<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, 1998
Commission File No. 0-10823
-------
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
July 10, 1998: 5,653,483
<PAGE>
BCT INTERNATIONAL, INC.
INDEX
<TABLE>
<CAPTION>
PAGE
NUMBER
<S> <C>
PART I. FINANCIAL INFORMATION
CONDENSED CONSOLIDATED BALANCE SHEETS - May 31, 1998
and February 28, 1998............................................ 2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS -
for the three months ended May 31, 1998 and 1997................. 3
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS' EQUITY - for the three months ended May 31, 1998... 4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS -
for the three months ended May 31, 1998 and 1997................. 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>
<PAGE>
PART I. FINANCIAL STATEMENTS
BCT INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(000's omitted)
<TABLE>
<CAPTION>
ASSETS May 31, 1998 February 28, 1998
- ------ ------------- ------------------
<S> <C> <C>
Current assets:
Cash and cash equivalent $ 871 $ 1,018
Accounts and notes receivable, net 2,917 2,482
Inventory, net 2,375 2,423
Assets held for sale, net 625 514
Prepaid expenses and other current assets 103 160
Deferred income taxes 720 919
------- -------
Total current assets 7,611 7,516
Accounts and notes receivable, net 5,343 5,376
Property and equipment at cost, net 608 651
Deferred income taxes 214 214
Deposits and other assets 89 89
Trademark and other intangible assets, net 304 311
------- -------
$14,169 $14,157
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Accounts payable $ 973 $ 1,264
Notes payable 105 105
Accrued liabilities 331 777
Deferred revenue 386 339
------- -------
Total current liabilities 1,795 2,485
Notes payable 515 539
------- -------
Total liabilities 2,310 3,024
------- -------
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 shares authorized,
5,653 shares issued and outstanding (5,573 shares
in fiscal 1998) 226 223
Paid in capital 12,310 12,254
Accumulated deficit (178) (845)
------- -------
12,358 11,632
Less: Treasury Stock, at cost, 251 shares (559) (559)
------- -------
Total Stockholders' Equity 11,799 11,073
------- -------
$14,169 $14,157
======= =======
</TABLE>
See notes to condensed consolidated financial statements.
2
<PAGE>
BCT INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
May 31
1998 1997
------ ------
<S> <C> <C>
Revenues:
Royalties and franchise fees $1,445 $1,260
Paper and printing sales 3,256 3,059
Company Franchise revenues 607 650
Sales of Franchises 35 ---
Interest and other 62 46
------ ------
5,405 5,015
------ ------
Expenses:
Cost of paper and printing sales 2,762 2,595
Operating costs of Company Franchises 685 764
Selling, general and administrative 1,043 975
Depreciation and amortization 47 48
------ ------
4,537 4,382
------ ------
Income before income taxes 868 633
Provision for income taxes 199 241
------ ------
Net income $ 669 $ 392
====== ======
Net income per common share:
Basic $ .13 $ .08
====== ======
Diluted $ .12 $ .07
====== ======
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE>
BCT INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
THREE MONTHS ENDED MAY 31, 1998
(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, 1998 5,573 $223 $12,254 $ (845) $ (559) $11,073
Exercise of warrants 76 3 44 --- --- 47
Non-cash exercise of options 4 --- 12 --- --- 12
Net income --- --- --- 669 --- 669
Dividend declared on convertible
preferred stock --- --- --- (2) --- (2)
----- ----- ------- ------ -------- -------
Balance May 31, 1998 5,653 $226 $12,310 $ (178) $ (559) $11,799
===== ===== ======= ====== ======== =======
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE>
BCT INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(000's omitted)
<TABLE>
<CAPTION>
Three months ended
May 31
1998 1997
------ ------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 669 $ 392
------ ------
Adjustments to reconcile net income to net cash provided
(used) by operating activities:
Depreciation and amortization 57 56
Provision for doubtful accounts 51 44
(Increase) decrease in accounts and notes receivable (453) 45
Decrease in inventory 48 369
(Increase) in assets held for sale (111) (334)
Decrease (increase) in prepaid expenses and other assets 57 (18)
Decrease in deposits and other assets --- 1
Decrease in deferred income taxes 199 241
(Decrease) in accounts payable and accrued liabilities (718) (297)
Increase (decrease) in deferred revenue 47 (109)
------ ------
Total adjustments (823) (2)
------ ------
Net cash (used) provided by operating activities (154) 390
------ ------
Cash flows from investing activities:
Capital expenditures (14) (50)
------ ------
Net cash (used) by investing activities (14) (50)
------ ------
Cash flows from financing activities:
Dividend payments on preferred stock (2) (2)
Principal payments on notes payable (24) (11)
Exercise of warrants for common stock 47 20
------ ------
Net cash provided by financing activities 21 7
------ ------
Net (decrease) increase in cash and cash equivalents (147) 347
Cash and cash equivalents at beginning of period 1,018 314
------ ------
Cash and cash equivalents at end of period $ 871 $ 661
====== ======
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE>
BCT INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(000's omitted)
May 31, 1998
------------
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, 1998.
2. The results for the three month periods ended May 31, 1998 and 1997, are not
necessarily indicative of results that may be expected for the fiscal year.
3. For the three months ended May 31, 1998 and 1997, 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 and
warrants and convertible preferred stock.
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.
The valuation allowance of $750 at February 28, 1998, which represented 40%
of the gross deferred tax assets on that date, was $610, or 40% on May 31,
1998. The tax provision for the three months ended May 31, 1997 includes a
current tax benefit of $140.
5. In April 1998, the Company advanced $102,000 to the 50% owner of the BCT
franchise in Honolulu, Hawaii. The Chairman of the Company is the other 50%
owner of the franchise. In June 1998, the Company advanced $65,000 to the
Chairman. Both advances are in anticipation of the resale of the Franchise
to the manager of the Franchise. To date, no transaction has been finalized.
As of May 31, 1998, the advance is included in assets held for sale.
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
Results of Operations
- ---------------------
Total revenues increased $390,000 for the first quarter ended May 31, 1998, as
compared to the corresponding period in the prior fiscal year. The increase in
revenue is attributable primarily to an increase in royalties ($185,000 or 15%),
paper and printing sales ($197,000 or 6.4%) and an increase in sales of
Franchises ($35,000 or 100%) combined with a decrease in revenues from Company
Franchises of $43,000 or 7% as the prior year included the revenues of the
Boston Franchise which was sold in August 1997. Royalties and paper and printing
sales have increased as a result of increased sales by the BCT network of
franchises. Franchise sales increased due to the sale of one domestic territory
and the partial recognition of the sale of a Franchise in Buenos Aires,
Argentina.
Selling and administrative expenses represented 19% of gross revenues for the
quarters ended May 31, 1998 and 1997. These expenses increased $68,000, but
there were no individually significant increases in the underlying expense
categories.
Expenses from Company Franchises decreased as the prior year included the
expenses of the Boston Franchise which was sold in August 1997. The Company
Franchises yielded a loss of $78,000 for the first quarter ended May 31, 1998
versus a loss of $114,000 during the first quarter of fiscal 1998.
The Company recorded net income of $669,000 for the three months ended May 31,
1998, as compared to $392,000 for the corresponding period in fiscal 1998.
Liquidity and Capital Resources
- -------------------------------
Cash resources decreased $147,000 during the first quarter of fiscal 1999. The
Company utilized working capital to make debt payments totaling $24,000, and
advanced $200,000 on behalf of the Franchise network relating to a national
account, $102,000 in anticipation of the resale of a franchise and $718,000 in
payment of accounts payable and accrued liabilities.
The Company plans to continue to improve its working capital and cash positions
during fiscal 1999 by continuing its efforts to (i) increase cash collections;
and (ii) develop new product lines while containing capital expenditures and
maintaining 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
<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: July 13, 1998 James H. Kaufenberg
------------------- ----------------------------------------
James H. Kaufenberg
Chief Executive Officer
Date: July 13, 1998 Michael R. Hull
------------------- ----------------------------------------
Michael R. Hull
Vice President & Chief Financial Officer
8
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<RESTATED>
<CIK> 0000351541
<NAME> BCT INTERNATIONAL, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-28-1998
<PERIOD-START> MAR-01-1998
<PERIOD-END> MAY-31-1998
<CASH> 871
<SECURITIES> 0
<RECEIVABLES> 9,511
<ALLOWANCES> 1,251
<INVENTORY> 2,375
<CURRENT-ASSETS> 7,611
<PP&E> 1,680
<DEPRECIATION> 1,072
<TOTAL-ASSETS> 14,169
<CURRENT-LIABILITIES> 1,795
<BONDS> 515
60
0
<COMMON> 226
<OTHER-SE> 11,573
<TOTAL-LIABILITY-AND-EQUITY> 14,169
<SALES> 3,863
<TOTAL-REVENUES> 5,405
<CGS> 2,883
<TOTAL-COSTS> 4,430
<OTHER-EXPENSES> 47
<LOSS-PROVISION> 51
<INTEREST-EXPENSE> 9
<INCOME-PRETAX> 868
<INCOME-TAX> 199
<INCOME-CONTINUING> 669
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 669
<EPS-PRIMARY> 0.13
<EPS-DILUTED> 0.12
</TABLE>
