<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the fiscal year ended December 31, 1995 Commission file number 0-8320
MID-PLAINS TELEPHONE, INC.
(Exact Name of Registrant as Specified in Its Charter)
WISCONSIN 39-0274450
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1912 Parmenter Street, P.O. Box 620070, Middleton, Wisconsin 53562-0070
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (608) 831-1000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on which
Title of each class Registered
NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock $3.33-1/3 Par Value
8% Subordinated Debentures, Due July 1, 2000
(Title of Class)
Indicate by checkmark 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.
Indicate by checkmark 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
As of March 11, 1996, there were 1,983,790 shares of Common Stock
outstanding. The aggregate market value (based upon unrelated party
non-broker transactions which the Company was familiar with) of Common
Stock held by nonaffiliates on that date was $79,351,600.
Documents incorporated by reference
Portions of the registrant's Annual Report to Shareholders for the fiscal
year ended December 31, 1994 are incorporated by reference into Parts I, II
and IV of this Form 10-K.
Portions of the registrant's Proxy Statement for the Annual Meeting to be
held April 29, 1996 are incorporated by reference into Part III of this
Form 10-K.
<PAGE>
MID-PLAINS TELEPHONE, INC.
FORM 10-K
Part I.
Item 1. BUSINESS.
(a) Mid-Plains Telephone, Inc., (Mid-Plains), which was incorporated
in 1901, is a public utility providing telecommunications
services primarily in Middleton, Cross Plains and the west side
of Madison, Wisconsin.
Mid-Plains has a wholly-owned subsidiary, Mid-Plains
Communications Systems, Inc., (MPCS), which, in southern
Wisconsin and northern Illinois, markets and installs
deregulated communications systems and provides maintenance
services related to their continued use. In October, 1994 MPCS
began providing long distance service. In October, 1995 MPCS
began providing Internet service.
There was no material change in the nature of the business
conducted by the Company during 1995.
Information regarding the recent development of the Company's
business in the number of access lines is shown below:
<TABLE>
Access
Year Lines in Service
<S> <C>
1995 28,549
1994 26,281
1993 24,414
</TABLE>
(b) Mid-Plains operates in two industry segments: a telecommunica-tions
utility providing telephone and data services (telephone
operations) and system sales and service operations. The
financial information regarding Mid-Plains' industry segments is
provided in the Company's Annual Report to Shareholders, page 21
(Footnote 9) for the year ended December 31, 1995, incorporated
herein and filed as Exhibit 13.
(c) Mid-Plains' principal line of business is providing
telecommunications services. Operating revenues fall into four
major classes: local network revenues, network access and long
distance services, system sales and services, and other (billing
and collection, directory, other nonregulated and miscellaneous).
<PAGE>
Revenues from each of these classes over the last three years
are as follows:
<TABLE>
Years Ended December 31,
1995 1994 1993
In Thousands
<S> <C> <C> <C>
Local Network Services $ 4,265 $3,548 $2,520
% of Total Revenues 17% 17% 13%
Network Access and
Long Distance Services $11,530 $9,916 $9,596
% of Total Revenues 47% 46% 51%
Other $ 2,308 $2,096 $2,143
% of Total Revenues 9% 10% 11%
System Sales and Services $ 6,475 $5,900 $4,782
% of Total Revenues 27% 27% 25%
</TABLE>
The business of Mid-Plains is not seasonal to any significant extent.
Mid-Plains telephone utility operations are subject to regulation by
the Public Service Commission of Wisconsin (PSCW). Mid-Plains
provides local exchange network service to customers within its 116
square mile service area located in Dane County, Wisconsin. The
customers have local extended area services (EAS) and access to the
nationwide direct dial toll service network. Although the Company's
customers have access to the nationwide direct toll network, the
Company does not have toll operators. The operator service is
provided primarily through Ameritech.
The communications industry is undergoing significant changes.
Regulatory, legislative and judicial decisions, new technologies,
heightened customer interest in advanced communications, and the
convergence of other industries with the telecommunications industry
are causes of increasing competition in the telecommunications
industry. The range of communications services, the equipment
available to provide and access such services and the number of
competitors offering such services continue to increase. Federal and
state regulators are encouraging changes that promote competition in
the industry in the belief that increased competition will drive
technological innovation, lower prices and improve service levels.
During 1993, the Wisconsin Legislature changed the definition of
small telecommunications utilities to include utilities with less
than 50,000 access lines. This change reduced regulation for Mid-Plains,
allowing greater flexibility in regulatory matters.
<PAGE>
In 1994, the Wisconsin Legislature enacted the Telecommunications Act
of 1993. This legislation resulted in open competition for Ameritech
and GTE and further relaxes regulation for other telecommunications
utilities in Wisconsin.
On February 8, 1996, the Telecommunications Act of 1996 was signed
into law. The bill breaks down regulatory barriers at both the state
and federal levels and is certain to accelerate the convergence of
local, long distance, wireless, video and data. The impact, however,
isn't likely to be felt immediately. The FCC and state regulators
must decide precisely how Congress' instructions will be carried out.
Due to Mid-Plains' size, it has limited exemption from several
provisions of the bill.
Mid-Plains believes that relief from excessive legislation will
enable the company to compete effectively and meet customers
expanding needs. On February 20, 1996, Mid-Plains was the first
independent local exchange company in Wisconsin to file with the
Public Service Commission of Wisconsin (PSCW) an application for
authority to implement an alternative plan to traditional rate-of-return
regulation. The five-year plan, if approved by the PSCW, would set rate
ceilings and decrease regulation. In return, the plan establishes goals
and will facilitate the transition to a greater competitive market.
As we look ahead, Mid-Plains faces increased competition with prices
and technology under continual pressure. Along with these
challenges, Mid-Plains also sees growing opportunities to expand
beyond its traditional markets and continues to monitor and consider
the most favorable options.
The Company also encounters substantial competition from other
companies in the sale and servicing of communication systems and in
the sale and provision of long distance service.
Information regarding the Company's major customers is provided in
Mid-Plains' Annual Report to Shareholders, page 17 (Footnote 1) for
the year ended December 31, 1995, incorporated herein and filed as
Exhibit 13.
Order backlog is not a significant consideration in the Company's
business, and the Company has no contracts or subcontracts which may
be subject to renegotiation of profits or termination at the election
of the Federal government.
Information regarding the Company's working capital practice is
provided in Mid-Plains Annual Report to Shareholders, page 11, for
the year ended December 31, 1995, incorporated herein and filed as
Exhibit 13.
<PAGE>
The number of employees on the Company's payroll as of December 31,
1995, was 159.
Item 2. PROPERTIES.
Information regarding the Company's properties is provided in Mid-Plains
Annual Report to Shareholders, page 18 (Footnote 4). All of
the telecommunications properties are necessary to provide services
in its serving area. Between January 1, 1993 and December 31, 1995,
the Company made property additions in the amount of $14.7 million
and retirements of $2.5 million. Virtually all of this property is
subject to liens securing long-term debt. In the opinion of
management, the Company's telecommunications plant is substantially
in good repair and suitably equipped.
Item 3. LEGAL PROCEEDINGS.
There are no material pending legal actions, either for or against
the Company.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were none in the fourth quarter.
Executive Officers of the Registrant.
The following table sets forth the names and ages of all executive
officers of Mid-Plains and all positions and offices within the
Company presently held by such executive officers. Executive
officers are elected annually for one year and hold office until
their successors are elected. None of the executive officers of Mid-Plains
has any family relationship with any other executive officer or director of
the Company.
<PAGE>
<TABLE>
Name Age Position Held
<S> <C> <C>
Dean W. Voeks 53 President and Director
Howard G. Hopeman 52 Vice-President and
Chief Financial Officer
Daniel J. Stein 41 Executive Vice-President and
General Manager of subsidiary,
Mid-Plains Communications Systems,
Inc.
Fredrick E. Urben 54 Vice-President, Administration &
Human Relations, Secretary &
Treasurer, and Director
</TABLE>
Dean W. Voeks has served as President and Director of Mid-Plains
since January, 1991. He has been an officer of Mid-Plains since
1987. He has been President and a Director of Mid-Plains
Communications Systems, Mid-Plains subsidiary, since 1991.
Howard G. Hopeman has served as Vice-President and Chief Financial
Officer since 1989. He has been a Director and Secretary & Treasurer
of Mid-Plains Communications Systems, Mid-Plains' subsidiary, since
1994.
Daniel J. Stein has served as Executive Vice-President and General
Manager of the subsidiary, Mid-Plains Communications Systems, Inc.,
for the past nine years. He became a Director of the subsidiary in
1987.
Fredrick E. Urben is Vice-President Administration & Human Relations,
and Secretary & Treasurer. He has been an officer of Mid-Plains
since 1972 and a Director since 1977.
PART II.
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
Reference is made to Mid-Plains' Annual Report To Shareholders, page
opposite page 1, page 17 (Footnote 2) and page 25, for the year ended
December 31, 1995, incorporated herein and filed as Exhibit 13.
<PAGE>
Item 6. SELECTED FINANCIAL DATA.
Reference is made to Mid-Plains' Annual Report To Shareholders, page
opposite page 1, for the year ended December 31, 1995, incorporated
herein and filed as Exhibit 13.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
Reference is made to Mid-Plains' Annual Report To Shareholders, pages
10-11, for the year ended December 31, 1995, incorporated herein and
filed as Exhibit 13.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Reference is made to the Company's Annual Report To Shareholders,
pages 12-22, for the year ended December 31, 1995, incorporated
herein and filed as Exhibit 13.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
None.
<PAGE>
Part III.
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information required as to the Directors of the Registrant is
incorporated by reference and is contained in Mid-Plains' definitive
proxy statement for its 1996 Annual Meeting of Shareholders filed or
to be filed not later than 120 days after the end of the fiscal year
covered by this report. Information as to the Executive Officers of
the Registrant appears in Part I of this Form 10K Annual Report as an
unnumbered item under the caption "Executive Officers of the
Registrant".
Item 11. EXECUTIVE COMPENSATION.
The information required by this item is incorporated by reference
and is contained in Mid-Plains' definitive proxy statement for its
1996 Annual Meeting of Shareholders filed or to be filed not later
than 120 days after the end of the fiscal year covered by this
report.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
(a) Security ownership of certain beneficial owners.
Pursuant to restrictions in Mid-Plains' By-Laws, no person,
including any "group" as that term is used in Section 13(d)(3)
of the Securities Exchange Act of 1934, may be, nor is any
person in fact the beneficial owner of more than five percent of
any class of the Company's voting securities.
(b) Security ownership of certain beneficial owners.
The information required by this item is incorporated by
reference and is contained in Mid-Plains' definitive proxy
statement for its 1996 Annual Meeting of Shareholders filed or
to be filed not later than 120 days after the end of the fiscal
year covered by this report.
(c) Changes in control.
Mid-Plains does not know of any arrangements, including the
pledge by any person, of the Company's securities, the operation
of which may at a subsequent date result in a change of control
of the Company.
<PAGE>
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required by this item is incorporated by reference
and is contained in Mid-Plains' definitive proxy statement for its
1996 Annual Meeting of Shareholders filed or to be filed not later
than 120 days after the end of the fiscal year covered by this
report.
Part IV.
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM
8-K.
(a) 1. Financial Statements. Reference is made to the
Registrant's Annual Report To Shareholders, pages 12-22,
for the year ended December 31, 1995, incorporated herein
and filed as Exhibit 13.
Consolidated Balance Sheets at December 31, 1995 and 1994.
Consolidated Statements for each of the three years ended
December 31, 1995 --
Statements of Income
Statements of Shareholders' Equity
Statements of Cash Flows
Notes to Consolidated Financial Statements.
Report of Management
Report of Independent Public Accountants
2. Financial Statements Schedules.
All schedules are omitted because of the absence of
conditions under which they are required.
Separate financial statements and supplemental schedules of
Mid-Plains are omitted since Mid-Plains is primarily an
operating company and its subsidiary, included in the
consolidated financial statements being filed, does not
have a minority equity interest or indebtedness to any
person other than Mid-Plains in an amount which exceeds
five percent of the total assets as shown by the
consolidated financial statements filed herein.
<PAGE>
3. Exhibits. Exhibits filed (or to be filed) as a part of
this Form 10-K Annual Report are as follows:
<TABLE>
Exhibit Number Description
<S> <C>
12 Computation of Ratio of
Earnings to Fixed Charges
13 MID-PLAINS TELEPHONE, INC.
Annual Report to Shareholders
for 1995
21 Subsidiary of the Registrant
27 Financial Data Schedule
</TABLE>
Exhibits Incorporated By Reference
Compilation of Articles of Incorporation current
in effect as of December 31, 1990 (See Exhibit
6, Form 10-K for the fiscal year ending
December 31, 1990).
By-laws of the Company in effect as of December
30, 1990 (See Exhibit 7, Form 10-K for the
fiscal year ending December 31, 1990).
January 16, 1992 Amendment to Bylaws (See
Exhibit 5, Form 10-K for the fiscal year ended
December 31, 1991).
Mid-Plains Telephone, Inc., Series 1995
Registered Subordinated Debenture to M&I First
National Bank, West Bend, Wisconsin, Trustee,
(See Exhibit 4, Form 8-K dated July 6, 1995.
Mid-Plains Telephone, Inc. Employee Stock Purchase
Plan (See Exhibit 99, Form 10-Q for the quarter ended
September 30, 1995).
(b) Reports on Form 8-K. There were no reports on Form 8-K filed
with the Securities and Exchange Commission during the fourth
quarter of the year ended December 31, 1995.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
MID-PLAINS TELEPHONE, INC.
(Registrant)
Date: March 29, 1996 By /s/Dean W. Voeks
Dean W. Voeks, President
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 Company and in the capacities and on the dates indicated.
/s/Dean W. Voeks President and Director March 29, 1996
Dean W. Voeks (Principal Executive
Officer)
/s/Howard G. Hopeman Vice-President and March 29, 1996
Howard G. Hopeman Chief Financial Officer
(Principal Financial
and Accounting Officer)
/s/Fredrick E. Urben Vice-President, March 29, 1996
Fredrick E. Urben Administration & Human
Relations, Secretary &
Treasurer and Director
/s/Charles Maulbetsch Director March 29, 1996
Charles Maulbetsch
/s/S. C. Ehlers Director March 29, 1996
S. C. Ehlers
The above signatures include a majority of the signatures of the
Board of Directors.
<PAGE>
EXHIBIT 12
MID-PLAINS TELEPHONE, INC.
Computation of Ratio of Earnings to Fixed Charges
Year Ended December 31,
1995 1994 1993 1992 1991
In Thousands:
Net Income $3,425 $2,889 $2,882 $2,680 $1,922
Income Tax
Expense 2,109 1,715 1,551 1,562 1,026
Interest Charges 957 896 955 1,004 1,062
Total Earnings $6,491 $5,500 $5,388 $5,246 $4,010
Interest
Expense 957 896 955 1,004 1,062
Ratio of Earnings
To Interest
Expense 6.78 6.14 5.64 5.23 3.77
<PAGE>
<PAGE>
<TABLE>
EXHIBIT 12
MID-PLAINS TELEPHONE, INC.
<CAPTION>
Computation of Ratio of Earnings to Fixed Charges
Year Ended December 31,
1995 1994 1993 1992 1991
In Thousands:
<S> <C> <C> <C> <C> <C>
Net Income $3,425 $2,889 $2,882 $2,680 $1,922
Income Tax
Expense 2,108 1,715 1,551 1,562 1,026
Interest Charges 949 896 955 1,004 1,062
Total Earnings $6,482 $5,500 $5,388 $5,246 $4,010
Interest
Expense 949 896 955 1,004 1,062
Ratio of Earnings
To Interest
Expense 6.83 6.14 5.64 5.23 3.77
</TABLE>
<PAGE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS<F1>
Dollars in thousands, except per share data
1995 1994 1993 1992 1991 1985
<S> <C> <C> <C> <C> <C> <C>
Access Lines 28,549 26,281 24,414 23,103 21,416 $13,300
Total Assets $40,714 $33,889 $33,676 $31,079 $29,361 $14,620
Stockholders'
Equity $19,722 $18,232 $16,766 $15,158 $13,943 $ 8,090
Long-Term Debt,
Including
Current
Maturities $ 8,570 $ 6,954 $ 7,756 $ 8,482 $ 9,141 $ 3,948
Short-Term
Notes Payable
to Banks $ 4,440 $ 1,300 $ 2,400 $ 1,400 $ 1,200 $ --
Ratio of
Earnings to
Interest
Expense<F2> 6.78 6.14 5.64 5.23 3.77 5.47
Revenues and
Sales $24,578 $21,460 $19,041 $18,075 $15,728 $ 6,759
Net Income $ 3,425 $ 2,889 $ 2,882 $ 2,680 $ 1,922 $ 1,162
Earnings Per
Share $ 1.73 $ 1.47 $ 1.47 $ 1.38 $ .99 $ .71
Cash Dividends
Per Share $ 1.120 $ .860 $ .780 $ .860 $ .705 $ .537
Average Common
Shares
Outstanding 1,978,725 1,969,628 1,958,846 1,948,860 1,941,627 1,632,948
Number of
Shareholders 2,281 2,222 2,135 2,067 2,015 1,621
<FN>
<F1>Earnings per share, cash dividends and average common shares outstanding
have been adjusted retroactively for the 3-for-1 stock split in 1990.
<F2>For the purpose of this ratio, earnings have been calculated by adding net
income, interest expense and income taxes.
</FN>
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Overview
1995 was an outstanding year for Mid-Plains, driven by record
revenues. Consolidated operating revenues increased $3.1
million, to $24.6 million, in 1995, and $2.4 million, to $21.5
million, in 1994. Consolidated net income increased $0.5 million,
to $3.4 million, in 1995, from $2.9 million in both 1994 and 1993.
This increased earnings per share by 17.7% to $1.73 in 1995 from
$1.47 in both 1994 and 1993.
Mid-Plains operates two business segments: a telecommunications
utility providing telephone and data services (telephone
operations) and system sales and service operations.
Telephone Service Operating Results
The telephone segment contributed operating income of $6.1
million, $5.0 million, and $5.0 million to the consolidated
operating income in 1995, 1994, and 1993, respectively.
Operating Revenues
Telephone service revenues increased $2.5 million to $18.1
million, in 1995, and $1.3 million to $15.6 million, in 1994.
For 1995, local network service revenues increased by $.7
million. The growth was primarily due to an increase in local
network service rates in 1995 which increased revenues by $1.1
million and the growth in the number of access lines served which
resulted in $.3 million growth in revenues. Local network
service increases for 1995 were offset in part by a credit of $.6
million in 1994 to eliminate regulatory liabilities no longer
considered payable. Network access and long distance service
revenues increased by $1.6 million in 1995. The increase was
primarily due to growth in network access, $.7 million, and the
provision of long distance service, $.7 million.
For 1994, local network services increased by $1.0 million. The
growth was primarily due to a credit of $0.6 million to eliminate
certain regulatory liabilities (see Note 1 to the Financial
Statements). In addition, 1994 revenues were affected by
Extended Community Calling, resulting in a $0.3 million increase
in local service network and decreases in network access and
other revenues of $0.4 million and $0.2 million, respectively.
Network access and long distance services revenues include both
interstate and intrastate revenues. For 1995, approximately 60%
of such revenues were interstate as compared to 59% in 1994 and
56% in 1993.
Operating Expenses
Telephone operating expenses, which includes plant, depreciation,
customer, corporate, and general taxes, increased by $1.4 million
to $12.0 million, in 1995, and $1.3 million to $10.5 million, in
1994. Increases in plant, customer and corporate expenses for
1995 were primarily due to growth in internal operations and the
cost of providing long distance services. The growth in these
expenses was offset by a charge of $.4 million made in 1994 to
eliminate regulatory assets no longer considered recoverable.
The changes in plant, customer and corporate expenses in 1994
were due primarily to the elimination of $0.4 million of
regulatory assets (see Note 1 to the Financial Statements),
start-up costs of $0.2 million associated with the provisioning
of long-distance services and internal growth. In addition, 1994
reflects shift of $0.3 million to corporate from plant and
customer due to planning and other changes.
Depreciation increased $0.8 million in 1995 and $0.2 million in
1994 as a result of increased depreciable property and, in 1995,
additional depreciation of $0.5 million in connection with the
change-out of central office equipment.
System Sales and Service Operating Results
The system sales and service segment contributed operating income
of $0.3 million, $0.5 million, and $0.4 million to the
consolidated operating income in 1995, 1994, and 1993,
respectively.
Operating Revenues
System sales and service revenues increased by $0.6 million to
$6.5 million, in 1995, and increased by $1.1 million to $5.9
million, in 1994, primarily as a result of increased system sales
and maintenance.
Operating Expenses
Cost of sales and services, as a percentage of operating
revenues, were 64% in 1995, 58% in 1994, and 56% in 1993. The
1995 increase was due primarily to reclassifying to cost of sales
payroll overheads which in 1994 and 1993 were included in
operating expenses. If the change had been made in 1994 and
1993, cost of sales would have increased 3% in 1994 and 1993 with
corresponding reduction in operating expenses. Operating
expenses, which did not increase in 1995 due to the above, were
$2.0 million in 1995 and 1994, an increase of $0.3 million over
1993.
Other Items
Interest expense did not change significantly in 1995, 1994 or
1993 primarily due to level amounts of short-term bank notes
during the periods. In July 1995 interest on debentures
increased as a result of additional financing, but was offset in
part by a reduction in debenture interest rates from 11% to 8%.
Income taxes increased in 1995 primarily due to higher taxable
income. The effective income tax rate was 38.1%, 37.3% and 34.8%
in 1995, 1994 and 1993, respectively.
LIQUIDITY AND CAPITAL RESOURCES
Overview
Mid-Plains Telephone, Inc. requires funds primarily for its
construction program, the retirement of maturing long-term debt,
dividend payments and investments. The capital resources
available to meet these requirements are provided through
internally generated funds and external financing. Net cash
provided from operations of the Company and its subsidiary for
the years 1993 - 1995 was $18.3 million. External
financing for the same period totaled $8.8 million.
Capital Requirements and Resources
The primary capital requirement of the Company consists of
expenditures under its construction program. Total construction
expenditures for the years 1993 - 1995 were $14.8 million. Total
construction expenditures for 1996 are estimated to be $6.3
million. In 1995, Mid-Plains sold $5.0 million of five-year
debentures and retired $2.5 million of debentures which were due
on July 1, 1995. It is expected that 1996 capital requirements
for construction expenditures and repayment of outstanding short-term
bank notes will be provided for with cash flow from
operations and the issuance of $5 million of long-term debt.
In 1995, Mid-Plains responded to a 1994 cellular partnership
capital call by contributing $2.0 million (See Note 8 to the
Financial Statements).
At December 31, 1995, the Company had available unused lines-of-credit
of $2.6 million. The Company has experienced no difficulty in obtaining
funds for its construction program or other purposes, however, management
is unable to predict the potential impact of competition on the Company's
future cash flow. Inflationary impacts on the Company's businesses are not
anticipated to be material.
External Financing
External financing for the years 1993 - 1995 were $8.8 million
consisting of $5.0 million raised through the sale of debentures,
$0.8 million from the sale of common stock under the employee
stock purchase plan and a net increase in short-term bank notes
of $3.0 million.
In connection with its long-term debt, the Company is subject to
certain restrictions on its debt, other investments and cash
dividends (See Note 2 to the Financial Statements). The
Company's ratio of shareholder's equity to total capitalization
(shareholders' equity plus long-term and short-term debt) was 60%
at December 31, 1995, as compared to 69% at December 31, 1994,
and 62% at December 31, 1993. The Company's long-term goal is to
maintain a common equity level of about 50% to 60%. The Company
expects its 1996 equity level to be within this range at December
31, 1996.
OTHER MATTERS
Regulatory and Competitive Trends
For state regulatory purposes, Mid-Plains is currently considered
a small telecommunication utility and is subject to reduced
regulation which allows for greater flexibility in regulatory
matters. Mid-Plains used this reduced regulation to increase its
local rates without a formal proceeding in January 1995.
On February 8, 1996, the Telecommunications Act of 1996 was
signed into law. The bill breaks down regulatory barriers at
both the state and federal levels and is certain to accelerate the
convergence of local, long distance, wireless, video and data.
The impact, however, isn't likely to be felt immediately. The
FCC and state regulators must decide precisely how Congress'
instructions will be carried out. Due to Mid-Plains' size, it has
limited exemption from several provisions of the bill.
On February 20, 1996, Mid-Plains was the first independent local
exchange company in Wisconsin to file with the Public Service
Commission of Wisconsin (PSCW) an application for authority to
implement an alternative plan to traditional rate-of-return
regulation. The five-year plan, if approved by the PSCW, would
set rate ceilings and decrease regulation. In return, the plan
establishes goals and will facilitate the transition to a grater
competitive market.
The breakdown of barriers at both the state and federal levels
allows competitors to enter the telecommunications service markets.
At the same time, telecommunications providers can enter new
markets. Today, Mid-Plains is already subject to competition
from numerous sources, including directory overlays, bypass of
the local exchange networks and competing cellular companies. As
we look ahead, Mid-Plains faces increased competition with prices
and technology under continual pressure. Along with these
challenges, Mid-Plains also sees growing opportunities to expand
beyond its traditional markets and continues to monitor and
consider the most favorable options.
New Accounting Pronouncement
In March 1995, the Financial Accounting Standards Board (FASB)
issued SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of" (SFAS 121).
This statement, which will be applicable to 1996 financial
statements, establishes accounting standards for the impairment
of long-lived assets to be held and used, and for long-lived
assets to be disposed of. Essentially, SFAS 121 requires review
of those assets for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be
recoverable. SFAS 121 also requires that a rate-regulated
enterprise recognize an impairment for the amount of costs
excluded when a regulator excludes all or part of a cost from an
enterprise's rate base or when regulatory assets are no longer
probable of recovery.
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
Year Ended December 31,
1995 1994 1993
In Thousands Except For Per Share Data
<S> <C> <C> <C>
OPERATING REVENUES
Telephone operations -
Local network services $ 4,265 $ 3,548 $ 2,520
Network access and long
distance services 11,530 9,916 9,596
Other 2,308 2,096 2,143
System sales and services 6,475 5,900 4,782
24,578 21,460 19,041
OPERATING EXPENSES
Telephone operations -
Plant operations 2,818 2,567 2,509
Depeciation and amortization 3,073 2,307 2,092
Customer operations 2,524 2,411 2,135
Corporate operations 2,531 2,381 1,732
General taxes 1,027 868 815
System sales and services -
Cost of sales and services 4,118 3,429 2,699
Operating expenses 2,023 2,015 1,682
18,114 15,978 13,664
OPERATING INCOME 6,464 5,482 5,377
Other income 27 18 11
Interest expense (957) (896) ( 955)
INCOME BEFORE INCOME TAX EXPENSE 5,534 4,604 4,433
Income tax expense 2,109 1,715 1,551
NET INCOME $ 3,425 $ 2,889 $ 2,882
Earnings per share $ 1.73 $ 1.47 $ 1.47
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
<PAGE>
CONSOLIDATED BALANCE SHEETS
<TABLE>
December 31, December 31,
1995 1994
In Thousands
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 560 $ 186
Accounts receivable
Due from subscribers 818 811
Customer sales and service 704 725
Other, principally connecting
companies 2,073 1,848
Refundable income taxes 215 184
Inventories
Plant materials and supplies 376 281
Communication systems and parts 903 863
Other 271 393
5,920 5,291
PROPERTY, PLANT AND EQUIPMENT
Telephone, in service and under
construction, at original cost 46,198 41,041
Less accumulated depreciation (16,663) (15,383)
29,535 25,658
INVESTMENTS AND OTHER ASSETS
Cellular limited partnership interest 4,374 2,379
Other 885 561
5,259 2,940
$40,714 $33,889
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 973 $ 3,380
Notes payable to banks 4,440 1,300
Accounts payable 2,949 2,798
Other 636 648
8,998 8,126
LONG-TERM DEBT 7,597 3,574
DEFERRED CREDITS
Income taxes 3,230 2,742
Investment tax credits 236 300
Other 931 915
4,397 3,957
STOCKHOLDERS' EQUITY
Common stock, $3.33-1/3 par value;
3,000,000 shares authorized;
issued 1,982,960 and 1,974,400
shares, respectively 6,610 6,581
Additional paid-in capital 5,059 4,806
Retained earnings 8,053 6,845
19,722 18,232
$40,714 $33,889
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Common Stock Additional Total
Shares Par Paid-in Retained Shareholders'
Issued Value Capital Earnings Equity
In Thousands
<S> <C> <C> <C> <C> <C>
Balances,
December 31, 1992 1,954 6,513 4,350 4,295 15,158
Net income 2,882 2,882
Cash dividend -
$.78 a share (1,528) (1,528)
Stock purchase plan 11 36 218 254
Balances,
December 31, 1993 1,965 6,549 4,568 5,649 16,766
Net Income 2,889 2,889
Cash dividend -
$.86 a share (1,693) (1,693)
Stock purchase plan 9 32 238 270
Balances,
December 31, 1994 1,974 6,581 4,806 6,845 18,232
Net income 3,425 3,425
Cash dividend -
$ 1.12 a share (2,217) (2,217)
Stock purchase plan 9 29 253 282
Balances,
December 31, 1995 1,983 6,610 5,059 8,053 19,722
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
</TABLE>
<TABLE>
MID-PLAINS TELEPHONE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31,
1995 1994 1993
In Thousands
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $3,425 $2,889 $2,882
Add (Deduct) adjustments to
reconcile net income to net
cash from operations:
Depreciation and amortization 3,173 2,390 2,161
Deferred income taxes 390 485 421
Change in accounts and other
receivables (211) (369) (100)
Change in inventories (134) 51 (207)
Change in accounts payable 150 809 (64)
Change in other assets and
liabilities 130 (139) 178
Net cash from operating activities 6,923 6,116 5,271
FINANCING ACTIVITIES
Long-term borrowings 5,000 -- --
Repay long-term debt (3,384) (802) (726)
Short-term bank notes:
Borrowings 9,230 400 1,400
Repayments (6,090) (1,500) (400)
Dividends paid (2,217) (1,693) (1,528)
Stock purchase plan 282 270 254
Net cash used in financing activities 2,821 (3,325) (1,000)
INVESTING ACTIVITIES
Additions to property, plant
and equipment (7,146) (4,233) (3,413)
Investment in cellular
partnership (1,995) -- --
Other, net (229) 22 (17)
Net cash used in investing activities (9,370) (4,211) (3,430)
CASH AND CASH EQUIVALENTS
Net increase (decrease)
during year 374 (1,420) 841
Beginning of year 186 1,606 765
End of year $ 560 $ 186 $1,606
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business and Consolidation - Mid-Plains' consolidated financial
statements include the accounts of Mid-Plains Telephone, Inc. and its
wholly-owned subsidiary, Mid-Plains Communications Systems, Inc. All
significant inter-company items have been eliminated in consolidation.
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
Mid-Plains' main business is a telecommunications provider which
provides telephone and data services to customers within its 116 square
mile service area located in Dane County, Wisconsin. Subsidiary
operations provide business systems, installation and service to a base
of customers throughout southern Wisconsin and northern Illinois.
Regulation - The accounting policies of Mid-Plains Telephone, Inc. and
its subsidiary ("Mid-Plains") conform to generally accepted accounting
principles, and where applicable, conform to the accounting principles
as prescribed by the Public Service Commission of Wisconsin (PSCW).
Mid-Plains follows the accounting for regulated enterprises as
prescribed by Statement of Financial Accounting Standards No.71,
"Accounting for the Effects of Certain Types of Regulation" ("SFAS 71").
This accounting requires the deferral of certain costs and obligations
based upon recovery of such amounts in future years. SFAS 71 also
requires companies to depreciate plant and equipment over lives
acceptable to the regulator. Mid-Plains annually reviews the continued
applicability of SFAS 71 based upon the current regulatory and
competitive environment.
In 1994, the Wisconsin Legislature enacted the Telecommunications
Act of 1993. As a result of this and other regulatory and legislative
activities, management concluded that the recovery of certain regulatory
assets and payment of certain regulatory liabilities related to employee
and retiree benefits would not be realized. The elimination of these
regulatory assets of $360,000 and regulatory liabilities of $574,000
were reflected as increases in the 1994 operating expenses and revenues,
respectively. These changes in estimates increased 1994 net income by
$130,000 ($.07 per share).
Property, Plant and Equipment - Telephone property is stated at
original cost of construction. Beginning in September 1995, regulators
modified accounting principles for the allowance for funds used during
construction (AFUDC) to conform with Statement of Financial Accounting
Standards No. 34 "Capitalization of Interest Cost". The impact of this
change was not material. No AFUDC was taken in 1995, 1994 or 1993.
Normal retirements of telephone property are charged against
accumulated depreciation along with the costs of removal less salvage,
with no gain or loss recognition. Renewals and betterments of plant and
equipment are capitalized while repairs, as well as renewals of minor
items, are charged to operating expenses.
Depreciation of telephone plant is provided for primarily on the
straight-line method using class rates acceptable to the PSCW. The
composite rates were 7.3%, 6.1%, and 6.0% for the years 1995, 1994, and
1993, respectively.
When non-telephone property is sold or retired, a gain or loss is
recognized. Depreciation is provided on the straight-line method over
estimated service lives.
Inventories - Inventories are stated at the lower of cost or market.
The cost of materials and supplies inventory, which is used
primarily for the construction of telephone plant, is determined
principally by the average cost method.
The cost of communications systems and parts inventory, held
primarily for sale and servicing of deregulated telephone systems, is
determined principally by the first-in, first-out (FIFO) method.
Income Taxes - Mid-Plains files a consolidated federal income tax
return.
Income tax expense is based on reported earnings before income
taxes. Refundable income taxes reflect the difference between the
amount of estimated income taxes prepaid and the amount currently owed.
Deferred income taxes have been established to reflect the impact of
temporary differences between the amount of assets and liabilities
recognized for financial reporting purposes and such amounts recognized
for tax purposes. In addition, deferred tax balances are adjusted to
reflect tax rates, based on currently enacted tax laws, that are
anticipated to be in effect in the years in which the temporary
differences are expected to reverse.
Investment tax credits which were deferred prior to 1986 are being
amortized over the service life of the related property.
Revenue Recognition - Mid-Plains recognizes revenues when earned,
regardless of the period in which they are billed.
Telephone Revenues - Mid-Plains is required to provide service
(and grant credit) to subscribers within its defined service
territory.
Revenues from long-distance services are derived from
charges for access to Mid-Plains' local exchange network,
subscriber line charges and contractual arrangements for billing
and collection and other services. Interstate access revenues are
based on an average schedule company settlement formula
administered by the National Exchange Carrier Association (NECA)
as regulated by the FCC. Intrastate access revenues are based on
an individual company tariff access charge structure regulated by
the PSCW.
The percentage of revenues for long-distance services
provided to carriers which exceeded 10% of telephone revenues
were: AT&T Communications, Inc. 23% in 1995, 30% in 1994, and
32% in 1993; Ameritech 15% in 1995, 16% in 1994, and 24% in 1993;
and MCI 10% in 1995, 11% in 1994 and 11% in 1993. No other
customer accounted for more than 10% of total revenues.
System Sales and Services Revenues - Revenues from system sales
and services are derived from the sale, installation and servicing
of deregulated communications systems. Mid-Plains grants credit
to customers, substantially all of whom are located in southern
Wisconsin.
Customer contracts for sales and installations are accounted
for using the completed-contract method which recognizes income
only if the contract is completed, or substantially so.
Cash and Cash Equivalents - Cash and cash equivalents include cash and
certificates of deposit with original maturities of three months or
less. Cash and cash equivalents are stated at cost which approximates
market value. At December 31, 1995 and 1994, Mid-Plains had bank
deposits in excess of federally insured limits of approximately
$510,000 and $343,000, respectively.
Supplemental Cash Flow Disclosures - Mid-Plains, during 1995, 1994,
and 1993, paid interest in the amount of approximately $960,000,
$888,000, and $955,000, respectively, and income taxes in the amount of
approximately $1,902,000, $1,137,000, and $1,327,000, respectively.
Earnings Per Share - Earnings per share are computed by dividing net
income by the weighted average number of shares of common stock
outstanding. The number of shares used in this calculation were:
1995 - 1,978,725; 1994 - 1,969,628; and 1993 - 1,958,846.
2. LONG-TERM DEBT
Long-term debt was comprised of the following:
<TABLE>
December 31, December 31,
1995 1994
In Thousands
<S> <C> <C>
Wisconsin Investment Board First
Mortgage Notes -
8-1/2% notes, payable in monthly
installments, from May 1, 1974
to October 1, 1998 $ 414 $ 548
9-3/4% note, payable in quarterly
installments, from September 19,
1987 to June 29, 1997 653 1,038
10-1/2% notes, payable in quarterly
installments, from February 7, 1991
to November 7, 2000 2,503 2,871
Registered Subordinated Debentures -
8% due July 1, 2000 5,000 -0-
11% due July 1, 1995 -0- 2,497
8,570 6,954
Less current portion 973 3,380
Long-term debt $ 7,597 $ 3,574
</TABLE>
Substantially all of Mid-Plains' telephone plant is pledged under
the mortgage notes of the Company.
In connection with its long-term debt, Mid-Plains is subject to
restrictions on debt, other investments and on the amount of retained
earnings available for cash dividends. At December 31, 1995, $5,861,000
of its retained earnings were not restricted and thus are available for
the payment of dividends.
Long-term debt maturing within each of the next five years is as
follows: 1996 - $973,000, 1997 - $833,000, 1998 - $606,000, 1999 -
$550,000, and 2000 - $5,608,000.
3. SHORT-TERM FINANCING
The table below contains information related to short-term financing.
<TABLE>
Year Ended December 31,
1995 1994 1993
In Thousands
<S> <C> <C> <C>
Balance of notes payable to
banks at end of year $4,440 $1,300 $2,400
Weighted average interest rate
at end of year 8.30% 8.50% 6.00%
Maximum amount outstanding
during year $4,440 $2,400 $2,400
Average amount outstanding
during year $1,619 $1,392 $1,569
Weighted average interest
rate during the year 8.80% 6.91% 5.94%
</TABLE>
At December 31, 1995, Mid-Plains had available unused
lines-of-credit of $2,560,000, for general corporate purposes.
Mid-Plains' lines of credit do not require compensating balances.
4. Property, Plant and Equipment
<TABLE>
The components of property, plant and equipment were as follows:
December 31,
1995 1994
(In Thousands)
<S> <C> <C>
Land $ 318 $ 318
Buildings 3,431 3,362
Central office equipment 15,668 12,818
Cable, wiring and conduit 21,813 19,540
Other 4,879 4,469
46,109 40,507
Under construction 89 534
46,198 41,041
Less accumulated depreciation (16,663) (15,383)
$29,535 $25,658
</TABLE>
5. INCOME TAXES
The components of income tax expense are as follows:
<TABLE>
Year Ended December 31,
1995 1994 1993
In Thousands
<S> <C> <C> <C>
Current:
Federal $1,479 $1,018 $ 881
State 373 263 236
Total current 1,852 1,281 1,117
Deferred:
Federal 247 395 391
State 74 110 123
Total deferred 321 505 514
Investment tax credits (64) (71) (80)
Total income tax expense $2,109 $1,715 $1,551
</TABLE>
<TABLE>
The following is a reconciliation of the statutory federal income
tax rate of 34% to Mid-Plains' effective income tax rate.
Year Ended December 31,
1995 1994 1993
<S> <C> <C> <C>
Statutory federal income tax
rate 34.0% 34.0% 34.0%
State income taxes, net of
federal benefit 5.4 5.3 5.4
Amortization of investment tax
credits (1.2) (1.6) (1.8)
Amortization of excess deferred
federal taxes (.6) (.7) (.8)
Other differences .5 .3 (2.0)
Effective income tax rate 38.1% 37.3% 34.8%
</TABLE>
<TABLE>
The components of Mid-Plains' deferred tax asset (liability) were as follows:
December 31,
1995 1994
(In Thousands)
<S> <C> <C>
Deferred tax asset:
Unamortized investment tax credit $ 112 $ 152
Compensated absences 196 -
Deferred compensation 106 92
Deferred income 91 82
Other 143 88
Deferred tax asset 648 414
Deferred tax liability:
Property, plant and equipment
depreciation (2,636) (2,182)
Cellular interest (920) (775)
Other (118) (29)
Deferred tax liabilities (3,674) (2,986)
Net deferred tax liability (3,026) (2,572)
Less: Current deferred tax asset (204) (170)
Long-term deferred tax liability $(3,230) $(2,742)
</TABLE>
6. BENEFIT PLANS
Pension Plan - Mid-Plains has a pension plan covering most of the
employees of its telephone operations. The plan is non-contributory
and provides for benefits to be paid to eligible employees at retirement
based primarily upon years of service with Mid-Plains and compensation
rates near retirement. Mid-Plains' funding policy is to contribute
annually an amount up to the maximum amount that can be deducted for
federal income tax purposes. Plan assets consist of fixed income
securities.
Mid-Plains applies the Financial Accounting Standards Board's
SFAS 87, Employers' Accounting for Pensions, using a measurement date
of September 30 for financial reporting purposes. In 1993 and prior
years, the funded amount was recognized for ratemaking and adjustments
made to revenues to reflect resulting regulatory liabilities. As
explained in Footnote 1, this regulatory liability has been eliminated.
Beginning in 1994, pension costs for ratemaking are based on costs
calculated under SFAS 87.
The funded status of the plan at October 1 for the year ended
December 31 was as follows:
<TABLE>
1995 1994
In Thousands
<S> <C> <C>
Vested benefit obligation $ 4,889 $ 4,435
Non-vested benefit obligation 89 139
Total actuarial present value of
accumulated benefit obligation $ 4,978 $ 4,574
Projected benefit obligation for
service rendered to date $(7,557) $(7,006)
Plan assets at fair value as of
October 1 6,101 5,116
Plan assets less than
projected benefit obligation (1,456) (1,890)
Unrecognized loss on assets 1,425 2,006
Unrecognized net asset at transition (115) (135)
Unrecognized prior service cost 243 278
Amount contributed to plan for fourth
quarter 155 158
Prepaid pension cost at December 31 $ 252 $ 417
</TABLE>
<TABLE>
The net periodic pension cost consists of the following:
1995 1994 1993
In Thousands
<S> <C> <C> <C>
Service cost - benefits earned
during the period $ 494 $ 548 $ 451
Interest cost on projected benefit
obligation 454 449 391
Actual return on plan assets (719) 230 (564)
Net amortization and deferral 403 (584) 310
Net pension cost calculated under
SFAS 87 $ 632 $ 643 $ 588
Rates used for calculations -
Discount Rate - interest rate used to
adjust for the time value of money 6.50% 6.50% 6.50%
Assumed rate of increase in
compensation levels 5.30% 5.33% 5.84%
Expected long-term rate of return
on pension assets 7.75% 7.75% 7.75%
</TABLE>
401(k) Benefit Plan - Mid-Plains offers a defined contribution 401(k)
benefit plan to substantially all employees. The cost of the 401(k)
plan was as follows: 1995 - $179,000, 1994 - $178,000, and
1993 - $163,000.
Retiree Health Insurance Plan - Mid-Plains has a retiree health
insurance plan for telephone operations employees retiring after 1992.
The plan, which is unfunded, provides for limited coverage to retirees
between the age of 60 and 65, based on accumulated sick leave in excess
of 720 hours. The cost of the plan was $48,000 in 1995, $26,000 in 1994,
and $26,000 in 1993.
Stock Purchase Plan - Mid-Plains has a stock purchase plan which allows
employees and directors to purchase limited quantities of Mid-Plains
Telephone, Inc. stock. Mid-Plains has a pricing policy under which
employees, other than officers, may purchase shares at a discounted
market price and officers and directors may buy shares at full market
price.
Deferred Compensation Plan - Mid-Plains has an unfunded deferred
compensation plan whereby an officer or director can defer a portion of
current officers' salaries or director fees. For income tax purposes,
a deduction is allowed at the time compensation is paid to the
participants.
7. COMMITMENTS
Construction expenditures for 1996 are estimated at $6.3 million, and
substantial commitments have been incurred in connection with such
expenditures.
8. INVESTMENT, LIMITED PARTNERSHIP
Mid-Plains has an 18% share in a cellular partnership with Ameritech
which provides cellular telephone service in Madison, Janesville/Beloit
and bordering areas. The investment is accounted for using the cost
method.
From time to time, the general partner may request additional
capital contributions from the limited partners to fund expansion or
operation of cellular service. In the event that additional capital is
requested, Mid-Plains may either contribute an amount equal to its then
current percentage interest or have its percentage interest reduced.
During 1995, Mid-Plains participated in a capital call and contributed
$1,995,000 to the partnership. No distributions from the partnership
have been received during the three years ended December 31, 1995.
9. SEGMENT INFORMATION
Mid-Plains operates in two industry segments: telephone services and the
sales and service of communications systems.
<TABLE>
Year Ended December 31,
1995 1994 1993
In Thousands
<S> <C> <C> <C>
Operating Revenues
Telephone operations $18,103 $15,560 $14,259
System sales and services 6,475 5,900 4,782
$24,578 $21,460 $19,041
Operating Income
Telephone operations $ 6,130 $ 5,026 $ 4,976
System sales and services 334 456 401
$ 6,464 $ 5,482 $ 5,377
Identifiable assets
Telephone operations $38,441 $31,508 $31,235
System sales and services 2,273 2,381 2,441
$40,714 $33,889 $33,676
Depreciation
Telephone operations $ 3,073 $ 2,307 $ 2,092
System sales and services 100 83 69
$ 3,173 $ 2,390 $ 2,161
Capital expenditures
Telephone operations $ 7,016 $ 4,089 $ 3,219
System sales and services 130 144 194
$ 7,146 $ 4,233 $ 3,413
10. FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of Cash and Cash Equivalents and Short-term Debt
are based on face amounts which approximate fair value.
The fair value of long-term debt, estimated using discounted cash
flow analysis based on Mid-Plains' estimated current incremental
borrowing rates for debt with similar terms, was as follows:
1995 1994
In Thousands
Carrying amount $8,570 $6,954
Fair market value $9,058 $7,057
It was not practicable to estimate the fair value of Mid-Plains'
investment in the cellular limited partnership interest because of lack
of quoted market prices. The carrying amount at December 31, 1995
represents the original cost of investment, which management believes
is not impaired.
11. QUARTERLY FINANCIAL INFORMATION (Unaudited):
</TABLE>
<TABLE>
Quarter Ended
March 31 June 30 Sept. 30 Dec.31
In Thousands Except For Per Share Data
<S> <C> <C> <C> <C>
1995
Operating Revenues $5,746 $6,019 $6,710 $6,103
Operating Income $1,535 $1,706 $1,856 $1,367
Net Income $ 825 $ 946 $ 976 $ 678
Earnings per Share $ .42 $ .46 $ .49 $ .36
1994
Operating Revenues $4,868 $5,640 $5,099 $5,853
Operating Income $1,230 $1,421 $1,421 $1,410
Net Income $ 633 $ 751 $ 768 $ 737
Earnings per Share $ .33 $ .38 $ .39 $ .37
</TABLE>
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors,
Mid-Plains Telephone, Inc.:
We have audited the accompanying consolidated balance sheets of
Mid-Plains Telephone, Inc. (a Wisconsin Corporation) and subsidiary as of
December 31, 1995 and 1994, and the related consolidated statements of
income, shareholders' equity, and cash flows for each of the three years in
the period ended December 31, 1995. These financial statements are the
responsibility of the Company'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 audits 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 Mid-Plains
Telephone, Inc. and subsidiary as of December 31, 1995 and 1994, and the
results of their operations and their cash flows for each of the three years
in the period ended December 31, 1995, in conformity with generally accepted
accounting principles.
/s/Kiesling Associates
KIESLING ASSOCIATES LLP
Madison, Wisconsin
January 19, 1996
<PAGE>
RESPONSIBILITY FOR FINANCIAL STATEMENTS
The management of Mid-Plains Telephone, Inc. is responsible for the financial
information and representations in this Annual Report. Management believes
the financial statements have been prepared in conformity with generally
accepted accounting principles and the other information in the Annual Report
is consistent with those statements. In preparing the financial statements,
management is required to include amounts based on estimates and judgements
which it believes are reasonable under the circumstances.
To fulfill these responsibilities, management maintains a system of internal
operating, accounting, and financial controls. These controls provide
reasonable, but not absolute, assurance that assets are safeguarded from loss
or unauthorized use, transactions are properly recorded, and the resulting
financial statements are reliable. The design, monitoring and revision of
the system of internal control involves, among other things, our judgment
with respect to the relative cost and expected benefits of specific control
measures.
The financial statements have been audited by Kiesling Associates,
independent public accountants, who have expressed their opinion with respect
to the fairness of these financial statements.
The Board of Directors pursues its responsibility for the financial
statements through its Audit Committee, comprised entirely of outside
directors. The Audit Committee meets periodically with management and the
independent public accountants to review matters relating to financial
reporting, internal controls, and auditing. The Audit Committee's outside
directors also meet separately with the independent public accountants to
ensure their free access to the Audit Committee.
/s/Dean W. Voeks /s/Howard G. Hopeman
DEAN W. VOEKS HOWARD G. HOPEMAN
President Vice-President and Chief Financial Officer
January 20, 1995 January 20, 1995
<PAGE>
<TABLE>
COMMON STOCK PRICE RANGES AND DIVIDEND<F1>
TRANSACTIONS PRICE PER SHARE<F2> DIVIDENDS
NUMBER SHARES HIGH LOW AVERAGE PAID
<S> <C> <C> <C> <C> <C> <C>
1995
4th Quarter 1 1,350 $40.00 $40.00 $40.00 $.25
Special Year-End .14
3rd Quarter 5 497 40.00 36.00 38.96 .25
2nd Quarter 16 17,157 41.00 35.00 38.91 .25
1st Quarter 14 3,818 38.14 35.00 36.34 .23
1994
4th Quarter 2 488 $35.00 $35.00 $35.00 $.23
3rd Quarter 6 6,425 35.00 32.00 34.81 .21
2nd Quarter 11 4,785 40.00 33.00 34.80 .21
1st Quarter 14 4,609 35.00 28.00 33.23 .21
<FN>
<F1>There were 2,282 shareholders as of February 1, 1996. Mid-Plains has
regularly paid dividends to its shareholders and expects it will continue to
do so in the future. Mid-Plains' By-Laws limit the common stock any one
shareholder may hold to five percent of the authorized capital stock of the
Company.
<F2>There are no principal market makers for Mid-Plains stock. Prices are
based only on unrelated party transactions for which the seller and/or buyer
have responded to a Company inquiry. Transactions include both those handled
privately (non-broker) and those handled by stock brokers. Non-broker prices
do not include retail markup, markdown or commissions which are included in
broker prices. Average prices are the weighted average of the transactions
described above.
</FN>
</TABLE>
<PAGE>
<PAGE>
EXHIBIT 21
MID-PLAINS TELEPHONE, INC.
Subsidiary of Registrant
The Company has one wholly-owned subsidiary, MID-PLAINS
COMMUNICATIONS SYSTEMS, INC., a corporation organized under the
laws of the State of Wisconsin. The financial statements of this
subsidiary are included in the Company's consolidated financial
statements.
<PAGE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 560
<SECURITIES> 0
<RECEIVABLES> 3595
<ALLOWANCES> 0
<INVENTORY> 1279
<CURRENT-ASSETS> 5920
<PP&E> 46198
<DEPRECIATION> 16663
<TOTAL-ASSETS> 40714
<CURRENT-LIABILITIES> 8998
<BONDS> 0
0
0
<COMMON> 6610
<OTHER-SE> 13112
<TOTAL-LIABILITY-AND-EQUITY> 40714
<SALES> 0
<TOTAL-REVENUES> 24578
<CGS> 0
<TOTAL-COSTS> 18114
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 957
<INCOME-PRETAX> 5534
<INCOME-TAX> 2109
<INCOME-CONTINUING> 3425
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3425
<EPS-PRIMARY> 1.73
<EPS-DILUTED> 1.73
<PAGE>
</TABLE>
