FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 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 0-19179
CT COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
NORTH CAROLINA 56-1837282
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
68 Cabarrus Avenue, East
P.O. Box 227, Concord, N.C. 28025
(Address of principal executive offices) (Zip Code)
(704) 788-0244
(Registrant's telephone number, including area code)
(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 such 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.
492,096 shares of Common Stock, $50 par value, outstanding
as of March 31, 1995.
Class A Voting - 75,673
Class B Non-Voting - 416,423
CT COMMUNICATIONS, INC.
INDEX
Page No.
PART I. Financial Information
Balance Sheets --
March 31, 1995 and December 31, 1994 2-3
Statements of Income --
Three Months Ended March 31, 1995 and 1994 4
Statements of Cash Flows --
Three Months Ended March 31, 1995 and 1994 5
Notes to Financial Statements 6-7
Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-9
PART II. Other Information 10
-1-
PART I. FINANCIAL INFORMATION
CT COMMUNICATIONS, INC.
Consolidated Balance Sheets
Unaudited
ASSETS
March 31, December 31,
1995 1994
CURRENT ASSETS:
Cash and cash equivalents $ 6,818,882 $ 8,346,235
Short-term investments 7,193,084 4,473,565
Securities available-for-sale (note 4) 1,394,045 954,628
Accounts receivable, net of allowance
for doubtful accounts of $100,000 7,032,653 7,044,969
Materials and supplies 1,595,479 1,422,406
Prepaid expenses 299,054 238,579
Deferred income taxes 468,200 468,200
Total current assets 24,801,397 22,948,582
Investments (note 5) 22,900,269 23,097,634
Property, plant, and equipment: (note 6)
Telephone plant in service:
Land, buildings, and general equipment 18,266,315 17,883,647
Central office equipment 40,064,636 38,396,870
Poles, wire, cables and conduit 60,800,661 60,153,447
Construction in progress 428,381 464,065
119,559,993 116,898,029
Less accumulated depreciation 64,304,833 63,057,606
Net property, plant, and equipment 55,255,160 53,840,423
TOTAL ASSETS $102,956,826 $ 99,886,639
(Continued)
-2-
Consolidated Balance Sheets, (Continued)
LIABILITIES & STOCKHOLDERS' EQUITY
Unaudited
March 31, December 31,
1995 1994
CURRENT LIABILITIES:
Current portion of long-term debt and
redeemable preferred stock (note 6) $ 1,540,000 $ 1,540,000
Accounts payable 6,812,925 8,141,677
Customer deposits and advance billings 1,030,786 989,810
Accrued payroll 305,389 387,526
Accrued pension cost 1,027,159 967,699
Other accrued liabilities 719,881 377,860
Income taxes payable 2,691,576 1,174,359
Total current liabilities 14,127,716 13,578,931
Long-term debt (note 6) 4,539,000 4,714,000
DEFERRED CREDITS AND OTHER LIABILITIES:
Deferred income taxes 3,029,273 3,251,202
Investment tax credits 1,335,255 1,397,388
Regulatory liability 3,047,956 3,047,956
Postretirement benefits other than pension 6,878,456 6,468,528
Other 1,103,098 1,103,098
15,394,038 15,268,172
Redeemable preferred stock, $100 par value:
4.8% series; authorized 5,000 shares;
issued and outstanding 1,875 175,000 175,000
Total liabilities 34,235,754 33,736,103
STOCKHOLDERS' EQUITY:
Preferred stock not subject to mandatory redemption:
5% series, $100 par value, 15,087 shares
outstanding 1,508,700 1,508,700
4.5% series, $100 par value; 2,000 shares
outstanding 200,000 200,000
Discount on 5% preferred stock (16,059) (16,059)
Common stock (note 3):
Voting, $50 par value; outstanding
75,673 shares in 1995 and 1994 3,783,650 3,783,650
Nonvoting, $50 par value; outstanding
416,423 shares in 1995 and 416,256 in 1994 20,821,150 20,812,800
Premium on common voting stock 237,444 237,444
Premium on common nonvoting stock 1,739,678 1,715,302
Other capital 298,083 298,083
Unrealized gain on securities available-
for-sale (note 4) 552,441 284,396
Equity in earnings of investment 260,624 260,624
Retained earnings 39,335,361 37,065,596
Total stockholders' equity 68,721,072 66,150,536
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $102,956,826 $ 99,886,639
See accompanying notes to financial statements.
-3-
CT COMMUNICATIONS, INC.
Statements of Income
For 3 months ended March 31, 1995 and 1994
Unaudited
1995 1994
OPERATING REVENUES:
Local service $ 5,098,727 $ 4,273,380
Toll service, net of toll settlements 5,788,181 6,894,213
Other operating 1,344,455 1,193,254
Less provisions for uncollectibles (36,928) (109,284)
Total operating revenues 12,194,435 12,251,563
OPERATING EXPENSES:
Plant specific 2,387,254 2,588,667
Depreciation and amortization 1,922,382 1,736,812
Customer and corporate operations 3,109,371 3,010,344
Total operating expenses, net 7,419,007 7,335,823
Net operating revenue 4,775,428 4,915,740
OPERATING TAXES:
Income taxes 2,055,279 1,907,186
Taxes, other than income taxes 321,792 292,443
Total operating taxes, net 2,377,071 2,199,629
Net operating income 2,398,357 2,716,111
OTHER INCOME (EXPENSES):
Non-regulated income, net 408,967 243,111
Interest on long-term debt (120,261) (123,178)
Interest and other income 726,658 325,522
Sundry, net (44,459) (25,855)
Gain (loss) on sale of investment, net (126,115) 266,996
Total other income 844,790 686,596
Net income 3,243,147 3,402,707
DIVIDEND ON PREFERRED STOCK 23,359 23,509
EARNINGS FOR COMMON STOCK $ 3,219,788 $ 3,379,198
EARNINGS PER COMMON SHARE* $ 6.54 $ 6.87
DIVIDENDS PER COMMON SHARE* $ 2.00 $ 1.96
WEIGHTED AVERAGE SHARES OUTSTANDING* 491,998 491,713
*See note 3
See accompanying notes to financial statements.
-4-
CT COMMUNICATIONS, INC.
Statements of Cash Flows
For 3 months ended March 31, 1995 and 1994
Unaudited
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 3,219,788 $ 3,402,707
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,992,069 1,778,055
Deferred income taxes and tax credits (125,866) (147,103)
Loss on retirement of non-regulated property 1,708 498
Other 10,901 17,301
(Increase) decrease in:
Receivables, net 12,316 (1,400,585)
Materials and supplies (173,073) (74,503)
Other assets (60,475) (122,091)
Increase (decrease) in:
Accounts payable (1,287,776) 169,948
Federal and state income taxes payable 1,517,217 1,859,204
Accrued liabilities 319,344 611,976
Total adjustments 2,206,365 2,692,700
Net cash provided by operating activities 5,426,153 6,095,407
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to non-regulated property and equipment (34,778) (13,888)
Capital additions to telephone plant (3,315,822) (3,042,801)
Salvage value of telephone plant retired, net (25,209) (8,714)
Purchases of investments (2,446,731) (1,375,687)
Net cash used in investing activities (5,822,540) (4,441,090)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock 26,736 4,500
Repayment of long-term debt (175,000) ---
Dividends paid on preferred stock (4,500) (4,500)
Dividends paid on common stock (984,192) (964,553)
Tax benefit from exercise of stock option 5,990 837
Net cash used in financing activities (1,130,966) (963,716)
Net increase (decrease) in cash (1,527,353) 690,601
Cash and cash equivalents at beginning of period 8,346,235 2,661,199
Cash and cash equivalents at end of period $ 6,818,882 $ 3,351,800
See accompanying notes to financial statements.
-5-
CT COMMUNICATIONS, INC.
NOTES TO FINANCIAL STATEMENTS
1. In the opinion of Management, the accompanying unaudited financial
statements contain all adjustments (consisting of only normal recurring
accruals) necessary to present fairly the financial position as of
March 31, 1995, and the results of operations for the three months then
ended and cash flows for the three months then ended.
2. The results of operations for the three months ended March 31, 1995 and
1994 are not necessarily indicative of the results to be expected for
the full year.
3. The following is a summary of common stock transactions during the
three months ended March 31, 1995.
.........Voting Class A.........
Shares Par Value Premium
Outstanding at December 31, 1994
and March 31, 1995.............. 75,673 $ 3,783,650 $ 237,444
Weighted average shares outstanding
for the three months ending
March 31, 1995.................. 75,673
.......Non-Voting Class B........
Shares Par Value Premium
Outstanding at December 31, 1994.. 416,256 $20,812,800 $1,715,302
Issuance of common stock.......... 167 8,350 18,386
Tax benefit from the
exercise of options. --- --- 5,990
Outstanding at March 31, 1995..... 416,423 $20,821,150 $1,739,678
Weighted average shares outstanding
for three months ending
March 31, 1995................. 416,325
The Company issued a 25% stock distribution to shareholders of record
September 1, 1994. All prior period per share amounts have been
restated to reflect this distribution.
-6-
4. SECURITIES AVAILABLE-FOR-SALE
March 31, 1994
Gross Unrealized
Securities Market
Available-for-Sale Cost Gains Losses Value
Equity Securities $ 488,405 934,390 28,750 1,394,045
5. INVESTMENTS
3/31/95 12/31/94
State, county, and municipal investments $ 16,794,838 $ 14,552,592
ITN Charter stock 777,200 777,200
U.S. Intelco stock 279,277 279,277
U.S. Telecom East 2,618,848 2,582,802
ITC Holdings (equity method) 5,260,624 5,260,624
Investment in Ellerbe partnership (equity method) 734,080 341,038
Investment in RSA 15 partnership (equity method) 3,106,258 3,305,823
Access/On 298,000 146,500
Embion of North Carolina (equity method) 118,885 220,000
Other, at cost which approximates market 105,343 105,343
30,093,353 27,571,199
Less current maturities 7,193,084 4,473,565
TOTAL $ 22,900,269 $ 23,097,634
6. LONG-TERM DEBT:
Long-term debt excluding annual maturities comprised the following:
First Mortgage Bonds: March 31, 1995 December 31, 1994
6 1/4% Series F, due 3/1/97 $ 1,440,000 $ 1,460,000
Note payable to a bank @ 7.25%
due in installments until 2001 3,099,000 3,254,000
TOTAL $ 4,539,000 $ 4,714,000
A substantial amount of the Company's telephone plant is pledged as
collateral to the first mortgage bonds. Annual maturities and sinking
fund requirements of the long-term debt outstanding amounts to $1,540,000
in 1995; $640,000 in 1996; $2,060,000 in 1997; $620,000 in 1998 and 1999;
and $599,000 thereafter.
-7-
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
LIQUIDITY AND CAPITAL RESOURCES
The liquidity of the Company increased during the three month period
ended March 31, 1995. Current assets exceeded current liabilities by
$10,673,681 at March 31, 1995. In comparison, current assets exceeded
current liabilities by $9,369,651 at December 31, 1994.
Current assets increased by $1,852,815 when compared to December 31,
1994. This increase is primarily due to an increase of cash and short-
term investments of $1,192,166, an increase of $439,417 in securities
available-for-sale, and an increase of $173,073 in materials and supplies.
Short term investments were increased in order to provide the availability
of funds to meet capital needs of the new venture in Personal Communica-
tions Services. Funds for these increases were generated by operations.
The increase in current liabilities of $548,785 represents an
increase of 4% compared to December 31, 1994. This increase was
primarily a result of increased Federal and State Income taxes payable,
due to the timing of tax deposits, and accrued liabilities, but was
offset in part by a substantial decrease in accounts payable due to the
payment of amounts owed on land purchased at year end.
The Company's primary source of liquidity is funds provided by
operations. During the three months ended March 31, 1995, cash provided
by operations totaled $5,426,153.
The primary use of cash during this period was for additions to
telephone plant - $3,315,822, purchase of investments - $2,446,731, and
payment of dividends - $988,692. Cash and cash equivalents decreased by
$1,527,353 during this period. This decrease in cash and cash equivalents
was caused by payment of accounts payable.
At March 31, 1995, the Company's investment portfolio totaled $30.1
million that could be pledged to secure additional borrowing if needed for
liquidity purposes. There are no plans to borrow additional funds at this
time. At March 31, 1995, the Company had available lines of credit
totaling $13,500,000, none of which was outstanding. Management believes
the liquidity is adequate to meet the operational needs of the Company.
It is anticipated that the Company will be able to meet its financial
needs for capital through internal operations.
-8-
RESULTS OF OPERATIONS
3 MONTHS ENDED MARCH 31, 1995 AND MARCH 31, 1994
Operating revenues remained essentially flat for the three months
ended March 31, 1995 when compared to the same period of 1994, decreasing
only $57,128 or .5%. Local service increased $825,347 or 19.3% which is
a result of growth in customers and demand for service.
Toll service, net of toll settlements, decreased by $1,106,032 or
16.0%. This reduction of toll service is a result of offering metro
calling plans to all customers in May 1994. Quarterly comparisons
after May 1995 will be more comparable.
Uncollectible expense has decreased for this period due to a
correction in the amount of write offs from quarter ended December 31,
1994 of $47,496, and increased collections of previously written off
accounts.
Operating expenses, exclusive of depreciation, decreased $102,386
or 1.8%. This decrease arises from decreased expenditures in the plant
specific area of operations of $201,413, which was offset in part by an
increase of $99,027 in the customer and corporate area of operations
arising from additional accruals in the pension costs and post retirement
benefits other than pensions.
Depreciation expenses increased $185,570 or 10.68% for this period.
This increased amount is due to an increased depreciable base and
increased rates as authorized by The North Carolina Utilities Commission.
Other income increased by $158,194 for the quarter ended March 31,
1995 as compared to the same period of 1994. Non-regulated income
increased $165,856 primarily as a result of increased sales and base of
telephone equipment. Interest and other income increased $401,136 over
the same period of 1994. Most of this increase is a result of increased
earnings from the cellular operations. Sale of investments decreased by
$393,111 when compared to the same period of 1994. This decrease
occurred as a result of sale during 1994 of a portion of the Company's
investment in American Telecasting with a resulting net gain of $266,996
and the loss during 1995 of $126,115 in the Embion of North Carolina
partnership.
-9-
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The registrant is not currently involved in any material legal proceedings
except as previously reported in Item 3 of its Annual Report on Form 10-K for
the year ended December 31, 1994 and in note 9 to the Registrant's financial
statements included therein.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
EXHIBIT NO. DESCRIPTION OF EXHIBIT
27 Financial Data Schedule
(B) REPORTS ON FORM 8-K - None
-10-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CT COMMUNICATIONS, INC.
(Registrant)
/s/ ROY W. LONG
Roy W. Long
Vice President, Treasurer
and Chief Financial Officer
May 12, 1995
Date
(The above signatory has dual responsibility as duly authorized officer and
principal financial and accounting officer of the registrant.)
-11-
<PAGE>
EXHIBIT INDEX
Exhibit No.
(per Item 601 Description of Sequential
of Reg. S-K) Exhibit Page No.
27 Financial Data
Schedule
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Appendix A to Item 601(c) of Regulation S-K
Commercial and Industrial Companies
Article 5 of Regulation S-X
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> MAR-31-1995
<CASH> 6,818,882
<SECURITIES> 1,394,045
<RECEIVABLES> 7,132,653
<ALLOWANCES> 100,000
<INVENTORY> 1,595,479
<CURRENT-ASSETS> 24,801,397
<PP&E> 119,559,993
<DEPRECIATION> 64,304,833
<TOTAL-ASSETS> 102,956,826
<CURRENT-LIABILITIES> 14,127,716
<BONDS> 4,539,000
<COMMON> 24,604,800
175,000
1,708,700
<OTHER-SE> 42,407,572
<TOTAL-LIABILITY-AND-EQUITY> 102,956,826
<SALES> 0
<TOTAL-REVENUES> 12,194,435
<CGS> 0
<TOTAL-COSTS> 7,419,007
<OTHER-EXPENSES> 321,792
<LOSS-PROVISION> 36,928
<INTEREST-EXPENSE> 120,261
<INCOME-PRETAX> 4,775,428
<INCOME-TAX> 2,055,279
<INCOME-CONTINUING> 3,243,147
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,243,147
<EPS-PRIMARY> 6.54
<EPS-DILUTED> 6.48
</TABLE>
