FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 0-19657
-------------------------
TRM COPY CENTERS CORPORATION
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(Exact name of registrant as specified in its charter)
Oregon 93-0809419
--------------------------------- -------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
5208 N.E. 122nd Avenue
Portland, Oregon 97230
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(Address of principal executive offices) (Zip Code)
(503) 257-8766
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report)
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
--- ---
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date:
CLASS OUTSTANDING AT SEPTEMBER 30, 1996
----- ---------------------------------
Common Stock 6,526,291
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
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<TABLE>
<CAPTION>
TRM COPY CENTERS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30, September 30,
1996 1996
---------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 873 $ 1,688
Accounts receivable, net 7,264 7,461
Inventories 5,253 5,192
Prepaid expenses and other 1,580 1,748
---------- ----------
Total current assets 14,970 16,089
Equipment and vehicles, less accumulated depreciation 39,172 38,428
Other assets 109 145
---------- ----------
$ 54,251 $ 54,662
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Checks in transit $ 938 $ 1,219
Accounts payable 1,799 1,282
Accrued expenses 3,373 3,563
---------- ----------
Total current liabilities 6,110 6,064
Long-term debt 8,128 7,000
Deferred income taxes 4,569 4,806
---------- ----------
Total liabilities 18,807 17,870
---------- ----------
Commitments -- --
Stockholders' equity:
Preferred stock, no par value. Authorized
5,000 shares; no shares issued
and outstanding -- --
Common stock, no par value. Authorized
10,000 shares; issued and
outstanding 6,526 and 6,484 shares 16,214 16,390
Retained earnings 19,704 20,741
Cumulative translation adjustment (474) (339)
---------- ----------
Total stockholders' equity 35,444 36,792
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$ 54,251 $ 54,662
========== ==========
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
TRM COPY CENTERS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three Months Ended
September 30,
--------------------------
1995 1996
------- -------
<S> <C> <C>
Sales $15,716 $16,577
Less discounts 2,710 2,736
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Net sales 13,006 13,841
Cost of sales 7,218 7,405
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Gross profit 5,788 6,436
Selling, general and administrative
expense 4,067 4,487
------- -------
Operating income 1,721 1,949
Other expense:
Interest 279 147
Other, net 39 88
------- -------
Income before income taxes 1,403 1,714
Provision for income taxes 559 677
------- -------
Net income $ 844 $ 1,037
======= =======
Net income per share $ 0.12 $ 0.14
======= =======
Weighted average common and
common equivalent shares
outstanding 7,101 7,332
======= =======
</TABLE>
-3-
<PAGE>
<TABLE>
<CAPTION>
TRM COPY CENTERS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands)
Common Stock Cumulative
--------------------- Retained Translation
Shares Amount Earnings Adjustment Total
------ ------- -------- ------------ -------
<S> <C> <C> <C> <C> <C>
Balance at June 30, 1996 6,484 $16,214 $19,704 $ (474) $35,444
Exercise of stock options 42 176 -- -- 176
Net income for the
three months ended
September 30, 1996 -- -- 1,037 -- 1,037
Foreign currency translation
adjustment -- -- -- 135 135
------ ------- ------- -------- -------
Balances at September 30, 1996 6,526 $16,390 $20,741 $ (339) $36,792
====== ======= ======= ======== =======
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
TRM COPY CENTERS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Three Months Ended
September 30,
-----------------------------
1995 1996
-------- --------
<S> <C> <C>
Operating activities:
Net income $ 844 $ 1,037
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation 1,222 1,410
Loss on disposal of equipment
and vehicles 10 16
Changes in items affecting operations:
Accounts receivable (666) (197)
Inventories 399 61
Prepaid expenses and other (81) (168)
Accounts payable 121 (517)
Accrued expenses (423) 190
Deferred income tax 196 237
-------- --------
Total operating activities 1,622 2,069
-------- --------
Investing activities:
Proceeds from sale of equipment 17 142
Capital expenditures (1,725) (832)
Other 6 (36)
-------- --------
Total investing activities (1,702) (726)
-------- --------
Financing activities:
Increase in checks in transit, net (312) 281
Principal payments on long-term debt (2,315) (1,128)
Proceeds from long-term debt 2,530 --
Net proceeds from issuance of common stock -- 176
Total financing activities (97) (671)
-------- --------
Effect of exchange rate changes (46) 143
-------- --------
Net increase (decrease) in cash and
cash equivalents (223) 815
Cash and cash equivalents at beginning
of period 755 873
-------- --------
Cash and cash equivalents at end of period $ 532 $ 1,688
======== ========
</TABLE>
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<PAGE>
TRM COPY CENTERS CORPORATION
Notes to Condensed Consolidated Financial Statements
1. Interim Financial Data:
The condensed financial statements included herein have been prepared
by the Company, without audit, pursuant to the rules and regulations
of the Securities and Exchange Commission and reflect all adjustments,
consisting only of normal recurring adjustments, which, in the opinion
of management, are necessary for a fair statement of the results of
the interim periods. These condensed interim financial data should be
read in conjunction with the Company's latest annual report to
shareholders.
2. Net Income Per Share:
Net income per share is computed based on the weighted average number
of shares of common stock and common stock equivalents assumed to be
outstanding during the periods. Common stock equivalents consist of
options to purchase stock (using the treasury stock method).
3. Inventories (in thousands):
June 30, September 30,
1996 1996
------- ------------
Paper $ 1,505 $1,586
Toner and developer 828 877
Parts 2,920 2,729
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$ 5,253 $5,192
======= ======
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
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General
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The Company has continued to expand its business by opening TRM
Centers in new and existing metropolitan service areas. The number of
metropolitan service areas served increased from 54 to 66 from June 30,
1995 to June 30, 1996. The number of TRM Centers grew from 28,995 to 31,719
over the same period. As of September 30, 1996, the Company had 70
metropolitan service areas with 32,551 TRM Centers.
Results of Operations
- ---------------------
Sales for the first quarter were $16.6 million, up 5.5% from first
quarter sales of the previous year of $15.7 million. This growth is due to
increased numbers of installed units during the quarter offset by slightly
decreased average sales per unit. The growth in the number of installed
units reflects expansion in both existing and recently opened service
areas.
Sales discounts are the portion of revenue retained by customers.
Sales discounts as a percentage of sales continue to decline, from 17.2% to
16.5% in the comparable quarters. This reflects changes made in business
agreements with new customers. The discount rate generally varies between
individual retail businesses based on volume.
Cost of sales increased 2.6% during the period over the prior year.
This was below the sales growth rate because of lower paper and toner usage
under the Company's higher copy price programs and because of lower paper
costs worldwide.
Selling, general and administrative expenses grew 10.3% to $4.5
million in the first quarter although they were lower than in the
immediately two preceding quarters. This downward trend reflects the
decreasing need to invest in new people and management systems.
Interest costs are incurred because the Company uses bank borrowings
to help fund its expansion. The decrease in interest costs is primarily due
to lower debt levels, which decreased from $14.5 million as of September
30, 1995, to $7.0 million as of September 30, 1996.
Liquidity and Capital Resources
- -------------------------------
During the three months ended September 30, 1996, cash flow from
operations fully funded capital expenditures of $832,000 and allowed for
repayment of $1.1 million in bank borrowings. This level of capital
expenditures was below the $1.7 million spent in the same period of the
prior year because the Company focused on removing and redeploying
low-performing customer placements in North America during the first
quarter.
The Company currently anticipates capital expenditures of
approximately $7 to $10 million during fiscal 1997. The Company intends to
finance these capital expenditures with cash generated from operations and
with bank borrowings. The Company expects that these sources will provide
adequate cash to fund its expansion through at least June 30, 1997.
Information in this Management's Discussions and Analysis about the
Company's goals, plans and expectations regarding expansion and capital
expenditures constitutes forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. The following factors are among the factors that
could cause actual results to differ materially from the forward-looking
statements: business conditions in the market areas in which the Company
operates, competitive factors, customer demand for the Company's services,
the Company's ability to execute its plans successfully and the volatility
of paper costs. Any forward-looking statements should be considered in
light of these factors.
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<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
---------------------------------
(A) EXHIBITS
Ex. 27 Financial Data Schedule
(B) REPORTS ON FORM 8-K.
There were no reports filed on Form 8-K during the three months
ended September 30, 1996.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
TRM COPY CENTERS CORPORATION
Date: November 14, 1996 By: ROBERT A. BRUCE
----------------- --------------------------------------
Robert A. Bruce
Secretary, Vice President, Finance and
Chief Financial Officer
-8-
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> SEP-30-1996
<CASH> 1688
<SECURITIES> 0
<RECEIVABLES> 7696
<ALLOWANCES> (235)
<INVENTORY> 5192
<CURRENT-ASSETS> 16089
<PP&E> 57374
<DEPRECIATION> (18946)
<TOTAL-ASSETS> 54662
<CURRENT-LIABILITIES> 6064
<BONDS> 7000
16390
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 54662
<SALES> 13841
<TOTAL-REVENUES> 13841
<CGS> 7405
<TOTAL-COSTS> 11892
<OTHER-EXPENSES> 88
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 147
<INCOME-PRETAX> 1714
<INCOME-TAX> 677
<INCOME-CONTINUING> 1037
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1037
<EPS-PRIMARY> .14
<EPS-DILUTED> .14
</TABLE>
