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, 1998
[ ] 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.
<PAGE>
NEW ULM TELECOM, INC.
CONTENTS
Page
PART I. FINANCIAL INFORMATION
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
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
MARCH 31, DECEMBER 31,
1998 1997
----------- ------------
CURRENT ASSETS:
Cash $ 1,786,379 $ 906,716
Certificates of Deposit 1,702,486 2,000,000
Receivables, Net of Allowance for
Doubtful Accounts of $19,551 and $31,000 1,149,287 933,109
Inventories 469,717 488,770
Prepaid Expenses 68,564 82,915
----------- -----------
Total Current Assets 5,176,433 4,411,510
----------- -----------
INVESTMENTS & OTHER ASSETS:
Excess of Cost Over Net Assets Acquired 3,645,564 3,674,010
Notes Receivable, Less Current Portion
of $5,507 and $4,745 77,968 79,965
Cellular Investments 3,671,016 3,547,686
Other 331,864 331,863
----------- -----------
Total Investments and Other Assets 7,726,412 7,633,524
----------- -----------
PROPERTY, PLANT & EQUIPMENT:
Telecommunications Plant 25,271,366 25,039,400
Other Property & Equipment 1,487,824 1,462,575
Cable Television Plant 762,048 762,048
----------- -----------
Total 27,521,238 27,264,023
Less Accumulated Depreciation 15,786,749 15,330,362
----------- -----------
Net Property, Plant & Equipment 11,734,489 11,933,661
----------- -----------
TOTAL ASSETS $24,637,334 $23,978,695
=========== ===========
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
MARCH 31, DECEMBER 31,
1998 1997
----------- -----------
CURRENT LIABILITIES:
Current Portion of Long-Term Debt $ 366,666 $ 366,666
Accounts Payable 583,921 621,338
Accrued Income Taxes 366,085 772
Other Accrued Taxes 68,215 62,198
Other Accrued Liabilities 251,841 274,975
----------- -----------
Total Current Liabilities 1,636,728 1,325,949
----------- -----------
LONG-TERM DEBT, LESS CURRENT PORTION 3,575,000 3,666,666
----------- -----------
DEFERRED CREDITS:
Income Taxes 1,467,487 1,467,487
Investment Tax Credits 32,093 35,095
----------- -----------
Total Deferred Credits 1,499,580 1,502,582
----------- -----------
STOCKHOLDER'S 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 9,263,751 8,821,223
----------- -----------
Total Stockholder's Equity 17,926,026 17,483,498
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $24,637,334 $23,978,695
=========== ===========
The accompanying notes are an integral part of the financial statements.
<PAGE>
NEW ULM TELECOM, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED
MARCH 31,
1998 1997
----------- -----------
OPERATING REVENUES:
Local Network $ 551,668 $ 528,417
Network Access 1,300,412 1,342,755
Billing and Collection 141,077 145,736
Miscellaneous 95,832 105,833
Nonregulated 496,111 368,607
----------- -----------
Total Operating Revenue 2,585,100 2,491,348
----------- -----------
OPERATING EXPENSES:
Plant Operations 258,494 255,710
Depreciation 458,267 440,314
Amortization 28,444 28,444
Customer 135,265 144,855
General and Administrative 318,809 288,214
Other Operating Expenses 318,219 232,961
----------- -----------
Total Operating Expenses 1,517,498 1,390,498
----------- -----------
OPERATING INCOME 1,067,602 1,100,850
----------- -----------
OTHER (EXPENSES) INCOME:
Interest Expense (64,698) (71,006)
Interest Income 45,331 42,944
Cellular Partnership Income 295,095 133,500
----------- -----------
Total Other Income, Net 275,728 105,438
----------- -----------
INCOME BEFORE INCOME TAXES 1,343,330 1,206,288
INCOME TAXES 554,311 495,986
----------- -----------
NET INCOME $ 789,019 $ 710,302
=========== ===========
NET INCOME PER SHARE - NOTE 2 $ 0.46 $ 0.41
=========== ===========
The accompanying notes are an integral part of the financial statements.
<PAGE>
NEW ULM TELECOM, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
COMMON STOCK RETAINED
SHARES AMOUNT EARNINGS
---------- ---------- ----------
BALANCE on December 31, 1996 1,732,455 $8,662,275 $7,723,098
Net Income 2,813,255
Dividends (1,715,130)
---------- ---------- ----------
BALANCE on December 31, 1997 1,732,455 $8,662,275 $8,821,223
Net Income 789,019
Dividends (346,491)
---------- ---------- ----------
BALANCE on March 31, 1998 1,732,455 $8,662,275 $9,263,751
========== ========== ==========
<PAGE>
NEW ULM TELECOM, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 789,019 $ 710,302
Adjustments to Reconcile Net Income to Net
Net Cash Provided by Operating Activities:
Depreciation and Amortization 486,711 468,758
Cellular Partnerships Income (295,095) (133,500)
(Increase) Decrease in:
Receivables (215,416) 29,909
Inventories 19,053 (39,614)
Prepaid Expenses 14,351 23,773
Increase (Decrease) in:
Accounts Payable (37,417) (69,930)
Accrued Income Taxes 365,313 330,696
Other Accrued Taxes 6,017 (8,225)
Other Accrued Liabilities (23,134) (7,601)
Deferred Investment Tax Credits (3,002) (4,709)
----------- -----------
Net Cash Provided by Operating Activities 1,106,400 1,299,859
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to Property, Plant & Equipment, Net (259,093) (134,769)
Change in Notes Receivable 1,235 (1,612)
Cellular Investments 171,765 62,511
Other, Net (1) (3,920)
----------- -----------
Net Cash Used in Investing Activities (86,094) (77,790)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal Payments of Long-Term Debt (91,666) (91,667)
Change in Temporary Cash Investments 297,514 (300,000)
Dividends Paid (346,491) (311,842)
----------- -----------
Net Cash Used in Financing Activities (140,643) (703,509)
----------- -----------
NET INCREASE (DECREASE) IN CASH 879,663 518,560
CASH
AT BEGINNING OF PERIOD 906,716 617,870
----------- -----------
CASH
AT END OF PERIOD $ 1,786,379 $ 1,136,430
=========== ===========
</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 March 31, 1998 and December 31, 1997
and the results of operations and changes in cash flows for the three months
ended March 31, 1998 and 1997.
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, 1997 Annual Report to Shareholders. The results of
operations for the period ending March 31, 1998 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 1998 and 1997 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: 1998 1997
-------- --------
Interest $ 65,191 $ 71,498
Income Taxes $175,000 $155,000
<PAGE>
NEW ULM TELECOM, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO
THE THREE M0NTHS ENDED MARCH 31, 1997
The increase in total operating revenues was $93,752 or 3.8%. Nonregulated
revenue was the largest contributor to this increase. These revenues grew 34.6%
over the revenues recorded for the first quarter ending March 31, 1997. The
increase of $127,504 was due mainly to our success with cable television,
Internet services, increased sales of customer premise equipment and increased
market share of our long distance service, which was introduced during the third
quarter of 1997. Local network saw a slight increase of 4.4%, which can be
credited to an increase in Centrex service. Network Access decreased 3.2%, which
can be attributed to a reduction in access charges charged to interexchange
carriers.
Total operating expenses increased by $127,000 or 9.1%. Other operating expenses
were responsible for 67.1% of the increase in operating expenses. This increase
is associated with the increased marketing efforts of our nonregulated services
and an increase in cost of goods sold for customer premise equipment.
Interest expense decreased by $6,308 due to a decrease in long-term debt
outstanding. Interest income increased by $2,387 reflecting larger amounts of
funds available for investment and favorable interest rates. The investment in
Midwest Wireless continues to be a strong performer, which can be evidenced by
the 121% or $161,575 increase.
Net income increased by $78,717 or 11.1%.
LIQUIDITY AND CAPITAL RESOURCES
The Company had an increase in cash of $879,663 for the quarter resulting in a
balance of $1,786,379 as of March 31, 1998.
The Company is budgeting approximately $1,600,000 for 1998 plant additions. The
Company intends to use internal funds for all of the 1998 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 March 31, 1998.
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: May 11, 1998 By \s\ James P. Jensen
James P. Jensen, President
Dated: May 11, 1998 By \s\ Bill Otis
Bill Otis, Executive Vice-President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 1,786,379
<SECURITIES> 1,702,486
<RECEIVABLES> 1,149,287
<ALLOWANCES> 19,551
<INVENTORY> 469,717
<CURRENT-ASSETS> 5,176,433
<PP&E> 27,521,238
<DEPRECIATION> 15,786,749
<TOTAL-ASSETS> 24,637,334
<CURRENT-LIABILITIES> 1,636,728
<BONDS> 3,575,000
0
0
<COMMON> 8,662,275
<OTHER-SE> 9,263,751
<TOTAL-LIABILITY-AND-EQUITY> 24,637,334
<SALES> 0
<TOTAL-REVENUES> 2,585,100
<CGS> 0
<TOTAL-COSTS> 1,517,498
<OTHER-EXPENSES> (340,426)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 64,698
<INCOME-PRETAX> 1,343,330
<INCOME-TAX> 554,311
<INCOME-CONTINUING> 789,019
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 789,019
<EPS-PRIMARY> 0.46
<EPS-DILUTED> 0.46
</TABLE>
