UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE
ACT
For the transition period from _______ to _______.
Commission File Number 0-3024
New Ulm Telecom, Inc.
(Exact name of small business issuer as specified in its charter)
Minnesota
(State or other jurisdiction of incorporation)
41-0440990
(IRS Employer Identification Number)
400 2nd Street North, New Ulm, MN 56073-0697
(Address of Principal executive offices)
507-354-4111
(Issuer's telephone number)
Check whether the issue (1) Filed all reports required to be filed by Section 13
or 15(d) of the Exchange Act during the past 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 ____
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 1,732,455 .
NEW ULM TELECOM, INC.
CONTENTS
Page
PART I. FINANCIAL INFORMATION
Unaudited Consolidated Balance Sheets 3 - 4
Unaudited Consolidated Statements of Income 5 - 6
Unaudited Consolidated Statements of Cash Flows 7
Notes to Unaudited Consolidated Financial Statements 8
Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II. OTHER INFORMATION 10
NEW ULM TELECOM AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
ASSETS
JUNE 30, DECEMBER 31,
1996 1995
----------- -----------
CURRENT ASSETS:
Cash & Temporary Cash Investments $ 1,616,278 $ 1,829,215
Receivables, Net of Allowance for
Doubtful Accounts of $26,083 and $17,500 1,075,229 1,150,731
Inventories 469,656 370,462
Prepaid Expenses 56,072 91,589
----------- -----------
Total Current Assets: 3,217,235 3,441,997
----------- -----------
INVESTMENTS & OTHER ASSETS:
Excess of Cost Over Net Assets Acquired 3,844,673 3,901,561
Notes Receivable, Less Current Portion
of $7,405 and $11,512 81,073 15,734
Cellular Investments 2,637,306 2,089,167
Other 156,656 166,314
----------- -----------
Total Investments and Other Assets 6,719,708 6,172,776
----------- -----------
PROPERTY, PLANT & EQUIPMENT:
Telecommunications Plant 23,676,311 23,248,747
Other Property & Equipment 1,278,740 1,276,946
Cable Television Plant 731,742 235,271
----------- -----------
Total 25,686,793 24,760,964
Less Accumulated Depreciation 13,172,730 12,390,334
----------- -----------
Net Property, Plant & Equipment 12,514,063 12,370,630
----------- -----------
TOTAL ASSETS $22,451,006 $21,985,403
=========== ===========
The accompanying notes are an integral part of the Financial Statements.
NEW ULM TELECOM AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDER'S EQUITY
JUNE 30, DECEMBER 31,
1996 1995
------------ ------------
CURRENT LIABILITIES:
Current Portion of Long-Term Debt $ 366,666 $ 366,666
Accounts Payable 123,465 260,351
Accrued Income Taxes 60,318 (36,052)
Other Accrued Taxes 60,140 57,372
Other Accrued Liabilities 242,140 265,143
------------ ------------
Total Current Liabilities 852,729 913,480
------------ ------------
LONG-TERM DEBT, LESS CURRENT PORTION 4,216,666 4,400,000
------------ ------------
DEFERRED CREDITS:
Income Taxes 1,469,790 1,469,790
Investment Tax Credits 71,168 88,405
------------ ------------
Total Deferred Credits 1,540,958 1,558,195
------------ ------------
STOCKHOLDERS' EQUITY: - NOTE 4
Common Stock - $5 Par Value, 6,400,000 Shares
Authorized, 1,732,455 Shares Issued and
Outstanding 8,662,275 2,887,425
Retained Earnings 7,178,378 12,226,303
------------ ------------
Total Stockholders' Equity 15,840,653 15,113,728
------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 22,451,006 $ 21,985,403
============ ============
The accompanying notes are an integral part of the Financial Statements.
NEW ULM TELECOM AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED JUNE 30, 1996 AND 1995
1996 1995
----------- -----------
OPERATING REVENUES:
Local Network $ 513,508 $ 465,703
Network Access 1,264,460 1,167,139
Billing and Collection 151,952 149,046
Miscellaneous 91,638 87,097
Nonregulated 335,759 302,547
----------- -----------
Total Operating Revenue 2,357,317 2,171,532
----------- -----------
OPERATING EXPENSES:
Plant Operations 235,184 286,266
Depreciation 407,983 393,433
Amortization 28,444 28,444
Customer 134,419 139,572
General and Administrative 249,664 287,452
Other Operating Expenses 163,953 220,480
----------- -----------
Total Operating Expenses 1,219,647 1,355,647
----------- -----------
OPERATING INCOME 1,137,670 815,885
----------- -----------
OTHER EXPENSES (INCOME):
Interest Expense 75,581 81,481
Interest Income (31,212) (34,390)
Cellular Partnership (Income) Losses (73,830) (67,245)
----------- -----------
Total Other Expenses, Net (29,461) (20,154)
----------- -----------
INCOME BEFORE INCOME TAXES 1,167,131 836,039
----------- -----------
INCOME TAXES 475,206 337,498
----------- -----------
NET INCOME $ 691,925 $ 498,541
=========== ===========
NET INCOME PER SHARE - NOTE 2 $ 0.40 $ 0.29
=========== ===========
The accompanying notes are an integral part of the financial statements.
NEW ULM TELECOM AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995
1996 1995
----------- -----------
OPERATING REVENUES:
Local Network $ 1,013,121 $ 920,229
Network Access 2,445,452 2,510,088
Billing and Collection 296,750 284,551
Miscellaneous 168,220 176,372
Nonregulated 648,755 583,823
----------- -----------
Total Operating Revenue 4,572,298 4,475,063
----------- -----------
OPERATING EXPENSES:
Plant Operations 486,687 569,811
Depreciation 815,967 786,866
Amortization 56,888 56,888
Customer 265,611 270,411
General and Administrative 524,871 558,347
Other Operating Expenses 373,020 411,381
----------- -----------
Total Operating Expenses 2,523,044 2,653,704
----------- -----------
OPERATING INCOME 2,049,254 1,821,359
----------- -----------
OTHER EXPENSES (INCOME):
Interest Expense 152,149 164,078
Interest Income (70,136) (68,754)
Cellular Partnership (Income) Losses (175,654) (195,549)
----------- -----------
Total Other Expenses, Net (93,641) (100,225)
----------- -----------
INCOME BEFORE INCOME TAXES 2,142,895 1,921,584
----------- -----------
INCOME TAXES 873,134 777,171
----------- -----------
NET INCOME $ 1,269,761 $ 1,144,413
=========== ===========
NET INCOME PER SHARE - NOTE 2 $ 0.73 $ 0.66
=========== ===========
The accompanying notes are an integral part of the financial statements.
<TABLE>
<CAPTION>
NEW ULM TELECOM AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
1996 1995
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 1,269,761 $ 1,144,413
Adjustments to Reconcile Net Income to Net
Net Cash Provided by Operating Activities:
Depreciation and Amortization 872,855 843,754
Cellular Partnerships (Income) Losses (175,654) (195,549)
(Increase) Decrease in:
Receivables 71,395 43,594
Inventories (99,194) (54,649)
Prepaid Expenses 35,517 28,344
Increase (Decrease) in:
Accounts Payable (136,886) 219,637
Accrued Income Taxes 96,370 (103,356)
Other Accrued Taxes 2,768 2,231
Other Accrued Liabilities (23,003) (21,601)
Deferred Investment Tax Credits (17,237) (22,473)
----------- -----------
Net Cash Provided by Operating Activities 1,896,692 1,884,345
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to Property, Plant & Equipment, Net (959,400) (570,260)
Change in Notes Receivable (61,232) 2,388
Cellular Investments (372,485) 139,672
Other, Net 9,658 (36,592)
----------- -----------
Net Cash Used in Investing Activities (1,383,459) (464,792)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal Payments of Long-Term Debt (183,334) (183,333)
Dividends Paid (542,836) (485,087)
----------- -----------
Net Cash Used in Financing Activities (726,170) (668,420)
----------- -----------
NET INCREASE (DECREASE) IN CASH AND TEMPORARY
CASH INVESTMENTS (212,937) 751,133
----------- -----------
CASH AND TEMPORARY CASH INVESTMENTS
AT BEGINNING OF PERIOD 1,829,215 1,433,772
----------- -----------
CASH AND TEMPORARY CASH INVESTMENTS
AT END OF PERIOD $ 1,616,278 $ 2,184,905
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
NEW ULM TELECOM, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE 1 - CONSOLIDATED FINANCIAL STATEMENTS
In the opinion of management, the accompanying unaudited financial statements
contain all adjustments (consisting of only normal recurring items) necessary to
present fairly the financial position as of June 30, 1996 and December 31, 1995
and the results of operations and changes in cash flows for the three months and
six months ended June 30, 1996 and 1995.
Certain information and footnote disclosures normally included in annual
financial statements prepared in accordance with generally accepted accounting
principles have been omitted. It is suggested that these financial statements be
read in conjunction with the financial statements and notes thereto included in
the Company's December 31, 1995 Annual Report to Shareholders. The results of
operations for the period ending June 30, 1996 are not necessarily indicative of
the operating results of the entire year.
NOTE 2 - NET INCOME PER COMMON STOCK
Net income per common share for 1996 and 1995 was computed by dividing the
weighted average number of shares of common stock outstanding into the net
income as adjusted for the three-for-one stock split on March 4, 1996.
NOTE 3 - STATEMENTS OF CASH FLOW
Supplemental Disclosures of Cash Flow Information:
1996 1995
Cash paid during the period for: ----------- --------
Interest $153,135 $165,063
Income Taxes 794,000 903,000
NOTE 4 - THREE-FOR-ONE STOCK SPLIT
On March 4, 1996, the Company's Board of Directors declared a three-for-one
stock split, effected in the form of a stock dividend, to stockholders of record
on March 4, 1996, payable on April 1, 1996. An amount equal to the par value of
the additional 1,154,970 shares issued has been transferred from retained
earnings to the common stock account. All per share amounts and references to
the Company's common stock, except shares authorized, have been retroactively
restated to reflect the stock split.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO
THE SIX MONTHS ENDED JUNE 30,1995
The increase in total operating revenues was $97,235 or 2.2%. The increase in
operating revenues was primarily the result of an increase in the number of
access lines causing an increase in local network revenues.
Total operating expenses decreased by $130,660 or 9.2%. Operating income
increased by $227,895 or 12.5%. Interest expense decreased by $11,929 due to a
decrease in long-term debt outstanding. Interest income increased by $1,382 as a
result of increased funds available for investment. Cellular partnership income
decreased by $19,895 or 10.2%. This decrease was caused by a $42,176 adjustment
to income to true up the 1995 estimated income per the 1995 K-1's.
Net income increased by $125,348 or 11.0%.
LIQUIDITY AND CAPITAL RESOURCES
The company had a decrease in cash and temporary cash investments of $212,937
for the quarter resulting in a balance of $1,616,278 as of June 30, 1996. The
primary cause of the decrease was the purchase of the cable TV systems for
Jeffers and Wabasso for $320,235.00.
The Company is budgeting approximately $1,800,000 for 1996 plant additions. The
Company intends to use internal funds for all of the 1996 expenditures.
Management believes the Company will be able to generate sufficient cash
internally from operations to meet its operating needs and sustain its
historical dividend levels.
The Minnesota Department of Public Service has been reviewing rate of return
levels for all independent telephone companies operating in Minnesota. The
Company's wholly owned subsidiary, Western Telephone Company, reduced rates in
1992 as a result of return investigation. Management cannot predict if any
future review process will have a significant impact on operating results.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
There were no reports on Form 8-K for the Quarter ended June 30, 1996.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
NEW ULM TELECOM, INC.
(Registrant)
Dated: August 8, 1994 By: /s/ James P. Jensen
JAMES P. JENSEN, PRESIDENT
Dated: August 8, 1994 By: /s/ Lavern Biebl
LAVERN BIEBL, TREASURER
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,616,278
<SECURITIES> 0
<RECEIVABLES> 1,075,229
<ALLOWANCES> 26,083
<INVENTORY> 469,656
<CURRENT-ASSETS> 3,217,235
<PP&E> 25,686,793
<DEPRECIATION> 13,172,730
<TOTAL-ASSETS> 22,451,006
<CURRENT-LIABILITIES> 852,729
<BONDS> 4,216,666
0
0
<COMMON> 8,662,275
<OTHER-SE> 7,178,378
<TOTAL-LIABILITY-AND-EQUITY> 22,451,006
<SALES> 0
<TOTAL-REVENUES> 4,572,298
<CGS> 0
<TOTAL-COSTS> 2,523,044
<OTHER-EXPENSES> (245,790)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 152,149
<INCOME-PRETAX> 2,142,895
<INCOME-TAX> 873,134
<INCOME-CONTINUING> 1,269,761
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,269,761
<EPS-PRIMARY> 0.73
<EPS-DILUTED> 0.73
</TABLE>
