SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Amendment No. 1 to
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR 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 0-19179
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 Ave. E., Concord, N.C. 28025
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (704) 782-7000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Class B Non-Voting Stock
(Title of Class)
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 .
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ( )
The aggregate market value of voting stock held by
non-affiliates of the Registrant:
The Registrant's Voting Common Stock is infrequently traded and
there is no established market for such shares. However, using the
sale price of $180 per share on March 19, 1997 for the Class B
Nonvoting Common Stock (the last sale known to the Registrant)
and not granting a premium for voting rights, the aggregate market
value of the Registrant's Voting Common Stock held by Non-Affiliates
is $21,716,640 (120,648 x $180).
As of February 28, 1997, the Registrant had outstanding 227,019
shares of Voting Common Stock and 1,258,180 shares of Class B
Nonvoting Stock.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
In Section (a)(1)(B) of Item 14, the page reference "F-39" is replaced
with "F-26".
In Section (a)(1)(C) of Item 14, the parenthetical is deleted and
the page reference "F-40" is replaced with "F-27". The financial statements
of North Carolina RSA 15 Cellular Partnership are filed herein.
SIGNATURES
Pursuant to the requirements of the Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned,
there unto duly authorized.
CT COMMUNICATIONS, INC.
Registrant
By: \S\ MICHAEL R. COLTRANE
Michael R. Coltrane
President, Chief Executive Officer
and Director
Date: June 26, 1997
Pursuant to the requirements of the Securities and Exchange
Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on
the dates indicated.
SIGNATURE TITLE DATE
\S\ MICHAEL R. COLTRANE President, Chief Executive June 26, 1997
Michael R. Coltrane Officer and Director
(Principal Executive Officer)
\S\ L.D. COLTRANE III Chairman of the Board June 26, 1997
L. D. Coltrane III
\S\ BARRY R. RUBENS Senior Vice President June 26, 1997
Barry R. Rubens (Principal Financial and
Principal Accounting Officer)
\S\ JOHN R. BOGER, JR. Director June 26, 1997
John R. Boger, Jr.
\S\ CHARLIE CHEWNING Director June 26, 1997
Charlie Chewning
___________________ Director June 26, 1997
Samuel E. Leftwich
\S\ JERRY H. McCLELLAN Director June 26, 1997
Jerry H. McClellan
\S\ BEN F. MYNATT Director June 26, 1997
Ben F. Mynatt
\S\ PHIL W. WIDENHOUSE Director June 26, 1997
Phil W. Widenhouse
NORTH CAROLINA RSA 15 CELLULAR PARTNERSHIP
FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 1996 AND 1995
TOGETHER WITH AUDITORS' REPORT
F-27
ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
To the Partners of North Carolina RSA 15 Cellular Partnership:
We have audited the accompanying balance sheets of North Carolina
RSA 15 Cellular Partnership (a North Carolina general
partnership) as of December 31, 1996 and 1995, and the related
statements of operations, changes in partners' capital and cash
flows for each of the three years in the period ended December 31,
1996. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion
on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of North Carolina RSA 15 Cellular Partnership as of December 31,
1996 and 1995, and the results of its operations and its cash
flows for each of the three years in the period ended December 31,
1996, in conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP
Little Rock, Arkansas,
January 22, 1997.
NORTH CAROLINA RSA 15 CELLULAR PARTNERSHIP
------------------------------------------
BALANCE SHEETS
--------------
AS OF DECEMBER 31,
------------------
1996 1995
------------- -------------
ASSETS
------
Current assets: $ 2,500 $ 1,950
Cash
Accounts receivable:
Customers - less allowance for
doubtful accounts of $273,238
and $339,914 2,346,336 2,209,852
Roamers 295,773 263,086
Other 110,202 14,749
------------- -------------
Total accounts receivable 2,752,311 2,487,687
Affiliate receivable, net 349,242 829,306
Prepaid expenses 8,273 5,034
------------- -------------
Total current assets 3,112,326 3,323,977
------------- -------------
Property and equipment (at cost):
Land and improvements 1,008,739 730,876
Buildings and improvements 1,523,220 1,215,742
Equipment 10,743,572 5,571,513
Furniture and fixtures 486,355 469,474
Assets under construction 28,421 930,664
------------- -------------
13,790,307 8,918,269
Less accumulated depreciation 3,396,159 2,201,209
------------- -------------
Property and equipment, net 10,394,148 6,717,060
Other assets, net 70,936 81,393
------------- -------------
Total assets $ 13,577,410 $ 10,122,430
============= =============
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
Current liabilities:
Accounts payable $ 211,456 $ 193,841
Customer deposits 67,135 69,821
Other accrued liabilities 209,824 224,484
------------- -------------
Total current liabilities 488,415 488,146
Commitments and contingencies
(Notes 3 and 4)
Partners' capital 13,088,995 9,634,284
------------- -------------
Total liabilities and
partners' capital $ 13,577,410 $ 10,122,430
============= =============
The accompanying notes are an integral part
of these balance sheets.
NORTH CAROLINA RSA 15 CELLULAR PARTNERSHIP
------------------------------------------
STATEMENTS OF OPERATIONS
------------------------
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
1996 1995 1994
------------- ------------- ---------------
Revenues and Sales:
Service revenue $ 20,377,059 $ 16,759,288 $ 10,488,228
Equipment Sales 1,087,024 985,888 705,104
------------ ------------ ------------
21,464,083 17,745,176 11,193,332
Cost and Expenses:
Cost of Services 3,450,524 2,803,334 1,275,334
Cost of Goods Sold 2,161,139 2,599,319 2,211,935
Selling, General and
Administrative 7,579,020 7,119,876 4,725,994
Depreciation and
Amortization 1,215,894 792,897 516,691
Total operating expenses 14,406,577 13,315,426 8,729,954
Operating Income 7,057,506 4,429,750 2,463,378
Other Income 320 33 -
Interest Income, Net 91,725 20,380 41,815
Net Income 7,149,551 4,450,163 2,505,193
=========== =========== ============
The accompanying notes are an integral part of these statements.
NORTH CAROLINA RSA 15 CELLULAR PARTNERSHIP
------------------------------------------
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
------------------------------------------
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
----------------------------------------------------
ALLTEL Mobile
Communications
of the CT Concord
Carolinas, Cellular, Telephone
Total Inc. Inc. Company
----------- ---------- ---------- -----------
Balance, December 31,
1993 $ 4,106,454 $2,053,227 $ - $ 2,053,227
Transfer of interest - - 2,053,227 (2,053,227)
Net income for the
year ended
December 31, 1994 2,505,193 1,252,597 1,252,596 -
---------- ---------- ---------- -----------
Balance, December 31,
1994 $ 6,611,647 $ 3,305,824 $3,305,823 -
Capital
distributions (1,427,526) (713,763) (713,763) -
Net income for
the year ended
December 31, 1995 4,450,163 2,225,081 2,225,082 -
----------- ---------- ---------- -----------
Balance, December 31,
1995 9,634,284 4,817,142 4,817,142 -
Capital
distributions (3,694,840) (1,847,420) (1,847,420) -
Net income for
the year ended
December 31, 1996 7,149,551 3,574,775 3,574,776 -
----------- ----------- ---------- ---------
Balance, December 31,
1996 $13,088,995 $6,544,497 $6,544,498 -
=========== ========== ========== =========
The accompanying notes are an integral part of these statements.
NORTH CAROLINA RSA 15 CELLULAR PARTNERSHIP
------------------------------------------
STATEMENTS OF CASH FLOWS
------------------------
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
1996 1995 1994
------------ ------------ ------------
Cash flows from operating
activities:
Net income $ 7,149,551 $ 4,450,163 $ 2,505,193
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and
amortization 1,215,894 792,897 516,691
Provision for uncollectible
accounts 961,042 865,742 190,281
Changes in operating assets
and liabilities:
Increase in accounts
receivable (1,225,666) (1,939,545) (760,386)
Increase in prepaid
expenses (3,239) (1,772) (3,862)
Increase (decrease) in
current liabilities 269 (129,375) 374,316
----------- ----------- -----------
Net cash provided by
operating activities 8,097,851 4,038,110 2,822,233
----------- ----------- -----------
Cash flows from investing activities:
Capital expenditures (4,882,525) (2,997,385) (2,230,503)
Purchase of other assets - - (51,247)
----------- ----------- ----------
Net cash used in
investing activities (4,882,525) (2,997,385) (2,281,750)
Cash flows from financing activities:
Distributions to partner (1,847,420) (713,763) -
Change in affiliate
receivable, net (1,367,356) (326,562) (540,483)
----------- ----------- ---------
Net cash used in financing
activities (3,214,776) (1,040,325) (540,483)
----------- ----------- --------
Net change in cash 550 400 -
Cash, beginning of year 1,950 1,550 1,550
----------- ----------- --------
Cash, end of year $ 2,500 $ 1,950 $ 1,550
=========== =========== =========
Supplemental cash flow information:
Interest paid (net of
capitalized interest) $ 3,776 $ 3,258 $ 6,328
=========== =========== =========
The accompanying notes are an integral part of these statements.
NORTH CAROLINA RSA 15 CELLULAR PARTNERSHIP
------------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
DECEMBER 31, 1996 AND 1995
-------------------------
1. ORGANIZATION:
------------
North Carolina RSA 15 Cellular Partnership (the "Partnership"), a
North Carolina general partnership, was formed on September 15,
1989. The Partnership was formed to fund, develop, and offer
cellular technology in the area of the State of North Carolina
designated by the Federal Communications Commission as North
Carolina Rural Service Area ("RSA") 15. The Partnership
commenced operations on April 1, 1991.
The partners and their respective ownership percentages as of
December 31, 1996 and 1995, are as follows:
Managing and general partner:
ALLTEL Mobile Communications
of the Carolinas, Inc. ("AMC") 50%
General partner:
CT Cellular, Inc. ("CT Cellular") 50%
AMC, a wholly-owned subsidiary of ALLTEL Mobile Communications,
Inc. ( ALLTEL Mobile"), is responsible for managing and operating
the Partnership. Pursuant to the terms of the Partnership
Agreement (the "Agreement"), the general partners are liable for
all obligations of the Partnership to the extent not paid by the
Partnership.
The partners make capital contributions to, share in the
operating results of, and receive distributions from the
Partnership in accordance with their respective ownership
percentages as defined in the Agreement.
2. SIGNIFICANT ACCOUNTING POLICIES:
-------------------------------
Use of Estimates -
- ----------------
The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the amount of assets,
liabilities, revenues, and expenses reported in the accompanying
financial statements. The estimates and assumptions used in the
accompanying financial statements are based upon management's
evaluation of the relevant facts and circumstances as of the date
of the financial statements. Actual results realized may differ
from these estimates.
Certain prior year amounts have been reclassified to conform with
the current year financial statement presentation.
Revenue Recognition -
- -------------------
The Partnership earns service revenue by providing access to the
cellular network (access revenue) and for usage of the cellular
network (airtime and toll revenues). Access revenue is recognized
when billed. Revenue that results from usage of the cellular
network is recognized when the services are rendered. Other
cellular service revenues are recognized when services are
provided and include, primarily, connection, detailed billing,
and custom calling feature revenues. Equipment sales are
recognized upon delivery of the equipment to the customer. Unbilled
revenues associated with the Partnership's service revenues totaled
$294,713 and $218,997 at December 31, 1996 and 1995, respectively.
Operating Expenses -
- ------------------
Operating expenses include expenses incurred directly by the
Partnership, as well as an allocation of costs incurred by the
managing partner or its affiliates on behalf of the Partnership.
See Note 4 for additional discussion of allocated costs and
related-party transactions.
Interest Income, Net -
- -------------------
The accompanying statements of operations reflect total interest
income, net of interest expense and interest capitalized. The
components of Interest income, net are as follows for the years
ended December 31, 1996, 1995 and 1994:
1996 1995 1994
------------ ------------ -----------
Interest income $ 95,501 $ 23,638 $ 48,143
Interest expense (3,776) (6,904) (8,793)
Interest capitalized - 3,646 2,465
------------ ------------ -----------
Interest income, net $ 91,725 $ 20,380 $ 41,815
============ ============ ===========
Income Taxes -
- ------------
All income, losses, and tax credits are not separately taxable to
the Partnership under the Internal Revenue Code and applicable
state statutes, but rather are allocated directly to the
partners. Accordingly, no provision for federal or state income
taxes has been made in the accompanying financial statements.
Affiliate Receivable, Net -
- -------------------------
Since the Partnership does not maintain a cash account for
operations, the cash receipts from revenues are recorded in an
ALLTEL Mobile cash account and reflected as advances to
affiliate. Likewise, all cash disbursements of the Partnership
are made by ALLTEL Mobile on behalf of the Partnership and are
reflected as advances from affiliate. In addition, AMC's
capital distributions/contributions are recorded through the
advance accounts. AMC's capital distributions of $1,847,420 and
$713,763 in 1996 and 1995, respectively, were recorded as
advances from affiliate. These advances are presented on a net
basis in the accompanying financial statements as Affiliate
receivable, net.
The Partnership is charged interest on advances provided by
ALLTEL Mobile and earns interest on advances provided to ALLTEL
Mobile. The average interest rate on advances provided to the
Partnership was 7.05%, 7.82% and 4.61% in 1996, 1995 and 1994,
respectively. The average interest rate on advances provided by
the Partnership was 5.21%, 5.71% and 4.01% in 1996, 1995 and 1994,
respectively.
Inventories -
- -----------
Inventories are purchased for the Partnership by an adjacent
Metropolitan Statistical Area ("MSA"), operated by the managing
partner. Upon sale, the related cost of the inventory is
transferred to the Partnership at the MSA's cost basis and is
reflected in the accompanying statements of operations as Cost of
Goods Sold.
Property and Equipment, Net -
- ---------------------------
Property and equipment, net represent the costs incurred to construct
a cellular mobile telephone system and cellular equipment, and
include capitalized interest and overhead charges related to
direct labor costs capitalized. Depreciation is recorded using
the straight-line method over the estimated useful lives of the
assets, which are as follows:
Years
-----
Buildings and improvements 7 - 25
Equipment 7 - 10
Furniture and fixtures 10
Land improvements 7
When property is retired, the cost of the property and the
related accumulated depreciation are removed from the balance
sheet, and any gain or loss on the transaction is included in the
accompanying statements of operations. See Note 4 concerning the
transfer of equipment with affiliates.
Assets under construction primarily represent the costs
incurred for the construction of cell sites and include
capitalized interest and allocated overheads related to the
direct labor costs capitalized. When these assets are placed in
service, they are recorded in the appropriate property and
equipment accounts and are depreciated from that time forward.
Depreciation expense for 1996, 1995 and 1994 was $1,205,438,
$782,445 and $509,389, respectively.
Other Assets, Net -
- -----------------
Other assets, net consist primarily of costs associated with the
acquisition of options to lease land relating to future or
existing cell sites. These costs are amortized using the
straight-line method over a 10 year term.
3. COMMITMENTS:
-----------
Future minimum payments required under operating leases for real
estate, office space, and tower space that have non-cancelable
lease terms in excess of one year as of December 31, 1996, are as
follows:
1997 $ 153,405
1998 84,787
1999 43,787
2000 34,887
2001 11,881
Thereafter 27,552
---------
$ 356,299
=========
These leases permit renewals at various intervals with provisions
for increased rentals at each renewal. Rental expense for
operating leases was $229,629, $180,629 and $85,957 in 1996, 1995
and 1994, respectively, and is included in Cost of Services in
the accompanying statements of operations.
4. RELATED - PARTY TRANSACTIONS:
----------------------------
ALLTEL Mobile, a wholly-owned subsidiary of ALLTEL Corporation,
provides certain services necessary for the operation,
management, and administration of the Partnership's business.
Services provided to the Partnership include accounting, cash
management, strategic planning, human resources, legal,
marketing, customer service, systems, and engineering. These
costs are allocated to the Partnership based on various factors,
which are modified periodically to more closely align costs with
services received. In accordance with the terms of the
Agreement, ALLTEL Mobile is reimbursed for its cost incurred on
behalf of the Partnership in providing these services. These
costs amounted to $847,540, $695,715 and $434,430 in 1996, 1995 and
1994, respectively.
A contiguous MSA, having common ownership with the Partnership,
provides the Partnership certain operational, management, and
administrative services; the costs of which are allocated to the
Partnership based on various factors. Costs incurred for such
services amounted to $1,493,032, $1,436,119 and $863,473 in 1996, 1995
and 1994, respectively. During 1996, the Partnership recorded a cost
allocation credit from ALLTEL Mobile and a contiguous MSA related
to the years 1992 through 1994. These credits totaled $125,716
and were recorded as a reduction of operating expenses in the
accompanying statements of operations. In addition, certain other
cost allocations for these prior years are currently in dispute
between ALLTEL Mobile and CT Cellular. Since no resolution has
been reached, the accompanying statements of operations do not
reflect any additional adjustments that may be agreed upon by the
partners.
The MSA also provides the Partnership with access to the MSA's
switch. The cost for this service is allocated to the Partnership
based on airtime usage and the number of ports in the switch
utilized. These costs were $571,430, $515,439 and $759,631 in 1996,
1995 and 1994, respectively. The MSA's switch is equipped with IS-41
capabilities, the cost of which is shared with the Partnership
based on a fixed monthly charge. The cost to the Partnership for
this additional service was $35,532 and $48,816 in 1996 and 1995,
respectively.
The Partnership purchased cellular telephone equipment and
materials and supplies amounting to $291,757, $227,405 and $134,108
in 1996, 1995 and 1994, respectively, from ALLTEL Supply, Inc., a
wholly-owned subsidiary of ALLTEL Corporation. Additionally,
ALLTEL Information Services, Inc. ("AIS"), a wholly-owned subsidiary
of ALLTEL Corporation, provides billing and mailing services to the
Partnership. The charge to the Partnership for these services was
$1,003,664, $738,172 and $414,794 in 1996, 1995 and 1994, respectively.
The cost of service is generally based upon the number of customer bills
processed and mailed. The prices charged by ALLTEL Supply, Inc. and AIS
are comparable to prices the Partnership would be required to pay other
suppliers for similar goods and services.
SYNGIS, Inc., a subsidiary of ALLTEL Corporation, provided services for
collecting past due accounts of the Partnership's customers. The
Partnership was charged $0 and $22,562 for these services in 1995 and 1994,
respectively. The cost for these services is generally based upon the number
of customer accounts turned over for collection.
During 1996 and 1995, the Partnership transferred certain
property and equipment to affiliates of the managing partner with
a cost of $55,753 and $951, respectively, and accumulated
depreciation of $7,965 and $439, respectively. In 1995, the
Partnership also received transfers of certain property from
affiliates of the managing partner with a cost of $9,711 and
accumulated depreciation of $3,240. These assets were transferred
at net book value on the date of the transaction.
The Partnership periodically incurs charges from ALLTEL
Corporation affiliates primarily relating to interconnect,
network, toll, and lockbox clearing charges. The Partnership
incurred charges of $127,726, $98,954 and $21,638 in 1996, 1995
and 1994, respectively. The prices for these services are charged to the
Partnership at tariffed rates or at cost.
The Partnership periodically incurs charges from non-ALLTEL
Corporation affiliates primarily relating to site utility,
interconnect, office rental, and site rental charges. Amounts
charged by these affiliates were $671,943, $497,504 and $290,919 in
1996, 1995 and 1994, respectively.
