<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES
EXCHANGE ACT OF 1934
For Quarter Ended May 3, 1998
[ ] 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: 0-8550
PCA INTERNATIONAL, INC.
--------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
North Carolina 56-0888429
--------------------------- ---------------------
(State or other (I.R.S. Employer
jurisdiction of Identification No.)
incorporation or
organization)
815 Matthews-Mint Hill Road
Matthews, North Carolina 28105
--------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
(704) 847-8011
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(Registrant's telephone number, including area code)
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 report), 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.
Common Stock, $0.20 par value 7,947,879
- ----------------------------------- ---------------------------------
Class Outstanding at June 1, 1998
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Page 1 of 13 Pages
The Exhibit Index begins on page 9
<PAGE> 2
PCA INTERNATIONAL, INC. AND SUBSIDIARIES
I N D E X
PART I. FINANCIAL INFORMATION: PAGE NO.
--------
Item 1. Financial Statements:
Consolidated Balance Sheets - May 3, 1998 and
February 1, 1998.......................................... 1
Consolidated Statements of Income - Three Months Ended
May 3, 1998 and May 4, 1997............................... 2
Consolidated Statement of Changes in Shareholders'
Equity - Three Months Ended May 3, 1998................... 3
Consolidated Statements of Cash Flows - Three Months
Ended May 3, 1998 and May 4, 1997......................... 4
Condensed Notes to Consolidated Financial Statements.......... 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................5-7
PART II. OTHER INFORMATION:
Item 5. Other Information............................................. 8
Item 6. Exhibits and Reports on Form 8-K.............................. 8
Signatures .............................................................. 8
Exhibit Index ..............................................................9-10
<PAGE> 3
PCA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
May 3, February 1,
ASSETS 1998 1998
------------- -------------
<S> <C> <C>
Current Assets:
Cash and cash equivalents ..................................... $ 11,073,455 $ 12,289,761
Accounts receivable (net of allowance for
doubtful accounts of $1,488,299 and $1,315,666):
Due from licensor stores and customers ................... 7,079,533 6,740,560
Other, including employee advances ....................... 438,133 763,925
Inventories ................................................... 8,069,236 10,078,719
Deferred income taxes ......................................... 4,788,074 5,827,324
Prepaid expenses .............................................. 1,247,313 1,043,708
------------- -------------
Total Current Assets ..................................... 32,695,744 36,743,997
------------- -------------
Property:
Land and improvements ......................................... 2,305,293 2,305,293
Building and improvements ..................................... 12,160,430 12,148,732
Photographic and sales equipment .............................. 57,685,314 57,713,911
Photographic finishing equipment .............................. 15,607,775 15,599,525
Furniture and equipment ....................................... 13,923,558 13,872,058
Transportation equipment ...................................... 294,920 292,593
Leasehold improvements ........................................ 16,022,441 16,050,719
Construction in progress ...................................... 2,296,667 1,429,621
------------- -------------
Total Property ........................................... 120,296,398 119,412,452
Less: Accumulated depreciation and
amortization ................................................ 66,971,841 64,488,965
------------- -------------
Property, net ............................................ 53,324,557 54,923,487
------------- -------------
Intangible Assets ................................................ 59,240,646 59,733,731
Other Assets ..................................................... 1,655,283 1,899,611
------------- -------------
Total Assets ..................................................... $ 146,916,230 $ 153,300,826
============= =============
<CAPTION>
May 3, February 1,
LIABILITIES AND SHAREHOLDERS' EQUITY 1998 1998
------------- -------------
<S> <C> <C>
Current Liabilities:
Current portion of long-term debt ............................ $ 8,750,000 $ 8,750,000
Accounts payable-trade ....................................... 23,797,823 25,915,285
Accrued insurance ............................................ 3,823,960 4,085,191
Accrued income taxes ......................................... 1,341,524 1,188,859
Accrued compensation ......................................... 4,791,914 6,474,414
Other accrued liabilities .................................... 9,858,281 10,664,577
------------- -------------
Total Current Liabilities ............................... 52,363,502 57,078,326
------------- -------------
Long-term debt .................................................. 41,104,831 42,063,857
------------- -------------
Deferred Income Taxes ........................................... 107,019 1,738,255
------------- -------------
Other Liabilities ............................................... 7,628,444 7,730,964
------------- -------------
Shareholders' Equity:
Preferred stock, $10.00 par value (authorized--
2,000,000 shares; outstanding--none) ........................ -- --
Common Stock, $0.20 par value (authorized--
20,000,000 shares; issued--7,947,879 shares and
7,901,579 shares) ........................................... 1,589,576 1,580,316
Additional paid-in capital .................................... 10,707,615 9,995,238
Retained earnings ............................................. 33,646,734 33,423,465
Cumulative foreign currency translation
adjustments ................................................ (231,491) (309,595)
------------- -------------
Total Shareholders' Equity ............................... 45,712,434 44,689,424
------------- -------------
Total Liabilities and Shareholders' Equity ....................... $ 146,916,230 $ 153,300,826
============= =============
</TABLE>
See Condensed Notes to Consolidated Financial Statements.
1
<PAGE> 4
PCA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
-------------------------------
May 3, May 4,
1998 1997
----------- -----------
<S> <C> <C>
SALES ................................... $54,661,925 $58,691,809
----------- -----------
COSTS AND EXPENSES:
Advertising and promotional costs .... 3,392,749 4,313,900
Costs of photographic sales .......... 19,361,353 21,794,658
Store commissions and selling costs .. 18,822,775 18,892,362
General and administrative expenses .. 9,921,037 10,176,412
Amortization of intangibles .......... 507,418 455,738
----------- -----------
Total costs and expenses .......... 52,005,332 55,633,070
----------- -----------
INCOME FROM OPERATIONS .................. 2,656,593 3,058,739
Interest expense, net ................ 1,219,709 1,619,383
----------- -----------
INCOME BEFORE INCOME TAXES .............. 1,436,884 1,439,356
INCOME TAX PROVISION .................... 658,811 796,030
----------- -----------
NET INCOME .............................. $ 778,073 $ 643,326
=========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES:
Basic ................................ 7,931,757 7,631,209
=========== ===========
Diluted .............................. 8,373,084 7,932,863
=========== ===========
BASIC AND FULLY DILUTED EARNINGS PER
COMMON SHARE:
Basic ............................. $ 0.10 $ 0.08
=========== ===========
Diluted ........................... $ 0.09 $ 0.08
=========== ===========
CASH DIVIDENDS PER COMMON SHARE ......... $ 0.07 $ --
=========== ===========
</TABLE>
See Condensed Notes to Consolidated Financial Statements.
2
<PAGE> 5
PCA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MAY 3, 1998
(Unaudited)
<TABLE>
<CAPTION>
Cumulative
Foreign
Common Stock Additional Currency
---------------------------- Paid-In Comprehensive Retained Translation
Shares Amount Capital Income Earnings Adjustment
------------- ------------- --------------- --------------- -------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, FEBRUARY 1, 1998: 7,901,579 $ 1,580,316 $ 9,995,238 $ 33,423,465 $ (309,595)
Comprehensive Income
Net income $ 778,073 778,073
Foreign currency translation
adjustment 46,081 78,104
---------------
Total comprehensive income $ 824,154
Exercise of stock options 46,300 9,260 712,377
Dividends (554,804)
--------------------------------------------- ---------------------------------
BALANCE, MAY 3, 1998: 7,947,879 $ 1,589,576 $ 10,707,615 $ 33,646,734 $ (231,491)
============================================= =================================
</TABLE>
See Condensed Notes to Consolidated Financial Statements.
3
<PAGE> 6
PCA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
---------------------------------
May 3, May 4,
1998 1997
------------ -----------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income .............................................. $ 778,073 $ 643,326
Adjustments to reconcile net income to net cash used in
operating activities:
Depreciation and amortization ........................ 3,748,314 3,741,882
Increase (decrease) in allowance for doubtful accounts 172,312 (25,679)
Provision for deferred income taxes .................. (591,986) (15,743)
Loss on disposal of property ......................... 166,233 4,283
Decrease in other liabilities ........................ (112,109) (275,131)
Decrease (increase) in other noncurrent assets ....... 244,328 (1,499,779)
Changes in operating assets and liabilities:
Increase in accounts receivable .................... (182,710) (902,267)
Decrease in inventories ............................ 2,010,683 1,700,347
(Increase) decrease in prepaid expenses ............ (193,772) 360,276
Decrease in accounts payable ....................... (2,118,292) (3,412,559)
Decrease in accrued expenses ....................... (2,603,743) (992,566)
------------ -----------
NET CASH PROVIDED FROM (USED IN) OPERATING ACTIVITIES 1,317,331 (673,610)
------------ -----------
INVESTING ACTIVITIES:
Purchase of property .................................... (1,785,076) (3,363,219)
Purchase of American Studios, Inc. ...................... -- (2,516,646)
Proceeds from sale of fixed assets ...................... 17,568 1,200
------------ -----------
NET CASH USED IN INVESTING ACTIVITIES ................... (1,767,508) (5,878,665)
------------ -----------
FINANCING ACTIVITIES:
(Decrease) increase in borrowings ....................... (959,026) 7,798,680
Exercise of stock options ............................... 721,637 963,121
Cash dividends .......................................... (554,804) --
------------ -----------
NET CASH (USED IN) PROVIDED FROM FINANCING ACTIVITIES ... (792,193) 8,761,801
------------ -----------
Effect of exchange rate changes on cash ................. 26,064 (11,106)
------------ -----------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS ....... (1,216,306) 2,198,420
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ........... 12,289,761 1,536,234
------------ -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ................. $ 11,073,455 $ 3,734,654
============ ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash Flow Data:
Interest paid ........................................ $ 901,935 $ 3,736,171
============ ===========
Income taxes paid .................................... $ 986,472 $ 1,219,348
============ ===========
</TABLE>
See Condensed Notes to Consolidated Financial Statements.
4
<PAGE> 7
PCA INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
With respect to the significant accounting policies of PCA
International, Inc., and its subsidiaries ("PCA" or the "Company"), which are
wholly-owned, reference is made to note 1 of the financial statements in the
Company's Form 10-K filed for the fiscal year ended February 1, 1998. The
interim financial statements reflect all adjustments (consisting of normal
recurring accruals) which are, in the opinion of management, necessary for a
fair statement of the results for the interim periods presented.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Overview
PCA is a holding company engaged through its subsidiaries in the sale
and processing of professional color portraits of children, adults, and
families. As of May 3, 1998, the Company operated 2,034 portrait studios within
Kmart and Wal-Mart discount stores and supercenters in the United States,
Canada, Mexico, Puerto Rico, and South America. The Company also operates an
extensive traveling studio business providing portrait photography services in
approximately 1,400 additional retail locations as well as to church
congregations and other institutions.
As reported on April 21, 1998, the Company and Jupiter Partners II,
L.P. ("Jupiter") entered into a definitive merger agreement under which between
approximately 95% and 97% of the primary common stock of PCA (excluding certain
shares to be retained by PCA senior management) will be acquired for $26.50 per
share in cash. The transaction, which will be accounted for as a
recapitalization, is valued at approximately $276 million, including refinancing
of existing debt. The merger was approved by the Board of Directors of PCA and
is expected to be completed in mid- to late-summer subject to approval of PCA
shareholders. The merger agreement, which the Company has previously filed in a
Current Report on Form 8-K, filed on April 20, 1998 with the Securities and
Exchange Commission, provides that the Company cannot declare or pay any
dividends prior to closing. The Company will continue to be run by its current
senior management team led by John Grosso, PCA president and chief executive
officer. Jupiter is a New York-based investment firm organized to invest in
management buyouts and growth capital opportunities.
As a result of the proposed merger, the Company and Jupiter will incur
various costs, currently estimated to be approximately $8 million on a pretax
basis, in connection with consummating the transaction. These costs consist
primarily of professional fees, registration costs, and other expenses. Although
the exact timing, nature and amount of these merger transaction costs are
subject to change, the Company expects that a one-time charge for these costs
will be recorded in the quarter during which the merger is consummated.
On April 22, 1998, the Company and the members of its Board of
Directors were sued by Harbor Finance Partners, a shareholder of the Company, to
enjoin the merger between the Company and Jupiter, or in the alternative, for
damages. The lawsuit was filed in the Superior Court of Mecklenburg County,
North Carolina. Harbor Finance Partners has alleged that the Company and its
Directors breached their fiduciary duty to the shareholders in connection with
the merger. The Company and the Directors deny these allegations and will defend
the lawsuit vigorously. On May 26, 1998, the Company and the Directors moved to
dismiss the lawsuit on the basis that Harbor Finance Partners had failed to
state a claim for which relief can be granted. A hearing date for that motion to
dismiss has not yet been set by the Court.
On April 28, 1998, the Company was notified by Kmart that the Company's
license agreements for 75 Kmart studios, which generated approximately $8
million in revenue and approximately $1.7 million in income from operations for
the fiscal year ended February 1, 1998, would be terminated in 180 days.
5
<PAGE> 8
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations, continued
Seasonality
Because of the retail nature of its services and its locations in
discount stores, the Company's business is very seasonal. The Christmas season
accounts for a high percentage of the Company's sales and earnings, and the
Company's fourth fiscal quarter (late October through late January) typically
produces a large percentage of annual sales and annual earnings. The fourth
fiscal quarters of 1997, 1996, and 1995, accounted for approximately 31.2%,
33.2%, and 32.2%, respectively, of sales, and 89.4%, 32.8%, and 64.2%,
respectively, of earnings for those years. Fiscal 1997 fourth quarter earnings
as a percentage of total earnings were out of proportion compared to prior
year's due to significant costs incurred for restructuring the Company's digital
studio operations, which led to operating losses in the first half of the year.
The 1996 fourth quarter earnings would have accounted for 69.5% of annual
earnings before giving effect to a $3.6 million after-tax charge for studio
closure costs. The Company's operations can be adversely affected by inclement
weather, especially during the important fiscal fourth quarter.
Results of Operations
For the first quarter ended May 3, 1998, the Company reported
consolidated sales of $54.7 million, a decrease of 6.9% compared to sales of
$58.7 million reported in the comparable fiscal 1997 quarter. The $4.0 million
sales decline in the 1998 first quarter was due to discontinued and closed
operations in fiscal 1997. During the first half of fiscal 1997, the Company
discontinued its subsidiary's fashion photography business and PCA's pilot pet
portrait operations, and closed 401 underperforming discount store portrait
studios. These operations represented sales of approximately $8.0 million in the
fiscal 1997 first quarter. Excluding sales from these discontinued or closed
operations in the fiscal 1997 first quarter, sales for PCA's 1998 first quarter
increased $4.0 million or 7.8 percent. Portrait studio sales through discount
retailers represented $52.9 million or 96.7% of total sales for the fiscal 1998
first quarter. At May 3, 1998, the Company operated 2,034 portrait studios in
discount stores. During the quarter, the Company opened 12 portrait studios and
closed 53 studios, resulting in a net reduction of 41 studios from the year-end
studio count of 2,075.
The following table presents the percentage of sales represented by the
following line items from the Company's statements of income for the periods
indicated:
<TABLE>
<CAPTION>
Three Months Ended
-----------------------------------
May 3, 1998 May 4, 1997
--------------- ---------------
<S> <C> <C>
Sales.................................. 100.0% 100.0%
Costs and expenses..................... 95.1 94.8
--------------- ---------------
Income from operations................. 4.9 5.2
Interest expense....................... 2.3 2.8
--------------- ---------------
Income before income taxes............. 2.6 2.4
Income tax provision................... 1.2 1.3
--------------- ---------------
Net income............................. 1.4% 1.1%
=============== ===============
</TABLE>
Total costs and expenses as a percentage of sales increased to 95.1% in
the 1998 first quarter from 94.8% in the first quarter of fiscal 1997. The 1998
quarter includes costs and expenses of $0.6 million or 1.1% of sales related to
the execution of the merger agreement with Jupiter (noted above). Advertising
and promotional expenses as a percentage of sales decreased to 6.2% for the
fiscal 1998 first quarter from 7.4% in the fiscal 1997 first quarter, reflecting
a less promotional environment in the discount retail segment. Cost of
photographic sales decreased to 35.4% of sales from 37.1% of sales in the
year-ago quarter principally due to cost savings resulting from the completion
of the American Studios, Inc. ("ASI") integration and the conversion of
approximately 600 ASI studios in Wal-Mart to PCA's integrated digital technology
system which lowered production costs per customer. Store commissions and
selling expense as a percentage of sales increased to 34.4% in the 1998 first
quarter versus 32.2%
6
<PAGE> 9
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations, continued
in the 1997 first quarter principally due to increased labor expense required to
operate more traveling studio promotions and staffing requirements for
additional seven-day studios. General and administrative expenses increased as a
percentage of sales to 18.1% compared to 17.3% of sales in the fiscal 1997
quarter.
Net interest expense for the quarter ended May 3, 1998 was $1.2
million, or 2.3% of sales, as compared to $1.6 million, or 2.8% of sales, in the
fiscal 1997 first quarter. The net interest expense on borrowings decreased as a
result of a lower level of debt. See "Liquidity and Capital Resources".
The income tax provision for the first quarter of 1998 was $0.7
million. This resulted in an effective tax rate for the 1998 quarter of 45.9%
compared to 55.3% in the first quarter of 1997. The decrease in effective tax
rate for the 1998 period is attributable to using the projected effective annual
tax rate as compared to using the first quarter actual calculated rate in the
same period in the prior year.
Net income for the first quarter of fiscal 1998 increased 21.0% to $0.8
million or 1.4% of sales as compared to $0.6 million or 1.1% of sales in the
same quarter of the prior year. Diluted earnings per share for the 1998 first
quarter were $0.09 as compared to $0.08 diluted earnings per share in the fiscal
1997 quarter. Net income for the 1998 first quarter includes $0.4 million
tax-effected expense, or $0.04 per diluted share, for previously mentioned
expenses related to the execution of the merger agreement with Jupiter.
Liquidity and Capital Resources
Net cash provided by operating activities was $1.3 million for the
quarter ended May 3, 1998. The Company's principal sources of working capital
are cash from operations and borrowings under its $15 million revolving line of
credit. Effective May 21, 1998, the Company reduced the available balance of its
revolving line of credit to $15 million from $25 million. At May 3, 1998, the
Company had $11.1 million in cash and cash equivalents and no short-term
borrowings.
During the quarter, the Company had property additions of $1.8 million,
principally for materials and equipment for the addition of new permanent
portrait studios and the upgrading of certain processing equipment in the
Company's two laboratory and processing facilities. During fiscal 1998, the
Company expects to spend approximately $11.5 million in capital expenditures,
including the opening of new permanent portrait studios, the refurbishment of
existing studios, and the purchase of laboratory equipment.
If consummated, the Company's proposed merger with Jupiter, as
described previously in the Overview, would have a substantial impact on the
Company's current capital structure. Upon consummation of the merger, the
recapitalized Company would be significantly higher-leveraged in comparison to
its current capital structure and, accordingly, the merger would result in
substantial changes to the Company's debt-to-equity ratio and its related debt
service requirements.
Shareholders' equity at May 3, 1998 was $45.7 million. Net income
increased shareholders' equity by $0.8 million and dividends paid in the quarter
amounted to $0.6 million. Options exercised in the first quarter of fiscal 1998
increased shareholders' equity by $0.7 million.
The Company believes, based on its short- and long-term business plans,
that it has the ability to adequately fund its operating and capital expenditure
needs for fiscal 1998 from operations, cash on hand, and its revolving line of
credit.
Inflation
Over the past few years, inflation has not had a significant impact on
the Company's financial condition or results of operations.
7
<PAGE> 10
PART II. OTHER INFORMATION
Item 5. Other Information
The Private Securities Litigation Reform Act of 1995 ("the Act")
provides safe harbor for forward-looking statements made by or on behalf of the
Company. Certain statements made by the Company which are not historical facts
are forward-looking statements that involve risks and uncertainties. Actual
results could differ materially from those expressed or implied in
forward-looking statements. Important factors that could cause financial
performance to differ materially from past results and from those expressed or
implied in this document include, without limitation, new store openings,
availability of financing, competitive pressures, management's ability to manage
growth, loss of customers, and a variety of other factors.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
Form 8-K filed April 20, 1998
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.
PCA INTERNATIONAL, INC.
-------------------------------
(Registrant)
Date: June 16, 1998 /s/ John Grosso
-------------------------------
John Grosso
President
(Principal Executive Officer)
Date: June 16, 1998 /s/ Bruce A. Fisher
-------------------------------
Bruce A. Fisher
Senior Vice President
(Principal Accounting Officer)
8
<PAGE> 11
EXHIBIT INDEX
PCA INTERNATIONAL, INC.
Index to Exhibits
Index No. Description Page No.
--------- ----------- --------
3(a) Restated Charter, as amended to date, incorporated by
reference to Exhibit 4(b) to the Company's Registration
Statement on Form S-2, Commission File No. 33-50738, dated
August 12, 1992.
3(b) Bylaws of PCA International, Inc. as amended to date,
incorporated by reference to Exhibit 3.4 to the Company's
Quarterly Report on Form 10-Q, Commission File No. 0-8550, for
the quarter ended May 3, 1992.
4 Instruments defining the rights of security holders,
incorporated by reference to Exhibit 4 to the Company's
Quarterly Report on Form 10-Q, Commission File No. 0-8550, for
the quarter ended May 3, 1992.
10(a) License Agreement dated July 29, 1992, between Wal-Mart
Corporation and American Studios, Inc., incorporated by
reference to Exhibit 10.1 to American Studios, Inc. 1992 Form
S-1 (Registration No. 33-58958).
10(b) License Agreement dated May 10, 1996, between Kmart
Corporation and PCA International, Inc., incorporated by
reference to Exhibit 10(b) to the Company's Quarterly Report
on Form 10-Q for the quarter ended April 28, 1996.
10(d)* The 1990 Non-Qualified Stock Option Plan, incorporated by
reference to Exhibit 4 to the Company's Registration Statement
on Form S-8 (Registration No. 33-36793).
10(e)* The 1992 Non-Qualified Stock Option Plan, as amended,
incorporated by reference to Exhibit 4 to the Company's
Registration Statement on Form S-8 (Registration No.
33-51458).
10(f) Loan Agreement dated January 27, 1997, between PCA
International, Inc., PCA Photo Corporation of Canada, Inc.,
PCA Specialty Retail Photo Corporation, Inc., Photo
Corporation of America, PCA National, Inc., ASI Acquisition
Corp., and NationsBank, N.A., as Agent, incorporated by
reference to the Company's Schedule 14D-1 and Schedule 13-D,
Amendment No. 3, dated January 27, 1997.
10(g) Loan Agreement dated February 28, 1997, between PCA
International, Inc., PCA Photo Corporation of Canada, Inc.,
PCA Specialty Retail Photo Corporation, Inc., Photo
Corporation of America, PCA National, Inc., ASI Acquisition
Corp., and NationsBank, N.A., as Agent, incorporated by
reference to Exhibit 10(g) to the Company's Annual Report on
Form 10-K for the year ended February 2, 1997.
10(i) Merger Agreement dated December 17, 1996, between PCA
International, Inc., ASI Acquisition Corp., and American
Studios, Inc., incorporated by reference to the Company's Form
8-K dated January 23, 1997.
10(j)* 1996 Omnibus Long-Term Compensation Plan, incorporated by
reference to Exhibit 10(j) to the Company's Quarterly Report
on Form 10-Q for the quarter ended April 28, 1996.
10(l)* Employment and Noncompete Agreement dated December 17, 1996,
between Randy J. Bates and PCA International, Inc.,
incorporated by reference to Exhibit 10(l) to the Company's
Annual Report on Form 10-K for the year ended February 2,
1997.
10(m)* Employment and Noncompete Agreement dated December 17, 1996,
between Robert Kent Smith and PCA International, Inc.,
incorporated by reference to Exhibit 10(m) to the Company's
Annual Report on Form 10-K for the year ended February 2,
1997.
9
<PAGE> 12
Index No. Description Page No.
--------- ----------- --------
10(n)* Employment and Noncompete Agreement dated December 17, 1996,
between J. Robert Wren, Jr., and PCA International, Inc.,
incorporated by reference to Exhibit 10(n) to the Company's
Annual Report on Form 10-K for the year ended February 2,
1997.
10(o)* Employment and Noncompete Agreement dated June 9, 1997,
between John Grosso and PCA International, Inc., incorporated
by reference to Exhibit 10(o) to the Company's Quarterly
Report on Form 10-Q for the quarter ended August 3, 1997.
10(p)* Employment and Noncompete Agreement dated June 9, 1997,
between Eric Jeltrup and PCA International, Inc., incorporated
by reference to Exhibit 10(p) to the Company's Quarterly
Report on Form 10-Q for the quarter ended August 3, 1997.
10(q)* Employment and Noncompete Agreement dated June 9, 1997,
between Bruce Fisher and PCA International, Inc., incorporated
by reference to Exhibit 10(q) to the Company's Quarterly
Report on Form 10-Q for the quarter ended August 3, 1997.
10(r) Sales contract dated August 1, 1997, between PCA
International, Inc., and Agfa Division of Bayer Corporation,
incorporated by reference to Exhibit 10(r) to the Company's
Quarterly Report on Form 10-Q for the quarter ended November
2, 1997.
10(s) Merger Agreement dated April 20, 1998, between PCA
International, Inc. and Jupiter Acquisition Corp.,
incorporated by reference to the Company's Form 8-K dated
April 20, 1998.
27 Financial Data Schedule.
* Management contract or compensatory plan or arrangement required to be filed
as an exhibit.
10
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1999
<PERIOD-START> FEB-02-1998
<PERIOD-END> MAY-03-1998
<CASH> 11,073,455
<SECURITIES> 0
<RECEIVABLES> 9,005,965
<ALLOWANCES> 1,488,299
<INVENTORY> 8,069,236
<CURRENT-ASSETS> 32,695,744
<PP&E> 120,296,398
<DEPRECIATION> 66,971,841
<TOTAL-ASSETS> 146,916,230
<CURRENT-LIABILITIES> 52,363,502
<BONDS> 0
0
0
<COMMON> 1,589,576
<OTHER-SE> 44,122,858
<TOTAL-LIABILITY-AND-EQUITY> 146,916,230
<SALES> 54,661,925
<TOTAL-REVENUES> 54,661,925
<CGS> 41,576,877
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<INTEREST-EXPENSE> 1,219,709
<INCOME-PRETAX> 1,436,884
<INCOME-TAX> 658,811
<INCOME-CONTINUING> 778,073
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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<NET-INCOME> 778,073
<EPS-PRIMARY> 0.10
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</TABLE>
