EX-99.3 2 v031789_ex.htm
 
AMERICAN MEDICAL ALERT CORP. AND SUBSIDIARIES

UNAUDITED PRO FORMA FINANCIAL DATA


The following interim unaudited pro forma financial statements are based upon the application of pro forma adjustments to the American Medical Alert Corp. (“AMAC” or the “Company”) historical consolidated financial statements. The Company is providing this information because the effect of the October 3, 2005 acquisition of substantially all of assets of WMR Associates, Inc. (“WMR”) on the Company’s financial information is considered material.

The interim unaudited pro forma statement of operations data for the nine months ended September 30, 2005 has been prepared to give pro forma effect to the WMR Associates, Inc. acquisition as if it occurred on January 1, 2005. The interim unaudited pro forma balance sheet data has been prepared to give effect to the WMR Associates, Inc. acquisition as if it had occurred on September 30, 2005.

The pro forma adjustments and preliminary allocation of purchase price are based upon internal valuations and estimates. The unaudited pro forma financial statements are for informational purposes only and should not be considered indicative of actual results that would have been achieved had the transaction described above actually been completed on the dates indicated and do not purport to indicate balance sheet information, results of operations, cash flows or other information as of any future date or any future period. Additionally, the following pro forma financial information is not necessarily indicative of the results that the combined businesses would have achieved if they had been combined for the periods shown or in the future.

The following data should be read in conjunction with the historical financial statements included in the Company’s previous filings with the Securities and Exchange Commission


 
AMERICAN MEDICAL ALERT CORP. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
As of September 30, 2005
(in 000's)
 
 
  
 
  
 
  
Pro Forma
  
 
  
Pro Forma
  
 
  
AMAC
  
WMR
  
Adjustments
  
Notes
  
Combined
  
ASSETS
  
 
  
 
  
 
  
 
  
 
  
Current assets:
  
 
  
 
      
 
  
 
  
Cash
 
$
4,072
  
$
85
  
$
(2,260
)
  
(1),(2),(5)
 
$
1,897
  
Accounts receivable
    
4,128
   
176
   
(146
 )   
(1),(5)
 
  
4,158
 
Notes receivable
    
24
   
22
    
(22
)
  
(2)
 
  
24
  
Inventories
    
493
   
-
    
-
       
493
 
Prepaid expenses and other current assets
    
746
    
-
    
-
          
746
  
Deferred Income taxes
   
397
   
-
   
-
          
397
 
 Total current assets
    
9,860
   
283
   
(2,428
)
      
7,715
 
 
                      
Fixed Assets, net
    
7,165
   
785
   
(734
)
  
(1),(2),(4)
 
  
7,216
 
                       
(5)
 
      
Other Assets
                                
Long-term portion of notes receivable
    
80
   
-
   
-
       
80
 
Intangible assets
    
1,480
    
3
    
1,102
    
(1),(3),(5)
 
  
2,585
  
Goodwill
    
2,795
    
102
    
1,227
    
(1),(5)
 
  
4,124
  
Other assets
    
379
    
-
    
-
          
379
  
Deferred income taxes
    
163
   
-
   
        -
          
163
 
Total assets
  
$
21,922
  
$
1,173
  
$
(833
)
    
$
22,262
  
 
                      
LIABILITIES AND SHAREHOLDERS' EQUITY
                      
Current liabilities:
                        
Current portion of notes payable
   
294
   
-
   
-
          
294
 
Accounts payable, accrued expenses and taxes payable
    
1,977
   
61
   
627
    
(1),(2),(5)
 
  
2,665
 
                       
(7),(8)
 
      
Current portion of lease obligation
    
48
    
-
    
-
          
48
  
Deferred revenue
    
113
   
46
   
(46
 )   
(5)
    
113
 
Total current liabilities
    
2,432
   
107
   
581
        
3,120
 
 
                      
Long-term portion of notes payable
    
259
    
-
    
-
        
259
  
Accrued rental obligation
    
181
   
-
   
-
        
181
 
Deferred tax liability
    
1,100
   
-
   
-
          
1,100
 
Other liabilities
    
205
   
-
   
-
        
205
 
Total liabilities
    
4,177
   
107
   
581
        
4,865
 
Minority interest
          
6
    
(6
)
  
(2)
 
  
-
  
Shareholders' equity:
                        
Preferred stock
    
-
   
-
                
-
 
Common stock
    
87
   
5
   
(5
)
  
(6)
 
  
87
 
Additional paid in capital
    
12,486
   
-
    
-
          
12,486
 
Retained Earnings
    
5,278
    
1,055
    
(1,403
)
  
(2),(5),(6)
 
  
4,930
  
                                             
(7),(8)
 
      
 
    
17,851
   
1,060
    
(1,408
)
      
17,503
 
 Less: treasury stock
    
(106
)
  
-
    
-
          
(106
)
 Total shareholders' equity
    
17,745
    
1,060
    
(1,408
)
      
17,397
  
Total liabilities and shareholders' equity
  
$
21,922
  
$
1,173
  
$
(833
)
    
$
22,262
  

 
 

AMERICAN MEDICAL ALERT CORP.

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

September 30, 2005

The unaudited pro forma combined balance sheet gives effect to the following unaudited pro forma adjustments:
 

1.  
Reflects the preliminary allocation of the purchase price for the acquisition of substantially all of the assets of WMR Associates, Inc. ("WMR"). The purchase price allocation is based on estimates, is subject to change upon the completion of the valuation of the intangibles and has been made solely for the purpose of this pro forma statement. The following summarizes the preliminary purchase price allocation of WMR based on American Medical Alert Corp.'s ("AMAC") current estimates (dollars in 000's):
 

Accounts Receivable
  
$
30
  
Fixed Assets
    
60
  
Non-compete Agreement
    
50
  
Customer List
    
1,250
  
Goodwill
    
1,329
  
         
Cost to acquire WMR
  
$
2,719
  
         
The payment to acquire WMR consisted of:
        
         
Cash
  
$
2,175
  
Due to Seller
    
544
  
         
Total payment to acquire WMR
  
$
2,719
  
            

2.  
Reflects the financial activity of North Shore Professional Building, which was owned 99% by WMR. The assets of this entity were not purchased by AMAC. The balance sheet of North Shore Professional Building consisted of the following (in 000’s):
 
Cash
  
$
13
  
Notes Receivable
    
22
  
Fixed Assets
    
744
  
Accounts Payable
    
(1
)
Minority Interest
    
(6
)
Equity
    
(772
)
 
3.  
Reflects accumulated amortization of $195,000 on the non-compete agreement and customer list associated with the acquisition of WMR. These assets are being amortized over a five year period.

4.  
Reflects adjustment to record depreciation of $9,000 on fixed assets purchased as part of the acquisition. The fixed assets purchased are being depreciated over five years.
 

AMERICAN MEDICAL ALERT CORP.

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

September 30, 2005


5.  
Reflects adjustment to the assets and liabilities of WMR that were not acquired as part of the acquisition.

6.  
Reflects the elimination of equity from the Seller.

7.  
Reflects adjustment to record the provision for income taxes of $165,000 on the acquired company based on net income earned for the nine months ended September 30, 2005. WMR filed as a "Subchapter S" Corporation and therefore, a provision for income taxes was not reflected at the corporation level.

8.  
Reflects the adjustment to record the provision (credit) for income taxes of $ (47,000) for the effect of the pro forma entries recorded on the Income Statement.

 

 
AMERICAN MEDICAL ALERT CORP. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
Nine Months Ended September 30, 2005
(in 000's, except per share data)

 
  
 
  
 
  
Pro Forma
  
 
  
Pro Forma
  
 
  
AMAC
  
WMR
  
Adjustments
  
Notes
  
Combined
  
 
                      
Revenues:
                                
 Services
  
$
15,947
  
$
1,528
  
$
-
      
$
17,475
  
Product sales
    
214
    
-
    
-
          
214
  
Rental income
    
-
   
35
   
(35
)
  
(1)
 
  
-
 
 Total revenues
    
16,161
   
1,563
   
(35
)
      
17,689
 
 
                      
Costs and Expenses (Income):
                                
Costs related to services
    
7,626
    
755
    
(96
)
  
(1),(3)
 
  
8,285
  
Costs of product sales
    
118
    
-
    
-
          
118
  
Selling, general and administrative expenses
    
7,304
    
447
    
161
    
(1),(2),(3)
 
  
7,912
  
                       
(5),(6)
 
      
Interest expense
    
33
   
-
    
-
       
33
 
Other income
    
(276
)
  
-
   
-
       
(276
)
 Total cost and expenses
    
14,805
   
1,202
    
65 
        
16,072
 
 
                      
Income before income taxes
    
1,356
   
361
    
(100
)
      
1,617
 
Provision for income taxes
   
651
   
-
   
118
   
(1),(7),(8)
 
  
769
  
 
                      
Net Income
 
$
705
  
$
361
  
$
(218
)
    
$
848
  
 
                      
Basic net income per share
  
$
0.08
              
$
0.10
  
Diluted net income per share
  
$
0.08
              
$
0.09
  
Basic weighted average common shares outstanding
    
8,370,315
                 
8,370,315
 
Diluted weighted average common shares outstanding    
9,067,566
         
4,177
   
(9)
 
  
9,071,743
 
                                 



 
AMERICAN MEDICAL ALERT CORP.

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED INCOME STATEMENT

Nine Months Ended September 30, 2005


The unaudited pro forma combined income statement gives effect to the following unaudited pro forma adjustments:

1.  
Reflects the financial activity of North Shore Professional Building, which was owned 99% by WMR. The assets of this entity were not purchased by AMAC. The income statement, after eliminating consolidation entries, of North Shore Professional consisted of the following (in 000’s):
 
Rental income
  
$
35
  
Cost related to services
    
70
  
Selling,general and administrative expense
    
5
  
     
(40
)
Provision for income taxes
    
18
  
Net loss
  
$
(22
)
 
2.  
Reflects amortization expense of $195,000 on the non-compete agreement and customer list associated with the acquisition of WMR. These assets are being amortized over a five year period.

3.  
Reflects adjustment to record depreciation of $9,000 on fixed assets purchased as part of the acquisition. The fixed assets purchased are being depreciated over five years.

4.  
Reflects adjustment to reverse depreciation and amortization expense of $24,150 and $1,433, respectively, recorded by WMR on the assets purchased by AMAC.

5.  
Reflects adjustment to decrease Seller’s salary by $97,000. In connection with the asset purchase agreement, an employment agreement was also executed for $75,000 per annum for a two year period.

6.  
Reflects adjustment to record rent expense of $58,500.
   
7.  
Reflects adjustment to record the provision for income taxes of $165,000 on the acquired company based on net income earned for the nine months ended September 30, 2005. WMR filed as "Subchapter S" Corporation and therefore, a provision for income taxes was not reflected at the corporation level.

8.  
Reflects adjustment to the provision (credit) for income taxes of $ (65,000) for the effect of Notes 2,3,4, 5 and 6 above.

9.  
Reflects adjustment to earnings per share based on AMAC granting stock options to the Seller to purchase 25,000 shares of the Company’s common stock at an exercise price of $4.93 per share.