<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 May 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
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(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
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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 .
--- ---
Number of shares of common stock outstanding as of
July 9, 1995: 4,567,884
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BCT INTERNATIONAL, INC.
INDEX
<TABLE>
<CAPTION>
PAGE
NUMBER
<S> <C>
PART I. FINANCIAL INFORMATION
CONDENSED CONSOLIDATED BALANCE SHEETS - May 31, 1995
and February 28, 1995........................................... 2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS -
for the three months ended May 31, 1995 and May 31, 1994........ 3
COMPUTATION OF EARNINGS PER SHARE - for the three months
ended May 31, 1995 and May 31, 1994............................. 4
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS' EQUITY - for the three months ended May 31, 1995.. 5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS -
for the three months ended May 31, 1995 and May 31, 1994........ 6
Notes to Condensed Consolidated Financial Statements............ 7
Management's Discussion and Analysis of Financial Condition and
Results of Operations........................................... 8
PART II. OTHER INFORMATION AND SIGNATURES
Signatures...................................................... 9
</TABLE>
1
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PART I. FINANCIAL STATEMENTS
BCT INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(000's omitted)
<TABLE>
<CAPTION>
ASSETS May 31, 1995 February 28, 1995
- ------- ------------- ------------------
<S> <C> <C>
Current assets:
Cash and cash equivalent $ 1,848 $ 1,299
Short-term investments --- 1,071
Accounts and notes receivable, net of allowance for
doubtful accounts of $397 ($337 in fiscal 1995) and
deferred interest of $18 ($18 in fiscal 1995) 2,660 2,305
Receivables from employees 63 76
Inventory, net of reserve of $105 ($105 in fiscal 1995) 1,962 1,863
Assets held for sale 226 216
Prepaid expenses and other current assets 135 25
Net deferred tax asset 84 88
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TOTAL 6,978 6,943
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Accounts and notes receivable, net of allowance
for doubtful accounts of $551 ($551 in fiscal 1995) 259 259
Property and equipment, less allowance for depreciation
and amortization of $375 ($313 in fiscal 1995) 786 640
Net deferred tax asset 1,387 1,466
Deposits and other assets 124 131
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2,556 2,496
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Trademark, net of accumulated amortization 168 170
Intangible assets, net of accumulated amortization 403 409
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$10,105 $10,018
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LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Accounts payable $ 891 $ 928
Notes payable 22 162
Accrued liabilities 244 287
Accrued payroll 41 24
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TOTAL 1,198 1,401
Notes payable - non-current 48 48
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1,246 1,449
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Preferred stock, Series A, 12% cumulative, $1 par value,
mandatorily redeemable, 810 shares authorized, issued
and outstanding 810 810
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810 810
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Stockholders' equity:
Common stock, $.04 par value, 25,000 shares authorized,
4,792 issued and outstanding (4,785 shares in fiscal 1995) 192 191
Paid in capital 11,132 11,110
Accumulated Deficit (2,774) (3,054)
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8,550 8,247
Less: Treasury Stock, at cost, 224 shares (501) (488)
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Total Stockholders' Equity 8,049 7,759
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$10,105 $10,018
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</TABLE>
See notes to condensed consolidated financial statements.
2
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BCT INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
May 31
1995 1994
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<S> <C> <C>
Gross revenues $3,957 $3,889
Cost of sales 2,064 2,112
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1,893 1,777
Selling and administrative expense 1,483 1,283
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Income before income taxes 410 494
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Income tax expense 106 91
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Net income $ 304 $ 403
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</TABLE>
See notes to condensed consolidated financial statements.
3
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BCT INTERNATIONAL, INC.
COMPUTATION OF EARNINGS PER SHARE
(UNAUDITED)
(000's omitted, except for per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
May 31
1995 1994
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<S> <C> <C>
Primary:
Average number of 4,569 2,697
shares outstanding 935 1,351
Common stock equivalents ------ ------
Totals 5,504 4,048
====== ======
Fully diluted:
Average number of
shares outstanding 4,569 2,697
Common stock equivalents
and dilutive securities 1,482 4,239
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Totals 6,051 6,936
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Earnings per common
- -------------------
share:
------
Net Income:
Primary $ .07 $ .09
Fully diluted $ .07 $ .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
THREE MONTHS ENDED MAY 31, 1995
(UNAUDITED)
000's omitted
-------------
<TABLE>
<CAPTION>
Common Stock
-------------------------- Less:
Number of Par Paid In Accumulated Treasury
Shares Value Capital Deficit Stock Total
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<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 --- --- 9 --- --- 9
Net Income --- --- --- 304 --- 304
Dividend declared on convertible
preferred stock --- --- --- (24) --- (24)
------ ----- --------- -------- ----- ------
Balance May 31, 1995 4,792 $192 $11,132 $(2,774) $(501) $8,049
====== ===== ========= ======== ===== ======
</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>
Three months ended
May 31
1995 1994
--------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 304 $ 403
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Adjustments to reconcile net income to net cash
used by operating activities:
Income tax benefit (82) (118)
Income tax expense 175 209
Depreciation and amortization 53 69
Cost assigned to warrants issued 9 9
(Increase) decrease in accounts and notes receivable (342) 1
(Increase) decrease in inventory (99) 31
(Increase) in assets held for sale (10) ---
(Increase) decrease in prepaid expenses and other assets (110) 36
Decrease in deposits and other assets 7 6
(Decrease) in accounts payable and accrued liabilities (37) (784)
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Total adjustments (436) (541)
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Net cash (used) by operating activities (132) (138)
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Cash flows from investing activities:
Maturity of short-term investments 1,071 ---
Capital expenditures (226) (13)
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Net cash provided (used) by investing activities 845 (13)
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Cash flows from financing activities:
Issuance of Series B convertible preferred stock --- 1,300
Restricted cash --- 738
Dividend payments on preferred stock (24) (24)
Repayment of subordinated debentures --- (1,180)
Principal payments on notes payable (140) (24)
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Net cash (used) provided by financing activities (164) 810
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Net increase in cash and cash equivalents 549 659
Cash and cash equivalents at beginning of period 1,299 80
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Cash and cash equivalents at end of period $1,848 $ 739
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Supplemental Disclosures:
- -------------------------
Interest paid $ 4 $ 51
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Income taxes paid $ 39 $ 19
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</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
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BCT INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
May 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 May
31, 1995.
2. The results for the three month periods ended May 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 common stock
outstanding and common stock equivalents, which consist of stock options
and stock 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 at February 28, 1995, which represents
50% of the gross deferred tax assets on that date, was $1,471, or 50% on
May 31, 1995. This reduction of the valuation allowance reduced income
tax expense by $83. The tax provision for the three months ended May 31,
1995, includes a current and deferred tax expense of $10 and $165,
respectively.
7
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
Results of Operations
- ---------------------
Total revenues increased $68,000, or 2%, for the first quarter ended May 31,
1995, as compared to the corresponding period in the prior fiscal year. Royalty
revenue increased by $110,000, or 10%; paper sales increased by $169,000 or 9%;
revenue from the company Plants increased by $79,000 or 32%; and revenue from
franchise Plant sales decreased by $357,000 or 77%. The decline in franchise
Plant sales is not indicative of a lack of marketable territories. The Company
has restructured its franchise sales department and anticipates continued
franchise sales during fiscal 1996.
Cost of goods sold as a percentage of revenues was 52% for the first quarter
ended May 31, 1995, as compared to 54% for the corresponding period 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 37% of gross revenues for the
first quarter ended May 31, 1995, and 32% for the corresponding period in
fiscal 1995. The primary causes of the increase in selling and administrative
expenses as a percentage of revenues were the increased expenses associated,
with (i) the company Plants' operations (a $103,000 or 52% increase over the
prior year's level) and (ii) the Company's formalization of its marketing
department. The costs associated with the marketing department in the first
quarter of fiscal 1996 increased by $58,000 (100%) from the prior year's level.
The increased revenues and expenses from Company Plants were due to the
operation of two Company Plants during the first quarter of fiscal 1996 while
only one Company Plant was operational during the first quarter of fiscal 1995.
The Company Plants yielded operating losses of $68,000 during the first quarter
of fiscal 1996 and $9,000 during the first quarter of fiscal 1995.
The Company earned a net income of $304,000 for the three months ended May 31,
1995, as compared to a net income of $403,000 for the corresponding period in
fiscal 1995. The fiscal 1996 first quarter net income reflects operating income
of $410,000 and a $106,000 income tax expense. Operating income for the first
quarter of fiscal 1995 was $494,000.
Liquidity and Capital Resources
- -------------------------------
In December 1994, the Company, through its demand conversion of the Series B
preferred stock warrants, received a net capital infusion of $1,938,000.
Through May 31, 1995, $288,000 of these proceeds have been utilized in efforts
to increase revenues. The remainder of the proceeds are being invested in
cash equivalents.
During the first quarter of 1996, the Company utilized working capital as well
as investment income to make debt payments totaling $140,000.
During the quarter ended May 31, 1995, the Company made capital expenditures of
approximately $226,000, most of which were dedicated to office equipment and
furniture and fixtures.
The Company anticipates that it will require an additional $100,000 to complete
the computer automation program for PPP during fiscal 1996.
The Company's Wedding Invitations and Social Stationery Catalog (the "Social
Catalog") continues to be performing at less than original plan; only 2,874
catalogs ($129,000) have been sold since inception. Because of the slow
implementation of this catalog by its 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 modified. At February 28, 1995, a $100,000 reserve
was recorded for the Social Catalog. The net investment in Social Catalog
inventories at May 31, 1995 approximates $57,000.
8
<PAGE>
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: 7/14/95 William Wilkerson
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William Wilkerson
Chairman & Chief Executive Officer
Date: 7/14/95 Donna Pagano-Leo
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Donna M. Pagano-Leo
Vice President & Chief Financial Officer
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-28-1995
<PERIOD-START> MAR-01-1995
<PERIOD-END> MAY-31-1995
<CASH> 1,848
<SECURITIES> 0
<RECEIVABLES> 3,867
<ALLOWANCES> 948
<INVENTORY> 1,962
<CURRENT-ASSETS> 6,978
<PP&E> 1,161
<DEPRECIATION> 375
<TOTAL-ASSETS> 10,015
<CURRENT-LIABILITIES> 1,198
<BONDS> 48
<COMMON> 192
810
0
<OTHER-SE> 8,358
<TOTAL-LIABILITY-AND-EQUITY> 10,015
<SALES> 2,577
<TOTAL-REVENUES> 3,957
<CGS> 2,064
<TOTAL-COSTS> 1,427
<OTHER-EXPENSES> 162
<LOSS-PROVISION> 61
<INTEREST-EXPENSE> 4
<INCOME-PRETAX> 410
<INCOME-TAX> 106
<INCOME-CONTINUING> 304
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 304
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
