FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1996
Commission File Number 1-8635
AMERICAN MEDICAL ALERT CORP.
(Exact Name of Registrant as Specified in its Charter)
New York 11-2571221
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
3265 Lawson Boulevard, Oceanside, New York 11572
(Address of principal executive offices)
(Zip Code)
(516) 536-5850
(Registrant's telephone number, including area code)
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 such 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: 5,710,816 shares of $.01 par
value common stock as of July 26, 1996.
<PAGE>
AMERICAN MEDICAL ALERT CORP.
INDEX
PART I FINANCIAL INFORMATION
PAGE
Item 1. Financial Statements.
Condensed Balance Sheets for June 30, 1996
and December 31, 1995 1
Condensed Statements of Income for the
Six Months Ended June 30, 1996 and 1995 2
Condensed Statements of Income for the
Three Months Ended June 30, 1996 and 1995 3
Condensed Statements of Cash Flows for
the Six Months Ended June 30, 1996 and 1995 4
Notes to Condensed Financial Statements 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations. 6
PART II OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security-Holders. 7
Item 6. Exhibits and Reports on Form 8-K. 7
<PAGE>
Item 1. Financial Statements.
AMERICAN MEDICAL ALERT CORP.
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
June 30, 1996 Dec. 31, 1995*
(Unaudited)
----------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 251,031 $ 319,989
Accounts and notes receivable
(net of allowance for doubtful accounts of $30,000 in '96 & '95) 1,343,232 1,236,938
Inventory 1,305,577 1,116,810
Prepaid expenses and other current assets 186,175 149,309
Deferred income tax benefit 30,000 54,000
----------- -----------
Total Current Assets 3,116,015 2,877,046
----------- -----------
FIXED ASSETS:
(Net of accumulated depreciation and amortization) 3,040,356 2,848,109
OTHER ASSETS 30,564 24,887
----------- -----------
TOTAL ASSETS $ 6,186,935 $ 5,750,042
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Note Payable Bank 300,000 -0-
Accounts payable 471,433 467,300
Accrued expenses 169,973 214,092
Taxes payable 111,430 -0-
Current portion of long-term debt 10,378 7,351
----------- -----------
Total Current Liabilities 1,063,214 688,743
DEFERRED INCOME TAX LIABILITY 195,000 195,000
NOTE PAYABLE BANK -0- 450,000
LONG-TERM DEBT - LESS CURRENT MATURITIES 16,576 8,949
----------- -----------
Total Liabilities 1,274,790 1,342,692
----------- -----------
COMMITMENTS AND CONTINGENT LIABILITIES
SHAREHOLDERS' EQUITY
Common stock - $.01 par value; authorized - 10,000,000 shares;
issued, and outstanding - 5,754,726 shares in 1996
and 5,504,741 shares in 1995 57,547 55,047
Additional paid-in capital 4,192,796 4,088,212
Retained Earnings 767,834 270,575
----------- -----------
5,018,177 4,413,834
Less 43,910 shares in 1996 & 1,995 in 1995 of treasury stock, at cost (106,032) (6,484)
----------- -----------
Total Shareholders Equity 4,912,145 4,407,350
----------- -----------
TOTAL Liabilities & Shareholders Equity $ 6,186,935 $ 5,750,042
=========== ===========
</TABLE>
See accompanying notes to condensed financial statements
* Derived from audited financial statements
1
<PAGE>
AMERICAN MEDICAL ALERT CORP.
CONDENSED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
--------------------------
1996 1995
---- ----
<S> <C> <C>
Revenues:
Services $ 3,014,028 $ 2,509,331
Product sales 508,988 284,162
----------- -----------
3,523,016 2,793,493
----------- -----------
Cost and Expenses (Income):
Costs related to services (Note 4) 1,012,304 824,880
Costs of products sold (Note 4) 347,046 198,959
Selling, general and
administrative expenses 1,251,171 1,075,242
Interest expense 25,236 29,396
Other income (1000) (291)
----------- -----------
2,634,757 2,128,186
----------- -----------
Income before provision for income
taxes 888,259 665,307
Provision for income taxes 391,000 282,988
----------- -----------
NET INCOME $ 497,259 $ 382,319
=========== ===========
Net income per share $ .09 $ .07
=========== ===========
Weighted average number of
common shares outstanding (Note 3) 5,765,456 5,833,436
=========== ===========
</TABLE>
See accompanying notes to condensed financial statements
2
<PAGE>
AMERICAN MEDICAL ALERT CORP.
CONDENSED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three months Ended June 30,
---------------------------
1996 1995
---- ----
<S> <C> <C>
Revenues:
Services $ 1,534,772 $ 1,347,063
Product sales 337,098 175,807
----------- -----------
1,871,870 1,522,870
----------- -----------
Cost and Expenses (Income):
Costs related to services (Note 4) 537,591 449,861
Costs of products sold (Note 4) 236,595 140,310
Selling, general and
administrative expenses 605,375 542,087
Interest expense 10,125 14,329
Other income (1000) (128)
----------- -----------
1,388,686 1,146,459
----------- -----------
Income before provision for income
taxes 483,184 376,411
Provision for income taxes 213,000 161,500
----------- -----------
NET INCOME $ 270,184 $ 214.911
=========== ===========
Net income per share $ .05 $ .04
=========== ===========
Weighted average number of
common shares outstanding (Note 3) 5,788,124 5,870,233
=========== ===========
</TABLE>
See accompanying notes to condensed financial statements
3
<PAGE>
AMERICAN MEDICAL ALERT CORP.
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------
1996 1995
--------- ---------
<S> <C> <C>
Cash Flows From Operating Activities:
Net Income $ 497,259 $ 382,319
Adjustments to reconcile net income to
net cash provided by operating activities
Provision for deferred income taxes 24,000 97,000
Depreciation and amortization 308,102 242,621
Change in Assets and Liabilities:
(Increase) Decrease in receivables (106,294) 75,018
(Increase) Decrease in inventory (188,767) 8,050
(Increase) in prepaid expenses
and other assets (42,543) (86,088)
Increase (Decrease) in accounts payable,
accrued expenses and taxes payable 71,444 (230,214)
--------- ---------
Net Cash Provided by Operating Activities 563,201 488,706
--------- ---------
Cash Flows from Investing Activities:
Expenditures for fixed assets (500,349) (390,040)
--------- ---------
Net Cash Used In Investing Activities (500,349) (390,040)
--------- ---------
Cash Flows from Financing Activities:
Repayment of bank borrowings (150,000) (100,000)
Net (Repayment of) loans payable 10,654 (1,063)
Net Proceeds upon exercise of stock options 7,536 13,405
--------- ---------
Net Cash Used In Financing Activities (131,810) (87,658)
--------- ---------
Net (Decrease) increase in Cash (68,958) 11,008
Cash, Beginning of Period 319,989 157,435
--------- ---------
Cash, End of Period $ 251,031 $ 168,443
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
CASH PAID DURING THE PERIOD
FOR INTEREST $ 25,236 $ 29,396
========= =========
CASH PAID DURING THE PERIOD
FOR INCOME TAXES $ 207,129 $ 179,284
========= =========
</TABLE>
See accompanying notes to condensed financial statements
4
<PAGE>
AMERICAN MEDICAL ALERT CORP.
Notes to Condensed Financial Statements
(Unaudited)
1. General:
These financial statements should be read in conjunction with the notes to
the financial statements contained in the latest annual report for the year
ended December 31, 1995.
2. Results of Operations:
In the opinion of management, the accompanying unaudited condensed
financial statements contain all adjustments (consisting only of normal
recurring accruals) necessary to present fairly the financial position as
of June 30, 1996, the condensed statements of income for the three and six
month periods ended June 30, 1996 and 1995, and the statements of cash
flows for the six months ended June 30, 1996 and 1995.
The condensed statements of income for the six and three month periods
ended June 30, 1996 are not necessarily indicative of the results to be
expected for the full year.
3. Income Per Share:
Income per share is computed using the weighted average number of common
shares and common share equivalents outstanding during each period. In 1996
and 1995, the dilutive effect of outstanding options and warrants was
included in the weighted average number of common shares.
4. Reclassification:
Certain costs in the 1995 condensed statements of income previously
included in costs of products sold have been reclassified to costs related
to services to conform with the 1996 presentation and to be consistent with
the classification of such costs in the Company's 1995 annual report on
Form 10-KSB.
5
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Conditions & Results
of Operations.
The following discussion and analysis provides information which management
believes is relevant to an assessment and understanding of the Company's results
of operations and financial condition. The discussion should be read in
conjunction with the consolidated financial statements contained in the
Company's Annual Report on Form 10-KSB
for the year ended December 31, 1995.
Liquidity and Capital Resources
- -------------------------------
On December 1, 1995, the Company renegotiated its $1,500,000 credit note (based
upon 75% of eligible accounts receivable and 25% of inventory, as defined) and
extended it until April 30, 1997. As of July 26, 1996, $300,000 was outstanding
under this note. The Company's working capital on June 30, 1996 was $2,052,801.
During 1996 the Company anticipates that it will make capital investments of
approximately $1,000,000 of which approximately $500,000 has been expended
through June 30, 1996 for the purchase and production of additional systems
which the Company intends to rent to its customers. The Company believes that
its present cash and working capital position, its borrowing availability and
future anticipated income will be sufficient to meet its cash and working
capital needs for the foreseeable future.
Results Of Operations
- ---------------------
Revenue from services increased $504,697 for the six months ended June 30, 1996
as compared to the same period in 1995, an increase of 20%. This increase
resulted from expansion of the Company's customer base for monthly monitoring
and leasing services. Costs related to services for the six months ended June
30, 1996 and 1995 were 34% and 33%, respectively.
Revenue from services increased $187,709 for the three months ended June 30,
1996 as compared to the same period in 1995, an increase of 14%. This increase
resulted from expansion of the Company's customer base for monthly monitoring
and leasing services. Costs related to services for the three months ended June
30, 1996 and 1995 were 35% and 33%, respectively.
Revenue from product sales increased $224,826 for the six months ended June 30,
1996 as compared to the same period in 1995, an increase of 79%. This increase
was primarily due to the increase in sales to distributors and retirement
communities. The gross profit on product sales for the six months ended June 30,
1996 and 1995 was 32% and 30%, respectively.
Revenue from product sales increased $161,291 for the three months ended June
30, 1996 as compared to the same period in 1995, an increase of 92%. This
increase was primarily due to the increase in sales to distributors and
retirement communities. The gross profit on product sales for the three months
ended June 30, 1996 and 1995 was 30% and 20%, respectively. This increase is due
to lower production costs resulting from production efficiencies in 1996.
Interest expense for the six months ended June 30, 1996 and 1995 was $25,236 and
$29,396, respectively. Selling, general and administrative expenses as compared
as a percentage of total revenues for the six months ended June 30, 1996 and
1995 were 36% and 38% respectively.
Interest expense for the three months ended June 30, 1996 and 1995 was $10,125
and $14,329, respectively. Selling, general and administrative expenses as
compared as a percentage of total revenues for the three months ended June 30,
1996 and 1995 were 32% and 36% respectively.
6
<PAGE>
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
On June 11, 1996 the Company held its 1996 Annual Meeting of Shareholders
(the "1996 Meeting"). At the 1996 Meeting, the Company's shareholders elected
six directors to serve until the 1997 Annual Meeting of Shareholders and until
their respective successors shall be elected and qualified. The vote for such
directors was as follows:
\ FOR WITHELD
Howard M. Siegel 4,792,378 45,888
Wilfred L. Mossey 4,798,435 39,831
Myron Segal 4,794,535 43,731
Leonard Herz 4,793,935 44,331
Peter Breitstone 4,796,035 42,231
Eli S. Feldman 4,795,935 42,331
In addition, at the 1996 Meeting the Company's shareholders voted with
respect to the ratification and approval of Margolin, Winer & Evens, LLP as the
Company's independent auditors for the year ending December 31, 1996. In
connection with this proposal, 4,802,285 votes were cast for the proposal,
27,050 votes were cast against the proposal and 8,931 votes abstained from
voting.
Item 6. Exhibit 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 for which this
report is filed.
7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
AMERICAN MEDICAL ALERT CORP.
By: /s/ Howard M. Siegel
-------------------------
Howard M. Siegel
President & Chief Operating Officer
(Chief Financial & Accounting Officer)
Dated: July 26, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000700721
<NAME> AMERICAN MEDICAL ALERT CORP.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 251,031
<SECURITIES> 0
<RECEIVABLES> 1,373,232
<ALLOWANCES> 30,000
<INVENTORY> 1,305,577
<CURRENT-ASSETS> 3,116,015
<PP&E> 3,040,356
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,186,935
<CURRENT-LIABILITIES> 1,063,214
<BONDS> 16,576
0
0
<COMMON> 57,547
<OTHER-SE> 4,854,598
<TOTAL-LIABILITY-AND-EQUITY> 6,186,935
<SALES> 508,988
<TOTAL-REVENUES> 3,523,016
<CGS> 347,046
<TOTAL-COSTS> 2,634,757
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 25,536
<INCOME-PRETAX> 888,259
<INCOME-TAX> 391,000
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<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 497,259
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