SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

AMENDMENT NO. 2

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended February 28, 2003

Commission file no. 0-10823

BCT INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

DELAWARE

22-2358849

(State or other jurisdiction

of incorporation of organization)

(I.R.S. Employer

Identification No.)

3000 NE 30th Place, Fifth Floor, Fort Lauderdale, Florida 33306

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (954) 563-1224

Securities registered pursuant to Section 12(b) of the Act:

NONE

Securities registered pursuant to Section 12(g) of the Act:

COMMON STOCK, par value $.04 per share

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 by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes ¨ No x

The aggregate market value of Registrant’s voting stock held by non-affiliates of the Registrant, at May 27, 2003 was approximately $2,136,000.

The number of shares outstanding of Registrant’s Common Stock, par value $.04 per share, at May 27, 2003 was 5,121,471.

DOCUMENTS INCORPORATED BY REFERENCE

NONE

EXPLANATORY NOTE

This Report on Form 10-K/A amends and revises the following items of the Annual Report on Form 10-K and Form 10-K/A Amendment 1 of BCT International, Inc. for the fiscal year ended February 28, 2003. The purpose of this amendment is to incorporate comments received from the Corporate Finance Division of the Securities and Exchange Commission in connection with their review of the preliminary Proxy Statement Form PRER14A filed by the registrant on June 17, 2003.

Item 1. is revised such that Item 1. reads as follows:

Item 1.

Business

(a)

General

BCT International, Inc. (the “Company”) is a holding company with one direct wholly-owned subsidiary: Business Cards Tomorrow, Inc., a Florida corporation (“BCT”). BCT operates the Business Cards Tomorrow franchise system. Since its founding in 1975, the system has grown to include 82 “Business Cards Tomorrow Franchises” (the “Franchises”) specializing in thermography products, labels, rubber stamps and business announcements for resale by retail printing providers in 36 states and Canada.

The Company adopted a plan effective February 28, 1999 for the disposition of all Company owned Franchises. Under the plan, the Company intended to sell the three Company owned Franchises in fiscal 2000. All but the franchise located in Merrimack, New Hampshire were sold in fiscal 2000. In October 2000, the Company sold the Merrimack, New Hampshire franchise in exchange for a $150,000 promissory note. In January 2001, as a result of the purchaser’s default on its obligations to the Company, the Company took back the franchise, ceased operations of the franchise and liquidated the assets.

In fiscal 2003, the Company began operating a Company owned franchise in San Carlos, California. This franchise replaced a franchise in San Francisco, whose franchise agreement was terminated. In addition, 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. and has taken over operation of the franchise.

BCT’s operations also include the Pelican Paper Products Division (“PPP”) which supplies paper products, press supplies and press parts to the BCT Franchises. The Company operates in three operating segments of a single industry. The segments include 1) operations as a franchisor of printing franchises, 2) sale of paper products and supplies to the BCT Franchises, and 3) other operations.

On May 28, 2003, the Company’s Board of Directors approved a definitive merger agreement pursuant to which the Company agreed to be acquired by Phoenix Group of Florida, Inc. (“Phoenix”) which is owned by William A. Wilkerson, the Company’s Chairman and Chief Executive Officer. Phoenix, together with its affiliates, including Mr. Wilkerson (the “Acquisition Group”), owns approximately 52.5% of the Company’s issued and outstanding common

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stock. Under the merger agreement each stockholder, other than the members of the Acquisition Group, will receive in cash $2.00 per share of common stock owned.

The Company entered into the merger agreement following Board of Directors approval based in part upon the unanimous recommendation of a special committee comprised of non-management directors of the Company. The special committee has received an opinion from Capitalink, L.C. that the price of $2.00 per share is fair from a financial point of view to the stockholders other than the Acquisition Group.

Notwithstanding its recommendation and consistent with the terms of the merger agreement, if the special committee concludes that the failure to provide information to, or engage in discussions with any other parties interested in a possible acquisition of the Company, would be inconsistent with its fiduciary duties to the Company’s stockholders, the special committee may provide information to, and engage in discussions and negotiations with such interested parties. Under specified circumstances, the Company has the right to terminate the merger agreement and to enter into an agreement with a party proposing a competing transaction.

Completion of the transaction is subject to customary closing conditions, including stockholder approval. In addition, the merger agreement requires approval by the holders of a majority of the Company’s shares held by persons other than members of the Acquisition Group The merger agreement does not include a financing contingency. See Certain Relationships and Related Transactions

(b)

Narrative description of the business

Business Cards Tomorrow, Inc.

General

The Franchises typically operate through the placement of business card, stationery, rubber stamp and labels catalogs with commercial and retail “quick” printers, office superstores, forms brokers, office supply companies and stationers in the Franchises’ trade areas (collectively, the “Dealers”). The Dealers secure orders from their customers for thermographed printed products and other printed matter which are normally picked up daily by the Franchises’ route drivers, who also deliver products previously ordered. Thermography is a specialized printing process that gives a raised printing effect similar to engraving and requires specialized equipment and operating techniques which commercial printers, quick printers, office superstores and other retail dealers choose not to invest in. The Franchises specialize in the “fast turnaround” of their products, delivering many items, such as business cards, in one business day, with most products being delivered within two days of the date of order. Increasingly, the Franchises receive orders by fax and electronic communications via the Internet using Orderprinting.com^™, an Internet-based ordering system.

In January 1999, the Company introduced Orderprinting.com^™ which is targeted toward the print broker market. Orderprinting.com^™ consists of a custom web-based ordering system which allows end users to log-in to a personalized Internet site which has the end user company’s business card and business stationery product layouts. The end user selects the product and layout desired and enters the required employee and location information, previews the finished stationery product on-line and approves the order for processing. The order is transmitted electronically to the BCT Franchise that will process the order. In addition, the print broker associated with the end user is notified of the order via e-mail.

BCT supplies business stationery and rubber stamp and label catalogs to its Franchises and also sells them paper products featured in the catalogs through PPP. The catalogs are printed at the Company’s catalog printing facility which is located in the Company’s warehouse and paper conversion facility in Menasha, Wisconsin.

PPP is a primary supplier of paper products for the BCT Franchises. PPP purchases raw paper directly from

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paper mills and paper brokers and utilizes the services of converters to convert the raw material to finished paper products. In addition, certain conversion functions are performed “in house”. PPP also performs converting and handling services for third parties. PPP utilizes three public storage facilities located strategically throughout the United States to house and ship out paper products to the Franchises.

BCT derives revenues from six principal sources: (i) royalties, which are based on a percentage of sales from the BCT Franchises; (ii) resale fees from the resale of operating Franchises; (iii) sales of paper products to franchisees; (iv) catalog and miscellaneous equipment and parts sales classified as printing sales; (v) interest income from financing franchise acquisitions (primarily resales) and receivables; and (vi) software licensing fees related to Orderprinting.com.

As of May 27, 2003, 82 BCT Franchises are in operation in 36 states and Canada (eight Franchises). In addition, one Company-owned BCT Satellite is in operation in Fort Myers, Florida. In August 2001, the Company reached agreement with the Franchise located in Buenos Aires, Argentina. Under the agreement, both parties released the other party from any further obligation under the then existing Franchise Agreement The current number of Franchises compares with 82 and 84 Franchises in operation on May 22, 2002 and May 25, 2001, respectively. The decrease in the number of franchises in fiscal 2002 is the result of the closing of one Franchise location and the agreement with the Buenos Aires Franchise described above.

BCT receives either a 5% or 6% royalty fee based on gross franchisee sales for original 15-25 year contracts. The royalty fee is dependent on the initial franchise agreement date. Generally, agreements dated through mid-1986 carry 5% royalties. Thereafter, the 6% royalty applies. Certain Franchises were granted a sliding scale of decreasing royalty rates based upon meeting specified quarterly sales plateaus in connection with the renewal of their franchise agreement. No franchise agreements are up for renewal in fiscal 2004. For fiscal years ended 2003, 2002, and 2001, continuing franchise royalties comprised approximately 27%, 30% and 28% of total revenue, respectively. PPP sales to the franchisees for fiscal years ended 2003, 2002, and 2001 were approximately 63%, 70%, and 72%, of total revenue, respectively.

Raw Materials

The primary raw materials of the BCT Franchises are paper products which are readily available from numerous industry suppliers. It is common practice within the paper industry to place minimum order levels when ordering specific materials. In addition, the need to maintain a complete stock of raw materials for all items listed in BCT’s catalogs requires significant continuing inventory investment. While BCT, through PPP, sells paper products to its Franchises, the Franchises are under no obligation to purchase these products from BCT and all such products are available from other suppliers.

The paper industry does suffer periodic shortages of specific paper products as well as price fluctuations caused by supply and demand changes, but these shortages and price fluctuations typically affect all similar types of printers in an industry such as similar products. Any increases in the cost of paper from the mills is generally passed on to the Franchises. It is not considered by BCT as very likely that any of its Franchises would be out of operation for any significant period of time due to an unavailability of raw materials resulting from major supply or price changes in the paper industry.

Franchises

BCT’s franchise agreements with individual Franchises are typically for a 15-to-25 year period and are renewable for additional 10-year periods. The right to renew is contingent upon the Franchise not being in default under any material term of the franchise agreement. BCT may terminate a franchise agreement under certain circumstances where

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the Franchisee is in material default under the franchise agreement and has not cured such default(s) after notice from BCT. BCT’s existing franchise agreements with individual Franchises have an average remaining term of approximately 15 years. No Franchises come up for renewal in fiscal 2004, and in the subsequent 10 years, 16 Franchises come up for renewal.

In April 2003, the Company opened a Satellite to its Company-owned Tampa, Florida franchise in Ft. Myers, Florida. The Satellite consists of a storefront location which performs the customer service, typesetting and delivery function of a BCT without the production capabilities. Production for Ft. Myers is done in Tampa. The Company is exploring this concept as a means to better penetrate smaller franchise territories and as an alternative to a full production plant start-up. Production for other Satellite locations would be done by either a Company-owned Franchise or if a Satellite territory is purchased by an existing BCT Franchise, that Franchise would perform production.

Competition

The Company and its franchisees compete with other franchisors, franchisees and independent operators in the graphic arts industry. While the Company believes that its BCT franchise system is the leading supplier of thermographed business cards to printers throughout the United States, there can be no assurance that competitors will not imitate or improve upon the Company’s business strategy. BCT’s major national competitors are Regency Thermographers, Carlson Craft, and American Wholesale Thermographers, Inc.; however, BCT’s franchisees also compete with numerous local and regional operations. BCT’s franchisees compete primarily on the basis of turnaround time, quality and close customer contact and, more recently with Orderprinting.com^™ Internet technology.

Trade and Service Marks

The Company has received federal registration of the names “Business Cards Tomorrow”, “BCT International, Inc.”, “Orderprinting.com” and the BCT commercial logo, as well as the names and commercial marks for “Typesetting Express”, “Engraving Tomorrow”, “Thrift-T-Cards”, “Thermo-Rite” and “Rubber Stamps Tomorrow”.

Research and Development

The Company performs ongoing research and development, seeking improvements in the operating procedures and products of its Franchises and development of proprietary software. These activities are primarily done at the Company’s corporate headquarters. Also, the Company often requests individual franchisees to perform tests of various equipment, materials or techniques in an actual production environment. The Company has invested in excess of $1.5 million in the research and development of Orderprinting.com^™, an Internet-based order entry and distribution system. Additional investment, anticipated to be approximately $300,000 annually, will be required to enhance the system and to provide for the increasing volume of orders being processed in this manner.

Government Regulation

The Federal Trade Commission has adopted rules relating to the sales of franchises and disclosure requirements to potential franchise purchasers. Additionally, various states have adopted laws regulating franchise sales and operations. As a franchisor, the Company is required to comply with these federal and state regulations and believes that it is not operating in violation of any of these regulations. The annual cost of compliance with all state and federal regulations is approximately $170,000.

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Employees

As of May 27, 2003, the Company has 42 employees, all of whom are located at either (i) the Company’s corporate headquarters in Fort Lauderdale, Florida, or (ii) the Company’s paper distribution warehouse and paper converting facility in Menasha, Wisconsin, none of whom are subject to collective bargaining agreements.

Financial Information Relating to Foreign and Domestic Operations

	February 28, 2003		February 28, 2002		February 28, 2001
Revenue:
Foreign operations	$	659,000	$	576,000	$	811,000
Domestic operations	$	18,387,000	$	16,708,000	$	17,926,000
Operating Profit:
Foreign operations	$	56,000	$	26,000	$	454,000
Domestic operations (1)	$	1,220,000	$	787,000	$	1,092,000
Identifiable Assets:
Foreign operations	$	285,000	$	299,000	$	309,000
Domestic operations	$	17,530,000	$	16,779,000	$	15,881,000

(1)

Amounts do not include losses from discontinued operations amounting to $31,000 for the fiscal year ended February 28, 2001.

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Page 6, Item 6, is revised to the following disclosure:

Item 6.

Selected Financial Data (000’s omitted, except per share data)

OPERATIONS for the fiscal year ended:	Feb. 28, 2003		Feb. 28, 2002		Feb. 28, 2001			Feb. 29, 2000			Feb. 28, 1999
REVENUES:
Royalties and franchise fees	$	5,221	$	5,117	$	5,267		$	5,394		$	5,356
Paper and printing sales		12,019		12,068		13,424			13,881			12,817
Sales of franchises		4		99		46			27			87
Company-owned franchise revenues		1,802		—		—			—			—

		19,046		17,284		18,737			19,302			18,260

EXPENSES:
Cost of paper and printing sales		10,410		10,592		11,605			11,574			10,939
Cost of Company-owned franchise revenues		448		—		—			—			—
Selling, general and administrative		7,403		6,376		6,455			6,619			4,290
Depreciation and amortization		278		226		232			189			186

		18,539		17,194		18,292			18,382			15,415

		507		90		445			920			2,845
Interest and other income		769		723		692			347			347
Legal settlement		—		—		—			941			—

Income from continued operations before income taxes		1,276		813		1,137			2,208			3,191
Income tax provision		491		321		442			837			690

Income from continued operations		785		492		695			1,371			2,501
Discontinued operations (2):
Loss from Company owned Franchises operated under a plan of disposition, net of income tax benefit		—		—		(31	)		(357	)		(327	)

Net income	$	785	$	492	$	664		$	1,014		$	2,174

Earnings (loss) per common share:
Income from continued operations	$	.15	$	.10	$	.13		$	.26		$	.47
Loss from discontinued operations		—		—		(.01	)		(.07	)		(.06	)

Basic	$	.15	$	.10	$	.13		$	.19		$	.41

Income from continued operations	$	.15	$	.10	$	.13		$	.25		$	.45
Loss from discontinued operations		—		—		(.01	)		(.06	)		(.06	)

Diluted	$	.15	$	.10	$	.13		$	.19		$	.39

Total assets	$	17,835	$	17,078	$	16,190		$	17,321		$	15,235
Long-term debt	$	410	$	—	$	236		$	330		$	433
Preferred stock	$	—	$	—	$	—		$	—		$	60
Working capital	$	9,402	$	8,285	$	6,921		$	5,666		$	6,424
Stockholders’ equity (1)	$	15,541	$	14,756	$	14,284		$	13,756		$	12,892

(1)

During the five fiscal years ended February 28, 2003, no cash dividends have been declared on the Common Stock outstanding.

(2)

Discontinued operations are discussed in Note 2 to the Consolidated Financial Statements.

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Item 7 is revised to read as follows:

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Critical Accounting Policies

Our critical accounting policies are those which we believe require the most subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. A discussion of our critical accounting policies, the underlying judgments and uncertainties affecting their application and the likelihood that materially different amounts would be reported under different conditions or using different assumptions, is as follows:

Royalty Revenue

Royalty revenue is recorded based upon reports received from Franchises. Each month, an accrual is made for each Franchise for unreported sales. This accrual is calculated by taking the number of unreported weeks for each Franchise multiplied by the average of the previous six reported weeks’ sales for that Franchise. The risk exists that actual sales for the unreported weeks may materially differ from the average used to calculate the accrual. For the fiscal years 2003, 2002 and 2001 the end of year accruals for unreported royalties approximated $288,000, $286,000 and $398,000, respectively.

In addition, the Company evaluates the collectibility of royalties. When the Company determines, through payment history, knowledge of weak financial condition or other factors, that collectibility of royalties from a particular Franchise is doubtful, the Company ceases accruing royalties for the franchise until the Franchise is transitioned to new ownership or until payments become current. At the end of fiscal 2003, 2002 and 2001 the Company was not accruing royalties for two franchises. The Company has an active program to assist in remarketing franchises that are not meeting the expectations of the owner(s) or the Company.

Certain franchises are eligible for a rebate of royalties paid based upon meeting specific contractually established sales levels and other financial performance requirements. The Company records an accrual each month for estimated royalty rebates. There is a risk that actual results may vary from the amounts accrued due to variances in sales levels and or failure by the Franchise to meet financial performance requirements.

Allowance for Doubtful Accounts

The Company records an allowance for doubtful accounts when it is determined that the amount a Franchise owes the Company approaches the estimated value of the Franchise. In addition, provision is made when, in management’s judgment, there is significant risk that a Franchise will not be able to meet its obligations as they become due. There is a risk that the value, estimated by the Company, may vary materially from the actual value of the Franchise or that factors beyond the control of the Company may result in a Franchise ceasing operations unexpectedly, thus significantly decreasing the value of the Franchise.

Line of Credit Guarantee

In August 2001, the board of directors of the Company approved a guaranty of a $2 million bank line of credit for Phoenix Group of Florida, Inc., (Phoenix) a company owned by the Chairman, Chief Executive Officer and President (the

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Chairman) of the Company. This guarantee has been treated as a commitment and as such the possible liability of the Company is not reflected in the balance sheet of the Company. Phoenix is a Company formed to acquire shares of the Company’s common stock in anticipation of a going private transaction via a merger between the Company and Phoenix. As such, the primary asset of Phoenix consists of the common stock of the Company. The Company periodically evaluates the ability of Phoenix to meet its obligations under the line of credit agreement.

Fiscal 2003 Compared to Fiscal 2002

Total revenue for fiscal 2003 increased $1,762,000 or 10.2%. Royalties increased $104,000 or 2%. Paper and printing sales decreased $49,000 or 0.4%. Revenues of Company-owned franchises increased $1,802,000 or 100%. Revenues from sales of franchise decreased $95,000 or 96%.

Royalties increased from an increase in sales of the BCT network of franchises. Network sales increased $3,000,000 or 2.9% in fiscal 2003. The resulting increase in royalties was impacted by the acquisition of two Company-owned franchises in fiscal 2003. The Company does not recognize royalty revenue from Company-owned franchises.

Paper and printing sales decreased primarily as a result of a decline in sales of label stock which resulted from the introduction of a new label catalog produced in conjunction with a new “outsource’ program in July 2002. Previously, certain franchises had produced labels in-house with Pelican Paper providing the label stock. Outsourcing requires a much lower initial investment by franchises.

Interest and other income increased as a result of an increase in the annual calendar year license fee for Orderprinting.com from $4,200 to $6,000 in January 2002. The increase in licensing fees was partially offset by a decrease in interest income which resulted from a decline in rates for overnight funds and the general maturity of the notes receivable portfolio.

Revenue from sales of franchises was lower in fiscal 2003 as there were no new sales or resales of franchises.

Cost of paper and printing sales as a percentage of paper and printing sales was 87%, 88% and 86%, respectively, for fiscal 2003, 2002 and 2001. Fluctuations in this percentage result primarily from changes in the sales mix. In addition, the Company recorded a reserve for obsolete inventory of $100,000 in fiscal 2003 ($175,000 and $30,000, respectively, in fiscal 2002 and 2001) relating to label catalog raw material and finished product and inventories of label stock, all made obsolete by the introduction of the new outsource label program.

Selling, general and administrative expenses represented 39%, 37% and 34% of total revenue, respectively, for fiscal 2003, 2002 and 2001. The increase in the fiscal 2003 percentage is primarily the result of the acquisition of two Company-owned franchises in fiscal 2003. During fiscal 2003, bad debt expense increased $180,000 or 13.8%. Selling, general and administrative expenses for BCT Tampa and BCT San Carlos amounted to $503,000 and $492,000, respectively. These increases were partially offset by a decrease in salaries and employee benefits of $430,000 or 13.5%, a decrease in research and development costs of $114,000 or 43% and a decrease in legal costs of $31,000 or 11%. Salaries and employee benefits were higher in fiscal 2002 as result of severance paid to the prior President and CEO and three other employees amounting to approximately $407,000. The higher legal costs in fiscal 2002 were primarily the result of the proposed merger of the Company with Phoenix Group of Florida, Inc. See Item 13. “Certain Relationships and Related Transactions.”

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Fiscal 2002 Compared to Fiscal 2001

Total revenues for fiscal 2002 decreased $1,453,000, or 8%. Royalties decreased $150,000 or 3%. Paper and printing sales decreased $1,356,000 or 10%. These decreases were partially offset by an increase in revenue from sales of franchises of $53,000 or 115%.

Royalties decreased due to lower network sales which resulted from the loss of a national account in Canada at the end of fiscal 2001 and the failure of 3 franchises in the 3^rd and 4^th quarters of fiscal 2001. Paper and printing sales decreased in fiscal 2002 due to the decrease in network sales and due to strict enforcement of payment terms.

The Company recognized deferred revenue from the sale of a franchise in connection with the payoff of the related note receivable in November 2001. In addition, the Company reached agreement with the franchise in Buenos Aires, Argentina releasing each party of any further 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. These factors resulted in higher revenue from sales of franchises in fiscal 2002.

Interest and other income increased due to an increase in fees charged to Franchises for use of Orderprinting.com. Franchises pay an annual license fee each calendar year. In 2001, the annual fee was $4,200 compared to $6,000 beginning in January 2002. In addition, interest income increased $27,000 or 7%.

Cost of paper and printing sales as a percentage of paper and printing sales was 88%, 86% and 83%, respectively, for fiscal 2002, 2001 and 2000. Fluctuations in this percentage result primarily from changes in the sales mix. In addition, the Company recorded a reserve for obsolete inventory of $175,000 in fiscal 2002 ($30,000 and $76,000, respectively, in fiscal 2001 and 2000) relating to label catalog raw material and finished product and inventories of label stock, all made obsolete by the introduction of a new outsource label program.

Selling, general and administrative expenses represented 37%, 34% and 34% of total revenue, respectively for fiscal 2002, 2001 and 2000. The increase in the fiscal 2002 percentage is primarily the result of the decrease in total revenues in fiscal 2002. During fiscal 2002, expenses for research and development decreased $403,000 or 60% as the Company migrated from the use of outside programmers to an in-house programmer. In addition, bad debt expense decreased $152,000 or 10% and travel expense decreased by $81,000 or 45%. These decreases were offset by increases in (i) salaries and employee benefits of $307,000 or 11% which resulted from severance paid to the prior President and CEO and three other employees amounting to approximately $407,000 and (ii) an increase in legal and professional fees of $313,000 or 133%, primarily the result of the proposed merger of the Company with Phoenix Group of Florida, Inc. See Item 13. “Certain Relationships and Related Transactions.”

Liquidity and Capital Resources

The Company generated cash from continuing operations of $291,000 during the fiscal year ended February 28, 2003. The Company employed the cash generated to make capital expenditures of approximately $197,000, to increase inventory by $948,000 in anticipation of better margins and to make principal payments on debt of $614,000. The Company’s cash decreased $543,000 in fiscal 2003.

Included in cash are amounts received from national accounts on behalf of Franchises which are remitted to the Franchises weekly. The balance to be remitted amounted to $526,000 and $279,000 at February 28, 2003 and 2002, respectively.

The Company believes that internally generated funds will be sufficient to satisfy its working capital and capital expenditure requirements for the foreseeable future; however, there can be no assurance that external financing will not be

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needed. During fiscal 2003, the Company renewed a one year renewable $2 million line of credit with Bank of America, N.A., bearing interest of LIBOR + 235 basis points and secured by substantially all the assets of the Company. No advances have been made on the line as of May 27, 2003.

It is the Company’s intention to reinvest cash generated from operations into financial assistance to the network in order to encourage replacement of outdated equipment and investment in new software and equipment to bring new products to the marketplace. Further, the Company will increase certain minimum order quantities from its paper suppliers in order to entice better pricing resulting in somewhat higher inventory levels in the future. In addition, as the volume of orders processed on Orderprinting.com continues to increase, significant future investment will be necessary to provide additional functionality and to support the increasing volume of transactions. Finally, the Company intends to retire its outstanding debt in fiscal 2003 which will reduce interest expense approximately $21,000.

At February 28, 2003, the Company has future obligations of the following:

Fiscal Year	Operating Leases		Long Term Debt		Total
2004	$	379	$	113	$	492
2005		348		322		670
2006		228		88		316
2007		230		—		230
2008		164		—		164

Totals	$	1,349	$	523	$	1,872

In August 2001, in connection with the $2 million bank loan to Phoenix (the “Loan”), the Company entered into an agreement with Phoenix and the Chairman providing the following conditions to the guarantee of the loan by the Company and its subsidiary BCT (which included a pledge of substantially all of the assets of the Company and BCT to secure the Loan): (i) the last year of the Chairman’s employment agreement with the Company was eliminated, so that the agreement would terminate on February 28, 2002; (ii) the Chairman and Phoenix, jointly and severally, agreed to (A) grant the Company an assignable one-year option to repurchase all of the shares of the Company’s common stock bought with the borrowed funds at the same price paid by Phoenix and (B) pay the Company’s expenses incurred in connection with the transaction, unless (1) the Chairman and/or Phoenix made an offer on or before September 30, 2001, to purchase for cash all of the Company’s shares held by public shareholders, and providing for a closing of that transaction on or before April 15, 2002 and (2) such transaction closes on terms deemed “fair” to the Company and its shareholders by the Special Committee, consisting of non-management directors of the Company; and (iii) the Company and Phoenix, jointly and severally, agreed to immediately reimburse the Company for all payments made pursuant to the corporate guaranty. As collateral for their reimbursement obligations, the Chairman and Phoenix granted the Company a first priority security interest in any and all shares of the Company’s common stock which Phoenix purchased with the borrowed funds and a subordinated security interest in the shares of the Company’s common stock already owned by Phoenix and pledged to the bank.

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Selected Quarterly Financial Data

Quarterly financial results were as follows: (000’s omitted, except per share data)

	Quarters Ended
	May 31			Aug. 31			Nov. 30			Feb. 28
Fiscal 2003
Revenues	$	4,663	(b)	$	4,234	(b)	$	4,644	(b)	$	4,739	(b)
Operating income		486			198			193			399

Net income	$	302		$	115		$	118		$	250

Earnings per share:
Basic	$	0.06		$	0.02		$	0.02		$	0.05

Diluted	$	0.06		$	0.02		$	0.02		$	0.05

Fiscal 2002
Revenues	$	4,602		$	4,398		$	4,162		$	4,122
Operating income (loss)		110			342			483			(122	)

Net income (loss)	$	67		$	209		$	291		$	(75	) (a)

Earnings per share:
Basic	$	0.01		$	0.04		$	0.06		$	(0.01	)

Diluted	$	0.01		$	0.04		$	0.06		$	(0.01	)

(a)

The 4^th quarter loss was attributable to additional bad debt expense due to the unanticipated seizure of a franchise in January 2002.

(b)

Quarterly revenues do not include the revenues of the 50% Company-owned Hawaii franchise whose results are reflected net above, but are consolidated elsewhere in this document for fiscal 2003.

Forward-Looking Information

Certain information contained in this annual 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. 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.

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Item 13. is revised to read as follows:

Item 13. Certain Relationships and Related Transactions

In February 1996, a company of which Mr. Wilkerson, the Chairman of the Board and Chief Executive Officer, was a 50% shareholder, purchased the Honolulu, Hawaii franchise (the “Hawaii Franchise”) for a total purchase price of $400,000 plus accounts receivable and inventory. The other shareholder was Val Antrim, joined by his wife Rosemary, the franchisee of the BCT plant in Addison, Illinois. The purchase price was payable pursuant to a $325,000 promissory note, representing an assumption of the prior franchisee’s debt to the Company and a $108,000 promissory note representing the value of the inventory and accounts receivable acquired. The $325,000 note bore interest at 8% per year and required equal monthly payments of principal and interest for 10 years based on a 15-year amortization, with a balloon payment due at the end of 10 years. The $108,000 note bore interest at 8% per year and was payable in five years pursuant to equal monthly payments of principal and interest. During fiscal 1997, the Company advanced an additional $65,000 to the Hawaii Franchise in exchange for three promissory notes due February 28, 1997 bearing interest of 8% (the “$65,000 notes”). The Hawaii Franchise notes were secured by pledges of substantially all of the assets of the Hawaii Franchise, as well as the joint and several personal guarantees of the shareholders.

In fiscal 1999, the Company advanced $167,000 to the owners of the Hawaii Franchise. Reserves were recorded by the Company on the accounts and notes receivable relating to the Hawaii Franchise. In May 2000, in order to further secure his obligations to the Company in connection with the Hawaii Franchise, Mr. Wilkerson pledged 100,000 shares of the Company’s Common Stock as collateral for those obligations.

As of May 2001, the Hawaii Franchise was 57 months behind on payments under the $325,000 note and 57 months behind on payments under the $108,000 note. Not payments had been made on the $65,000 notes. Further, the Hawaii Franchise’s debt to the Company for paper purchases, royalties and other advances totaling $581,000 was more than 90 days past due. In May 2001, in a transaction designed to strengthen the Hawaii Franchise and maintain a presence in Hawaii to support national accounts, the Board of Directors approved the Company’s purchase of 50% of the Hawaii Franchise from Mr. Wilkerson’s partner, Mr. Antrim, who had filed for protection under Chapter 7 of the U.S. bankruptcy code in March 2001, in exchange for forgiveness of 50% of the principal amounts owed to the Company by the Hawaii Franchise ($566,000). In connection with the purchase, the Company realized a loss amounting to approximately $466,000, representing the excess of amounts forgiven over the fair market value of the assets acquired. This loss was specifically reserved for in a prior year. In connection with this transaction, the Company received a promissory note from Mr. Wilkerson for the remaining principal balance due the Company ($566,000). The note bears interest of 8% and requires monthly installments of principal and interest consisting of Mr. Wilkerson’s proportional share of the monthly cash flow of the business until May 25, 2006 when the remaining principal and accrued interest is due. During the fiscal year ended February 28, 2003, no payments were made under the note because the Hawaii Franchise failed to generate positive cash flow. The Hawaii Franchise remains owned 50% by Mr. Wilkerson and 50% by the Company.

Effective May 8, 1999, the Company entered into a three-year employment agreement with Peter T. Gaughn, its President and Chief Executive Officer. The agreement provided for a base salary of $250,000 during the first year with minimum 5% salary increases thereafter. In addition, the agreement provided for incentive compensation equal to 2.5% of the Company’s pre-tax income, subject to a limit of $125,000 in fiscal 2000 and the base salary thereafter. Additionally, the agreement provided for the grant of options to purchase 400,000 shares of Common Stock at $2.25, of which 100,000 options vested immediately and the remainder were to vest in annual increments of 60,000 shares over the next five years. In addition, the agreement provided for the granting each year of options to purchase a number of shares of Common Stock equal to the amount of incentive compensation for that fiscal year divided by the market price of the

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Common Stock on the day preceding the payment of the incentive compensation. These options were to vest 25% immediately and 15% each year for five years thereafter.

Effective May 25, 2001, Mr. Gaughn’s employment with the Company was terminated without cause. As prescribed by Mr. Gaughn’s employment agreement, Mr. Gaughn received his $276,000 annual salary until May 2002. In addition, Mr. Gaughn was paid $39,000, representing the incentive compensation due him for fiscal 2001 and the first three months of fiscal 2002, and accrued vacation. The Company recorded a charge in operations for the previously unrecorded costs associated with the pay out of Mr. Gaughn’s employment agreement in the first quarter of fiscal 2002.

Effective February 22, 2001, the Company entered into a two year oral consulting agreement with Jeffrey Hewson, a Director. Under the arrangement, Mr. Hewson is paid $3,500 monthly in addition to his monthly director fee, and is reimbursed for all related expenses. Pursuant to the agreement, Mr. Hewson is required to perform an operational review of the Company and provide management of the Company with a report on same and to assist management in developing and implementing the future strategic direction of the Company. In February 2003, the Board of Directors approved a two year extension of Mr. Hewson’s consulting agreement at a monthly rate of $5,000 plus expenses.

In May 2001, Mr. Wilkerson expressed to the Company’s board his interest in exploring the possibility of purchasing the shares of the Company’s common stock not already owned by him. On May 21, 2001, Mr. Wilkerson acquired the right to purchase 623,782 shares of the Company’s common stock at a price of $1.75 per share pursuant to an option agreement with Bill LeVine, a former director of the Company, as Trustee of the 1982 Bill and Bonnie LeVine Trust (the “LeVine Trust”). On June 19, 2001, the Company’s board appointed Jeffrey K. Hewson and Phillip M. Pisciotta, both independent directors, as members of a Special Committee to consider the terms and conditions of a possible future proposal for Mr. Wilkerson and persons affiliated with him to purchase the shares of the Company’s common stock not already owned by him. The Special Committee was authorized to engage legal counsel and a financial advisor at the Company’s expense, to consider the proposed offer from Mr. Wilkerson as well as any other bonafide offers made to the Company, to negotiate the definitive terms and conditions of any such transaction and to prepare and deliver to the Company’s board its presentation and recommendation on the appropriate course of action for the Company.

On August 9, 2001, the Company entered into an agreement with Mr. Wilkerson and Phoenix Group of Florida, Inc., (“Phoenix”) a Nevada corporation wholly-owned by Mr. Wilkerson and formed to hold the shares of the Company’s common stock beneficially owned by Mr. Wilkerson, providing the terms and conditions pursuant to which the Company would guarantee a $2 million bank loan to Phoenix, collateralized by a pledge of substantially all of the Company’s assets, which Phoenix and Mr. Wilkerson (the “Acquisition Group”) could use to acquire shares of the Company’s common stock with a view to acquiring all of the shares of the common stock not owned by the Acquisition Group. The Company agreed to guarantee the bank loan on the following terms and conditions:

(i)

The last year of Mr. Wilkerson’s employment agreement with the Company was eliminated, so that the agreement would terminate on February 28, 2002;

(ii)

Mr. Wilkerson and Phoenix, jointly and severally, agreed to (A) grant the Company an assignable one-year option to repurchase all of the shares of the Company’s common stock bought with the borrowed funds at the same price paid by Phoenix and (B) pay the Company’s expenses incurred in connection with the transaction, unless (1) Mr. Wilkerson and/or Phoenix made an offer on or before September 30, 2001, to purchase for cash, all of the Company’s shares held by public shareholders and provided for a closing of the transaction on or before April 15, 2002 (subject to extension to May 31, 2002 in the event

Page 13

of delays caused by a third party), with the option to run one year from the Acquisition Group’s failure to meet the applicable deadline; and (2) such transaction closes on terms deemed “fair” to the Company and its shareholders by the Special Committee; and

(iii)

Mr. Wilkerson and Phoenix, jointly and severally, agreed to immediately reimburse the Company for all payments made pursuant to the guarantee.

As collateral for their reimbursement obligations, Wilkerson and Phoenix granted to the Company a first priority security interest in all shares of the Company’s common stock which Phoenix purchased with the borrowed funds and a subordinated security interest in the 935,382 shares of the Company’s common stock already owned by Phoenix and pledged to the bank.

On August 29, 2001, Phoenix purchased an aggregate of 618,482 shares of the Company’s common stock from Steven N. Bronson and Catalyst Financial, LLC, at a price of $1.50 per share. On September 1, 2001, pursuant to the LeVine Trust option assigned by Wilkerson to Phoenix, Phoenix exercised the option and purchased the 623,782 shares held by the LeVine Trust at a purchase price of $1.75 per share. In connection with the exercise of the option, Phoenix made of payment of $45,484 to the LeVine Trust at the closing and Mr. Wilkerson executed a two-year promissory note in favor of the LeVine Trust for the balance of the aggregate exercise price of $1,046,134. Between August 20 and October 21, 2001, Phoenix purchased an aggregate of 454,036 shares of common stock from various shareholders in private transactions for an aggregate purchase price of $408,632 ($.90 per share). The funds used for these private purchases came from the proceeds of the bank loan.

On September 20, 2001, Phoenix presented a written offer to purchase all of the Company’s shares not owned by Phoenix at a price of $.85 per share. On November 26, 2001, after two months of negotiations between Phoenix and the Special Committee and extensive financial analysis by Capitalink, LLC as financial advisor to the Special Committee, the board of directors of the Company approved a definite merger agreement between the Company and Phoenix and Wilkerson providing for the Acquisition Group to purchase all of the shares of the Company’s outstanding common stock not owned by the Acquisition Group at a price of $1.13 per share. Prior to approving the merger agreement, the board received an opinion from Capitalink stating its belief that the proposed merger consideration was fair from a financial point of view to the Company’s stockholders other than the Acquisition Group.

On April 26, 2002, the Company and Phoenix entered into an agreement terminating the merger agreement. As of July 31, 2002, the Company has advanced, on Wilkerson’s behalf, payment of approximately $209,000 in legal fees incurred by the Acquisition Group in connection with the proposed merger.

On April 26, 2002, the Company and Phoenix agreed to extend to June 1, 2003, the expiration of the company’s option to purchase from Phoenix 454,036 shares of the Company’s common stock at a price of $.90 per share and the Company’s option to purchase 618,482 shares at $1.50 per share.

In March 2003, Phoenix expressed to the Special Committee a renewed interest in purchasing all of the Company’s shares not owned by Phoenix. On May 28, 2003, after two months of negotiation between Phoenix and the Special committee and extensive financial analysis by Capitalink, the Board of Directors of the Company approved a definitive merger agreement between the Company and Phoenix and Wilkerson providing for the Acquisition Group to purchase all of the shares of the Company’s outstanding common stock not owned by the Acquisition Group at a price of $2.00 per share. Prior to approving the merger agreement, the Board received an opinion from Capitalink stating its belief that the proposed merger consideration was fair from a financial point-of-view to the Company’s stockholders other than the Acquisition Group. The increased price in the 2003 merger agreement was based on substantial improvements in the Company’s business and financial condition from November 2001 to May 2003.

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The Statement of Operations is revised as follows:

BCT INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(000’s omitted, except per share data)

	For the Fiscal year ended February 28, 2003		For the Fiscal year ended February 28, 2002		For the Fiscal year ended February 28, 2001
Revenues:
Royalties and franchise fees	$	5,221	$	5,117	$	5,267
Paper and printing sales		12,019		12,068		13,424
Sales of franchises		4		99		46
Company-owned franchise revenues		1,802		—		—

		19,046		17,284		18,737

Expenses:
Cost of paper and printing sales		10,410		10,592		11,605
Cost of Company-owned franchise revenues		448		—		—
Selling, general and administrative		7,403		6,376		6,455
Depreciation and amortization		278		226		232

		18,539		17,194		18,292

Income from continued operations before interest and other income and income taxes		507		90		445
Interest and other income		769		723		692

Income from continued operations before income taxes		1,276		813		1,137
Income tax provision		491		321		442

Income from continued operations		785		492		695
Discontinued operations:
Loss from Company owned Franchises operated under a plan of disposition, net of tax benefit of $0, $0, and $19, respectively		—		—		(31	)

Net income	$	785	$	492	$	664

Net income (loss) per common share
Income from continued operations	$	.15	$	.10	$	.13
Loss from discontinued operations		—		—		(.01	)

Basic	$	.15	$	.10	$	.13

Income from continued operations	$	.15	$	.10	$	.13
Loss from discontinued operations		—		—		(.01	)

Diluted	$	.15	$	.10	$	.13

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

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Note 1 - Trademark and Other Intangible Assets is revised as follows:

Trademark and Other Intangible Assets

The trademark is amortized using the straight-line method over 17 years. Other intangible assets consist of the excess of purchase price over the fair value of the net assets acquired relating primarily to the acquisition of the Canadian franchise rights in fiscal 1994. The amortization period for the Canadian franchise rights is 19 years, which represented the remaining life of the franchise agreement acquired. As of February 28, 2003 and 2002, accumulated amortization of intangible assets amounted to $294 and $268, respectively. In June 2001 SFAS No. 142, “Goodwill and Other Intangible Assets” was issued. SFAS No. 142 eliminates the amortization of goodwill and indefinite-lived intangible assets and requires an impairment review of both of these non-amortizable intangible assets annually, or when events or circumstances dictate. Identifiable intangible assets with a determinable useful life will continue to be amortized. The Company adopted SFAS 142 effective March 1, 2002. Upon initial application of SFAS No. 142, the Company did not identify impairment losses for intangible assets resulting from a transitional impairment test and as a result, the adoption of this standard did not have an effect on Company’s financial position and results of operations because there is no goodwill included in trademark and other intangible assets.

Revenue recognition footnote revision

Note 1 - Business and Summary of Significant Accounting Policies, Sale of Franchises, is revised to read as follows:

Sales of Franchises

In accordance with SFAS No. 45, “Accounting for Franchise Fee Revenue”, revenue from sales of individual franchises, including the initial equipment package, is recognized upon the opening of the related franchise and when all significant services or conditions relating to the sale have been substantially performed. When these criteria have not been met, then the net profit from the sale has been deferred and characterized as deferred revenue.

Note 3 - Accounts and Notes Receivable, paragraph 3 is revised to read as follows:

At February 28, 2001, $485 of notes receivable, with an 8% interest rate per annum were related to the purchase of a franchise by South Pacific Wholesale Printers, Inc. (“SPWP”). The Chairman of the Board of the Company owns 50% of SPWP and was a guarantor of SPWP’s debt to the Company. Receivables for paper and royalties due to the Company from this Franchise as of February 28, 2001, amounted to $418. Reserves were recorded on the receivables relating to this Franchise. Revenues from the Hawaii Franchise amounted to $155 in fiscal 2001. On May 25, 2001, the Company purchased a 50% interest in South Pacific Wholesale Printers, Inc. from the Chairman’s partner in exchange for forgiveness of 50% of the principal amounts due to the Company by the Franchise, ($566). As a result of the purchase, the Company realized a loss of approximately $466 in fiscal 2002 representing the excess of amounts owed over the fair market value of the assets acquired. This loss was specifically reserved for at February 28, 2001 and was recognized as bad debt expense. In connection with the purchase transaction, the Company received a promissory note from the Chairman for the remaining principal balance due the Company ($566). This note bears interest of 8% and is payable in monthly installments equal to the Chairman’s proportionate share of the monthly cash flow of the Franchise until May 25, 2006 when the remaining principal and accrued interest is due. The Company believes principal and interest due under this note are ultimately recoverable because the Hawaii franchise has recently begun to generate positive cash flow. Further, the Company believes the Chairman should be able to pay the note in the event the Hawaii franchise does not generate sufficient cash flow to repay this obligation. In May 20000, the Chairman pledged 100,000 shares of the Company’s Common Stock to secure his guarantee of SPWP’s debt to the Company. NO payments were made on this note during the fiscal year ended February 28, 2003 and 2002. The Company recognized losses of $48 relating to the Hawaii franchise in fiscal 2002.

Note 5 - Sales and Acquisitions of Company-owned Franchises, paragraph 2 is revised to read as follows:

On March 31, 2003, TBDS, Inc. sold certain assets to BCT Enterprises of Tampa, Inc., a wholly owned subsidiary of BCT, in exchange for the assumption of certain of TBDS, Inc.’s liabilities in the amount of $526. These liabilities consisted primarily of equipment leases and trade payables to third parties. In addition, BCT assigned to TBDS, Inc. the rights to $181 of receivables from TBDS, Inc’s minority shareholder. These receivables consisted of royalties and paper purchases for which the minority shareholder was personally liable under the franchise agreement. The Company has recorded this as a purchase and, consequently, the results of operations of BCT Enterprises of Tampa, Inc. will be included in the consolidated statement of operations.

Note 9 - Commitments and Contingencies, paragraph 5 is revised to read as follows:

In fiscal 2002, the Board of Directors of the Company approved the Company’s guarantee of a $2 million bank line of credit for Phoenix Group of Florida, Inc., a company owned by the Chairman. The proceeds from the line of credit could be used by Phoenix to acquire shares of the Company’s common stock. The terms of the guarantee are the same as the terms of the line of credit. In connection with the guarantee, the Chairman’s employment agreement was terminated on February 28, 2002. In June 2002, the Board of Directors approved an increase in the Chairman’s annual base salary to $465 after receiving approval by the Compensation Committee.

Page 16

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this amendment to be signed on its behalf by the undersigned, thereunto duly authorized.

	BCT INTERNATIONAL, INC.

DATE: October 7, 2003	By:	/s/ MICHAEL R. HULL
		Michael R. Hull Vice President, Treasurer & Chief Financial Officer

Page 17

BCT INTERNATIONAL INC / 10-K/A