<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
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: 0-14809
AMERICAN CLAIMS EVALUATION, INC.
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(Exact name of Registrant as specified in its charter)
New York 11-2601199
- - ------------------------------- -------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
One Jericho Plaza, Jericho, New York 11753
- - ----------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(516) 938-8000
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(Registrant's telephone number, including area code)
(Not applicable)
-----------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
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 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 ____
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, par value $.01 per share
4,250,000 shares outstanding at October 25, 1995
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AMERICAN CLAIMS EVALUATION, INC.
INDEX
Page No.
--------
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of
September 30, 1995 and March 31, 1995 3
Consolidated Statements of Earnings for
the Six Months and Three Months,
respectively, ended September 30, 1995
and 1994 4
Consolidated Statements of Cash Flows for
the Six Months ended September 30, 1995
and 1994 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 7-8
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 9
SIGNATURES 10
2
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PART I. FINANCIAL INFORMATION
Item 1 - Consolidated Financial Statements
AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
Sep. 30, 1995 Mar. 31, 1995
------------- -------------
(Unaudited)
Assets
------
Current Assets:
Cash and cash equivalents $6,102,417 5,500,159
Accounts receivable (net of
allowance for doubtful
accounts of $15,000) 826,272 834,932
Prepaid expenses 63,728 101,793
---------- ----------
Total current assets 6,992,417 6,436,884
Marketable securities 1,154,563 1,157,625
Property and equipment, net 326,088 372,259
Excess cost over fair value of net
assets acquired, net 582,299 598,511
Deposits 905 1,905
---------- ----------
$9,056,272 8,567,184
========== ==========
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Accounts payable 508,905 481,444
Accrued expenses 105,727 119,905
Income taxes payable 275,050 103,142
Deferred income taxes 131,585 181,973
---------- ----------
Total current liabilities 1,021,267 886,464
---------- ----------
Stockholders' equity:
Common stock, $.01 par value;
authorized 10,000,000 shares;
4,250,000 shares issued and
outstanding 42,500 42,500
Additional paid-in capital 3,267,699 3,267,699
Unrealized gain on marketable
securities, net of tax 209,864 131,243
Retained earnings 4,514,942 4,239,278
---------- ----------
Total stockholders' equity 8,035,005 7,680,720
---------- ----------
$9,056,272 8,567,184
========== ==========
Note: The balance sheet at March 31, 1995 has been derived from the
audited financial statements at that date.
3
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AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARIES
Consolidated Statements of Earnings
(Unaudited)
Three months ended Six months ended
------------------ ----------------
Sep. 30, 1995 Sep. 30, 1994 Sep. 30, 1995 Sep. 30, 1994
------------- ------------- ------------- -------------
Revenues $1,382,875 1,325,770 2,776,944 2,772,443
Cost of services 656,607 525,652 1,284,196 1,136,905
---------- --------- --------- ---------
Gross margin 726,268 800,118 1,492,748 1,635,538
Selling, general and
administrative expenses 621,131 915,653 1,298,711 1,768,940
---------- --------- --------- ---------
Operating earnings 105,137 (115,535) 194,037 (133,402)
(loss)
Other income:
Interest income 84,823 64,604 166,053 117,047
Gain on sale of
marketable securities 28,228 - 66,721 -
Miscellaneous income 19,427 9,804 38,853 24,676
---------- --------- --------- ---------
Earnings (loss) before
provision for
(benefit from) income
taxes 237,615 (41,127) 465,664 8,321
Provision for (benefit
from) income taxes 100,000 (8,000) 190,000 4,000
---------- --------- --------- ---------
Net earnings (loss) $ 137,615 (33,127) 275,664 4,321
========== ========= ========= =========
Net earnings (loss) per
share of common stock $ .03 (.01) .06 .00
========== ========= ========= =========
Weighted average
common and common
equivalent shares 4,251,267 4,250,000 4,250,634 4,258,334
========== ========= ========= =========
4
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AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
Six months ended
----------------
Sep. 30, 1995 Sep. 30, 1994
------------- -------------
Cash flows from operating activities:
Net earnings $ 275,664 4,321
---------- ----------
Adjustments to reconcile net
earnings to net cash provided by
operating activities:
Depreciation and amortization 72,750 78,775
Gain on sales of marketable
securities (66,721) -
Deferred income taxes (91,000) (92,000)
Changes in assets and liabilities:
Decrease in accounts receivable 8,660 22,678
Decrease in prepaid expenses 38,065 4,889
Decrease in prepaid taxes - 87,440
(Increase) decrease in deposits 1,000 (2,654)
Increase in accounts payable 27,461 148,524
(Decrease) in accrued expenses (14,178) (66,251)
Increase in income taxes payable 171,908 -
---------- ----------
Total adjustments 147,945 181,401
---------- ----------
Net cash provided by operating
activities 423,609 185,722
---------- ----------
Cash flows from investing activities:
Decrease in short-term investments - (3,018,840)
Purchase of marketable securities (26,893) (388,980)
Proceeds from sales of marketable
securities 215,909 -
Capital expenditures (10,367) (39,598)
---------- ----------
Net cash provided by (used in)
investing activities 178,649 (3,447,418)
---------- ----------
Net increase (decrease) in cash and
cash equivalents 602,258 (3,261,696)
Cash and cash equivalents at beginning
of period 5,500,159 3,978,409
---------- ----------
Cash and cash equivalents at end of
period $6,102,417 716,713
========== ==========
Supplemental Disclosure of Cash Flow
Information:
Income taxes paid $ 109,092 8,560
========== ==========
5
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AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
General
The accompanying unaudited financial statements and footnotes have been
condensed and therefore do not contain all disclosures required by generally
accepted accounting principles. Reference should be made to the Company's
Annual Report to Shareholders for the year ended March 31, 1995. In the opinion
of management, all adjustments (consisting of normal recurring accruals) have
been made to present fairly the financial position, results of operations and
cash flows as at and for the periods shown.
Financial Statement Reclassification
Certain reclassifications have been made to prior periods' financial statements
to conform to the current period's presentation.
Marketable Securities
Marketable securities are classified as available for sale securities and as a
result are recorded at fair value. Fair value is determined based on quoted
market prices. Unrealized gains, net of taxes, are reported as a separate
component of stockholders' equity. For purposes of determining realized gains
and losses, the cost of marketable securities is based on the first-in,
first-out method.
6
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Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations - Six Months ended September 30, 1995 and 1994
Consolidated revenues for the six months ended September 30, 1995 totaled
$2,776,944, which were relatively consistent with the $2,772,443 reported for
the comparable period ended September 30, 1994. For the three months ended
September 30, 1995, consolidated revenues were $1,382,875 compared to $1,325,770
for the corresponding period in the previous year, reflecting an increase of
4.3%. During this period, hospital bill audit ("HBA") services increased by
6.5% and vocational rehabilitation services declined by 2.3% from the prior
year's results.
The cost of evaluations for HBA services as a percentage of HBA revenues
increased to 46.1% for the six months ended September 30, 1995 from the previous
year's comparable percentage of 38.4%. This increase is primarily attributable
to a change in the mix of HBA services currently being rendered. Provider
discount network services, which were not offered during the six month period
ended September 30, 1994, generally provide lower gross margins due to the cost
of the related access fees. The cost of services for vocational rehabilitation
services decreased to 46.9% of related revenues for the six months ended
September 30, 1995 as compared to 49.2% of related revenues in the same period
last year.
Selling, general and administrative expenses for the six months ended September
30, 1995 decreased to 46.8% of consolidated revenues from 63.8% of consolidated
revenues for the comparable period last year. This decrease was achieved
through various cost saving measures introduced during the prior fiscal year,
the benefits of which are now being fully realized. Overall, selling, general
and administrative expenses decreased by $470,229 (26.6%) from the comparable
six month period last year even though revenues were relatively unchanged.
During the six months ended September 30, 1995, the Company earned $166,053 of
interest income representing an increase of $49,006 over the six months ended
September 30, 1994. This increase resulted from higher interest rates in
addition to an increase in the Company's cash and cash equivalents available for
investment. The Company also realized gains of $66,721 on the sales of
marketable securities during the current six month period.
Liquidity and Capital Resources
During the six month period ended September 30, 1995, cash provided by operating
activities was $423,609, compared with $185,722 during
7
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the comparable period last year. Net earnings of $275,664 and an increase in
income taxes payable of $171,908 were the major factors in cash provided by
operations during the current quarter.
Cash provided by investing activities for the six months ended September 30,
1995 was $178,649. During this period, $215,909 of cash provided from the
proceeds of sales of marketable securities was offset by $26,893 used for the
purchase of additional marketable securities and $10,367 used for capital
expenditures.
At September 30, 1995, the Company had working capital of $5,971,150 as compared
to working capital of $5,550,420 at March 31, 1995. The Company believes that
it has sufficient cash resources and working capital to meet its present cash
requirements.
The Company is engaged in a far-reaching review of possibilities for maximizing
shareholder value, centering upon strategic acquisitions and/or dispositions of
assets. In connection therewith, the Company will consider acquisitions within
its current line of business as well as other fields.
8
<PAGE>
PART II. OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareholders of American Claims Evaluation, Inc.
was held on September 21, 1995.
One proposal, subject to shareholder approval, was approved at the
Annual meeting by a vote of shareholders. Under this proposal,
management nominees for election to the Board of Directors, Messrs.
Gelman, Elkin and Gutmann, were re-elected as directors of the Company
to serve until the Annual Meeting of Shareholders to be held in 1996
and until their respective successors are duly elected and qualified.
Item 6 - Exhibits and Reports on Form 8-K
(a) None.
(b) No reports on Form 8-K were filed during the quarter ended
September 30, 1995.
9
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.
AMERICAN CLAIMS EVALUATION, INC.
/s/ Gary Gelman
Date: October 27, 1995 By: ------------------------------
Gary Gelman
Chairman of the Board,
President and Chief Executive
Officer
(Principal Executive Officer)
/s/ Gary J. Knauer
Date: October 27, 1995 By: -----------------------------
Gary J. Knauer
Chief Financial Officer
and Treasurer
(Principal Financial Officer)
10
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
consolidated financial statements and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 6,102,417
<SECURITIES> 1,154,563
<RECEIVABLES> 841,272
<ALLOWANCES> 15,000
<INVENTORY> 0
<CURRENT-ASSETS> 6,992,417
<PP&E> 856,646
<DEPRECIATION> 530,558
<TOTAL-ASSETS> 9,056,272
<CURRENT-LIABILITIES> 1,021,267
<BONDS> 0
<COMMON> 42,500
0
0
<OTHER-SE> 3,267,699
<TOTAL-LIABILITY-AND-EQUITY> 9,056,272
<SALES> 2,776,944
<TOTAL-REVENUES> 2,776,944
<CGS> 1,284,196
<TOTAL-COSTS> 1,284,196
<OTHER-EXPENSES> 1,298,711
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 465,664
<INCOME-TAX> 190,000
<INCOME-CONTINUING> 275,664
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 275,664
<EPS-PRIMARY> 0.06
<EPS-DILUTED> 0.06
</TABLE>
