SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1995
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 0-9040
METRO TEL CORP.
DELAWARE 11-2014231
____________________________________________________________________________
(State of other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification No.)
500 North Broadway, Suite 240, Jericho, New York 11753
(516) 937-3420
Check whether the issuer; (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 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 .
State the number of shares outstanding of each of the issuer's
classes of common equity as of the latest practicable date:
Common Stock, $.025 par value per share - 2,004,046 shares
outstanding as of February 9, 1996.
===========================================================================
Metro Tel Corp.
Statement of Operations
(Unaudited, Note A)
For the six months For the three months
ended December 31 ended December 31
1995 1994 1995 1994
Net Sales $ 1,950,620 $ 2,068,890 $1,027608 $ 968,295
Cost of goods sold 1,217,432 1,263,433 626,713 592,369
Gross Profit 733,188 805,457 400,895 375,926
Selling, general and
administrative
expenses 577,168 561,430 280,354 294,608
Research & development 141,673 144,458 68,860 75,906
Interest expense -- 754 -- 335
Royalty,interest and
other income (7,032) (5,600) ( 6,726) (5,600)
711,809 701,042 342,488 365,249
Earnings before
provision for
income taxes 21,379 104,415 58,407 10,677
Provision (credit) for
income taxes 8,500 32,350 23,300 (5,150)
Net Earnings $ 12,879 $ 72,065 $ 35,107 $ 15,827
==========================================================================
Earnings per common
share (Note B) $ .01 $ .04 $ .02 $ .01
==========================================================================
Weighted average number
of shares
outstanding 2,004,046 2,004,046 2,004,046 2,004,046
============================================================================
Metro Tel Corp.
Balance Sheets
(Unaudited, Note A)
ASSETS
December 31, June 30,
1995 1995
Current Assets
Cash and cash equivalents $ 211,496 $ 297,157
Accounts receivable, net 578,619 598,281
Inventories 1,520,226 1,498,562
Prepaid expenses and other 40,865 16,141
Total current assets 2,351,206 2,410,141
Property and equipment - at cost
Machinery and equipment 466,488 450,498
Furniture and fixtures 88,564 88,564
Leasehold improvements 8,765 8,765
563,817 547,827
Less accumulated depreciation 495,778 478,708
68,039 69,119
Other assets
Goodwill, net of accumulated
amortization of $354,530
on December 31, 1995 and
$339,621 on June 30, 1995 838,170 853,079
Other, net 25,627 29,692
863,797 882,771
$3,283,042 $3,362,031
==========================================================================
Metro Tel Corp.
Balance Sheets
(Unaudited, Note A)
LIABILITIES AND
STOCKHOLDERS' EQUITY
December 31, June 30,
1995 1995
Current Liabilities
Accounts payable $ 147,948 $ 196,378
Accrued liabilities 131,759 154,156
Income taxes payable 9,924 30,965
Total current liabilities 289,631 381,499
Stockholders' Equity
Preferred stock, $1 par value,
200,000 shares authorized,
none issued or outstanding
Common stock, $.025 par value,
6,000,000 shares authorized,
2,030,296 shares issued,
2,004,046 shares outstanding 50,757 50,757
Additional paid-in capital 2,107,173 2,107,173
Retained earnings 904,231 891,352
3,062,161 3,049,282
Less 26,250 shares of treasury
stock - at cost (68,750) (68,750)
2,993,411 2,980,532
$3,283,042 $3,362,031
=============================================================================
Metro Tel Corp.
Statements of Cash Flows
(Unaudited, Note A)
For the six months ended
December 31,
1995 1994
Cash flows from operating activities
Net earnings $ 12,879 $ 72,065
Adjustments to reconcile net earnings
to cash provided by operating
activities
Depreciation and amortization 36,044 37,818
(Increase) decrease in operating assets
Accounts receivable 19,662 107,609
Inventories (21,664) (9,005)
Prepaid expenses and other (24,724) (22,240)
Increase (decrease) in operating
liabilities
Accounts payable (48,430) (3,491)
Accrued liabilities (22,397) (64,738)
Income taxes payable (21,041) 4,318
Net cash provided
by operating activities (69,671) 122,336
Cash flows from investing activities
Capital expenditures (15,990) (6,795)
Net cash used in
investing activities (15,990) (6,795)
Cash flows from financing activities
Principal payment of long term debt (25,000)
Net cash used in financing
activities (25,000)
Net (decrease) increase in cash
and cash equivalents (85,661) 90,541
Cash and cash equivalents at beginning
of year 297,157 180,653
Cash and cash equivalents at end of
six months $ 211,496 $ 271,194
============================================================================
Supplement disclosures of cash flow
information
Cash paid during the period for
Interest $ -- $ 754
Income taxes $ 29,540 $ 25,489
[FN]
METRO TEL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note A - General: The accompanying unaudited financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial information and the instructions to Form 10-QSB
related to interim period financial statements. Accordingly, these
financial statements do not include certain information and footnotes
required by generally accepted accounting principles for complete
financial statements. However, the accompanying unaudited financial
statements contain all adjustments (consisting only of normal recurring
accruals) which, in the opinion of management, are necessary in order to
make the financial statements not misleading. The results of operations
for interim periods are not necessarily indicative of the results to be
expected for the full year. For further information, refer to the
Company's financial statements and footnotes thereto included in the
Company's Annual Report on Form 10-KSB for the year ended June 30, 1995.
Note B - Earnings Per Common Share: Earnings per common share is based upon
the weighted average number of shares of common stock outstanding during the
year. Stock options have not been included in the calculation since their
inclusion would not be materially dilutive.
Management's Discussion and Analysis of
Financial Condition and Results of Operation
Liquidity and Capital Resources
During the six month period ended December 31, 1995, cash
decreased by $85,661. The decrease included, (i) cash used by operating
activities ($69,671), resulting from a net use of $118,594 for working
capital items which offset cash provided by net income of $12,879 and
non-cash charges of $36,044 for depreciation and amortization, (ii)
cash used to purchase capital assets ($15,990).
The Company believes that the cash which it expects to generate from
operations will be sufficient to meet operational needs.
Results of Operations
Net sales for the six month and three month periods ended
December 31, 1995 decreased by $118,270 (5.7%), but increased by $59,313
(6.1%), respectively, from the comparable periods of fiscal 1995.
The decrease in sales for the six month period was mainly due to a
reduction in foreign orders and a continuing reduction in sales to the
Regional Bell Operating Companies (RBOCs). The increase in sales during
the second quarter was attributable to the shipment of new products
which offset a reduction in foreign and RBOC orders. Prices remained
constant. Sales of telephone test equipment decreased by $217,474
(12.5%) and $68,812 (8.5%) for the six month and three month periods,
respectively, of fiscal 1996 from the same periods of fiscal 1995. These
decreases were attributable to the reduction in sales to RBOC companies
and foreign orders. Sales of customer premise equipment increased
by $126,480 (72.8%) and $174,581 (310.2%) for the six and three
month periods, respectively,of fiscal 1996 from the same periods of
fiscal 1995. These increases were primarily due to increased shipments of
data products (CSU/DSU). Sales of spares, repairs and miscellaneous
products decreased by $29,742 (19.2%) for the six month period and
$46,248 (44.6%) for the three month period of fiscal 1996.
The Company's gross profit margin, expressed as a percentage of sales,
decreased to 37.6% for the first six months of fiscal 1996 from 38.9% for
the same period of fiscal 1995. Gross profit for the second quarter improved
to 39.0% in fiscal 1996 from 38.8% in fiscal 1995. The changes for both
periods relate to the changes in sales for the same period which affect
the ability of the Company to absorb its fixed expenses.
Selling, general and administrative expenses increased by $15,738 (2.8%)
for the six month period and decreased by $14,253 (4.8%) for the three month
periods, respectively, of fiscal 1996 when compared to the comparable periods
of fiscal 1995. For the six month period the increase was primarily
attributed to increases of sales expense due to the addition of a
Vice President of Sales and Marketing, which offset reductions in royalty
expenses due to the renegotiating of a royalty agreement. The decrease for
the three month period was mainly due to reductions in advertising,
royalties and commissions which offset increases in benefits, travel expenses
and professional fees.
Research and development expenses increased by $2,785 (1.9%) and
$7,046 (9.3%) for the six and three month periods, respectively, in fiscal
1996 over fiscal 1995 due to decreases in engineering supplies and
hospitalization expenses.
The provision for income taxes in the fiscal 1995 periods are lower
than the statutory rates as a result of a tax refund credit.
PART 11 - OTHER INFORMATION
Item 7. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the
quarter ended December 31, 1995.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
METRO-TEL CORP.
Date: February 9, 1996 By: Venerando J. Indelicato
President, Treasurer and
Principal Financial and
Chief Accounting Officer
EXHIBIT INDEX
Exhibit Number Description Page
27 Financial Data Schedule 10
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> DEC-31-1995
<CASH> 111,496
<SECURITIES> 100,000
<RECEIVABLES> 598,619
<ALLOWANCES> 20,000
<INVENTORY> 1,520,226
<CURRENT-ASSETS> 2,351,206
<PP&E> 563,817
<DEPRECIATION> 495,778
<TOTAL-ASSETS> 3,283,042
<CURRENT-LIABILITIES> 289,631
<BONDS> 0
<COMMON> 50,757
0
0
<OTHER-SE> 2,942,654
<TOTAL-LIABILITY-AND-EQUITY> 3,283,042
<SALES> 1,950,620
<TOTAL-REVENUES> 1,950,620
<CGS> 1,217,432
<TOTAL-COSTS> 711,809
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 20,000
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 21,379
<INCOME-TAX> 8,500
<INCOME-CONTINUING> 12,879
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,879
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
