UNITED STATES
-------------
SECURITIES AND EXCHANGE COMMISSION
----------------------------------
Washington, D.C. 20549
----------------------
------------
FORM 10-Q
(Mark one)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
--
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 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 0-2180
TOTAL-TEL USA COMMUNICATIONS, INC.
----------------------------------
(Exact name of registrant as specified in its charter)
New Jersey 22-1656895
----------------------- ----------------
(State or other Jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
150 Clove Road, 8th Floor, Little Falls, NJ 07424
-------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code: (201) 812-1100
Not applicable
- ----------------------------------------------------------
(Former address of principal executive offices) (Zip Code)
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
issuer's classes of common stock, as of the latest
practicable date.
Class Outstanding at June 9, l995
- ------------------- -----------------------------
Common Share,
$.05 par value 1,449,751 shares
TOTAL-TEL USA COMMUNICATIONS, INC.
----------------------------------
AND SUBSIDIARIES
----------------
FIRST QUARTER REPORT ON FORM 10-Q
---------------------------------
INDEX
-----
Page No.
PART I. FINANCIAL INFORMATION
Condensed Consolidated Statement of Earnings
Three months ended April 30, 1995 and 1994 3
(unaudited)
Condensed Consolidated Balance Sheets
April 30, 1995 (unaudited), and 4-5
January 31, 1995
Condensed Consolidated Statements of Cash Flows
Three months ended April 30, 1995 and 1994 6
(unaudited)
Notes to Condensed Consolidated Financial
Statements (unaudited) 7
Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-10
PART II. OTHER INFORMATION
Items 1-5 11
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 11
<TABLE>
<CAPTION>
TOTAL-TEL USA COMMUNICATIONS, INC. AND SUBSIDIARIES
---------------------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
---------------------------------------------
(Unaudited)
Three months ended
------------------
April 30.
---------
1995 1994
---- ----
<S> <C> <C>
Net Sales $10,515,612 $5,414,453
----------- ----------
Costs and Expenses
Cost of Sales 7,401,128 3,773,815
Selling, general and administrative 2,545,892 1,408,187
----------- ----------
9,947,020 5,182,002
----------- ----------
Operating Income 568,592 232,451
----------- ----------
Other Income (Expense)
Interest income 30,117 30,961
Other income 1,002 7,408
Interest expense (4,007) (374)
----------- ----------
Total Other Income 27,112 37,995
----------- ----------
Earnings before provision for income taxes 595,704 270,446
Provision for Income Tax 230,100 (103,000)
NET EARNINGS $365,604 $167,446
----------- ----------
NET EARNINGS PER COMMON AND COMMON
EQUIVALENT SHARE $.23 $.10
----------- ----------
Weighted Average Shares Outstanding 1,615,063 1,629,876
----------- ----------
Dividends Per Share NONE NONE
----------- ----------
See notes to condensed consolidated financial statements.
</TABLE>
<TABLE>
<CAPTION>
TOTAL-TEL USA COMMUNICATIONS, INC. AND SUBSIDIARIES
---------------------------------------------------
CONDENSED CONSOLIDATED BALANCE SHEETS
-------------------------------------
APRIL 30, JANUARY 31,
1995 1995
----------- -----------
(Unaudited) (Note)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 2,027,043 $ 1,347,625
Investments available for sale 1,803,745 --
Marketable securities -- 1,923,424
Accounts receivable 6,816,545 5,939,634
Notes receivable 631,180 653,792
Deferred income taxes 278,900 263,000
Prepaid expenses and other current assets 450,316 420,309
----------- -----------
TOTAL CURRENT ASSETS 12,007,729 10,547,784
PROPERTY AND EQUIPMENT, LESS ACCUMULATED
DEPRECIATION AND AMORTIZATION 4,239,694 3,924,139
OTHER ASSETS:
Deferred income taxes 75,000 44,000
Deferred line installation costs, less
accumulated amortization 226,425 220,985
Other assets 537,165 372,665
----------- -----------
$ 838,590 $ 637,650
----------- -----------
$17,086,013 $15,109,573
----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 5,695,999 $ 4,120,841
Other current and accrued liabilities 964,895 1,098,884
Salaries and wages payable 311,771 296,659
----------- -----------
TOTAL CURRENT LIABILITIES 6,972,665 5,516,384
----------- -----------
OTHER LONG-TERM LIABILITIES 187,889 110,814
----------- -----------
DEFERRED INCOME TAXES 447,581 389,581
----------- -----------
SHAREHOLDERS' EQUITY
Common stock 93,240 93,240
Additional paid-in capital 3,621,324 3,621,324
Retained earnings 7,401,344 7,035,740
----------- -----------
11,115,908 10,750,304
Treasury stock (1,584,687) (1,584,687)
Receivable from shareholder (100,000) (100,000)
Unrealized gain on available-for-sale securities 46,657 27,177
----------- -----------
Total shareholders' equity 9,477,878 9,092,794
----------- -----------
$17,086,013 $15,109,573
----------- -----------
NOTE: The balance sheet at January 31, 1995 has been taken from
the audited consolidated financial statements at that date.
See notes to condensed consolidated financial statements.
</TABLE>
<TABLE>
<CAPTION>
TOTAL TEL USA COMMUNICATIONS, INC. AND SUBSIDIARIES
---------------------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------
(Unaudited)
Three months ended
------------------
April 30,
---------
1995 1994
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings $ 365,604 $ 167,446
Adjustment for non-cash charges 359,784 149,682
Changes in assets and liabilities 307,299 (756,059)
---------- ---------
Net cash provided by (used in) operating activities 1,032,687 (438,931)
---------- ---------
INVESTING ACTIVITIES:
Maturities of securities available for sale 152,161 --
Decrease in marketable securities -- 105,162
Collection of notes receivable 22,612 22,612
Purchase of property and equipment (503,457) (315,670)
Additions to deferred line installation costs (24,585) (16,366)
Other -- (58,232)
---------- ---------
Net cash used in investing activities (353,269) (262,494)
---------- ---------
FINANCING ACTIVITIES:
Exercise by employee of stock option -- 49,275
---------- ---------
Net cash provided by financing activities -- 49,275
---------- ---------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 679,418 (652,150)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 1,347,625 1,368,471
---------- ---------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $2,027,043 $ 716,321
---------- ---------
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION:
Cash paid during the period for:
Interest $ 2,187 $ 374
Income taxes $ 235,375 $ 50,000
See notes to condensed consolidated financial statements.
</TABLE>
TOTAL-TEL USA COMMUNICATIONS, INC. AND SUBSIDIARIES
---------------------------------------------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
(Unaudited)
-----------
Note A--Basis of Presentation
The accompanying unaudited condensed consolidated
financial statements have been prepared in accordance with
generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q
and Rule 10-01 of Regulation S-X. They do not include all
information and notes required by generally accepted
accounting principles for complete financial statements.
However, except as disclosed herein, there has been no
material change in the information disclosed in the notes to
consolidated financial statements included in the Annual
Report on Form 10-K of Total-Tel USA Communications, Inc. and
Subsidiaries (the Company) for the fiscal year ended January
31, 1995. In the opinion of Management, all adjustments
(consisting of only normal recurring accruals) considered
necessary for a fair presentation have been included.
Operating results for the three month period ended April 30,
1995 are not necessarily indicative of the results that may
be expected for the year ending January 31, 1996.
Note B--Stock Dividend
On July 15, 1994, the Company distributed 131,795 shares
of common stock valued at $16.75 per share, in connection
with a 10% stock dividend on all outstanding shares as of
June 30, 1994. All references in the accompanying financial
statements to the number of common shares and per-share
amounts for 1994 have been restated to reflect the stock
dividend.
TOTAL-TEL USA COMMUNICATIONS, INC. AND SUBSIDIARIES
---------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
- -----------------------------------------------------------
AND RESULT OF OPERATIONS
------------------------
Results of Operations
Net sales were approximately $10,516,000 for the first
quarter of the current fiscal year, an increase of
approximately $5,101,000 or 94.2%, as compared to the first
quarter of the prior fiscal year. This increase was
attributable to continued, intensive sales and marketing
efforts by the Registrant, and an expanded agency sales
network. However, given the competitive climate in the long
distance telephone industry, there can be no assurance that
this rate of growth will continue throughout the remainder of
the current fiscal year.
For the current fiscal quarter, the telephone service billed
approximately 71,501,000 minutes of calling as compared to
approximately 36,566,000 minutes of calling for the
comparable quarter of the prior year, resulting in an
increase of approximately 34,935,000 minutes, or 96.1%. The
average revenue per minute decreased slightly in the current
fiscal quarter as compared to the prior fiscal year's
quarter, and was primarily attributable to the intense
competition faced by the registrant.
Cost of sales increased approximately $3,627,000 or 96.1% to
approximately $7,401,000 for the current quarter. The
increase was slightly unfavorable in relation to the 94.2%
increase in sales. While the Registrant was able to continue
to negotiate lower line rates from several of its major
suppliers the gross margin for the current quarter decreased
to approximately 29.6% as compared to approximately 30.3% for
the same quarter of the prior fiscal year. This decrease in
the gross margin is reflective of the lower charge per minute
billed by the Registrant which was approximately $.0015 per
minute lower for the current fiscal quarter compared to the
same quarter of the prior fiscal year.
Selling, general and administrative expense for the current
first quarter was approximately $2,546,000, an increase of
approximately $1,138,000, or 80.8%, as compared to the first
quarter of the prior fiscal year due primarily to increased
sales and administrative salaries of $477,000, sales
commissions of $370,000, provision for bad debts of $72,000
and data processing services of $42,000, all of which can be
attributed to the increased sales volume in the quarter.
Earnings per share from continuing operations increased to
$.23 per share for the current quarter as compared to $.10
per share for the quarter ended April 30, 1994.
Liquidity and Capital Resources
At April 30, 1995, the Registrant had working capital of
$5,035,064, an increase of $3,664 as compared to January 31,
1995. The ratio of current assets to current liabilities at
April 30, 1995 was 1.7:1, as compared to 1.9:1 at January
31, 1995. The slight increase in working capital at April 30,
1995 was attributable to increases in (i) cash of
approximately $679,000 (ii) accounts receivable of $877,000
and (iii) prepaid expenses and other current assets of
approximately $30,000; a decrease in other current and
accrued liabilities of $134,000, partially offset by an
increase in accounts payable of approximately $1,575,000, a
decrease in investments available for sale of approximately
$120,000 and an increase in salaries and wages payable of
$15,000. The Registrant has continued to maintain a strong
liquidity position.
The increase in cash of approximately $679,000 was the result
primarily of earnings of approximately $366,000, an increase
in accounts payable of approximately $1,438,000, non-cash
charges of approximately $360,000 and maturities of
investments available for sale of approximately $152,000,
partially offset by an increase in accounts receivable of
approximately $877,000, the purchase of property and
equipment for approximately $508,000 and an increase in
prepaid expenses and other current assets of approximately
$165,000.
Capital expenditures during the first three months of fiscal
year 1996 totaled approximately $503,000 and were financed
from funds provided by operations. Approximately $258,000 of
these expenditures were applicable to the switching system
to maintain the speed and quality of the network and $58,000
was expended for equipment at customer's locations. In
addition, approximately $144,000 was expended for the local
area network in the Little Falls, New Jersey office to
improve management information systems and operating
efficiencies. The balance of capital expenditures was for
furniture and fixtures.
Capital expenditures for the balance of fiscal year 1996 are
estimated at approximately $1,650,000. Approximately $500,000
of these expenditures are planned for upgrading the Company's
switching equipment which should substantially increase its
calling capabilities. Approximately $500,000 is proposed to
be expended for office improvements, and furniture and
equipment in connection with the expansion of the main office
and sales office location in Little Falls, New Jersey and its
research facility in Belleville, New Jersey. In addition,
approximately $600,000 is expected to be invested in new data
processing equipment and continued development of the
Company's local area network. These expenditures would be
financed through a combination of funds from operations and
current working capital.
As of April 30, 1995, the Registrant had no short or long-
term bank lines of credit and during the current fiscal
quarter had no new bank borrowings. The Company is currently
in the process of negotiating a line of credit for $500,000
with a major New Jersey bank.
TOTAL-TEL USA COMMUNICATIONS, INC. AND SUBSIDIARIES
---------------------------------------------------
PART II - OTHER INFORMATION
---------------------------
THREE MONTHS ENDED APRIL 30, 1995
---------------------------------
ITEMS 1 - 5 Not applicable
ITEM 6 Exhibits and reports on Form 8-K
(a) Exhibits - none
(b) There were no reports on Form 8-K
filed for the three months ended April 30, 1995.
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.
TOTAL-TEL USA COMMUNICATIONS, INC.
(Registrant)
Date: June 9, 1995 /s/By
------------ -----------------------
Warren H. Feldman, Esq.
President and Chief
Executive Officer
Date: June 9, 1995 /s/By
------------ -----------------------
Thomas P. Gunning
Chief Financial Officer,
Secretary, Controller and
Principal Accounting Officer
