<PAGE>
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 June 30, 1997
------------------------------------------------
- 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 the 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: 4,592,543 shares of no par common
stock as of June 30, 1997.
<PAGE>
HICKORY TECH CORPORATION
JUNE 30, 1997
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
CONSOLIDATED INCOME STATEMENT
(NOT AUDITED)
<TABLE>
<CAPTION>
In Thousands For Quarter Ended For Six Months Ended
------------------ --------------------
6-30-97 6-30-96 6-30-97 6-30-96
------- ------- ------- -------
<S> <C> <C> <C> <C>
OPERATING REVENUES
Telephone $11,232 $8,533 $20,248 $17,078
Billing and Data Services 2,304 2,122 4,608 4,796
Equipment Sales 3,533 3,564 8,000 6,319
Telecom. Product Development 2,230 1,723 3,933 3,290
------- ------- ------- --------
TOTAL OPERATING REVENUES 19,299 15,942 36,789 31,483
COSTS AND EXPENSES
Cost of Sales 4,015 3,586 8,335 6,445
Operating Expenses 7,540 6,801 14,744 13,942
Depreciation 1,729 1,363 3,152 2,748
Amortization of Intangibles 352 882 550 1,184
------- ------- ------- --------
TOTAL COSTS AND EXPENSES 13,636 12,632 26,781 24,319
------- ------- ------- --------
OPERATING INCOME 5,663 3,310 10,008 7,164
OTHER INCOME 421 241 753 540
INTEREST EXPENSE (664) (42) (720) (137)
------- ------- ------- --------
INCOME BEFORE INCOME TAXES 5,420 3,509 10,041 7,567
INCOME TAXES 2,264 1,338 4,163 2,980
------- ------- ------- --------
CONSOLIDATED NET INCOME $3,156 $2,171 $5,878 $4,587
------- ------- ------- --------
------- ------- ------- --------
EARNINGS PER SHARE $0.68 $0.43 $1.26 $0.90
DIVIDENDS PER SHARE $0.300 $0.275 $0.60 $0.55
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
HICKORY TECH CORPORATION
JUNE 30, 1997
CONSOLIDATED BALANCE SHEET (NOT AUDITED)
<TABLE>
<CAPTION>
In Thousands 6/30/97 12/31/96
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and Cash Equivalents ($10) $2,954
Receivables, Net of Allowance 11,867 10,782
Inventories 2,616 2,859
Deferred Tax Benefit and Other 1,266 1,372
------------ ------------
TOTAL CURRENT ASSETS 15,739 17,967
INVESTMENTS 3,183 2,980
PROPERTY, PLANT & EQUIPMENT:
Telecommunications Plant 106,971 78,132
Other Property and Equipment 9,834 9,464
------------ ------------
TOTAL 116,805 87,596
Less Accumulated Depreciation 61,448 46,723
------------ ------------
NET PROPERTY, PLANT AND EQUIPMENT 55,357 40,873
OTHER ASSETS:
Intangible Assets 31,745 8,735
Note Receivable 65 230
Miscellaneous 471 478
------------ ------------
TOTAL OTHER ASSETS 32,281 9,443
------------ ------------
TOTAL ASSETS $106,560 $71,263
------------ ------------
------------ ------------
LIABILITIES & SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts Payable and Accrued Taxes $7,632 $9,396
Advanced Billings & Deposits 1,925 2,080
Current Maturities of Long-Term Debt - 212
------------ ------------
TOTAL CURRENT LIABILITIES 9,557 11,688
LONG-TERM DEBT, NET OF CURRENT MATURITIES 41,038 877
DEFERRED CREDITS:
Income Taxes and Credits 2,889 2,921
Compensation Benefits and Other 3,047 3,150
------------ ------------
TOTAL DEFERRED CREDITS 5,936 6,071
SHAREHOLDERS' EQUITY:
Common Stock 459 479
Additional Paid-In Capital 1,803 1,778
Reinvested Earnings 47,767 50,370
------------ ------------
TOTAL SHAREHOLDERS' EQUITY 50,029 52,627
------------ ------------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $106,560 $71,263
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
HICKORY TECH CORPORATION
JUNE 30, 1997
CONSOLIDATED STATEMENT OF CASH FLOWS (NOT AUDITED)
<TABLE>
<CAPTION>
In Thousands 6/30/97 6/30/96
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $5,878 $4,587
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities
Depreciation and Amortization 3,790 4,058
Equity in Subsidiary Income (372) (241)
Provision for Losses on Notes Rec. & Investments 375 130
Gain from Disposition of Assets (326) 0
------------ ------------
CASH PROVIDED FROM OPERATIONS BEFORE CHANGES
IN ASSETS AND LIABILITIES 9,345 8,534
Changes in Assets and Liabilities Net of
Effects of Acquisitions and Dispositions:
(Increase) Decrease in:
Receivables (1,085) (1,758)
Inventories 243 (447)
Increase (Decrease) in:
Accounts Payable and Accrued Taxes (1,764) (600)
Advanced Billings & Deposits (155) (277)
Deferred Income Taxes and Credits (32) (72)
Other 10 (388)
------------ ------------
Net Cash Provided by Operating Activities 6,562 4,992
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to Property, Plant & Equipment (17,795) (1,656)
Additions to Intangible Assets (23,560) (1,057)
Increase in Note Receivable and Investments (41) (43)
Decrease in Temporary Cash Investments 0 5,899
Proceeds from Sale of Assets 397 0
------------ ------------
Net Cash Provided by(Used in) Investing Activities (40,999) 3,143
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of Debt (51) (101)
Increase in Long-Term Debt 40,000 0
Proceeds from Issuance of Common Stock 100 303
Acquisition of Common Stock (5,773) (3,612)
Dividends Paid (2,803) (2,811)
------------ ------------
Net Cash Provided by(Used in) Financing Activities 31,473 (6,221)
------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (2,964) 1,914
CASH AND CASH EQUIVALENTS At Beginning of Year 2,954 4,517
------------ ------------
CASH AND CASH EQUIVALENTS At End of Period ($10) $6,431
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
HICKORY TECH CORPORATION
JUNE 30, 1997
PART 1. FINANCIAL INFORMATION
ITEM 1. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
The preceding, not audited, Consolidated Statement of Income,
Balance Sheet and Statement of Cash Flows include all adjustments which are,
in the opinion of management, necessary to present a fair statement of the
results for the interim periods being reported.
NOTE 1. BASIS OF CONSOLIDATION
The Registrant is a communications holding company headquartered in
Mankato, Minnesota. The consolidated financial statements of the Registrant
include Hickory Tech Corporation, the parent company, and its eight
wholly-owned operating subsidiaries. The companies and operations of the
Registrant are grouped into four primary lines of business.
MANKATO CITIZENS TELEPHONE COMPANY, MID-COMMUNICATIONS, INC., AMANA
COLONIES TELEPHONE COMPANY, and HEARTLAND TELECOMMUNICATIONS COMPANY OF IOWA
are local exchange telephone companies. Mankato Citizens Telephone Company
and Mid-Communications, Inc. provide telephone service in south central
Minnesota, specifically, Mankato (population 42,000) and eleven communities
surrounding Mankato. CABLE NETWORK, INC. owns and operates fiber optic cable
facilities in southern Minnesota which are used to transport interexchange
communications as a service to telephone exchange carriers. It also holds a
minority ownership interest in a rural cellular limited liability company in
south central Minnesota. Amana Colonies Telephone Company provides telephone
service for the seven communities of the Amana Colonies in east central Iowa.
Heartland Telecommunications Company of Iowa provides telephone service for
eleven communities in northwest Iowa. These five subsidiaries comprise the
Registrant's Telephone Sector.
COMPUTOSERVICE, INC. (CSI) provides data processing service to local
telephone companies, interexchange long distance companies and enhanced
service providers throughout the United States. CSI also provides standard
batch processing of telephone billing and rating in large volume
applications, as well as specialized contract data processing services,
through its subsidiary, National Independent Billing, Inc. (NIB). The
operations of CSI and NIB constitute the Registrant's Billing and Data
Services Sector.
COLLINS COMMUNICATIONS SYSTEMS CO. (Collins) sells, installs and
services telecommunications equipment in the retail market in the
metropolitan Minneapolis/St. Paul area. Collins primarily installs and
maintains Nortel PBX and key system equipment and integrated software. The
Registrant's Equipment Sales Sector is comprised of this subsidiary.
DIGITAL TECHNIQUES, INC. (DTI) designs, assembles and distributes
unique business telecommunications components for business telephone systems
throughout North America, the United Kingdom and the Pacific Rim. The
operations comprise the Registrant's Telecommunications Product Development
Sector.
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.
<PAGE>
All intercompany transactions have been eliminated from the
consolidated financial statements.
Certain balances for 1996 have been restated to conform with
presentation of 1997. In the quarter ended June 30, 1996 and the six month
period ended June 30, 1996, $546,000 and $1,167,000 respectively, of revenues
associated with Equipment Sales in southern Minnesota and Iowa were
reclassified from the Equipment Sales Sector to the Telephone Sector. This
reclassification more closely matches the Company's management reporting
lines. Total revenues and all other subtotals of the Consolidated Income
Statement remain unchanged.
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 June 30, 1997, the earnings per common share calculation was
based on 4,613,091 shares. For the six months ended June 30, 1997, the
calculation was based on 4,662,495 shares. For the quarter ended June 30,
1996, the earnings per common share calculation was based on 5,081,645
shares. For the six months ended June 30, 1996, the calculation was based on
5,101,992 shares. The number of shares outstanding on June 30, 1997 was
4,592,543.
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 first and second quarters of 1997 and 1996 were as
follows:
<TABLE>
<CAPTION>
SHARES OUTSTANDING ON RECORD DATE 1997 1996
--------------------------------- --------- ---------
<S> <C> <C>
1st Quarter (Feb 15) 4,733,981 5,121,873
2nd Quarter (May 15) 4,608,924 5,098,119
</TABLE>
NOTE 3. INVENTORIES
Inventories are stated at the lower of average cost or market and consist
of the following:
<TABLE>
<CAPTION>
(IN THOUSANDS) 6/30/97 12/31/96
--------------- -------- --------
<S> <C> <C>
Finished Goods $188 $ 211
Work in Process 195 156
Materials and Supplies 2,233 2,492
--------------- -------- --------
Total $ 2,616 $ 2,859
--------------- -------- --------
--------------- -------- --------
</TABLE>
NOTE 4. COMMON STOCK
The Registrant's common stock has no par value. There are 25,000,000
shares authorized. There were 4,592,543 shares outstanding on June 30, 1997,
and 4,790,229 shares outstanding on December 31, 1996.
Pursuant to the Retainer Stock Plan for Directors, 264 shares of
common stock were issued in place of retainers to three members of the
Registrant's Board of Directors on March 31, 1997 and 270 shares were issued
to three Directors on June 30, 1997. Pursuant to a long-term incentive award
plan for officers, 3,155 shares of common stock were issued to officers of
the Registrant. Shares issued to directors and officers were issued at 100%
of fair market value on the date of issue.
<PAGE>
During the six months ended June 30, 1997, 201,375 shares of common
stock were retired at a cost of $5,774,293.
On January 29, 1997, the Board of Directors of the Registrant
adopted a new share repurchase program authorizing the Registrant to
repurchase up to 500,000 additional shares, which represented 10.8% of its
outstanding common stock. This new repurchase program follows the repurchase
program which the Registrant announced on April 8, 1996. Due to the
successful completion of the initial repurchase program in February 1997, the
Registrant began the new repurchase program effective February 17, 1997. This
program was reported on Form 8-K dated February 17, 1997.
NOTE 5. CORPORATE DEVELOPMENT
On January 31, 1997, the Registrant sold the assets associated with
its cable television operations to Woodstock LLC. The Registrant recorded a
gain on the sale of the assets of $326,000.
On April 10, 1997, the Registrant acquired the assets of eleven
rural telephone exchanges in the State of Iowa from US West Communications,
Inc. ("US West") for $35,271,000. The eleven exchanges contain approximately
12,500 access lines. The new exchanges are reported as operations of
Heartland Telecommunications Company of Iowa, a wholly-owned subsidiary of
the Registrant. The acquisition was structured as a purchase of telephone
assets from US West. The acquisition was financed by new long-term debt
instruments from seven institutional investors in a private debt placement. A
total of $40,000,000 in senior unsecured notes was funded. This acquisition
was reported on Form 8-K dated April 25, 1997.
NOTE 6. 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, 1996
Form 10-K.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION.
Consolidated net income for the quarter ended June 30, 1997, was
45.4% higher than the same period in 1996, as illustrated by the following
table:
<TABLE>
<CAPTION>
NET INCOME (thousands) 1997 1996 1995 1994
---------------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
1st Quarter $2,722 $2,416 $2,221 $2,121
2nd Quarter $3,156 $2,171 $2,505 $2,255
</TABLE>
Operating Revenues were 21.1% higher for the quarter ended June 30,
1997, than for the quarter ended June 30, 1996, as illustrated by the
following table:
<TABLE>
<CAPTION>
OPERATING REVENUES (thousands) 1997 1996 1995 1994
------------------------------ ------- ------- ------- -------
<S> <C> <C> <C> <C>
1st Quarter $17,490 $15,541 $14,647 $14,095
2nd Quarter $19,299 $15,942 $15,573 $14,589
</TABLE>
<PAGE>
A. Material changes in results of operations:
1. TELEPHONE - Operating Revenues for the second quarter of 1997
increased $2,699,000 or 31.6% compared with the same period in 1996. For the
six months ended June 30, 1997, Operating Revenues were $3,170,000 or 18.6%
higher than the same period in 1996. The primary contributors to the revenue
growth include the commencement of Heartland Telecommunications Company of
Iowa operations on April 10, 1997, new fiber optic cable networks providing
additional toll transport revenue, access line growth and minutes of use
growth. Without the commencement of Heartland Telecommunications Company of
Iowa operations, Operating Revenues would have increased $1,255,000 or 7.3%
for the first six months of 1997 compared to the same period in 1996.
2. BILLING AND DATA SERVICES - Operating Revenues for the second
quarter of 1997 increased $182,000 or 8.6% compared with the same period in
1996. For the six months ended June 30, 1997, Operating Revenues were
$188,000 or 3.9% lower than the six months ended June 30, 1996. The increase
in the second quarter can be attributed to increased messages processed for
an international long distance carrier, now in the local exchange telephone
business, and an increase in the long distance reseller business. The decline
in Operating Revenues for the six month period ending June 30, 1997 was
mostly due to activities in the first quarter of 1997. During first quarter
1997, revenues attributed to contract programming services were $302,000
lower as compared to the same period in the prior year. Although the revenues
were lower, the higher margins associated with processing the sector's
growing volume of service bureau transactions resulted in a significant
increase in profitability for this sector.
3. EQUIPMENT SALES - Operating Revenues for this sector for the quarter
ended June 30, 1997 decreased $31,000 or 0.9% compared with the quarter ended
June 30, 1996. For the six months ended June 30, 1997, Operating Revenues
were $1,681,000 or 26.6% higher than the same period in 1996. This six month
period increase in Operating Revenues was a result of a $827,000 increase in
new phone system installations and $852,000 increase in phone system moves,
adds and changes (MAC) over the first six months of 1996. The Equipment Sales
Sector experienced considerable customer base growth in 1996 that has
assisted in the higher margin MAC activity in the first six months of 1997.
4. TELECOMMUNICATIONS PRODUCT DEVELOPMENT - Operating Revenues for the
quarter ended June 30, 1997 increased $507,000 or 29.4% compared with the
second quarter of 1996. For the six months ended June 30, 1997, Operating
Revenues were $643,000 or 19.5% higher than the six months ended June 30,
1996. Standard Product Sales increased $580,000 as compared to 1996's first
six months. Standard Product Sales are sold at a higher margin than Original
Equipment Manufacturer (OEM) Sales. The OEM Sales were flat as compared to
the same period in 1996. The sector generated a net profit of $121,000 for
the first six months of 1997, compared to a net loss of $128,000 for the same
period in 1996.
<PAGE>
5. COST OF SALES - Cost of Sales increased $429,000 or 12.0% for the
quarter ended June 30, 1997, compared with the same period in 1996. For the
six months ended June 30, 1997, Cost of Sales were $1,890,000 or 29.3% higher
than the six months ended June 30, 1996. Through the first six months of
1997, Operating Revenues for the two sectors (Equipment Sales and
Telecommunications Product Development) which generated most of the Cost of
Sales increased $2,324,000 or 24.2% compared with Operating Revenues during
the six months ended June 30, 1996. In terms of percentage of Operating
Revenues from these two sectors, Cost of Sales was 69.8% for the six months
ended June 30, 1997, compared to 67.1% for the same period in 1996. Operating
margins have been satisfactory to management, considering the new business
development for Collins and DTI.
6. OPERATING EXPENSES - Operating Expenses for the quarter ended
June 30, 1997, increased $739,000 or 10.9% compared with the same period in
1996. For the six months ended June 30, 1997, Operating Expenses were
$802,000 or 5.8% higher than the six months ended June 30, 1996. Heartland
Telecommunications Company of Iowa's Operating Expenses were $635,000 for the
period of April 10, 1997 through June 30, 1997. Without the addition
Heartland Telecommunications Company of Iowa's Operating Expense, the first
six months would have only increased $167,000 or 1.2%. This minimal increase
is a result of various cost control measures implemented in 1996. Operating
Expense curtailment has been particularly effective in the Billing and Data
Services and the Telecommunications Product Development Sectors.
7. DEPRECIATION - Depreciation expense for the quarter ended June 30,
1997 was $366,000 or 26.9% higher than for the same period ended June 30,
1996. For the six months ended June 30, 1997, Depreciation expense was
$404,000 or 14.7% higher than for the same period in 1996. The increase is
due to the new operations of Heartland Telecommunications Company of Iowa
that incurred $312,000 in Depreciation expense in the six months ended June
30, 1997.
8. AMORTIZATION OF INTANGIBLES - Amortization for the quarter ended
June 30, 1997, was $530,000 lower than for the quarter ended June 30, 1996.
For the six months ended June 30, 1997, Amortization was $634,000 lower than
for the same period in 1996. In the second quarter 1996, the Registrant
accelerated the amortization of capitalized software costs in its Billing and
Data Services Sector, which resulted in a nonrecurring expense of $573,000.
9. OTHER INCOME - Other Income increased $180,000 or 74.7% for the
quarter ended June 30, 1997, compared to the same period last year. For the
six months ended June 30, 1997, Other Income was $213,000 higher than for the
same period in 1996. Gain on the sale of cable television assets of $326,000,
Equity in Cellular Partnership income increase of $130,000, miscellaneous
income increase of $270,000, and offsets of provision for losses on note
receivable and investments of $375,000 were the contributors to the balance.
INTEREST EXPENSE - Interest Expense increased $622,000 for the quarter
ended June 30, 1997, compared to the same period last year. For the six
months ended June 30, 1997, Interest Expense was $583,000 higher than for the
same period in 1996. The increase in Interest Expense was due to the
Registrant securing $40,000,000 long-term debt instruments in April 1997 for
the acquisition of the US West telephone exchanges in Iowa which are operated
as Heartland Telecommunications Company of Iowa.
<PAGE>
B. Material changes in financial condition:
1. CASH FLOWS - Cash and Cash Equivalents decreased $2,964,000 for the
six months ended June 30, 1997, compared with an increase of $1,914,000 for
the same period in 1996. The primary sources of cash in 1997 were from the
securing of long term debt instruments of $40,000,000 and from the
Registrant's internal operations. The primary uses of cash in the first six
months of 1997 were the acquisition of the US West telephone exchanges in
Iowa for $35,271,00 and the Registrant's stock repurchase program which
required $5,773,000. Additions to Property, Plant and Equipment required
$4,846,000 in 1997 and $1,656,000 in 1996. Dividends paid for the first six
months were $2,803,000 in 1997 compared to $2,811,000 for the same period in
1996. The 0.3% decrease was due to a combination of a $0.05 or 9.1% per share
increase in dividends paid, offset by a 877,087 or an average of 8.6%
decrease in the number of shares outstanding on the respective record dates.
2. WORKING CAPITAL - Current Assets exceeded Current Liabilities by
$6,182,000 as of June 30, 1997, compared to a working capital surplus of
$6,279,000 as of December 31, 1996. The ratio of current assets to current
liabilities was 1.6:1.0 as of June 30, 1997.
3. LONG-TERM DEBT - The Registrant's Long-Term Debt as of June 30,
1997, was $41,038,000.
On April 8, 1997, the Registrant secured new $40,000,000 long-term debt
instruments with 15 year maturities to fund the $35,271,000 acquisition of
the Iowa - US West telephone exchanges. The new long-term debt will accrue
interest at 7.11%. No principal payments are due during the first four years.
In addition, the Registrant has $1,038,000 of outstanding long term debt
that was secured in the 1970's with Rural Utilities Service (RUS) for the
financing of telephone property, plant and equipment of Mid-Communications,
Inc. Due to accumulated principal prepayment credits with RUS, the Registrant
has not recorded current maturities on the long-term debt. The accumulated
prepayment credits will be applied to the long-term debt payments over the
next twelve months. 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. No material liquidity problems are
anticipated from the long-term funding of the debts maturing in 2003 through
2007.
In July 1996, the Registrant secured a $10,000,000 line of credit
arrangement. 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 a variable annual rate equal to 150 basis points in
excess of the 30 day LIBOR rate. On June 30, 1997, the Registrant had no
advances against this line of credit.
4. 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 seven acquisitions in the previous six
years which were funded out of existing cash balances. The April 1997
acquisition of Iowa rural telephone assets from US West required external
debt financing. Growth plans and acquisitions in the future will require
additional debt financing. Should the Registrant have a need to secure
additional senior debt financing as a result of pursuing additional corporate
acquisitions, the Registrant has been assured by its financial capital
sources that no difficulty should be anticipated.
The Registrant's stock repurchase program has been funded with internal
cash and advances on the line of credit to date. It is anticipated the same
sources will be utilized for financing future stock repurchases.
<PAGE>
HICKORY TECH CORPORATION
June 30, 1997
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.
a. The annual shareholders' meeting was held on April 14, 1997.
b. Two directors were elected to serve three year terms. The names
of the directors elected at the annual meeting and the
applicable votes were as follows:
<TABLE>
<CAPTION>
BROKER
DIRECTOR FOR AGAINST WITHHELD NONVOTES
------------------- --------- ------- -------- --------
<S> <C> <C> <C> <C>
Lyle T. Bosacker 3,506,910 62,278 290 None
Brett M. Taylor, 3,501,726 65,326 2,426 None
</TABLE>
The other directors of the Registrant are as follows:
Robert D. Alton, Jr. Lyle G. Jacobson
Robert K. Else R. Wynn Kearney, Jr.
James H. Holdrege Starr J. Kirklin
c. Olsen Thielen & Co., Ltd. was also confirmed as the auditors
for the Registrant for 1997 at the annual meeting. The votes
regarding the selection of the auditors were as follows:
<TABLE>
<CAPTION>
BROKER
FOR AGAINST ABSTAIN NONVOTES
--- ------- ------- --------
<S> <C> <C> <C>
3,726,194 13,884 28,462 None
</TABLE>
Item 5. OTHER INFORMATION.
None.
Item 6. EXHIBITS AND REPORTS OF FORM 8-K.
On July 30, 1997, the Registrant filed a Form 8-K. Items 2
(Acquisition or Disposition of Assets) and 7 (Financial Statements and
Exhibits) were reported on the Form 8-K. The Form 8-K reported that on July
15, 1997, the Company sold its exclusive DirecTV distribution rights in seven
counties in southern Minnesota to Golden Sky Systems, Inc. of Kansas City,
Missouri in exchange for approximately $7.2 million in cash. The DirecTV
distribution rights were acquired by the Registrant in 1993 and had a net
asset value of approximately $900,000 as of July 15, 1997.
<PAGE>
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: August 13, 1997 HICKORY TECH CORPORATION
----------------
By /s/ Robert D. Alton, Jr.
----------------------------------------------------------------
Robert D. Alton, Jr., Chief Executive Officer
By /s/ David A. Christensen
----------------------------------------------------------------
David A. Christensen, Chief Financial Officer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
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0
0
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</TABLE>
