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 March 31, 1997
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: 5,832,814 shares of $.01 par
value common stock as of May 13, 1997.
<PAGE>
AMERICAN MEDICAL ALERT CORP.
INDEX PAGE
Part I Financial Information
Condensed Balance Sheets for March 31, 1997
and December 31, 1996 1
Condensed Statements of Income for the
Three Months Ended March 31, 1997 and 1996 2
Condensed Statements of Cash Flows for
the Three Months Ended March 31, 1997 and 1996 3 - 4
Notes to Condensed Financial Statements 5
Management's Discussion and Analysis of
Financial Condition and Results of Operations 6
Part II Other Information 7
<PAGE>
Item 1. Financial Statements.
--------------------
AMERICAN MEDICAL ALERT CORP.
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
March 31, 1997 Dec. 31, 1996*
(Unaudited)
----------- --------------
CURRENT ASSETS:
<S> <C> <C>
Cash $ 391,402 $ 301,013
Accounts and notes receivable
(net of allowance for doubtful accounts of $30,000 in '97 & '96) 1,329,606 1,327,799
Inventory 1,161,296 1,171,021
Prepaid expenses and other current assets 98,192 137,247
Deferred income tax benefit 54,000 54,000
------------ ------------
Total Current Assets 3,034,496 2,991,080
------------ ------------
INVENTORY OF MEDICAL DEVICES HELD FOR LEASE - AT COST 637,000 637,000
------------ ------------
NOTES RECEIVABLE 15,241 15,956
------------ ------------
FIXED ASSETS:
(Net of accumulated depreciation and amortization) 3,126,537 3,115,110
------------ ------------
OTHER ASSETS 25,367 24,868
------------ ------------
TOTAL ASSETS $ 6,838,641 $ 6,784,014
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 101,240 $ 192,707
Accrued expenses 232,042 311,954
Taxes payable 46,737 16,464
Current portion of long-term debt 9,458 9,182
------------ ------------
Total Current Liabilities 389,477 530,307
DEFERRED INCOME TAX LIABILITY 258,000 258,000
NOTE PAYABLE BANK 450,000 450,000
LONG-TERM DEBT - LESS CURRENT MATURITIES 9,379 11,849
------------ ------------
Total Liabilities 1,106,856 1,250,156
------------ ------------
COMMITMENTS AND CONTINGENT LIABILITIES
SHAREHOLDERS' EQUITY
Common stock - $.01 par value; authorized - 10,000,000 shares;
issued - 5,852,589 shares in 1997
and 5,843,246 shares in 1996 58,525 58,432
Additional paid-in capital 4,414,478 4,391,990
Retained Earnings 1,364,814 1,189,468
------------ ------------
5,837,817 5,639,890
Less 43,910 shares in 1997 & 1996 of treasury stock, at cost (106,032) (106,032)
------------ ------------
Total Shareholders' Equity 5,731,785 5,533,858
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 6,838,641 $ 6,784,014
============ ============
See accompanying notes to condensed financial statements.
* Derived from audited financial statements.
</TABLE>
1
<PAGE>
AMERICAN MEDICAL ALERT CORP.
CONDENSED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three months Ended March 31,
1997 1996
---- ----
Revenues:
<S> <C> <C>
Services $ 1,615,765 $ 1,479,256
Product sales 114,575 171,890
------------ ------------
1,730,340 1,651,146
------------ ------------
Costs and Expenses (Income):
Costs related to services 591,292 474,713
Costs of products sold 107,399 110,451
Selling, general and
administrative expenses 704,819 645,796
Interest expense 12,830 15,111
Other income (346) -0-
------------ ------------
1,415,994 1,246,071
------------ ------------
Income before provision for income
taxes 314,346 405,075
Provision for income taxes 139,000 178,000
------------ ------------
NET INCOME $ 175,346 $ 227,075
============ ------------
Net income per share $ .03 $ .04
------------ ------------
Weighted average number of
common shares outstanding (Note 3) 5,900,101 5,742,788
============ ============
See accompanying notes to condensed financial statements.
</TABLE>
2
<PAGE>
AMERICAN MEDICAL ALERT CORP.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1997 1996
---- ----
Cash Flows From Operating Activities:
<S> <C> <C>
Net Income $ 175,346 $ 227,075
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation and amortization 171,144 148,773
Loss on unrecovered leased medical equipment 22,246 -0-
Change in Assets and Liabilities:
(Increase) in receivables (1,092) (11,094)
Decrease (Increase) in inventory 9,725 (178,552)
(Increase) Decrease in prepaid expenses
and other assets 38,556 120,582
(Decrease) in accounts payable,
accrued expenses and taxes payable 141,106 (137,312)
------------ -----------
Net Cash Provided by Operating Activities 274,819 169,472
------------ -----------
Cash Flows from Investing Activities:
Expenditures for fixed asset (204,817) (233,797)
------------ -----------
Net Cash (Used In) Investing Activities (204,817) (233,797)
------------ -----------
Cash Flows from Financing Activities:
Repayment of loans payable ( 2,194) ( 1,839)
Net Proceeds upon exercise of stock options 22,581 3,741
------------ -----------
Net Cash Provided by Financing Activities 20,387 1,902
------------ -----------
See accompanying notes to condensed financial statements.
</TABLE>
3
<PAGE>
AMERICAN MEDICAL ALERT CORP.
CONDENSED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1997 1996
---- ----
<S> <C> <C>
Net Increase (Decrease) in Cash $ 90,389 $ (62,423)
Cash, Beginning of Period 301,013 319,989
----------- -----------
Cash, End of Period $ 391,402 $ 257,566
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
CASH PAID DURING THE PERIOD
FOR INTEREST $ 12,830 $ 15,111
=========== ===========
CASH PAID DURING THE PERIOD
FOR INCOME TAXES $ 108,727 $ 60,134
=========== ===========
</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 financial
statements and notes thereto for the year ended December 31, 1996 included
in the Company's Annual Report on Form 10-KSB.
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 March 31, 1997, and the results of operations and of cash flows for the
three months ended March 31, 1997 and 1996.
The accounting policies used in preparing these financial statements are
the same as those described in the December 31, 1996 financial statements.
The results of operations for the three months ended March 31, 1997 are not
necessarily indicative of the results to be expected for any other interim
period or for the full year.
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 March 31, 1997, the related per share
disclosure for both basic and diluted earnings per share would have been $
.03 for the three months ended March 31, 1997 and $ .05 and $ .04 for the
same period for 1996.
5
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and 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 latest
Annual Report dated December 31, 1996.
This discussion contains forward-looking statements which, in addition to
assuming a continuation of the degree and timing of customer utilization and
rate of renewals of contracts with the Company at historical levels, are subject
to a number of known and unknown risks that, in addition to general economic,
competitive and other business conditions, could cause actual results,
performance and achievements to differ materially from those described or
implied in the forward-looking statements.
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 May 13, 1997, $350,000 was outstanding
under this note. The Company's working capital on March 31, 1997 was $
2,645,019. During 1997 the Company anticipates that it will make capital
investments of approximately $1,000,000 of which approximately $186,000 has been
expended through March 31, 1997 for the purchase and production of additional
systems which the Company intends to rent. As a result, the Company believes
that its present cash and working capital position is sufficient in order to
meet its financial requirements for at least the ensuing twelve months.
Results of Operations
- ---------------------
Revenue from services increased $136,509 for the three months ended March 31,
1997 as compared to the same period in 1996, an increase of 9%. 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 March
31, 1997 and 1996 were 37% and 32%, respectively. The increase in costs was due
to a write off of unrecoverable units and reserves for repairs.
Revenue from product sales decreased $57,315 for the three months ended March
31, 1997 as compared to the same period in 1996, a decrease of 33%. This
decrease was primarily due to the decrease in sales to distributors and
retirement communities. The gross profit on product sales for the three months
ended March 31, 1997 and 1996 was 6% and 36%, respectively. Gross profit
declined as a result of increased fixed production costs.
Interest expense for the three months ended March 31, 1997 and 1996 was $12,830
and $15,111, respectively. Selling, general and administrative expenses as
compared as a percentage of total revenues for the three months ended March 31,
1997 and 1996 were 41% and 39% respectively. The increase in costs in 1997 were
due to expansion of the Illinois office and the growth of the Company's
infrastructure.
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: May 13, 1997 By: /s/ Howard M. Siegel
------------------------------
Howard M. Siegel
President & Chief Operating Officer
By: /s/ Corey M. Aronin
------------------------------
Corey M. Aronin
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000700721
<NAME> AMERICAN MEDICAL ALERT CORP.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 391,402
<SECURITIES> 0
<RECEIVABLES> 1,374,847
<ALLOWANCES> 30,000
<INVENTORY> 1,798,296
<CURRENT-ASSETS> 3,034,496
<PP&E> 3,126,537
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,838,641
<CURRENT-LIABILITIES> 389,477
<BONDS> 468,837
0
0
<COMMON> 58,525
<OTHER-SE> 5,673,260
<TOTAL-LIABILITY-AND-EQUITY> 6,891,904
<SALES> 114,575
<TOTAL-REVENUES> 1,730,340
<CGS> 107,399
<TOTAL-COSTS> 1,415,994
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,830
<INCOME-PRETAX> 314,346
<INCOME-TAX> 139,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 175,346
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
