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 September 30, 1997
Commission File Number 1-8635
AMERICAN MEDICAL ALERT CORP.
(Exact Name of Small Business Issuer 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
(Issuer's telephone number, including area code)
Check whether the issuer (1) 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: 5,904,607 shares of $.01 par
value common stock as of October 20, 1997.
<PAGE>
AMERICAN MEDICAL ALERT CORP.
INDEX
PART I FINANCIAL INFORMATION
PAGE
----
Item 1. Financial Statements.
Condensed Balance Sheets for September 30, 1997
and December 31, 1996 1
Condensed Statements of Income for the
Nine Months Ended September 30, 1997 and 1996 2
Condensed Statements of Income for the
Three Months Ended September 30, 1997 and 1996 3
Condensed Statements of Cash Flows for
the Nine Months Ended September 30, 1997 and 1996 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 6. Exhibits and Reports on Form 8-K. 7
<PAGE>
Item 1. Financial Statements.
AMERICAN MEDICAL ALERT CORP.
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
September 30, 1997
(UNAUDITED) Dec. 31, 1996*
----------- ---------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 271,572 $ 301,013
Accounts and notes receivable
(net of allowance for doubtful accounts of $30,000 in '97 & '96) 2,018,528 1,327,799
Inventory 1,168,778 1,171,021
Prepaid expenses and other current assets 246,827 137,247
Deferred income tax benefit 54,000 54,000
----------- -----------
Total Current Assets 3,759,705 2,991,080
----------- -----------
Inventory of Medical Devices held for lease-at Cost 229,500 637,000
----------- -----------
NOTE RECEIVABLE -- 15,956
----------- -----------
FIXED ASSETS:
(Net of accumulated depreciation and amortization) 3,645,040 3,115,110
OTHER ASSETS 25,692 24,868
----------- -----------
TOTAL ASSETS $ 7,659,937 $ 6,784,014
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Note Payable Bank $ 450,000 $ 0
Accounts payable 313,648 192,707
Accrued expenses 317,378 311,954
Taxes payable 15,462 16,464
Current portion of long-term debt 9,607 9,182
----------- -----------
Total Current Liabilities 1,106,095 $ 530,307
DEFERRED INCOME TAX LIABILITY 258,000 258,000
NOTE PAYABLE BANK -- 450,000
LONG-TERM DEBT - LESS CURRENT MATURITIES 4,641 11,849
----------- -----------
TOTAL LIABILITIES 1,368,736 1,250,156
----------- -----------
COMMITMENTS AND CONTINGENT LIABILITIES
SHAREHOLDERS' EQUITY
Preferred stock - $.01 par value; authorized 1,000,000 shares;
none issued and outstanding 0 0
Common stock - $.01 par value; authorized - 10,000,000 shares;
issued, and outstanding - 5,904,607 shares in 1997
and 5,771,208 shares in 1996 59,046 58,432
Additional paid-in capital 4,523,189 4,391,990
Retained Earnings 1,814,998 1,189,468
----------- -----------
6,397,233 5,639,890
(106,032) (106,032)
----------- -----------
Total Shareholders Equity 6,291,201 533,858
----------- -----------
TOTAL Liabilities & Shareholders Equity $ 7,659,937 $ 6,784,014
=========== ===========
</TABLE>
See accompanying notes to condensed financial statements.
* Derived from audited financial statements
1
<PAGE>
AMERICAN MEDICAL ALERT CORP.
CONDENSED STATEMENTS OF INCOME
(Unaudited)
NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------
1997 1996
----------- -----------
Revenues:
Services $ 5,009,103 $ 4,575,177
Product sales 736,836 901,915
----------- -----------
5,745,939 5,477,092
Cost and Expenses (Income):
Costs related to services 1,911,850 1,526,525
Costs of products sold 675,659 623,974
Selling, general and
administrative expenses 2,008,717 1,880,979
Interest expense 35,183 33,635
Other income (1,001) (1,000)
----------- -----------
4,630,408 4,064,113
----------- -----------
Income before provision for income taxes 1,115,531 1,412,979
Provision for income taxes 490,000 622,000
----------- -----------
NET INCOME $ 625,531 $ 790,979
=========== ===========
Net income per share $ .11 $ .14
=========== ===========
Weighted average number of
common shares outstanding (Note 3) 5,938,691 5,837,120
=========== ===========
See accompanying notes to condensed financial statements
2
<PAGE>
AMERICAN MEDICAL ALERT CORP.
CONDENSED STATEMENTS OF INCOME
(Unaudited)
THREE MONTHS ENDED SEPTEMBER 30,
--------------------------------
1997 1996
---------- -----------
Revenues:
Services $1,724,311 $ 1,561,149
Product sales 444,94 392,927
2,169,253 1,954,076
Cost and Expenses (Income):
Costs related to services 678,242 514,221
Costs of products sold 405,240 276,928
Selling, general and
administrative expenses 653,138 629,808
Interest expense 11,248 8,399
Other income (-0-) (320)
---------- -----------
1,747,548 1,429,356
---------- -----------
Income before provision for income
taxes 421,705 524,720
Provision for income taxes 184,300 231,000
---------- -----------
NET INCOME $ 237,405 $ 293,720
========== ===========
Net income per share $ .04 $ .05
========== ===========
Weighted average number of
common shares outstanding (Note 3) 5,979,819 5,921,582
========== ===========
See accompanying notes to condensed financial statements
3
<PAGE>
AMERICAN MEDICAL ALERT CORP.
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------
1997 1996
--------- ---------
Cash Flows From Operating Activities:
Net Income $ 625,531 $ 790,979
Adjustments to reconcile net income to
net cash provided by operating activities
Provision for deferred income taxes -- 24,000
Depreciation and amortization 569,680 468,864
Issuance of stock for consulting fees 3,828 --
Change in Assets and Liabilities:
(Increase) in receivables (690,729) (187,356)
(Decrease) in inventory 2,243 (540,794)
(Increase) in prepaid expenses
and other assets (94,448) (59,929)
Increase (Decrease) in accounts payable,
accrued expenses and taxes payable 125,363 239,151
--------- ---------
Net Cash Provided by Operating Activities 541,468 734,915
--------- ---------
Cash Flows from Investing Activities:
Expenditures for fixed assets (692,110) (619,421)
--------- ---------
Net Cash Used In Investing Activities (692,110) (619,421)
--------- ---------
Cash Flows from Financing Activities:
Repayment of bank borrowings -- (150,000)
Net (Repayment of) loans payable (6,783) 7,560
Net Proceeds upon exercise of stock options 127,984 45,523
--------- ---------
Net Cash Provided (Used) In Financing Activities 121,201 (96,917)
--------- ---------
Net (Decrease) increase in Cash (29,441) 18,577
Cash, Beginning of Period 301,013 319,989
--------- ---------
Cash, End of Period $ 27 $ 338,566
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
CASH PAID DURING THE PERIOD
FOR INTEREST $ 35,183 $ 33,635
========= =========
CASH PAID DURING THE PERIOD
FOR INCOME TAXES $ 521,118 $ 400,000
========= =========
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 on Form
10-KSB for the year ended December 31, 1996.
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 September
30, 1997, the condensed statements of income for the three and nine month
periods ended September 30, 1997 and 1996, and the statements of cash flows
for the nine months ended September 30, 1997 and 1996. These financial
statements should be read in conjunction with the financial statements and
notes thereto for the year ended December 31, 1996 included in the Company's
Annual Report on Form 10-KSB. The accounting policies used in preparing
these financial statements are consistent with those applied in the December
31, 1996 financial statements.
3. Income Per Share:
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share"
which changes the methodology of calculating earnings per share. SFAS No.
128 requires the disclosure of diluted earnings per share regardless of its
difference from basic earnings per share. The company plans to adopt SFAS
No. 128 in December 1997. Early adoption is not permitted. Had the company
adopted SFAS No. 128 as of September 30, 1997, the related per share
disclosure for both basic and diluted earnings per share would have been:
THREE MONTHS ENDED SEPTEMBER 30 NINE MONTHS ENDED SEPTEMBER 30
BASIC DILUTED BASIC DILUTED
1997 .04 .04 .11 .11
=== === === ===
1996 .05 .05 .14 .14
=== === === ===
5
<PAGE>
AMERICAN MEDICAL ALERT CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(for the Nine Months Ended September 30, 1997)
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 latest
Annual Report on Form 10-KSB dated December 31, 1996.
LIQUIDITY AND CAPITAL RESOURCES
On March 27, 1997, 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, 1998. As of October 21, 1997, $ 350,000 was
outstanding under this note. The Company's working capital on September 30, 1997
was $2,653,610. During 1997 the Company anticipates that it will make capital
investments of approximately $ 1,000,000 of which approximately $692,110 has
been expended through September 30, 1997 for the purchase and production of
additional systems which the Company intends to rent. 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 $433,926 for the nine months ended September 30,
1997 as compared to the same period in 1996, an increase of 9%. This increase
resulted from the expansion of the Company's customer base for monthly
monitoring and leasing services. Costs related to services for the nine months
ended September 30, 1997 and 1996 were 38% and 33% respectively.
Revenue from services increased $163,162 for the three months ended September
30, 1997 as compared to the same period in 1996, an increase of 10%. This
increase resulted from the expansion of the Company's customer base for monthly
monitoring and leasing services. Costs related to services for the three months
ended September 30, 1997 and 1996 were 39% and 33% respectively.
Revenue from product sales decreased $165,079 for the nine months ended
September 30, 1997 as compared to the same period in 1996, a decrease of 18%.
This decrease was primarily due to the reduction of sales to retirement
communities and assisted living facilities. The gross profit on product sales
for the nine months ended September 30, 1997 and 1996 was 8% and 31%
respectively. This decline was attributable to increased fixed production costs
and sales concessions made to a major new customer.
Revenue from product sales increased $52,015 for the three months ended
September 30, 1997 as compared to the same period in 1996, a increase of 13%.
This increase resulted from sales to distributors and new customers. The gross
profit on product sales for the three months ended September 30, 1997 and 1996
was 9% and 30% respectively. This decline was attributable to increased fixed
production costs and sales concessions made to a major new customer.
6
<PAGE>
PART II - OTHER INFORMATION
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.
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.
Dated: November 5, 1997 By:/S/ HOWARD M. SIEGEL
------------------------
Howard M. Siegel
President and Chief Operating Officer
By: /S/ COREY M. ARONIN
------------------------
Corey M. Aronin
Chief Financial Officer
8
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<NAME> AMERICAN MEDICAL ALERT CORP.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 271,572
<SECURITIES> 0
<RECEIVABLES> 2,048,528
<ALLOWANCES> 30,000
<INVENTORY> 1,398,278
<CURRENT-ASSETS> 3,759,705
<PP&E> 3,645,040
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<TOTAL-ASSETS> 7,659,937
<CURRENT-LIABILITIES> 1,106,095
<BONDS> 464,248
0
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<COMMON> 59,046
<OTHER-SE> 6,232,155
<TOTAL-LIABILITY-AND-EQUITY> 7,659,937
<SALES> 736,836
<TOTAL-REVENUES> 5,745,939
<CGS> 675,659
<TOTAL-COSTS> 4,630,408
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 35,183
<INCOME-PRETAX> 1,115,531
<INCOME-TAX> 490,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 625,531
<EPS-PRIMARY> .11
<EPS-DILUTED> 0
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