<PAGE>
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, 1997
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: (954) 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
June 27, 1997: 5,450,778
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BCT INTERNATIONAL, INC.
INDEX
<TABLE>
<CAPTION>
PAGE
NUMBER
<S> <C>
PART I. FINANCIAL INFORMATION
CONDENSED CONSOLIDATED BALANCE SHEETS - May 31,1997
and February 28, 1997........................................... 2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS -
for the three months ended May 31, 1997 and May 31, 1996........ 3
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS'
EQUITY -for the three months ended May 31, 1997................. 4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS -
for the three months ended May 31, 1997 and May 31, 1996........ 5
Notes to Condensed Consolidated Financial Statements............ 6
Management's Discussion and Analysis of Financial Condition and
Results of Operations........................................... 7
PART II. OTHER INFORMATION AND SIGNATURES
Signatures...................................................... 8
</TABLE>
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PART I. FINANCIAL STATEMENTS
BCT INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(000's omitted)
<TABLE>
<CAPTION>
ASSETS May 31, 1997 February 28, 1997
- ------ ------------ -----------------
<S> <C> <C>
Current assets:
Cash and cash equivalent $ 661 $ 314
Accounts and notes receivable, net of
allowance for doubtful accounts of $567
($379 in fiscal 1997) 1,803 1,641
Inventory, net of reserve of $80
($89 in fiscal 1997) 2,108 2,468
Assets held for sale, net 801 457
Prepaid expenses and other current assets 84 66
Net deferred tax asset 312 312
-------- --------
Total current assets 5,769 5,258
Accounts and notes receivable, net of allowance
for doubtful accounts of $769
($769 in fiscal 1997) 2,937 3,209
Property and equipment at cost, net of
accumulated depreciation and amortization
of $962 ($675 in fiscal 1997) 768 762
Net deferred tax asset 1,360 1,569
Deposits and other assets 93 94
Trademark, net of accumulated amortization
of $84 ($81 in 1997) 110 113
Intangible assets, net of accumulated
amortization of $97 ($93 in 1997) 220 224
-------- --------
$ 11,257 $ 11,229
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Accounts payable $ 824 $ 1,032
Notes payable 55 49
Accrued liabilities 239 291
Deferred revenue 161 272
-------- --------
Total current liabilities 1,279 1,644
Notes payable 198 215
-------- --------
Total liabilities 1,477 1,859
-------- --------
Preferred stock, Series A, 12% cumulative,
$1 par value, mandatorily redeemable,
810 shares authorized, 60 shares
issued and outstanding 60 60
-------- --------
Stockholders' equity:
Common stock, $.04 par value, 25,000
authorized, 5,426 shares issued and
outstanding (5,410 shares in fiscal 1997 217 216
Paid in capital 12,075 12,056
Accumulated deficit ( 2,013) ( 2,403)
-------- --------
10,279 9,869
Less: Treasury Stock, at cost, 251 shares
(226 shares in 1997) ( 559) ( 559)
-------- --------
Total Stockholders' Equity 9,720 9,310
-------- --------
$ 11,257 $ 11,229
======== ========
</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
1997 1996
---- ----
<S> <C> <C>
Gross revenues $ 4,969 $ 4,734
Cost of sales 2,744 2,406
Selling and administrative expense 1,592 2,449
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Income (loss) before income taxes 633 ( 121)
Income tax (benefit) expense 241 ( 30)
---------- ---------
Net income (loss) $ 392 $ ( 91)
========== ==========
Net income (loss) per common share: $ .07 $ ( .02)
========== ==========
</TABLE>
See notes to condensed consolidated financial statements.
3
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BCT INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
THREE MONTHS ENDED MAY 31, 1996
(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, 1997 5,410 $ 216 $ 12,056 $( 2,403) $( 559) $ 9,310
Exercise of options 16 1 19 --- 20
Net income --- --- --- 392 --- 392
Dividend declared on convertible
preferred stock --- --- --- ( 2) --- ( 2)
------ ----- -------- -------- ------ -------
Balance May 31, 1996 5,426 $ 217 $ 12,075 $( 2,013) $( 559) $ 9,720
====== ===== ======== ======== ====== =======
</TABLE>
See notes to condensed consolidated financial statements.
4
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BCT INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(000's omitted)
<TABLE>
<CAPTION>
Three months ended
May 31
1997 1996
---------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 392 $( 91)
Adjustments to reconcile net income (loss) to net cash provided --------- ----------
used by operating activities:
Income tax benefit --- ( 43)
Income tax expense 241 13
Depreciation and amortization 56 115
Cost assigned to warrants issued --- 9
Provision for doubtful accounts 44 164
Decrease (increase) in accounts and notes receivable 45 ( 63)
Decrease (increase) in inventory 369 ( 231)
(Increase) in assets held for sale ( 334) ( 21)
(Increase) in prepaid expenses and other assets ( 18) ( 86)
Decrease in deposits and other assets 1 24
(Decrease) increase in accounts payable and accrued liabilities ( 297) 123
(Decrease) in deferred revenue ( 109) ---
--------- ---------
Total adjustments ( 2) 4
--------- ---------
Net cash provided (used) by operating activities 390 ( 87)
--------- ---------
Cash flows from investing activities:
Maturity of short-term investments --- 50
Capital expenditures ( 50) ( 115)
--------- ---------
Net cash (used) by investing activities ( 50) ( 65)
--------- ---------
Cash flows from financing activities:
Dividend payments on preferred stock ( 2) ( 8)
Principal payments on notes payable ( 11) ( 23)
Redemption of treasury stock --- ( 58)
Exercise of options for common stock 20 60
--------- ---------
Net cash provided (used) by financing activities 7 ( 29)
--------- ---------
Net increase (decrease) in cash and cash equivalents 347 ( 181)
Cash and cash equivalents at beginning of period 314 923
--------- ---------
Cash and cash equivalents at end of period $ 661 $ 742
========= =========
</TABLE>
See notes to condensed consolidated financial statements.
5
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BCT INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(000's omitted)
May 31, 1997
------------
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, 1997.
2. The results for the three month periods ended May 31, 1997 and 1996, are
not necessarily indicative of results that may be expected for the fiscal
year.
3. For the three months ended May 31, 1997, 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 stock warrants. For
the three month period ended May 31, 1996, earnings per share do not
include common stock equivalents as they are antidilutive. Fully diluted
earnings per common share are not presented because they are not materially
dilutive.
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 returns. In
estimating future tax consequences, consideration is given to all expected
future events other than enactments of changes in the tax law or rates.
The valuation allowance of $806 at February 28, 1997, which represented 30%
of the gross deferred tax assets on that date, was $806, or 33% on May 31,
1997. The tax provision for the three months ended May 31, 1997 includes no
current or deferred tax benefit.
5. On March 1, 1997, the Company acquired certain assets of the Boston,
Massachusetts Franchise for $75 cash and forgiveness of amounts owed the
Company ($380). This acquisition was accounted for under the purchase
method of accounting and accordingly, the purchase price was allocated to
the assets acquired based upon the estimated fair values at the date of
acquisition. The purchase price associated with the acquisition was
recorded as an asset held for sale as it is the Company's intent to resell
this Franchise. Operating results of this business acquisition have been
included in the Company's consolidated results of operations from March 1,
1997.
6. In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128 (FAS 128) - Earnings per Share
(EPS). The statement is effective for financial statements issued for
periods ending after December 15, 1997. FAS 128 supersedes Accounting
Principles Board Opinion No. 15 and replaces primary and fully diluted EPS
with basic and diluted EPS. Basic EPS is computed by dividing net income
available to common shareholders by the weighted average common shares
outstanding. Diluted EPS includes all dilutive potential common shares.
The Company does not expect the new standard to have a material impact on
its financial position and results of operations for fiscal 1998.
The following illustrate the Company's pro forma earnings per share as if
FAS 128 had been used in the three months ended May 31, 1997 and 1996.
<TABLE>
<CAPTION>
Three Months
Ended May 31,
--------------------
1997 1996
---- ----
<S> <C> <C> <C>
Earnings (losses) per share - Basic $ .08 $ (.02)
- Diluted .06 (.02)
</TABLE>
Diluted losses per share for the three months ended May 31, 1996 do not
include potential common shares because they are antidilutive.
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
Results of Operations
- ---------------------
Total revenues increased $235,000, or 5%, for the first quarter ended May 31,
1997, as compared to the corresponding period in the prior fiscal year. The
increase in revenue is attributable primarily to an increase in paper sales of
($281,000 or 11%).
Selling and administrative expenses represented 32% of gross revenues for the
first quarter ended May 31, 1997, and 52% for the corresponding period in
fiscal 1997. The primary causes of the decrease in selling and administrative
expenses as a percentage of revenues were (i) the decreased operating expenses
associated with the Company Franchises (a $249,000 or 29% decrease over the
prior year's level); (ii) decrease in Corporate salaries and benefits (a
$245,000 or 32% decrease over the prior year; (iii) decreased provision for
doubtful accounts (a $125,000 or 74% decrease over the prior year); and (iv)
decreased professional fees (a $44,000 or 54% decrease over the prior year).
The decreased expenses from Company Franchises resulted from the Company's 100%
involvement in the operation of two Company Franchises and a 70% involvement in
a third Company Franchise during the first quarter of fiscal 1998 while four
Company Franchises and a 70% involvement in a fifth Company Franchise were
operated by the Company during the first quarter of fiscal 1997. The Company
Franchises yielded a loss of $9,000 for the first quarter ended May 31, 1997
versus a loss of $232,000 during the first quarter of fiscal 1996.
The Company recorded net income of $392,000 for the three months ended May 31,
1997, as compared to a net loss of $91,000 for the corresponding period in
fiscal 1997.
Liquidity and Capital Resources
- -------------------------------
During the first quarter of fiscal 1998, the Company utilized working capital to
make debt payments totaling $11,000.
During the quarter ended May 31, 1997, the Company made capital expenditures of
approximately $50,000, most of which were dedicated to leasehold improvements
and furniture and fixtures, and the Company advanced approximately $115,000 in
the purchase and support of the Boston Company Franchise. In addition, the
purchase of the Boston Franchise increased assets held for sale approximately
$342,000, and decreased long term notes and accounts receivable, current notes
and accounts receivable, and deferred revenue by $272,000, $123,000, and
$104,000, respectively.
The Company plans to continue to improve its working capital and cash positions
during fiscal 1998 by continuing its efforts to (i) increase cash collections;
and (ii) develop new product lines while containing capital expenditures and
reducing inventory levels.
The Company believes that current 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 or that, if needed, it will be available
on commercially reasonable terms.
7
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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: June 27, 1997 William Wilkerson
----------------------- -----------------------------------------
William Wilkerson
Chairman & Chief Executive Officer
Date: June 27, 1996 Michael R. Hull
----------------------- ----------------------------------------
Michael R. Hull
Vice President & Chief Financial Officer
8
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> FEB-28-1997
<PERIOD-START> MAR-01-1997
<PERIOD-END> MAY-31-1997
<EXCHANGE-RATE> 1
<CASH> 661
<SECURITIES> 0
<RECEIVABLES> 6,076
<ALLOWANCES> 1,336
<INVENTORY> 2,108
<CURRENT-ASSETS> 5,769
<PP&E> 1,730
<DEPRECIATION> 962
<TOTAL-ASSETS> 11,257
<CURRENT-LIABILITIES> 1,279
<BONDS> 0
60
0
<COMMON> 217
<OTHER-SE> 9,503
<TOTAL-LIABILITY-AND-EQUITY> 11,257
<SALES> 3,709
<TOTAL-REVENUES> 4,969
<CGS> 2,744
<TOTAL-COSTS> 4,142
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 188
<INTEREST-EXPENSE> 6
<INCOME-PRETAX> 633
<INCOME-TAX> 241
<INCOME-CONTINUING> 392
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 392
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
