<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------------
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
--- THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1997
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 No. 0-10516
---------------------------------------
Aliant Communications Inc.
(Exact name of registrant as specified in its charter)
Nebraska 47-0632436
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1440 M Street, Lincoln, Nebraska 68508
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 402-436-5289
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 the number of shares outstanding of each of the Registrant's
classes of Common Stock as of the latest practicable date.
Class of Common Stock Outstanding at March 31, 1997
$.25 par Value 36,443,501
<PAGE>
ALIANT COMMUNICATIONS INC. AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
- ------
The following consolidated financial statements of Aliant Communications
Inc. and its wholly owned subsidiaries have been prepared pursuant to the
rules and regulations of the Securities and Exchange Commission (SEC) and,
in the opinion of management, include all adjustments necessary for a fair
statement of income for each period shown. All such adjustments made are of
a normal recurring nature except when noted as extraordinary or
nonrecurring. Certain information and footnote disclosures normally
included in consolidated financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted
pursuant to such SEC rules and regulations. Management believes that the
disclosures made are adequate and that the information is fairly presented.
The results for the interim periods are not necessarily indicative of the
results for the full year. These consolidated financial statements should
be read in conjunction with the consolidated financial statements and notes
thereto in the 1996 Annual Report on Form 10-K, which is incorporated by
reference.
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Item 1 - Financial Statements
<TABLE>
ALIANT COMMUNICATIONS INC.
CONSOLIDATED BALANCE SHEETS
Mar. 31, 1997 Dec. 31, 1996
------------- -------------
(Unaudited) (Audited)
(Dollars in Thousands)
<CAPTION>
ASSETS
<S> <C> <C>
Current assets $ 91,539 $ 81,218
Property and equipment less accumulated
depreciation and amortization 249,674 255,020
Investments and other assets 172,615 171,684
Deferred charges 14,172 13,480
------- --------
Total assets $ 528,000 $ 521,402
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued liabilities $ 77,942 $ 73,594
Deferred credits and other long-term liabilities 60,501 61,662
Long-term debt 100,005 103,080
Preferred stock, 5%, redeemable 4,499 4,499
Stockholders' equity 285,053 278,567
------- -------
Total liabilities and stockholders' equity $ 528,000 $ 521,402
======= =======
</TABLE>
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<TABLE>
ALIANT COMMUNICATIONS INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
Three Months Ended
March 31, 1997 March 31, 1996
-------------- --------------
(Dollars in Thousands Except Per Share Data)
<CAPTION>
<S> <C> <C>
Operating revenues:
Telephone revenues:
Local network services $ 19,343 18,448
Access services 14,809 14,070
Long distance services 7,851 8,341
Other wireline communications services 6,852 6,325
------ ------
Total telephone revenues 48,855 47,184
Wireless communications services 16,746 13,158
Telephone equipment sales and services 4,540 4,998
Intercompany revenues (1,953) (2,057)
------ ------
Total operating revenues 68,188 63,283
------ ------
Operating expenses:
Depreciation and amortization 12,006 11,331
Other operating expenses 36,834 35,914
Taxes, other than payroll and income 967 960
Intercompany expenses (1,953) (2,057)
------ ------
Total operating expenses 47,854 46,148
------ ------
Operating income 20,334 17,135
------ ------
Non-operating income and expense:
Income from interest and other investments 2,010 2,031
Other deductions 325 283
Interest expense 2,179 2,368
------ ------
Net non-operating expense 494 620
------ ------
(Continued on following page)
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ALIANT COMMUNICATIONS INC.
CONSOLIDATED STATEMENTS OF EARNINGS (Cont'd)
(UNAUDITED)
Three Months Ended
March 31, 1997 March 31, 1996
-------------- --------------
(Dollars in Thousands Except Per Share Data)
Income before income taxes 19,840 16,515
Income taxes 7,862 6,697
------ ------
Net income $ 11,978 $ 9,818
Preferred dividends 56 56
------ ------
Earnings available for common shares $ 11,922 $ 9,762
====== ======
Earnings per common share $ .33 $ .27
====== ======
Weighted average common shares outstanding
(in thousands) 36,436 36,647
====== ======
Dividends declared per common share $ .16 $ .15
====== ======
</TABLE>
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<TABLE>
ALIANT COMMUNICATIONS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
March 31, 1997 March 31, 1996
-------------- --------------
(Dollars in Thousands)
<CAPTION>
<S> <C> <C>
Cash flows from operating activities:
Net income $ 11,978 $ 9,818
------ ------
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 12,014 11,339
Net change in investments and other assets (931) (848)
Deferred income taxes (1,471) 1,484
Changes in assets and liabilities resulting
from operating activities:
Receivables 2,349 2,154
Other assets (2,119) 1,252
Accounts payable and accrued expenses (3,509) (5,112)
Other liabilities 6,092 2,735
------ ------
Total adjustments 12,425 13,004
------ ------
Net cash provided by operating
activities 24,403 22,822
------ ------
Cash flows from investing activities:
Expenditures for property and equipment (6,448) (8,504)
Net salvage on retirements 614 (1)
------ ------
Net capital additions (5,834) (8,505)
Proceeds from sale of investments and other
assets 287 31
Purchases of investments and other assets -- (990)
Purchases of temporary investments (299) (1,669)
Maturities and sales of temporary investments 265 2,010
------ ------
Net cash used for investing
activities (5,581) (9,123)
------ ------
(Continued on following page)
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ALIANT COMMUNICATIONS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Cont'd)
(UNAUDITED)
Three Months Ended
March 31, 1997 March 31, 1996
-------------- --------------
(Dollars in Thousands)
Cash flows from financing activities:
Dividends to stockholders (5,883) (5,549)
Retirement of notes payable -- (8,000)
Payments of long term debt (1,007) (3,687)
Net purchases and sales of treasury stock 397 615
------ ------
Net cash used in
financing activities $ (6,493) $(16,621)
------ ------
Net increase (decrease) in cash and cash
equivalents 12,329 (2,922)
Cash and cash equivalents at beginning of year 25,290 21,151
------ ------
Cash and cash equivalents at end
of quarter $ 37,619 $ 18,229
====== ======
Supplemental disclosures of cash flow information:
Interest paid $ 1,110 $ 1,034
===== =====
Taxes paid $ 4,116 $ 2
===== =====
</TABLE>
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ALIANT COMMUNICATIONS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Business
The consolidated Form 10-Q reflects the operations of Aliant Communications
Inc. (the "Company") and its wholly owned subsidiaries. The primary
subsidiary is Aliant Communications Co. (the "Telco"), which provides
local and long distance telephone service in 22 southeastern counties of
Nebraska. It also provides cellular telecommunications services in the
Lincoln, Nebraska Metropolitan Statistical Area ("MSA") (which includes
all of Lancaster County in Nebraska) under the trade name of Aliant
Cellular-Lincoln ("Lincoln MSA"). Aliant Cellular Inc. ("Aliant
Cellular"), formerly Nebraska Cellular Telephone Corporation, provides
cellular service outside the Lincoln and Omaha metropolitan areas in
Nebraska. Aliant Systems Inc. ("Systems"), formerly LinTel Systems Inc.,
provides long distance telephone services beyond Telco's local service
territory, sells non-regulated telecommunications products and services and
provides telephone answering services. Prairie Communications, Inc.
("Prairie") has a 50% investment in, and is the operating partner of, a
general partnership with Centel Nebraska, Inc. ("Centel") which manages a
limited partnership providing cellular telecommunications services in the
Omaha MSA (which includes Douglas and Sarpy Counties in Nebraska and
Pottawattamie County in Iowa). The limited partnership is doing business
as Aliant Cellular-Omaha ("Omaha MSA"). Aliant Midwest Inc. ("Midwest")
was incorporated October 10, 1996, and Aliant Network Services Inc.
("Network Services") was incorporated February 20, 1997, both as wholly-
owned subsidiaries of the Company. Midwest is a Competitive Local Exchange
Carrier ("CLEC") formed to provide local exchange service outside Telco's
service region. Network Services was formed to own and operate fiber optic
transmission facilities to be constructed outside of Telco's traditional
service area. Capacity on the network will be leased to long distance and
wireless carriers. Neither Midwest nor Network Services had operations
through the first quarter of 1997.
The Telecommunications Act of 1996 (the "Act") was signed into effect in
February 1996. The Act facilitates the entry of new competitors into the
local exchange market by allowing companies to purchase and resell
Incumbent Local Exchange Carrier ("ILEC") services, by requiring
companies to unbundle their networks, and by requiring ILECs to negotiate
interconnection agreements with companies desiring connection to ILEC
networks. Telco may apply to the Nebraska Public Service Commission
("NPSC") for a waiver or modification of such requirements pursuant to
Section 251(f)2 of the Act. Telco has not received a bona fide request to
negotiate an agreement for resale, unbundled network elements or
interconnection with a CLEC. The Act also provides new business
opportunities for the Company, such as entry into the cable television
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market, and entry into additional geographic markets with either a full
range of services or selected services to niche markets.
The FCC released an Order (the "Interconnection Order") on August 8,
1996, to implement the interconnection portion of the Act. The
Interconnection Order contains pricing proxies which are unfavorable to
ILECs. Several ILECs, including Telco, filed petitions to review the
Interconnection Order with the Federal Courts and requested that the
pricing provisions of the Interconnection Order be stayed. On October 15,
1996, the Eighth Circuit Court of Appeals entered an Order Granting Stay
Pending Judicial Review which did stay the effectiveness of the pricing and
the so-called "pick and choose" provisions of the Interconnection Order.
The FCC and certain telecommunications companies requested a review of the
Eighth Circuit's Stay Order by the United States Supreme Court; however,
the Supreme Court declined to make such a review. While briefing and oral
arguments have been completed, the case is pending for final decision by
the Eighth Circuit.
On November 8, 1996, Telco announced a 10% increase to residential basic
local service rates effective March 23, 1997. Telco had not increased such
rates since 1991. The residential basic local exchange service increase is
offset by an 8% to 10% reduction in Telco's long distance rates within its
service area, and by a reduction to intrastate access service rates of
approximately 16%. The passage of the Act, which encourages local exchange
competition, necessitates rate adjustments by Telco to bring prices for
residential basic local exchange service closer to actual costs. Taken as
a whole, the projected annual revenue impact to the Company is expected to
be a reduction of approximately $1.1 million in operating revenues.
Also effective March 23, 1997, Telco raised rates for two additional
services. Pay phone rates increased from 25 cents to 35 cents per call,
and directory assistance calls increased from 40 cents per call with two
free calls per month to 60 cents per call with one free call per month, and
no free calls for businesses. Telco is anticipating rate changes for some
other services, which could take effect as early as the third quarter of
1997.
(2) Managed Cellular Markets
The Company manages all four cellular entities in which it has an ownership
interest. The Lincoln MSA and Aliant Cellular are wholly-owned markets
containing approximately 229,000 and 844,000 POPs (potential customers),
respectively. Through its general partnership with Centel, the Company
holds a 27.6% interest in the limited partnership which operates the Omaha
MSA market, containing approximately 628,000 POPs. The Company also holds
an option to purchase an additional 27.6% interest in the limited
partnership during the two-year period ending on December 31, 1998.
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In addition, the Company has an 11.8% interest in Iowa Rural Service Area 1
(RSA 1) which is contiguous to the Company's telephone operating area in
Nebraska and to Omaha, and contains approximately 62,000 POPs. By the end
of first quarter 1997, penetration (subscribers compared to POPs) rates
achieved in these markets by the entities in which the Company holds
interests were 18.7% in the Lincoln MSA, 13.2% in Aliant Cellular, 11.0% in
the Omaha MSA, and 6.2% in RSA 1.
The Company believes the use of proportionate operating data for these
managed cellular markets facilitates the understanding and assessment of
its consolidated financial statements. Reporting proportionate data for
the cellular markets is not in accordance with generally accepted
accounting principles. The proportionate data summarized on the following
page reflects the Company's relative ownership interests in its managed
markets.
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<PAGE>
Supplemental Proportionate Data For Managed Cellular Markets (1)
First Quarter
(dollars in thousands)
Unaudited
Total
Total Total Not Proportionate
Consolidated(2) Consolidated(3) Data
Customer Lines 1997 153,931 19,478 173,409
1996 117,514 14,614 132,128
1995 22,469 9,830 32,299
Service Revenues 1997 $ 16,549 $ 2,136 $ 18,685
1996 12,995 1,747 14,742
1995 3,018 1,292 4,310
Operating Expenses 1997 $ 9,529 $ 1,061 $ 10,590
(before depreciation) 1996 8,031 1,071 9,102
1995 1,576 822 2,398
Net Operating Income 1997 $ 5,075 $ 772 $ 5,847
1996 3,294 429 3,723
1995 1,192 285 1,477
EBITDA (4) 1997 $ 7,020 $ 1,075 $ 8,095
1996 4,964 676 5,640
1995 1,442 470 1,912
(1) The Company's interest in Aliant Cellular is not included in
the proportionate data prior to acquisition in July 1995.
(2) Financial activities of the Lincoln MSA and Aliant Cellular
(since acquisition) are included in respective operating portions
of the Company's Consolidated Statements of Earnings.
(3) The Company's share of the financial activities of the Omaha
MSA (27.6%) and RSA 1 (11.8%) are not included in the operating
portions of the Company's Consolidated Statements of Earnings.
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<PAGE>
(4) Earnings before interest, income taxes, depreciation and
amortization (EBITDA) is commonly used in the cellular
communications industry to analyze cellular providers on the bases
of operating performance, and liquidity. EBITDA should not be
considered an alternate to (i) operating income (as determined in
accordance with generally accepted accounting principles) as an
indicator of the Company's operating performance or (ii) cash
flows from operating activities (as determined in accordance with
generally accepted accounting principles) as a measure of
liquidity.
(3) Restructuring Charges and Work Force Reduction
In November 1995, the Company announced its plans to reduce its existing
work force by offering a voluntary early retirement program to eligible
employees. The eligible employees are both management and non-management
employees who are employed by the Company, Telco, and Systems. The Company
implemented an enhancement to the Company's pension plan by adding five
years to both the age and net credited service for eligible employees. The
program also provides for the employees to receive a lump-sum payment and a
supplemental monthly income payment in addition to their normal pension. As
a result of 330 employees accepting this voluntary early retirement offer,
the Company recorded a reduction to its pension assets and recognized a
restructuring charge of $20.1 million at December 31, 1995. The charge
reflected pension enhancements of $23.4 million less curtailment gains of
$3.3 million. Retirements under the program are being phased in and will
become fully effective by December 31, 1997. It is anticipated that
approximately 100 positions will need to be replaced by new hires at a
lower cost.
Because the entire restructuring charge for the work force reduction was
recorded in December 1995, and because the enhanced pension payments are
paid through the Company pension fund, there has been no further financial
impact to the Company. As of the end of first quarter 1997, 100 employees
have retired under the voluntary early retirement program, including 14
retirements during first quarter 1997.
(4) Income Taxes
Total income tax expense for the three-month periods ended March 31, 1997
and 1996 was $7,862,000 and $6,697,000; and was comprised solely of income
taxes on income from continuing operations. Income tax expense
attributable to income from continuing operations for the three-month
periods ended March 31, 1997 and 1996 consists of the following:
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<PAGE>
Three Months Ended March 31,
(Dollars in thousands) 1997 1996
- ------------------------------------------------------------------
Current:
U.S. Federal $6,961 $4,529
State and local 1,512 1,045
-------- --------
Total current tax expense 8,473 5,574
Deferred:
U.S. Federal (386) 1,105
State and local (45) 209
-------- --------
Total deferred tax expense (431) 1,314
Investment tax credits (180) (191)
-------- --------
Total income tax expense $7,862 $6,697
======== ========
(5) Postretirement Benefits
In addition to the Company's defined benefit pension plan, the Company
sponsors a health care plan (the "Plan") that provides postretirement
medical and other benefits to employees who meet minimum age and service
requirements upon retirement.
The following table presents the Plan's status reconciled with amounts
recognized in the Company's consolidated balance sheet at December 31,
1996:
Accumulated Postretirement Benefit Obligation: (Dollars in thousands)
Retirees $33,212
Active plan participants - fully eligible 12,227
Active plan participants - other 7,026
---------
52,465
Unrecognized prior service cost (1,597)
Unrecognized net loss (4,919)
---------
Accrued postretirement benefit costs $45,949
=========
For purposes of measuring the benefit obligation, a discount rate of 8.0%
and a 10.8% annual rate of increase in the per capita cost of covered
benefits (i.e., health care cost trend rate) were assumed for 1996. The
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projected rates for 1997 are 8.0% and 10.0%, respectively. The health care
cost trend rate of increase is assumed to decrease gradually to 5.5% by the
year 2004.
The Company has not designated any assets to fund Plan obligations. Net
periodic postretirement benefit costs for the three-month periods ended
March 31, 1997 and 1996 include the following components:
Three Months Ended March 31,
(Dollars in thousands) 1997 1996
- ------------------------------------------------------------------
Service cost $ 138 $ 124
Interest cost 1,017 1,010
Unrecognized prior service cost 28 28
Amortization of
unrecognized loss (3) 8
--------- ---------
Net periodic postretirement
benefit costs $ 1,180 $ 1,170
========= =========
For purposes of measuring the benefit cost, a discount rate of 8.0% and an
11.3% annual rate of increase in the health care cost trend rate were
assumed for 1996. The projected rates for 1997 are 8.0% and 10.8%,
respectively. The rate of increase is assumed to decrease gradually to
5.5% by the year 2004. The health care cost trend rate assumptions have a
significant effect on the amounts reported.
(6) Temporary Investments
The Company applies the provisions of FAS 115, Accounting for Certain
Investments in Debt and Equity Securities.
FAS 115 requires fair value reporting for certain investments in debt and
equity securities. Pursuant to FAS 115, the Company has classified all of
its investments as "available for sale" at March 31, 1997 and December 31,
1996. This information is summarized as follows:
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March 31, 1997
- ---------------------------------------------------------------------------
Estimated
Amortized Gross Unrealized Market
(Dollars in thousands) Cost Gains Losses Value
- ---------------------------------------------------------------------------
U.S. Government obligations $ 2,961 2 (44) 2,919
U.S. Government agency
obligations 3,135 18 (92) 3,061
Corporate debt securities 625 13 (22) 616
--------- ------ -------- ---------
$ 6,721 33 (158) 6,596
========= ====== ======== =========
December 31, 1996
- ---------------------------------------------------------------------------
Estimated
Amortized Gross Unrealized Market
(Dollars in thousands) Cost Gains Losses Value
- ---------------------------------------------------------------------------
U.S. Government obligations $ 2,663 14 (12) 2,665
U.S. Government agency
obligations 3,400 32 (60) 3,372
Corporate debt securities 624 15 (32) 607
--------- ------ -------- ---------
$ 6,687 61 (104) 6,644
========= ====== ======== =========
The net unrealized gain/(loss) on investments available for sale is not
reported separately as a component of stockholders' equity due to its
insignificance to the consolidated balance sheet at March 31, 1997 and
December 31, 1996.
The amortized cost and estimated market value of debt securities at
March 31, 1997 and December 31, 1996, by contractual maturity, are shown in
the following tables. Expected maturities may differ from the contractual
maturities because borrowers have the right to call or prepay obligations
with or without call or prepayment penalties.
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March 31, 1997
- -------------------------------------------------------------------------
Estimated
Amortized Market
(Dollars in thousands) Cost Value
- -------------------------------------------------------------------------
Due after three months through five years $ 1,232 $ 1,235
Due after five years through ten years 3,804 3,676
Thereafter 1,685 1,685
--------- ---------
$ 6,721 $ 6,596
========= =========
December 31, 1996
- -------------------------------------------------------------------------
Estimated
Amortized Market
(Dollars in thousands) Cost Value
- -------------------------------------------------------------------------
Due after three months through five years $ 1,182 $ 1,192
Due after five years through ten years 3,801 3,725
Thereafter 1,704 1,727
--------- ---------
$ 6,687 $ 6,644
========= =========
The gross realized gains and losses on the sale of securities were
insignificant to the consolidated financial statements at March 31, 1997
and December 31, 1996. The Company does not invest in securities classified
as held to maturity or traded securities.
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Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations
LIQUIDITY AND CAPITAL RESOURCES
Total capital additions to communications facilities for 1997 are projected
to be $64,928,000. During the three-month period ended March 31, 1997,
cash provided by operating activities, less dividends paid, exceeded
capital expenditures.
As of March 31, 1997, the Company had $100,005,000 of long-term debt,
consisting of the following:
- $44,000,000 of First Mortgage Bonds due June 1, 2000.
- A $30,000,000 variable rate term loan due in 13 consecutive quarterly
installments commencing on September 15, 1997.
- A $23,000,000 variable rate revolving loan with principal due July 6,
1998, and interest currently due monthly.
- $12,355,000 of various variable rate Rural Telephone Finance
Cooperative (RTFC) loan agreements maturing through 2002.
- Less current installments of long-term debt of $9,350,000.
RESULTS OF OPERATIONS
Revenues
- --------
Three Months Ended March 31
----------------------------------
(Dollars in thousands) 1997 1996 Change %
- ---------------------- ---- ---- ------ ---
Operating revenues:
Telephone revenues:
Local network services $19,343 $18,448 $ 895 4.9%
Access services 14,809 14,070 739 5.3%
Long distance services 7,851 8,341 (490) (5.9%)
Other wireline communications services 6,852 6,325 527 8.3%
-------- -------- -------
Total telephone revenues 48,855 47,184 1,671 3.5%
Wireless communications services 16,746 13,158 3,588 27.3%
Telephone equipment sales and services 4,540 4,998 (458) (9.2%)
Intercompany revenues (1,953) (2,057) 104 5.1%
-------- -------- ------
Total operating revenues $68,188 $63,283 $4,905 7.8%
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All comparisons hereinafter made are of first quarter 1997 with the same
period in 1996. The adjustments included are all of a normal recurring
nature except when noted as extraordinary or nonrecurring.
Local network services revenue increased $895,000 (4.9%). Basic local
services revenue increased $883,000 (6.6%), led by growth in revenue from
residential, business, and Centrex services. Telephone access lines in
service grew by 9,485 lines (3.7%) from March 31, 1996. Enhanced services
revenue continued its strong growth with a 15.5% increase over first
quarter 1996.
Access services revenue increased $739,000 (5.3%). This increase resulted
primarily from increased volume of access minutes, which reached a total of
251.1 million minutes in first quarter 1997. Overall minutes of access use
increased by 4.2%.
Long distance services revenue decreased $490,000 (5.9%), mainly due to
continued competition for residential customers, and to larger business
contracts renegotiated at lower rates.
Other wireline communications services revenues, consisting of directory
advertising and sales, carrier billing and collections, data
communications, and miscellaneous items, increased $527,000 (8.3%). A
significant part of the growth, $270,000, is due to increased directory
advertising and sales revenue, as directory advertising continues to be
actively promoted in our second year with our directory services provider.
Data communications growth continues to be strong, mainly due to the growth
of NAVIX, the Company's Internet access service.
Wireless communications services revenues increased $3,588,000 (27.3%) due
to expansion of the customer base, with more significant increases being seen
in access revenue opposed to usage. Lincoln MSA revenues increased $952,000
(24.5%), and 11,293 customer lines were added between March 31, 1996, and
March 31, 1997. Aliant Cellular's revenues increased $2,602,000 (28.6%),
and 25,124 customer lines were added between March 31, 1996, and March 31,
1997.
Telephone equipment sales and services revenues decreased $458,000 (9.2%).
The decrease is partly due to the sporadic nature of equipment sales; first
quarter 1996 revenue was high relative to average quarterly revenue. Another
factor causing the decrease was the reduction in the variety of phones and
accessories included in the retail inventory in the phone centers.
Overall, total operating revenues increased $4,905,000 (7.8%) for the
three-month period ended March 31, 1997, compared to the same period in
1996.
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Operating Expenses
- ------------------
Three Months Ended March 31
----------------------------------
(Dollars in thousands) 1997 1996 Change %
- ---------------------- ---- ---- ------ ---
Depreciation and amortization $12,006 $11,331 $ 675 6.0%
Other operating expenses 36,834 35,914 920 2.6%
Taxes, other than payroll and income 967 960 7 0.7%
Intercompany expenses (1,953) (2,057) 104 5.1%
-------- -------- -------
Total operating expenses $47,854 $46,148 $1,706 3.7%
All comparisons hereinafter made are of first quarter 1997 with the same
period in 1996. The adjustments included are all of a normal recurring
nature except when noted as extraordinary or nonrecurring.
Depreciation and amortization increased $675,000 (6.0%). The increase is
resulting from the addition of depreciable assets.
Other operating expenses increased by $920,000 (2.6%), primarily as a
result of the greater costs associated with cellular operations and NAVIX
Internet service.
Overall, total operating expenses increased $1,706,000 (3.7%) for the
three-month period ended March 31, 1997, compared to the same period in
1996.
Non-Operating Income and Expense
- --------------------------------
Three Months Ended March 31
----------------------------------
(Dollars in thousands) 1997 1996 Change %
- ---------------------- ---- ---- ------ ---
Income from interest and other
investments $ 2,010 $ 2,031 $ (21) (1.0%)
Other deductions 325 283 42 14.8%
Interest expense 2,179 2,368 (189) (8.0%)
-------- -------- ------
Net non-operating expense $ 494 $ 620 $(126) (20.3%)
Interest expense decreased $189,000 (8.0%), primarily as a result of debt
reductions.
Income Taxes
- ------------
Income taxes increased $1,165,000 (17.4%), which is proportionate to the
increase in taxable income.
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PART II - OTHER INFORMATION
Item 1-3 - Not applicable
Item 4 - Name Change
Stockholders approved the amendment to the articles of
incorporation changing the name of the Company from Lincoln
Telecommunications Company to Aliant Communications Inc. at
the annual stockholders' meeting April 24, 1996. The name
change was approved by a vote of 27,444,469 for the name
change, and 2,048,846 against, for a total of 29,493,315
votes. The name change became effective on September 3, 1996.
Item 5 - Purchase of Common Stock
On April 24, 1991, the Board of Directors of the Company
authorized the Company to purchase up to 600,000 shares of its
common stock from time to time as market conditions warrant.
On November 20, 1996, the Board of Directors authorized the
Company to purchase an additional 400,000 shares of its common
stock, bringing to 1,000,000 the number of shares authorized
to be purchased by the Company. As of March 31, 1997, 526,926
shares had been purchased. As of May 12, 1997, an additional
215,644 shares have been purchased, thereby bringing to
742,570 the total number of shares purchased. These purchases
are in addition to the purchases which the Company has been
making for purposes of satisfying participant requirements
under the Employee and Stockholder Dividend Reinvestment and
Stock Purchase Plan, satisfying Employer Matching and Stock
Bonus Contributions under the Company's 401(k) Savings and
Stock Ownership Plan and satisfying participant requirements
under the Company's 1989 Stock and Incentive Plan.
Item 6 - See Exhibit Index.
-19-
<PAGE>
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.
Aliant Communications Inc.
------------------------------
(Registrant)
May 15, 1997 /s/ Robert L. Tyler
Date..................... ......................................
(Signature)
Robert L. Tyler, Senior Vice President-
Chief Financial Officer
May 15, 1997 /s/ Michael J. Tavlin
Date..................... ......................................
(Signature)
Michael J. Tavlin, Vice President-
Treasurer
____________________________
*See General Instruction G
**Print name and title of the signing officer under his signature.
-20-
<PAGE>
Form 10-Q
Exhibit Index
Exhibit Title Page No.
27 Financial Data Schedule *
-21-
<PAGE>
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