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UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





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Form 10-Q





QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE


SECURITIES EXCHANGE ACT OF 1934





For the
Quarter ended November 30, 2002





Commission File No. 0-10823





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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





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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


January 14, 2003:  5,828,458





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BCT INTERNATIONAL, INC.





INDEX





PAGE NUMBERPART I.

FINANCIAL INFORMATIONCONDENSED CONSOLIDATED BALANCE SHEETSNovember 30, 2002 and February 28, 2002

2CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSfor the three months ended November 30, 2002 and November 30, 2001 and the nine months ended November 30, 2002 and November 30, 2001

3CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITYfor the nine months ended November 30, 2002

4CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSfor the nine months ended November 30, 2002 and November 30, 2001

5Notes to Condensed Consolidated Financial Statements

6-7Managements Discussion and Analysis of Financial Condition and Results of Operations

8-9PART II.

OTHER INFORMATION AND SIGNATURESSignatures

10Certifications

11-12Exhibits

13-14






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PART I.    FINANCIAL STATEMENTS





BCT INTERNATIONAL, INC.


CONDENSED CONSOLIDATED BALANCE SHEETS


(UNAUDITED)


(000s omitted)





November 30, 2002


February 28, 2002ASSETSCurrent assets:Cash

$
4,805


$
4,819Accounts and notes receivable, net


2,386



2,889Inventory, net


2,697



1,887Assets held for sale, net


173



105Prepaid expenses and other current assets


326



154Deferred income taxes


419



419Total current assets


10,806



10,273Accounts and notes receivable, net


5,186



5,170Property and equipment at cost, net


963



435Deferred income taxes


1,001



970Deposits and other assets


43



24Trademark and other intangible assets, net


186



206$
18,185


$
17,078LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
789


$
432Notes payable


294



560Accrued liabilities


938



871Deferred revenue


125



125Total current liabilities


2,146



1,988Deferred revenue


214



334Notes payable


534



Total liabilities


2,894



2,322Stockholders equity:Common stock, $.04 par value, 25,000 shares authorized, 5,828 shares issued


233



233Paid in capital


12,605



12,605Retained earnings


4,025



3,49016,863



16,328Less: treasury stock, at cost, 707 shares


(1,572
)


(1,572
)Total stockholders equity


15,291



14,756Total liabilities and stockholders equity

$
18,185


$
17,078





See notes to condensed consolidated financial statements.




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BCT INTERNATIONAL, INC.


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


(UNAUDITED)


(000s omitted, except per share amounts)








Three Months Ended

Nine Months EndedNovember 30,

November 30,2002

2001

2002

2001Revenues:Royalties and franchise fees

$
1,273

$
1,230

$
3,894

$
3,844Paper and printing sales


2,935


2,912


9,080


9,297Company-owned franchise sales


452





528


Sales of franchises


1


67


3


89Interest and other


181


181


592


4934,842


4,390


14,097


13,723Expenses:Cost of paper and printing sales


2,536


2,546


7,822


8,073Cost of Company-owned franchise sales


100





119


Selling, general and administrative


1,947


1,305


5,102


4,545Depreciation and amortization


66


56


177


1704,649


3,907


13,220


12,788Income before provision forincome taxes


193


483


877


935Provision for income taxes


75


192


342


368Net income

$
118

$
291

$
535

$
567Earnings per share:Basic

$
0.02

$
0.06

$
0.10

$
0.11Diluted

$
0.02

$
0.06

$
0.10

$
0.11





See notes to condensed consolidated financial statements.




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BCT INTERNATIONAL, INC.


CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY


NINE MONTHS ENDED NOVEMBER 30, 2002


(UNAUDITED)


(000s omitted)








Common Stock





Less:Number of Shares

Par Value

Paid In Capital

Retained Earnings

Treasury Stock


TotalBalance February 28, 2002

5,828

$
233

$
12,605

$
3,490

$
(1,572
)

$
14,756Net income










535






535Balance November 30, 2002

5,828

$
233

$
12,605

$
4,025

$
(1,572
)

$
15,291








See notes to condensed consolidated financial
statements.




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BCT INTERNATIONAL, INC.


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


(UNAUDITED)


(000s omitted)





Nine months ended November
30,2002


2001Cash flows from operating activities:Net income

$
535


$
567Adjustments to reconcile net income to net cash provided by operating activities:Inventory provision


75



75Depreciation and amortization


177



170Provision for doubtful accounts


1,050



675Other adjustments






3Changes in operating assets and liabilities:Accounts and notes receivable


(660
)


1,212Inventory


(885
)


(138
)Assets held for sale


(68
)


Prepaid expenses and other assets


(191
)


(77
)Deferred income taxes


31



116Accounts payable and accrued liabilities


506



357Deferred revenue


(120
)


(231
)Net cash provided by operating activities


450



2,729Cash flows from investing activities:Capital expenditures


(124
)


(144
)Net cash (used in) investing activities


(124
)


(144
)Cash flows from financing activities:Principal payments on notes payable


(340
)


(64
)Exercise of options for common stock






8Net cash (used in) financing activities


(340
)


(56
)Net (decrease) increase in cash


(14
)


2,529Cash at beginning of period


4,819



1,799Cash at end of period

$
4,805


$
4,328





Noncash Activities:





In July 2002, the Company entered into a capital lease in the amouunt of $231 for the equipment acquired to operate the Company-owned franchise in San Carlos, California.





In September 2002, the Company acquired a 37.15% interest in the BCT Tampa franchise, in addition to the 19% interest already held by it. No
additional consideration was given in exchange for this acquisition.





See notes to condensed consolidated financial statements.




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BCT INTERNATIONAL, INC.


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(UNAUDITED)


(000s omitted,)





November 30, 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 November 30, 2002.
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




|2. |  | The results for the three and nine month periods ended November 30, 2002 and 2001, are not necessarily indicative of results that may be expected for the fiscal
year.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------




|3. |  | For the three and nine months ended November 30, 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 and nine months ended November 30, 2002 and 2001, the number of shares used for both the basic and diluted earnings per share calculations were
5,121 and 5,123 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 options and 1,093 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. |  | On September 19, 2002, the Company exercised its option to acquire an additional 37.15% interest in TBDS, Inc., the BCT franchise in Tampa, Florida. After
exercising its option, the Company owns 56.15% of TBDS, Inc. Under the option agreement, as a result of the poor performance of the franchise, no further consideration was given for the additional ownership interest . The Company intends to operate
the BCT Tampa franchise as a Company-owned franchise. The results of operations of TBDS, Inc. since September 19, 2002, income of $1, are included in the condensed consolidated statement of operations.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




|6. |  | The Company has four reporting segments (1) Franchisor Operations, (2) Pelican Paper Products, (3) Company-owned franchises and (4) Other Operations (consisting
primarily of interest income and internet software fees). 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 nine months
ended November 30:
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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BCT INTERNATIONAL, INC.


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Continued


(UNAUDITED) (000s omitted)


November 30, 2002





Franchiser


Pelican Paper

Company owned Franchises


Other

TotalFor the Three Months Ended November 30,2002Revenues

$
1,274


$
2,935

$
452


$
181

$
4,842Cost of sales






2,536


100






2,636Operating expenses


1,404



152


457






2,013Income (loss) before income taxes

$
(130
)

$
247

$
(105
)

$
181

$
193Depreciation and amortization

$
31


$
22

$
13


$


$
66Income tax (benefit) provision

$
(51
)

$
96

$
(41
)

$
71

$
75Capital expenditures

$
54


$


$
28


$


$
822001Revenues

$
1,297


$
2,912

$



$
181

$
4,390Cost of sales






2,546









2,546Operating expenses


1,215



146









1,361Income before income taxes

$
82


$
220

$



$
181

$
483Depreciation and amortization

$
31


$
25

$



$


$
56Income tax provision

$
31


$
89

$



$
72

$
192Capital expenditures

$
82


$
11

$



$


$
93





Franchiser


Pelican Paper

Company owned Franchises


Other

TotalFor the Nine Months Ended November 30,2002Revenues

$
3,897


$
9,080

$
528


$
592

$
14,097Cost of sales






7,822


119






7,941Operating expenses


4,255



461


563






5,279Income (loss) before income taxes

$
(358
)

$
797

$
(154
)

$
592

$
877Depreciation and amortization

$
93


$
71

$
13


$


$
177Income tax (benefit) provision

$
(140
)

$
311

$
(60
)

$
231

$
342Capital expenditures

$
80


$
16

$
286


$


$
3822001Revenues

$
3,933


$
9,297

$



$
493

$
13,723Cost of sales






8,073









8,073Operating expenses


4,283



432









4,715Income (loss) before income taxes

$
(350
)

$
792

$



$
493

$
935Depreciation and amortization

$
91


$
79

$



$


$
170Income tax (benefit) provision

$
(138
)

$
312

$



$
194

$
368Capital expenditures

$
126


$
18

$



$


$
144







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MANAGEMENTS DISCUSSION AND ANALYSIS OF


FINANCIAL CONDITION AND RESULTS OF OPERATIONS





November 30, 2002





Results of Operations





Total revenues increased $452,000, or 10%, for the three
months ended November 30, 2002 as compared to the corresponding period in the prior fiscal year. The increase in revenue is attributable primarily to increases in (i) Company-owned franchise sales ($452,000); (ii) paper and printing sales ($23,000,
or 1%) and (iii) royalty revenue ($43,000, or 3%). These increases were offset by a decrease in revenue from sales of franchises ($66,000 or 99%).





The increase in Company-owned franchise sales resulted from the opening of BCT San Carlos, California in July 2002 which succeeded the closing of BCT San Francisco, and the Company taking over majority ownership and operations of BCT
Tampa, Florida in September 2002.





In fiscal 2002, the Company recognized deferred revenue from the sale of a franchise in connection
with the payoff of the related note receivable. In addition, the Company reached agreement with the franchise in Buenos Aires, Argentina releasing each party of any future contractual obligations, which resulted in the recognition of revenue which
was previously deferred due to the uncertainty of related support costs associated with the revenue. The previous two factors resulted in higher revenue related to sales of franchise in the three and nine months ended November 30, 2001.





Total revenues increased $374,000, or 3%, for the nine months ended November 30, 2002, as compared to the corresponding period in the
prior fiscal year. The increase in revenue is attributable primarily to (i) the increase in Company-owned franchise sales of $528,000; (ii) an increase in royalty revenue ($50,000 or 1%) and (iii) an increase in interest and other revenue ($99,000
or 20%). These increases were offset by decreases in paper and printing sales ($217,000 or 2%) and revenue from the sales of franchises ($86,000 or 97%).





Cost of paper and printing sales as a percentage of paper and printing sales was 86.4% and 86.1%, respectively, for the three and nine months ended November 30, 2002, as compared to 87.4% and 86.8%, respectively, for the
corresponding periods in fiscal 2002. Although the percentage generally remains stable, it does fluctuate due to periodic changes in the revenue mix.





Selling and administrative expenses represented 40% and 36% of gross revenues for the three and nine months ended November 30, 2002 as compared to 30% and 33% for the corresponding periods in fiscal 2002. The year to date fiscal 2003
selling and administrative expense percentage was increased by the additional expenses associated with the Company-owned franchises ($457,000 and $563,000, respectively, for the three and nine months ended November 30, 2002). In addition the
Companys provision for bad debts increased $375,000 for the nine months ended November 30, 2002.





Liquidity and Capital
Resources





Cash resources decreased $14,000 during the nine months ended November 30, 2002. The Company made principal payments on
debt of $340,000 and capital expenditures of $124,000.





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. The Company has available a $2 million line of credit with a bank. No advances have been made on the line.




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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 LIBOR + 2.35%. No advances have been made on the line.





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 January 14, 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:





99.1

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.99.2

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 November 30, 2002.




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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:

January 14, 2003





William A.WilkersonWilliam A.Wilkerson Chairman, President & Chief Executive Officer





Date:

January 14, 2003





Michael R. HullMichael R. Hull Vice President & Chief Financial Officer
















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Certification of Chief Executive Officer





I, William Wilkerson, Chief Executive Officer of BCT International,
Inc., certify that:





| | (1) |  | I have reviewed this quarterly report on Form 10-Q of BCT International, Inc;
| | --- |  | -----------------------------------------------------------------------------




| | (2) |  | Based on my knowledge, this quarterly report dos not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make
the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the periods covered by this quarterly report; and
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




| | (3) |  | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this quarterly report.
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




January 14, 2003 Date





William A. WilkersonWilliam A. Wilkerson Chief Executive Officer










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Certification of Chief Financial Officer





I, Michael R. Hull, Chief Financial Officer of BCT International, Inc., certify that:





| | (1) |  | I have reviewed this quarterly report on Form 10-Q of BCT International, Inc;
| | --- |  | -----------------------------------------------------------------------------




| | (2) |  | Based on my knowledge, this quarterly report dos not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make
the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the periods covered by this quarterly report; and
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




| | (3) |  | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this quarterly report.
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




January 14, 2003 Date





Michael R. HullMichael R. Hull Chief Financial Officer







12