-----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, RldpfO3UpOvExX2WXDTtZilI51U3WS430mQ+BK7pzP9DU7BHY6PbDXahMHst9288 1z6QiB5lXp9sEa5EBQ+AaQ== 0000893877-98-000119.txt : 19980218 0000893877-98-000119.hdr.sgml : 19980218 ACCESSION NUMBER: 0000893877-98-000119 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980217 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRM COPY CENTERS CORP CENTRAL INDEX KEY: 0000749254 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PERSONAL SERVICES [7200] IRS NUMBER: 930809419 STATE OF INCORPORATION: OR FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-19657 FILM NUMBER: 98541190 BUSINESS ADDRESS: STREET 1: 5208 N E 122ND AVENUE CITY: PORTLAND STATE: OR ZIP: 97230-1074 BUSINESS PHONE: 5032578766 10-Q 1 FORM 10-Q 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 December 31, 1997 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 ------------------------------------------------------ (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 ------------------------------------------------------ (Address of principal executive offices) (Zip Code) (503) 257-8766 ------------------------------------------------------ (Registrant's telephone number, including area code) ------------------------------------------------------ (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 DECEMBER 31, 1997 ------------ -------------------------------- Common Stock 6,984,141 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS
TRM COPY CENTERS CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) June 30, December 31, 1997 1997 -------- -------- ASSETS Current assets: Cash and cash equivalents $ 2,528 $ 1,974 Accounts receivable, net 7,704 7,560 Inventories 4,611 4,995 Prepaid expenses and other 1,399 1,801 -------- -------- Total current assets 16,242 16,330 Equipment and vehicles, less accumulated depreciation 33,872 36,315 Other assets 46 46 -------- -------- $ 50,160 $ 52,691 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Checks in transit $ 1,409 $ 1,257 Accounts payable 1,568 2,280 Accrued expenses 3,697 3,251 -------- -------- Total current liabilities 6,674 6,788 Long-term debt 400 0 Deferred income taxes 4,258 4,770 -------- -------- Total liabilities 11,332 11,558 -------- -------- 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 6,931 and 6,984 shares 16,601 16,894 Retained earnings 22,279 24,203 Cumulative translation adjustment (52) 36 -------- -------- Total stockholders' equity 38,828 41,133 -------- -------- $ 50,160 $ 52,691 ======== ========
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TRM COPY CENTERS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) Three Months Ended Six Months Ended December 31, December 31, --------------------------- --------------------------- 1996 1997 1996 1997 -------- -------- -------- -------- Sales $ 17,347 $ 16,709 $ 33,924 $ 32,946 Less discounts 2,920 2,715 5,656 5,285 -------- -------- -------- -------- Net sales 14,427 13,994 28,268 27,661 Cost of sales 7,630 7,636 15,035 14,988 -------- -------- -------- -------- Gross profit 6,797 6,358 13,233 12,673 Selling, general and administrative Expense 4,656 4,721 9,143 9,228 -------- -------- -------- -------- Operating income 2,141 1,637 4,090 3,445 Other expense: Interest 119 10 266 22 Other, net 100 177 188 266 -------- -------- -------- -------- Income before income taxes 1,922 1,450 3,636 3,157 Provision for income taxes 759 559 1,436 1,233 -------- -------- -------- -------- Net income $ 1,163 $ 891 $ 2,200 $ 1,924 ======== ======== ======== ======== Basic net income per share Shares outstanding 6,528 6,980 6,511 6,967 ======== ======== ======== ======== Net income per share $ 0.18 $ 0.13 $ 0.34 $ 0.28 ======== ======== ======== ======== Diluted net income per share Shares outstanding 7,328 7,349 7,332 7,356 ======== ======== ======== ======== Net income per share $ 0.16 $ 0.12 $ 0.30 $ 0.26 ======== ======== ======== ========
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TRM COPY CENTERS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (In thousands) Common Stock Cumulative --------------------- Retained Translation Shares Amount Earnings Adjustment Total ------ ------- -------- ----------- ------- Balance at June 30, 1997 6,931 $16,601 $22,279 $ (52) $38,828 Exercise of stock options 53 293 -- -- 293 Net income for the six months ended December 31, 1997 -- -- 1,924 -- 1,924 Foreign currency translation adjustment -- -- -- 88 88 ------ ------- ------- -------- ------- Balance at December 31, 1997 6,984 $16,894 $24,203 $ 36 $41,133 ====== ======= ======= ======== =======
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TRM COPY CENTERS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Six Months Ended December 31, --------------------------------- 1996 1997 -------- -------- Operating activities: Net income $ 2,200 $ 1,924 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,858 2,795 Loss on disposal of equipment and vehicles 50 79 Changes in items affecting operations: Accounts receivable (355) 144 Inventories (5) (384) Prepaid expenses and other (467) (402) Accounts payable 120 712 Accrued expenses 42 (446) Deferred income tax 522 512 -------- -------- Total operating activities 4,965 4,934 -------- -------- Investing activities: Proceeds from sale of equipment 180 270 Capital expenditures (1,824) (5,678) Other (56) 0 -------- ------- Total investing activities (1,700) (5,408) -------- -------- Financing activities: Change in checks in transit, net 517 (152) Principal payments on long-term debt (3,128) (400) Proceeds from long-term debt 0 0 Net proceeds from issuance of common stock 193 293 -------- -------- Total financing activities (2,418) (259) -------- -------- Effect of exchange rate changes 269 179 -------- -------- Net increase (decrease) in cash and cash equivalents 1,116 (554) Cash and cash equivalents at beginning of period 873 2,528 -------- -------- Cash and cash equivalents at end of period $ 1,989 $ 1,974 ======== ========
-5- 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: Basic and diluted net income per share are based on the weighted average number of common shares outstanding during each year, with diluted including the effect of potentially dilutive common shares. For the three months ended December 31, 1996 and 1997, and six months ended December 31, 1996 and 1997, the weighted average number of common shares for basic net income per share computations were 6,528,000; 6,980,000; 6,511,000; and 6,967,000; respectively. For diluted net income per share, 800,000; 369,000; 821,000; and 389,000 shares were added to weighted average shares outstanding for the three months ended December 31, 1996 and 1997 and for the six months ended December 31, 1996 and 1997, respectively, representing potential dilution for stock options outstanding, calculated using the treasury stock method. 3. Inventories (in thousands): June 30, December 31, 1997 1997 ------- ------- Paper $ 1,231 $ 1,298 Toner and developer 692 842 Parts 2,688 2,855 ------- ------- $ 4,611 $ 4,995 ======= ======= -6- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS General The Company has continued to expand its business by opening TRM Centers in new and existing market areas. The number of market areas served increased from 66 to 72 from June 30, 1996 to June 30, 1997. The number of TRM Centers grew from 31,719 to 34,796 over the same period. This expansion has continued into the first six months of fiscal 1998 with the opening of three new market areas and 834 TRM Centers. As of December 31, 1997, the Company had 75 market areas with 35,630 TRM Centers. Results of Operations Sales for the second quarter were $16.7 million, down 3.7% from second quarter sales of the previous year of $17.3 million. Sales for the six months year-to-date were $32.9 million, down 2.9% from prior year-to-date sales of $33.9 million. Sales in Europe continue to increase, although at a slowing rate as the European market matures. Sales in North America, where the market is more fully developed, continue to decline, offsetting the growth in Europe. Sales discounts are the portion of revenue retained by customers. Sales discounts as a percentage of sales continue to decline, from 16.8% to 16.2% in the comparable quarters. This reflects changes made in business agreements with new customers. The discount rate generally varies among individual retail businesses based on volume. Cost of sales remained flat compared to the same quarter in prior year and decreased 0.3% compared to the prior six months. Cost of sales increased as a percent of sales from 44.0% to 45.7% in the comparable prior-year quarter due to certain costs being fixed while sales have decreased. Selling, general and administrative costs grew by 1.4% to $4.7 million in the second quarter and 0.9% to $9.2 million for the first six months. Increased health care costs and vehicle fleet costs caused this change. Interest costs are incurred because the Company uses bank borrowings to help fund its expansion. The decrease in interest expense is due to reduced bank borrowings compared to the prior-year quarter and year-to-date. Liquidity and Capital Resources During the six months ended December 31, 1997, the Company funded capital expenditures of $5.7 million and repaid $0.4 million in bank borrowings with no additional draws on its line of credit. Capital expenditures increased by $3.9 million over the same period of the prior year due to increased purchases and installations of NextGenTM copiers ($2.3 million) and increased expenditures for other copiers ($1.2 million). Additional capital expenditures of $400,000 were for normal operating purposes. The Company currently anticipates capital expenditures of approximately $13 million during fiscal 1998. The Company intends to finance these capital expenditures with cash generated from operations and with bank borrowings under its existing line of credit. The Company expects that these sources will provide adequate cash to fund its expansion through at least June 30, 1998. Year 2000 Disclosure The Company is aware of, and currently evaluating its exposure related to potential year 2000 information systems problems. Generally, internal accounting and operating systems are either year 2000 compliant or will become compliant as part of a general information technology upgrade initiative (the "Initiative"), which is presently underway at the Company. The core components of the Initiative are anticipated to be completed by December 31, 1998. Total cost of the Initiative is -7- expected to be approximately $1.2 million, of which $300,000 has been expended through December 31, 1997. The Company has also determined that a portion of its telephone system will also require upgraded capability, at a cost of approximately $50,000. The Company is presently assessing the risk that major customers or suppliers may have year 2000 problems, which could impact the Company. The extent that such risk exists, if any, has not yet been determined. New Accounting Pronouncements In February 1997, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share." This Statement establishes a different method of computing net income per share than was previously required under the provisions of Accounting Principles Board Opinion No. 15. Under SFAS No. 128, the Company is required to present both basic net income per share and diluted net income per share. The Company adopted SFAS No. 128 in the second fiscal quarter of 1998 and all historical net income per share data has been restated to conform to the provisions of this Statement. In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income," which established requirements for disclosure of comprehensive income. The objective of SFAS No. 130 is to report all changes in equity that result from transactions and economic events other than transactions with owners. Comprehensive income is the total of net income and all other non-owner changes in equity. SFAS No. 130 is effective for fiscal years beginning after December 15, 1997. Reclassification of earlier financial statements for comparative purposes is required. The Company is in the process of quantifying the effect of adoption of SFAS No.130. Forward Looking Statement 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: competitive factors, consumer demand for the Company's services, the Company's ability to execute its plans successfully, the impact of year 2000 issues, the risk that the NextGenTM copiers performance may vary significantly from expected results and from customer acceptance. Any forward-looking statements should be considered in light of these factors as well as risk factors and business conditions discussed in the Company's SEC Form 10-K for the year ended June 30, 1997. -8- PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibit 27 - Financial Data Schedule (b) Reports on Form 8-K. There were no reports filed on Form 8-K during the three months ended December 31, 1997. 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: February 17, 1998 By: /s/ PAUL M. BROWN ----------------- ------------------------------------- Paul M. Brown Secretary, Vice President, Finance and Chief Financial Officer -9- EX-27 2 EXHIBIT 27
5 1,000 6-MOS JUN-30-1998 DEC-31-1997 1974 0 7726 (166) 4995 16330 58307 (21992) 52691 6788 0 16894 0 0 0 52691 27661 27661 14988 24216 266 0 22 3157 1233 1924 0 0 0 1924 .28 .26
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