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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter ended May 31, 2002
Commission File No. 0-10823
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BCT INTERNATIONAL, INC.
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(Exact name of Registrant as specified in its Charter)
Delaware 22-2358849
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(State of Incorporation) (I.R.S. Employer Identification Number)
3000 NE 30th Place, 5th Floor, Fort Lauderdale, FL 33306
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (954) 563-1224
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Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES X NO ____.
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Number of shares of common stock outstanding as of
July 12, 2002: 5,121,451
BCT INTERNATIONAL, INC.
INDEX
PAGE
NUMBER
PART I. FINANCIAL INFORMATION
ITEM 1 - Financial Statements
CONDENSED CONSOLIDATED BALANCE SHEETS - May 31, 2002 and February 28,
2002 ...................................................................... 2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - for the three months
ended May 31, 2002 and 2001 ............................................... 3
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY -
for the three months ended May 31, 2002 ................................... 4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS -
for the three months ended May 31, 2002 and 2001 .......................... 5
Notes to Condensed Consolidated Financial Statements ...................... 6
ITEM 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations ..................................................... 7
ITEM 3 - Quantitive and Qualitive Disclosures About Market Risk ......... 8
PART II. OTHER INFORMATION AND SIGNATURES
ITEM 6 - Exhibits and Reports on Form 8-K ................................. 8
Signatures ................................................................ 9
PART I. FINANCIAL STATEMENTS
BCT INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(000's omitted)
ASSETS May 31, 2002 February 28, 2002
- ------ ------------ -----------------
(UNAUDITED)
Current assets:
Cash $ 4,616 $ 4,819
Accounts and notes receivable, net 2,364 2,889
Inventory, net 2,709 1,887
Assets held for sale, net 90 105
Prepaid expenses and other current assets 145 154
Deferred income taxes 419 419
----------- -----------
Total current assets 10,343 10,273
Accounts and notes receivable, net 4,907 5,170
Property and equipment at cost, net 401 435
Deferred income taxes 1,075 970
Deposits and other assets 24 24
Trademark and other intangible assets, net 199 206
----------- -----------
Total assets $ 16,949 $ 17,078
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Accounts payable $ 516 $ 432
Notes payable 308 560
Accrued liabilities 701 871
Deferred revenue 125 125
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Total current liabilities 1,650 1,988
Deferred revenue 241 334
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Total liabilities 1,891 2,322
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Stockholders' equity:
Common stock, $.04 par value, 25,000 shares authorized,
5,828 shares issued 233 233
Paid in capital 12,605 12,605
Retained earnings 3,792 3,490
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16,630 16,328
Less: Treasury stock, at cost, 707 shares (1,572) (1,572)
----------- -----------
Total stockholders' equity 15,058 14,756
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Total liabilities and stockholders' equity $ 16,949 $ 17,078
=========== ===========
See notes to condensed consolidated financial statements.
2
BCT INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
May 31
2002 2001
---- ----
Revenues:
Royalties and franchise fees $1,380 $1,348
Paper and printing sales 3,242 3,275
Sales of Franchises 1 13
Interest and other 217 168
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4,840 4,804
------ ------
Expenses:
Cost of paper and printing sales 2,763 2,831
Selling, general and administrative 1,535 1,806
Depreciation and amortization 56 57
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4,354 4,694
------ ------
Income before provision for
income taxes 486 110
Income tax provision 184 43
------ ------
Net income $ 302 $ 67
====== ======
Net income per common share:
Basic $ .06 $ .01
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Diluted $ .06 $ .01
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See notes to condensed consolidated financial statements.
3
BCT INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
THREE MONTHS ENDED MAY 31, 2002
(UNAUDITED)
000's omitted
Common Stock Less:
-----------------------------
Number of Par Paid In Retained Treasury
Shares Value Capital Earnings Stock Total
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Balance February 28, 2002 5,828 $ 233 $12,605 $ 3,490 $ ( 1,572) $14,756
Net income -- -- -- 302 -- 302
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Balance May 31, 2002 5,828 $ 233 $12,605 $ 3,792 $ (1,572) $15,058
======= ======= ======= ======= =========== =======
See notes to condensed consolidated financial statements.
4
BCT INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(000's omitted)
Three months ended
May 31
2001 2002
---- ----
Cash flows from operating activities:
Net income $ 302 $ 67
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 56 57
Provision for doubtful accounts 350 225
Provision for inventory obsolescence 25 25
Changes in operating assets and liabilities:
Accounts and notes receivable 438 505
Inventory (847) (232)
Assets held for sale 15 6
Prepaid expenses and other assets 9 (32)
Deferred income taxes (105) 91
Accounts payable and accrued liabilities (86) (339)
Deferred revenue (93) (58)
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Net cash provided (used) by operating activities 64 315
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Cash flows from investing activities:
Capital expenditures (15) (7)
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Net cash (used) by investing activities (15) (7)
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Cash flows from financing activities:
Principal payments on notes payable (252) (22)
Exercise of options for common stock -- 8
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Net cash (used) by financing activities (252) (14)
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Net (decrease) increase in cash (203) 294
Cash at beginning of period 4,819 1,799
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Cash at end of period $ 4,616 $ 2,093
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See notes to condensed consolidated financial statements.
5
BCT INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(000's omitted, except per share data)
May 31, 2002
1. In the opinion of management, the foregoing unaudited condensed
consolidated financial statements contain all normal recurring adjustments
necessary to present fairly the financial position of the Company as of May
31, 2002.
2. The results for the three month periods ended May 31, 2002 and 2001, are
not necessarily indicative of results that may be expected for the fiscal
year.
3. For the three months ended May 31, 2002 and 2001, basic earnings per common
share are calculated by dividing net earnings applicable to common stock by
the weighted average number of shares of common stock outstanding. Diluted
earnings per common share are calculated by dividing net earnings
applicable to common stock by the weighted average number of shares of
common stock outstanding and common stock equivalents which consist of
stock options.
For the three months ended May 31, 2002 and 2001, the number of shares
used for both the basic and diluted earnings per share calculations were
5,121,000 and 5,127,000, respectively. All of the stock options outstanding
for both periods were excluded from the diluted earnings per share
calculation as their impact was anti-dilutive. In 2002, and 2001, 885,000
options and 1,393,000 options, respectively, were excluded.
4. The Company utilizes an asset and liability approach in accounting for
income taxes that requires the recognition of deferred tax assets and
liabilities for the expected future tax consequences of events that have
been recognized in the Company's financial statements or tax return. In
estimating future tax consequences, consideration is given to all expected
future events other than enactments of changes in the tax law or rates.
5. The Company has three reporting segments (1) Franchisor Operations, (2)
Pelican Paper Products and (3) Other Operations. The Company evaluates the
performance of its segments based on earnings before income taxes.
The Company is organized on the basis of business activity units. The table
below presents information about reported segments for the 3 months ended
May 31:
Pelican
2002 Franchisor Paper Other Total
---- ---------- ----- ----- -----
Revenues $ 1,381 $ 3,242 $ 217 $ 4,840
Cost of sales --- 2,763 --- 2,763
Operating expenses 1,436 155 --- 1,591
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Income (loss) before income taxes $ (55) $ 324 $ 217 $ 486
========== ========= ======= =========
Depreciation and amortization $ 32 $ 24 $ --- $ 56
========== ========= ======= =========
Income tax provision (benefit) $ (21) $ 123 $ 82 $ 184
========== ========= ======= =========
Capital expenditures $ 11 $ 4 $ --- $ 15
========== ========= ======= =========
2001
----
Revenues $ 1,361 $ 3,275 $ 168 $ 4,804
Cost of sales --- 2,831 --- 2,831
Operating expenses 1,724 139 --- 1,863
---------- --------- ------- ---------
Income before income taxes $ (363) $ 305 $ 168 $ 110
========== ========= ======= =========
Depreciation and amortization $ 30 $ 27 $ --- $ 57
========== ========= ======= =========
Income tax provision $ (142) $ 119 $ 66 $ 43
========== ========= ======= =========
Capital expenditures $ 7 $ --- $ --- $ 7
========== ========= ======= =========
6
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Total revenues increased $36,000 or 1% for the first quarter ended May 31, 2002,
as compared to the corresponding period in the prior fiscal year. Royalty
revenues increased $32,000 or 2% due to an increase in sales by the BCT network
of franchises. Interest and other revenue increased $49,000 or 29% as a result
of an increase in the annual licensing fees for Orderprinting.com(TM) from
$4,200 to $6,000. These increases were offset by decreases in paper and printing
sales of $33,000 or 1% and a decrease in revenue from sales of Franchises of
$12,000 or 92%.
Cost of paper and printing sales as a percentage of paper and printing sales was
85% and 86%, respectively, for the quarters ended May 31, 2002 and 2001.
Fluctuations in this percentage result primarily from changes in the sales mix.
Selling, general and administrative expenses represented 32% and 38% of gross
revenues for the quarters ended May 31, 2002 and 2001, respectively. These
expenses were higher in fiscal 2002 primarily as a result of severance
costs associated with the departure of the former President and Chief Operating
Officer ($300,000) which were recorded in the quarter ended May 31, 2001.
Liquidity and Capital Resources
Cash resources decreased $203,000 during the first quarter of fiscal 2003. The
Company generated $64,000 from operations. The Company made debt payments
totaling $252,000. The Company invested $847,000 for additional inventory during
the first quarter of fiscal 2003.
The Company believes current cash reserves and internally generated funds will
be sufficient to satisfy the Company's working capital and capital expenditure
requirements for the foreseeable future; however, there can be no assurance that
external financing will not be needed. The Company has available a $2 million
line of credit with a bank. No advances have been made on the line.
Certain information contained in this report, particularly information regarding
future economic performance and finances, plans and objectives of management,
constitutes "forward-looking statements" within the meaning of the federal
securities laws. In some cases, information regarding certain important factors
that could cause actual results to differ materially from any forward-looking
statement appear together with such statement. In addition, the following
factors, in addition to other possible factors not listed, could affect the
Company's actual results and cause such results to differ materially from those
expressed in forward-looking statements. These factors include competition
within the wholesale printing industry, which is intense; changes in general
economic conditions; technological changes; changes in customer tastes; legal
claims; the continued ability of the Company and its franchisees to obtain
suitable locations and financing for new Franchises as well as expansion of
existing Franchises; governmental initiatives, in particular those relating to
franchise regulation and taxation; and risk factors detailed from time to time
in the Company's filings with the Securities and Exchange Commission.
7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CONTINUED
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company had no outstanding balances subject to market risk during
the period covered by this report. The Company has a $2 million line of credit
with a bank which bears interest at LIBOR + 2.35%.
Part II OTHER INFORMATION AND SIGNATURES
Item 6. Exhibits and Reports on Form 8-K
(a) No exhibits
(b) No reports on Form 8-K were filed by the Company during the period
ended May 31, 2002.
8
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.
BCT INTERNATIONAL, INC.
(Registrant)
Date: July 12, 2002 William Wilkerson
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William Wilkerson
Chief Executive Officer
Date: July 12, 2002 Michael R. Hull
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Michael R. Hull
Vice President & Chief Financial Officer
9