UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30,1997
[ ] 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 registrant as specified in its charter)
Minnesota 41-0440990
(State or other jurisdiction of incorporation) IRS Employer ID 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 (of
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.
<PAGE>
NEW ULM TELECOM, INC.
CONTENTS
Page
PART I FINANCIAL INFORMATION
ITEM 1. Financial Statements
Unaudited Consolidated Balance Sheets 3 - 4
Unaudited Consolidated Statements of Income 5
Unaudited Consolidated Statements of Stockholders'
Equity 6
Unaudited Consolidated Statements of Cash Flows 7
Notes to Unaudited Consolidated Financial Statements 8
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-10
PART II OTHER INFORMATION 11
<PAGE>
PART I. FINANCIAL INFORMATION
NEW ULM TELECOM, INC. AND SUBSIDIARIES
ITEM I. FINANCIAL STATEMENTS
UNAUDITED CONSOLIDATED BALANCE SHEETS
ASSETS
SEPTEMBER 30, DECEMBER 31,
1997 1996
----------- -----------
CURRENT ASSETS:
Cash & Temporary Cash Investments $ 2,678,509 $ 2,517,870
Receivables, Net of Allowance for
Doubtful Accounts of $2,584 and $17,500 1,204,112 981,336
Inventories 469,162 357,900
Prepaid Expenses 23,839 81,869
----------- -----------
Total Current Assets 4,375,622 3,938,975
----------- -----------
INVESTMENTS & OTHER ASSETS:
Excess of Cost Over Net Assets Acquired 3,702,455 3,787,786
Notes Receivable, Less Current Portion
of $6,718 and $6,046 81,172 78,226
Cellular Investments 3,168,306 2,746,295
Other 295,915 152,291
----------- -----------
Total Investments and Other Assets 7,247,848 6,764,598
----------- -----------
PROPERTY, PLANT & EQUIPMENT:
Telecommunications Plant 24,669,504 23,726,599
Other Property & Equipment 1,465,488 1,356,503
Cable Television Plant 762,048 753,054
----------- -----------
Total 26,897,040 25,836,156
Less Accumulated Depreciation 14,975,002 13,690,324
----------- -----------
Net Property, Plant & Equipment 11,922,038 12,145,832
----------- -----------
TOTAL ASSETS $23,545,508 $22,849,405
=========== ===========
The accompanying notes are an integral part of the Financial Statements.
<PAGE>
NEW ULM TELECOM, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDER'S EQUITY
SEPTEMBER 30, DECEMBER 31,
1997 1996
----------- -----------
CURRENT LIABILITIES:
Current Portion of Long-Term Debt $ 366,666 $ 366,666
Accounts Payable 534,318 222,970
Other Accrued Taxes 40,767 57,650
Other Accrued Liabilities 314,705 290,202
----------- -----------
Total Current Liabilities 1,256,456 937,488
----------- -----------
LONG-TERM DEBT, LESS CURRENT PORTION 3,758,334 4,033,334
----------- -----------
DEFERRED CREDITS:
Income Taxes 1,439,279 1,439,279
Investment Tax Credits 39,803 53,931
----------- -----------
Total Deferred Credits 1,479,082 1,493,210
----------- -----------
STOCKHOLDERS' EQUITY:
Common Stock - $5 Par Value, 6,400,000 Shares
Authorized, 1,732,455 Shares Issued and
Outstanding 8,662,275 8,662,275
Retained Earnings 8,389,361 7,723,098
----------- -----------
Total Stockholders' Equity 17,051,636 16,385,373
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $23,545,508 $22,849,405
=========== ===========
The accompanying notes are an integral part of the Financial Statements.
<PAGE>
NEW ULM TELECOM, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Local Network $ 532,580 $ 515,507 $ 1,591,490 $ 1,528,628
Network Access 1,292,534 1,163,024 3,804,370 3,608,476
Billing and Collection 129,580 131,478 410,436 428,228
Miscellaneous 92,062 93,514 287,225 261,734
Nonregulated 425,119 337,284 1,251,220 986,039
----------- ----------- ----------- -----------
Total Operating Revenue 2,471,875 2,240,807 7,344,741 6,813,105
----------- ----------- ----------- -----------
OPERATING EXPENSES:
Plant Operations 303,971 277,827 833,506 764,514
Depreciation 440,662 407,983 1,321,291 1,223,950
Amortization 28,445 28,444 85,332 85,332
Customer 132,326 123,578 413,885 389,189
General and Administrative 264,428 279,153 847,028 804,024
Other Operating Expenses 256,474 198,611 780,125 571,631
----------- ----------- ----------- -----------
Total Operating Expenses 1,426,306 1,315,596 4,281,167 3,838,640
----------- ----------- ----------- -----------
OPERATING INCOME 1,045,569 925,211 3,063,574 2,974,465
----------- ----------- ----------- -----------
OTHER EXPENSES (INCOME):
Interest Expense 67,913 73,827 208,123 225,976
Interest Income (33,345) (28,130) (113,015) (98,266)
Cellular Partnership (Income) (204,644) (141,646) (484,521) (317,300)
----------- ----------- ----------- -----------
Total Other (Income), Net (170,076) (95,949) (389,413) (189,590)
----------- ----------- ----------- -----------
INCOME BEFORE INCOME TAXES 1,215,645 1,021,160 3,452,987 3,164,055
INCOME TAXES 494,703 415,625 1,418,085 1,288,759
----------- ----------- ----------- -----------
NET INCOME $ 720,942 $ 605,535 $ 2,034,902 $ 1,875,296
=========== =========== =========== ===========
NET INCOME PER SHARE - NOTE 2 $ 0.42 $ 0.35 $ 1.17 $ 1.08
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
NEW ULM TELECOM, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK RETAINED
SHARES AMOUNT EARNINGS
------------ ------------ ------------
<S> <C> <C> <C>
BALANCE on December 31, 1995 577,485 $ 2,887,425 $ 12,226,303
Three-for-One Stock Split 1,154,970 5,774,850 (5,774,850)
Net Income 2,403,515
Dividends (1,131,870)
------------ ------------ ------------
BALANCE on December 31, 1996 1,732,455 8,662,275 7,723,098
Net Income 2,034,902
Dividends (1,368,639)
------------ ------------ ------------
BALANCE on September 30, 1997 1,732,455 $ 8,662,275 $ 8,389,361
============ ============ ============
</TABLE>
The accompanying notes are an integral part of the Financial Statements.
<PAGE>
NEW ULM TELECOM, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 2,034,902 $ 1,875,296
Adjustments to Reconcile Net Income to Net
Net Cash Provided by Operating Activities:
Depreciation and Amortization 1,406,623 1,309,282
Cellular Partnerships (Income) (484,521) (317,300)
(Increase) Decrease in:
Receivables (222,104) 49,792
Inventories (111,262) (180,590)
Prepaid Expenses 58,030 52,160
Increase (Decrease) in:
Accounts Payable 311,348 37,183
Accrued Income Taxes 0 78,216
Other Accrued Taxes (16,883) (14,288)
Other Accrued Liabilities 24,503 23,996
Deferred Investment Tax Credits (14,128) (25,855)
----------- -----------
Net Cash Provided by Operating Activities 2,986,508 2,887,892
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to Property, Plant & Equipment, Net (1,097,497) (1,176,287)
Change in Notes Receivable (3,619) (59,030)
Cellular Investments 62,510 (372,484)
Other, Net (143,624) 7,649
----------- -----------
Net Cash Used in Investing Activities (1,182,230) (1,600,152)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal Payments of Long-Term Debt (275,000) (275,000)
Dividends Paid (1,368,639) (820,029)
----------- -----------
Net Cash Used in Financing Activities (1,643,639) (1,095,029)
----------- -----------
NET INCREASE (DECREASE) IN CASH AND TEMPORARY
CASH INVESTMENTS 160,639 192,711
CASH AND TEMPORARY CASH INVESTMENTS
AT BEGINNING OF PERIOD 2,517,870 1,829,215
----------- -----------
CASH AND TEMPORARY CASH INVESTMENTS
AT END OF PERIOD $ 2,678,509 $ 2,021,926
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
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, 1997 and December 31,
1996 and the results of operations and changes in cash flows for the three
months and nine months ended September 30, 1997 and 1996.
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, 1996 Annual Report to Shareholders. The results of
operations for the period ended September 30, 1997 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 1997 and 1996 was computed by dividing the
weighted average number of shares of common stock outstanding into the net
income.
NOTE 3 - STATEMENTS OF CASH FLOW
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for: 1997 1996
---------- ----------
Interest $ 209,599 $ 227,454
Income Taxes 1,461,500 1,236,000
<PAGE>
NEW ULM TELECOM, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER, 1997 COMPARED TO
THE NINE MONTHS ENDED SEPTEMBER 30, 1996
The increase in total operating revenues was $531,636 or 7.8%. The increase in
operating revenues is attributed to the increase in the number of access lines
and an increase in the minutes of use, allowing local network and network access
revenue to grow by 5%. The nonregulated income increased by 27%, which can be
attributed to our cable television services, internet services, and increased
sales of customer premises equipment associated with increased access lines. Our
increased efforts in marketing all of our services has been a primary factor in
our increased revenues. We have greatly increased our marketing efforts for all
services offered including the introduction of long distance service during the
third quarter which can be seen by our nonregulated revenues.
Total operating expenses increased by $442,527 or 11.5%. Depreciation expense
accounted for 22% of the increase in operating expenses. This increase was due
mainly to the increased depreciation rate for central office equipment over the
rate charged during the same time period in 1996. Other operating expenses were
responsible for 47.1% of the increase in operating expenses. This increase is
mainly attributed to increased expenses associated with our marketing efforts of
our services. Interest expense decreased by $17,853 due to a decrease in
long-term debt outstanding.
Interest income increased by $14,749 reflecting larger amounts of funds
available for investment and favorable interest rates. Cellular partnership
income increased by $167,221 or 52.7%, as the cellular partnership continues to
be a strong performer.
Net income increased by $159,606 or 8.5%.
LIQUIDITY AND CAPITAL RESOURCES
The Company had an increase in cash and temporary cash investments of $160,639
for the quarter resulting in a balance of $2,678,509 as of September 30, 1997.
The Company is budgeting approximately $1,400,000 for 1997 plant additions.
<PAGE>
The Company intends to use internal funds for all of the 1997 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.
<PAGE>
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 September 30, 1997.
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 31, 1997 By: /s/ James P. Jensen
-------------------------------------
James P. Jensen, President
Dated: October 31, 1997 By: /s/ Bill Otis
-------------------------------------
Bill Otis, Executive Vice President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 2,678,509
<SECURITIES> 0
<RECEIVABLES> 1,204,112
<ALLOWANCES> 2,584
<INVENTORY> 469,162
<CURRENT-ASSETS> 4,375,622
<PP&E> 26,897,040
<DEPRECIATION> 14,975,002
<TOTAL-ASSETS> 23,545,508
<CURRENT-LIABILITIES> 1,256,456
<BONDS> 3,758,334
0
0
<COMMON> 8,662,275
<OTHER-SE> 8,389,361
<TOTAL-LIABILITY-AND-EQUITY> 23,545,508
<SALES> 0
<TOTAL-REVENUES> 7,344,741
<CGS> 0
<TOTAL-COSTS> 4,281,167
<OTHER-EXPENSES> (597,535)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 208,123
<INCOME-PRETAX> 3,452,987
<INCOME-TAX> 1,418,085
<INCOME-CONTINUING> 2,034,902
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,034,902
<EPS-PRIMARY> 1.17
<EPS-DILUTED> 1.17
</TABLE>
