-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ONBfypqv9Oznl6Wskq3sJ2f8KqJ1WhYfSO+D9lhTeizsJ7ugGA0VH9Zea+AvzcBP yUFCsd8XV1UK8PEN6G8ljA== 0000950144-99-007519.txt : 19990616 0000950144-99-007519.hdr.sgml : 19990616 ACCESSION NUMBER: 0000950144-99-007519 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990615 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CT COMMUNICATIONS INC /NC CENTRAL INDEX KEY: 0000023259 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 561837282 STATE OF INCORPORATION: NC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: SEC FILE NUMBER: 000-19179 FILM NUMBER: 99646968 BUSINESS ADDRESS: STREET 1: 68 CABARRUS AVE EAST STREET 2: P O BOX 227 CITY: CONCORD STATE: NC ZIP: 28025 BUSINESS PHONE: 7047880244 MAIL ADDRESS: STREET 1: 68 CABARRUS AVE EAST STREET 2: PO BOX 227 CITY: CONCORD STATE: NC ZIP: 28025 FORMER COMPANY: FORMER CONFORMED NAME: CONCORD TELEPHONE CO DATE OF NAME CHANGE: 19920703 10-K/A 1 CT COMMUNICATIONS 10-K/A 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 AMENDMENT NO. 3 TO FORM 10-K (Mark one) [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended: December 31, 1998 [ ] 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: 0-19179 CT COMMUNICATIONS, INC. - ------------------------------------------------------------------------------ (Exact name of registrant as specified in its charter)
NORTH CAROLINA 56-1837282 (State or other jurisdiction of (I.R.S. Employer Identification Number) incorporation or organization 68 CABARRUS AVENUE, EAST, CONCORD, NORTH CAROLINA 28025 (Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (704) 722-2500 Securities registered pursuant to Section 12(b) of the Act:
Title of each class: Name of exchange on which registered: NONE NONE
Securities registered pursuant to Section 12(g) of the Act: COMMON STOCK RIGHTS TO PURCHASE COMMON STOCK Indicate by check mark whether the Company (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Company was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10- K or any amendment to this Form 10-K. [ ] The aggregate market value of the voting stock held by nonaffiliates of the Company is approximately $344,685,845 (based on the June 9, 1999 closing price of the Common Stock of $39.56 per share). As of June 9, 1999, there were 9,354,263 shares of the Company's Common Stock outstanding. Documents Incorporated by Reference NONE 2 ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K. Exhibit 99.2 hereof sets forth the consolidated financial statements of Palmetto MobileNet, L.P., as of December 31, 1998 and 1997 and for each of the years in the three-year period ended December 31, 1998, which are included pursuant to Rule 3-09 of Securities and Exchange Commission Regulation S-X. 2 3 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CT COMMUNICATIONS, INC. By: /s/ MICHAEL R. COLTRANE -------------------------------------------- Michael R. Coltrane President and Chief Executive Officer Date: June 15, 1999 /s/ BARRY R. RUBENS ------------------------------------------- Barry R. Rubens Senior Vice President, Treasurer and Chief Financial Officer (Principal Financial and Principal Accounting Officer) Date: June 15, 1999 Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated.
Signature Title Date --------- ----- ---- /s/ L.D. COLTRANE, III Chairman of the Board June 15, 1999 - -------------------------------------------- and Director L.D. Coltrane, III /s/ MICHAEL R. COLTRANE President, Chief Executive June 15, 1999 - -------------------------------------------- Officer and Director Michael R. Coltrane (Principal Executive Officer) /s/ JOHN R. BOGER, JR. Director June 15, 1999 - -------------------------------------------- John R. Boger, Jr.
3 4
Signature Title Date --------- ----- ---- /s/ O. CHARLIE CHEWNING, JR. Director June 15, 1999 - -------------------------------------------- O. Charlie Chewning, Jr. /s/ WILLIAM A. COLEY Director June 15, 1999 - -------------------------------------------- William A. Coley /s/ SAMUEL E. LEFTWICH Director June 15, 1999 - -------------------------------------------- Samuel E. Leftwich /s/ JERRY H. MCCLELLAN Director June 15, 1999 - -------------------------------------------- Jerry H. McClellan - -------------------------------------------- Director , 1999 Ben F. Mynatt -------- /s/ PHIL W. WIDENHOUSE Director June 15, 1999 - -------------------------------------------- Phil W. Widenhouse
4 5 INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION OF DOCUMENT - ------- ----------------------- 23.4 Consent of Bauknight Pietras & Stormer, P.A. 23.5 Consent of Arthur Andersen LLP 99.2 Consolidated Financial Statements of Palmetto MobileNet, L.P.
5 EX-23.4 2 CONSENT OF BAUKNIGHT PIETRAS & SLORMER 1 EXHIBIT 23.4 INDEPENDENT AUDITORS' CONSENT The Board of Directors CT Communications, Inc.: We consent to incorporation by reference in the Registration Statements (Registration Nos. 33- 59641, 33-59643, 33-59645, 333-15537, 333-30125, 333-38895, 333-77323 and 333-79723) of CT Communications, Inc. of our report dated June 10, 1999, relating to the audited consolidated financial statements of Palmetto MobileNet, L.P. as of and for the years ended December 31, 1998, 1997 and 1996, which report is included in Exhibit 99.2 of the December 31, 1998 Annual Report on Form 10-K/A No. 3 of CT Communications, Inc. /s/ Bauknight Pietras & Stormer, P.A. Bauknight Pietras & Stormer, P.A. Columbia, South Carolina June 14, 1999 6 EX-23.5 3 CONSENT OF ARTHUR ANDERSON 1 EXHIBIT 23.5 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Shareholders of CT Communications, Inc.: As independent public accountants, we hereby consent to the incorporation by reference in the Registration Statements (Registration Nos. 33-59641, 33-59643, 33-59645, 333-15537, 333-30125, 333-38895, 333-77323 and 333-79723) of CT Communications, Inc. of our reports dated January 22, 1999, with respect to the North Carolina RSA 5 Cellular Partnership, North Carolina RSA 15 Cellular Partnership, South Carolina RSA No. 2 Cellular General Partnership, South Carolina RSA No. 3 Cellular General Partnership, South Carolina RSA No. 4 Cellular General Partnership, South Carolina RSA No. 5 Cellular General Partnership, South Carolina RSA No. 6 Cellular General Partnership, South Carolina RSA No. 7 Cellular General Partnership, South Carolina RSA No. 8 Cellular General Partnership, South Carolina RSA No. 9 Cellular General Partnership, included in CT Communications' Form 10-K/A for the year ended December 31, 1998. Such partnership financial statements are not included separately in CT Communications' Form 10-K/A. /s/ Arthur Andersen LLP ARTHUR ANDERSEN LLP Little Rock, Arkansas June 14, 1999 7 EX-99.2 4 CONSOLADATED FINANCIAL STATEMENT 1 EXHIBIT 99.2 Consolidated Financial Statements Palmetto MobileNet, L.P. Years ended December 31, 1998, 1997 and 1996 with Report of Independent Auditors 8 2 PALMETTO MOBILENET, L.P. CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 CONTENTS Report of Independent Auditors 3 Consolidated Financial Statements Consolidated Balance Sheets 4 Consolidated Statements of Income and Partners' Equity 5 Consolidated Statements of Cash Flow 6 Notes to Consolidated Financial Statements 7-10 2 3 REPORT OF INDEPENDENT AUDITORS To the Partners of Palmetto MobileNet, L.P. We have audited the accompanying consolidated balance sheets of Palmetto MobileNet, L.P. as of December 31, 1998 and 1997, and the related consolidated statements of income and partners' equity, and cash flows for each of the three years in the period ended December 31, 1998. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the financial statements of certain RSA partnerships, the investment in which, as discussed in Note 2 to the financial statements, are accounted for by the equity method of accounting. The investment in these RSA partnerships was $96,613,823 and $40,113,746 as of December 31, 1998 and 1997, respectively, and the equity in their net income was $23,390,795, $15,014,286, and $14,117,348 for the years 1998, 1997, and 1996, respectively. The financial statements of the RSA partnerships were audited by other auditors whose reports were furnished to us, and our opinion on the consolidated financial statements of Palmetto MobileNet, L.P., insofar as it relates to the amounts included for the RSA partnerships, is based solely on the reports of the other auditors. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Palmetto MobileNet, L.P. as of December 31, 1998 and 1997, and the results of its operations and its cash flows for each of the three years in the period then ended in conformity with generally accepted accounting principles. /s/ Bauknight Pietras & Stormer, P.A. June 10, 1999 Columbia, South Carolina 3 4 PALMETTO MOBILENET, L.P. CONSOLIDATED BALANCE SHEETS
December 31, 1998 1997 ------------ ----------- Assets Current assets: Cash and cash equivalents $ 12,181,206 $ 4,998,777 ------------ ----------- Total current assets 12,181,206 4,998,777 Interest in RSA partnerships 96,613,823 40,113,746 Other assets: Rural Telephone Finance Cooperative Subordinated Capital Certificates 448,545 500,000 Deferred acquisition costs -- 57,121 ------------ ----------- Total assets $109,243,574 $45,669,644 ============ =========== Liabilities and partners' equity Current liabilities: Accounts payable -- PMN, Inc. $ 149,920 $ 159,807 Accrued expenses 50,237 49,571 Accrued interest 44,583 50,667 Accrued distributions to partners 496,375 -- Current portion of long-term debt 1,078,118 938,275 ------------ ----------- Total current liabilities 1,819,233 1,198,320 Long-term debt, net of current portion 6,974,627 8,032,621 Partners' equity 100,449,714 36,438,703 ------------ ----------- Total liabilities and partners' equity $109,243,574 $45,669,644 ============ ===========
See accompanying notes. 4 5 PALMETTO MOBILENET, L.P. CONSOLIDATED STATEMENTS OF INCOME AND PARTNERS' EQUITY
Years Ended December 31, --------------------------------------------------- 1998 1997 1996 ------------- ------------ ------------ Equity in earnings of RSA partnership interests $ 23,390,795 $ 15,014,286 $ 14,117,348 Management fee (243,194) (316,157) (244,385) ------------- ------------ ------------ Income from operations 23,147,601 14,698,129 13,872,963 Other income (expense): Interest expense (561,851) (618,326) (1,009,088) Investment income 485,851 863,028 633,801 Other 179,637 351,673 1,970,027 ------------- ------------ ------------ Net income 23,251,238 15,294,504 15,467,703 Partners' equity, beginning of year 36,438,703 39,244,199 30,776,496 Equity exchanged for partnership interests 57,699,333 -- -- Distributions to partners (16,939,560) (18,100,000) (7,000,000) ------------- ------------ ------------ Partners' equity, end of year $ 100,449,714 $ 36,438,703 $ 39,244,199 ============= ============ ============
See accompanying notes. 5 6 PALMETTO MOBILENET, L.P. CONSOLIDATED STATEMENTS OF CASH FLOW
Years Ended December 31, -------------------------------------------------- 1998 1997 1996 ------------ ------------ ------------ Operating activities Net income $ 23,251,238 $ 15,294,504 $ 15,467,703 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Equity in earnings of RSA partnership interests (23,390,795) (15,014,286) (14,117,348) Gain on sale of RSA partnership interests -- -- (1,970,027) Changes in operating assets and liabilities: Accounts receivable -- 114,402 255,424 Accounts payable and accrued expenses (15,305) (2,501,847) 1,591,117 ------------ ------------ ------------ Net cash provided by (used in) operating activities (154,862) (2,107,227) 1,226,869 Investing activities Investment in RSA partnership interests (393,221) -- (998,979) Proceeds from RSA partnership distributions 25,341,231 8,287,967 8,689,152 Costs of acquisition (300,838) (57,121) -- Proceeds from sale of RSA partnership interests -- -- 40,932,477 Refund of investment in Rural Telephone Finance Cooperative Subordinated Capital Certificates 51,455 1,763,158 -- ------------ ------------ ------------ Net cash provided by investing activities 24,698,627 9,994,004 48,622,650 Financing activities Repayments of long-term debt (918,151) (829,864) (35,462,399) Distributions of partnership capital (16,443,185) (18,100,000) (7,000,000) ------------ ------------ ------------ Net cash used in financing activities (17,361,336) (18,929,864) (42,462,399) ------------ ------------ ------------ Net change in cash and cash equivalents 7,182,429 (11,043,087) 7,387,120 Cash and cash equivalents, beginning of year 4,998,777 16,041,864 8,654,744 ------------ ------------ ------------ Cash and cash equivalents, end of year $ 12,181,206 $ 4,998,777 $ 16,041,864 ============ ============ ============
See accompanying notes. 6 7 PALMETTO MOBILENET, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1998 AND 1997 1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Palmetto MobileNet, L.P. (the "Partnership") is a South Carolina limited partnership and is a general partner in ten general partnerships formed to provide cellular telephone service in certain Rural Service Areas ("RSA") in South Carolina and North Carolina. These partnerships' operations are managed by affiliates of ALLTEL Communications, Inc. CONSOLIDATION The financial statements include the accounts of the Partnership and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. CASH EQUIVALENTS The Partnership considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. The Partnership maintains its cash and cash equivalent balances in one financial institution located in Columbia, South Carolina. At December 31, 1998 and 1997, cash equivalents of $11,250,000 and $4,150,000, respectively, consist of investments in repurchase agreements. INTERESTS IN RSA PARTNERSHIPS Investments in the general RSA partnerships are accounted for using the equity method, under which the Partnership's share of earnings of these RSA partnerships is reflected in income as earned and distributions are credited against the interests in the RSA partnerships when received. ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 7 8 PALMETTO MOBILENET, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) INCOME TAXES Palmetto MobileNet, L.P. is a South Carolina limited partnership and therefore is not subject to income taxes. Each partner includes in income its distributive share of the Partnership's taxable income or loss. 2. ACQUISITION In January 1998, the Partnership entered into an agreement to acquire 100% of the outstanding shares of CT Cellular, Inc. and a 51% interest in Ellerbe-Concord Cellular Company (a North Carolina general partnership) in exchange for 28,300 units of Partnership equity valued at approximately $57,700,000. The transaction has been recorded using purchase accounting. The financial results of CT Cellular, Inc. and Ellerbe-Concord Cellular Company have been included in the accompanying financial statements for the period from January 1, 1998 (the date of acquisition) through December 31, 1998. This transaction has been accounted for as a non-cash investing and financing activity in the accompanying statement of cash flows. As a result of the above transaction, the Partnership obtained a 50% interest in North Carolina RSA 5 Cellular Partnership and a 50% interest in North Carolina RSA 15 Cellular Partnership. Consistent with investments in other general partnerships, these interests are accounted for using the equity method. The investments in these partnerships, which are recorded at cost less amortization, exceed the underlying equity in net assets at the date of acquisition by approximately $11,116,000 and $37,512,000, respectively. Approximately $48,627,000 of cost in excess of underlying equity in net assets is being amortized over a 15 year period. Amortization for the year ended December 31, 1998 was $3,241,810, which has been recorded as a reduction in the interest in RSA partnerships and a reduction in the equity in earnings of RSA partnership interests. 8 9 PALMETTO MOBILENET, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 3. INTERESTS IN PARTNERSHIPS Interests in partnerships which are all engaged in providing cellular telephone service to rural areas of South Carolina and North Carolina are: South Carolina RSA No. 2 Cellular General Partnership (50% owned) South Carolina RSA No. 3 Cellular General Partnership (50% owned) South Carolina RSA No. 4 Cellular General Partnership (50% owned) South Carolina RSA No. 5 Cellular General Partnership (50% owned) South Carolina RSA No. 6 Cellular General Partnership (50% owned) South Carolina RSA No. 7 Cellular General Partnership (50% owned) South Carolina RSA No. 8 Cellular General Partnership (50% owned) South Carolina RSA No. 9 Cellular General Partnership (50% owned) North Carolina RSA 5 Cellular Partnership (50% owned) North Carolina RSA 15 Cellular Partnership (50% owned) Summarized combined financial information for the partnerships (including 1997 and 1996 information for the North Carolina RSA partnerships that were purchased in 1998) follows: At December 31:
1998 1997 -------------- -------------- Current assets $ 27,280,291 $ 30,816,865 Noncurrent assets 83,149,074 82,207,504 Current liabilities 7,972,387 13,150,139 Partners' equity 102,456,978 99,874,230
For the years ended December 31:
1998 1997 1996 -------------- -------------- -------------- Net sales $ 163,628,528 $ 133,057,976 $ 120,362,274 Net income 53,265,210 41,220,607 36,346,879
The Partnership's equity in the combined net income of the RSA partnerships was $26,632,605, $15,014,286 and $14,117,348 for the years ended December 31, 1998, 1997 and 1996, respectively. Market values of these partnership interests are not readily available. 9 10 PALMETTO MOBILENET, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 4. LONG-TERM DEBT The Partnership has a $10 million term loan agreement and a $3 million working line of credit agreement with the Rural Telephone Finance Cooperative (the "RTFC"). The terms of the agreements require the Partnership to maintain a specified amount of RTFC Subordinated Capital Certificates ("SCC's"). At December 31, 1998 and 1997, the Partnership had $448,545 and $500,000 of SCC's, respectively. The debt is collateralized by a first lien on the assets of the Partnership other than the Partnership's equity interests in the eight South Carolina and two North Carolina RSA partnership investments. The term loan provides varying quarterly payments of principal, plus interest at fixed rates ranging from 5.85% to 6.50%. The terms of the line of credit agreement provide for interest to be paid quarterly at the RTFC's published variable interest rate. No funds have been advanced against the line of credit agreement. At December 31, 1998 and 1997, $8,052,745 and $8,970,896 were outstanding under the financing agreement. Under the terms of the financing agreement, the Partnership is required to maintain a specified debt service coverage ratio. The Partnership was in compliance with this covenant at December 31, 1998. Cash paid for interest totaled $567,935, $621,158 and $1,173,588 for the years ended December 31, 1998, 1997 and 1996, respectively. Maturities of long-term debt are as follows: 1999 $ 1,078,118 2000 1,149,923 2001 1,226,510 2002 1,308,198 2003 1,395,326 Thereafter 1,894,670 ------------ $ 8,052,745 ============
5. RELATED PARTY TRANSACTIONS The business affairs of Palmetto MobileNet, L.P. are managed by its 0.8% general partner, PMN, Inc. For the years ended December 31, 1998, 1997 and 1996, approximately $243,000, $316,000 and $244,000 were paid to the general partner to perform this function. 6. COMMITMENTS AND CONTINGENCIES Pursuant to each RSA general partnership agreement, Palmetto MobileNet, L.P. is subject to requests for additional capital. 7. SUBSEQUENT EVENT On May 12, 1999, the partnership paid a distribution to partners totaling approximately $10,010,000. 10 -----END PRIVACY-ENHANCED MESSAGE-----