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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 2 TO
FORM 10-K
(Mark one)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended: December 31, 1998
[ ] 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)
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<S> <C>
NORTH CAROLINA 56-1837282
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization
68 CABARRUS AVENUE, EAST, CONCORD, NORTH CAROLINA 28025
(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code: (704) 722-2500
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class: Name of exchange on which registered:
-------------------- -------------------------------------
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NONE NONE
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Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK
RIGHTS TO PURCHASE COMMON STOCK
Indicate by check mark whether the Company (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 Company 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 the voting stock held by nonaffiliates of the
Company is approximately $322,178,318 (based on the May 25, 1999 closing price
of the Common Stock of $38.50 per share). As of May 25, 1999, there were
9,341,795 shares of the Company's Common Stock outstanding.
Documents Incorporated by Reference
NONE
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ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
Certain items in the CT Communications, Inc. Consolidated Statements of
Income for the years ended December 31, 1998, 1997 and 1996 of CT
Communications, Inc. have been reclassified. The reclassification does not
affect the net income of the Company. Also, note 15 of the Company's
Consolidated Financial Statements has been revised to reflect a change in the
Company's reported business segments, effective March 31, 1999. The reclassified
Consolidated Statements of Income, note 1(n) and note 15 are set forth in
Exhibit 99.1 hereto.
2
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SIGNATURES
Pursuant to the requirements of 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, thereunto duly authorized.
CT COMMUNICATIONS, INC.
By: /s/ MICHAEL R. COLTRANE
------------------------------------
Michael R. Coltrane
President and Chief
Executive Officer
Date: May 28, 1999
/s/ BARRY R. RUBENS
------------------------------------
Barry R. Rubens
Senior Vice President, Treasurer and
Chief
Financial Officer
(Principal Financial and Principal
Accounting Officer)
Date: May 28, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
Registrant in the capacities and on the dates indicated.
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Signature Title Date
- --------- ----- ----
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/s/ L.D. COLTRANE, III Chairman of the Board May 28, 1999
- ---------------------------------- and Director
L.D. Coltrane, III
/s/ MICHAEL R. COLTRANE President, Chief Executive May 28, 1999
- ---------------------------------- Officer and Director
Michael R. Coltrane (Principal Executive Officer)
/s/ JOHN R. BOGER, JR. Director May 28, 1999
- ----------------------------------
John R. Boger, Jr.
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3
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Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ O. CHARLIE CHEWNING, JR. Director May 28, 1999
- ----------------------------------
O. Charlie Chewning, Jr.
/s/ WILLIAM A. COLEY Director May 28, 1999
- ----------------------------------
William A. Coley
/s/ SAMUEL E. LEFTWICH Director May 28, 1999
- ----------------------------------
Samuel E. Leftwich
/s/ JERRY H. MCCLELLAN Director May 28, 1999
- ----------------------------------
Jerry H. McClellan
- ---------------------------------- Director ______, 1999
Ben F. Mynatt
/s/ PHIL W. WIDENHOUSE Director May 28, 1999
- ----------------------------------
Phil W. Widenhouse
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INDEX TO EXHIBITS
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EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------ -----------------------
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23.3 Consent of KPMG LLP, independent public accountants
99.1 Reclassified Consolidated Statements of Income, Note 1(n) and Note 15 thereto of CT
Communications, Inc.
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EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
CT Communications, Inc.:
We consent to incorporation by reference in the Registration Statements on Form
S-8 (Registration Nos. 33- 59641, 33-59643, 33-59645, 333-15537, 333-30125, and
333-38895) of CT Communications, Inc. of our report dated March 5, 1999,
relating to the consolidated balance sheets of CT Communications, Inc. and
subsidiaries as of December 31, 1998 and 1997, and the related consolidated
statements of operations, stockholders' equity and cash flows for each of the
years in the three-year period ended December 31, 1998, and related schedule,
which report is included in the December 31, 1998 Annual Report on Form 10-K of
CT Communications, Inc.
/s/ KPMG LLP
-----------------------------------
KPMG LLP
Charlotte, North Carolina
May 28, 1999
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EXHIBIT 99.1
CT COMMUNICATIONS, INC. AND SUBSIDIARIES
Consolidated Statements of Income
Years ended December 31, 1998, 1997, and 1996
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1998 1997 1996
---- ---- ----
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Operating revenues $ 91,725,394 $ 78,483,514 $ 67,054,006
Operating expenses 70,272,414 58,390,372 51,349,967
------------ ------------ ------------
Operating income 21,452,980 20,093,142 15,704,039
------------ ------------ ------------
Other income (expenses):
Equity in income of affiliates, net 431,088 130,637 1,801,952
Interest, dividend income and gain on
sale of investments 1,916,446 261,459 244,213
Other expenses, principally interest (1,491,635) (985,275) (705,112)
------------ ------------ ------------
Total other income (expense) 855,899 (593,179) 1,341,053
------------ ------------ ------------
Income before income taxes and
extraordinary item 22,308,879 19,499,963 17,045,092
Income taxes 8,926,469 7,898,159 6,583,671
------------ ------------ ------------
Net income before extraordinary item 13,382,410 11,601,804 10,461,421
Extraordinary item - discontinuance of SFAS 71,
net of income taxes of $1,493,312 -- 2,239,045 --
------------ ------------ ------------
Net income after extraordinary item 13,382,410 13,840,849 10,461,421
Dividends on preferred stock 28,457 73,073 92,535
------------ ------------ ------------
Earnings for common stock $ 13,353,953 $ 13,767,776 $ 10,368,886
============ ============ ============
Basics earnings per common share:
Earnings before extraordinary item $ 1.45 $ 1.27 $ 1.15
Extraordinary item -- 0.25 --
------------ ------------ ------------
Earnings per common share $ 1.45 $ 1.52 $ 1.15
============ ============ ============
Diluted earnings per common share:
Earnings before extraordinary item $ 1.44 $ 1.26 $ 1.14
Extraordinary item -- 0.25 --
------------ ------------ ------------
Earnings per common share $ 1.44 $ 1.51 $ 1.14
============ ============ ============
Basic weighted average shares outstanding 9,227,016 9,076,211 9,051,731
============ ============ ============
Diluted weighted average shares outstanding 9,276,504 9,111,439 9,078,385
============ ============ ============
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See accompanying notes to consolidated financial statements.
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(1)(n) RECENT ACCOUNTING PRONOUNCEMENTS
On January 1, 1998, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 130 "Reporting Comprehensive Income."
SFAS No. 130 requires companies to display, with the same prominence as
other financial statements, the components of comprehensive income.
Items considered to be other comprehensive income include adjustments
made for unrealized holding gains and losses on available-for-sale
securities.
During 1998, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 131 "Disclosures about Segments of an Enterprise
and Related Information." SFAS No. 131 establishes standards for the
way public business enterprises are to report information about
operating segments in annual financial statements and requires those
enterprises to report selected financial information about operating
segments in interim financial reports issued to shareholders.
During 1998, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 132, "Employers' Disclosures About Pension and
Other Postretirement Benefits" and has revised its disclosures for its
pension and postretirement plans accordingly.
(15) SEGMENT INFORMATION
Effective December 31, 1998, the Company adopted FAS 131, "Disclosures
about Segments of an Enterprise and Related Information." In early 1999
the Company reorganized internal reporting to better manage business
segments. As a result, the Company has four reportable segments, the
incumbent local exchange carrier (ILEC), the competitive local exchange
carrier and long distance services (CLEC/LD), Internet and data
services (ISP), and the digital wireless group (DCS). Results for 1998
and prior years have been reclassified to be comparative to 1999
presentation. Accounting policies of the segments are the same as those
described in the summary of significant accounting policies. The
Company evaluates performance based on operating profit before other
income (expenses) and income taxes. Intersegment sales are accounted
for as if the transactions were to third parties.
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December 31, 1998:
ILEC CLEC/LD ISP DCS OTHER TOTAL
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External revenues $ 70,646,748 $13,883,555 $3,369,305 $ 3,150,786 $ 675,000 $ 91,725,394
Intersegment revenues 5,017,641 -- -- -- -- 5,017,641
Depreciation and amortization 11,530,611 643,970 553,765 55,196 57,019 12,840,561
Segment operating profit 25,534,663 (2,354,985) (388,906) (1,250,329) (87,463) 21,452,980
Segment assets 127,179,588 2,644,738 6,735,650 (2,086,098) 49,160,480 183,634,358
December 31, 1997:
CTC CLEC/LD ISP DCS OTHER TOTAL
External revenues $ 64,417,269 $11,881,063 $ 580,217 $ 1,604,965 $ -- $ 78,483,514
Intersegment revenues 3,629,556 -- -- -- -- 3,629,556
Depreciation and amortization 9,130,090 411,732 32,088 38,175 -- 9,612,085
Segment operating profit 22,583,696 957,312 (93,090) (2,220,351) (1,134,425) 20,093,142
Segment assets 107,059,374 4,331,091 206,629 163,262 35,579,073 147,339,429
December 31, 1996:
CTC CLEC/LD ISP DCS OTHER TOTAL
External revenues $ 57,981,521 $ 8,584,187 $ 192,056 $ 296,242 $ -- $ 67,054,006
Intersegment revenues 2,387,185 -- -- -- -- 2,387,185
Depreciation and amortization 10,050,369 47,776 -- 6,657 -- 10,104,802
Segment operating profit 17,679,860 (963,269) 96,028 (960,981) (147,599) 15,704,039
Segment assets 90,752,228 4,172,155 103,315 617,947 19,418,318 115,063,963
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