-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JasKkMiXIhWhMVGAlZLuFSG0uiKpEsMsu3CvCs3H9kiwJ2H8KXwxOqhzXfPiAPrI Nl6/ZM1Srl/R3sAEcAhGLw== 0000889812-97-000173.txt : 19970225 0000889812-97-000173.hdr.sgml : 19970225 ACCESSION NUMBER: 0000889812-97-000173 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970129 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN CLAIMS EVALUATION INC CENTRAL INDEX KEY: 0000774517 STANDARD INDUSTRIAL CLASSIFICATION: 6411 IRS NUMBER: 112601199 STATE OF INCORPORATION: NY FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-14807 FILM NUMBER: 97513042 BUSINESS ADDRESS: STREET 1: 375 N BROADWAY STREET 2: ONE JERICHO PLAZA CITY: JERICHO STATE: NY ZIP: 11753 BUSINESS PHONE: 5169388000 MAIL ADDRESS: STREET 1: ONE JERICHO PLAZA CITY: JERICHO STATE: NY ZIP: 11753 10-Q 1 QUARTERLY REPORT 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, 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 4,073,500 shares outstanding at January 24, 1997 AMERICAN CLAIMS EVALUATION, INC. INDEX Page No. -------- PART I - FINANCIAL INFORMATION Item 1. Consolidated Financial Statements Consolidated Balance Sheets as of December 31, 1996 and March 31, 1996 3 Consolidated Statements of Earnings for the Nine Months and Three Months, respectively, ended December 31, 1996 and 1995 4 Consolidated Statements of Cash Flows for the Nine Months ended December 31, 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 PART I. FINANCIAL INFORMATION Item 1 - Consolidated Financial Statements AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARY Consolidated Balance Sheets Dec.31,1996 Mar.31,1996 ----------- ----------- (Unaudited) Assets Current Assets: Cash and cash equivalents $ 7,671,133 7,242,029 Marketable securities - 364,500 Accounts receivable, net 442,020 771,585 Prepaid expenses 28,076 53,571 ----------- --------- Total current assets 8,141,229 8,431,685 Property and equipment, net 193,965 269,015 Excess cost over fair value of net assets acquired, net 541,768 566,086 ----------- --------- $ 8,876,962 9,266,786 =========== ========= Liabilities and Stockholders' Equity Current liabilities: Accounts payable 360,309 511,694 Accrued expenses 109,647 129,293 Income taxes payable 26,175 142,703 Deferred income taxes 14,473 78,826 ----------- --------- Total current liabilities 510,604 862,516 ----------- --------- Stockholders' equity: Common stock, $.01 par value; authorized 10,000,000 shares; issued 4,250,000 shares 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 5,354,376 4,976,916 ----------- --------- 8,664,575 8,404,270 Less treasury stock, at cost, 176,500 shares at Dec. 31, 1996 (298,217) - ----------- --------- Total shareholders' equity 8,366,358 8,404,270 ----------- --------- $ 8,876,962 9,266,766 =========== ========= Note: The balance sheet at March 31, 1996 has been derived from the audited financial statements at that date. 3 AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARY Consolidated Statements of Earnings (Unaudited) Three months ended Nine months ended ------------------------- ------------------------ Dec.31,1996 Dec.31,1995 Dec.31,1996 Dec.31,1995 ----------- ----------- ----------- ----------- Revenues $ 719,680 1,356,754 2,411,326 4,133,698 Cost of services 325,425 663,377 1,075,112 1,947,573 ----------- --------- ---------- --------- Gross margin 394,255 693,377 1,336,214 2,186,125 Selling, general and administrative expenses 439,607 655,826 1,379,842 1,954,537 ----------- --------- ---------- --------- Operating earnings (loss) (45,352) 37,551 (43,628) 231,588 Other income: Interest income 99,165 88,082 317,784 254,135 Gain on sale of marketable securities - 170,478 285,356 237,199 Miscellaneous income 10,983 19,426 32,948 58,279 ----------- --------- ---------- --------- Earnings before provision for income taxes 64,796 315,537 592,460 781,201 Provision for income taxes 20,000 120,000 215,000 310,000 ----------- --------- ---------- --------- Net earnings $ 44,796 195,537 377,460 471,201 =========== ========= ========== ========= Net earnings per share of common stock $ .01 .05 .09 .11 =========== ========= ========== ========= Weighted average common and common equivalent shares 4,073,500 4,250,824 4,177,395 4,250,697 =========== ========= ========== ========= 4 AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARY Consolidated Statements of Cash Flows (Unaudited) Nine months ended ------------------------- Dec.31,1996 Dec.31,1995 ----------- ----------- Cash flows from operating activities: Net earnings $ 377,460 471,201 ----------- ---------- Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 99,368 109,887 Gain on sales of marketable securities (285,356) (237,199) Deferred income taxes (4,000) (91,000) Changes in assets and liabilities: Decrease in accounts receivable 329,565 62,206 Decrease in prepaid expenses 25,495 49,840 Decrease in deposits - 987 Increase (decrease) in accounts payable (151,385) 210,319 Increase (decrease) in accrued expenses (19,646) 19,578 Increase (decrease) in income taxes payable (116,528) 14,446 ----------- ---------- Total adjustments (122,487) 139,064 ----------- ---------- Net cash provided by operating activities 254,973 610,265 ----------- ---------- Cash flows from investing activities: Purchase of marketable securities (118,768) (26,893) Proceeds from sales of marketable securities 591,116 675,708 Capital expenditures - (14,690) ----------- ---------- Net cash provided by investing activities 472,348 634,125 ----------- ---------- Cash flows from financing activities: Purchase of treasury stock (298,217) - ----------- ---------- Net increase in cash and cash equivalents 429,104 1,244,390 Cash and cash equivalents at beginning of period 7,242,029 5,500,159 ----------- ---------- Cash and cash equivalents at end of period $ 7,671,133 6,744,549 =========== ========== Supplemental Disclosure of Cash Flow Information: Income taxes paid $ 336,797 386,553 =========== ========== 5 AMERICAN CLAIMS EVALUATION, INC. AND SUBSIDIARY Notes to Consolidated Financial Statements (Unaudited) General The accompanying consolidated condensed financial statements have been prepared in accordance with the instructions to Form 10-Q and do not contain all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consist ing of normal recurring accruals) considered necessary for a fair presentation have been included. These statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended March 31, 1996, as filed with the Securities and Exchange Commission. 6 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations - Nine Months ended December 31, 1996 and 1995 The following table sets forth information with respect to the Company's sources of revenue for the nine month and three month periods ended December 31, 1996 and 1995, respectively: Nine months ended Three months ended ------------------------- ------------------------- Dec.31,1996 Dec.31,1995 Dec.31,1996 Dec.31,1995 ----------- ----------- ----------- ----------- Hospital bill audit services $1,519,955 3,163,468 430,097 1,026,003 Vocational rehab. services 891,371 970,230 289,583 330,751 ---------- --------- --------- --------- $2,411,326 4,133,698 719,680 1,356,754 ========== ========= ========= ========= Consolidated revenues for the nine months ended December 31, 1996 decreased 41.7% to $2,411,326 from the $4,133,698 reported for the comparable period ended December 31, 1995. During this period, hospital bill audit ("HBA") services declined approximately 52.0% with vocational rehabilitation services decreasing 8.1% from last year's corresponding results. Over the past several years, the HBA industry as a whole has suffered a decline in demand for its services. The single most notable cause for the Company's 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 HBA 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 decreased slightly to 45.7% from the previous year's comparable percentage of 47.6%. The cost of services for voca tional rehabilitation services decreased to 42.7% of related revenues for the nine months ended December 31, 1996 as compared to 45.6% for the nine months ended December 31, 1995. Selling, general and administrative expenses for the nine months ended December 31, 1996 increased to 57.2% of consolidated revenues from 47.3% of consolidated revenues during the nine months ended December 31, 1995. This percentage increase was caused by the revenue reductions experienced by the Company. In response to this situation, management cut selling, general and administrative expenses by $574,695, or 29.4%, during the nine months ended December 31, 1996 from the comparable period last year. 7 During the nine months ended December 31, 1996, the Company earned $317,784 of interest income representing an increase of $63,649 over the nine months ended December 31, 1995. This increase resulted from the combination of higher interest rates and an increase in cash and cash equivalents available for investment purposes. The Company also realized net gains on the sales of marketable securities of $285,356 during the nine months ended December 31, 1996, as compared to gains of $237,199 on the sales of marketable securities during the nine months ended December 31, 1995. Liquidity and Capital Resources During the nine month period ended December 31, 1996, cash provided by operating activities was $254,973, compared with $610,265 during the comparable period last year. Net earnings of $377,460 coupled with a decrease in accounts receivable of $329,565 which were offset by gains on the sale of marketable securities of $285,356 and decreases in accounts payable and taxes payable of $151,385 and $116,528, respectively, were the major factors in net cash provided by operations during the nine month period ended December 31, 1996. Cash provided by investing activities for the nine months ended December 31, 1996 was $472,348, as compared with $634,125 in the comparable period last year. During the nine months ended December 31, 1996, $591,116 of cash provided from the proceeds of sales of marketable securities was offset by $118,768 used for the purchases of marketable securities. Cash used in financing activities during the nine ended December 31, 1996 consisted of $298,217 used by the Company to repurchase 176,500 of its Common Shares. The Company had working capital of $7,630,625 at December 31, 1996, compared to working capital of $7,569,169 at March 31, 1996. The Company believes that it has sufficient cash resources and working capital to meet its capital requirements for the foreseeable future. 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. 8 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, 1996. 9 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 27, 1997 By: /s/ Gary Gelman Gary Gelman Chairman of the Board, President and Chief Executive Officer (Principal Executive Officer) Date: January 27, 1997 By: /s/ Gary J. Knauer Gary J. Knauer Chief Financial Officer and Treasurer (Principal Financial Officer) 10 EX-27 2 FINANCIAL DATA SCHEDULE
5 The schedule contains summary financial information extracted from the consolidated financial statements and is qualified in its entirety by reference to such financial statements. 1 9-MOS MAR-31-1997 DEC-31-1996 7,671,133 0 452,020 10,000 0 8,141,229 647,320 453,355 8,876,962 510,604 0 42,500 0 0 3,267,699 8,876,962 2,411,326 2,411,326 1,075,112 1,075,112 1,379,842 0 0 592,460 215,000 377,460 0 0 0 377,460 0.09 0.09
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