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, 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.
___________________________________________________________________________
(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 February 13, 1997
===========================================================================
Metro Tel Corp.
Statement of Operations
(Unaudited, Note A)
For the six months For the three months
ended December 31, ended December 31,
1996 1995 1996 1995
____________________________________________________________________________
Net sales $1,752,930 $1,950,620 $ 736,680 $1,027,608
Cost of goods sold 1,131,990 1,217,432 505,376 626,713
____________________________________________________________________________
Gross profit 620,940 733,188 231,304 400,895
____________________________________________________________________________
Selling, general, and
administrative expenses 589,913 577,168 309,528 280,354
Research and development 132,095 141,673 63,492 68,860
Interest and other income (2,670) (7,032) (1,298) (6,726)
____________________________________________________________________________
719,338 711,809 371,722 342,488
____________________________________________________________________________
Earnings (loss) before
provision (credit) for
income taxes (98,398) 21,379 (140,418) 58,407
Provision (credit) for
income taxes (39,400) 8,500 (56,200) 23,300
____________________________________________________________________________
Net earnings (loss) $ (58,998) $ 12,879 $ (84,218) $ 35,107
============================================================================
Earnings (loss) per
common share (Note B) $ (.03) $ .01 $ (.04) $ .02
==========================================================================
Weighted average number
of shares outstanding
(Note B) 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,
1996 1996
____________________________________________________________________________
Current Assets
Cash and cash equivalents $ 219,798 $ 411,924
Accounts receivable, net 475,899 716,103
Inventories 1,533,427 1,413,379
Prepaid expenses and other 117,682 14,254
Deferred income taxes 31,000 31,000
____________________________________________________________________________
Total current assets 2,377,806 2,586,660
Property and equipment - at cost
Machinery and equipment 503,539 470,433
Furniture and fixtures 89,647 88,414
Leasehold improvements 8,765 8,765
____________________________________________________________________________
601,951 567,612
Less accumulated depreciation 493,782 477,054
____________________________________________________________________________
108,169 90,558
Other assets
Goodwill, net of accumulated
amortization of $384,346
on December 31, 1996 and
$369,438 on June 30, 1996 808,354 823,262
Other, net 20,904 21,562
____________________________________________________________________________
829,258 844,824
- ---------------------------------------------------------------------------
$3,315,233 $3,522,042
==========================================================================
Metro Tel Corp.
Balance Sheets
(Unaudited, Note A)
LIABILITIES AND
STOCKHOLDERS' EQUITY
____________________________________________________________________________
December 31, June 30,
1996 1996
____________________________________________________________________________
Current Liabilities
Accounts payable $ 121,388 $ 209,968
Accrued liabilities 133,839 174,204
Income taxes payable 18,866
_____________________________________________________________________________
Total current liabilities 255,227 403,038
Defrred Income Taxes 14,000 14,000
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,
2,030,296 shares issued,
2,004,046 shares outstanding 50,757 50,757
Additional paid-in capital 2,107,173 2,107,173
Retained earnings 956,826 1,015,824
_____________________________________________________________________________
3,114,756 3,173,754
Less 26,250 shares of treasury
stock - at cost (68,750) (68,750)
_____________________________________________________________________________
3,046,006 3,105,004
_____________________________________________________________________________
$3,315,233 $3,522,042
=============================================================================
Metro Tel Corp.
Statements of Cash Flows
(Unaudited, Note A)
____________________________________________________________________________
For the six months ended
December 31,
1996 1995
____________________________________________________________________________
Cash flows from operating activities
Net earnings (loss) $ (58,998) $ 12,879
Adjustments to reconcile net earnings
to cash provided by operating
activities
Depreciation and amortization 32,292 36,044
(Increase) decrease in operating assets
Accounts receivable 240,204 19,662
Inventories (120,048) (21,664)
Prepaid expenses and other (103,426) (24,724)
Increase (decrease) in operating
liabilities
Accounts payable (88,580) (48,430)
Accrued liabilities (40,365) (22,397)
Income taxes payable (18,866) (21,041)
____________________________________________________________________________
Net cash (used) provided
by operating activities (157,787) (69,671)
____________________________________________________________________________
Cash flows from investing activities
Capital expenditures (34,339) (15,990)
____________________________________________________________________________
Net cash used in
investing activities (34,339) (15,990)
____________________________________________________________________________
Net increase (decrease) in cash
and cash equivalents (192,126) (85,661)
Cash and cash equivalents at beginning
of year 411,924 297,157
____________________________________________________________________________
Cash and cash equivalents at end of
period $ 219,798 $ 211,496
============================================================================
Supplement disclosures of cash flow
information
Cash paid during the period for
Income taxes $ 60,627 $ 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 statements 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, 1996.
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 December 31, 1996, cash decreased
by $192,126. The decrease resulted from $157,787 used by operating activities
and $34,339 used in investing activities to purchase capital assets. A
portion of the Company's existing cash, together with cash generated by the
collection of accounts receivable ($240,204), were used to fund increases
in inventories ($120,048) and prepaid expenses ($103,426) and a decrease
in current liabilities ($147,811), as well as the Company's cash loss
($26,706), net of depreciation. The Company believes that the cash it expects
to generate from operations will be sufficient to meet operational needs.
Results of Operations
Net sales for the three month period ended December 31, 1996 decreased
by $290,928 (28.3%) from the comparable period of fiscal 1996. This decrease
offset an increase in sales in the first quarter and caused a $197,690 (10.1%)
overall decrease in net sales for the full six month reported fiscal 1997
period. The decrease in comparable sales was mainly due to the completion,
in the second quarter of fiscal 1996, of a substantial contract for CSU/DSU
data devices in customer premise equipment and, to a lessor degree, to an
overall reduction, in the second quarter of fiscal 1997, in sales of test
equipment to the Regional Bell Operating Companies (RBOCs) due to year end
budget constraints. Sales of telephone test equipment decreased by $68,870
(9.3%) for the three month period ended December 31, 1996 although,due to
increases in the first quarter of fiscal 1997, sales were $86,689 (5.7%)
higher for the overall six months of fiscal 1997 than for the first half of
fiscal 1996. Due principally to the completion of the CSU/DSU contract
referred above, sales of customer premise equipment decreased by $234,360
(78.1%) and $201,846 (87.4%) for the six and three month periods, respectively,
from the comparable periods of fiscal 1996. Sales of spare parts, repairs and
miscellaneous products decreased by $47,892 (38.2%) and $20,692 (36.1%) for
the six and three month periods, respectively. Prices remained mostly constant
though all reporting periods.
The Company's gross profit margin, expressed as a percentage of sales,
decreased to 35.4% for the six month period of fiscal 1997 from 37.6% for the
same period of fiscal 1996. Gross profit margin decreased to 31.4% for the
second quarter of fiscal 1997 from 39.0%. The decreases were due to the
reduction in sales which affected the ability of the Company to absorb its
fixed expenses and also offset decreases of 10.2% in the six month period and
7.5% in the three month period in variable overhead expenses caused mainly by
a decrease in indirect labor.
Selling, general and administrative expenses increased by $29,175 (10.4%)
in the second quarter of fiscal 1997 over the comparable period of fiscal 1996,
offsetting a decrease in this category of expenses for the first quarter and
producing a net increase of $12,747 (2.2%) for the six month fiscal 1997
period. For the six month period, general and administrative expenses decreased
by 2.8% which, to a large degree, offset increases in sales expense of 10.7%
due mainly to increases in advertising and salaries. The increase for the
second quarter of fiscal 1997 was mainly due to sales expense increases in
advertising, salaries, and royalties which offset a decrease in general and
administrative expenses.
Research and development expenses decreased by $9,578 (6.8%) and $5,368
(7.8%) for the six and three month periods, respectively, in fiscal 1997 over
the comparable fiscal 1996 periods due to decreases in payroll and payroll
expenses.
Interest and other income decreased by $4,362 and $5,428 for the six and three
month periods in fiscal 1997 from the same periods in fiscal 1996.
The effective tax rate for each reported period 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 December 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: February 12, 1997 By: Venerando J. Indelicato
President, Treasurer and
Principal Financial and
Chief Accounting Officer
EXHIBIT INDEX
Exhibit Number Description
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> DEC-31-1996
<CASH> 119,798
<SECURITIES> 100,000
<RECEIVABLES> 485,899
<ALLOWANCES> 10,000
<INVENTORY> 1,533,427
<CURRENT-ASSETS> 2,377,806
<PP&E> 601,951
<DEPRECIATION> 493,782
<TOTAL-ASSETS> 3,315,233
<CURRENT-LIABILITIES> 255,227
<BONDS> 0
<COMMON> 50,757
0
0
<OTHER-SE> 3,009,249
<TOTAL-LIABILITY-AND-EQUITY> 3,315,233
<SALES> 1,752,930
<TOTAL-REVENUES> 1,752,930
<CGS> 1,131,990
<TOTAL-COSTS> 719,338
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 10,000
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (98,398)
<INCOME-TAX> (39,400)
<INCOME-CONTINUING> (58,998)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (58,998)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
</TABLE>
