<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 June 30, 1996
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 July 29, 1996
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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
June 30, 1996 and March 31, 1996 3
Consolidated Statements of Earnings
for the Three Months ended
June 30, 1996 and 1995 4
Consolidated Statements of Cash Flows
for the Three Months ended
June 30, 1996 and 1995 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
Jun.30,1996 Mar.31,1996
----------- -----------
(Unaudited)
Assets
Current Assets:
Cash and cash equivalents $ 7,882,668 7,242,029
Marketable securities -- 364,500
Accounts receivable (net of
allowance for doubtful
accounts of $15,000) 566,670 771,585
Prepaid expenses 52,799 53,571
----------- -----------
Total current assets 8,502,137 8,431,685
Property and equipment, net 242,321 269,015
Excess cost over fair value of net
assets acquired, net 557,980 566,086
----------- -----------
$ 9,302,438 9,266,786
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable 419,591 511,694
Accrued expenses 91,129 129,293
Income taxes payable 227,252 142,703
Deferred income taxes 14,473 78,826
----------- -----------
Total current liabilities 752,445 862,516
----------- -----------
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 -- 117,155
Retained earnings 5,239,794 4,976,916
----------- -----------
Total stockholders' equity 8,549,993 8,404,270
----------- -----------
$ 9,302,438 9,266,786
=========== ===========
Note: The balance sheet at March 31, 1996 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
------------------
Jun.30,1996 Jun.30,1995
----------- -----------
Revenues $ 953,160 1,394,069
Cost of services 440,279 627,589
---------- ----------
Gross margin 512,881 766,480
Selling, general and administrative
expenses 494,127 677,580
---------- ----------
Operating earnings 18,754 88,900
Other income:
Gain on sale of marketable
securities, net 285,356 38,493
Interest income 111,785 81,230
Miscellaneous income 10,983 19,426
---------- ----------
Earnings before provision for
income taxes 426,878 228,049
Provision for income taxes 164,000 90,000
---------- ----------
Net earnings $ 262,878 138,049
========== ==========
Net earnings per share of common
stock $ .06 .03
========== ==========
Weighted average common and
common equivalent shares 4,266,157 4,250,000
========== ==========
4
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AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
Three months ended
<TABLE>
<CAPTION>
Jun.30,1996 Jun.30,1995
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 262,878 138,049
----------- -----------
Adjustments to reconcile net
earnings to net cash provided by
operating activities:
Depreciation and amortization 34,800 37,261
Gain on sales of marketable
securities (285,356) (38,493)
Deferred income taxes (4,000) (91,000)
Changes in assets and liabilities:
Decrease in accounts receivable 204,915 147,740
Decrease in prepaid expenses 772 10,349
Decrease in deposits -- 250
(Decrease) in accounts payable (92,103) (26,271)
(Decrease) in accrued expenses (38,164) (3,673)
Increase in income taxes payable 84,549 145,103
----------- -----------
Total adjustments (94,587) 181,266
Net cash provided by operating
activities 168,291 319,315
----------- -----------
Cash flows from investing activities:
Purchase of marketable securities (118,768) (26,893)
Proceeds from sales of marketable
securities 591,116 127,196
Capital expenditures -- (9,829)
----------- -----------
Net cash provided by investing
activities 472,348 90,474
----------- -----------
Net increase in cash and cash
equivalents 640,639 409,789
Cash and cash equivalents at beginning
of period 7,242,029 5,500,159
----------- -----------
Cash and cash equivalents at end of
period $ 7,882,668 5,909,948
=========== ===========
Supplemental Disclosure of Cash Flow
Information:
Income taxes paid $ 84,167 35,897
=========== ===========
</TABLE>
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, 1996. 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.
6
<PAGE>
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations - Three Months ended June 30, 1996 and 1995
The following table sets forth information with respect to the Company's
sources of revenues for the three month periods ended June 30, 1996 and June
30, 1995:
Three months Three months
ended ended
June 30, 1996 June 30, 1995
------------- -------------
Hospital bill audit services $ 652,071 $1,079,708
Vocational rehabilitation
services 301,089 314,361
---------- ----------
$ 953,160 $1,394,069
========== ==========
Consolidated revenues for the three months ended June 30, 1996 decreased 31.6%
to $953,160 from the $1,394,069 reported for the comparable period ended June
30, 1995. During the three months ended June 30, 1996, hospital bill audit
("HBA") services declined by 39.6% and vocational rehabilitation services
posted a 4.2% decrease from the corresponding period last year. The most
notable cause for the decrease in HBA revenues is the previously announced loss
of business from a single client. During August 1995, MetraHealth notified the
Company that it was to be acquired by United Healthcare Corp. and planned to
perform its hospital bill audits internally, thus phasing out the use of the
Company's services. MetraHealth, formerly the Company's largest client,
accounted for approximately 22% of consolidated revenues prior to August 1995.
The cost of evaluations for HBA services as a percentage of HBA revenues
increased to 47.6% from the previous year's comparable percentage of 44.6%.
This increase is primarily attributable to a change in the mix of HBA services
being rendered with provider discount network ("PDN") services capturing a
larger percentage in the current period. PDN services generally provide for
lower gross margins due to the cost of related access fees. The cost of
services for vocational rehabilitation services decreased to 43.1% of related
revenues for the three months ended June 30, 1996 as compared to 46.4% for the
three months ended June 30, 1995.
Selling, general and administrative expenses for the three months ended June
30, 1996 increased to 51.8% of consolidated revenues from 48.6% of consolidated
revenues during the three months ended June 30, 1995. Overall, selling, general
and administrative expenses for the quarter ended June 30, 1996 decreased by
$183,453, or 27.1%, from the comparable period last year.
During the current quarter, the Company earned $111,785 of interest income
representing an increase of $30,555 over the three months
7
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ended June 30, 1995. 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 net gains on the sale of marketable
securities of $285,356 during the three months ended June 30, 1996, as compared
to gains of $38,493 on the sale of marketable securities during the three
months ended June 30, 1995.
Liquidity and Capital Resources
During the three month period ended June 30, 1996, cash provided by operating
activities was $168,291, compared with $319,315 during the comparable period
last year. Net earnings of $262,878 coupled with a decrease in accounts
receivable of $204,915 which was offset by gains on the sale of marketable
securities of $285,356 were the major factors in net cash provided by
operations during the current quarter.
Cash provided by investing activities for the three months ended June 30, 1996
was $472,348, as compared with $90,474 in the comparable period last year.
During the three month ended June 30, 1996, $591,116 of cash provided from the
proceeds of sales of marketable securities was offset by $118,768 used for the
purchase of additional marketable securities.
At June 30, 1996, the Company had working capital of $7,749,692 as compared to
working capital of $7,569,169 at March 31, 1996.
The Company has intensified its review of strategic alternatives for maximizing
shareholder value, focusing upon acquisitions and/or the dispositions of
certain assets. Potential acquisitions will be evaluated based on their merits
within the Company's current line of business, as well as other fields.
The Company believes that it has sufficient cash resources and working capital
to meet its capital requirements for the foreseeable future.
8
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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
June 30, 1996.
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.
Date: August 7, 1996 By: /s/ Gary Gelman
----------------
Gary Gelman
Chairman of the Board,
President and Chief Executive
Officer
(Principal Executive Officer)
Date: August 7, 1996 By: /s/ Gary J. Knauer
-------------------
Gary J. Knauer
Chief Financial Officer
and Treasurer
(Principal Financial Officer)
<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> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> JUN-30-1996
<CASH> 7,882,668
<SECURITIES> 0
<RECEIVABLES> 581,670
<ALLOWANCES> 15,000
<INVENTORY> 0
<CURRENT-ASSETS> 8,502,137
<PP&E> 647,320
<DEPRECIATION> 404,999
<TOTAL-ASSETS> 9,302,438
<CURRENT-LIABILITIES> 752,445
<BONDS> 0
<COMMON> 42,500
0
0
<OTHER-SE> 3,267,699
<TOTAL-LIABILITY-AND-EQUITY> 9,302,438
<SALES> 953,160
<TOTAL-REVENUES> 953,160
<CGS> 440,279
<TOTAL-COSTS> 440,279
<OTHER-EXPENSES> 494,127
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 426,878
<INCOME-TAX> 164,000
<INCOME-CONTINUING> 262,878
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 262,878
<EPS-PRIMARY> 0.06
<EPS-DILUTED> 0.06
</TABLE>
