<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT OF
1934 For the quarterly period ended March 31, 1996
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 0-6234
ACMAT CORPORATION
Connecticut 06-0682460
(State of Incorporation) (I.R.S. Employer Identification No.)
233 Main Street, New Britain, Connecticut 06050-2350
(Address of principal executive offices)
Registrants's telephone number including area code: (860) 229-9000
NONE
(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 filing requirements
for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Shares outstanding
Title of Class at April 30, 1996
- -------------- ------------------
<S> <C>
Common Stock 634,340
Class A Stock 2,232,585
</TABLE>
<PAGE> 2
TABLE OF CONTENTS
Part I FINANCIAL INFORMATION PAGE
----
Item 1. Financial Statements
Consolidated Balance Sheets 3
Consolidated Statements of Earnings 4
Consolidates Statements of Stockholders' Equity 5
Consolidated Statements of Cash Flows 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
Part II OTHER INFORMATION
Item 3. Legal Proceedings 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
2
<PAGE> 3
Part I Financial Information
Item I Financial Statements
ACMAT CORPORATION AND SUBSIDIARIES
Financial Statements
Consolidated Balance Sheets
<TABLE>
<CAPTION>
March 31, December 31,
Assets 1996 1995
- ------ --------- ------------
<S> <C> <C>
Investments:
Fixed maturities-available for
sale, at market (Cost of
$123,618,913 in 1996 and
$121,612,706 in 1995) $123,993,476 122,387,491
Equity securities, at market value
(Cost $5,262 in 1996 and
$20,000 in 1995) 5,262 20,000
Limited partnership investment, at
market value (Cost $1,108,995 in 1996
and $1,120,354 in 1995) 1,806,762 1,641,763
Short-term investments, at cost which
approximates market 11,058,431 8,359,047
------------ -----------
Total investments 136,863,931 132,408,301
Cash and cash equivalents 3,417,271 5,120,375
Accrued interest receivable 2,215,558 2,230,988
Reinsurance recoverable 3,942,899 3,872,099
Receivables, net 10,379,749 9,022,434
Federal income tax recoverable - 233,572
Prepaid expenses 250,120 178,965
Deferred income taxes 1,986,794 1,971,148
Property & equipment, net 13,883,156 13,987,256
Deferred policy acquisition costs 3,623,280 3,459,308
Other assets 3,672,053 3,869,028
Intangibles, net 3,967,101 4,048,764
------------ -----------
$184,201,912 180,402,238
============ ===========
Liabilities & Stockholders' Equity
Notes payable to banks $ 16,200,000 7,500,000
Accounts payable 2,098,339 2,189,645
Reserves for losses and loss
adjustment expenses 45,928,421 45,235,311
Unearned premiums 14,873,786 14,302,613
Cash collateral held 17,054,794 17,767,955
Accrued liabilities 1,947,312 1,861,815
Income taxes 154,892 -
Long-term debt 39,140,204 40,127,590
------------ -----------
Total liabilities 137,397,748 128,984,929
Minority interests 14,118,797 13,830,050
Stockholders' Equity:
Common Stock (No Par Value; 3,500,000 shares
Authorized; 634,340 and 642,464
Shares Issued and Outstanding) 634,340 642,464
Class A Stock (No Par Value; 10,000,000
Shares Authorized; 2,232,585 and
2,665,836 shares Issued and Outstanding) 2,232,585 2,665,836
Additional paid-in capital - 1,921,100
Retained earnings 29,188,725 31,601,383
Net unrealized loss on securities 629,717 756,476
------------ -----------
Total stockholders' equity 32,685,367 37,587,259
------------ -----------
$184,201,912 180,402,238
============ ===========
</TABLE>
See Notes to Consolidated Financial Statements.
3
<PAGE> 4
ACMAT CORPORATION AND SUBSIDIARIES
Consolidated Statements of Earnings
Three Months Ended March 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
----------- ---------
<S> <C> <C>
Earned premiums $ 4,644,032 5,702,614
Contract revenues 1,986,682 2,720,521
Investment income, net 1,649,027 1,376,886
Net realized capital losses (7,788) (120)
Other income 187,020 165,934
----------- ---------
8,458,973 9,965,835
----------- ---------
Cost of contract revenues 1,906,875 2,529,468
Losses and loss adjustment expenses 1,393,210 1,710,784
Amortization of policy acquisition costs 674,256 1,088,831
Selling, general and administrative expenses 1,319,921 1,366,390
Interest expense 1,232,383 1,210,835
----------- ---------
6,526,645 7,906,308
----------- ---------
Earnings before income taxes and minority
interests 1,932,328 2,059,527
Income taxes
Federal 447,460 481,985
State 35,000 40,000
----------- ---------
482,460 521,985
----------- ---------
Earnings before minority interests 1,449,868 1,537,542
Minority interests (309,754) (334,117)
----------- ---------
Net earnings $ 1,140,114 1,203,425
=========== =========
Net earnings per share and share equivalent .34 .30
Net earnings per share - assuming full dilution .28 -
Weighted average shares outstanding 3,400,691 3,965,165
</TABLE>
See Notes to Consolidated Financial Statements.
4
<PAGE> 5
ACMAT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Class A Net
stock stock Additional unrealized
par par paid-in Retained gains Total
value value capital earnings (losses) stockholders'
------ ------- ---------- -------- on securities equity
------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance as of December 31, 1994 $652,920 $3,313,067 $ 9,358,948 $26,251,103 $(1,571,103) $38,004,935
Acquisition and Retirement of
1,106 Shares of Common Stock (1,106) -- (15,484) -- -- (16,590)
Acquisition and Retirement of
88,500 Shares of Class A Stock -- (88,500) (747,750) -- -- (836,250)
Net Unrealized Appreciation of
Debt and Equity Securities -- -- -- -- 1,209,872 1,209,872
Net Earnings -- -- -- 1,203,425 -- 1,203,425
-------- ---------- ----------- ----------- ----------- -----------
Balance as of March 31, 1995 $651,814 $3,224,567 $ 8,595,714 $27,454,528 $ (361,231) $39,565,392
======== ========== =========== =========== =========== ===========
Balance as of December 31, 1995 $642,464 $2,665,836 $ 1,921,100 $31,601,383 $ 756,476 $37,587,259
Acquisition and Retirement of
8,124 Shares of Common Stock (8,124) -- (63,925) (63,000) -- (135,049)
Acquisition and Retirement of
483,250 Shares of Class A Stock -- (483,250) (2,307,166) (3,489,772) -- (6,280,188)
Issuance of 49,999 Shares of -- 49,999 449,991 -- -- 499,990
Class A Stock
Net Unrealized Losses on Debt -- -- -- -- (126,759) (126,759)
and Equity Securities
Net Earnings -- -- -- 1,140,114 -- 1,140,114
-------- ---------- ----------- ----------- ----------- -----------
Balance as of March 31, 1996 $634,340 $2,232,585 $ -- $29,188,725 $ 629,717 $32,685,367
======== ========== =========== =========== =========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
5
<PAGE> 6
ACMAT CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Three Months Ended March 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
------------ ---------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 1,140,114 1,203,425
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 504,163 591,295
Minority interests 309,754 334,117
Net realized capital losses 7,788 120
Changes in:
Accrued interest receivable 15,430 (247,089)
Reinsurance recoverable (70,800) 612,577
Receivables, net (1,357,315) 1,082,359
Deferred policy acquisition costs (163,972) 137,139
Prepaid expenses and other assets 107,613 (363,780)
Accounts payable and accrued liabilities (5,809) (262,657)
Cash collateral held (713,161) 5,882,729
Reserves for losses and loss
adjustment expenses 693,110 849,223
Income taxes, net 448,930 280,056
Unearned premiums 571,173 (807,566)
------------ ---------
Net cash provided by operating
activities 1,487,018 9,291,948
------------ ---------
Cash flows from investing activities:
Proceeds from investments sold or matured:
Fixed maturities-sold 1,305,893 130,802
Fixed maturities-matured 10,636,500 17,848,750
Equity securities -- --
Purchases of:
Fixed maturities (14,194,921) (24,090,180)
Equity securities (5,262) --
Limited Partnership Investment adjustment 11,360 --
Short-term investments, net (2,699,384) (3,403,800)
Capital expenditures (41,675) (54,120)
------------ ---------
Net cash used for investing activities (4,987,489) (9,568,548)
------------ ---------
Cash flows from financing activities:
Borrowings under lines of credit 8,700,000 --
Repayments on long-term debt (487,396) (852,055)
Payments for acquisition & retirement
of stock (6,415,237) (852,840)
------------ ---------
Net cash provided by (used for)
financing activities 1,797,367 (1,704,895)
------------ ---------
Net decrease in cash and cash equivalents (1,703,104) (1,981,495)
Cash and cash equivalents at beginning of period 5,120,375 5,471,148
------------ ---------
Cash and cash equivalents at end of period $ 3,417,271 3,489,653
============ =========
</TABLE>
See Notes to Consolidated Financial Statements.
6
<PAGE> 7
ACMAT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Financial Statements
The consolidated financial statements include the accounts of ACMAT Corporation
("ACMAT" or the "Company") and its subsidiaries. The consolidated financial
statements have been prepared in conformity with generally accepted accounting
principles and are unaudited.
The interim financial information contained in this report has been prepared
from the books and records of the Company and its subsidiaries and reflects, in
the opinion of the management of the Company, all adjustments (consisting of
normal and recurring accruals) necessary to fairly present results of operations
for the periods indicated. All significant intercompany accounts and
transactions have been eliminated in consolidation.
These statements should be read in conjunction with the financial statements and
notes thereto included in the Company's annual report on Form 10-K for the year
ended December 31, 1995.
(2) Earnings Per Share and Share Equivalent
The earnings per share and share equivalent were computed by dividing net
earnings by the weighted average number of Common and Class A shares outstanding
of 3,400,691 and 3,965,165 for 1996 and 1995, respectively, and includes the
common stock equivalency of outstanding options, if dilutive. The number of
shares was also increased by the number of shares issuable on the exercise of
options when the market price of the stock exceeded the exercise price of the
option. This increase in the number of shares was reduced by the number of
shares which are assumed to have been purchased with the proceeds from the
exercise of the option; these purchases were assumed to have been made at the
average price of the common stock during that part of the period when the market
price of the common stock exceeded the exercise price of the option.
Earnings per share - assuming full dilution was determined on the assumptions
that the convertible notes for 1996 were converted and the options were
exercised at the beginning of the period. As to the debentures, net earnings
were adjusted for the interest expense, net of its tax effect. As to the
options, outstanding shares were increased as described above, except that
purchases were assumed to have been made at the period-end price of the shares
as it was higher than the average price during the period. Earnings per share -
assuming full dilution was not presented for 1995 because the effect was not
material.
(3) Supplemental Cash Flow Information
Income taxes paid during the three months ended March 31, 1996 and 1995 was
$33,530 and $241,928, respectively, and interest paid for the three months ended
March 31, 1996 and 1995 was $680,501 and $736,236, respectively.
On March 29, 1996, the Company issued 49,999 shares of Class A Stock at $10 per
share pursuant to the conversion options of the Convertible Senior Notes to AIG
Life Insurance Company and American International Life Assurance Company of New
York. The issuance of stock pursuant to the conversion option of the Convertible
Senior notes is a non-cash transaction that is not reflected in the Consolidated
Statement of Cash Flows.
(4) Application of New Accounting Standards
Effective January 1, 1996, the Company adopted Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of" (FAS 121). This statement establishes
accounting standards for the impairment of long-lived assets and certain
identifiable intangibles to be disposed of. This statement requires a write down
to fair value when long-lived assets to be held and used are impaired. The
adoption of this statement did not have any effect on results of operations,
financial condition or liquidity as no adjustments were required.
Also, effective January 1, 1996 the Company adopted Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation" (FAS
123). This statement addresses alternative accounting treatments for stock-based
compensation, such as stock options and restricted stock. FAS 123 permits
disclosing in the financial statement
7
<PAGE> 8
footnotes the pro forma impact to net income as if the value of stock-based
compensation awards had been expensed. The value of awards are measured at the
grant date based upon estimated fair value, using option pricing models. The
Company has selected the alternative method which provides for pro forma
disclosure in the footnotes to the year-end financial statements only.
8
<PAGE> 9
ACMAT CORPORATION AND SUBSIDIARIES
Item 2: Management's Discussion and Analysis of
Financial Conditions and Results of Operations
RESULTS OF OPERATIONS:
Overview
Net earnings were $1,140,114 for the three months ended March 31, 1996 compared
to $1,203,425 for the same period a year ago. The decrease in net earnings for
the quarter ended March 31, 1996 reflects a decrease in earned premiums and
contract revenues partially offset by an increase in interest income.
Earned Premiums
Earned premiums for the three months ended March 31, 1996 decreased to
$4,644,032 compared to $5,702,614 for the same period in 1995. The decrease in
earned premiums is a result of some insurance policies issued with policy
durations in excess of twelve months. Net written premiums were $5,165,081 for
the three months ended March 31, 1996 compared to $5,102,114 for the three
months ended March 31, 1995. Variances in net written premiums have historically
occurred due to the fluctuations in size, number and timing of bonds and
policies bound by the Company.
Contract Revenues
Contract revenues were $1,986,682 for the three-month period ended March 31,
1996 compared to $2,720,521 for the same period in 1995. During the past several
years, the Company has focused on fewer more profitable projects. Construction
revenue is difficult to predict and depends greatly on the successful
securement of contracts bid. However, since the backlog at March 31, 1996 was
lower than the backlog a year ago, the Company expects contract revenues to be
lower in 1996.
Investment Income, Net
Net investment income increased to $1,649,027 for the three-month period ended
March 31, 1996 compared to $1,376,886 for the same period in 1995, representing
effective yields of 4.75% and 4.27%, respectively. The increase in investment
income in 1996 over 1995 was due substantially to higher yields on the portfolio
as the result of higher interest rates obtained on reinvested assets as well as
an increase in the total invested assets. Invested assets, including cash, were
$140,281,205 and $137,528,676 at March 31, 1996 and December 31, 1995,
respectively. The increase in invested assets is attributable to the net cash
flow generated by written premiums and the reinvestment of investment income
offset by the repayment of debt and the repurchase of stock.
Net Realized Capital Losses
Realized capital losses from the sale of investments in the three-month period
ended March 31, 1996 were $7,788 compared to realized capital losses of $120 for
the same period in 1995.
Costs of Contract Revenues
Costs of contract revenues decreased to $1,906,875 for the three-month period
ended March 31, 1996 compared to $2,529,468 for the same period in 1995. The
decrease in costs of contract revenues reflects the decrease in contract
revenues. Costs of contract revenues vary from period to period as a function of
contract revenues (See Contract Revenues). The Company's construction backlog
was approximately $3,400,000 at March 31, 1996 compared to $7,700,000 a year
ago.
Losses and Loss Adjustment Expenses
Losses and loss adjustment expenses were $1,393,210 for the three-month period
ended March 31, 1996 compared to $1,710,784 for the same period in 1995. The
decrease in losses and loss adjustment expenses are attributable to the decrease
in earned premiums from 1996 to
9
<PAGE> 10
1995 without any fluctuations in the loss ratios. Losses and loss adjustment
expense reserves represent management's estimate of the ultimate costs of unpaid
losses incurred for these periods relative to premiums earned.
Amortization of policy acquisition costs
Amortization of policy acquisition costs was $674,256 for the three-month period
ended March 31, 1996 as compared to $1,088,831 for the same period in 1995. The
decrease in amortization of policy acquisition costs is primarily attributable
to the decrease in premiums earned. Policy acquisition costs, primarily
commissions, are deferred and amortized over the policy or bond term.
Selling, General and Administrative Expenses
Selling, general and administrative expenses were $1,319,921 for the three-month
period ended March 31, 1996 compared to $1,366,390 for the same period in 1995.
The decrease in the selling, general and administrative expenses during 1996 is
due primarily to a decrease in salary expense.
Interest Expense
Interest expense increased to $1,232,383 for the three-month period ended March
31, 1996 compared to $1,210,835 for the same period in 1995. The increase in
interest expense in 1996 is due primarily to the increase in short-term
borrowings offset in part by the repayment of long-term debt.
Income Taxes
Income tax expense was $482,460 for the three-month period ended March 31, 1996
compared to $521,985 for the same period in 1995, representing effective Federal
tax rates of 23.2% and 23.4%, respectively. The Federal effective tax rate
fluctuates according to the mix of tax exempt and taxable securities held by the
Company.
RESERVES FOR LOSSES AND LOSS ADJUSTMENT EXPENSES:
Reserves for losses and loss adjustment expenses are established with respect to
both reported and incurred but not reported claims for insured risks. The amount
of loss reserves for reported claims is primarily based upon a case-by-case
evaluation of the type of risk involved, knowledge of the circumstances
surrounding each claim and the policy provisions relating to the type of claim.
As part of the reserving process, historical data is reviewed and consideration
is given to the anticipated impact of various factors such as legal developments
and economic conditions, including the effects of inflation. Reserves are
monitored and evaluated periodically using current information on reported
claims.
Management believes that the reserves for losses and loss adjustment expenses at
March 31, 1996 are adequate to cover the unpaid portion of the ultimate net cost
of losses and loss adjustment expenses, including losses incurred but not
reported. Reserves for losses and loss adjustment expenses are estimates at any
given point in time of what the Company may have to pay ultimately on incurred
losses, including related settlement costs, based on facts and circumstances
then known. The Company also reviews its claim reporting patterns, loss
experience, risk factors and current trends and considers their effect in the
determination of estimates of incurred but not reported reserves. Ultimate
losses and loss adjustment expenses are affected by many factors which are
difficult to predict, such as claim severity and frequency, inflation levels and
unexpected and unfavorable judicial rulings. Reserves for surety claims also
consider the amount of collateral held as well as the financial strength of the
principal and its indemnitors.
The Company's insurance subsidiaries' loss ratios under generally accepted
accounting principles ("GAAP") was 30.0% for the three-month periods ended March
31, 1996 and 1995. These loss ratios are below industry averages and are
believed to be the result of conservative underwriting. There can be no
assurance that such loss ratios can continue. The Company's insurance
subsidiaries' expense ratios under GAAP were 44.5% and 41.0% for the three-month
period ended March 31, 1996 and 1995, respectively. The Company's insurance
subsidiaries' combined ratios under GAAP were 74.5% and 71.0% for the
three-month period ended March 31, 1996 and 1995, respectively.
10
<PAGE> 11
LIQUIDITY AND CAPITAL RESOURCES:
The Company generates sufficient funds from its operations and maintains a
relatively high degree of liquidity in its investment portfolio. The primary
source of funds to meet the demands of claim settlements and operating expenses
are premium collections, investment earnings and maturing investments. As of
March 31, 1996, the Company had no material commitments for capital expenditures
and, in the opinion of management of the Company, the Company currently has
adequate sources of liquidity to fund its operations over the next 12 months.
ACMAT, exclusive of its subsidiaries, has incurred negative cash flows from
operating activities primarily because of interest expense related to notes
payable and long-term debt incurred to acquire and capitalize its insurance
subsidiaries. ACMAT has also incurred negative working capital as a result of
holding short-term debt related to its operations.
ACMAT's principal sources of funds are dividends from its wholly-owned
subsidiaries, intercompany and short-term borrowings, insurance underwriting
fees from its subsidiaries, construction contracting operations and rental
income. Management believes that these sources of funds are adequate to service
its indebtedness and its construction contracting operations without regard to
any dividends from ACMAT's insurance holding company subsidiaries, United Coasts
and ACSTAR Holdings. ACMAT has recently utilized short-term borrowings to
repurchase its stock. On a long-term basis, ACMAT could rely, if necessary, on
dividends from its insurance holding company subsidiaries to improve its working
capital.
The Company realized cash flow from operations of $1,487,018 for the three-month
period ended March 31, 1996 compared to $9,291,948 for the same period in 1995.
Net cash flows provided by operations in 1996 were derived principally from
premium collections offset in part by cash collateral returned.
Purchases of investments are made based upon excess cash available after the
payment of losses and loss adjustment expenses and other operating and
non-operating expenses. The Company's short term investment strategy coincides
with the relatively short maturity of its liabilities which are comprised
primarily of reserves for losses covered by claims-made insurance policies,
reserves related to surety bonds and collateral held for surety obligations.
Net cash used for investing activities in the first quarter of 1996 amounted to
$4,987,489 compared to net cash used for investing activities of $9,568,548 for
the same period in 1995.
The terms of the Company's note agreements contain limitations on payment of
cash dividends, re-acquisition of shares, borrowings and investments and require
maintenance of specified ratios and minimum net worth levels, including cross
default provisions. The Company is prohibited from paying any dividend prior to
July 1, 1997. The payment of future cash dividends and the re-acquisition of
shares are restricted each to amounts of an Available Fund. The Available Fund
is a cumulative fund which is increased each year by 20% of the Consolidated Net
Earnings (as defined). The Company is in compliance with all covenants at March
31, 1996, except for the limitation on the reacquisition of shares which
exceeded the Available Fund at March 31, 1996. The Company does not consider
this a significant event of default and has received a waiver from the note
holders.
The Company maintains two short-term unsecured bank credit line totalling $17.5
million to fund interim cash requirements. There was $16,200,000 outstanding
under these lines of credit as of March 31, 1996.
During the three-month period ended March 31, 1996, the Company purchased, in
the open market and privately negotiated transactions, 8,124 shares of its
Common Stock at an average price of $16.62. The Company also repurchased, in the
open market and privately negotiated transactions, 483,250 shares of its Class A
Stock at an average price of $13.00 per share.
The Company's principal source of cash for repayment of long-term debt is
borrowings from its two insurance holding companies. Under applicable insurance
regulations, ACMAT's insurance subsidiaries are restricted as to the amount of
dividends they may pay to their
11
<PAGE> 12
respective holding companies, without the prior approval of their domestic state
insurance department. The amount of dividends ACMAT's insurance subsidiaries may
pay are limited to approximately $6,600,000 in 1996.
REGULATORY ENVIRONMENT
The National Association of Insurance Commissioners has recently adopted a
risk-based capital formula for property and casualty companies which will be
used by insurance regulators in assessing the capital adequacy of insurance
companies. The risk-based capital formula, effective December 31, 1995, is a
regulatory tool designed to identify weakly capitalized companies. The formula
determines a required amount of capital based on the risks that the insurer
assumes. Various regulatory actions are then prescribed if a company's ratio
falls below the minimum required ratio. These actions range from requiring the
insurer to submit a comprehensive plan to the insurance commissioner in the
event its statutory surplus falls below its Company Action Level which is 200%
of it Authorized Control Level, as calculated under the formula, to placing the
insurer under regulatory control if its statutory surplus falls below 70% of its
Authorized Control Level. The ratio for each of the Company's insurance
subsidiaries as of December 31, 1995 was significantly above the level which
might require regulatory action.
12
<PAGE> 13
Part II - Other Information
Item 3 - Legal Proceedings
ACMAT and the directors of United Coasts, Henry W. Nozko, Sr., Henry W. Nozko,
Jr. and John C. Creasy are defendants in an action brought by a shareholder of
United Coasts seeking to enjoin a 1993 exchange offer by ACMAT for shares of
United Coasts held by unaffiliated persons. ACMAT subsequently withdrew the
exchange offer but the plaintiff continues to seek, among other things, (a) a
determination that the action is a proper class action, (b) a mandatory
injunction requiring the registration of United Coasts common stock under the
Securities Exchange Act of 1934, (c) unspecified damages and (d) attorneys' fees
and costs.
On May 2, 1996, ACMAT entered into a Stipulation of Settlement with counsel to
shareholders of United Coasts which will allow for a proposed merger of United
Coasts into ACMAT. Under the terms of the merger, the United Coasts'
shareholders would receive one share of ACMAT Class A Stock for each one and
one-half shares of United Coasts shares, adjusted to reflect any counsel fees
payable to the shareholders' counsel. The merger is subject to several
conditions, including shareholder and court approval.
The Company has, together with many other defendants, been named as a defendant
in approximately 140 actions brought in Connecticut state courts by injured
individuals or their representatives based on product liability claims relating
to materials containing asbestos. No specific claims for monetary damages are
asserted in these actions. Although it is early in the litigation process, the
Company does not believe that its exposure in connection with these cases is
significant.
Item 6 - Exhibits and Reports on Form 8-K
a. Exhibits - None
-27. Financial Data Schedule
b. Report on Form 8-K - None
13
<PAGE> 14
SIGNATURES
Pursuant to the requirements of Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
ACMAT CORPORATION
Date: May 13, 1996 /S/ Henry W. Nozko, Sr.
---------------------------------------------
Henry W. Nozko, Sr., President and Chairman
Date: May 13, 1996 /S/ Henry W. Nozko, Jr.
---------------------------------------------
Henry W. Nozko, Jr., Executive Vice President
Chief Operating Officer, and Treasurer
14
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1996
<CASH> 3,417,271
<SECURITIES> 136,863,931
<RECEIVABLES> 10,634,304
<ALLOWANCES> (254,825)
<INVENTORY> 0
<CURRENT-ASSETS> 157,069,528
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0
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</TABLE>
