<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, 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 0-6234
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)
Registrant'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, 1997
- -------------- -----------------
<S> <C>
Common Stock 598,357
Class A Stock 2,817,491
</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 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
Consolidated Balance Sheets
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
---- ----
<S> <C> <C>
Assets
Investments:
Fixed maturities-available for sale, at market (Cost of $131,545,352 in 1997
and $93,397,819 in 1996) $130,987,612 93,511,048
Equity securities, at market value (Cost $5,262 in 1997 and 1996) 10,573 10,573
Limited partnership investment, at market value (Cost $1,148,298 in 1997
and $1,086,630 in 1996) 1,333,300 1,439,174
Short-term investments, at cost which approximates market 9,120,147 46,969,137
------------ -----------
Total investments 141,451,632 141,929,932
Cash and cash equivalents 2,500,718 2,187,227
Accrued interest receivable 2,063,169 1,567,761
Reinsurance recoverable 3,565,425 3,841,001
Receivables, net 8,831,981 8,381,590
Prepaid expenses 268,032 206,562
Deferred income taxes 2,472,103 2,285,883
Property & equipment, net 13,434,939 13,553,114
Deferred policy acquisition costs 2,609,017 2,905,875
Other assets 3,185,985 3,951,946
Intangibles, net 3,467,012 3,548,675
------------ -----------
$183,850,013 184,359,566
============ ===========
Liabilities & Stockholders' Equity
Notes payable to banks $ 10,000,000 13,200,000
Accounts payable 1,594,990 1,873,611
Reserves for losses and loss adjustment expenses 47,720,350 47,960,084
Unearned premiums 11,182,424 12,341,642
Cash collateral held 21,533,798 21,830,566
Accrued liabilities 1,676,777 1,404,821
Income taxes 607,124 239,019
Long-term debt 51,397,806 35,807,419
------------ -----------
Total liabilities 145,713,269 134,657,162
Stockholders' Equity:
Common Stock (No Par Value; 3,500,000 Shares Authorized; 598,357 and
600,257 Shares Issued and Outstanding) 598,357 600,257
Class A Stock (No Par Value; 10,000,000 Shares Authorized; 2,817,792 and
3,488,860 Shares Issued and Outstanding) 2,817,792 3,488,860
Additional paid-in capital -- 8,407,877
Retained earnings 35,100,900 36,894,494
Net unrealized gain (loss) on securities (380,305) 310,916
------------ -----------
Total stockholders' equity 38,136,744 49,702,404
------------ -----------
$183,850,013 184,359,566
============ ===========
</TABLE>
See Notes to Consolidated Financial Statements.
3
<PAGE> 4
ACMAT CORPORATION AND SUBSIDIARIES
Consolidated Statements of Earnings
Three Months Ended March 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Earned premiums $4,477,238 4,644,032
Contract revenues 1,773,134 1,986,682
Investment income, net 1,797,770 1,649,027
Net realized capital gains (losses) 35,556 (7,788)
Other income 180,111 187,020
---------- ----------
8,263,809 8,458,973
---------- ----------
Cost of contract revenues 1,660,662 1,906,875
Losses and loss adjustment expenses 1,343,171 1,393,210
Amortization of policy acquisition costs 863,054 674,256
Selling, general and administrative expenses 1,461,013 1,319,921
Interest expense 1,320,284 1,232,383
---------- ----------
6,648,184 6,526,645
---------- ----------
Earnings before income taxes and minority interest 1,615,625 1,932,328
Income taxes
Federal 446,399 447,460
State 20,000 35,000
---------- ----------
466,399 482,460
---------- ----------
Earnings before minority interest 1,149,226 1,449,868
Minority interest -- (309,754)
---------- ----------
Net earnings $1,149,226 $1,140,114
========== ==========
Net earnings per share and share equivalent .30 .34
Net earnings per share - assuming full dilution .27 .28
Weighted average shares outstanding 3,875,529 3,400,691
</TABLE>
See Notes to Consolidated Financial Statements.
4
<PAGE> 5
ACMAT CORPORATION AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
<TABLE>
<CAPTION>
Class A Additional
Common stock stock par paid-in Retained
par value value capital earnings
--------- ----- ------- --------
<S> <C> <C> <C> <C>
Balance as of December 31, 1995 $ 642,464 $ 2,665,836 $ 1,921,100 $31,601,383
Acquisition and Retirement of 8,124 Shares
of Common Stock (8,124) -- (63,925) (63,000)
Acquisition and Retirement of 483,250
Shares of Class A Stock -- (483,250) (2,307,166) (3,489,772)
Issuance of 49,999 Shares of Class A Stock -- 49,999 449,991 --
Net Unrealized Losses on Debt and Equity
Securities -- -- -- --
Net Earnings -- -- -- 1,140,114
---------- ----------- ------------ -----------
Balance as of March 31, 1996 $ 634,340 $ 2,232,585 $ -- $29,188,725
========== =========== ============ ===========
Balance as of December 31, 1996 $ 600,257 $ 3,488,860 $ 8,407,877 $36,894,494
Acquisition and Retirement of
Shares of Common Stock (1,900) -- (37,396) --
Acquisition and Retirement of
Shares of Class A Stock -- (1,129,568) (12,462,981) (2,942,820)
Issuance of 450,000 Shares of Class A Stock -- 450,000 4,050,000 --
Issuance of 8,500 Shares of Class A Stock
pursuant to stock options -- 8,500 42,500 --
Net Unrealized Appreciation of Debt and
Equity Securities -- -- -- --
Net Earnings -- -- -- 1,149,226
---------- ----------- ------------ -----------
Balance as of March 31, 1997 $ 598,357 2,817,792 -- 35,100,900
========== =========== ============ ===========
</TABLE>
<TABLE>
<CAPTION>
Net
unrealized Total
gains(losses) stockholders'
on securities equity
------------- ------
<S> <C> <C>
Balance as of December 31, 1995 $ 756,476 $37,587,259
Acquisition and Retirement of 8,124 Shares
of Common Stock -- (135,049)
Acquisition and Retirement of 483,250
Shares of Class A Stock -- (6,280,188)
Issuance of 49,999 Shares of Class A Stock -- 499,990
Net Unrealized Losses on Debt and Equity
Securities (126,759) (126,759)
Net Earnings -- 1,140,114
------------ -----------
Balance as of March 31, 1996 $ 629,717 $32,685,367
============ ===========
Balance as of December 31, 1996 $ 310,916 $49,702,404
Acquisition and Retirement of
Shares of Common Stock -- (39,296)
Acquisition and Retirement of
Shares of Class A Stock (16,535,369)
Issuance of 450,000 Shares of Class A Stock -- 4,500,000
Issuance of 8,500 Shares of Class A Stock
pursuant to stock options -- 51,000
Net Unrealized Appreciation of Debt and
Equity Securities (691,221) (691,221)
Net Earnings -- 1,149,226
------------ -----------
Balance as of March 31, 1997 (380,305) 38,136,744
============ ===========
</TABLE>
See Notes to Consolidated Financial Statements.
5
<PAGE> 6
ACMAT CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Three Months Ended March 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 1,149,226 1,140,114
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization 388,177 504,163
Minority interests -- 309,754
Net realized capital losses (gains) (35,556) 7,788
Changes in:
Accrued interest receivable (495,408) 15,430
Reinsurance recoverable 275,576 (70,800)
Receivables, net (450,391) (1,357,315)
Deferred policy acquisition costs 296,858 (163,972)
Prepaid expenses and other assets 686,284 107,613
Accounts payable and accrued liabilities (6,665) (5,809)
Cash collateral held (296,768) (713,161)
Reserves for losses and loss adjustment expenses (239,734) 693,110
Income taxes, net 329,178 448,930
Unearned premiums (1,159,218) 571,173
------------ -----------
Net cash provided by operating activities 441,559 1,487,018
------------ -----------
Cash flows from investing activities:
Proceeds from investments sold or matured:
Fixed maturities-sold 6,233,293 1,305,893
Fixed maturities-matured 6,800,000 10,636,500
Short-term investments 80,604,928 21,375,007
Purchases of:
Fixed maturities (51,301,008) (14,194,921)
Equity securities -- (5,262)
Limited Partnership Investment adjustment (61,668) 11,360
Short-term investments (42,755,938) (24,074,391)
Capital expenditures (14,399) (41,675)
------------ -----------
Net cash used for investing activities (494,792) (4,987,489)
------------ -----------
Cash flows from financing activities:
Borrowings under lines of credit 2,000,000 8,700,000
Repayments under lines of credit (5,200,000) --
Borrowings on long-term debt 8,500,000 --
Repayments on long-term debt (409,611) (487,396)
Payments for acquisition & retirement of stock (4,523,665) (6,415,237)
------------ -----------
Net cash provided by financing activities 366,724 1,797,367
------------ -----------
Net increase (decrease) in cash and cash equivalents 313,491 (1,703,104)
Cash and cash equivalents at beginning of period 2,187,227 5,120,375
------------ -----------
Cash and cash equivalents at end of period $ 2,500,718 3,417,271
============ ===========
</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, 1996.
(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 3,875,529 and 3,400,691 for 1997 and 1996, 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 1997 and 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.
(3) Supplemental Cash Flow Information
Income taxes paid during the three months ended March 31, 1997 and 1996 was
$137,221 and $33,530, respectively, and interest paid for the three months ended
March 31, 1997 and 1996 was $568,712 and $680,501, respectively.
On February 5, 1997 and March 29, 1996, the Company issued 450,000 and 49,999
shares of Class A Stock, respectively, 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) Stock Transaction
On February 5, 1997, ACMAT Corporation purchased 1,099,996 shares of its own
Class A Stock from AIG Life Insurance Company (366,663 shares) and American
International Life Assurance Company of New York, (733,333). The shares were
purchased at an average price of $14.70 per share for a total purchase price of
$16,174,942.
The purchase price of $16,174,942 consisted of $4,174,942 in cash and promissory
notes totaling $12,000,000. The promissory notes are with AIG Life Insurance
Company and American International Life Assurance Company of New York and are
payable over eight years with interest at prime rate (8-1/4%). The interest rate
is equal to the prime rate, however, it shall not exceed 9-1/4% and it shall not
be less than 7-1/4%. The purchase of stock with the $12,000,000 promissory notes
is a non-cash transaction that is not reflected in the Consolidated Statement of
Cash Flows.
The 1,099,996 shares of Class A Stock were acquired throughout the past two
years by AIG Life Insurance Company and American International Life Assurance
Company of New York pursuant to the conversion options of the Convertible Senior
Notes.
7
<PAGE> 8
(5) Application of New Accounting Standards
The Financial Accounting Standards Board has recently issued SFAS No. 128,
"Earnings per Share." This statement simplifies the computation of earnings per
share (EPS) by replacing the presentation of primary EPS with basic EPS. Under
the new statement, dual presentation of basic and diluted EPS is required on
the face of the income statement for entities with complex capital structures.
A reconciliation of the numerator and denominator used in the basic EPS
computation to the diluted EPS computation's numerator and denominator is
also required. SFAS No. 128 is effective for financial statements issued for
periods ending after December 15, 1997, including interim periods. The Company
believes that the effect of the adoption of SFAS No. 128 will not be material
to its disclosure of earnings per share.
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 $1,149,226 for the three months ended March 31, 1997 compared
to $1,140,114 for the same period a year ago. The increase in net earnings for
the quarter ended March 31, 1997 reflects the full consolidation of ACMAT's
insurance company subsidiary offset in part by a decrease in earned premiums and
contract revenues.
Earned Premiums
Earned premiums for the three months ended March 31, 1997 decreased to
$4,477,238 compared to $4,644,032 for the same period in 1996. The decrease in
earned premiums is a result of some insurance policies issued with policy
duration's in excess of twelve months and as a result of declining net written
premiums. Net written premiums were $3,741,360 for the three months ended March
31, 1997 compared to $5,165,081 for the three months ended March 31, 1996.
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 and due to competition.
Contract Revenues
Contract revenues were $1,773,134 for the three-month period ended March 31,
1997 compared to $1,986,682 for the same period in 1996. 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. The Company's construction backlog was approximately
$7,000,000 at March 31, 1997 compared to $3,400,000 a year ago.
Investment Income, Net
Net investment income increased to $1,797,770 for the three-month period ended
March 31, 1997 compared to $1,649,027 for the same period in 1996, representing
effective yields of 4.99% and 4.75%, respectively. The increase in investment
income in 1997 over 1996 was due substantially to higher yields on the portfolio
as the result of higher interest rates obtained on reinvested assets. Invested
assets, including cash, were $143,952,350 and $144,117,159 at March 31, 1997 and
December 31, 1996, respectively. The decrease in invested assets is attributable
to the net cash flow used to repay debt and repurchase stock offset by net cash
flow generated from written premiums and the reinvestment of investment income.
Net Realized Capital Losses
Realized capital gains from the sale of investments in the three-month period
ended March 31, 1997 were $35,556 compared to realized capital losses of $7,788
for the same period in 1996.
Costs of Contract Revenues
Costs of contract revenues decreased to $1,660,662 for the three-month period
ended March 31, 1997 compared to $1,906,875 for the same period in 1996. 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).
Losses and Loss Adjustment Expenses
Losses and loss adjustment expenses were $1,343,171 for the three-month period
ended March 31, 1997 compared to $1,393,210 for the same period in 1996. The
decrease in losses and loss adjustment expenses are attributable to the decrease
in earned premiums from 1997 to 1996 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.
9
<PAGE> 10
Amortization of policy acquisition costs
Amortization of policy acquisition costs was $863,054 for the three-month period
ended March 31, 1997 as compared to $674,256 for the same period in 1996. The
increase 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 $1,461,013 for the three-month
period ended March 31, 1997 compared to $1,319,921 for the same period in 1996.
The increase in the selling, general and administrative expenses during 1997 is
due primarily to a increase in bad debt expense and salary expense.
Interest Expense
Interest expense increased to $1,320,284 for the three-month period ended March
31, 1997 compared to $1,232,383 for the same period in 1996. The increase in
interest expense in 1997 is due primarily to the increase in long-term
borrowings offset in part by the repayment of short-term debt.
Income Taxes
Income tax expense was $466,399 for the three-month period ended March 31, 1997
compared to $482,460 for the same period in 1996, representing effective Federal
tax rates of 27.6% and 23.2%, 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, 1997 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") were 30.0% for the three-month periods ended
March 31, 1997 and 1996. 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 46.0% and 44.5% for the three-month
period ended March 31, 1997 and 1996, respectively. The Company's insurance
subsidiaries' combined ratios under GAAP were 76.0% and 74.5% for the
three-month period ended March 31, 1997 and 1996, respectively.
LIQUIDITY AND CAPITAL RESOURCES:
The Company internally generates sufficient funds for its operations and
maintains a relatively high degree of liquidity in its investment portfolio. The
primary sources of funds to meet the demands of claim settlements and operating
expenses are premium collections, investment earnings and maturing investments.
As of March 31, 1997, 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
year.
10
<PAGE> 11
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 and to repurchase Company stock. 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. 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 subsidiaries to improve its working capital.
The Company realized cash flow from operations of $441,559 for the three-month
period ended March 31, 1997 compared to $1,487,018 for the same period in 1996.
Substantially all of the Company's cash flow was used to repay long-term debt,
repurchase stock and purchase investments.
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 1997 amounted to
$494,792 compared to net cash used for investing activities of $4,987,489 for
the same period in 1996.
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, 1997.
The Company maintains a short-term unsecured bank credit line totaling $10.0
million to fund interim cash requirements. There was $10.0 million outstanding
under this line of credit as of March 31, 1997.
During the three-month period ended March 31, 1997, the Company purchased, in
the open market and privately negotiated transactions, 1,900 shares of its
Common Stock at an average price of $20.68. The Company also repurchased, in the
open market and privately negotiated transactions, 1,121,068 shares of its Class
A Stock at an average price of $14.64 per share.
The Company's principal source of cash for repayment of long-term debt is from
dividends from its two insurance companies. Under applicable insurance
regulations, ACMAT's insurance subsidiaries are restricted as to the amount of
dividends they may pay to their 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 $7,011,000
in 1997.
REGULATORY ENVIRONMENT
Risk-based capital requirements are used as early warning tools by the National
Association of Insurance Commissioners and the states to identify companies that
require further regulatory action. The ratio for each of the Company's insurance
subsidiaries as of March 31, 1997 was significantly above the level which might
require regulatory action.
11
<PAGE> 12
Part II - Other Information
Item 6 - Exhibits and Reports on Form 8-K
a. Exhibits
-27. Financial Data Schedule
b. Report on Form 8-K
-Report on Form 8-K dated February 13, 1997
On February 5, 1997, ACMAT Corporation purchased 1,099,996 shares of its own
Class A Stock from AIG Life Insurance Company (366,663 shares) and American
International Life Assurance Company of New York (733,333). The shares were
purchased at an average price of $14.70 per share for a total purchase price of
$16,174,942.
12
<PAGE> 13
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, 1997 /s/ Henry W. Nozko, Sr.
-----------------------
Henry W. Nozko, Sr., President and Chairman
Date: May 13, 1997 /s/ Henry W. Nozko, Jr.
-----------------------
Henry W. Nozko, Jr., Executive Vice President
Chief Operating Officer, and Treasurer
13
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1997
<CASH> 2,500,718
<SECURITIES> 141,451,632
<RECEIVABLES> 9,154,387
<ALLOWANCES> (322,406)
<INVENTORY> 0
<CURRENT-ASSETS> 158,680,957
<PP&E> 17,575,332
<DEPRECIATION> 4,140,393
<TOTAL-ASSETS> 183,850,013
<CURRENT-LIABILITIES> 94,315,463
<BONDS> 51,397,806
0
0
<COMMON> 3,416,149
<OTHER-SE> 34,720,595
<TOTAL-LIABILITY-AND-EQUITY> 183,850,013
<SALES> 6,250,372
<TOTAL-REVENUES> 8,263,809
<CGS> 3,866,887
<TOTAL-COSTS> 3,866,887
<OTHER-EXPENSES> 1,461,013
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,320,284
<INCOME-PRETAX> 1,615,625
<INCOME-TAX> 466,399
<INCOME-CONTINUING> 1,149,226
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,149,226
<EPS-PRIMARY> .30
<EPS-DILUTED> .27
</TABLE>
