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 September 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 41-0440990
(State or other jurisdiction (IRS Employer Identification Number)
of incorporation)
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
<TABLE>
<CAPTION>
ASSETS
September 30, December 31,
1996 1995
------------- ------------
<S> <C> <C>
CURRENT ASSETS:
Cash & Temporary Cash Investments $ 2,021,926 $ 1,829,215
Receivables, Net of Allowance for
Doubtful Accounts of $17,457 and $17,500 1,096,070 1,150,731
Inventories 551,052 370,462
Prepaid Expenses 39,429 91,589
----------- -----------
Total Current Assets: 3,708,477 3,441,997
----------- -----------
INVESTMENTS & OTHER ASSETS:
Excess of Cost Over Net Assets Acquired 3,816,229 3,901,561
Notes Receivable, Less Current Portion
of $13,279 and $16,827 79,633 15,734
Cellular Investments 2,778,951 2,089,167
Other 158,665 166,314
----------- -----------
Total Investments and Other Assets 6,833,478 6,172,776
----------- -----------
PROPERTY, PLANT & EQUIPMENT:
Telecommunications Plant 23,877,743 23,248,747
Other Property & Equipment 1,282,146 1,276,946
Cable Television Plant 731,767 235,271
----------- -----------
Total 25,891,656 24,760,964
Less Accumulated Depreciation 13,568,689 12,390,334
----------- -----------
Net Property, Plant & Equipment 12,322,967 12,370,630
----------- -----------
TOTAL ASSETS $22,864,922 $21,985,403
=========== ===========
The accompanying notes are an integral part of the Financial Statements.
</TABLE>
NEW ULM TELECOM AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDER'S EQUITY
September 30, December 31,
1996 1995
------------- ------------
<S> <C> <C>
CURRENT LIABILITIES:
Current Portion of Long-Term Debt $ 366,666 $ 366,666
Accounts Payable 297,534 260,351
Accrued Income Taxes 42,164 (36,052)
Other Accrued Taxes 43,084 57,372
Other Accrued Liabilities 289,139 265,143
------------ ------------
Total Current Liabilities 1,038,587 913,480
------------ ------------
LONG-TERM DEBT, Less Current Portion 4,125,000 4,400,000
------------ ------------
DEFERRED CREDITS:
Income Taxes 1,469,790 1,469,790
Investment Tax Credits 62,550 88,405
------------ ------------
Total Deferred Credits 1,532,340 1,558,195
------------ ------------
STOCKHOLDERS' EQUITY:
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 7,506,720 12,226,303
------------ ------------
Total Stockholders' Equity 16,168,995 15,113,728
------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 22,864,922 $ 21,985,403
============ ============
The accompanying notes are an integral part of the Financial Statements.
</TABLE>
NEW ULM TELECOM AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
1996 1995
----------- -----------
OPERATING REVENUES:
Local Network $ 515,507 $ 471,486
Network Access 1,163,024 1,071,915
Billing and Collection 131,478 158,163
Miscellaneous 93,514 103,131
Nonregulated 337,284 393,947
----------- -----------
Total Operating Revenue 2,240,807 2,198,642
----------- -----------
OPERATING EXPENSES:
Plant Operations 277,827 273,434
Depreciation 407,983 393,433
Amortization 28,444 28,444
Customer 123,578 127,351
General and Administrative 279,153 276,805
Other Operating Expenses 198,611 216,501
----------- -----------
Total Operating Expenses 1,315,596 1,315,968
----------- -----------
OPERATING INCOME 925,211 882,674
----------- -----------
OTHER EXPENSES (INCOME):
Interest Expense 73,827 79,498
Interest Income (28,130) (35,966)
Cellular Partnership (Income) Losses (141,646) (115,998)
----------- -----------
Total Other Expenses, Net (95,949) (72,466)
----------- -----------
INCOME BEFORE INCOME TAXES 1,021,160 955,140
----------- -----------
INCOME TAXES 415,625 387,501
----------- -----------
NET INCOME $ 605,535 $ 567,639
=========== ===========
NET INCOME PER SHARE - NOTE 2 $ 0.35 $ 0.33
=========== ===========
The accompanying notes are an integral part of the financial statements.
NEW ULM TELECOM AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
1996 1995
----------- -----------
OPERATING REVENUES:
Local Network $ 1,528,628 $ 1,391,715
Network Access 3,608,476 3,582,003
Billing and Collection 428,228 442,714
Miscellaneous 261,734 279,503
Nonregulated 986,039 977,770
----------- -----------
Total Operating Revenue 6,813,105 6,673,705
----------- -----------
OPERATING EXPENSES:
Plant Operations 764,514 843,245
Depreciation 1,223,950 1,180,299
Amortization 85,332 85,332
Customer 389,189 397,762
General and Administrative 804,024 835,152
Other Operating Expenses 571,631 627,882
----------- -----------
Total Operating Expenses 3,838,640 3,969,672
----------- -----------
OPERATING INCOME 2,974,465 2,704,033
----------- -----------
OTHER EXPENSES (INCOME):
Interest Expense 225,976 243,576
Interest Income (98,266) (104,720)
Cellular Partnership (Income) Losses (317,300) (311,547)
----------- -----------
Total Other Expenses, Net (189,590) (172,691)
----------- -----------
INCOME BEFORE INCOME TAXES 3,164,055 2,876,724
----------- -----------
INCOME TAXES 1,288,759 1,164,672
----------- -----------
NET INCOME $ 1,875,296 $ 1,712,052
=========== ===========
NET INCOME PER SHARE - NOTE 2 $ 1.08 $ 0.99
=========== ===========
The accompanying notes are an integral part of the financial statements.
NEW ULM TELECOM AND SUBSIDIARIES
<TABLE>
<CAPTION>
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
1996 1995
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 1,875,296 $ 1,712,052
Adjustments to Reconcile Net Income to Net
Net Cash Provided by Operating Activities:
Depreciation and Amortization 1,309,282 1,265,631
Cellular Partnerships (Income) Losses (317,300) (311,547)
(Increase) Decrease in:
Receivables 49,792 (106,286)
Inventories (180,590) (64,863)
Prepaid Expenses 52,160 46,693
Increase (Decrease) in:
Accounts Payable 37,183 (27,136)
Accrued Income Taxes 78,216 65,382
Other Accrued Taxes (14,288) (14,680)
Other Accrued Liabilities 23,996 15,524
Deferred Investment Tax Credits (25,855) (33,711)
----------- -----------
Net Cash Provided by Operating Activities 2,887,892 2,547,059
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to Property, Plant & Equipment, Net (1,176,287) (1,296,823)
Change in Notes Receivable (59,030) 3,249
Cellular Investments (372,484) 226,812
Other, Net 7,649 (37,883)
----------- -----------
Net Cash Used in Investing Activities (1,600,152) (1,104,645)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal Payments of Long-Term Debt (275,000) (275,001)
Dividends Paid (820,029) (744,955)
----------- -----------
Net Cash Used in Financing Activities (1,095,029) (1,019,956)
----------- -----------
NET INCREASE (DECREASE) IN CASH AND TEMPORARY
CASH INVESTMENTS 192,711 422,458
----------- -----------
CASH AND TEMPORARY CASH INVESTMENTS
at Beginning of Period 1,829,215 1,433,772
----------- -----------
CASH AND TEMPORARY CASH INVESTMENTS
at End of Period $ 2,021,926 $ 1,856,230
=========== ===========
The accompanying notes are an integral part of the financial statements.
</TABLE>
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 September 30, 1996 and December 31,
1995 and the results of operations and changes in cash flows for the three
months and nine months ended September 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 September 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:
Cash paid during the period for: 1996 1995
---------- ----------
Interest $ 227,454 $ 245,054
Income Taxes 1,236,000 1,133,000
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
NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO
THE NINE MONTHS ENDED SEPTEMBER 30,1995
The increase in total operating revenues was $139,400 or 2.1%. 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 $131,032 or 3.3%. Operating income
increased by $270,432 or 10.0%. Interest expense decreased by $17,600 due to a
decrease in long-term debt outstanding. Interest income decreased by $6,454
because fewer funds available for investment. Cellular partnership income
increased by %5,753 or 1.9%.
Net income increased by $163,244 or 9.5%.
LIQUIDITY AND CAPITAL RESOURCES
The Company had an increase in cash and temporary cash investments of $192,711
for the quarter resulting in a balance of $2,021,926 as of September 30, 1996.
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: October 23, 1996 By /s/ James P. Jensen
------------------------------------
JAMES P. JENSEN, PRESIDENT
Dated: October 23, 1996 By /s/ Bill Otis
------------------------------------
BILL OTIS, EXECUTIVE VICE PRESIDENT
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 2,021,926
<SECURITIES> 0
<RECEIVABLES> 1,096,070
<ALLOWANCES> 17,457
<INVENTORY> 551,052
<CURRENT-ASSETS> 3,708,477
<PP&E> 25,891,656
<DEPRECIATION> 13,568,689
<TOTAL-ASSETS> 22,864,922
<CURRENT-LIABILITIES> 1,038,587
<BONDS> 4,125,000
0
0
<COMMON> 8,662,275
<OTHER-SE> 7,506,720
<TOTAL-LIABILITY-AND-EQUITY> 22,864,922
<SALES> 0
<TOTAL-REVENUES> 6,813,105
<CGS> 0
<TOTAL-COSTS> 3,838,640
<OTHER-EXPENSES> (415,566)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 225,976
<INCOME-PRETAX> 3,164,055
<INCOME-TAX> 1,288,759
<INCOME-CONTINUING> 1,875,296
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,875,296
<EPS-PRIMARY> 1.08
<EPS-DILUTED> 1.08
</TABLE>
