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 June 30,1997
[ ] 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.
<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
PART II OTHER INFORMATION 10
<PAGE>
PART I. FINANCIAL INFORMATION
NEW ULM TELECOM, INC. AND SUBSIDIARIES
ITEM I. FINANCIAL STATEMENTS
UNAUDITED CONSOLIDATED BALANCE SHEETS
ASSETS
JUNE 30, DECEMBER 31,
1997 1996
----------- -----------
CURRENT ASSETS:
Cash & Temporary Cash Investments $ 2,404,836 $ 2,517,870
Receivables, Net of Allowance for
Doubtful Accounts of $13,425 and $23,500 1,219,599 981,336
Inventories 510,048 357,900
Prepaid Expenses 56,820 81,869
----------- -----------
Total Current Assets: 4,191,303 3,938,975
----------- -----------
INVESTMENTS & OTHER ASSETS:
Excess of Cost Over Net Assets Acquired 3,730,899 3,787,786
Notes Receivable, Less Current Portion
of $6,672 and $6,046 78,143 78,226
Cellular Investments 2,963,661 2,746,295
Other 273,453 152,291
----------- -----------
Total Investments and Other Assets 7,046,156 6,764,598
----------- -----------
PROPERTY, PLANT & EQUIPMENT:
Telecommunications Plant 24,083,271 23,726,599
Other Property & Equipment 1,461,616 1,356,503
Cable Television Plant 762,135 753,054
----------- -----------
Total 26,307,022 25,836,156
Less Accumulated Depreciation 14,556,558 13,690,324
----------- -----------
Net Property, Plant & Equipment 11,750,464 12,145,832
----------- -----------
TOTAL ASSETS $22,987,923 $22,849,405
=========== ===========
The accompanying notes are an integral part of the Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
NEW ULM TELECOM, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDER'S EQUITY
JUNE 30, DECEMBER 31,
1997 1996
----------- -----------
<S> <C> <C>
CURRENT LIABILITIES:
Current Portion of Long-Term Debt $ 366,666 $ 366,666
Accounts Payable 321,039 222,970
Other Accrued Taxes 57,849 57,650
Other Accrued Liabilities 266,042 290,202
----------- -----------
Total Current Liabilities 1,011,596 937,488
----------- -----------
LONG-TERM DEBT, LESS CURRENT PORTION 3,850,000 4,033,334
----------- -----------
DEFERRED CREDITS:
Income Taxes 1,439,279 1,439,279
Investment Tax Credits 44,513 53,931
----------- -----------
Total Deferred Credits 1,483,792 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 7,980,260 7,723,098
----------- -----------
Total Stockholders' Equity 16,642,535 16,385,373
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $22,987,923 $22,849,405
=========== ===========
The accompanying notes are an integral part of the Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NEW ULM TELECOM, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
JUNE 30, JUNE 30,
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Local Network $ 530,493 $ 513,508 $ 1,058,910 $ 1,013,121
Network Access 1,169,081 1,264,460 2,511,836 2,445,452
Billing and Collection 135,120 151,952 280,856 296,750
Miscellaneous 89,330 91,638 195,163 168,220
Nonregulated 457,494 335,759 826,101 648,755
----------- ----------- ----------- -----------
Total Operating Revenue 2,381,518 2,357,317 4,872,866 4,572,298
----------- ----------- ----------- -----------
OPERATING EXPENSES:
Plant Operations 273,825 235,184 529,535 486,687
Depreciation 440,315 407,983 880,629 815,967
Amortization 28,443 28,444 56,887 56,888
Customer 136,704 134,419 281,559 265,611
General and Administrative 294,386 249,664 582,600 524,871
Other Operating Expenses 290,690 163,953 523,651 373,020
----------- ----------- ----------- -----------
Total Operating Expenses 1,464,363 1,219,647 2,854,861 2,523,044
----------- ----------- ----------- -----------
OPERATING INCOME 917,155 1,137,670 2,018,005 2,049,254
----------- ----------- ----------- -----------
OTHER EXPENSES (INCOME):
Interest Expense 69,204 75,581 140,210 152,149
Interest Income (36,726) (31,212) (79,670) (70,136)
Cellular Partnership (Income) (146,377) (73,830) (279,877) (175,654)
----------- ----------- ----------- -----------
Total Other (Income), Net (113,899) (29,461) (219,337) (93,641)
----------- ----------- ----------- -----------
INCOME BEFORE INCOME TAXES 1,031,054 1,167,131 2,237,342 2,142,895
----------- ----------- ----------- -----------
INCOME TAXES $ 427,396 $ 475,206 $ 923,382 $ 873,134
----------- ----------- ----------- -----------
NET INCOME $ 603,658 $ 691,925 $ 1,313,960 $ 1,269,761
=========== =========== =========== ===========
NET INCOME PER SHARE - NOTE 2 $ 0.35 $ 0.40 $ 0.76 $ 0.73
=========== =========== =========== ===========
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NEW ULM TELECOM, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
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 1,313,960
Dividends (1,056,798)
------------ ------------ ------------
BALANCE on June 30, 1997 1,732,455 $ 8,662,275 $ 7,980,260
============ ============ ============
The accompanying notes are an integral part of the Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NEW ULM TELECOM AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1997 AND 1996
1997 1996
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 1,313,960 $ 1,269,761
Adjustments to Reconcile Net Income to Net
Net Cash Provided by Operating Activities:
Depreciation and Amortization 937,516 872,855
Cellular Partnerships (Income) (279,877) (175,654)
(Increase) Decrease in:
Receivables (237,637) 71,395
Inventories (152,148) (99,194)
Prepaid Expenses 25,049 35,517
Increase (Decrease) in:
Accounts Payable 98,069 (136,886)
Accrued Income Taxes 0 96,370
Other Accrued Taxes 199 2,768
Other Accrued Liabilities (24,160) (23,003)
Deferred Investment Tax Credits (9,418) (17,237)
----------- -----------
Net Cash Provided by Operating Activities 1,671,553 1,896,692
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to Property, Plant & Equipment, Net (485,261) (959,400)
Change in Notes Receivable (543) (61,232)
Cellular Investments 62,511 (372,485)
Other, Net (121,162) 9,658
----------- -----------
Net Cash Used in Investing Activities (544,455) (1,383,459)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal Payments of Long-Term Debt (183,334) (183,334)
Dividends Paid (1,056,798) (542,836)
----------- -----------
Net Cash Used in Financing Activities (1,240,132) (726,170)
----------- -----------
NET INCREASE (DECREASE) IN CASH AND TEMPORARY
CASH INVESTMENTS (113,034) (212,937)
CASH AND TEMPORARY CASH INVESTMENTS
AT BEGINNING OF PERIOD 2,517,870 1,829,215
----------- -----------
CASH AND TEMPORARY CASH INVESTMENTS
AT END OF PERIOD $ 2,404,836 $ 1,616,278
=========== ===========
The accompanying notes are an integral part of the financial statements.
</TABLE>
<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 June 30, 1997 and December 31, 1996
and the results of operations and changes in cash flows for the three months and
six months ended June 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 June 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 $141,196 $153,135
Income Taxes 1,081,500 794,000
<PAGE>
NEW ULM TELECOM, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO
THE SIX MONTHS ENDED JUNE 30, 1996
The increase in total operating revenue was $300,568 or 6.6%. The increase in
operating revenues is attributed to the increase in the number of access lines
and increase in the minutes of use, allowing local network and network access
revenue to grow. The nonregulated income increased by 27%. This increase is a
reflection of success with our cable television ventures and successfully
marketing Internet services. We have greatly increased our marketing efforts for
all services offered, which can be seen by our increased nonregulated revenues.
Total operating expenses increased by $341,627 or 13.5%. Depreciation expense
accounted for 7.9% 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 40.4% of the increase in operating expenses. This increase is
mainly attributed to increased expenses associated with our marketing efforts of
our nonregulated services. Interest expense decreased by $11,939 due to a
decrease in long-term debt outstanding.
Interest income increased by $9,534 reflecting larger amounts of funds available
for investment and favorable interest rates. Cellular partnership income
increased by $114,033 or 64.9% as the cellular partnership continues to show
strong performances.
Net income increased by $44,199 or 3.5%.
LIQUIDITY AND CAPITAL RESOURCES
The Company had a decrease in cash and temporary cash investments of $113,034
for the quarter resulting in a balance of $2,404,836 as of June 30, 1997. The
decrease was due to the payment of $433,114 for a special dividend declared at
the 4-15-97 Board of Directors meeting and paid on 5-15-97.
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.
<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 June 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: August 1, 1997 By: /s/ James P. Jensen
-------------------------------------
James P. Jensen, President
Dated: August 1, 1997 By: /s/ Bill Otis
-------------------------------------
Bill Otis, Executive Vice President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 2,404,836
<SECURITIES> 0
<RECEIVABLES> 1,219,599
<ALLOWANCES> 13,425
<INVENTORY> 510,048
<CURRENT-ASSETS> 4,191,303
<PP&E> 26,307,022
<DEPRECIATION> 14,556,558
<TOTAL-ASSETS> 22,987,923
<CURRENT-LIABILITIES> 1,011,596
<BONDS> 3,850,000
0
0
<COMMON> 8,662,275
<OTHER-SE> 7,980,260
<TOTAL-LIABILITY-AND-EQUITY> 22,987,923
<SALES> 0
<TOTAL-REVENUES> 4,872,866
<CGS> 0
<TOTAL-COSTS> 2,864,671
<OTHER-EXPENSES> (369,357)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 140,210
<INCOME-PRETAX> 2,237,342
<INCOME-TAX> 923,382
<INCOME-CONTINUING> 1,313,960
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,313,960
<EPS-PRIMARY> 0.76
<EPS-DILUTED> 0.76
</TABLE>
