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 September 30, 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 0-9040
METRO TEL CORP.
___________________________________________________________________________
(Exact name of small business issuer as specified in its charter)
DELAWARE 11-2014231
____________________________________________________________________________
(State of other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification No.)
250 South Milpitas Blvd., Milpitas, California 95035
___________________________________________________________________________
(Adress of principal executive offices)
(408) 946-4600
- ---------------------------------------------------------------------------
(Issuer's telephone number)
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 - 2,054,046 shares
outstanding as of November 12, 1997
===========================================================================
Metro Tel Corp.
Statement of Operations
(Unaudited, Note A)
For the three months
ended September 30,
1997 1996
Net Sales $ 1,046,628 $1,016,250
Cost of goods sold 633,406 626,614
____________________________________________________________________________
Gross Profit 413,222 389,636
____________________________________________________________________________
Selling, general and
administrative
expenses 311,323 280,385
Research & development 56,129 68,603
Interest and other income (2,785) (1,372)
____________________________________________________________________________
364,667 347,616
Earnings (loss) before provision
for income taxes 48,555 42,020
Provision (credit) for
income taxes 19,400 16,800
____________________________________________________________________________
Net Earnings $ 29,155 $ 25,220
============================================================================
Earnings per common
share (Note B) $ .01 $ .01
============================================================================
Weighted average number
of shares
outstanding (Note B) 2,054,046 2,004,046
============================================================================
Metro Tel Corp.
Balance Sheets
(Unaudited, Note A)
ASSETS
September 30, June 30,
1997 1997
Current Assets
Cash and cash equivalents $ 383,930 $ 498,615
Accounts receivable, net 622,058 550,457
Inventories 1,607,157 1,516,339
Prepaid expenses and other 52,776 43,696
Deferred income taxes 27,000 27,000
____________________________________________________________________________
Total current assets 2,692,921 2,636,107
Property and equipment - at cost
Machinery and equipment 500,237 486,683
Furniture and fixtures 76,927 76,883
Leasehold Improvements 8,765 8,765
__________________________________________________________________________
585,929 572,331
Less accumulated depreciation 467,667 457,671
__________________________________________________________________________
118,262 114,660
Other assets
Goodwill, net of accumulated
amortization of $406,709
on September 30, 1997 and
$399,255 on June 30, 1997 785,990 793,444
Other, net 10,134 10,465
____________________________________________________________________________
796,124 803,909
$3,607,307 $3,554,676
==========================================================================
Metro Tel Corp.
Balance Sheets
(Unaudited, Note A)
LIABILITIES AND
STOCKHOLDERS' EQUITY
September 30, June 30,
1997 1997
Current Liabilities
Accounts payable $ 160,483 $ 212,171
Accrued liabilities 247,044 171,880
_____________________________________________________________________________
Total current liabilities 407,527 384,051
Deferred Income Taxes 7,000 7,000
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,
2,080,296 shares issued,
2,054,046 shares outstanding 52,007 52,007
Additional paid-in capital 2,152,423 2,152,423
Retained earnings 1,057,100 1,027,945
_____________________________________________________________________________
3,261,530 3,232,375
Less 26,250 shares of treasury
stock - at cost (68,750) (68,750)
_____________________________________________________________________________
3,192,780 3,163,625
_____________________________________________________________________________
$3,607,307 $3,554,676
=============================================================================
Metro Tel Corp.
Statements of Cash Flows
(Unaudited, Note A)
For the three months ended
September 30,
1997 1996
Cash flows from operating activities:
Net earnings $ 29,155 $ 25,220
Adjustments to reconcile net earnings
to cash provided by operating
activities
Depreciation and amortization 17,781 16,147
(Increase) decrease in operating assets:
Accounts receivable (71,601) 214,740
Inventories (90,818) (139,816)
Prepaid expenses and other (9,080) (30,390)
Increase (decrease) in operating
liabilities:
Accounts payable (51,688) (50,625)
Accrued liabilities 75,164 (56,873)
Income taxes payable (14,127)
____________________________________________________________________________
Net cash (used) provided
by operating activities (101,087) (35,724)
____________________________________________________________________________
Cash flows from investing activities:
Capital expenditures (13,598) (8,226)
____________________________________________________________________________
Net (decrease) in cash
and cash equivalents (114,685) (43,950)
Cash and cash equivalents at beginning
of year 498,615 411,924
____________________________________________________________________________
Cash and cash equivalents at end of
period $ 383,930 $ 367,974
============================================================================
Supplement disclosures of cash flow
information
Cash paid during the period for
Income taxes - $ 29,540
[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, 1997.
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 three month period ended September 30, 1997, cash
decreased by $114,685. The decrease included $101,087 used by operating
activities and $13,598 used to purchase capital assets. Cash generated for
operations by profits ($29,155) and depreciation ($17,781) were used to
support changes in operating assets and liabilities, primarily increases in
inventories ($90,818), accounts receivable ($71,601) and accrued expenses
($75,164), and a decrease in accounts payable ($51,688). The Company believes
that the cash which it expects to generate from operations and its existing
cash will be sufficient to meet operational needs.
Results of Operations
Net sales increased by $30,378 (3.0%) in the first quarter of fiscal
1998 from the same period in fiscal 1997. The increase in sales during the
first quarter was mainly due to increases in foreign sales of telephone test
equipment and an increase in new test equipment sales to the Regional Bell
Operating Companies (RBOCs). Prices remained constant during the period.
Sales of telephone test equipment increased by $44,410 (4.7%) in the first
quarter of fiscal 1998 from the same period in fiscal 1997, with increases
in sales of installers's test sets (15.2%) being offset partially by decreases
in sales of outside plant test sets (2.6%) and transmission test equipment
(19.8%). Sales of customer premise equipment decreased by $17,022 (46.2%)
during the first three months of fiscal 1998 when compared to the same period
of fiscal 1997, mainly due to a reduction in the sale of dialers. Sales of
miscellaneous products, parts and repairs increased by $2,990 (7.5%).
The Company's gross profit margin, expressed as a percentage of sales,
improved to 39.5% for the first quarter of fiscal 1998 from 38.3% for the same
period of fiscal 1997. The improvement was mainly due to the increased level
of sales which permitted the Company to better absorb its fixed expenses and
to a slight reduction in labor costs.
Selling, general and administrative expenses increased during the first
quarter of fiscal 1998 by $30,938 (11.0%) and as a percentage of sales to
29.7% from 27.6% during the first quarter of fiscal 1997. The increase,
which was mainly in selling expenses (58.4%), consisted of increases in
advertising (172.1%), royalties and commissions (69.3%) and payroll (71.2%).
These increases offset decreases in general and adminstrative expenses (14.2%)
due principally to the closing of the Company's Jericho, NY office in January
1997.
Research and development expenses decreased by $10,727 (15.6%) in the
first quarter of fiscal 1998 compared to the same period of fiscal 1997
mainly due to payroll reductions associated with staff changes.
PART 11 - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
At the Company's 1997 Annual Meeting of Stockholders held
on November 5, 1997, stockholders re-elected the Company's
existing Board of Directors by the following votes:
For Withheld
Michael Epstein 1,454,098 6,763
Lloyd Frank 1,454,169 6,692
Venerando J. Indelicato 1,455,923 4,938
Michael Michaelson 1,456,810 4,051
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 September 30, 1997.
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: November 12, 1997 By: Venerando J. Indelicato
President, Treasurer and
Principal Financial and
Chief Accounting Officer
EXHIBIT INDEX
Exhibit Number Description
27 Financial Data Schedule
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> SEP-30-1997
<CASH> 183,930
<SECURITIES> 200,000
<RECEIVABLES> 632,058
<ALLOWANCES> 10,000
<INVENTORY> 1,607,157
<CURRENT-ASSETS> 2,692,921
<PP&E> 585,929
<DEPRECIATION> 467,667
<TOTAL-ASSETS> 3,607,307
<CURRENT-LIABILITIES> 407,527
<BONDS> 0
<COMMON> 52,007
0
0
<OTHER-SE> 3,147,773
<TOTAL-LIABILITY-AND-EQUITY> 3,607,307
<SALES> 1,046,628
<TOTAL-REVENUES> 1,046,628
<CGS> 633,406
<TOTAL-COSTS> 364,667
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 10,000
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 48,555
<INCOME-TAX> 19,400
<INCOME-CONTINUING> 29,155
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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