-----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, CoIvPVmRgCvxM0Jl/NSZ1FhvtHQtr7Ptsdad3vV16aPnDIeM2jm0xq9GQsf4Eu9z nF8Q3LedU4DQnlOhamz17Q== 0000946550-96-000014.txt : 19961113 0000946550-96-000014.hdr.sgml : 19961113 ACCESSION NUMBER: 0000946550-96-000014 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961112 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CTC COMMUNICATIONS CORP CENTRAL INDEX KEY: 0000764841 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-TELEPHONE INTERCONNECT SYSTEMS [7385] IRS NUMBER: 042731202 STATE OF INCORPORATION: MA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-13627 FILM NUMBER: 96658443 BUSINESS ADDRESS: STREET 1: 360 SECOND AVE CITY: WALTHAM STATE: MA ZIP: 02154 BUSINESS PHONE: 6174668080 MAIL ADDRESS: STREET 1: 360 SECOND AVENUE CITY: WALTHAM STATE: MA ZIP: 02154 FORMER COMPANY: FORMER CONFORMED NAME: COMPUTER TELEPHONE CORP DATE OF NAME CHANGE: 19920703 10-Q 1 9/30/96 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For Quarter ended September 30, 1996. Commission File Number 0-13627. CTC COMMUNICATIONS CORP. (Exact name of registrant as specified in its charter) Massachusetts 04-2731202 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 360 Second Avenue, Waltham, Massachusetts 02154 (Address of principal executive offices) (Zip Code) (617) 466-8080 (Registrant's telephone number including area code) Computer Telephone Corp. (Former name, former address and former fiscal year, if changed since last report) 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 [ ] 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: As of November 6, 1996, 9,601,155 shares of Common Stock were outstanding. CTC COMMUNICATIONS CORP. FORM 10-Q INDEX
Part I FINANCIAL STATEMENTS PAGE NO. Item 1. Financial Statements Condensed Balance Sheets as of September 30 and March 31, 1996 3 Condensed Statements of Income Three Months Ended September 30, 1996 and 1995 4 Condensed Statements of Income Six Months Ended September 30, 1996 and 1995 5 Condensed Statements of Cash Flows Six Months Ended September 30, 1996 and 1995 6 Notes to Condensed Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8-10 Part II OTHER INFORMATION Item 1. Legal Proceedings Inapplicable Item 2. Changes in Securities Inapplicable Item 3. Default Upon Senior Securities Inapplicable Item 4. Submission of Matters to a Vote of Security Holders 11 Item 5. Other Information Inapplicable Item 6. Exhibits and Reports on Form 8-K The following exhibit is included herein: (11) Statements Regarding Computation of Per Share Earnings Three Months and Six Months ended September 30, 1996 and 1995
The Company did not file any reports on Form 8-K during the three months ended September 30, 1996. 2 CTC COMMUNICATIONS CORP. CONDENSED BALANCE SHEETS
September 30, March 31, 1996 1996 --------------- -------------- ASSETS Current Assets Cash and cash equivalents $ 3,633,957 $ 3,941,876 Accounts receivable, net 9,588,788 6,557,229 Inventories 19,193 25,190 Prepaid expenses and other current assets 590,803 365,699 ------------- ------------- Total Current Assets $ 13,832,741 $ 10,889,994 Furniture, Fixtures and Equipment 6,379,794 6,046,493 Less accumulated depreciation (5,149,755) (4,822,755) ------------- ------------- Total Equipment 1,230,039 1,223,738 Deferred tax asset 277,000 277,000 Other assets 115,835 118,485 ------------- ------------- Total Assets $ 15,455,615 $ 12,509,217 ============= ============= LIABILITIES AND STOCKHOLDERS EQUITY Current Liabilities Accounts payable and accrued expenses $ 1,576,383 $ 1,176,804 Accrued salaries and related taxes 2,081,062 1,828,288 Deferred revenue 13,495 9,302 ------------- ------------- Total Current Liabilities 3,670,940 3,014,394 Stockholders' Equity Common stock 96,011 95,841 Additional paid in capital 4,691,656 4,644,988 Retained-earnings 7,132,833 4,889,819 ------------- ------------- 11,920,500 9,630,648 Amounts due from stockholders (135,825) (135,825) ------------- ------------- Total Stockholders' Equity 11,784,675 9,494,823 ------------- ------------- Total Liabilities and Stockholders' Equity $ 15,455,615 $ 12,509,217 ============= =============
The accompanying notes are an integral part of these financial statements. 3 CTC COMMUNICATIONS CORP. CONDENSED STATEMENTS OF INCOME
Three Months Ended September 30, September 30, 1996 1995 ------------- ------------- Revenue Network service commission income $ 6,827,449 $ 6,899,380 Resale product usage income 2,789,619 1,296,139 ------------- ------------- 9,617,068 8,195,519 Costs and expenses Cost of resale product 2,153,225 1,016,153 Selling, general and administrative expenses 5,719,936 5,629,471 ------------- ------------- 7,873,161 6,645,624 ------------- ------------- Income from operations 1,743,907 1,549,895 Other Interest income 43,878 35,548 Interest expense (5,781) (569) Other 5,824 9,126 ------------- ------------- 43,921 44,105 ------------- ------------- Income before income taxes 1,787,828 1,594,000 Provision for income taxes 739,000 645,500 ------------- ------------- Net income $ 1,048,828 $ 948,500 ============= ============= Net income per common share Primary $ 0.10 $ 0.09 ============= ============= Fully diluted $ 0.10 $ 0.09 ============= ============= Weighted average number of common shares Primary 10,821,505 10,521,070 ============= ============= Fully diluted 10,867,983 10,575,546 ============= =============
The accompanying notes are an integral part of these financial statements. 4 CTC COMMUNICATIONS CORP. CONDENSED STATEMENTS OF INCOME
Six Months Ended September 30, September 30, 1996 1995 ------------- ------------- Revenue Network service commission income $ 13,575,690 $ 12,756,080 Resale product usage income 5,048,838 2,344,715 ------------- ------------- 18,624,528 15,100,795 Costs and expenses Cost of resale product 3,832,413 1,843,997 Selling, general and administrative expenses 11,057,406 10,586,320 ------------- ------------- 14,889,819 12,430,317 ------------- ------------- Income from operations 3,734,709 2,670,478 Other Interest income 85,506 67,572 Interest expense (6,406) (569) Other 8,405 9,119 ------------- ------------- 87,505 76,122 ------------- ------------- Income before income taxes 3,822,214 2,746,600 Provision for income taxes 1,579,200 1,108,850 ------------- ------------- Net income $ 2,243,014 $ 1,637,750 ============= ============= Net income per common share Primary $ 0.21 $ 0.16 ============= ============= Fully diluted $ 0.21 $ 0.16 ============= ============= Weighted average number of common shares Primary 10,901,267 10,395,570 ============= ============= Fully diluted 10,924,506 10,460,146 ============= =============
The accompanying notes are an integral part of these financial statements. 5 CTC COMMUNICATIONS CORP. CONDENSED STATEMENTS OF CASH FLOWS
Six Months Ended September 30, September 30, 1996 1995 ------------- ------------- OPERATING ACTIVITIES Net Income $ 2,243,014 $ 1,637,750 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 327,000 286,000 Changes in noncash working capital items: Accounts receivable (3,031,559) (1,532,633) Inventories 5,997 10,041 Other current assets (225,104) (64,694) Other assets 2,650 2,400 Accounts payable 399,579 359,445 Accrued liabilities 252,774 733,596 Accrued taxes 0 (241,350) Deferred revenue 4,193 0 ------------- ------------- Net cash provided by operating activities (21,456) 1,190,555 INVESTING ACTIVITIES Additions to equipment (333,301) (315,830) ------------- ------------- Net cash used in investing activities (333,301) (315,830) FINANCING ACTIVITIES Proceeds from the issuance of common stock 46,838 56,782 Dividends Paid 0 (840) ------------- ------------- Net cash used by financing activities 46,838 55,942 Increase (decrease) in cash (307,919) 930,637 Cash at beginning of year 3,941,876 2,390,546 ------------- ------------- Cash and cash equivalents at end of period $ 3,633,957 $ 3,321,183 ============= =============
The accompanying notes are an integral part of these financial statements. 6 CTC COMMUNICATIONS CORP. NOTES TO FINANCIAL STATEMENTS NOTE 1: BASIS OF PRESENTATION The accompanying condensed financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all the information and footnote disclosures required by generally accepted accounting principles for complete financial statements. In the opinion of management all adjustments (consisting of normal recurring accruals) necessary for a fair presentation have been included. Operating results for the three and six months ended September 30, 1996 are not necessarily indicative of the results that may be expected for the year ending March 31, 1997. These statements should be read in conjunction with the financial statements and related notes included in the Company's Annual Report on Form 10-K for the year ended March 31, 1996. NOTE 2: CASH DIVIDENDS The Company has not paid cash dividends during the period presented. NOTE 3: COMMITMENTS AND CONTINGENCIES The Company is party to suits arising in the normal course of business which either individually or in the aggregate are not material. NOTE 4. COMMON STOCK TRANSACTIONS SUBSEQUENT TO JUNE 30, 1996 On July 8, 1996, the Computer Telephone Corp. Employee Stock Purchase Plan purchased 2,998 shares of Common Stock from the Company at $11.05 for the purchase period ended June 30, 1996. Through October 25, 1996, 13,268 shares of Common Stock were issued as a result of employees exercising outstanding stock options. NOTE 5. NET INCOME PER SHARE Net income per share is computed based on the weighted average number of common stock and, if dilutive, common stock equivalent shares outstanding during the period. Common stock shares result from the assumed exercise of common stock options using the treasury stock method. All income per share and weighted average share information have been restated to reflect the 2-for-1 stock split effective October 23, 1995. 7 Part I Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the Financial Statements and Notes set forth elsewhere in this Report. RESULTS OF OPERATIONS - THREE MONTHS AND SIX MONTHS ENDED SEPTEMBER 30, 1996 AS COMPARED TO THE THREE MONTHS AND SIX MONTHS ENDED SEPTEMBER 30, 1995. Total revenues for the second quarter of Fiscal 1997 increased 17% to $9,617,000 from $8,196,000 for the same period for the preceding year (Fiscal 1996). Network service commission income, which represents fees earned by the Company in its capacity as an agent for various local and long distance telephone companies, decreased 1% to $6,827,000 for the three months ended September 30, 1996, from $6,899,000 for the second quarter of Fiscal 1996. Resale product usage income, which represents the gross billings to commercial accounts on the Company's long distance and Internet access networks, increased 115% to $2,790,000 from $1,296,000 for the same period of the preceding fiscal year. Total revenues for the six month period ended September 30, 1996 increased 23% to $18,625,000 from $15,101,000 for the same period of Fiscal 1996. Network service commission income increased 6% to $13,576,000 from $12,756,000 for the same period of the preceding fiscal year. For the six month period, the Company recognized resale product usage income of $5,049,000 as compared to $2,345,000 for the same period of Fiscal 1996, an increase of 115%. Network service commission income experienced a 2% decrease and 6% increase, respectively, for the three and six months ended September 30, 1996, as compared to the same periods of the prior fiscal year. In both periods there was a sharp increase in the development of new customer relationships, as well as substantial growth in unit sales. These increases were offset by substantial decreases in certain fees and commissions payable under the Company's 1996 NYNEX Sales Agency Contract, which is adjusted annually. For the quarter ended September 30, 1996, resale product usage income included revenues derived from the reselling of Internet access charges. The Company intends to further leverage its customer relationships by offering additional telecommunications products, including wireless services and pagers, in subsequent quarters. 8 Selling, general, and administrative expenses increased 2% to $5,720,000 for the second quarter of Fiscal 1997 as compared to $5,629,000 for the second quarter of Fiscal 1996. For the six month period ended September 30, 1996, selling, general and administrative expenses increased 4% to $11,057,000, as compared to $10,586,000 for the same period of the preceding fiscal year. These increases are directly attributable to the increases in the variable sales commission and bonus expenses incurred in connection with the increases in revenues. As a percentage of revenues, these selling, general and administrative expenses were 60% and 59%, respectively, for the three and six month periods of Fiscal 1997, as compared to 69% and 70%, respectively, for the corresponding periods of Fiscal 1996. These relative reductions reflect the continuing efforts by the Company to control operating expenses, as well as the positive financial impact of increased sales to the same customer base. During the quarter ended September 30, 1996, the Company expanded its operations and entered into a lease for larger office space in New York City, and opened new branches in Albany, NY and Braintree and Marlborough, Massachusetts. The Company currently has the office space capacity to expand its sale force to its goal of approximately 170 account executives by the spring of 1997, from its current sales force of 125. Operating income for the second quarter of Fiscal 1997 increased to $1,744,000 from $1,550,000 for the same period of Fiscal 1996. For the six months ended September 30, 1996, operating income increased to $3,735,000 from $2,670,000 for the same six month period of Fiscal 1996. The Company estimates that it will utilize an effective tax rate of approximately 41% for the balance of Fiscal 1997. On October 10, 1995, the Company announced a 2-for-1 stock split, effective October 23, 1995. The period ended September 30, 1996 marks the thirteenth consecutive quarter of profits for the Company. Management believes that its strategy of building long term relationships and offering additional products to these same customers, when combined with continuing efforts to control costs, should result in continued profitability throughout the balance of Fiscal 1997. 9 LIQUIDITY AND CAPITAL RESOURCES Working capital at September 30, 1996 amounted to $10,162,000, as compared to $7,876,000 at March 31, 1996, an increase of 29%. Cash balances at September 30, 1996 totaled $3,634,000. On September 26, 1996, the Company amended its revolving line of credit agreement with Fleet Bank, which is available under certain conditions, to provide for an increase in the credit line to $5,000,000 from $3,000,000 at the prime rate of interest, with additional LIBOR pricing options. The Company presently has no bank debt and expects that the revolving credit line, together with cash flows from operations, will be sufficient to meet the cash requirements of the Company for the next twelve months. The foregoing statements in Part I Item 2 regarding the Company's intent to further leverage its customer relationships, its intent to expand its sales force, its expectation of continued profitability throughout the remainder of Fiscal 1997 and its ability to meet its cash requirements for the next 12 months are forward looking statements made in good faith pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. There are several factors that could cause actual results to differ materially from those contained in such forward looking statements, including the Company's inability to hire and retain experienced account executives, unfavorable changes for 1997 in the commissions payable to the Company under its NYNEX Sales Agency Agreement, and increased competitive pressures from current and additional resellers of local and long-distance telephone services. 10 PART II Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. (a) The 1996 Annual Meeting of Stockholders of the Company was held on September 26, 1996. (b) Not applicable. (c) Each nominee for director received the following votes:
Withhold Name For Authority - --------------------------------------------------------------- Robert J. Fabbricatore 5,035,735 1,052 Philip J. Richer 5,035,835 952 Richard J. Santagati 5,035,735 1,052 J. Richard Murphy 5,035,735 1,052 Henry Hermann 5,035,735 1,052
The following table sets forth the other matters voted upon and the respective number of votes cast for, against, number of absentions and broker nonvotes.
Matter Votes Votes Delivered Voted Upon For Against Abstentions No Vote - --------------------------------------------------------------------------------- Amendment to Articles of Organization to change the name of Company to "CTC Communications Corp." 5,016,485 1,128 18,174 1,000 To approve adoption of the Company's 1996 Stock Option Plan 4,793,505 233,108 9,174 1,000 To approve selection of Ernst & Young as accountants for the Company for the fiscal year ending 3/31/97 5,033,561 3,126 100 0
(d) Not applicable. 11 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on behalf by the undersigned thereunto duly authorized. CTC COMMUNICATIONS CORP. Date: November 11, 1996 /S/ ROBERT FABBRICATORE ------------------------- Robert Fabbricatore Chief Executive Officer Date: November 11, 1996 /S/ JOHN D. PITTENGER ----------------------- John D. Pittenger Chief Financial Officer 12 EX-11 2 Exhibit 11 CTC COMMUNICATIONS CORP. STATEMENTS REGARDING COMPUTATION OF PER SHARE EARNINGS (IN THOUSANDS EXCEPT FOR PER SHARE DATA)
Three Months Ended Six Months Ended September 30, September 30, September 30, September 30, 1996 1995 1996 1995 ------------- ------------- ------------- ------------- PRIMARY Average shares outstanding 9,601 9,368 9,593 9,359 Net effect of stock options, if dilutive, based on the treasury stock method using the average market price 1,221 1,153 1,308 1,037 ---------- ---------- ---------- ---------- Total 10,822 10,521 10,901 10,396 Net income $ 1,049 $ 949 $ 2,243 $ 1,638 ---------- ---------- ---------- ---------- Net income per share $ 0.10 $ 0.09 $ 0.21 $ 0.16 ---------- ---------- ---------- ---------- FULLY DILUTED Average shares outstanding 9,601 9,368 9,593 9,359 Net effect of stock options, if dilutive, based on the treasury stock method using the period-end market price 1,267 1,208 1,332 1,101 ---------- ---------- ---------- ---------- Total 10,868 10,576 10,925 10,460 Net income $ 1,049 $ 949 $ 2,243 $ 1,638 ---------- ---------- ---------- ---------- Net income per share $ 0.10 $ 0.09 $ 0.21 $ 0.16 ---------- ---------- ---------- ----------
EX-27 3 FDS FOR Q.E. 9/30/96
5 1,000 6-MOS MAR-31-1997 SEP-30-1996 3,634 0 9,589 190 19 591 6,380 5,150 15,456 3,671 0 0 0 96 11,824 15,456 18,625 18,718 3,832 14,890 0 0 6 3,822 1,579 2,243 0 0 0 2,243 0.21 0.21
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