<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000766561
<NAME> HICKORY TECH CORPORATION
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 7,761
<SECURITIES> 4,447
<RECEIVABLES> 6,282
<ALLOWANCES> 112
<INVENTORY> 2,847
<CURRENT-ASSETS> 19,554
<PP&E> 76,512
<DEPRECIATION> 41,072
<TOTAL-ASSETS> 68,868
<CURRENT-LIABILITIES> 7,236
<BONDS> 0
<COMMON> 2,014
0
0
<OTHER-SE> 51,780
<TOTAL-LIABILITY-AND-EQUITY> 68,868
<SALES> 5,279
<TOTAL-REVENUES> 14,647
<CGS> 3,060
<TOTAL-COSTS> 11,032
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 30
<INCOME-PRETAX> 3,721
<INCOME-TAX> 1,500
<INCOME-CONTINUING> 2,221
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,221
<EPS-PRIMARY> .43
<EPS-DILUTED> .43
</TABLE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
- - or -
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-13721
HICKORY TECH CORPORATION
P.O. Box 3248
221 East Hickory Street
Mankato, Minnesota 56002-3248
(800) 326-5789
Incorporated in Minnesota I.R.S. Employer Identification
41-1524393
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934
during preceding 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. (X)
The number of shares outstanding of each of the Registrant's classes of common
stock, as of the latest practicable date: 5,124,656 shares of no par common
stock as of March 31, 1995.
<TABLE>
HICKORY TECH CORPORATION
MARCH 31, 1995
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements.
CONSOLIDATED INCOME STATEMENT
(UNAUDITED)
In Thousands
<CAPTION>
For Quarter Ended
3-31-95 3-31-94
<S> <C> <C>
OPERATING REVENUES
Telephone $ 7,544 $ 6,487
Computer 1,824 1,960
Equipment Sales 3,597 3,770
Telecommunications Product Development 1,682 1,878
---------- ----------
TOTAL OPERATING REVENUES 14,647 14,095
OPERATING EXPENSES
Cost of Sales 3,060 3,395
Operating Expenses 6,139 5,775
Depreciation 1,350 1,335
Amortization of Intangibles 483 297
---------- ----------
TOTAL OPERATING EXPENSES 11,032 10,802
---------- ----------
OPERATING INCOME 3,615 3,293
OTHER INCOME 136 155
INTEREST EXPENSE 30 21
---------- ----------
INCOME BEFORE INCOME TAXES 3,721 3,427
INCOME TAXES 1,500 1,306
---------- ----------
CONSOLIDATED NET INCOME $ 2,221 $ 2,121
========== ==========
EARNINGS PER SHARE $0.43 $0.41
DIVIDENDS PER SHARE $0.25 $0.215
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
HICKORY TECH CORPORATION
MARCH 31, 1995
CONSOLIDATED BALANCE SHEET (UNAUDITED)
<CAPTION>
In Thousands 3-31-95 12-31-94
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and Cash Equivalents $ 7,761 $ 5,065
Temporary Cash Investments 1,834 1,887
Receivables, Net of Allowance 6,170 7,258
Inventories 2,847 2,948
Deferred Tax Benefit and Other 942 1,029
---------- ----------
TOTAL CURRENT ASSETS 19,554 18,187
INVESTMENTS 2,613 2,648
PROPERTY, PLANT & EQUIPMENT:
Telecommunications Plant 66,065 63,645
Other Property and Equipment 10,447 10,222
---------- ----------
TOTAL 76,512 73,867
Less Accumulated Depreciation 41,072 38,236
--------- ----------
NET PROPERTY, PLANT AND EQUIPMENT 35,440 35,631
OTHER ASSETS:
Intangible Assets 10,523 10,649
Note Receivable 325 252
Miscellaneous 413 413
---------- ----------
TOTAL OTHER ASSETS 11,261 11,314
TOTAL ASSETS $ 68,868 $ 67,780
========== ==========
<CAPTION>
LIABILITIES & SHAREHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES:
Accounts Payable $ 3,820 $ 4,275
Notes Payable 468 763
Accrued Taxes 1,401 404
Advanced Billings & Deposits 1,334 1,295
Current Maturities of Long-Term Debt 213 219
---------- ----------
TOTAL CURRENT LIABILITIES 7,236 6,956
LONG-TERM DEBT, NET OF CURRENT MATURITIES 1,246 1,295
DEFERRED CREDITS:
Investment Tax Credits 313 337
Income Taxes 4,395 4,395
Other 1,884 1,955
---------- ----------
TOTAL DEFERRED CREDITS 6,592 6,687
SHAREHOLDERS' EQUITY:
Common Stock 2,014 2,002
Reinvested Earnings 51,780 50,840
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 53,794 52,842
---------- ----------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 68,868 $ 67,780
========== ==========
<FN>
The accompanying notes are an integral part of the financial statements
</TABLE>
<TABLE>
HICKORY TECH CORPORATION
MARCH 31, 1995
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
<CAPTION>
In Thousands 3-31-95 3-31-94
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 2,221 $ 2,121
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities
Depreciation and Amortization 1,833 1,632
Decrease in:
Receivables 1,088 411
Inventory and Other 188 602
Increase (Decrease) in:
Accounts Payable (455) 260
Accrued Taxes 997 247
Advance Billings & Deposits 39 154
Deferred Investments Tax Credits (24) (31)
Deferred Income Taxes 0 (269)
Other (71) 44
---------- ----------
Net Cash Provided by Operating Activities 5,816 5,171
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to Property, Plant & Equipment (1,159) (1,991)
Additions to Intangible Assets (357) (592)
Issuance of Note Receivable (73) 0
(Increase) Decrease in Investments 35 (216)
Decrease in Temporary Cash Investments 53 1,271
Other 0 (17)
---------- ----------
Net Cash Used in Investing Activities (1,501) (1,545)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of Debt (350) (84)
Proceeds from Issuance of Common Stock 12 12
Acquisition of Common Stock 0 (474)
Dividends Paid (1,281) (1,103)
---------- ----------
Net Cash Used in Financing Activities (1,619) (1,649)
---------- ----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 2,696 1,977
CASH AND CASH EQUIVALENTS At Beginning of Year 5,065 8,478
---------- ----------
CASH AND CASH EQUIVALENTS At End of Period $ 7,761 $ 10,455
========== ==========
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
HICKORY TECH CORPORATION
MARCH 31, 1995
PART 1. FINANCIAL INFORMATION
ITEM 1. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
The preceding unaudited Consolidated Statement of Income, Balance
Sheet and Statement of Cash Flows include all adjustments which are,
in the opinion of management, necessary to a fair statement of the
results for the interim periods reported on.
Note 1. BASIS OF CONSOLIDATION
The Registrant is a diversified communications company headquartered
in Mankato, Minnesota. The consolidated financial statements of the
Registrant include Hickory Tech Corporation, the parent company, and
its seven operating subsidiaries. The companies and operations of the
Registrant are grouped into four primary lines of business.
MANKATO CITIZENS TELEPHONE CO., MID-COMMUNICATIONS, INC. and AMANA
COLONIES TELEPHONE COMPANY are local exchange telephone companies.
Mankato Citizens Telephone Company also owns and operates a direct
broadcast satellite license under the trade name DirectVision. CABLE
NETWORK, INC. owns and operates fiber optic cable facilities for the
transportation of long distance communications. It also operates cable
television systems and owns partnership interest in three cellular
properties in south central Minnesota. These four wholly-owned
subsidiaries comprise the Registrant's Telephone Segment.
COMPUTOSERVICE, INC. provides data processing for the Telephone
Segment as well as other unrelated telephone companies. It also
provides services to interexchange carriers such as AT&T, MCI and U.S.
West Communications, Inc. through its subsidiary, National Independent
Billing, Inc. The operations of this wholly-owned subsidiary
constitute the Registrant's Computer Segment.
COLLINS COMMUNICATIONS SYSTEMS CO. sells, installs, and services
telecommunications equipment in the retail market in the metropolitan
Minneapolis/St. Paul area as well as in Santa Ana, California. The
Registrant's Equipment Sales Segment is made up of this wholly-owned
subsidiary as well as the retail sales and service operations of the
Registrant's local exchange telephone companies in southern Minnesota
and east-central Iowa.
DIGITAL TECHNIQUES, INC. creates and sells unique business telephone
system interface devices. Its operations comprise the Registrant's
Telecommunications Product Development Segment. The Registrant owns
81% of Digital Techniques, Inc.
The accounting policies of the Registrant are in conformity with
generally accepted accounting principles and, where applicable,
conform to the accounting principles as prescribed by federal and
state telephone utility regulatory authorities.
All intercompany transactions have been eliminated from the
consolidated financial statements.
HICKORY TECH CORPORATION
MARCH 31, 1995
PART 1. FINANCIAL INFORMATION
ITEM 1. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. (continued)
NOTE 2. EARNINGS AND CASH DIVIDENDS PER COMMON SHARE
Earnings per common share are based on the weighted average number of
shares of common stock equivalents outstanding during all periods. For
the quarter ended March 31, 1995, the earnings per common share
calculation was based on 5,124,291 shares. For the quarter ended March
31, 1994, the earnings per common share calculation was based on
5,133,691 shares.
Cash dividends are based on the number of common shares outstanding at
the respective record dates. The number of shares outstanding as of
the record date for the quarter ended March 31, 1995 was 5,124,291.
The number of shares outstanding as of the record date for the quarter
ended March 31, 1994, was 5,129,029.
NOTE 3. INVENTORIES
Inventories are stated at the lower of average cost or market and
consist of the following:
(in Thousands) 3-31-95 12-31-94
Finished Goods $ 317 $ 304
Work in Process 430 433
Materials and Supplies 2,100 2,211
------- -------
Total $ 2,847 $ 2,948
------- -------
NOTE 4 COMMON STOCK
The Registrant's common stock has no par value. There are 25,000,000
shares authorized. There were 5,124,656 shares outstanding on March
31, 1995, and 5,124,291 shares outstanding on December 31, 1994.
Pursuant to the Retainer Stock Plan for Directors, 365 shares of
common stock were issued in lieu of retainers to five members of the
Registrant's Board of Directors on March 31, 1995. These shares were
issued at 100% of fair market value on the date of issue.
NOTE 5 OTHER
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested
these condensed financial statements be read in conjunction with the
financial statements and notes thereto included in the Registrant's
December 31, 1994 Form 10-K.
HICKORY TECH CORPORATION
MARCH 31, 1995
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION.
Consolidated Net Income for the quarter ended March 31, 1995, was
slightly higher (4.71%) than the same period in 1994, as illustrated
by the following table:
NET INCOME (thousands) 1995 1994 1993 1992
------ ------ ------ ------
1st Quarter $2,221 $2,121 $2,233 $1,875
Operating Revenues were also moderately higher (3.92%) for the quarter
ended March 31, 1995, than for the quarter ended March 31, 1994, as
illustrated by the following table:
OPERATING REVENUES (thousands)1995 1994 1993 1992
------- ------- ------- -------
1st Quarter $14,647 $14,095 $13,309 $12,543
A. Material changes in results of operations:
1. TELEPHONE - Operating Revenues for the first quarter of 1995 were
$1,057,000 or 16.3% higher than the same period in 1994. $257,000
of the increase resulted from the operations of Amana Colonies
Telephone Company which was acquired in April, 1994. In addition
local service and network access revenues from existing local
telephone operations increased $727,000 as a result of increased
local rates, increased number of access lines and higher message
volumes. The Registrant's new direct broadcast satellite service,
DirectVision, also provided $54,000 of revenues which did not
exist during the first quarter of 1994.
2. COMPUTER - Operating Revenues for the first quarter of 1995 were
$136,000 or 6.9% lower than for the first quarter of 1994. The
primary cause of this decrease was the expiration in February,
1995, of a contract with US Sprint. The revenues lost from this
contract will be partially replaced in the second quarter, 1995,
by a new software and management contract with MCI. This new MCI
contract provides for services for the next three years.
3. EQUIPMENT SALES - Operating Revenues for this segment were down
$173,000 or 4.6% for the first quarter, 1995, when compared to
the same period in 1994. Operating Revenues from the California
division of Collins Communications Systems Co. for this period
decreased $304,000 from 1994 to 1995. This division is in the
process of completing a restructuring of its sales force and
customer service personnel. The need for this restructure and the
process itself have contributed to its lower performance.
Operating Revenues in Minneapolis/St. Paul and southern
Minnesota, while 3.5% higher in 1995 than 1994, were not enough
to entirely compensate for the California division.
4. TELECOMMUNICATIONS PRODUCT DEVELOPMENT - Operating Revenues for
the quarter ended March 31, 1995, were down $196,000 or 10.4%
when compared to the first quarter of 1994. The primary reason
for the decline is lower royalty revenues. Royalties are
generated from a right to manufacture contract entered into early
in 1994. While royalty revenues are higher than anticipated this
year, they are below last year's levels, which were unusually
high. Standard product revenues are also below last year's
levels. This situation is expected to turn around in the near
future as a result of distribution agreements which have recently
been executed.
5. COST OF SALES - Consolidated Cost of Sales was $335,000 or 9.9%
lower for the quarter ended March 31, 1995, than the same period
in 1994. Operating Revenues for the two segments (Equipment
Sales and Telecommunications Product Development) which generate
most of the Cost of Sales were lower during the same period as
described in previous paragraphs. In terms of percentage of
Operating Revenues from these two segments, Cost of Sales was 58%
for the quarter ended March 31, 1995, compared to 60% for the
quarter ended March 31, 1994. This improvement in gross margin
occurred in spite of reductions in royalty and standard product
revenue which generate high margins. This improvement is the
result of better pricing methods, particularly in the Equipment
Sales Segment. Pricing methods have been totally restructured in
the California division of Collins to generate higher gross
margins, and the Minnesota division continues to be selective
regarding margins on products sold.
6. OPERATING EXPENSES - Operating Expenses for the quarter ended
March 31, 1995, are $364,000 or 6.3% higher than the same period
in 1994. In addition to normal increases in costs incurred,
Operating Expenses for the first quarter, 1995, included expenses
at Amana Colonies Telephone Company which did not exist in the
first quarter of 1994. The Registrant is also experiencing a
higher level of professional fees relating to potential
acquisition activities.
7. AMORTIZATION OF INTANGIBLES - Amortization for the quarter ended
March 31, 1995, was $186,000 higher than for the quarter ended
March 31, 1994. Amortization of intangibles resulting from the
acquisition of Amana Colonies Telephone Company in April, 1994,
represented $30,000 of the increase. Amortization of the license
fee for the new DBS service represented $29,000 of the increase.
Acceleration of the amortization of intangibles resulting from
the 1992 acquisition of the California division of Collins
Communications Systems Co. resulted in a $60,000 increase over
1994. The Registrant has also accelerated the amortization of
capitalized software costs in its Computer Segment. The overall
increase in amortization of software costs over 1994 is $49,000.
B. Material changes in financial condition:
1. CASH FLOWS - Cash and Cash Equivalents increased $2,696,000 for
the three months ended March 31, 1995, compared with an increase
of $1,977,000 for the same period in 1994. The primary source of
cash for both periods was internal operations which generated
$5.8 million in 1995 and $5.2 million in 1994. Additions to
Property, Plant and Equipment required $1.2 million in 1995 and
$2.0 million in 1994. Dividends paid for the first quarter were
higher (16.1%) in 1995 than 1994 reflecting a $0.035 per share
increase.
2. WORKING CAPITAL - Current Assets exceeded Current Liabilities by
$12.3 million dollars as of March 31, 1995, compared to a working
capital surplus of $11.2 million as of December 31, 1994. The
primary source of working capital was internal operations.
3. USES OF CAPITAL - Additions to Property, Plant and Equipment
constituted the Registrant's largest investing activity, using
$16.6 million for the three years ended December 31, 1994. The
$1.2 million of internal working capital used during the first
three months of 1995 was indicative of the continuing need for
funding in the Registrant's capital intensive industry.
4. LONG-TERM DEBT - The Registrant's Long-Term Debt as of March 31,
1995, was $1,246,000. In addition Current Maturities of Long-Term
Debt were $213,000. The general purpose of this debt was the
financing of telephone property, plant and equipment of Mid-
Communications, Inc. This debt has final maturities at various
times in 2003 through 2007 with interim sinking fund payments.
Currently debt service is being funded out of operations. Plans
have not been completed for the long-term funding of the debts
maturing in 2003 through 2007. Additionally, the Registrant has
entered into a debt financing agreement (Computoservice Line of
Credit) to provide financing for building improvements for
offices and computer facilities for its Computer Segment. This
new debt requires interest only payments for one year at which
time it will be converted to installment debt. Through March 31,
1995, $468,000 has been advanced against this line of credit. In
March, 1994, the Registrant secured a $10,000,000 line of credit
(HTC Line of Credit) arrangement with a local bank. This line of
credit will be used for general corporate purposes and as bridge
financing for future acquisition activity. The line of credit
provides for borrowing at the prime interest rate. Through March
31, 1995, no advances have been made against this line of credit.
5. CAPITAL FROM OPERATIONS - Management believes the Registrant will
be able to generate sufficient working capital internally from
operations to meet its immediate operating needs, and sustain its
historical dividend levels. The Registrant has completed five
acquisitions in the previous five years which were all funded out
of existing cash balances. Growth plans and acquisitions may
require additional debt financing in 1995 and beyond. Discussions
have been conducted with several sources of long-term debt
financing, but no commitments have been made. Should the
Registrant have a need to secure senior debt financing as a
result of pursuing corporate acquisitions, no difficulty is
anticipated.
HICKORY TECH CORPORATION
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
None.
Item 3. Default Upon Senior Securities,
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports of Form 8-K.
None.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereto duly authorized.
Dated: May 12, 1995
HICKORY TECH CORPORATION
Robert D. Alton, Jr.
Robert D. Alton, Jr., Chief Executive Officer
David A. Christensen
David A. Christensen, Chief Financial Officer
