-----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, NK7ViNwoivFzCZ0wUOnXvT80HkIJSiRlbcfuihfbgovsySF1MK9V2ALp79xcYTqG siXWigDJGXenPD7swSELlA== 0000928816-96-000280.txt : 19960917 0000928816-96-000280.hdr.sgml : 19960917 ACCESSION NUMBER: 0000928816-96-000280 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960731 FILED AS OF DATE: 19960916 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TOTAL TEL USA COMMUNICATIONS INC CENTRAL INDEX KEY: 0000034497 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 221656895 STATE OF INCORPORATION: NJ FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-02180 FILM NUMBER: 96630279 BUSINESS ADDRESS: STREET 1: 150 CLOVE RD CITY: LITTLE FALLS STATE: NJ ZIP: 07424-049 BUSINESS PHONE: 2018121100 MAIL ADDRESS: STREET 1: 150 CLOVE ROAD CITY: LITTLE FALLS STATE: NJ ZIP: 07424-0449 FORMER COMPANY: FORMER CONFORMED NAME: FARADYNE ELECTRONICS CORP DATE OF NAME CHANGE: 19920223 10-Q 1 10-Q UNITED STATES ------------- SECURITIES AND EXCHANGE COMMISSION ---------------------------------- Washington, D.C. 20549 FORM 10-Q (Mark one) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE - --- SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 31, 1996 ------------------------------- 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 0-2180 TOTAL-TEL USA COMMUNICATIONS, INC. ---------------------------------- (Exact name of registrant as specified in its charter) New Jersey 22-1656895 - --------------------- ----------------- (State or other Jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 150 Clove Road, 8th Floor, Little Falls, NJ 07424 ------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (201) 812-1100 Not applicable ---------------------------------------------------------- (Former address of principal executive offices) (Zip Code) 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 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. Yes__X__ No_____ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at September 11, 1996 - --------------------------------- ---------------------------------- Common Share, $.05 par value 2,936,330 shares TOTAL-TEL USA COMMUNICATIONS, INC. ---------------------------------- AND SUBSIDIARIES ---------------- SECOND QUARTER REPORT ON FORM 10-Q ---------------------------------- INDEX ----- Page No. PART I. FINANCIAL INFORMATION Condensed Consolidated Statement of Earnings Six months ended July 31, 1996 and 1995 (unaudited) and three months ended July 31, 1996 and 1995 (unaudited) 3 Condensed Consolidated Balance Sheets July 31, 1996 (unaudited), and January 31, 1996 4-5 Condensed Consolidated Statements of Cash Flows Six months ended July 31, 1996 and 1995 (unaudited) 6 Notes to Condensed Consolidated Financial Statements (unaudited) 7 Management's Discussion and Analysis of Financial Condition and Results of Operations 8-10 PART II. OTHER INFORMATION Items 1-5 11 Item 6. Exhibits and Reports on Form 8-K 11 SIGNATURES 11 TOTAL-TEL USA COMMUNICATIONS, INC. AND SUBSIDIARIES --------------------------------------------------- CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS --------------------------------------------- (Unaudited)
Six months ended Three months ended ---------------- ------------------ July 31, July 31, -------- -------- 1996 1995 1996 1995 Net Sales $ 40,487,602 $ 22,135,323 $ 23,117,555 $ 11,619,711 Costs and Expenses Cost of Sales 29,677,300 15,620,184 17,088,793 8,219,056 Selling, general and administrative 8,752,452 5,536,177 4,777,632 2,990,285 ---------- ---------- ---------- --------- 38,429,752 21,156,361 21,866,425 11,209.341 ---------- ---------- ---------- ---------- Operating Income 2,057,850 978,962 1,251,130 410,370 --------- ------- --------- ------- Other Income (Expense) Interest income 61,162 95,985 37,543 65,868 Other income 37,265 6,132 21,522 5,130 Interest expense - (4,909) - (902) ---------- ---------- ---------- ----------- Total Other Income 98,427 97,208 59,065 70,096 ----------- ---------- ---------- ---------- Earnings before provision for income taxes 2,156,277 1,076,170 1,310,195 480,466 Provision for Income Tax 871,400 416,300 528,700 186,200 ----------- ---------- ---------- ---------- NET EARNINGS $ 1,284,877 $ 659,870 $ 781,495 $ 294,266 ------------- ------------ ------------ ------------ NET EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE $0.38 $0.20 $0.23 $0.09 ------------- ------------ ------------ ------------ Weighted Average Shares Outstanding 3,413,842 3,278,556 3,357,164 3,290,842 ------------- ------------ ------------ ------------ Dividends Per Share NONE NONE NONE NONE ------------- ------------ ------------ ------------
See notes to condensed consolidated financial statements. TOTAL-TEL USA COMMUNICATIONS, INC. AND SUBSIDIARIES --------------------------------------------------- CONDENSED CONSOLIDATED BALANCE SHEETS -------------------------------------
JULY 31, JANUARY 31, 1996 1996 --------- ----------- (Unaudited) (Note) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 3,319,448 $ 3,177,138 Investments available for sale 1,194,555 966,935 Accounts receivable 13,104,835 8,741,918 Note receivable 134,156 27,000 Deferred income taxes 350,600 314,600 Prepaid expenses and other current assets 588,092 392,974 ---------- ------------ TOTAL CURRENT ASSETS 18,691,686 13,620,565 ---------- ------------ PROPERTY AND EQUIPMENT, LESS ACCUMULATED DEPRECIATION AND AMORTIZATION 7,446,030 6,011,005 OTHER ASSETS: Note Receivable 90,281 90,281 Deferred line installation costs, less accumulated amortization 260,634 247,019 Other assets 444,762 426,164 ----------- ----------- 795,677 763,464 ----------- ----------- $ 26,933,393 $ 20,395,034 ------------ ------------
NOTE: The balance sheet at January 31, 1996 has been taken from the audited consolidated financial statements at that date. See notes to condensed consolidated financial statements. TOTAL-TEL USA COMMUNICATIONS, INC. AND SUBSIDIARIES --------------------------------------------------- CONDENSED CONSOLIDATED BALANCE SHEETS -------------------------------------
JULY 31, JANUARY 31, 1996 1996 ------------ ------------- (Unaudited) (Note) LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $10,739,621 $ 6,604,459 Other current and accrued liabilities 2,477,356 1,775,256 Salaries and wages payable 685,765 441,516 ------------ ------------ TOTAL CURRENT LIABILITIES 13,902,742 8,821,231 ------------ ------------ OTHER LONG-TERM LIABILITIES 286,481 313,742 ------------ ------------ DEFERRED INCOME TAXES 714,001 560,481 ------------ ------------ SHAREHOLDERS' EQUITY Common stock 93,671 93,440 Additional paid-in capital 3,634,766 3,600,105 Retained earnings 9,875,206 8,590,329 ------------ ------------ 13,603,643 12,283,874 Treasury stock (1,547,251) (1,547,251) Receivable from shareholder (100,000) (100,000) Unrealized gain on securities available for sale 73,777 62,957 ------------ ------------ Total shareholders' equity 12,030,169 10,699,580 ------------ ------------ $26,933,393 $20,395,034 ------------ ------------ NOTE: The balance sheet at January 31, 1996 has been taken from the audited consolidated financial statements at that date. See notes to condensed consolidated financial statements.
TOTAL TEL USA COMMUNICATIONS, INC. AND SUBSIDIARIES --------------------------------------------------- CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ----------------------------------------------- (Unaudited) Six months ended ---------------- July 31, -------- 1996 1995 OPERATING ACTIVITIES Net earnings $ 1,284,877 $ 659,870 Adjustment for non-cash charges 1,318,054 798,437 Changes in assets and liabilities (88,932) (326,691) ------------ ------------ Net cash provided by operating activities 2,513,999 1,131,616 ------------ ------------ INVESTING ACTIVITIES: Maturities of securities available for sale 471,400 189,059 Purchase of securities available for sale (685,141) - Collection of notes receivable 2,135 628,792 Note receivable employee (107,156) - Purchase of property and equipment (1,286,189) (1,350,823) Deposits on equipment (745,000) - Additions to deferred line installation costs (56,630) (67,641) ------------ ------------ Net cash used in investing activities (2,406,581) (600,613) ------------ ------------ FINANCING ACTIVITIES: Exercise of stock options 34,892 - ------------ ------------ Net cash provided by financing activities 34,892 - ------------ ------------ NET INCREASE IN CASH AND CASH EQUIVALENTS 142,310 531,003 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 3,177,138 1,347,625 CASH AND CASH EQUIVALENTS, END OF PERIOD $ 3,319,448 $ 1,878,628 ------------ ------------ SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for: Interest $ - 4,909 Income taxes $ 590,000 $ 395,375 See notes to condensed consolidated financial statements.
TOTAL-TEL USA COMMUNICATIONS, INC. AND SUBSIDIARIES --------------------------------------------------- NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ---------------------------------------------------- (Unaudited) Note A--Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. They do not include all information and notes required by generally accepted accounting principles for complete financial statements. However, except as disclosed herein, there has been no material change in the information disclosed in the notes to consolidated financial statements included in the Annual Report on Form 10-K of Total-Tel USA Communications, Inc. and Subsidiaries (the "Company") for the fiscal year ended January 31, 1996. In the opinion of Management, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six month period ended July 31, 1996 are not necessarily indicative of the results that may be expected for the year ending January 31, 1997. Note B -- Stock Split On July 1, l996, the Company distributed 1,463,165 shares of Common Stock $.05 par value, in connection with a 2 for 1 stock split to record holders as of June 15, 1996. All references in the accompanying financial statements to the number of Common Shares and per-share amounts have been restated to reflect the proposed stock split. Note C -- Subsequent Event On August 23, l996 the Registrant entered into a credit agreement with a major New Jersey bank. This agreement provides the Registrant with a line of credit of $10,000,000, of which $4,000,000 is unsecured and may be used for working capital purposes and the balance of $6,000,000 is available to finance 80% of future equipment purchases. TOTAL-TEL USA COMMUNICATIONS, INC. AND SUBSIDIARIES --------------------------------------------------- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ----------------------------------------------------------- AND RESULT OF OPERATIONS ------------------------ Results of Operations - --------------------- Net sales were approximately $40,488,000 for the first six months of the current fiscal year, an increase of approximately $18,352,000 or 82.9% as compared to the first six months of the prior fiscal year. Net sales for the second quarter of the current fiscal year were approximately $23,118,000, an increase of approximately $11,498,000 or 99.0% compared to the second quarter of the prior fiscal year. These increases were attributable to intensive sales and marketing efforts by the Registrant and an increase in wholesale revenues. However, given the competitive climate in the long distance telephone industry, there can be no assurance that this rate of growth will continue throughout the remainder of fiscal year 1996. For the current fiscal six months, the telephone service billed approximately 286,816,000 minutes of calling as compared to approximately 153,011,000 minutes of calling for the comparable six months of the prior year, resulting in an increase of approximately 133,805,000 minutes or 87.4%. For the second fiscal quarter of the current fiscal year, the Registrant billed approximately 152,636,000 minutes of calling as compared to approximately 81,510,000 minutes of calling for the second quarter of the prior fiscal year, an increase of 71,126,000 minutes or 87.3%. The average revenue per minute decreased in the current fiscal six month period and second quarter of the current fiscal year as compared to the prior fiscal year's six month period and prior fiscal year's second quarter, and was primarily attributable to the intense price competition in the long distance telecommunications industry and the lower per minute charge for carrier sales. Cost of sales increased approximately $14,057,000 or 90.0% to approximately $29,677,000 for the current six months and increased approximately $8,870,000 or 107.9% to approximately $17,089,000 for the second quarter of the current fiscal year. Both of these increases were unfavorable in relation to the 82.9% increase in the sales volume for the six month period and the 99.0% increase in the second quarter. While the Registrant was able to continue to negotiate lower line rates from several of its major suppliers, the gross margin for the current six months decreased to approximately 26.7% as compared to approximately 29.4% for the first six months of the prior fiscal year, and decreased to 26.1% from 29.3% for the second quarter of the current fiscal year as compared to the second quarter of the prior fiscal year. These decreases in the gross margins are reflective of the lower charge per minute billed by the Registrant which was approximately $.003 per minute lower for both the first six months and the second quarter of the current fiscal year as compared to the respective periods of the prior fiscal year and the substantial increase in wholesale revenues at substantially lower margins. Selling, general and administrative expense for the current six months was approximately $8,752,000, an increase of approximately $3,216,000 or 58.1% as compared to the first six months of the prior fiscal year and approximately $4,778,000 for the second quarter of the current fiscal year, an increase of approximately $1,787,000 or 59.8% as compared to the second quarter of the prior fiscal year. These increases for the six months ended July 31, l996 as compared to the first six months of the prior year are due primarily to increased salaries of approximately $1,255,000, sales commissions of approximately $648,000, bad debt expense of approximately $190,000, advertising and promotion of approximately $269,000 and legal and consulting expense of approximately $365,000. The increase for the second quarter of the current fiscal year as compared to the second quarter of the prior fiscal year is due primarily to increased salaries of approximately $689,000, sales commissions of approximately $355,000, bad debt expense of approximately $114,000, advertising and promotion of approximately $110,000 and legal and consulting expense of approximately $142,000. The decrease in interest income for the first six months of fiscal year 1997 was due to a reduction in funds invested for this period as compared to the first six months of the fiscal year ended January 31, l996. Earnings per share increased to $.38 per share for the current six months as compared to $.20 per share for the six months ended July 31, l995, and increased to $.23 per share for the second quarter of the current fiscal year as compared to $.09 per share for the quarter ended July 31, l995. Liquidity and Capital Resources - ------------------------------- At July 31, l996, the Registrant had working capital of $4,788,944, a decrease of $10,390 or 0.2% as compared to January 31, 1996. The ratio of current assets to current liabilities at July 31, 1996 was 1.3:1, as compared to a current ratio of 1.5:1 at January 31, 1996. The slight decrease in working capital at July 31, 1996 was primarily attributable to an increase in accounts payable of approximately $4,135,000, salaries and wages payable of approximately $243,000, and an increase in other current and accrued liabilities of $702,000 partially offset by an increase in cash of approximately $142,000, an increase in accounts receivable of approximately $4,363,000, an increase in prepaid expense of approximately $195,000 and an increase in investments available for sale of approximately $228,000. The Registrant has continued to maintain a strong liquidity position. The increase in cash of approximately $142,000 was the result primarily of an increase in accounts payable and other current liabilities of approximately $4,963,000, earnings of approximately $1,285,000, non cash charges of $1,318,000, and exercise of stock options of approximately $35,000 partially offset by an increase in accounts receivable of approximately $4,839,000 net of provision for bad debts,, the purchase of equipment of approximately $1,343,000 an increase in other current assets of approximately $19,000, an increase in notes receivable from employees of approximately $107,000, a net increase in securities available for sale of approximately $214,000 and deposits on equipment of approximately $745,000. Capital expenditures during the first six months of the current fiscal year totaled approximately $1,286,000 and were financed from funds provided by operations. Approximately $779,000 of these expenditures were applicable to the switching system to maintain the speed and quality of the network. Approximately $61,000 was expended for equipment at customers locations. In addition, approximately $321,000 was expended for the local area network in the Little Falls, New Jersey office to improve management information systems and operating efficiencies. The balance of capital expenditures was for furniture and fixtures. Capital expenditures for the balance of fiscal 1997 are estimated at approximately $4,000,000 and are expected to be used for the following: To provide further enhancements to the signaling and switching system, to enhance the interconnection to the Bell Companies and other long distance carriers and to increase switching capacity to allow for growth; for office improvements, furniture and equipment in connection with the expansion of the main office and sales office operation; for new data processing equipment to complement and expand the present system of the Registrant; improvement to the new facility located in Belleville, New Jersey; continued development of the local network for the new sales and administrative offices in Little Falls, New Jersey; for additional vehicles for service technicians. As of July 31, l996, the Registrant had a Bank line of credit of $500,000, and no bank borrowings. On August 23, l996 the Registrant entered into a credit agreement with a major New Jersey bank. This agreement provides Registrant with a line of credit of $10,000,000 of which $4,000,000 is unsecured and may be used for working capital purposes and the balance of $6,000,000 is available to finance 80% of future equipment purchases. TOTAL-TEL USA COMMUNICATIONS, INC. AND SUBSIDIARIES --------------------------------------------------- PART II - OTHER INFORMATION --------------------------- THREE MONTHS ENDED JULY 31, 1996 -------------------------------- ITEMS 1 - 5 Not applicable ITEM 6 Exhibits and reports on Form 8-K (a) Exhibits - none (b) There were no reports on Form 8-K filed for the three months ended July 31, 1996. SIGNATURES ---------- Pursuant to the requirements 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. TOTAL-TEL USA COMMUNICATIONS, INC. ---------------------------------- (Registrant) Date September 11, 1996 By /S/ Warren H. Feldman ------------------------- Warren H. Feldman, Esq. President and Chief Executive Officer Date September 11, 1996 By /S/ Thomas P. Gunning ------------------------- Thomas P. Gunning Chief Financial Officer, Secretary, Controller and Principal Accounting Officer 11 EX-27 2
5 TOTAL-TEL USA COMMUNICATIONS, INC. Exhibit 27 - FINANCIAL DATA SCHEDULE THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AS OF JULY 31, 1996 AND THE CONSOLIDATED STATEMENT OF OPERATIONS FOR SIX MONTHS ENDED JULY 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 6-MOS JAN-31-1997 JUL-31-1996 3,319,448 1,194,555 14,560,989 1,456,154 0 18,691,686 13,111,290 5,665,260 26,933,393 13,902,742 0 93,671 0 0 11,936,498 26,933,393 40,487,602 40,586,029 29,677,300 29,677,300 8,276,703 475,749 0 2,156,277 871,400 1,284,877 0 0 0 1,284,877 0.38 0.38
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