10-Q 1 d10q.txt FORM 10-Q 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, 2002 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 12, 2002: 5,121,451 BCT INTERNATIONAL, INC. INDEX

PART I. FINANCIAL STATEMENTS BCT INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (000's omitted)

See notes to condensed consolidated financial statements. 2 BCT INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended May 31 2002 2001 ---- ---- Revenues: Royalties and franchise fees $1,380 $1,348 Paper and printing sales 3,242 3,275 Sales of Franchises 1 13 Interest and other 217 168 ------ ------ 4,840 4,804 ------ ------ Expenses: Cost of paper and printing sales 2,763 2,831 Selling, general and administrative 1,535 1,806 Depreciation and amortization 56 57 ------ ------ 4,354 4,694 ------ ------ Income before provision for income taxes 486 110 Income tax provision 184 43 ------ ------ Net income $ 302 $ 67 ====== ====== Net income per common share: Basic $ .06 $ .01 ====== ====== Diluted $ .06 $ .01 ====== ====== See notes to condensed consolidated financial statements. 3 BCT INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY THREE MONTHS ENDED MAY 31, 2002 (UNAUDITED) 000's omitted

See notes to condensed consolidated financial statements. 4 BCT INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (000's omitted)

See notes to condensed consolidated financial statements. 5 BCT INTERNATIONAL, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (000's omitted, except per share data) May 31, 2002 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, 2002. 2. The results for the three month periods ended May 31, 2002 and 2001, are not necessarily indicative of results that may be expected for the fiscal year. 3. For the three months ended May 31, 2002 and 2001, 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. For the three months ended May 31, 2002 and 2001, the number of shares used for both the basic and diluted earnings per share calculations were 5,121,000 and 5,127,000, respectively. All of the stock options outstanding for both periods were excluded from the diluted earnings per share calculation as their impact was anti-dilutive. In 2002, and 2001, 885,000 options and 1,393,000 options, respectively, were excluded. 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. 5. The Company has three reporting segments (1) Franchisor Operations, (2) Pelican Paper Products and (3) Other Operations. The Company evaluates the performance of its segments based on earnings before income taxes. The Company is organized on the basis of business activity units. The table below presents information about reported segments for the 3 months ended May 31:

6 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Total revenues increased $36,000 or 1% for the first quarter ended May 31, 2002, as compared to the corresponding period in the prior fiscal year. Royalty revenues increased $32,000 or 2% due to an increase in sales by the BCT network of franchises. Interest and other revenue increased $49,000 or 29% as a result of an increase in the annual licensing fees for Orderprinting.com(TM) from $4,200 to $6,000. These increases were offset by decreases in paper and printing sales of $33,000 or 1% and a decrease in revenue from sales of Franchises of $12,000 or 92%. Cost of paper and printing sales as a percentage of paper and printing sales was 85% and 86%, respectively, for the quarters ended May 31, 2002 and 2001. Fluctuations in this percentage result primarily from changes in the sales mix. Selling, general and administrative expenses represented 32% and 38% of gross revenues for the quarters ended May 31, 2002 and 2001, respectively. These expenses were higher in fiscal 2002 primarily as a result of severance costs associated with the departure of the former President and Chief Operating Officer ($300,000) which were recorded in the quarter ended May 31, 2001. Liquidity and Capital Resources Cash resources decreased $203,000 during the first quarter of fiscal 2003. The Company generated $64,000 from operations. The Company made debt payments totaling $252,000. The Company invested $847,000 for additional inventory during the first quarter of fiscal 2003. The Company believes current cash 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. The Company has available a $2 million line of credit with a bank. No advances have been made on the line. Certain information contained in this report, particularly information regarding future economic performance and finances, plans and objectives of management, constitutes "forward-looking statements" within the meaning of the federal securities laws. In some cases, information regarding certain important factors that could cause actual results to differ materially from any forward-looking statement appear together with such statement. In addition, the following factors, in addition to other possible factors not listed, could affect the Company's actual results and cause such results to differ materially from those expressed in forward-looking statements. These factors include competition within the wholesale printing industry, which is intense; changes in general economic conditions; technological changes; changes in customer tastes; legal claims; the continued ability of the Company and its franchisees to obtain suitable locations and financing for new Franchises as well as expansion of existing Franchises; governmental initiatives, in particular those relating to franchise regulation and taxation; and risk factors detailed from time to time in the Company's filings with the Securities and Exchange Commission. 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS CONTINUED Item 3. Quantitative and Qualitative Disclosures About Market Risk The Company had no outstanding balances subject to market risk during the period covered by this report. The Company has a $2 million line of credit with a bank which bears interest at LIBOR + 2.35%. Part II OTHER INFORMATION AND SIGNATURES Item 6. Exhibits and Reports on Form 8-K (a) No exhibits (b) No reports on Form 8-K were filed by the Company during the period ended May 31, 2002. 8 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 12, 2002 William Wilkerson ---------------------- ---------------------------------------- William Wilkerson Chief Executive Officer Date: July 12, 2002 Michael R. Hull ---------------------- ---------------------------------------- Michael R. Hull Vice President & Chief Financial Officer 9

BCT INTERNATIONAL INC / 10-Q