748,032)                           | (4,758,919)                          | (2,213,071)                         
|                                                                |                                       |                                       |                                      |                                     
|                                                                |                                       |                                       |                                      |                                     
|CASH FLOWS FROM FINANCING ACTIVITIES                            |                                       |                                       |                                      |                                     
|Issuance of capital stock for cash                              | -                                     | -                                     | 164,889                              | 41,102                              
|Treasury shares acquired                                        | (7,495)                               | (28,337)                              | (55,199)                             | (167,938)                           
|Bank indebtedness                                               | 436,352                               | 2,023,376                             | 4,499,214                            | 2,666,692                           
|                                                                |                                       |                                       |                                      |                                     
|Net cash provided by financing activities                       | 428,857                               | 1,995,039                             | 4,608,904                            | 2,539,856                           
|                                                                |                                       |                                       |                                      |                                     
|                                                                |                                       |                                       |                                      |                                     
|CASH FLOWS FROM INVESTING ACTIVITIES                            |                                       |                                       |                                      |                                     
|Purchase of capital assets                                      | (51,576)                              | (284,215)                             | (83,324)                             | (313,555)                           
|Deposits                                                        | -                                     | (14,400)                              | -                                    | (14,400)                            
|                                                                |                                       |                                       |                                      |                                     
|Net cash used in investing activities                           | (51,576)                              | (298,615)                             | (83,324)                             | (327,955)                           
|                                                                |                                       |                                       |                                      |                                     
|Change in cash and cash equivalents                             | 39,115                                | (51,608)                              | (233,339)                            | (1,170)                             
|                                                                |                                       |                                       |                                      |                                     
|Cash and cash equivalents, beginning of period                  | 197,537                               | 373,060                               | 469,991                              | 322,622                             
|                                                                |                                       |                                       |                                      |                                     
|Cash and cash equivalents, end of period                        | $
236,652                             | $
321,452                             | $
236,652                            | $
321,452                           



Supplemental disclosure with respect to cash flows (Note 14)



The accompanying notes are an integral part of these consolidated financial statements.

JEWETT-CAMERON TRADING COMPANY LTD.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Expressed in U.S. Dollars)

(Unaudited - Prepared by Management)



|                                  | Common Stock     | Treasury Shares |                  |             |                           
|--------------------------------- | ---------------- | --------------- | ---------------- | ----------- | --------------------------
|                                  | Number
of Shares | Amount          | Number
of Shares | Amount      | Additional
Paid-In
Capital
|                                  |                  |                 |                  |             |                           
|                                  |                  |                 |                  |             |                           
|                                  |                  |                 |                  |             |                           
|Balance, August 31, 2002          | 1,508,493        | $
1,706,451     | 67,050           | $
(257,272) | $
602,587                 
|                                  |                  |                 |                  |             |                           
|Net income for the period         | -                | -               | -                | -           | -                         
|Private placement                 | 12,860           | 106,100         | -                | -           | -                         
|Shares issued for ESOP            | 7,083            | 58,789          | -                | -           | -                         
|Treasury shares acquired          | -                | -               | 6,800            | (55,199)    | -                         
|Stock based compensation
recovery | -                | -               | -                | -           | (19,376)                  
|Adjustment for 3:2 stock split    | 9,972            | -               | 2,700            | -           | -                         
|                                  |                  |                 |                  |             |                           
|Balance, May 31, 2003             | 1,538,408        | $
1,871,340     | 76,550           | $
(312,471) | $
583,211                 





























































The accompanying notes are an integral part of these consolidated financial statements.

JEWETT-CAMERON TRADING COMPANY LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

(Unaudited - Prepared by Management)

MAY 31, 2003









1.

NATURE OF OPERATIONS





The Company was incorporated under the Company Act of British Columbia on July 8, 1987.



The Company through its subsidiaries operates out of facilities located in Portland, Oregon, North Plains, Oregon and Ogden, Utah.  The Company operates as a wholesaler of lumber and building materials to home improvement centres located primarily in the Pacific and Rocky Mountain regions of the United States; as a processor and distributor of industrial wood and other specialty building products principally to original equipment manufacturers; as an importer and distributor of pneumatic air tools and industrial clamps throughout the United States, and as a processor and distributor of agricultural seeds in the United States.





2.

SIGNIFICANT ACCOUNTING POLICIES





Generally accepted accounting principles



These consolidated financial statements have been prepared in accordance with generally accepted accounting principles of the United States of America, which are not materially different from generally accepted accounting principles utilized in Canada.



In the opinion of management, the accompanying consolidated financial statements contain all adjustments necessary (consisting only of normal recurring accruals) to present fairly the financial information contained therein.  These consolidated financial statements do not include all disclosures required by generally accepted accounting principles in the United States of America and should be read in conjunction with the audited consolidated financial statements of the Company for the year ended August 31, 2002.  The results of operations for the period ended May 31, 2003 are not necessarily indicative of the results to be expected for the year ending August 31, 2003.





Principles of consolidation



These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, The Jewett-Cameron Lumber Corporation, Jewett-Cameron Seed Co., Greenwood Products, Inc. and MSI-PRO Co., all of which are incorporated under the laws of Oregon, U.S.A.



Significant inter-company balances and transactions have been eliminated upon consolidation.





Estimates



The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

-#-



JEWETT-CAMERON TRADING COMPANY LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

(Unaudited - Prepared by Management)

MAY 31, 2003









2.

SIGNIFICANT ACCOUNTING POLICIES (cont'd...)





Revenue recognition



The Company recognizes revenue from the sales of building supply products, industrial wood and other specialty products and tools, when the products are shipped, title passes and the ultimate collection is reasonably assured.  Revenue from the Company's seed operations is generated by the provision of seed processing, handling and storage services provided to seed growers, and by the sales of seed products.  Revenue from the provision of these services and products is recognized when the services have been performed and products sold and collection of the amounts is reasonably assured.





Currency



These financial statements are expressed in U.S. dollars as the Company's operations are based predominately in the United States.  Any amounts expressed in Canadian dollars are indicated as such.





Cash and cash equivalents



Cash and cash equivalents include highly liquid investments with original maturities of three months or less.





Inventory



Inventory is recorded at the lower of cost, based on the average cost method, and net realizable value.





Capital assets and depreciation



Capital assets are recorded at cost less accumulated depreciation and the Company provides for depreciation over the estimated life of each asset on a straight-line basis over the following periods:





|Office equipment    | 5-7 years  | 
|------------------- | ---------- | 
|Warehouse equipment | 2-10 years | 
|Buildings           | 5-30 years | 





Foreign exchange



The Company's functional currency for all operations worldwide is the U.S. dollar.  Non-monetary assets and liabilities are translated at historical rates and monetary assets and liabilities are translated at exchange rates in effect at the end of the year.  Statement of operations accounts are translated at average rates for the year.  Gains and losses resulting from foreign currency translations are included in current results of operations.

-#-



JEWETT-CAMERON TRADING COMPANY LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

(Unaudited - Prepared by Management)

MAY 31, 2003









2.

SIGNIFICANT ACCOUNTING POLICIES (cont'd...)





Earnings per share



In February 1997, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS 128").  Under SFAS 128, basic and diluted earnings per share are to be presented. Basic earnings per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding in the period. Diluted earnings per share take into consideration common shares outstanding (computed under basic earnings per share) and potentially dilutive common shares.



A reconciliation of the basic and diluted weighted average number of common shares outstanding for the periods ended May 31 is summarized as follows:



|                                                                         | Three Month
Period Ended
May 31,
2003 | Three Month
Period Ended
May 31,
2002 | Nine Month
Period Ended
May 31,
2003 | Nine Month
Period Ended
May 31,
2002
|------------------------------------------------------------------------ | ------------------------------------- | ------------------------------------- | ------------------------------------ | ------------------------------------
|                                                                         |                                       |                                       |                                      |                                     
|Basic earnings per share weighted                                        |                                       |                                       |                                      |                                     
|average number of shares outstanding                                     | 1,461,298                             | 1,447,629                             | 1,455,304                            | 1,449,923                           
|Effect of dilutive securities                                            |                                       |                                       |                                      |                                     
|Stock options                                                            | 47,543                                | 79,251                                | 50,847                               | 74,795                              
|                                                                         |                                       |                                       |                                      |                                     
|Diluted earnings per share weighted
average number of shares outstanding | 1,508,841                             | 1,526,880                             | 1,506,151                            | 1,524,718                           





Employee stock option plan



Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation (SFAS 123) encourages, but does not require, companies to record compensation cost for stock-based employee compensation plans based on the fair value of options granted.  The Company has elected to continue to account for stock-based compensation using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25 Accounting for Stock Issued to Employees (APB 25) and related interpretations and to provide additional disclosures with respect to the pro-forma effects of adoption had the Company recorded compensation expense as provided in SFAS 123.



In accordance with APB 25, compensation costs for stock options is recognized in income based on the excess, if any, of the quoted market price of the stock at the grant date of the award or other measurement date over the amount an employee must pay to acquire the stock.  Generally, the exercise price for stock options granted to employees equals or exceeds the fair market value of the Company's common stock at the date of grant, thereby resulting in no recognition of compensation expense by the Company.

-#-



JEWETT-CAMERON TRADING COMPANY LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

(Unaudited - Prepared by Management)

MAY 31, 2003









2.

SIGNIFICANT ACCOUNTING POLICIES (cont'd...)





Employee stock option plan (contd)





The Company accounts for stock based compensation associated with the repricing of employee stock options in accordance with the provisions of FASB Interpretation No. 44,  Accounting for Certain Transactions involving Stock Compensation  (FIN 44).  For accounting purposes, the repricing of existing stock options requires variable accounting for the new options granted from the date of modification.  Variable accounting requires that the intrinsic value, being the excess of the current market price at the end of each reporting period in excess of the exercise price of the repriced options, be expensed as non-cash stock based compensation expense, until such time as the repriced options are exercised, expire or are otherwise forfeited.  Any increase in the intrinsic value of the repriced options will decrease reported earnings, and any subsequent decreases in value will increase reported earnings.



If under SFAS 123 the Company determined compensation costs based on the fair value at the grant date for its stock options, net earnings and earnings per share would have been reduced to the following pro-forma amounts:



|                                                                                                                                            | Three Month
Period Ended
May 31,
2003 | Three Month
Period Ended
May 31,
2002 | Nine Month
Period Ended
May 31,
2003 | Nine Month
Period Ended
May 31,
2002
|------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------- | ------------------------------------- | ------------------------------------ | ------------------------------------
|                                                                                                                                            |                                       |                                       |                                      |                                     
|Net income                                                                                                                                  |                                       |                                       |                                      |                                     
|As reported                                                                                                                                 | $
215,723                             | $
326,427                             | $
402,906                            | $
491,558                           
|                                                                                                                                            |                                       |                                       |                                      |                                     
|Add:
Total stock-based employee compensation expense included in income, as reported determined under APB 25, net of related tax effects    | (8,512)                               | -                                     | (19,376)                             | 20,340                              
|                                                                                                                                            |                                       |                                       |                                      |                                     
|Deduct:
Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects | -                                     | -                                     | -                                    | (30,312)                            
|                                                                                                                                            |                                       |                                       |                                      |                                     
|Pro forma                                                                                                                                   | $
207,211                             | $
326,427                             | $
383,530                            | $
481,586                           
|                                                                                                                                            |                                       |                                       |                                      |                                     
|Basic earnings per share                                                                                                                    |                                       |                                       |                                      |                                     
|As reported                                                                                                                                 | $
0.15                                | $
0.23                                | $
0.28                               | $
0.34                              
|                                                                                                                                            |                                       |                                       |                                      |                                     
|Pro forma                                                                                                                                   | $
0.14                                | $
0.23                                | $
0.26                               | $
0.33                              
|                                                                                                                                            |                                       |                                       |                                      |                                     
|Diluted earnings per share                                                                                                                  |                                       |                                       |                                      |                                     
|As reported                                                                                                                                 | $
0.14                                | $
0.21                                | $
0.27                               | $
0.32                              
|                                                                                                                                            |                                       |                                       |                                      |                                     
|Pro forma                                                                                                                                   | $
0.14                                | $
0.21                                | $
0.25                               | $
0.32                              

-#-



JEWETT-CAMERON TRADING COMPANY LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

(Unaudited - Prepared by Management)

MAY 31, 2003









2.

SIGNIFICANT ACCOUNTING POLICIES (cont'd...)







Financial instruments





The Company uses the following methods and assumptions to estimate the fair value of each class of financial instruments for which it is practicable to estimate such values:



Cash and short-term investments



The carrying amount approximates fair value because of the short-term maturity of those instruments.



Accounts receivable



The carrying value of accounts receivable approximates fair value due to the short-term nature and historical collectability.



Accounts payable and accrued liabilities



The carrying value of accounts payable approximates fair value due to the short-term nature of the obligations.



Bank indebtedness



The carrying amount approximates fair value due to the short-term nature of the obligation.



Notes payable



The fair value of the Companys note payable is estimated based on current rates offered to the Company for debt of the same remaining maturities.



The estimated fair values of the Company's financial instruments are as follows:



|                                         | May 31, 2003    |            | August 31, 2002
|---------------------------------------- | --------------- | ---------- | ---------------
|                                         | Carrying
Amount | Fair
Value |                
|                                         |                 |            |                
|Cash and cash equivalents                | $
236,652       | $
236,652  |                
|Accounts receivable                      | 6,321,918       | 6,321,918  |                
|Bank indebtedness                        | 7,464,853       | 7,464,853  |                
|Accounts payable and accrued liabilities | 1,328,273       | 1,328,273  |                
|Notes payable                            | 2,889,560       | 2,889,560  |                

-#-



JEWETT-CAMERON TRADING COMPANY LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

(Unaudited - Prepared by Management)

MAY 31, 2003









2.

SIGNIFICANT ACCOUNTING POLICIES (cont'd...)





Comparative figures



Certain comparative figures have been reclassified to conform with the presentation adopted for the current period.





Income taxes



Income taxes are provided in accordance with Statements of Financial Accounting Standards No. 109, "Accounting for Income Taxes".  A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carryforwards.  Deferred tax expense (benefit) results from the net change during the year of deferred tax assets and liabilities.



Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.  Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.





Shipping and handling costs



The Company incurs certain expenses related to preparing, packaging and shipping its products to its customers, mainly third-party transportation fees. All costs related to these activities are included as a component of cost of goods sold in the consolidated statement of operations. All costs billed to the customer are included as revenue in the consolidated statement of operations.





New accounting pronouncements



In June 2001, the Financial Accounting Standards Board (FASB) approved the issuance of Statements of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets (SFAS 142).  SFAS 142 requires that goodwill no longer be amortized to earnings, but instead be reviewed for impairment.  The statement is effective for fiscal years beginning after December 15, 2001, and is required to be applied at the beginning of an entity's fiscal year and to be applied to all goodwill and other intangible assets recognized in its financial statements at that date.  Impairment losses for goodwill and indefinite-lived intangible assets that arise due to the initial application of this statement (resulting from a transitional impairment test) are to be reported as resulting from a change in accounting principle.  Under an exception to the date at which this statement becomes effective, goodwill and intangible assets acquired after June 30, 2001, will be subject immediately to the non-amortization and amortization provisions of this statement.



In June 2001, FASB issued Statements of Financial Accounting Standards No. 143, Accounting for Asset Retirement Obligations (SFAS 143) that records the fair value of the liability for closure and removal costs associated with the legal obligations upon retirement or removal of any tangible long-lived assets.  The initial recognition of the liability will be capitalized as part of the asset cost and depreciated over its estimated useful life.  SFAS 143 is required to be adopted effective January 1, 2003.

-#-



JEWETT-CAMERON TRADING COMPANY LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

(Unaudited - Prepared by Management)

MAY 31, 2003









2.

SIGNIFICANT ACCOUNTING POLICIES (cont'd...)







New accounting pronouncements (contd)





In August 2001, FASB issued Statements of Financial Accounting Standards No. 144, Accounting for the Impairment on Disposal of Long-lived Assets (SFAS 144), which supersedes Statements of Financial Accounting Standards No. 121, Accounting for the Impairment of Long-lived Assets and for Long-lived Assets to be Disposed of.  SFAS 144 requires that long-lived assets that are to be disposed of by sale be measured at the lower of book value or fair value less cost to sell.  Additionally, SFAS 144 expands the scope of discontinued operations to include all components of an entity with operations that (1) can be distinguished from the rest of the entity and (2) will be eliminated from the ongoing operations of the entity in a disposal transaction.  SFAS 144 is effective for fiscal years beginning after December 15, 2001, and, generally, its provisions are to be applied prospectively.



In April 2002, FASB issued Statements of Financial Accounting Standards No. 145, Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections (SFAS 145).  SFAS 145 eliminates the requirement that gains and losses from the extinguishment of debt be aggregated and, if material, classified as an extraordinary item, net of the related income tax effect and eliminates an inconsistency between the accounting for sale-leaseback transactions and certain lease modifications that have economic effects that are similar to sale-leaseback transactions. Generally, SFAS 145 is effective for transactions occurring after May 15, 2002.



In June 2002, FASB issued Statements of Financial Accounting Standards No. 146, Accounting for Costs Associated with Exit or Disposal Activities (SFAS 146) that nullifies Emerging Issues Task Force No. 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (Including Certain Costs Incurred in a Restructuring) (EITF 94-3).  SFAS 146 requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred, whereby EITF 94-3 had recognized the liability at the commitment date to an exit plan.  The provisions of this statement are effective for exit or disposal activities that are initiated after December 31, 2002 with earlier application encouraged.



In October 2002, FASB issued Statements of Financial Accounting Standards No. 147, Accounting of Certain Financial Institutions  an amendment of FASB Statements No. 72 and 44 and FASB Interpretation No. 9 (SFAS 147).  SFAS 147 requires the application of the purchase method of accounting to all acquisitions of financial institutions, except transactions between two or more mutual enterprises.  SFAS 147 is effective for acquisitions for which the date of acquisition is on or after October 1, 2002.



In December 2002, FASB issued Statements of Financial Accounting Standards No. 148, Accounting for Stock-Based Compensation  Transition and Disclosure  an amendment of FASB Statement No. 123 (SFAS 148).  SFAS 148 amends FASB Statement No. 123 to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation.  In addition, SFAS 148 amends the disclosure requirements of FASB Statement No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results.  SFAS 148 is effective for fiscal years ending after December 15, 2002.

-#-



JEWETT-CAMERON TRADING COMPANY LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

(Unaudited - Prepared by Management)

MAY 31, 2003









2.

SIGNIFICANT ACCOUNTING POLICIES (cont'd...)



New accounting pronouncements (contd)



In April 2003, FASB issued Statements of Financial Accounting Standards No. 149 Amendment of Statement 133 on Derivative Instruments and Hedging Activities (SFAS 149).  SFAS 149 amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities under FASB Statement No. 133 Accounting for Derivative Instruments and Hedging Activities.  SFAS 149 is generally effective for contracts entered into or modified after June 30, 2003.



In May 2003, FASB issued Statements of Financial Accounting Standards No. 150 Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity (SFAS 150).  SFAS 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity.  SFAS 150 is effective for financial instruments entered into or modified after May 31, 2003.



The adoption of these new pronouncements is not expected to have a material effect on the Company's consolidated financial position or results of operations.



3.

INVENTORY



|                                   | May 31,
2003 | August 31,
2002
|---------------------------------- | ------------ | ---------------
|                                   |              |                
|Home improvement and wood products | $
8,981,535  | $
3,862,811    
|Air tools and industrial clamps    | 260,312      | 289,847        
|Agricultural seed products         | 641,843      | 544,125        
|                                   |              |                
|                                   | $
9,883,690  | $
4,696,783    



4.

CAPITAL ASSETS



|                         | May 31,
2003 | August 31,
2002
|------------------------ | ------------ | ---------------
|                         |              |                
|Office equipment         | $
563,666    | $
488,108      
|Warehouse equipment      | 681,670      | 669,274        
|Buildings                | 2,085,241    | 2,088,042      
|Land                     | 851,568      | 851,568        
|                         |              |                
|                         | 4,182,145    | 4,096,992      
|Accumulated depreciation | (1,478,655)  | (1,235,142)    
|                         |              |                
|Net book value           | $
2,703,490  | $
2,861,850    

-#-



JEWETT-CAMERON TRADING COMPANY LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

(Unaudited - Prepared by Management)

MAY 31, 2003









4.

CAPITAL ASSETS (contd)



In the event that facts and circumstances indicate that the carrying amount of an asset may not be recoverable and an estimate of future undiscounted cash flows is less than the carrying amount of the asset, an impairment loss will be recognized. Management's estimates of revenues, operating expenses, and operating capital are subject to certain risks and uncertainties which may affect the recoverability of the Company's assets.  Although management has made its best estimate of these factors based on current conditions, it is possible that changes could occur which could adversely affect management's estimate of the net cash flow expected to be generated from its operations.



5.

DEFERRED INCOME TAXES



Deferred income taxes of $176,000 (August 31, 2002 - $171,900) relate principally to temporary differences between the accounting and tax treatment of income, expenses, reserves and depreciation.



6.

BANK INDEBTEDNESS



|            | May 31,
2003 | August 31,
2002
|----------- | ------------ | ---------------
|            |              |                
|Demand loan | $
7,464,853  | $
2,965,639    



Bank indebtedness is secured by an assignment of accounts receivable and inventory.  Interest is calculated at either prime or the LIBOR rate plus 190 basis points.



7.

NOTES PAYABLE



|                                                                                                                           | May 31,
2003 | August 31,
2002
|-------------------------------------------------------------------------------------------------------------------------- | ------------ | ---------------
|                                                                                                                           |              |                
|Note payable bears interest at the U.S. prime rate plus 2% per annum and is due September 15, 2004 or on demand thereafter | $
2,376,896  | $
-            
|                                                                                                                           |              |                
|Note payable bears interest at the U.S. prime rate plus 2% per annum and is due September 15, 2004 or on demand thereafter | 512,664      | -              
|                                                                                                                           |              |                
|Balance, end of year                                                                                                       | $
2,889,560  | $
-            



8.

CAPITAL STOCK



Holders of common stock are entitled to one vote for each share held.  There are no restrictions that limit the Company's ability to pay dividends on its common stock.  The Company has not declared any dividends since incorporation.

-#-



JEWETT-CAMERON TRADING COMPANY LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

(Unaudited - Prepared by Management)

MAY 31, 2003









8.

CAPITAL STOCK (contd)





Holders of common stock are entitled to one vote for each share held.  There are no restrictions that limit the Company's ability to pay dividends on its common stock.  The Company has not declared any dividends since incorporation.



On February 28, 2003, the Company implemented a 3:2 stock split on its common shares.  The number of shares outstanding increased from 1,025,605 common shares to 1,538,408 common shares.  The ending balance of all share and per share amounts have been restated to give retroactive recognition to the stock split for all periods presented.



Treasury stock



Treasury stock is recorded at cost.  During the periods ended May 31, 2003 and 2002, the Company repurchased 5,400 (8,100 post 3:2 stock split) and 1,400 shares during the period ended May 31, 2003 and 23,400 (35,100 post 3:2 stock split) shares during the period ended May 31, 2002 at an aggregate cost of $55,199 and $167,938, respectively.





9.

EMPLOYEE STOCK OWNERSHIP PLAN



The Company sponsors an employee stock ownership plan ("ESOP") that covers all U.S. employees who are employed by the Company on August 31 of each year and who have at least one thousand hours with the Company in the twelve months preceding that date.  The ESOP grants to participants in the plan certain ownership rights in, but not possession of, the common stock of the Company held by the Trustee of the Plan.  Shares of common stock are allocated annually to participants in the ESOP pursuant to a prescribed formula.  The Company accounts for its ESOP in accordance with SOP 93-6 Employers' Accounting for Employee Stock Ownership Plans.  The Company records compensation expense equal to the market price of the shares acquired on the open market.  Any dividends on allocated ESOP shares are recorded as a reduction of retained earnings.





10.

STOCK BASED COMPENSATION EXPENSE



Stock options



The Company has a stock option plan under which stock options to purchase securities from the Company can be granted to directors and employees of the Company on terms and conditions acceptable to the regulatory authorities of Canada, notably the TSX Exchange ("TSX"), the Ontario Securities Commission and the British Columbia Securities Commission.



Under the stock option program, stock options for up to 10% of the number of issued and outstanding common shares may be granted from time to time, provided that stock options in favour of any one individual may not exceed 5% of the issued and outstanding common shares.  No stock option granted under the stock option program is transferable by the optionee other than by will or the laws of descent and distribution, and each stock option is exercisable during the lifetime of the optionee only by such optionee.

-#-



JEWETT-CAMERON TRADING COMPANY LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

(Unaudited - Prepared by Management)

MAY 31, 2003









10.

STOCK BASED COMPENSATION EXPENSE (contd)



Stock options (contd)



The exercise price of all stock options, granted under the stock option program, must be at least equal to the fair market value (subject to regulated discounts) of such common shares on the date of grant.



Proceeds received by the Company from exercise of stock options are credited to capital stock.



Following is a summary of the status of options outstanding at May 31, 2003:



|                               | Number
of Shares               | Weighted
Average
Exercise
Price
|------------------------------ | ------------------------------ | -------------------------------
|                               | (Adjusted
for 3:2
stock split) | (Adjusted
for 3:2
stock split) 
|                               |                                |                                
|Outstanding at August 31, 2001 | 117,000                        | Cdn$  3.11                     
|Repriced                       | 18,000                         | Cdn$  5.00                     
|Exercised                      | (12,000)                       | Cdn$  5.50                     
|                               |                                |                                
|Outstanding at August 31, 2002 | 123,000                        | Cdn$  3.15                     
|Expired                        | (18,000)                       | Cdn$  5.00                     
|                               |                                |                                
|Outstanding at May 31, 2003    | 105,000                        | Cdn$  2.83                     



|               | Outstanding Options            |                                             | Exercisable Options            
|-------------- | ------------------------------ | ------------------------------------------- | -------------------------------
|Exercise Price | Number                         | Weighted
Average
Remaining
Contractual
Life | Weighted
Average
Exercise
Price
|               | (Adjusted for 3:2 stock split) |                                             | (Adjusted for 3:2 stock split) 
|               |                                |                                             |                                
|Cdn$  2.83     | 105,000                        | 3.18                                        | Cdn$
2.83                      



During the period ended May 31, 2003, $19,376 was recovered for stock based compensation as a result of the quarterly recalculation of the options that were repriced during fiscal 2002.  Stock based compensation recognized during the period ended May 31, 2002 was $20,340.  These amounts were allocated to wages and employee benefits in the accompanying consolidated statement of operations.

-#-



JEWETT-CAMERON TRADING COMPANY LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

(Unaudited - Prepared by Management)

MAY 31, 2003









10.

STOCK BASED COMPENSATION EXPENSE (contd)





Stock options (contd)



The weighted average estimated fair value of stock options granted and repriced during the periods ended May 31, 2003 and 2002 were Cdn$Nil and $3.98 per share, respectively.  These amounts were determined using the Black-Scholes option pricing model, which values options based on the stock price at the grant date, the expected life of the option, the estimated volatility of the stock, the expected dividend payments, and the risk-free interest rate over the expected life of the option.  The assumptions used in the Black-Scholes option pricing model were as follows for stock options granted and repriced:



|                             | May 31,
2003 | May 31,
2002
|---------------------------- | ------------ | ------------
|                             |              |             
|Risk-free interest rate      | -            | 3%          
|Expected life of the options | -            | 2 years     
|Expected volatility          | -            | 41.62%      
|Expected dividend yield      | -            | -           





11.

CONTINGENT LIABILITIES AND COMMITMENTS



a)

On March 1, 2002, the Company entered into an agreement with Greenwood Forest Products, Inc. (Greenwood) to acquire certain assets of Greenwood.  The assets being acquired consist of nearly $7 million of inventory, purchased in seven installments over the next two years for a price equal to the sellers cost plus 2%; furnishings, equipment and supplies for $260,000 payable at closing (paid); and a license to use all of the intangible assets of the seller for a five year term, with an option to purchase the intangible assets for a nominal amount of $1,000, payable at closing (paid).  During the period ended May 31, 2003, the Company completed the final inventory installment purchase by acquiring inventory from Greenwood in the amount of $2,889,560.



b)

At May 31, 2003, the Company had an unutilized line-of-credit of approximately $693,000.





12.

SEGMENT INFORMATION



The Company has four principal operating segments: the sales of building materials and industrial wood products to home improvements centres and original equipment manufacturers in the United States; the sale of pneumatic air tools and industrial clamps in the United States; and the processing and sales of agricultural seeds in the United States.  These operating segments were determined based on the nature of the products offered.  Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly in deciding how to allocate resources and in assessing performance.  The Company evaluates performance based on several factors, of which the primary financial measure is business segment income before taxes.  The following tables show the operations of the Company's reportable segments.

-#-



JEWETT-CAMERON TRADING COMPANY LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

(Unaudited - Prepared by Management)

MAY 31, 2003









12.

SEGMENT INFORMATION (contd)



Following is a summary of segmented information for the nine month periods:



|                                   | May 31,
2003 | May 31,
2002
|---------------------------------- | ------------ | ------------
|                                   |              |             
|Sales to unaffiliated customers:   |              |             
|Building materials                 | $
5,032,048  | $
10,921,222
|Industrial tools                   | 668,414      | 576,387     
|Industrial wood products           | 33,113,434   | 13,709,870  
|Seed processing services and sales | 1,683,800    | 1,910,913   
|                                   |              |             
|                                   | $
40,497,696 | $
27,118,392
|                                   |              |             
|Income (loss) from operations:     |              |             
|Building materials                 | $
(114,138)  | $
382,948   
|Industrial tools                   | 62,795       | 55,711      
|Industrial wood products           | 867,444      | 203,404     
|Seed processing services and sales | 41,950       | 173,847     
|General corporate                  | (13,184)     | (43,883)    
|                                   |              |             
|                                   | $
844,867    | $
772,027   
|                                   |              |             
|Identifiable assets:               |              |             
|Building materials                 | $
7,328,499  | $
6,802,538 
|Industrial tools                   | 110,013      | 123,613     
|Industrial wood products           | 11,207,605   | 6,175,974   
|Seed processing services and sales | 937,580      | 908,208     
|General corporate                  | 9,490        | 16,969      
|                                   |              |             
|                                   | $
19,593,187 | $
14,027,302
|                                   |              |             
|Depreciation:                      |              |             
|Building materials                 | $
190,629    | $
202,269   
|Industrial wood products           | 51,055       | -           
|                                   |              |             
|                                   | $
241,684    | $
202,269   
|                                   |              |             
|Capital expenditures:              |              |             
|Building materials                 | $
25,552     | $
26,283    
|Industrial wood products           | 45,390       | 267,792     
|Seed processing services and sales | 14,210       | 19,480      
|                                   |              |             
|                                   | $
85,152     | $
313,555   



-continued -

-#-



JEWETT-CAMERON TRADING COMPANY LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

(Unaudited - Prepared by Management)

MAY 31, 2003









12.

SEGMENT INFORMATION (cont'd)



|                         | May 31,
2003 | May 31,
2002
|------------------------ | ------------ | ------------
|                         |              |             
|Continued                |              |             
|                         |              |             
|Interest expense:        |              |             
|Building materials       | $
-          | $
20,360    
|Industrial wood products | 211,250      | -           
|                         |              |             
|                         | $
211,250    | $
20,360    



For the nine month periods ended May 31, 2003 and 2002 the Company made sales of $4,316,412 (2002 - $6,931,865) and $Nil (2002 - $2,491,255) to customers of the building material segments which were in excess of 10% of total sales for the nine month periods.





13.

CONCENTRATIONS OF CREDIT RISK



Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable.  The Company places its cash and cash equivalents with high quality financial institutions and limits the amount of credit exposure with any one institution.  The Company has concentrations of credit risk with respect to accounts receivable as large amounts of its accounts receivable are concentrated geographically in the United States amongst a small number of customers.  At May 31, 2003, no customers accounted for total accounts receivable greater than 10%.  At May 31, 2002, one customer totalling $701,180 accounted for accounts receivable greater than 10% of total accounts receivable.  The Company controls credit risk through credit approvals, credit limits, and monitoring procedures.  The Company performs credit evaluations of its commercial customers but generally does not require collateral to support accounts receivable.





14.

SUPPLEMENTAL DISCLOSURES WITH RESPECT TO CASH FLOWS



|                                 | May 31,
2003 | May 31,
2002
|-------------------------------- | ------------ | ------------
|                                 |              |             
|Cash paid during the period for: |              |             
|Interest                         | $
211,250    | $
20,360    
|Income taxes                     | -            | -           



Significant non-cash transactions for the nine month periods ended May 31, 2003 and 2002 consisted of the Company acquiring inventory by issuing a note payable in the amount of $2,889,560 (2002 - $Nil).

-#-









Item 2.

Managements Discussion and Analysis of Financial Condition and

Results of Operations.



This quarterly report includes forwardlooking statements as that term is defined in Section 21E of the Securities Exchange Act of 1934. Forward-looking statements can be identified by the use of forward-looking terminology such as believes, expects, may, will, should, seeks, approximately, intends, plans, estimates, anticipates, or hopeful, or the negative of those terms or other comparable terminology, or by discussions of strategy, plans or intentions. For example, this section contains numerous forward-looking statements.  All forward-looking statements in this report are made based on managements current expectations and estimates, which involve risks and uncertainties, including those described in the following paragraphs.



•

Demand for company products may change;

•

Production time and the overall cost of products could increase if any of the primary suppliers are lost or if any primary supplier increased the prices of products;

•

Fluctuations in quarterly and annual operating results may make it difficult to predict future performance;

•

Shareholders could experience significant dilution;

•

The Company could lose its significant customers;

•

The Company could experience delays in the delivery of its products;

•

A loss of the bank credit agreement could impact future liquidity;

•

The limited daily trading volume of the Companys common stock could make it difficult for investors to purchase additional shares or sell currently held shares.



These financial statements are those of the Company and its wholly owned subsidiaries. In the opinion of management, the accompanying Consolidated Financial Statements of Jewett-Cameron Trading Company Ltd., contain all adjustments, consisting only of normal recurring adjustments, necessary to fairly state its financial position as of May 31, 2003 and 2002 and its results of operations and its cash flows for the three month period ended May 31, 2003 and 2002 and for the nine month period ended May 31, 2003 and May 31, 2002.  Operating results for the three month period ended May 31, 2003 and the nine month period ended May 31, 2003 are not necessarily indicative of the results that may be experienced for the fiscal year ending August 31, 2003.



RESULTS OF OPERATIONS



Three months ended May 31, 2003 and 2002:



Jewett Camerons operations are classified into four principle industry segments: sales of building materials, sales of wood products with industrial and OEM applications, sales of industrial tools and sales of processed agricultural seeds and grain. Sales of building materials have traditionally consisted of wholesale sales of lumber and building materials in the United States. This has transitioned to include both wood and non-wood items. Sales of wood products with industrial and OEM applications consist of wholesale sales of wood products primarily to the transportation and recreational boating industries in the United States. Sales of industrial tools consist of the distribution of pneumatic air tools and industrial clamps in the United States.  Sales of processed seeds and grain consist of the distribution of processed agricultural seeds and grain in the United States. The Companys major distribution centers are located in North Plains, Oregon and Ogden, Utah.



For the third quarter of the current fiscal year, ended May 31, 2003, sales decreased 23.5% to $14,998,178 compared to $19,597,409 for the same quarter of the previous year.



Net income for the quarter was $215,723 which represents a 34% decrease compared to the third quarter of the last fiscal year when net income was $326,427.



Earnings per share were $0.15 for the third quarter of Fiscal 2003 compared to $0.23 for the third quarter of fiscal 2002.



The principal reasons for the 23.5% decrease in sales during the third quarter of Fiscal 2003 and the 34% decrease in net income were reductions in the Companys raw commodity sales (fencing materials, decking materials and landscape materials) and.  products associated with marine and transportation O.E.M. orders.



Management attributes the decrease in raw commodity sales to a lowering of demand for these items brought about by current economic conditions. They believe that consumers are postponing replacing or installing such items as decks and fences because of the associated high costs.



Management attributes the decrease in the sales of marine insulation products to the lack of demand for new boats by consumers also resulting from the current recession. They anticipate that sales will increase as general economic conditions improve.



In order to compensate for the decrease in consumer demand for these products, the Company has transitioned from its traditional wood-based product line to adding non-wood based products. These recently introduced items include gates, dog runs, green houses and welded wire mesh panels which are used in place of traditional wood fencing.

General and administrative expenses for the Company were $1,713,558 for the third quarter down from $2,180,886 for the third quarter of the last fiscal year.  The primary reason for the decrease of $467,328 was a restructuring of the activities of Greenwood Products during the first and second quarters of Fiscal 2003. This restructuring included reductions in salaries resulting from the elimination of some positions and lower earned commissions resulting from the sales decreases. As a result of these actions, wages and employee benefits decreased from the third quarter of Fiscal 2002 level of $1,540,102 to  $1,188,164 for the third quarter of Fiscal 2003. Office expenses also decreased by 452,758 during the third quarter of Fiscal 2003 as compared to the third quarter of Fiscal 2002 resulting from the Companys efforts to reduce expenses.



Nine Months Ended May 31, 2003 and 2002



For the first nine months of the current fiscal year, ended May 31, 2003, sales increased 49% to $40,497,696 compared to $27,118,392 for the same period of the previous fiscal year.



The principal reason for the 49% increase in sales was the contribution of Greenwood Products Inc. Greenwood Products Inc., accounted for $33,113,434 for the first nine months of Fiscal 2003 as compared to sales of $13,709,870 during the first nine months of Fiscal 2002.



Sales of building materials were $5,032,048 for the period, a decrease of 51% compared to sales of $10,921,222 for the first nine months of Fiscal 2002. The sale of building materials is accomplished through the activities of Jewett Cameron Lumber Company, which is a wholly owned subsidiary of Jewett Cameron Trading Company Ltd. As stated earlier, management attributes the decrease in the sales of building materials to the current downturn in the economy.



Sales of pneumatic tools and industrial clamps were $668,414 for the period as compared to $576,387 for the same period of last year, an increase of about 16%. As was the case for the third quarter of Fiscal 2003 as compared to the  third quarter of Fiscal 2002, the efforts of the newly hired sales staff resulted in the stronger sales evidenced during this period as compared to the prior like period.



Sales of processed seeds and grain were $1,683,800 for the period compared to $1,910,913 for the first nine months of the last fiscal year, a decrease of slightly over 12%. The sales of processed seeds and grain are accomplished through the activities of Jewett Cameron Seed Company, which is a wholly owned subsidiary of Jewett Cameron Lumber Company.  The decrease in sales, which occurred in the period as compared to the first nine months of Fiscal 2002, was due primarily to a smaller crop and increased price competition for the available crop resulting in lower prices.

General and administrative expenses for the Company were $5,247,664 for the first nine months of Fiscal 2003 as compared to $3,808,059 for the first nine months of the last fiscal year.  In spite of the fact that the absolute numbers relating to general and administrative expenses (year to date) have increased, the current trend within the Company is one of decreasing expenses as disclosed earlier in the discussion pertaining to the three month period ended May 31, 2003. As was the case during the  prior fiscal year, the addition of Greenwood Products resulted in increases in every category of general and administrative expenses with the exception of repairs and maintenance and insurance.  The most notable of these changes were: wages and employee benefits which increased $1,439,605; although, for the three month period ended May 31, 2003 this category of expenses decreased by $351,938 as a result of managements efforts in cutting expenses. Warehouse expenses and supplies increased $271,290; travel entertainment and advertising increased $92,223; telephone and utilities increased $33,735; repairs and maintenance decreased by $19,045; rent increased by $102,162; professional fees increased by $60,301; office and miscellaneous increased by $52,988; insurance decreased by $33,976; depreciation and amortization increased by $39,15; and, bad debt recovery increased by $205,671. When considering the increases in these categories, it is important to note that since the Companys cost cutting measures were put in place during the second quarter of Fiscal 2003, general and administrative expenses have decreased by $467,328.

There are no additional categories of expenses associated with Greenwood Products, Inc. as its operations are similar to those of Jewett-Cameron Lumber Corporation; Jewett-Cameron Seed Company; and, MSI-PRO Corp.



Net income for the nine months ended May 31, 2003 was $402,906, which represents an 18% decrease over the first nine months of the last fiscal year when net income was $491,558.  The decrease in net income was due to a 53% increase in the cost of sales brought about by the lower margins associated with the items sold through Greenwood Products; the 38% increase in year to date general and administrative expenses; and, an increase in interest expenses of 937% brought about by the Companys higher level of borrowing as compared to the prior period.



Earnings per share were $0.28 for the first nine months of Fiscal 2003 compared to $0.32 for the first nine months of fiscal 2002, a decrease of 12.5%.



LIQUIDITY AND CAPITAL RESOURCES



As of May 31, 2003 the Company had working capital of $7,920,571, which represented an increase of $3,537,040 as compared to the working capital position of $4,383,531 as of August 31, 2002.  The primary reason for the increase in working capital was an increase of $5,186,907 in inventory; an increase in accounts receivable of  $223,185; and, an increased in prepaid expenses in the amount $169,014. Offsetting these increases in the asset accounts, on the liability side bank indebtedness increased by $4,499,214; however, accounts payable and accrued liabilities decreased by $2,690,487.



External sources of liquidity include a bank line from the United States National Bank of Oregon.  The total line of credit available is $8.0 million of which there was an outstanding balance on May 31, 2003 of $7,464,853 and an outstanding balance as of August 31, 2002 of 2,965,639.



Based on the Companys current working capital position, its policy of retaining earnings, and the line of credit available, the Company has adequate working capital to meet its needs during the current fiscal year.



ISSUES AND UNCERTAINTIES



This Quarterly Report contains statements that are forward-looking. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially because of issues and uncertainties such as those listed below, which, among others, should be considered in evaluating the Companys financial outlook.



Demand for Company products may change:



In the past the Company has experienced decreasing annual sales in the areas of home improvement products and industrial tools. The reasons for this can be generally attributed to worldwide economic conditions, specifically those pertaining to lumber prices; demand for industrial tools; and, consumer interest rates. If economic conditions continue to worsen or if consumer preferences change, the Company could experience a significant decrease in profitability.



Production time and the overall cost of products could increase if any of the primary suppliers are lost or if a primary supplier increased the prices of raw materials:



The Companys manufacturing operation, which consists of cutting fencing material to specific sizes and shapes, depends upon obtaining adequate supplies of lumber on a timely basis. The results of operations could be adversely affected if adequate supplies of raw materials cannot be obtained in a timely manner or if the costs of lumber increased significantly.



Fluctuations in quarterly and annual operating results may make it difficult to predict future performance:



Quarterly and annual operating results could fluctuate in the future due to a variety of factors, some of which are beyond managements control. As a result of quarterly fluctuations, it is important to realize quarter-to-quarter comparisons of operating results are not necessarily meaningful and should not be relied upon as indicators of future performance.



Shareholders could experience significant dilution:



The Company is authorized to issue up to 10,000,000 shares of preferred stock, without par value per share.  As of the date of this Annual Report, no shares of preferred stock have been issued.  The Companys preferred stock may bear such rights and preferences, including dividend and liquidation preferences, as the board of Directors may fix and determine from time to time.  Any such preferences may operate to the detriment of the rights of the holders of the Common Stock and would cause dilution to these shareholders.



The Company could lose its significant customers:



The top ten customers of the Company represent 49% of its business.  The Company would experience a significantly adverse effect if these customers were lost and could not be replaced.



The Company could experience delays in the delivery of its products:



The Company purchases its products from other vendors and a delay in shipment from these vendors to the Company could cause significant delays in delivery to the Companys customers. This could result in a decrease in sales orders to the Company.



A loss of the bank credit agreement could impact future liquidity:



The Company currently maintains a line of credit with U.S. Bank in the amount of $8 million. A loss of this credit line could have a significantly adverse effect on the liquidity of the Company.



The limited daily trading volume of the Companys common stock could make it difficult for investors to purchase additional shares or sell currently held shares in the open market:



The shares of the Company currently trade within the NASDAQ system in the United States and on the Toronto Stock Exchange in Canada. The average daily trading volume of the Companys common stock is 500 shares within the NASDAQ system and significantly less on the Toronto Stock Exchange.  With this limited trading volume investors could find it difficult to purchase or sell the Companys common stock.





Item 3  Quantitative and Qualitative Disclosures about Market Risks:



Interest Rate Risk



The Company does not have any derivative financial instruments as of May 31, 2003; however, the Company is exposed to interest rate risk.



The Companys interest income and expense are most sensitive to changes in the general level of U.S. interest rates.  In this regard, changes in U.S. interest rates affect the interest earned on the Companys cash equivalents as well as interest paid on debt.



The Company has a line of credit whose interest rate is based on various published rates that may fluctuate over time based on economic changes in the environment.  The Company is subject to interest rate risk and could be subject to increased interest payments if market interest rates fluctuate.  The Company does not expect any change in the interest rates to have a material adverse effect on the Companys results from operations.



Foreign Currency Risk



Management does not expect foreign currency exchange rates to significantly impact the Company in the future as all of the Companys business operations are in the United States.



Item 4. Controls and Procedures



a)

Under the supervision and with the participation of the Companys management, including the Companys Chief Executive Officer and Chief Financial Officer, the Company has evaluated the effectiveness of the design and operation of its disclosure controls and procedures pursuant to Exchange Act Rule 13a-14(c) within 90 days of the filing date of this quarterly report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are effective. There were no significant changes in the Companys internal controls or in other factors that could significantly affect internal controls subsequent to the date of their evaluation.



b)

There have been no significant changes (including corrective actions with regard

to significant deficiencies or material weaknesses) in our internal controls or in other factors that could significantly affect these controls subsequent to the date of the evaluation referenced in paragraph a) above.



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Part II  OTHER INFORMATION



Item 1.

Legal Proceedings

---No Disclosure Required---



Item 2.

Changes in Securities

---No Disclosure Required---



Item 3.

Default Upon Senior Securities

---No Disclosure Required---



Item 4.

Submission of Matters to a Vote of Securities Holders

---No Disclosure Required---



Item 5.

Other Information

---No Disclosure Required---



Item 6.    Exhibits and Reports on Form 8-K



(A)

EXHIBITS

|    
|----
|99.1



(B)

REPORTS ON FORM 8-K -

No Disclosures



SIGNATURES



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.



Jewett-Cameron Trading Company Ltd.

(Registrant)





Dated: July  9, 2003

/s/ Donald M. Boone

Donald M. Boone, President/CEO/Director



/s/ Michael C. Nasser

Michael C. Nasser, Corporate Secretary





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CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002



I, Donald M. Boone, certify that:



1.

I have reviewed this quarterly report on Form 10-Q of Jewett- Cameron Trading Company Ltd;

2.

Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.

Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operation and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.

The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:



a)

designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b)

evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the Evaluation Date), and

c)

presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date:



5.

The registrants other certifying officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent function):



a)

all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and

b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and

6.

The registrants other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.



Date: July 9, 2003

/s/ DONALD M. BOONE

Donald M. Boone, President/Chief Executive Officer/Chief Financial Officer/Director





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CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002



I, Michael C. Nasser, certify that:



1.

I have reviewed this quarterly report on Form 10-Q of Jewett Cameron Trading Company Ltd;

2.

Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.

Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operation and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.

The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:



a.

designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b.

evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the Evaluation Date), and

c.

presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date:



5.

The registrants other certifying officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent function):



a.

all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and

b.

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and

6.

The registrants other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.



Date: July 9, 2003

/s/ MICHAEL C. NASSER

Michael C. Nasser, Corporate Secretary

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Exhibit 99.1



CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. SECTION 1350)



In connection with the Quarterly Report of Jewett-Cameron Trading Company Ltd, a British Columbia, Canada corporation (the Company), on Form 10-Q for the quarter ending March 31, 2003 as filed with the Securities and Exchange Commission (the Report), I, Donald M. Boone, Chief Executive Officer and Chief Financial Officer of the Company, certify, pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350), that to my knowledge:



(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and



(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.



/s/    Donald M. Boone

Donald M. Boone

Chief Executive Officer

Chief Financial Officer

July 9, 2003



[A signed original of this written statement required by Section 906 has been provided to Jewett- Cameron Trading Company Ltd. and will be retained by Jewett- Cameron Trading Company Ltd., and furnished to the Securities and Exchange Commission or its staff upon request.]



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