-----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, DubPTN0+eedKBT0v1Z2x54qV3K4e0JaoG9QEl+Ii2ZCz8/iU55hfj7IPLSdFzU97 xs19+ukI2ZPR54VEV8Euqw== 0000897101-98-001085.txt : 19981111 0000897101-98-001085.hdr.sgml : 19981111 ACCESSION NUMBER: 0000897101-98-001085 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981110 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEW ULM TELECOM INC CENTRAL INDEX KEY: 0000071557 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 410440990 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-03024 FILM NUMBER: 98741615 BUSINESS ADDRESS: STREET 1: 400 2ND ST N CITY: NEW ULM STATE: MN ZIP: 56073 BUSINESS PHONE: 5073544111 MAIL ADDRESS: STREET 1: P O BOX 697 CITY: NEW ULM STATE: MN ZIP: 56073 FORMER COMPANY: FORMER CONFORMED NAME: NEW ULM RURAL TELEPHONE CO DATE OF NAME CHANGE: 19840816 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1998 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT For the transition period from to . Commission File Number 0-3024 New Ulm Telecom, Inc. --------------------- (Exact name of small business issuer as specified in its charter.) Minnesota 41-0440990 --------- ---------- (State or jurisdiction of incorporation) (IRS Employer Identification Number) 400 2nd Street North, New Ulm, MN 56073-0697 -------------------------------------------- (Address of Principal executive offices) (507) 354-4111 -------------- (Issuer's telephone number) Check whether the issue (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] APPLICABLE ONLY TO CORPORATE ISSUERS State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 1,732,455. NEW ULM TELECOM, INC. CONTENTS Page ---- PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Unaudited Consolidated Balance Sheets 3-4 Unaudited Consolidated Statements of Income 5 Unaudited Consolidated Statements of Stockholders' Equity 6 Unaudited Consolidated Statements of Cash Flows 7 Notes to Unaudited Consolidated Financial Statements 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION 9-10 PART II. OTHER INFORMATION 10-11 PART I. FINANCIAL INFORMATION NEW ULM TELECOM, INC. AND SUBSIDIARIES ITEM I. FINANCIAL STATEMENTS UNAUDITED CONSOLIDATED BALANCE SHEETS ASSETS SEPTEMBER 30, DECEMBER 31, 1998 1997 ------------ ----------- CURRENT ASSETS: Cash $ 1,106,568 $ 906,716 Certificates of Deposit 1,400,000 2,000,000 Receivables, Net of Allowance for Doubtful Accounts of $27,302 and $31,000 1,153,950 933,109 Inventories 411,989 488,770 Prepaid Expenses 38,024 82,915 ----------- ----------- Total Current Assets 4,110,531 4,411,510 ----------- ----------- INVESTMENTS & OTHER ASSETS: Excess of Cost Over Net Assets Acquired 3,588,677 3,674,010 Notes Receivable, Less Current Portion of $5,174 and $4,745 776,516 79,965 Cellular Investments 4,265,667 3,547,686 Other 294,020 331,863 ----------- ----------- Total Investments and Other Assets 8,924,880 7,633,524 ----------- ----------- PROPERTY, PLANT & EQUIPMENT: Telecommunications Plant 25,903,415 25,039,400 Other Property & Equipment 1,527,591 1,462,575 Cable Television Plant 762,534 762,048 ----------- ----------- Total 28,193,540 27,264,023 Less Accumulated Depreciation 16,694,492 15,330,362 ----------- ----------- Net Property, Plant & Equipment 11,499,048 11,933,661 ----------- ----------- TOTAL ASSETS $24,534,459 $23,978,695 =========== =========== The accompanying notes are an integral part of the financial statements. 3 NEW ULM TELECOM, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED BALANCE SHEETS LIABILITIES AND STOCKHOLDER'S EQUITY SEPTEMBER 30, DECEMBER 31, 1998 1997 ----------- ----------- CURRENT LIABILITIES: Current Portion of Long-Term Debt $ 366,666 $ 366,666 Accounts Payable 217,072 622,110 Other Accrued Taxes 54,889 62,198 Other Accrued Liabilities 287,644 274,975 ----------- ----------- Total Current Liabilities 926,271 1,325,949 ----------- ----------- LONG-TERM DEBT, LESS CURRENT PORTION 3,391,667 3,666,666 ----------- ----------- DEFERRED CREDITS: Income Taxes 1,467,487 1,467,487 Investment Tax Credits 26,088 35,095 ----------- ----------- Total Deferred Credits 1,493,575 1,502,582 ----------- ----------- STOCKHOLDERS' EQUITY: Common Stock - $5 Par Value, 6,400,000 Shares Authorized, 1,732,455 Shares Issued and Outstanding 8,662,275 8,662,275 Retained Earnings 10,060,671 8,821,223 ----------- ----------- Total Stockholders' Equity 18,722,946 17,483,498 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $24,534,459 $23,978,695 =========== =========== The accompanying notes are an integral part of the financial statements. 4 NEW ULM TELECOM, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 1998 1997 1998 1997 ----------- ----------- ----------- ------------ OPERATING REVENUES: Local Network $ 559,636 $ 532,580 $ 1,672,769 $ 1,591,490 Network Access 1,348,749 1,292,534 3,936,765 3,804,370 Billing and Collection 124,022 129,580 391,793 410,436 Miscellaneous 94,174 92,062 305,745 287,225 Nonregulated 484,699 425,119 1,487,711 1,251,220 ----------- ----------- ----------- ----------- Total Operating Revenue 2,611,280 2,471,875 7,794,783 7,344,741 ----------- ----------- ----------- ----------- OPERATING EXPENSES: Plant Operations 366,641 303,971 951,885 833,506 Depreciation 458,266 440,662 1,374,801 1,321,291 Amortization 28,444 28,445 85,332 85,332 Customer 118,947 132,326 384,212 413,885 General and Administrative 325,885 264,428 997,414 847,028 Other Operating Expenses 271,908 256,474 897,577 780,125 ----------- ----------- ----------- ----------- Total Operating Expense 1,570,091 1,426,306 4,691,221 4,281,167 ----------- ----------- ----------- ----------- OPERATING INCOME 1,041,189 1,045,569 3,103,562 3,063,574 ----------- ----------- ----------- ----------- OTHER (EXPENSES) INCOME: Interest Expense (61,847) (67,913) (189,927) (208,123) Interest Income 42,240 33,345 129,515 113,015 Cellular Partnership Income 265,094 204,644 828,738 484,521 ----------- ----------- ----------- ----------- Total Other Income, Net 245,487 170,076 768,326 389,413 ----------- ----------- ----------- ----------- INCOME BEFORE INCOME TAXES 1,286,676 1,215,645 3,871,888 3,452,987 INCOME TAXES 525,415 494,703 1,592,967 1,418,085 ----------- ----------- ----------- ----------- NET INCOME $ 761,261 $ 720,942 $ 2,278,921 $ 2,034,902 =========== =========== =========== =========== NET INCOME PER SHARE - NOTE 2 $ 0.44 $ 0.42 $ 1.32 $ 1.17 =========== =========== =========== ===========
The accompanying notes are an integral part of the financial statements. 5 NEW ULM TELECOM, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY COMMON STOCK RETAINED SHARES AMOUNT EARNINGS ------------- ----------- ------------ BALANCE on December 31, 1996 1,732,455 $ 8,662,275 $ 7,723,098 Net Income 2,813,255 Dividends (1,715,130) ----------- ----------- ----------- BALANCE on December 31, 1997 1,732,455 $ 8,662,275 $ 8,821,223 Net Income 2,278,921 Dividends (1,039,473) ----------- ----------- ----------- BALANCE on September 30, 1998 1,732,455 $ 8,662,275 $10,060,671 =========== =========== =========== The accompanying notes are an integral part of the financial statements. 6 NEW ULM TELECOM, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
1998 1997 ---------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $2,278,921 $2,034,902 Adjustments to Reconcile Net Income to Net Net Cash Provided by Operating Activities: Depreciation and Amortization 1,460,134 1,406,623 Cellular Partnerships Income (828,738) (484,521) (Increase) Decrease in: Receivables (220,412) (222,104) Inventories 76,781 (111,262) Prepaid Expenses 44,891 58,030 Increase (Decrease) in: Accounts Payable (405,038) 311,348 Other Accrued Taxes (7,309) (16,883) Other Accrued Liabilities 12,669 24,503 Deferred Investment Tax Credits (9,007) (14,128) ----------- ----------- Net Cash Provided by Operating Activities 2,402,892 2,986,508 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Additions to Property, Plant & Equipment, Net (940,188) (1,097,497) Change in Notes Receivable (696,980) (3,619) Cellular Investments 110,757 62,510 Change in Temporary Cash Investments 600,000 600,000 Other, Net 37,843 (143,624) ----------- ----------- Net Cash Used in Investing Activities (888,568) (582,230) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Principal Payments of Long-Term Debt (274,999) (275,000) Dividends Paid (1,039,473) (1,368,639) ----------- ----------- Net Cash Used in Financing Activities (1,314,472) (1,643,639) ----------- ----------- NET INCREASE (DECREASE) IN CASH 199,852 760,639 CASH AT BEGINNING OF PERIOD 906,716 617,870 ----------- ----------- CASH AT END OF PERIOD $ 1,106,568 $ 1,378,509 =========== ===========
The accompanying notes are an integral part of the financial statements. 7 NEW ULM TELECOM, INC. AND SUBSIDIARIES NOTES TO UNAUDITED FINANCIAL STATEMENTS NOTE 1 - CONSOLIDATED FINANCIAL STATEMENTS In the opinion of management, the accompanying unaudited financial statements contain all adjustments (consisting of only normal recurring items) necessary to present fairly the financial position as of SEPTEMBER 30, 1998 and December 31, 1997 and the results of operations and changes in cash flows for the nine months ended SEPTEMBER 30, 1998 and 1997. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been omitted. It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto included in the Company's December 31, 1997 Annual Report to Shareholders. The results of operations for the period ending September 30, 1998 are not necessarily indicative of the operating results of the entire year. NOTE 2 - NET INCOME PER COMMON STOCK Net income per common share for 1998 and 1997 was computed by dividing the weighted average number of shares of common stock outstanding into the net income. NOTE 3 - STATEMENTS OF CASH FLOW Supplemental Disclosures of Cash Flow Information: Cash paid during the period for: 1998 1997 ---------- --------- Interest $ 191,405 $ 209,599 Income taxes 1,692,500 1,461,500 8 NEW ULM TELECOM, INC. AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO THE NINE MONTHS ENDED SEPTEMBER 30, 1997 The increase in total operating revenues was $450,042 or 6.1%. Local network saw an increase of 5.1% due to an increase in Centrex service and the number of access lines. An increase in minutes of use billed to interexchange carriers is responsible for a 3.5% increase in network access revenues. Nonregulated revenue continues to show strong growth. These revenues grew 18.9% over the revenues recorded for the same period in 1997. The increase, of $236,491, is the result of our success with cable television, Internet services, increased sales of customer premise equipment and increased market share of our long distance service, which was introduced during the third quarter of 1997. Total operating expenses increased by $410,054 or 9.6%. General and Administrative expenses were responsible for 36.7% of the increase in operating expenses. This increase is attributed to an increase in labor expense and the use of outside consultants to enhance shareholder value and to strengthen corporate performance. Plant operations expenses were accountable for 28.9% of the increase in operating expenses. This increase is primarily the result of increased labor and associated expenses caused by a July 20, 1998 storm. Other operating expenses were responsible for 28.6% of the increase in operating expenses. This increase is associated with the increased marketing efforts of our nonregulated services and increase in cost of goods sold for customer premise equipment. Interest expense decreased by $18, 196 due to a decrease in long-term debt outstanding. Interest income increased by $16,500 reflecting larger amounts of funds available for investment. Cellular partnership income increased $344,217 or 71%, as the investment in Midwest Wireless continues to be a strong performer. Net income increased by $244,019 or 12.0%. THREE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO THE THREE MONTHS ENDED SEPTEMBER 30, 1997 The increase in total operating revenues was $139,405 or 5.6%. Local network saw an increase of 5.1% due to an increase in Centrex service and the number or access lines. An increase in minutes of use billed to interexchange carriers is responsible for a 4.4% increase in network access revenues. Nonregulated revenue continues to show strong growth. These revenues grew 14% over the revenues recorded for the same period in 1997. The increase of $59,580 is the result of our success with cable television, Internet service, increased sales of customer premise equipment and increased market share of our long distance service, which was introduced during the third quarter of 1997. Total operating expenses increased by $143,785 or 10.1%. General and Administrative expenses were responsible for 42.7% of the increase in operating expenses. This increase is attributed to an increase in labor expense and the use of outside consultants to enhance shareholder value and to strengthen corporate performance. Plant operation expenses were accountable for 43.6% of the increase in operating expenses. This is primarily the result of increase labor and associated expenses caused by a July 20, 1998 storm. Other operating expenses were responsible for 10.7% of the increase in operating expenses. This increase is associated with the increased marketing efforts of our nonregulated services and increase in cost of goods sold for customer premise equipment. Interest expense decreased by $6,066 due to a decrease in long-term debt outstanding. Interest income increased by $8,895 reflecting larger amounts of funds available for investment. Celluar partnership income increased $60,450 or 29.5%, as the investment in Midwest Wireless continues to be a strong performer. Net income increased by $40,319 or 5.6%. 9 Liquidity and Capital Resources The Company had an increase in cash of $199,852 for the quarter resulting in a balance of $1,106,568 as of September 30, 1998. Cash invested in Certificates of Deposit at September 30, 1998 was $1,400,000, which is a decrease of $600,000 over the balance at December 31, 1997. Cash decreased due to the registrant loaning the General Manager $700,000 to purchase stock of the company. The balance can be found in Investments and Other Assets on the Balance Sheet. Notes Receivable includes $700,000 from Manager. The note is secured by 51,230 shares of stock in New Ulm Telecom, Inc., has a variable interest rate which was 6% at September 30, 1998 and is collectible within 60 days from the date of termination or date of death. Interest payments are to be paid annually on December 31. Working Capital increased $98,699 from December 31, 1997, which was $3,085,561. This increase can be attributed to a decrease in accounts payable of $405,038 and an increase in receivables of $220,841. The Company is budgeting approximately $1,600,000 for 1998 plant additions. The Company intends to use internal funds for all of the 1998 expenditures. Management believes the Company will be able to generate sufficient cash internally from operations to meet its operating needs and sustain its historical dividend levels. PART II. OTHER INFORMATION NEW ULM TELECOM, INC. AND SUBSIDIARIES ITEMS 1-3. Not applicable. ITEM 4. Submission of matters to a vote of Security Holders The annual meeting of shareholders of the registrant was held May 7, 1998 in New Ulm, Minnesota. The total number of shares outstanding and entitled to vote at the meeting was 1,732,455 of which 1,356,275 were present either in person or by proxy. Three 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: Director For Against Abstain - -------- --- ------- ------- Lavern Biebl 1,349,412 1,463 James Jensen 1,365,612 1,463 Perry Meyer 1,349,772 1,103 10 PART II. OTHER INFORMATION (CONTINUED) The Board members continuing and whose terms expire at subsequent annual meetings are as follows: 1999 Annual Meeting 2000 Annual Meeting - ------------------- ------------------- Robert Ranweiler Rosemary Dittrich Mark Retzlaff Linus Grathwohl Richard Rodenberg Gary Nelson The shareholders also approved the appointment of Olsen, Thielen & Co., Ltd. as the auditors for 1999, by a vote of 1,352,882 for, 1,503 against and 1,890 abstained. ITEM 5. Not applicable ITEM 6. Exhibits and Reports on Form 8-K There were no reports on Form 8-K for the Quarter ended September 30, 1998. SIGNATURES In accordance with the requirements of the Exchange Act, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized NEW ULM TELECOM, INC. ----------------------------------- Registrant) Dated: October 31, 1998 By /s/ James P. Jensen ------------------------------------- James P. Jensen, President Dated: October 31, 1998 By /s/ Bill Otis ------------------------------------- Bill Otis, Executive Vice-President 11 EX-27 2 FINANCIAL DATA SCHEDULE
5 9-MOS DEC-31-1998 SEP-30-1998 1,106,568 1,400,000 1,153,950 27,302 411,989 4,110,531 28,193,540 16,694,492 24,534,459 926,271 3,391,667 0 0 8,662,275 10,060,671 24,534,459 0 7,794,783 0 4,691,221 (958,253) 0 189,927 3,871,888 1,592,967 2,278,921 0 0 0 2,278,921 1.32 1.32
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