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 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 0-9040
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 May 13, 1996.
===========================================================================
Metro Tel Corp.
Statement of Operations
(Unaudited, Note A)
For the nine months For the three months
ended March 31, ended March 31,
1996 1995 1996 1995
Net Sales $ 3,022,791 $ 3,153,465 $ 1,072,171 $ 1,084,575
Cost of goods sold 1,880,233 1,917,741 662,801 654,308
Gross Profit 1,142,558 1,235,724 409,370 430,267
Selling, general and
administrative
expenses 858,137 866,576 280,969 305,146
Research & development 210,106 216,128 68,433 71,670
Interest expense -- 754 -- --
Royalty,interest and
other income (9,209) (6,103) (2,177) (503)
1,059,034 1,077,355 347,225 376,313
Earnings before
provision for
income taxes 83,524 158,369 62,145 53,954
Provision for
income taxes 33,400 53,934 24,900 21,584
Net Earnings $ 50,124 $ 104,435 $ 37,245 $ 32,370
============================================================================
Earnings per common
share (Note B) $ .03 $ .05 $ .02 $ .02
============================================================================
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
March 31, June 30,
1996 1995
Current Assets
Cash and cash equivalents $ 333,029 $ 297,157
Accounts receivable, net 619,231 598,281
Inventories 1,496,485 1,498,562
Prepaid expenses 34,453 16,141
Total current assets 2,483,198 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 504,313 478,708
59,504 69,119
Other assets
Goodwill, net of accumulated
amortization of $361,984
on March 31, 1996 and
$339,621 on June 30, 1995 830,716 853,079
Other, net 23,594 29,692
854,310 882,771
$3,397,012 $3,362,031
==========================================================================
Metro Tel Corp.
Balance Sheets
(Unaudited, Note A)
LIABILITIES AND
STOCKHOLDERS' EQUITY
March 31, June 30,
1996 1995
Current Liabilities
Accounts payable $ 173,926 $ 196,378
Accrued liabilities 175,007 154,156
Income taxes payable 17,423 30,965
Total current liabilities 366,356 381,499
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 941,476 891,352
3,099,406 3,049,282
Less 26,250 shares of treasury
stock - at cost (68,750) (68,750)
3,030,656 2,980,532
$3,397,012 $3,362,031
=============================================================================
Metro Tel Corp.
Statements of Cash Flows
(Unaudited, Note A)
For the nine months ended
March 31,
1996 1995
Cash flows from operating activities
Net earnings $ 50,124 $ 104,435
Adjustments to reconcile net earnings
to net cash provided by operating
activities
Depreciation and amortization 54,066 56,730
(Increase) decrease in operating assets
Accounts receivable (20,950) 55,094
Inventories 2,077 (47,231)
Prepaid expenses and other (18,312) (11,373)
Increase (decrease) in operating
liabilities
Accounts payable (22,452) 40,711
Accrued liabilities 20,851 (28,630)
Income taxes payable (13,542) 25,899
Net cash provided
by operating activities 51,862 195,635
Cash flows from investing activities
Capital expenditures (15,990) (15,767)
Net cash used in
investing activities (15,990) (15,767)
Cash flows from financing activities
Principal payment of long term debt (25,000)
Net cash used in financing
activities (25,000)
Net increase in cash
and cash equivalents 35,872 154,868
Cash and cash equivalents at beginning
of year 297,157 180,653
Cash and cash equivalents at end of
nine months $ 333,029 $ 335,521
============================================================================
Supplement disclosures of cash flow
information
Cash paid during the period for
Interest $ -- $ 754
Income taxes $ 46,942 $ 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 nine month period ended March 31, 1996, cash
increased by $35,872. Of the cash generated by operating activities
($51,862), $50,124 was derived from net income and $54,066 was derived
from non-cash expense for depreciation and amortization. These were offset,
in part, by the use of cash primarily to support higher receivables and
prepaid expenses. Cash of $15,990 was used to purchase capital assets.
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 nine month and three month periods ended
March 31, 1996 decreased by $130,674 (4.1%), and $12,404 (1.1%),
respectively, from the comparable periods of fiscal 1995. The decrease
in sales for the nine month and three month period was primarily due to a
reduction in foreign sales and a continuing reduction in sales to the
Regional Bell Operating Companies (RBOCs). Prices for the periods remained
constant. Sales of telephone test equipment decreased by $248,140 (9.3%)
and $30,666 (3.3%) for the nine and three month periods, respectively, of
of fiscal 1996 from the same periods of fiscal 1995. These decreases
were attributable to the reduction in sales of older products to the RBOCs,
which seem to have stabilized for the third quarter. Sales of customer
premise equipment increased by $191,140 (82.5%) and $64,660 (111.18%) for
the nine 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) to a large long distance telephone
company. Sales of spares, repairs and miscellaneous products decreased
by $75,844 (30.0%) for the nine month period and $46,102 (47.2%) in the
third quarter due to a foreign engineering contract which was completed
during the fourth quarter of fiscal 1995.
The Company's gross profit margin, expressed as a percentage of sales,
decreased to 37.8% for the first nine months of fiscal 1996 from 39.2% for
the same period of fiscal 1995. Gross profit margin for the third quarter
decreased to 38.2% in fiscal 1996 from 39.7% in fiscal 1995. The change
during the nine month period related primarily to the reduction of sales
for the period which reduces the ability of the Company to absorb its
fixed expenses. During the third quarter, the change was mainly
attributable to a change in product mix whereby products with lower margins
outsold products with higher margins.
Selling, general and administrative expenses decreased by $8,439 (1.0%)
and $24,177 (7.9%) for the nine and three month periods, respectively, in
fiscal 1996 from fiscal 1995. The reduction in expenses for both periods
was attributable primarily to a reduction in advertising and royalty
expenses, due to the renegotiating of a royalty agreement.
Research and development expenses decreased by $6,022 (2.8%) and
$3,237 (4.5%) for the nine 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 nine month period of fiscal 1995
(34.1%) was lower than by applying statutory rates as a result of a tax
refund credit received during the second quarter. The effective rate in all
other periods was approximately 40%.
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 March 31, 1996.
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: May 13, 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> 9-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> MAR-31-1996
<CASH> 233,029
<SECURITIES> 100,000
<RECEIVABLES> 639,231
<ALLOWANCES> 20,000
<INVENTORY> 1,496,485
<CURRENT-ASSETS> 2,483,198
<PP&E> 563,817
<DEPRECIATION> 504,313
<TOTAL-ASSETS> 3,397,012
<CURRENT-LIABILITIES> 366,356
<BONDS> 0
<COMMON> 50,757
0
0
<OTHER-SE> 2,979,899
<TOTAL-LIABILITY-AND-EQUITY> 3,397,012
<SALES> 3,022,791
<TOTAL-REVENUES> 3,022,791
<CGS> 1,880,233
<TOTAL-COSTS> 1,059,034
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 20,000
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 83,524
<INCOME-TAX> 33,400
<INCOME-CONTINUING> 50,124
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 50,124
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
