-----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, QjCwIpzcH3UeFiIwKPp02omkOBiZoWvvvR4vbxCQyQpUOtLiYTHeS2zD6YEBgBOd f7lBzHa7PWZE3N3kP4bYsQ== 0000897101-01-500298.txt : 20010515 0000897101-01-500298.hdr.sgml : 20010515 ACCESSION NUMBER: 0000897101-01-500298 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010514 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: 1633323 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 newulm011539_10q.txt NEW ULM TELECOM, INC. FORM 10-Q 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 March 31, 2001 -------------------------------- [ ] 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 registrant 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 ----------------------------------------------------------- (Registrant's telephone number) Indicate by checkmark whether the registrant (1) has 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 Indicate the number of shares outstanding of each of the issuer's classes of Common stock, as of the latest practicable date: 1,718,965. ---------- NEW ULM TELECOM, INC. CONTENTS Page ---- PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Unaudited Consolidated Balance Sheets 3-4 Unaudited Consolidated State 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 9-11 CONDITION AND RESULTS OF OPERATION PART II. OTHER INFORMATION 11 NEW ULM TELECOM, INC. AND SUBSIDIARIES MARCH 31, 2001 PART I. FINANCIAL INFORMATION ITEM I. FINANCIAL STATEMENTS UNAUDITED CONSOLIDATED BALANCE SHEETS ASSETS MARCH 31, DECEMBER 31, 2001 2000 ----------- ----------- CURRENT ASSETS: Cash $ 671,159 $ 700,744 Receivables, Net of Allowance for Doubtful Accounts of $329,367 and $377,213 1,144,791 1,493,288 Inventories 1,553,376 1,860,969 Prepaid Expenses 89,631 127,560 ----------- ----------- Total Current Assets 3,458,957 4,182,561 ----------- ----------- INVESTMENTS & OTHER ASSETS: Excess of Cost Over Net Assets Acquired 3,304,236 3,332,681 Notes Receivable, Less Current Portion of $4,453 and $4,721 956,919 981,483 Cellular Investments 5,981,815 5,721,718 Other 1,025,055 982,910 ----------- ----------- Total Investments and Other Assets 11,268,025 11,018,792 ----------- ----------- PROPERTY, PLANT & EQUIPMENT: Telecommunications Plant 38,552,835 37,355,385 Other Property & Equipment 1,971,772 1,920,514 Cable Television Plant 1,228,988 1,147,862 ----------- ----------- Total 41,753,595 40,423,761 Less Accumulated Depreciation 21,348,661 20,666,826 ----------- ----------- Net Property, Plant & Equipment 20,404,934 19,756,935 ----------- ----------- TOTAL ASSETS $35,131,916 $34,958,288 =========== =========== The accompanying notes are an integral part of the financial statements. 3 NEW ULM TELECOM, INC. AND SUBSIDIARIES MARCH 31, 2001 UNAUDITED CONSOLIDATED BALANCE SHEETS (CONTINUED) LIABILITIES AND STOCKHOLDERS' EQUITY MARCH 31, DECEMBER 31, 2001 2000 ----------- ----------- CURRENT LIABILITIES: Current Portion of Long-Term Debt $ 1,116,666 $ 866,666 Accounts Payable 861,495 1,285,007 Accrued Income Taxes 173,975 40,424 Other Accrued Taxes 43,057 63,589 Other Accrued Liabilities 381,513 452,673 ----------- ----------- Total Current Liabilities 2,576,706 2,708,359 ----------- ----------- LONG-TERM DEBT, LESS CURRENT PORTION 9,549,000 8,990,667 ----------- ----------- DEFERRED CREDITS: Income Taxes 1,478,964 1,478,964 Investment Tax Credits 12,908 13,794 ----------- ----------- Total Deferred Credits 1,491,872 1,492,758 ----------- ----------- STOCKHOLDERS' EQUITY: Common Stock - $5 Par Value, 6,400,000 Shares Authorized, 1,718,965 and 1,731,955 Shares Issued and Outstanding 8,594,825 8,659,775 Retained Earnings 12,919,513 13,106,729 ----------- ----------- Total Stockholders' Equity 21,514,338 21,766,504 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $35,131,916 $34,958,288 =========== ===========
The accompanying notes are an integral part of the financial statements. 4 NEW ULM TELECOM, INC. AND SUBSIDIARIES MARCH 31, 2001 UNAUDITED CONSOLIDATED STATEMENTS OF INCOME FOR THREE MONTHS ENDED MARCH 31, 2000 2000 ----------- ----------- OPERATING REVENUES: Local Network $ 759,386 $ 696,290 Network Access 1,508,938 1,318,067 Billing and Collection 102,904 101,714 Miscellaneous 113,282 148,538 Nonregulated 740,655 659,179 ----------- ----------- Total Operating Revenues 3,225,165 2,923,788 ----------- ----------- OPERATING EXPENSES: Plant Operations 453,624 374,707 Depreciation 681,399 552,562 Amortization 28,456 28,456 Customer 243,341 199,751 General and Administrative 420,411 415,964 Other Operating Expenses 503,153 392,445 ----------- ----------- Total Operating Expenses 2,330,384 1,963,885 ----------- ----------- OPERATING INCOME 894,781 959,903 ----------- ----------- OTHER (EXPENSES) INCOME: Interest Expense (173,752) (52,858) Interest Income 14,606 25,507 Cellular Investment Income 346,909 415,785 Other Investment Income (Expense) 43,088 (13,847) ----------- ----------- Total Other Income, Net 230,851 374,587 ----------- ----------- INCOME BEFORE INCOME TAXES 1,125,632 1,334,490 INCOME TAXES 471,265 552,129 ----------- ----------- NET INCOME $ 654,367 $ 782,361 =========== =========== NET INCOME PER SHARE - NOTE 2 $ 0.38 $ 0.45 =========== =========== The accompanying notes are an integral part of the financial statements. 5 NEW ULM TELECOM, INC. AND SUBSIDIARIES MARCH 31, 2001 UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY COMMON STOCK RETAINED SHARES AMOUNT EARNINGS ------------ ------------ ------------ BALANCE on December 31, 1999 1,732,455 $ 8,662,275 $ 11,890,307 Retired Stock (500) (2,500) (14,250) Net Income 2,963,127 Dividends (1,732,455) ------------ ------------ ------------ BALANCE on December 31, 2000 1,731,955 $ 8,659,775 $ 13,106,729 Retired Stock (12,990) (64,950) (411,328) Net Income 654,367 Dividends (430,255) ------------ ------------ ------------ BALANCE on March 31, 2001 1,718,965 $ 8,594,825 $ 12,919,513 ============ ============ ============ 6 NEW ULM TELECOM, INC. AND SUBSIDIARIES MARCH 31, 2001 UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THREE MONTHS ENDED 2001 2000 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 654,367 $ 782,361 Adjustments to Reconcile Net Income to Net Net Cash Provided by Operating Activities: Depreciation and Amortization 709,855 581,018 Cellular Investment Income (346,909) (415,785) (Increase) Decrease in: Receivables 348,765 386,962 Inventories 307,593 (306,483) Prepaid Expenses 37,929 14,827 Increase (Decrease) in: Accounts Payable (423,512) (643,288) Accrued Income Taxes 133,551 187,125 Other Accrued Taxes (20,532) (20,729) Other Accrued Liabilities (71,160) (47,817) Deferred Investment Tax Credits (886) (885) ----------- ----------- Net Cash Provided by Operating Activities 1,329,061 517,306 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Additions to Property, Plant & Equipment, Net (1,329,410) (417,104) Change in Notes Receivable 24,296 1,052 Cellular Investments 86,812 235,972 Change in Temporary Cash Investments -- 600,000 Other, Net (42,145) (220,750) ----------- ----------- Net Cash Used in Investing Activities (1,260,447) 199,170 ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Principal Payments of Long-Term Debt (91,667) (91,668) Issuance of Long-Term Debt 900,000 -- Retired Stock (476,277) -- Dividends Paid (430,255) (433,114) ----------- ----------- Net Cash Used in Financing Activities (98,199) (524,782) ----------- ----------- NET INCREASE (DECREASE) IN CASH (29,585) 191,694 CASH At Beginning of Period 700,744 1,533,044 ----------- ----------- CASH At End of Period $ 671,159 $ 1,724,738 =========== ===========
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 March 31, 2001 and December 31, 2000 and the results of operations and changes in cash flows for the three months ended March 31, 2001 and 2000. 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, 2000 Annual Report to Shareholders. The results of operations for the period ending March 31, 2001 are not necessarily indicative of the operating results of the entire year. NOTE 2 - NET INCOME PER COMMON SHARE Net income per common share for 2001 and 2000 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: 2001 2000 ---- ---- Interest $174,652 $53,352 Income taxes $338,600 $230,000 NOTE 4 - UNSECURED TEN-YEAR REDUCING REVOLVING CREDIT FACILITY In fiscal 2000, the Company entered into a $10 million unsecured ten-year reducing revolving credit facility maturing in 2010. The borrowings under the credit facility bear interest, at the Company's option, at either fixed or variable rates linked to the Company's overall leverage ratio. At March 31, 2001, there was $7,824,000 of direct borrowings outstanding under this facility at an interest rate of 6.27%. 8 NEW ULM TELECOM, INC. AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS --------------------- THREE MONTHS ENDED MARCH 31, 2001 COMPARED TO THE THREE MONTHS ENDED MARCH 31, 2000 Total operating revenues increased 10.3% or $301,377. Local network revenues increased 9.1% or $$63,096. This revenue increase is attributable to growth in the number access lines due to increased development within the Company's service areas and a rate increase, which took effect February 1, 2001. This growth is seen in both the residential and business sectors of the Company's service areas and is caused by the demand for advanced telephone services, most notably in broadband services. Network access revenues increased 14.5% or $190,871. This increase is predominately the result of the investment the Company has made in its broadband infrastructure in New Ulm, MN, which has resulted in higher cost settlements for the Company. Billing and collection revenues increased $1,190 or 1.2% as a result of increased billing associated with higher calling volume for New Ulm Long Distance, Inc. A $35,256 decrease in Miscellaneous revenues is due to timing differences that existed at March 31, 2000. The growth of nonregulated revenues continues to be strong. The $81,476 or 12.4% increase in revenues is the result of demand for internet services, video services, call management services, and the continued demand of technical communications solutions for residential and business customers. Our nonregulated revenues are expected to show continued growth as the Company continues to capture the customers' demands through increased marketing efforts, using information from customer surveys and focus groups, and a calling program which focuses on a one-to-one relationship with customers. Total operating expenses increased by $366,499 or 18.7%. Plant operations increased by $78,917 or 21.1% due to increased labor costs and higher maintenance expenses on telephone plant associated with the Company's initiative to bring broadband services to the community of New Ulm, MN. Depreciation increased by $128,837 or 23.3%, which is directly related to the increase in property, plant and equipment associated with the Company's efforts that brought state of the art very high speed digital subscriber line (VDSL) technology to the community of New Ulm, MN. These plant upgrades have brought fiber optics to every neighborhood within the city limits of New Ulm, MN. This platform allows the Company to offer telephony, high bandwidth connections and a variety of video services on the same infrastructure. Customer expenses increased $43,590 or 21.8%. This increase is a reflection of the Company's commitment to its objective of achieving 100% customer satisfaction by making the customer our top priority, deserving our best service, attitude and consideration. To achieve this objective, the Company has implemented marketing programs, customer surveys and focus groups, a calling program to enhance customer relations, and specialized training for customer service personnel. The marketplace is continuing to evolve and our subscribers are becoming more 9 technically savvy which places demands on our customer relations personnel to provide our subscribers with solutions to their unique telecommunication needs. General and Administrative expenses increased $4,447 or 1.1%. This is due to the Company's continued search for investment opportunities to provide our shareholders with the growth they anticipate in a competitive marketplace. Other operating expenses increased $110,708 or 28.2%. This increase is associated with the Company's sale of video services to the community of New Ulm, MN. Operating income decreased 65,122 or 6.8%. The Company places considerable emphasis on customer service and its commitment to provide broadband services. The Company is positioning itself to be the communications provider of choice in all of the communities it serves. This commitment is realized through additional staffing in the customer support and technical areas, the addition of broadband infrastructure, and a considerable investment in education. The Company's goals are to create an environment of knowledgeable personnel that are capable of solving all of the customers' communications needs and desires at all levels of the organization. This commitment will be realized in an environment that recognizes and expects the employees to achieve excellence in all facets of their jobs, encouraging innovations and empowering employees to make the right decisions. Interest expense increased by $120,894 as a result of additional borrowings associated with significant capital expenditures in 2000. Interest income decreased by $10,901 reflecting fewer funds available for investment. Cellular partnership income decreased $68,876 or 16.6%. The $56,935 increase in income from other investments consists of the expected income from an investment in Fibercom, Inc., a competitive local exchange service in Iowa, for 2001 and the recording of income from K-1's for 2000 for investments held by the Company. Net income decreased by $127,994 or 16.4%. LIQUIDITY AND CAPITAL RESOURCES ------------------------------- The Company had a decrease in cash of $29,585 for the quarter resulting in a balance of $671,159 as of March 31, 2001. The Company's investing activity is primarily derived from the additions to property, plant and equipment. These additions were associated with the equipment needed to provide VDSL. Net cash used in Financing Activities was $98,199. Principal payments and Dividend payments accounted for usage of $521,922. The purchase and retirement of stock by the Company accounted for $476,277 of the usage. Included in the financing activities is $900,000 of borrowing from the Company's Term loan with CoBank. Working Capital decreased $341,951 from December 31, 2000. This decrease is the result of a $307,593 decrease in inventory, which largely consisted of equipment installed to provide broadband services. Notes Receivable includes $700,000 from Manager. The note is secured by 51,230 shares of stock in New Ulm Telecom, Inc., had a variable interest rate which was 6.09% at December 31, 2000. The original note, which became due on January 1, 2001, was renewed. The new note is a 5-year note, secured by New Ulm Telecom, Inc. common stock with an annual interest rate of 6.09%. This note requires an annual payment of $55,228, including interest, with payments commencing on January 1, 2002 and a final balloon payment due on January 1, 2006. 10 The Company operates in a capital-intensive industry. To meet the demands of the industry the Company continues to make investments in state-of-the-art technology to offer subscribers state of the art technological solutions to their communication needs. Capital expenditures for 2001 are expected to be $4 million. PART II. OTHER INFORMATION Items 1-6. Not Applicable 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: April 30, 2001 By /s/ James P. Jensen ------------------------- James P. Jensen, Chairman Dated: April 30, 2001 By /s/ Bill Otis ------------------------- Bill Otis, President 11 -----END PRIVACY-ENHANCED MESSAGE-----