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, 1998
Commission File Number 1-8635
New York 11-2571221
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
3265Lawson 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: 5,890,950 shares of $.01 par
value common stock as of May 4, 1998.
<PAGE>
AMERICAN MEDICAL ALERT CORP.
INDEX PAGE
Part I Financial Information
Condensed Balance Sheets for March 31, 1998
and December 31, 1997 1
Condensed Statements of Income for the
Three Months Ended March 31, 1998 and 1997 2
Condensed Statements of Cash Flows for
the Three Months Ended March 31, 1998 and 1997 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
ASSETS
<TABLE>
<CAPTION>
March 31, 1998 Dec. 31,
(UNAUDITED) 1997*
----------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 448,468 $ 304,739
Accounts and notes receivable
(net of allowance for doubtful accounts of $40,000 in
'98 & $30,000 in '97) 1,784,634 1,574,738
Inventory 1,270,800 1,310,551
Prepaid expenses and other current assets 175,290 196,990
Deferred income tax benefit 93,000 97,000
----------- -----------
Total Current Assets $ 3,772,192 $ 3,484,018
FIXED ASSETS:
(Net of accumulated depreciation and amortization) 4,005,080 3,732,849
OTHER ASSETS 236,687 34,761
----------- -----------
TOTAL ASSETS $ 8,013,959 $ 7,251,628
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Note payable - bank $ -- $ 150,000
Accounts payable 316,188 161,795
Accrued expenses 207,223 139,802
Taxes payable 126,334 --
Current portion of deferred income 4,700 --
Current portion of long-term debt 59,532 9,056
----------- -----------
Total Current Liabilities 713,977 460,653
----------- -----------
DEFERRED INCOME TAX LIABILITY 318,000 318,000
DEFERRED INCOME 23,666 --
LONG-TERM DEBT - LESS CURRENT MATURITIES 186,968 2,797
----------- -----------
Total Liabilities 1,242,611 781,450
----------- -----------
COMMITMENTS AND CONTINGENT LIABILITIES
SHAREHOLDERS' EQUITY
Common stock - $.01 par value; authorized - 10,000,000 shares;
issued - 5,928,309 shares in 1998 59,283 59,045
and 5,904,607 shares in 1997 4,568,875 4,523,189
Additional paid-in capital 2,249,222 1,993,976
----------- -----------
Retained Earnings 6,877,380 6,576,210
Less 43,910 shares in 1998 & 1997 of treasury stock, at cost (106,032) (106,032)
----------- -----------
Total Shareholders' Equity 6,771,348 6,470,178
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 8,013,959 $ 7,251,628
=========== ===========
</TABLE>
See accompanying notes to condensed financial statements.
* Derived from audited financial statements.
334749-1
1
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AMERICAN MEDICAL ALERT CORP.
CONDENSED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three months Ended March 31,
1998 1997
----------- -----------
<S> <C> <C>
Revenues:
Services $ 1,822,425 $ 1,615,765
Product sales 221,257 114,575
----------- -----------
2,043,682 1,730,340
Costs and Expenses (Income):
Costs related to services 662,104 591,292
Costs of products sold 161,197 107,399
Selling, general and administrative expenses 751,213 704,818
Interest expense 6,548 12,830
Other income (626) (346)
----------- -----------
Income before provision for income taxes 463,246 314,347
Provision for income taxes 208,000 139,000
----------- -----------
NET INCOME $ 255,246 $ 175,347
=========== ===========
Net income per share:
Basic $ .04 $ .03
----------- -----------
Diluted $ .04 $ .03
----------- -----------
Weighted average number of common shares outstanding (Note 3)
Basic 5,871,715 5,804,674
=========== ===========
Diluted 5,931,089 5,848,584
=========== ===========
</TABLE>
See accompanying notes to condensed financial statements.
2
<PAGE>
AMERICAN MEDICAL ALERT CORP.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1998 1997
--------- ---------
<S> <C> <C>
Cash Flows From Operating Activities:
Net Income $ 255,246 $ 175,346
Adjustments to reconcile net income to
net cash provided by operating activities
Provision for bad debts 10,000 --
Depreciation and amortization 224,514 171,144
Loss on unrecovered leased medical equipment 21,675 22,246
Change in Assets and Liabilities:
(Increase) in receivables (219,896) (1,092)
Decrease in inventory 39,751 9,725
(Increase) Decrease in prepaid expenses
and other assets (1,226) 38,556
(Increase) Decrease in accounts payable,
accrued expenses and taxes payable 348,148 (141,106)
--------- ---------
Net Cash Provided by Operating Activities 678,212 274,819
--------- ---------
Cash Flows from Investing Activities:
Net expenditures for fixed assets (618,773) (204,817)
Payment for account acquisitions (175,000) --
--------- ---------
Net Cash (Used In) Investing Activities (793,773) (204,817)
--------- ---------
Cash Flows from Financing Activities:
Increase (Decrease) in loans payable 84,647 (2,194)
Net Proceeds upon exercise of stock options 45,924 22,581
Sale/leaseback of equipment 128,719 --
--------- ---------
Net Cash Provided by Financing Activities 258,290 20,387
--------- ---------
</TABLE>
See accompanying notes to condensed financial statements.
3
<PAGE>
AMERICAN MEDICAL ALERT CORP.
CONDENSED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
Three Months Ended March 31,
1998 1997
-------- --------
Net Increase (Decrease) in Cash $143,729 $ 90,389
Cash, Beginning of Period 304,739 301,013
-------- --------
Cash, End of Period $448,468 $391,402
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
CASH PAID DURING THE PERIOD
FOR INTEREST $ 6,548 $ 12,830
======== ========
CASH PAID DURING THE PERIOD
FOR INCOME TAXES $ 45,659 $108,727
======== ========
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, 1997 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,
1998, and the results of operations and of cash flows for the three months
ended March 31, 1998 and 1997.
The accounting policies used in preparing these financial statements are the
same as those described in the December 31, 1997 financial statements.
The results of operations for the three months ended March 31, 1998 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 adopted SFAS No. 128
in December 1997. Earnings per share data for the three months ended March
31, 1997 have been stated to conform with this pronouncement.
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, 1997.
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 April 27, 1998, the Company negotiated a $2,000,000 Revolving Credit Facility
with a bank (based upon 75% of eligible accounts receivable and 25% of
inventory, as defined) expiring May 31, 2000. The note bears interest at the
lower of prime rate or LIBOR Rate plus 2.50 % (as defined) and is collateralized
by the Company's assets. There are no amounts outstanding under the Credit
Facility as of May 4, 1998. The agreement provides for negative and affirmative
covenants including those related to tangible net worth, working capital and
other borrowings.
During 1998, the Company anticipates that it will make capital investments of
approximately $1,500,000 of which approximately $430,000 has been expended
through March 31, 1998 for the purchase and production of additional systems the
Company intends to rent. In addition, approximately $80,000 has been expended
for the purchase of office and computer equipment used in operations. The
Company has also entered into a sale/leaseback agreement for equipment.
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 $206,660 for the three months ended March 31,
1998 as compared to the same period in 1997, an increase of 13%. 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, 1998 and 1997 were 36% and 37%, respectively.
Revenue from product sales increased $106,682 for the three months ended March
31, 1998 as compared to the same period in 1997, a increase of 93%. This
increase was primarily due to the increase in sales of our new Model 700 to
distributors and sales to retirement communities. The gross profit on product
sales for the three months ended March 31, 1998 and 1997 was 27% and 6%,
6
<PAGE>
respectively. Gross profit increased as a result of lower production and
overhead costs.
Interest expense for the three months ended March 31, 1998 and 1997 was $6,548
and $12,830, respectively. Selling, general and administrative expenses as
compared as a percentage of total revenues for the three months ended March 31,
1998 and 1997 were 37% and 31% respectively. The decrease in costs as a
percentage of total revenue in 1998 was due to greater operating efficiencies.
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 5, 1998 By: /S/ HOWARD M. SIEGEL
------------------------
Howard M. Siegel
President & Chief Operating
Officer
By: /S/ COREY M. ARONIN
------------------------
Corey M. Aronin
Chief Financial Officer
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<ARTICLE> 5
<CIK> 0000700721
<NAME> AMERICAN MEDICAL ALERT CORP.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 448,468
<SECURITIES> 0
<RECEIVABLES> 1,824,634
<ALLOWANCES> 40,000
<INVENTORY> 1,270,800
<CURRENT-ASSETS> 3,772,192
<PP&E> 4,005,080
<DEPRECIATION> 0
<TOTAL-ASSETS> 8,013,959
<CURRENT-LIABILITIES> 713,977
<BONDS> 246,500
0
0
<COMMON> 59,283
<OTHER-SE> 6,712,065
<TOTAL-LIABILITY-AND-EQUITY> 8,013,959
<SALES> 221,257
<TOTAL-REVENUES> 2,043,682
<CGS> 161,197
<TOTAL-COSTS> 1,580,436
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,548
<INCOME-PRETAX> 463,246
<INCOME-TAX> 208,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 255,246
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
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