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 August 31, 2003

Commission File No. 0-10823

BCT INTERNATIONAL, INC.

(Exact name of Registrant as specified in its Charter)

Delaware	22-2358849
(State of Incorporation)	(IRS 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

October 15, 2003: 5,121,471

BCT INTERNATIONAL, INC.

INDEX

		PAGE NUMBER
PART I.	FINANCIAL INFORMATION
	CONDENSED CONSOLIDATED BALANCE SHEETS—August 31, 2003 and February 28, 2003	2
	CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS—for the three months ended August 31, 2003 and August 31, 2002 and the six months ended August 31, 2003 and August 31, 2002	3
	CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY—for the six months ended August 31, 2003	4
	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS—for the six months ended August 31, 2003 and August 31, 2002	5
	Notes to Condensed Consolidated Financial Statements	6-7
	Management’s Discussion and Analysis of Financial Condition and Results of Operations	8-9
PART II.	OTHER INFORMATION AND SIGNATURES
	Signatures	10
	Certifications and Exhibits	11-14

PART I.    FINANCIAL STATEMENTS

BCT INTERNATIONAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(000’s omitted)

	August 31, 2003			February 28, 2003
ASSETS
Current assets:
Cash	$	5,663		$	4,276
Accounts and notes receivable, net		2,627			3,117
Inventory, net		2,364			2,735
Assets held for sale, net		112			85
Prepaid expenses and other current assets		166			314
Deferred income taxes		419			406
Total current assets		11,351			10,933
Accounts and notes receivable, net		4,723			4,721
Property and equipment at cost, net		954			1,034
Deferred income taxes		964			919
Deposits and other assets		43			48
Trademark and other intangible assets, net		168			180
Total assets	$	18,203		$	17,835
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,013		$	901
Notes payable		113			113
Accrued liabilities		320			462
Deferred revenue		55			55
Total current liabilities		1,501			1,531
Deferred revenue		299			335
Notes payable		352			410
Total liabilities		2,152			2,276
Minority interest		27			18
Stockholders’ equity:
Common stock, $.04 par value, 25,000 shares authorized, 5,828 shares issued		233			233
Paid in capital		12,605			12,605
Retained earnings		4,758			4,275
		17,596			17,113
Less: Treasury stock, at cost, 707 shares		(1,572	)		(1,572	)
Total stockholders’ equity		16,024			15,541
Total liabilities and stockholders’ equity	$	18,203		$	17,835

The accompanying notes are an integral part of these condensed consolidated financial statements.

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BCT INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(000’s omitted)

	Three Months Ended August 31,				Six Months Ended August 31,
	2003		2002		2003		2002
Revenues:
Royalties and franchise fees	$	1,290	$	1,241	$	2,679	$	2,621
Paper and printing sales		2,871		2,903		5,955		6,145
Company-owned franchise sales		740		76		1,483		76
Sales of Franchises		—		1		9		2
		4,901		4,221		10,126		8,844
Expenses:
Cost of paper and printing sales		2,545		2,523		5,212		5,286
Cost of Company-owned franchise sales		159		19		325		19
Selling, general and administrative		1,985		1,620		3,993		3,155
Depreciation and amortization		81		55		158		111
		4,770		4,217		9,688		8,571
Income before interest and other income and provision for income taxes		131		4		438		273
Interest and other income		159		194		354		411
Income before provision for income taxes		290		198		792		684
Provision for income taxes		119		83		309		267
Net income	$	171	$	115	$	483	$	417
Earnings per share:
Basic	$	.03	$	.02	$	.09	$	.08
Diluted	$	.03	$	.02	$	.09	$	.08

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

BCT INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

SIX MONTHS ENDED AUGUST 31, 2003

(UNAUDITED)

000’s omitted

	Common Stock							Less: Treasury Stock
	Number of Shares	Par Value		Paid In Capital		Retained Earnings					Total
Balance February 28, 2003	5,828	$	233	$	12,605	$	4,275	$	(1,572	)	$	15,541
Net income	—		—		—		483		—			483
Balance August 31, 2003	5,828	$	233	$	12,605	$	4,758	$	(1,572	)	$	16,024

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

BCT INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(000’s omitted)

	Six months ended August 31,
	2003			2002
Cash flows from operating activities:
Net income	$	483		$	417
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		158			111
Provision for doubtful accounts		450			700
Provision for inventory obsolescence		50			50
Other adjustments		9			—
Changes in operating assets and liabilities:
Accounts and notes receivable		38			(143	)
Inventory		321			(788	)
Assets held for sale		(27	)		(72	)
Prepaid expenses and other assets		153			(171	)
Deferred income taxes		(58	)		(219	)
Accounts payable and accrued liabilities		(30	)		414
Deferred revenue		(36	)		(106	)
Net cash provided by operating activities		1,511			193
Cash flows from investing activities:
Capital expenditures		(66	)		(69	)
Net cash (used in) investing activities		(66	)		(69	)
Cash flows from financing activities:
Principal payments on notes payable		(58	)		(256	)
Net cash (used in) financing activities		(58	)		(256	)
Net increase (decrease) in cash		1,387			(132	)
Cash at beginning of period		4,276			4,819
Cash at end of period	$	5,663		$	4,687

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

BCT INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(000’s omitted)

August 31, 2003

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 August 31, 2003. The balance sheet as of February 28, 2003 was derived from audited financial statements.

2. The results for the three and six month periods ended August 31, 2003 and 2002, are not necessarily indicative of results that may be expected for the fiscal year.

3. For the three and six months ended August 31, 2003 and 2002, 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 and six months ended August 31, 2003 and 2002, the number of shares used for basic earnings per share calculations were 5,121,000. For the three and six months ended August 31, 2002, 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 fiscal 2003, 885,000 options were excluded. For the three and six months ended August 31, 2003, the number of shares used to calculate diluted earnings per share were 5,651,000.

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 enactment’s of changes in the tax law or rates.

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BCT INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Continued …

(UNAUDITED) (000’s omitted)

August 31, 2003

5. The Company has four reporting segments (1) Franchiser 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. The table below presents information about reported segments for the three and six months ended August 31:

	Franchiser			Pelican Paper		Company owned Franchises			Other		Total
For the Three Months Ended August 31,
2003
Revenues	$	1,290		$	2,871	$	740		$	159	$	5,060
Cost of sales		—			2,545		159			—		2,704
Operating expenses		1,248			184		634			—		2,066
Income (loss) before income taxes	$	42		$	142	$	(53	)	$	159	$	290
Depreciation and amortization	$	31		$	22	$	28		$	—	$	81
Income tax (benefit) provision	$	17		$	58	$	(21	)	$	65	$	119
Capital expenditures	$	—		$	—	$	(18	)	$	—	$	(18	)
2002
Revenues	$	1,242		$	2,903	$	76		$	194	$	4,415
Cost of sales		—			2,523		19			—		2,542
Operating expenses		1,415			154		106			—		1,675
Income (loss) before income taxes	$	(173	)	$	226	$	(49	)	$	194	$	198
Depreciation and amortization	$	30		$	25	$	—		$	—	$	55
Income tax (benefit) provision	$	(73	)	$	95	$	(20	)	$	81	$	83
Capital expenditures	$	15		$	12	$	258		$	—	$	285
	Franchiser			Pelican Paper		Company owned Franchises			Other		Total
For the Six Months Ended August 31,
2003
Revenues	$	2,688		$	5,955	$	1,483		$	354	$	10,480
Cost of sales		—			5,212		325			—		5,537
Operating expenses		2,515			339		1,297			—		4,151
Income (loss) before income taxes	$	173		$	404	$	(139	)	$	354	$	792
Depreciation and amortization	$	62		$	44	$	52		$	—	$	158
Income tax (benefit) provision	$	67		$	158	$	(54	)	$	138	$	309
Capital expenditures	$	8		$	2	$	56		$	—	$	66
2002
Revenues	$	2,623		$	6,145	$	76		$	411	$	9,255
Cost of sales		—			5,286		19			—		5,305
Operating expenses		2,851			309		106			—		3,266
Income (loss) before income taxes	$	(228	)	$	550	$	(49	)	$	411	$	684
Depreciation and amortization	$	62		$	49	$	—		$	—	$	111
Income tax (benefit) provision	$	(89	)	$	215	$	(19	)	$	160	$	267
Capital expenditures	$	26		$	16	$	258		$	—	$	300

7

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

August 31, 2003

Results of Operations

Total revenues increased $680,000, or 16.1% for the three months ended August 31, 2003 as compared to the corresponding period in the prior fiscal year. The increase in revenue is attributable primarily to increases in (i) royalty revenue ($49,000 or 3.9%) and (ii) Company-owned Franchise sales of $664,000 or 874%. These increases were partially offset by a decrease in Paper and Printing Sales of $32,000 or 1% The increase in Company-owned Franchise Sales is the result of the Company acquiring two franchises in fiscal 2003, one in July and the other in September.

Total revenues increased $1,282,000, or 14.5% for the six months ended August 31, 2003 as compared to the corresponding period in the prior fiscal year. The increase in revenue is attributable to an increase in Company-owned Franchise Sales of $1,407,000 or 1851% and an increase in royalty revenue of $58,000 or 2.2%. These increases were partially offset by a decrease in Paper and Printing Sales of $190,000 or 3.1%.

Cost of paper and printing sales as a percentage of paper and printing sales was 89% and 88%, respectively, for the three and six months ended August 31, 2003 as compared to 87% and 86%, respectively, for the corresponding periods in fiscal 2003.

Selling and administrative expenses represented 40.5% and 38.4% of gross revenues for the three and six months ended August 31, 2003 as compared to 39.4% and 35.7% for the corresponding periods in fiscal 2003. The selling and administrative expense percentage is higher for the three and six months ended August 31, 2003 due to an additional selling and administrative expenses associated with the Company-owned Franchises which amounted to $634,000 and $1,297,000, respectively, for the three and six months ended August 31, 2003. These increases were partially offset by a decrease in the provision for bad debts of $250,000 for the six months ended August 31, 2003 as compared to the same period in the prior year.

Liquidity and Capital Resources

Cash resources increased $1,387,000 during the six months ended August 31, 2003. The Company generated $1,511,000 from operations during the six months ended August 31, 2003. During the first six months of fiscal 2003, the Company made debt payments totaling $58,000 and made capital expenditures of $66,000.

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’s $2 million line of credit with a bank expired on September 19, 2003. No advances were ever 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.

8

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 had a $2 million line of credit with a bank which bears interest at LIBOR + 2.35% which expired September 19, 2003.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer have evaluated our disclosure controls and procedures as of October 15, 2003 and believe that they are effective.

Change in Internal Controls

Not applicable.

Part II OTHER INFORMATION AND SIGNATURES

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits:

31.1 Certification of Chief Executive Officer

31.2 Certification of Chief Financial Officer

32.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(b) No reports on Form 8-K were filed by the Company during the three month period ended August 31, 2003

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:	October 15, 2003		William Wilkerson
			William Wilkerson
			Chairman, President & Chief Executive Officer
Date:	October 15, 2003		Michael R. Hull
			Michael R. Hull
			Vice President & Chief Financial Officer

10