<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 EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 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: 0-14807
AMERICAN CLAIMS EVALUATION, INC.
(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
(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 January 26, 1996
<PAGE>
AMERICAN CLAIMS EVALUATION, INC.
INDEX
Page No.
--------
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of
December 31, 1995 and March 31, 1995 3
Consolidated Statements of Earnings for
the Nine Months and Three Months,
respectively, ended December 31, 1995
and 1994 4
Consolidated Statements of Cash Flows for
the Nine Months ended December 31, 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
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1 - Consolidated Financial Statements
AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
Dec.31,1995 Mar.31,1995
----------- -----------
(Unaudited)
Assets
Current Assets:
Cash and cash equivalents $6,744,549 5,500,159
Accounts receivable (net of
allowance for doubtful
accounts of $15,000) 772,726 834,932
Prepaid expenses 51,953 101,793
---------- ---------
Total current assets 7,569,228 6,436,884
Marketable securities 918,813 1,157,625
Property and equipment, net 301,380 372,259
Excess cost over fair value of net
assets acquired, net 574,193 598,511
Deposits 918 1,905
---------- ---------
$9,364,532 8,567,184
========== =========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable 691,763 481,444
Accrued expenses 139,483 119,905
Income taxes payable 117,588 103,142
Deferred income taxes 149,799 181,973
---------- ---------
Total current liabilities 1,098,633 886,464
---------- ---------
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 245,221 131,243
Retained earnings 4,710,479 4,239,278
---------- ---------
Total stockholders' equity 8,265,899 7,680,720
---------- ---------
$9,364,532 8,567,184
========== =========
Note: The balance sheet at March 31, 1995 has been derived from the audited
financial statements at that date.
3
<PAGE>
AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARIES
Consolidated Statements of Earnings
(Unaudited)
Three months ended Nine months ended
----------------------- -----------------------
Dec.31,1995 Dec.31,1994 Dec.31,1995 Dec.31,1994
----------- ----------- ----------- -----------
Revenues $1,356,754 1,360,840 4,133,698 4,133,283
Cost of services 663,377 573,997 1,947,573 1,710,902
---------- --------- --------- ---------
Gross margin 693,377 786,843 2,186,125 2,422,381
Selling, general and
administrative expenses 655,826 916,916 1,954,537 2,685,856
---------- --------- --------- ---------
Operating earnings (loss) 37,551 (130,073) 231,588 (263,475)
Other income:
Interest income 88,082 74,987 254,135 192,034
Gain on sale of
marketable securities 170,478 50,988 237,199 50,988
Miscellaneous income 19,426 24,386 58,279 49,062
---------- --------- --------- ---------
Earnings before provision
for income taxes 315,537 20,288 781,201 28,609
Provision for income taxes 120,000 9,000 310,000 13,000
---------- --------- --------- ---------
Net earnings $ 195,537 11,288 471,201 15,609
========== ========= ========= =========
Net earnings per
share of common stock $ .05 .00 .11 .00
========== ========= ========= =========
Weighted average
common and common
equivalent shares 4,250,824 4,256,145 4,250,697 4,257,746
========== ========= ========= =========
4
<PAGE>
AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
Nine months ended
-------------------------
Dec.31,1995 Dec.31,1994
----------- -----------
Cash flows from operating activities:
Net earnings $ 471,201 15,609
---------- ----------
Adjustments to reconcile net
earnings to net cash provided by
operating activities:
Depreciation and amortization 109,887 114,848
Gain on sales of marketable
securities (237,199) (50,988)
Deferred income taxes (91,000) (92,000)
Changes in assets and liabilities:
(Increase) decrease in accounts
receivable 62,206 (185,733)
Decrease in prepaid expenses 49,840 16,640
Decrease in prepaid taxes - 102,869
Decrease in deposits 987 162
Increase in accounts payable 210,319 197,743
Increase (decrease) in accrued
expenses 19,578 (16,041)
Increase in income taxes payable 14,446 -
---------- ----------
Total adjustments 139,064 87,500
---------- ----------
Net cash provided by operating
activities 610,265 103,109
---------- ----------
Cash flows from investing activities:
Decrease in short-term investments - 2,030,107
Purchase of marketable securities (26,893) (388,980)
Proceeds from sales of marketable
securities 675,708 151,423
Capital expenditures (14,690) (65,939)
---------- ----------
Net cash provided by
investing activities 634,125 1,726,611
---------- ----------
Net increase in cash and cash
equivalents 1,244,390 1,829,720
Cash and cash equivalents at beginning
of period 5,500,159 3,978,409
---------- ----------
Cash and cash equivalents at end of
period $6,744,549 5,808,129
========== ==========
Supplemental Disclosure of Cash Flow
Information:
Income taxes paid $ 386,553 9,504
========== ==========
5
<PAGE>
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 opera-
tions 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
<PAGE>
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations - Nine Months ended December 31, 1995 and 1994
Consolidated revenues for the nine months ended December 31, 1995
totaled $4,133,698, which were consistent with the $4,133,283
reported for the comparable period ended December 31, 1994. For
the three months ended December 31, 1995, consolidated revenues
were $1,356,754 compared to $1,360,840 for the corresponding period
in the previous year. During the current three month period,
hospital bill audit ("HBA") services decreased by 0.8% and
vocational rehabilitation services increased by 1.4% from the prior
year's results.
The cost of evaluations for HBA services as a percentage of HBA
revenues increased to 47.6% for the nine months ended December 31,
1995 from the previous year's comparable percentage of 39.0%. This
increase is predominantly attributable to a change in the mix of
HBA services currently being rendered. Provider discount network
services, which were not offered during the first six months of the
period ended December 31, 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 45.6%
of related revenues for the nine months ended December 31, 1995,
as compared to 49.0% of related revenues in the same period last
year.
Selling, general and administrative expenses for the nine months
ended December 31, 1995 decreased to 47.3% of consolidated revenues
from 65.0% 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. Even though revenues were
unchanged, selling, general and administrative expenses decreased
by $731,319, or 27.2%, from the comparable nine month period last
year.
During the nine months ended December 31, 1995, the Company
realized gains of $237,199 on the sales of marketable securities as
compared to gains of $50,988 during the nine months ended December
31, 1994. The Company also earned $254,135 of interest income
during the current nine month period representing an increase of
$62,101 over the nine months ended December 31, 1994. This
increase was the result of higher interest rates coupled with an
increase in cash and cash equivalents available for investment.
7
<PAGE>
Liquidity and Capital Resources
During the nine month period ended December 31, 1995, cash provided
by operating activities was $610,265, compared with $103,109 during
the comparable period last year. Net earnings of $471,201 was the
major contributor to cash provided by operations during the current
period.
Cash provided by investing activities for the nine months ended
December 31, 1995 was $634,125. During this period, $675,708 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 $14,690 used for capital expenditures.
At December 31, 1995, the Company had working capital of $6,470,595
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 6 - Exhibits and Reports on Form 8-K
(a) None.
(b) No reports on Form 8-K were filed during the quarter
ended December 31, 1995.
9
<PAGE>
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.
Date: January 29, 1996 By: /s/ Gary Gelman
Gary Gelman
Chairman of the Board,
President and Chief Executive
Officer
(Principal Executive Officer)
Date: January 29, 1996 By: /s/ Gary J. Knauer
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> 9-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> DEC-31-1995
<CASH> 6,744,549
<SECURITIES> 919,813
<RECEIVABLES> 772,726
<ALLOWANCES> 15,000
<INVENTORY> 0
<CURRENT-ASSETS> 7,569,228
<PP&E> 658,100
<DEPRECIATION> 356,720
<TOTAL-ASSETS> 9,364,532
<CURRENT-LIABILITIES> 1,098,633
<BONDS> 0
0
0
<COMMON> 42,500
<OTHER-SE> 3,267,699
<TOTAL-LIABILITY-AND-EQUITY> 9,364,532
<SALES> 4,133,698
<TOTAL-REVENUES> 4,133,698
<CGS> 1,947,573
<TOTAL-COSTS> 1,947,573
<OTHER-EXPENSES> 1,954,537
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 781,201
<INCOME-TAX> 310,000
<INCOME-CONTINUING> 471,201
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 471,201
<EPS-PRIMARY> 0.11
<EPS-DILUTED> 0.11
</TABLE>
