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 March 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
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TRM COPY CENTERS CORPORATION
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(Exact name of registrant as specified in its charter)
Oregon 93-0809419
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5208 N.E. 122nd Avenue
Portland, Oregon 97230
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(Address of principal executive offices) (Zip Code)
(503) 257-8766
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(Registrant's telephone number, including area code)
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(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
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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 MARCH 31, 1997
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Common Stock 6,924,928
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TRM COPY CENTERS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30, March 31,
1996 1997
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ASSETS
Current assets:
Cash and cash equivalents $ 873 $ 1,884
Accounts receivable, net 7,264 8,165
Inventories 5,253 5,040
Prepaid expenses and other 1,580 1,890
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Total current assets 14,970 16,979
Equipment and vehicles, less accumulated depreciation 39,172 38,177
Other assets 109 153
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$ 54,251 $ 55,309
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Checks in transit $ 938 $ 1,230
Accounts payable 1,799 1,519
Accrued expenses 3,373 4,094
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Total current liabilities 6,110 6,843
Long-term debt 8,128 3,500
Deferred income taxes 4,569 5,392
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Total liabilities 18,807 15,735
Commitments -- --
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 6,925 and 6,484 shares 16,214 16,469
Retained earnings 19,704 23,269
Cumulative translation adjustment (474) (164)
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Total stockholders' equity 35,444 39,574
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$ 54,251 $ 55,309
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TRM COPY CENTERS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three Months Ended Nine Months Ended
March 31, March 31,
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1996 1997 1996 1997
---- ---- ---- ----
Sales $17,394 $18,023 $49,838 $51,947
Less discounts 3,027 3,042 8,654 8,698
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Net sales 14,367 14,981 41,184 43,249
Cost of sales 7,708 7,574 22,474 22,609
------- ------- ------- -------
Gross profit 6,659 7,407 18,710 20,640
Selling, general and administrative
expense 4,504 4,870 12,928 14,013
------- ------- ------- -------
Operating income 2,155 2,537 5,782 6,627
Other expense:
Interest 230 78 779 344
Other, net 122 202 275 390
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Income before income taxes 1,803 2,257 4,728 5,893
Provision for income taxes 726 892 1,897 2,328
------- ------- ------- -------
Net income $ 1,077 $ 1,365 $ 2,831 $ 3,565
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Net income per share $ 0.15 $ 0.19 $ 0.39 $ 0.49
======= ======= ======= =======
Weighted average common and
common equivalent shares
outstanding 7,317 7,329 7,234 7,333
======= ======= ======= =======
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TRM COPY CENTERS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands)
Cumulative
Common Stock Retained Translation
Shares Amount Earnings Adjustment Total
------ ------- -------- ---------- -------
Balance at June 30, 1996 6,484 $16,214 $19,704 $ (474) $35,444
Exercise of stock options 435 201 -- -- 201
Issuance to employees 6 54 54
Net income for the
nine months ended
March 31, 1997 -- -- 3,565 -- 3,565
Foreign currency translation
adjustment -- -- -- 310 310
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Balances at March 31, 1997 6,925 $16,469 $23,269 $ (164) $39,574
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TRM COPY CENTERS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Nine Months Ended
March 31,
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1996 1997
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Operating activities:
Net income $ 2,831 $ 3,565
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 3,884 4,367
Loss on disposal of equipment
and vehicles 39 81
Changes in items affecting operations:
Accounts receivable (990) (901)
Inventories 1,296 213
Prepaid expenses and other 231 (310)
Accounts payable (310) (280)
Accrued expenses (4) 721
Deferred income tax 664 823
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Total operating activities 7,641 8,279
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Investing activities:
Proceeds from sale of equipment 80 266
Capital expenditures (4,355) (3,452)
Other 31 (44)
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Total investing activities (4,244) (3,230)
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Financing activities:
Change in checks in transit, net (306) 292
Principal payments on long-term debt (10,150) (4,628)
Proceeds from long-term debt 6,465 --
Net proceeds from issuance of common stock 130 255
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Total financing activities (3,861) (4,081)
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Effect of exchange rate changes 224 43
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Net increase (decrease) in cash and
cash equivalents (240) 1,011
Cash and cash equivalents at beginning
of period 755 873
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Cash and cash equivalents at end of period $ 515 $ 1,884
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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:
Net income per share is computed based on the weighted average number of
shares of common stock and common stock equivalents assumed to be
outstanding during the periods. Common stock equivalents consist of options
to purchase stock (using the treasury stock method).
3. Inventories (in thousands):
June 30, March 31,
1996 1997
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Paper $1,505 $1,470
Toner and developer 828 738
Parts 2,920 2,832
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$5,253 $5,040
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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
56 to 66 from June 30, 1995 to June 30, 1996. The number of TRM Centers grew
from 28,995 to 31,719 over the same period. This expansion has continued into
the first nine months of fiscal 1997 with the opening of six new market areas
and 1,766 TRM Centers. As of March 31, 1997, the Company had 72 market areas
with 33,485 TRM Centers.
Results of Operations
Sales for the third quarter were $18.0 million, up 3.6% from third quarter
sales of the previous year of $17.4 million. This growth is due to increased
numbers of installed units during the quarter offset by decreased average sales
per unit. The growth in the number of installed units reflects expansion in both
existing and recently opened service areas.
Sales discounts are the portion of revenue retained by customers. Sales
discounts as a percentage of sales continue to decline, from 17.4% to 16.9% in
the comparable quarters. This reflects changes made in business agreements with
new customers. The discount rate generally varies between individual retail
businesses based on volume.
Cost of sales decreased 1.7% compared to the prior quarter, despite an
increase in sales. This is due to lower paper and toner usage under the
Company's higher copy price programs and because of lower paper costs worldwide.
Selling, general and administrative costs grew by 8.1% to $4.9 million in
the third quarter. This is due to an increase in health care costs, vehicle
fleet costs and European collections costs.
Interest costs are incurred because the Company uses bank borrowings to
help fund its expansion. The decrease in interest costs is primarily due to
lower debt levels, which decreased from $10.6 million as of March 31, 1996, to
$3.5 million as of March 31, 1997.
Liquidity and Capital Resources
During the nine months ended March 31, 1997, cash flow from operations
fully funded capital expenditures of $3.5 million and allowed for repayment of
$4.6 million in bank borrowings.
The Company currently anticipates capital expenditures of approximately $8
to $10 million over the next twelve months. The Company intends to finance these
capital expenditures with cash generated from operations and with bank
borrowings. The Company expects that these sources will provide adequate cash to
fund its expansion through at least June 30, 1997.
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:
business conditions in the market areas in which the Company operates,
competitive factors, customer demand for the Company's services, the Company's
ability to execute its plans successfully and the volatility of paper costs. Any
forward-looking statements should be considered in light of these factors.
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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 March 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: March 15, 1997 By: /s/ ROBERT A. BRUCE
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Robert A. Bruce
Secretary, Vice President, Finance and
Chief Financial Officer
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