-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CP1tyaJMq9hwFb8rBuWww5Fd+oLd2maR98QSTjyhNwpRF8VezSP208/gzYSQzYi4 7LSNzLf5TQjdXebcPx4N/A== 0000928385-99-002261.txt : 19990715 0000928385-99-002261.hdr.sgml : 19990715 ACCESSION NUMBER: 0000928385-99-002261 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990531 FILED AS OF DATE: 19990714 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BCT INTERNATIONAL INC / CENTRAL INDEX KEY: 0000351541 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-PAPER AND PAPER PRODUCTS [5110] IRS NUMBER: 222358849 STATE OF INCORPORATION: DE FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-10823 FILM NUMBER: 99664381 BUSINESS ADDRESS: STREET 1: 3000 NE 30TH PL 5TH FL CITY: FT LAUDERDALE STATE: FL ZIP: 33306 BUSINESS PHONE: 3055631224 MAIL ADDRESS: STREET 1: 3000 NE 30TH PL STREET 2: 5TH FL CITY: FORT LAUDERDALE STATE: FL ZIP: 33306 FORMER COMPANY: FORMER CONFORMED NAME: BUSINESS CARDS TOMORROW INC DATE OF NAME CHANGE: 19881017 FORMER COMPANY: FORMER CONFORMED NAME: GOOD TACO CORP DATE OF NAME CHANGE: 19860318 10-Q 1 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, 1999 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 9, 1999: 5,805,625 BCT INTERNATIONAL, INC. INDEX
PAGE NUMBER PART I. FINANCIAL INFORMATION CONDENSED CONSOLIDATED BALANCE SHEETS - May 31, 1999 and February 28, 1999....................................................... 2 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - for the three months ended May 31, 1999 and 1998............................ 3 CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - for the three months ended May 31, 1999.............. 4 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - for the three months ended May 31, 1999 and 1998............................ 5 Notes to Condensed Consolidated Financial Statements........................ 6-7 ITEM 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations....................................................... 8-9 ITEM 3 - Quantitive and Qualitive Disclosures About Market Risk........... 9 PART II. OTHER INFORMATION AND SIGNATURES Item 1 - Legal Proceedings.................................................. 9 Item 6 - Exhibits and Reports on Form 8-K................................... 9 Signatures.................................................................. 10
PART I. FINANCIAL STATEMENTS BCT INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (000's omitted)
ASSETS May 31, 1999 February 28, 1999 - ------ ------------- ------------------ Current assets: Cash and cash equivalent $ 1,459 $ 1,143 Accounts and notes receivable, net 3,412 3,252 Inventory, net 2,245 2,122 Assets held for sale, net 994 1,082 Prepaid expenses and other current assets 209 199 Deferred income taxes 476 476 -------- -------- Total current assets 8,795 8,274 Accounts and notes receivable, net 6,634 6,052 Property and equipment at cost, net 431 460 Deferred income taxes 246 246 Deposits and other assets 90 90 Trademark and other intangible assets, net 278 284 -------- -------- Total assets $ 16,474 $ 15,406 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------ Current liabilities: Accounts payable $ 1,029 $ 844 Notes payable 113 113 Accrued liabilities 693 753 Deferred revenue 684 311 -------- -------- Total current liabilities 2,519 2,021 Notes payable 405 433 -------- -------- Total liabilities 2,924 2,454 -------- -------- Preferred stock, Series A, 12% cumulative, $1 par value, mandatorily redeemable, 810 shares authorized, 60 shares issued and outstanding in fiscal 1999 --- 60 -------- -------- Stockholders' equity: Common stock, $.04 par value, 25,000 shares authorized, 5,806 shares issued and outstanding (5,753 shares in fiscal 1999) 232 230 Paid in capital 12,576 12,506 Retained earnings 1,966 1,322 -------- -------- 14,774 14,058 Less: Treasury stock, at cost, 521 shares (496 in fiscal 1999) (1,224) (1,166) -------- -------- Total stockholders' equity 13,550 12,892 -------- -------- Total liabilities and stockholders' equity $ 16,474 $ 15,406 ======== ========
See notes to condensed consolidated financial statements. 2 BCT INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended May 31 1999 1998 ------ ------ Revenues: Royalties and franchise fees $1,457 $1,445 Paper and printing sales 3,545 3,256 Sales of Franchises --- 35 Interest and other 64 62 ------ ------ 5,066 4,798 ------ ------ Expenses: Cost of paper and printing sales 2,960 2,762 Selling, general and administrative 1,027 1,043 Depreciation and amortization 45 47 ------ ------ 4,032 3,852 ------ ------ Income from continued operations before income taxes 1,034 946 Income tax provision 362 217 ------ ------ Income from continued operations 672 729 Discontinued operations: Loss from company owned franchises operated under a plan of disposition, net of tax benefit of $15 and $18, respectively (28) (60) ------ ------ Net income $ 644 $ 669 ====== ====== Net income per common share: Income from continued operations $ .13 $ .14 Loss from discontinued operations (.01) (.01) ------ ------ Basic $ .12 $ .13 ====== ====== Income from continued operations $ .12 $ .13 Loss from discontinued operations --- (.01) ------ ------ Diluted $ .12 $ .12 ====== ======
See notes to condensed consolidated financial statements. 3 BCT INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY THREE MONTHS ENDED MAY 31, 1999 (UNAUDITED) 000's omitted -------------
Common Stock ---------------- Less: Number of Par Paid In Retained Treasury Shares Value Capital Earnings Stock Total --------- ----- ------------ -------- ---------- -------- Balance February 28, 1999 5,753 $230 $12,506 $1,322 $ (1,166) $12,892 Purchase of treasury stock --- --- --- --- (58) (58) Exercise of options 12 --- 12 --- --- 12 Conversion of preferred stock 41 2 58 --- --- 60 Net income --- --- --- 644 --- 644 ----- ----- ------- -------- --------- ------- Balance May 31, 1999 5,806 $232 $12,576 $1,966 (1,224) $13,550 ===== ===== ======= ======== ========= =======
See notes to condensed consolidated financial statements. 4 BCT INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (000's omitted)
Three months ended May 31 1999 1998 ------ ------ Cash flows from operating activities: Net income $ 644 $ 669 Plus loss from discontinued operations 28 60 ------ ------ Income from continued operations 672 729 Adjustments to reconcile net income to net cash provided (used) in operating activities: Depreciation and amortization 45 57 Provision for doubtful accounts 18 51 Other adjustments (21) 18 Changes in operating assets and liabilities: Accounts and notes receivable (760) (453) Inventory (123) 48 Assets held for sale 88 (111) Prepaid expenses and other assets (10) 57 Deferred income taxes --- 199 Accounts payable and accrued liabilities 125 (718) Deferred revenue 445 47 ------ ------ Net cash provided by (used in) continued operations 449 (76) Net cash used by discontinued operations (43) (78) --------- ------ Net cash provided by (used in) operating activities 406 (154) ------ ------ Cash flows from investing activities: Capital expenditures (10) (14) ------ ------ Net cash (used in) investing activities (10) (14) ------ ------ Cash flows from financing activities: Dividend payments on preferred stock --- (2) Principal payments on notes payable (28) (24) Exercise of warrants for common stock --- 47 Exercise of options for common stock 6 --- Treasury stock purchases (58) --- ------ ------ Net cash (used in) provided by financing activities (80) 21 ------ ------ Net increase (decrease) in cash and cash equivalents 316 (147) Cash and cash equivalents at beginning of period 1,143 1,018 ------ ------ Cash and cash equivalents at end of period $1,459 $ 871 ====== ======
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, 1999 ------------ 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, 1999. 2. The results for the three month periods ended May 31, 1999 and 1998, are not necessarily indicative of results that may be expected for the fiscal year. 3. For the three months ended May 31, 1999 and 1998, 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. 5. On February 28, 1999, the Company's Board of Directors approved a strategy decision to discontinue the operations comprising its Company owned franchises. The Company owned franchises included the 100% owned franchises in Delray Beach, Florida and Merrimack, New Hampshire and the 70% owned franchise in Louisville, Kentucky. On May 14, 1999, the Company executed an agreement for the sale of the Delray Beach Company owned franchise (See Note 6). As of July 9, 1999, the sale of the 70% owned Franchise in Louisville, Kentucky is pending final document preparation. Net assets of the Louisville, Kentucky and Merrimack, New Hampshire franchises of $994 are included in assets held for sale in the May 31, 1999 condensed consolidated balance sheet. Sales from Company owned franchise discontinued operations were $800 and $600 for the three months ended May 31, 1999 and 1998, respectively. After tax losses from the date of measurement, February 28, 1999, of $28 have been incurred through May 31, 1999 for the Delray Beach, Florida and Louisville, Kentucky Franchises. Management intends to sell the Merrimack, New Hampshire franchise in fiscal 2000; however, no assurances can be made that a sale will be consummated. The results of operations for the three months ended May 31, 1998 have been reclassified for the company franchises designated as discontinued operations in fiscal 1999. 6. On May 14, 1999, the Company sold the Delray Beach Company owned Franchise in exchange for a $550, ten year promissory note bearing interest of 7.5%. In addition, the Company expects to receive approximately $75 for accounts receivable. The transaction resulted in deferred revenue of approximately $440, which will be recognized over the life of the promissory note. 6 BCT INTERNATIONAL, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS CONTINUED (UNAUDITED) (000's omitted, except per share data) 7. The Company has four reporting segments (1) Franchisor Operations, (2) Pelican Paper Products, (3) Company Owned Franchises and (4) 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. Information relating to Company owned Franchises is included in Note 5. The table below presents information about reported segments for the 3 months ended May 31:
Pelican 1999 Franchisor Paper Other Total - --------------------------------- ---------- ------ ------- ------ Revenues $1,457 $3,545 $64 $5,066 Cost of sales --- 2,960 --- 2,960 Operating expenses 925 147 --- 1,072 ------ ------ --- ------ Income before income taxes $ 532 $ 438 $64 $1,034 ====== ====== === ====== Depreciation and amortization $ 18 $ 27 $-- $ 45 ====== ====== === ====== Income tax provision $ 186 $ 154 $22 $ 362 ====== ====== === ====== Capital expenditures $ 10 $ --- $-- $ 10 ====== ====== === ====== 1998 - --------------------------------- Revenues $1,480 $3,256 $62 $4,798 Cost of sales --- 2,762 --- 2,762 Operating expenses 970 120 --- 1,090 ------ ------ --- ------ Income before income taxes $ 510 $ 374 $62 $ 946 ====== ====== === ====== Depreciation and amortization $ 20 $ 27 $-- $ 47 ====== ====== === ====== Income tax provision $ 117 $ 86 $14 $ 217 ====== ====== === ====== Capital expenditures $ 14 $ --- $-- $ 14 ====== ====== === ======
8. On May 1, 1999, 60,000 shares of Series A preferred stock were converted into 40,541 shares of $.04 par value common stock. 9. On June 14, 1999, the Company entered into a settlement agreement involving litigation brought against a former franchise owner. During June 1999, the Company received payment of $1 million in accordance with the terms of the settlement agreement. This amount includes reimbursement of approximately $58 of accounts receivable which were previously reserved. 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS --------------------------------------------- Results of Operations - --------------------- Total revenues increased $268,000 for the first quarter ended May 31, 1999, as compared to the corresponding period in the prior fiscal year. The increase in revenue is attributable primarily to an increase in paper and printing sales ($289,000 or 9%), royalties ($12,000 or 1%) and combined with a decrease in sales of Franchises ($35,000 or 100%). Royalties increased as a result of increased sales by the BCT network of franchises. Paper and printing sales increased due to the addition of rubber stamp supplies as a product line in November 1998. Selling and administrative expenses represented 20% and 22% of gross revenues for the quarters ended May 31, 1999 and 1998, respectively. These expenses decreased $16,000 as a result of a decrease in bad debt expense of $33,000 and general and administrative expense of $27,000 combined with an increase in salaries and employee benefits of $27,000 and travel and entertainment of $15,000. Income from continued operations increased $88,000 or 9%. Net income decreased $25,000 or 4% as a result of the current year's higher effective tax rate which resulted in an increase of $145,000 or 67% in the provision for income taxes. The lower effective rate in the prior year resulted from the reversal of the valuation allowance for the deferred tax asset relating to net operating loss carryforwards. Liquidity and Capital Resources - ------------------------------- Cash resources increased $316,000 during the first quarter of fiscal 2000. The Company generated $449,000 from continued operations. The Company utilized working capital to make debt payments totaling $28,000, advanced $212,000 on behalf of the Franchise network relating to a national account, $58,000 to purchase treasury stock and $300,000 for accrued management incentives. The Company plans to continue to improve its working capital and cash positions during fiscal 2000 by continuing its efforts to (i) increase cash collections; and (ii) marketing to new customer channels through the implementation of a proprietary internet based ordering system while containing capital expenditures and maintaining inventory levels. The Company believes 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. The Company has available a $2 million line of credit with a bank. No advances have been made on the line. Year 2000 Issue - --------------- The Year 2000 issue affects the Company's installed computer systems, network elements, software applications and other business systems that have time- sensitive programs, including those with embedded microprocessors, that may not properly reflect or recognize the year 2000 and years thereafter. Because many computers and computer applications define dates by the last two digits of the year, "00" or other two-digit dates after the year 2000 may not properly be identified as the year 2000 or the appropriate later year, but rather the year 1900 or a year between 1901 and 1999 (as the case may be). This error could result in system and equipment failures or malfunctions causing disruption of operations including among other things, a temporary inability to process telephone calls, transactions and information, or engage in normal business activities. The Company has evaluated its installed computer systems, network elements, software applications and other business systems that have time-sensitive programs and has developed and implemented a plan to ensure their Year 2000 compliance. The Company believes that its hardware, network and software systems, with minor modifications, will be Year 2000 compliant. Since the Year 2000 issue may affect the systems and applications of the Company's franchises, customers or suppliers, the Company has communicated with its franchises, customers and suppliers to determine their overall Year 2000 readiness. Based upon responses received from its franchises, customers and suppliers, the Company does not anticipate any material adverse impact on its operations as a result of Year 2000 issues. No assurance can be given that the failure by one or more of its major franchises, suppliers or customers to become Year 2000 compliant will not have a material adverse impact on its operations. The cost to the Company of developing and implementing its Year 2000 compliance plan has amounted to approximately $45,000. 8 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS CONTINUED 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. 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 prime + .25%. Part II OTHER INFORMATION AND SIGNATURES Item 1. Legal Proceedings - ------ ----------------- Business Cards Tomorrow, Inc. v. Anuco, Inc., Robert V. Nugent, Sr. and ----------------------------------------------------------------------- Marco Nugent. This case was filed in 1991 by the Company against two individual - ------------ franchisees and their corporation in Broward County, Florida, Circuit Court. The Company sued for breach of the franchisees' franchise agreement based on their failure to submit royalty reports and failure to pay accrued royalties in the amount of $74,251.30. The complaint also sought to recover royalties accruing after the date of the lawsuit. The franchisees filed a counterclaim against the Company alleging fraud, misrepresentation and breach of the franchise agreement by the Company. Both parties also sought recovery of attorney's fees. The case was tried before a jury in February 1997, and the jury reached a verdict in favor of the Company awarding the Company $931,000 in accrued royalties and interest, plus attorney's fees and post-judgement interest, and rejecting the franchisees' counterclaim. In March 1997, the franchisees filed for bankruptcy protection and sought to discharge the judgement in favor of the Company. In April 1999, the bankruptcy court ruled in favor of the Company's objection to discharge of the franchisees' debt to the Company. In June 1999, the Company and the franchisees entered into a settlement agreement requiring payment of $1,000,000 in cash to the Company out of a total judgement of $1,331,000 (including attorney's fees and interest accrued since February 1997). In June 1999, the franchisees paid the $1,000,000 cash required under the settlement agreement, leaving a balance of $331,000 owed by Anuco, Inc. The Company intends to aggressively pursue collection of the amount owed by Anuco, Inc. 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, 1999. 9 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 , 1999 Peter T. Gaughn ------------- ----------------------- Peter T. Gaughn Chief Executive Officer Date: July , 1999 Michael R. Hull ------------- ----------------------- Michael R. Hull Vice President & Chief Financial Officer 10 EX-27 2 FINANCIAL DATA SCHEDULE
5 0000351541 BCT INTERNATIONAL, INC. 1,000 U.S. DOLLARS 3-MOS FEB-28-1999 MAR-01-1999 MAY-31-1999 1 1,459 0 11,367 (1,321) 2,245 8,795 1,546 (1,115) 16,474 2,519 405 0 0 232 13,318 16,474 3,545 5,066 2,960 2,960 994 18 15 1,034 362 672 (28) 0 0 644 .12 .12
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