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 March 31, 1997
[ ] TRANSACTION 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.
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
PART II OTHER INFORMATION 10
PART I. FINANCIAL INFORMATION
NEW ULM TELECOM, INC. AND SUBSIDIARIES
ITEM 1. FINANCIAL STATEMENTS
UNAUDITED CONSOLIDATED BALANCE SHEETS
ASSETS
MARCH 31, DECEMBER 31,
1997 1996
----------- -----------
CURRENT ASSETS:
Cash & Temporary Cash Investments $ 3,336,430 $ 2,517,870
Receivables, Net of Allowance for
Doubtful Accounts of $19,069 and $23,500 927,998 981,336
Inventories 397,514 357,900
Prepaid Expenses 58,096 81,869
----------- -----------
Total Current Assets: 4,720,038 3,938,975
----------- -----------
INVESTMENTS & OTHER ASSETS:
Excess of Cost Over Net Assets Acquired 3,759,342 3,787,786
Notes Receivable, Less Current Portion
of $6,539 and $6,046 79,345 78,226
Cellular Investments 2,817,284 2,746,295
Other 156,211 152,291
----------- -----------
Total Investments and Other Assets 6,812,182 6,764,598
----------- -----------
PROPERTY, PLANT & EQUIPMENT:
Telecommunications Plant 23,836,598 23,726,599
Other Property & Equipment 1,369,651 1,356,503
Cable Television Plant 761,990 753,054
----------- -----------
Total 25,968,239 25,836,156
Less Accumulated Depreciation 14,127,952 13,690,324
----------- -----------
Net Property, Plant & Equipment 11,840,287 12,145,832
----------- -----------
TOTAL ASSETS $23,372,507 $22,849,405
=========== ===========
The accompanying notes are an integral part of the Financial Statements.
NEW ULM TELECOM, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDER'S EQUITY
MARCH 31, DECEMBER 31,
1997 1996
----------- -----------
CURRENT LIABILITIES:
Current Portion of Long-Term Debt $ 366,666 $ 366,666
Accounts Payable 153,040 222,970
Accrued Income Taxes 306,774 -0-
Other Accrued Taxes 49,425 57,650
Other Accrued Liabilities 282,601 290,202
----------- -----------
Total Current Liabilities 1,158,506 937,488
----------- -----------
LONG-TERM DEBT, LESS CURRENT PORTION 3,941,667 4,033,334
----------- -----------
DEFERRED CREDITS:
Income Taxes 1,439,279 1,439,279
Investment Tax Credits 49,222 53,931
----------- -----------
Total Deferred Credits 1,488,501 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 8,121,558 7,723,098
----------- -----------
Total Stockholders' Equity 16,783,833 16,385,373
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $23,372,507 $22,849,405
=========== ===========
The accompanying notes are an integral part of the Financial Statements.
NEW ULM TELECOM, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
1997 1996
----------- -----------
OPERATING REVENUES:
Local Network $ 528,417 $ 499,613
Network Access 1,342,755 1,180,992
Billing and Collection 145,736 144,798
Miscellaneous 105,833 76,582
Nonregulated 368,607 312,996
----------- -----------
Total Operating Revenue 2,491,348 2,214,981
----------- -----------
OPERATING EXPENSES:
Plant Operations 255,710 251,503
Depreciation 440,314 407,984
Amortization 28,444 28,444
Customer 144,855 131,192
General and Administrative 288,214 275,207
Other Operating Expenses 232,961 209,067
----------- -----------
Total Operating Expenses 1,390,498 1,303,397
----------- -----------
OPERATING INCOME 1,100,850 911,584
----------- -----------
OTHER EXPENSES (INCOME):
Interest Expense 71,006 76,568
Interest Income (42,944) (38,924)
Cellular Partnership Income (133,500) (101,824)
----------- -----------
Total Other Income, Net (105,438) (64,180)
----------- -----------
INCOME BEFORE INCOME TAXES 1,206,288 975,764
INCOME TAXES 495,986 397,928
----------- -----------
NET INCOME $ 710,302 $ 577,836
=========== ===========
NET INCOME PER SHARE - NOTE 2 $ 0.41 $ 0.33
=========== ===========
The accompanying notes are an integral part of the financial statements.
NEW ULM TELECOM, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
COMMON STOCK RETAINED
SHARES AMOUNT EARNINGS
------------ ------------ ------------
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 710,302
Dividends (311,842)
------------ ------------ ------------
BALANCE on March 31, 1997 1,732,455 $ 8,662,275 $ 8,121,558
============ ============ ============
The accompanying notes are an integral part of the Financial Statements.
<TABLE>
<CAPTION>
NEW ULM TELECOM, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
1997 1996
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 710,302 $ 577,836
Adjustments to Reconcile Net Income to Net
Net Cash Provided by Operating Activities:
Depreciation and Amortization 468,758 436,428
Cellular Partnerships Income (133,500) (101,824)
(Increase) Decrease in:
Receivables 53,831 114,128
Inventories (39,614) 3,387
Prepaid Expenses 23,773 28,236
Increase (Decrease) in:
Accounts Payable (69,930) (70,341)
Accrued Income Taxes 306,774 316,547
Other Accrued Taxes (8,225) 8,677
Other Accrued Liabilities (7,601) (11,894)
Deferred Investment Tax Credits (4,709) (8,618)
----------- -----------
Net Cash Provided by Operating Activities 1,299,859 1,292,562
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to Property, Plant & Equipment, Net (134,769) (322,059)
Change in Notes Receivable (1,612) 3,524
Cellular Investments 62,511 42,975
Other, Net (3,920) (38,867)
----------- -----------
Net Cash Used in Investing Activities (77,790) (314,427)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal Payments of Long-Term Debt (91,667) (91,667)
Dividends Paid (311,842) (265,643)
----------- -----------
Net Cash Used in Financing Activities (403,509) (357,310)
----------- -----------
NET INCREASE (DECREASE) IN CASH AND TEMPORARY
CASH INVESTMENTS 818,560 620,825
CASH AND TEMPORARY CASH INVESTMENTS
AT BEGINNING OF PERIOD 2,517,870 1,829,215
----------- -----------
CASH AND TEMPORARY CASH INVESTMENTS
AT END OF PERIOD $ 3,336,430 $ 2,450,040
=========== ===========
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 March 31, 1997 and December 31, 1996
and the results of operations and changes in cash flows for the three months and
three months ended March 31, 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 March 31, 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 $ 71,498 $ 77,062
Income Taxes 155,000 90,000
NEW ULM TELECOM, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO
THE THREE MONTHS ENDED MARCH 31, 1996
The increase in total operating revenue was $276,367 or 12.5%. Operating revenue
increase was due mainly to the increase in access lines and in increase in
minutes of use, which enabled local network and network access revenues to grow.
Our nonregulated income showed an 18% growth over March 31, 1996. This growth
can be attributed to our success with our cable television and Internet
ventures.
Total operating expenses increased by $87,101 or 6.7%. Depreciation expense was
responsible for 37.1% of the increase in operating expenses. The reason for this
increase was due mainly to the increased depreciation rate of central office
equipment over the rate charged for the first quarter of 1996. Interest expense
decreased by $5,562 due to a decrease in long-term debt outstanding.
Interest income increased by $4,020 reflecting larger amounts of funds available
for investment and favorable interest rates. Cellular partnership income
increased by $31,676 or 31.1%, as the cellular partnership continues to be a
strong performer.
Net income increased by $132,466 or 22.9%.
LIQUIDITY AND CAPITAL RESOURCES
The Company had an increase in cash and temporary cash investments of $818,560
for the quarter resulting in a balance of $3,336,430 as of March 31, 1997.
The Company is budgeting approximately $1,400,000 for 1997 plant additions. 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.
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 March 31, 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: March 31, 1997 By: /s/ James P. Jensen
-----------------------------------
James P. Jensen, President
Dated: March 31, 1997 By: /s/ Bill Otis
-----------------------------------
Bill Otis, Executive Vice President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1996
<CASH> 3,336,430
<SECURITIES> 0
<RECEIVABLES> 927,998
<ALLOWANCES> 19,069
<INVENTORY> 397,514
<CURRENT-ASSETS> 4,720,038
<PP&E> 25,968,239
<DEPRECIATION> 14,127,952
<TOTAL-ASSETS> 23,372,507
<CURRENT-LIABILITIES> 1,158,506
<BONDS> 3,941,667
0
0
<COMMON> 8,662,275
<OTHER-SE> 8,121,558
<TOTAL-LIABILITY-AND-EQUITY> 23,372,507
<SALES> 0
<TOTAL-REVENUES> 2,491,348
<CGS> 0
<TOTAL-COSTS> 1,390,498
<OTHER-EXPENSES> (176,444)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 71,006
<INCOME-PRETAX> 1,206,288
<INCOME-TAX> 495,986
<INCOME-CONTINUING> 710,302
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 710,302
<EPS-PRIMARY> 0.41
<EPS-DILUTED> 0.41
</TABLE>
