<PAGE>
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 August 31, 1995
Commission File No. 0-10823
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BCT INTERNATIONAL, INC.
- -------------------------------------------------------------------------------
(Exact name of Registrant as specified in its Charter)
Delaware 22-2358849
------------------------ ---------------------------------------
(State of Incorporation) (I.R.S. Employer Identification Number)
3000 NE 30th Place, 5th Floor, Fort Lauderdale, FL 33306
- -------------------------------------------------- ----------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (305) 563-1224
--------------
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 .
------- ----
Number of shares of common stock outstanding as of
October 9, 1995: 4,568,877
<PAGE>
BCT INTERNATIONAL, INC.
INDEX
<TABLE>
<CAPTION>
PAGE
NUMBER
<S> <C>
PART I. FINANCIAL INFORMATION
CONDENSED CONSOLIDATED BALANCE SHEETS -
August 31, 1995 and February 28, 1995.................................. 2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS -
for the six months ended August 31, 1995 and August 31, 1994 and
the three months ended August 31, 1995 and August 31, 1994 ............ 3
COMPUTATION OF EARNINGS PER SHARE - for the six months
ended August 31, 1995 and August 31, 1994 and the three months
ended August 31, 1995 and August 31, 1994 ............................. 4
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES
IN STOCKHOLDERS' EQUITY - for the six months ended
August 31, 1995 ....................................................... 5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS -
for the six months ended August 31, 1995 and August 31, 1994 .......... 6
Notes to Condensed Consolidated Financial Statements .................. 7
Management's Discussion and Analysis of Financial Condition and
Results of Operations ................................................. 8-9
PART II. OTHER INFORMATION AND SIGNATURES
Signatures ............................................................ 10
</TABLE>
<PAGE>
PART I. FINANCIAL STATEMENTS
BCT INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(000's omitted)
<TABLE>
<CAPTION>
ASSETS August 31, 1995 February 28, 1995
- ------ --------------- -----------------
<S> <C> <C>
Current assets:
Cash and cash equivalent $ 680 $ 1,299
Short-term investments 1,471 1,071
Accounts and notes receivable, net of allowance for
doubtful accounts of $268 ($337 in fiscal 1995) and
deferred interest of $18 ($18 in fiscal 1995) 3,050 2,305
Receivables from employees 71 76
Inventory, net of reserve of $105 ($105 in fiscal 1995) 2,175 1,863
Assets held for sale 166 216
Prepaid expenses and other current assets 116 25
Net deferred tax asset 85 88
-------- --------
TOTAL 7,814 6,943
-------- --------
Accounts and notes receivable, net of allowance
for doubtful accounts of $551 ($551 in fiscal 1995) 658 259
Property and equipment, less allowance for depreciation
and amortization of $410 ($313 in fiscal 1995) 818 640
Net deferred tax asset 1,325 1,466
Deposits and other assets 124 131
-------- --------
2,925 2,496
-------- --------
Trademark, net of accumulated amortization 167 170
Intangible assets, net of accumulated amortization 350 409
-------- --------
$ 11,256 $ 10,018
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Accounts payable $ 1,782 $ 928
Notes payable 13 162
Accrued liabilities 279 287
Accrued payroll 57 24
-------- --------
TOTAL 2,131 1,401
Notes payable - non-current 48 48
-------- --------
2,179 1,449
-------- --------
Preferred stock, Series A, 12% cumulative, $1 par value,
mandatorily redeemable, 810 shares authorized, issued
and outstanding 810 810
-------- --------
810 810
-------- --------
Stockholders' equity:
Common stock, $.04 par value, 25,000 shares authorized,
4,792 shares issued and outstanding (4,785 shares in fiscal 1995) 192 191
Paid in capital 11,142 11,110
Accumulated Deficit (2,566) (3,054)
-------- --------
8,768 8,247
Less: Treasury Stock, at cost, 224 shares (224 shares in fiscal 1995) (501) (488)
-------- --------
Total Stockholders' Equity 8,267 7,759
-------- --------
$ 11,256 $ 10,018
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
2
<PAGE>
BCT INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(000's omitted, except per share amounts)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
August 31 August 31
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Gross revenues $8,500 $6,961 $4,542 $3,072
Cost of sales 4,420 3,717 2,382 1,578
------ ------ ------ ------
4,080 3,244 2,160 1,494
Selling and administrative expense 3,368 2,560 1,859 1,304
------ ------ ------ ------
Income before income taxes 712 684 301 190
Income tax expense 176 126 70 35
------ ------ ------ ------
Net income $ 536 $ 558 $ 231 $ 155
====== ====== ====== ======
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE>
BCT INTERNATIONAL, INC.
COMPUTATION OF EARNINGS PER SHARE
(UNAUDITED)
(000's omitted, except for per share amounts)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
August 31 August 31
1995 1994 1995 1994
------ ------ ------ ------
<S> <C> <C> <C> <C>
Primary:
Average number of
shares outstanding 4,569 2,921 4,569 2,935
Common stock equivalents 935 1,968 1,668 2,083
------ ------ ------ ------
Totals 5,504 4,889 6,237 5,018
====== ====== ====== ======
Fully diluted:
Average number of
shares outstanding 4,569 2,921 4,569 2,935
Common stock equivalents
and dilutive securities 1,445 4,798 1,481 4,817
------ ------ ------ ------
Totals 6,014 7,719 6,050 7,752
====== ====== ====== ======
Earnings per common share:
- -------------------------
Net Income:
Primary $ .07 $ .10 $ .02 $ .04
Fully diluted $ .07 $ .05 $ .02 $ .04
====== ====== ====== ======
</TABLE>
See notes to condensed consolidated financial statements.
4
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BCT INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
SIX MONTHS ENDED AUGUST 31, 1995
(UNAUDITED)
000's omitted
-------------
<TABLE>
<CAPTION>
Common Stock
---------------------- Less:
Number of Par Paid In Accumulated Treasury
Shares Value Capital Deficit Stock Total
--------- ----- -------- ----------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
Balance February 28, 1995 4,785 $191 $11,110 $(3,054) (488) $7,759
Exercise of warrants 7 1 13 --- (13) 1
Issuance of warrants --- --- 19 --- --- 19
Net Income --- --- --- 536 --- 536
Dividend declared on convertible
preferred stock --- --- --- (48) --- (48)
----- ---- ------- -------- ---- ------
Balance August 31, 1995 4,792 $192 $11,142 $(2,566) (501) $8,267
===== ==== ======= ======== ==== ======
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE>
BCT INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(000's omitted)
<TABLE>
<CAPTION>
Six months ended
August 31
1995 1994
---------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 536 $ 558
------- -------
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Income tax benefit (144) (163)
Income tax expense 320 289
Depreciation and amortization 145 142
Cost assigned to warrants issued 19 18
(Increase) in accounts and
notes receivable (1,139) (52)
(Increase) in inventory (312) (39)
Decrease in assets held for sale 50 ---
(Increase) in prepaid expenses
and other assets (91) (74)
(Increase) in intangible assets --- (2)
Decrease (increase) in deposits 7 (10)
and other assets
Increase (decrease) in accounts payable and 879 (627)
accrued liabilities ------- -------
Total adjustments (266) (518)
------- -------
Net cash provided (used) by 270 40
operating activities ------- -------
Cash flows from investing activities:
Increase in short-term investments (400) ---
Capital expenditures (292) (52)
------- -------
Net cash provided (used) by
investing activities (692) (52)
------- -------
Cash flows from financing activities:
Issuance of Series B convertible
preferred stock --- 1,300
Issuance of common stock --- 12
Restricted cash --- 738
Dividend payments on preferred stock (48) (111)
Repayment of subordinated debentures --- (1,180)
Principal payments on notes payable (149) (49)
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Net cash (used) provided by
financing activities (197) 710
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Net (decrease) increase in cash
and cash equivalents (619) 698
Cash and cash equivalents at
beginning of period 1,299 80
------- -------
Cash and cash equivalents at
end of period $ 680 $ 778
======= =======
Interest paid $ 6 $ 25
======= =======
Income taxes paid $ 12 $ 12
======= =======
</TABLE>
Noncash Activities:
- ------------------
During the first quarter ended May 31, 1995, a warrant holder exercised 10
warrants and tendered 6 of the Company's stock for payment of the exercise of
these warrants and received 7 shares of the Company's stock.
During the first quarter ended May 31, 1994, $252 and $150 of subordinated
convertible debentures were converted into 84 and 66 shares of common stock,
respectively.
During the first quarter ended May 31, 1994, a note receivable due from an
employee in the amount of $17 was satisfied through the cancellation of 5 shares
of common stock of the Company that collateralized this note receivable.
See notes to condensed consolidated financial statements.
6
<PAGE>
BCT INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
August 31, 1995
---------------
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
August 31, 1995.
2. The results for the six month periods ended August 31, 1995 and 1994, are
not necessarily indicative of results that may be expected for the fiscal
year.
3. Primary 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 and warrants. On a fully-diluted basis, net earnings,
weighted average shares outstanding and common stock equivalents are
adjusted to assume the conversion of convertible subordinated debentures
and preferred stock from the date of issue.
4. In February 1993, the Company prospectively adopted Statement of Financial
Accounting Standards No. 109 (FAS 109), Accounting for Income Taxes. FAS
---------------------------
109 is an asset and liability approach 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 returns. In estimating future tax consequences, FAS 109
generally considers all expected future events other than enactments of
changes in the tax law or rates.
The valuation allowance of $1,554,000 at February 28, 1995, which
represents 50% of the gross deferred tax assets on that date, was
$1,410,000, or 50% on August 31, 1995. This reduction of the valuation
allowance reduced income tax expense by $144,000. The tax provision for the
six and three months ended August 31, 1995, includes a current and deferred
tax expense of $33,000 and $287,000 and $9,000 and $122,000, respectively.
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
August 31, 1995
---------------
Results of Operations
- ---------------------
Total revenues increased $1,470,000, or 49%, for the three months ended August
31, 1995, as compared to the corresponding period in the prior fiscal year. The
increase in revenue is attributable primarily to increases in (i) sales of paper
products ($344,000, or 20%), (ii) franchise sales ($725,000, or 9062%),
(iii) print shop sales ($94,000, or 91%), (iv) royalty revenue ($71,000, or 7%)
and (v) Company stores revenue ($199,000, or 106%).
Total revenues increased $1,539,000, or 22%, for the six months ended August 31,
1995, as compared to the corresponding period in the prior fiscal year. The
increase in revenue is attributable primarily to increases in (i) sales of paper
products ($513,000, or 14%), (ii) royalty revenue ($119,000, or 5%), (iii) print
shop sales ($148,000, or 61%), (iv) franchise sales ($376,000, or 81%) and (v)
Company stores revenue ($279,000, or 6%). The revenue growth reflects the use
of the new business card catalog by 95% of the franchisees and the sales of two
franchises, a facility (an adjacent territory added to an existing franchise), a
territory and a Company store.
Cost of goods sold as a percentage of revenues was 52% and 53%, respectively,
for the six and three months ended August 31, 1995, as compared to 52% and 51%,
respectively, for the corresponding periods in fiscal 1995. Although the
percentage generally remains stable, it does fluctuate due to periodic changes
in the revenue mix.
Selling and administrative expenses represented 40% and 37% of gross revenues
for the six and three months ended August 31, 1995, respectively, and 41% and
42% for the corresponding periods in fiscal 1994. While selling and
administrative expenses in the current period declined as a percentage of
revenues, they increased on an aggregate basis due primarily to the increased
expenses associated with the Company Plants' operations (a $706,000, or 630%
increase over the prior year).
The increased revenues and expenses from Company Plants were due to the
operation of four Company Plants during the first six months of fiscal 1996
while only one Company Plant was operational during the first six months of
fiscal 1995. The fourth Company Plant was sold June 30, 1995. The Company
Plants yielded operating losses of $347,000 for the first six months of fiscal
1996 versus $112,000 during the comparable period in fiscal 1995.
The Company earned net income of $536,000 and $231,000 for the six and three
months ended August 31, 1995, respectively, as compared to net income of
$558,000 and $155,000 for the corresponding periods in fiscal 1995. The fiscal
1996 net income for the first six months reflects operating income of $712,000
and a $176,000 income tax expense. Operating income for the first six months of
fiscal 1995 was $684,000.
Liquidity and Capital Resources
- -------------------------------
In December 1994, as a result of the exercise of most of the Series B preferred
stock warrants following the Company's call of those warrants, the Company
received a net capital infusion of $1,938,000. Through August 31, 1995,
$467,000 of these proceeds have been utilized in efforts to increase revenues.
The remainder of the proceeds have been placed in short-term investments.
During the first quarter of fiscal 1996, the Company utilized working capital as
well as investment income to make debt payments totalling $149,000.
During the six months ended August 31, 1995, the Company made capital
expenditures of approximately $292,000, most of which were dedicated to office
equipment, computer software and equipment, and furniture and fixtures.
The Company anticipates that it will require an additional $50,000 to complete
the computer automation program for Pelican Paper Products (PPP) during fiscal
1996.
8
<PAGE>
The Company's Wedding Invitations and Social Stationery Catalog (the "Social
Catalog") continues to be performing at less than original plan; only 2,890
catalogs ($130,000) have been sold since inception. Because of the slow
implementation of this catalog by Company franchisees, during fiscal 1995 the
Company engaged a marketing consultant to perform comprehensive research on the
Social Catalog. To date, two of the three stages of research have been
completed. It is apparent from the research completed to date that the Social
Catalog program needs to be significantly modified. At February 28, 1995, a
$100,000 reserve against inventory was recorded for the Social Catalog. The net
investment in Social Catalog inventories at August 31, 1995 approximates
$57,000.
The Company's accounts and notes receivable increased $1,144,000, or 45%, from
February 28, 1995 to August 31, 1995. This increase is attributable to a
$400,000 financing of a franchise sale, PPP's increase of its market share
within the franchise network, yielding $265,000 in additional receivables, and
the growth in BCT system sales, yielding $479,000 in additional receivables.
The Company plans to continue to improve its working capital and cash positions
during fiscal 1996 by focusing its efforts on increasing cash collections and
developing new product lines while containing capital expenditures and keeping
inventories at their current levels.
The Company believes that 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 or that, if needed, it will be available on
commercially reasonable terms.
9
<PAGE>
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: October 9, 1995 William Wilkerson
--------------- -----------------------------------------
William Wilkerson
Chairman & Chief Executive Officer
Date: October 9, 1995 Donna Pagano-Leo
--------------- -----------------------------------------
Donna M. Pagano-Leo
Vice President & Chief Financial Officer
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-28-1995
<PERIOD-START> MAR-01-1995
<PERIOD-END> AUG-31-1995
<CASH> 680
<SECURITIES> 0
<RECEIVABLES> 4,527
<ALLOWANCES> 819
<INVENTORY> 2,175
<CURRENT-ASSETS> 7,814
<PP&E> 1,228
<DEPRECIATION> 410
<TOTAL-ASSETS> 11,256
<CURRENT-LIABILITIES> 2,131
<BONDS> 61
<COMMON> 192
810
0
<OTHER-SE> 8,075
<TOTAL-LIABILITY-AND-EQUITY> 11,256
<SALES> 5,197
<TOTAL-REVENUES> 8,500
<CGS> 4,420
<TOTAL-COSTS> 7,632
<OTHER-EXPENSES> 332
<LOSS-PROVISION> 119
<INTEREST-EXPENSE> 6
<INCOME-PRETAX> 712
<INCOME-TAX> 176
<INCOME-CONTINUING> 536
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 536
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
