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HomeMy WebLinkAbout2002Annual Report.pdf,,"""".-"" ""'"", RECEIVED IT)FILED 2nO3 APR I ~ AM 8: ~, ANNU ALJl:il/EP R T Direct Communications Rockland, Inc. NAME o. Box 269 Rockland, Idaho 83271 ADDRESS TO TH E IDAHO PUBLIC UTiliTIES COMMISSION FOR THE YEAR ENDED December 2002 ANNUAL REPORT OF SMALL TELEPHONE COMPANIES TO THE IDAHO PUBLIC UTILITIES COMMISSION FOR THE YEAR ENDING December 31. 2002 COMPANY INFORMATION Exact name of utility: DIRECT COMMUNICATIONS ROCKLAND , INC. Address of principal office: 150 South Main Rockland , Idaho 83271 Telephone Number (Area Code 208 ) 548 - 2345 Cities or towns served: Rockland, Arbon, Paris, Bloomington, S1. Charles, & Fish Haven Name and title of officer having custody of the general corporate books of account: Leonard May, President , Address of office where corporate books are kept and phone number: 150 South Main Rockland, Idaho 83271 (208) 548 - 2345 Organized under the laws of the State of: Idaho Date of organization: 1973 Form of organization (proprietorship, association, corporation):Corporation If a Subchapter S Corporation, please specify: Name and address of controlling company, if any: Names of affiliated companies. Give address and description of business: OFFICERS Report below the title, name and office address of each general officer of the utility at the end of the year. If there were any changes during the year, show the name, title, and address of the previous officer and the date of change. Title Name Address President - Treasurer Leonard May O. Box 269 Rockland , Idaho 83271 Vice Pres. - Secretary Marilyn May O. Box 269 Rockland, Idaho 83271 Rev 3/02 Page 1 DIRECTORS List the name of each person who was a member of the Board of Directors at any given time during the year: (Fees related to meetings only. Name and Address Term Expired or Current Term Will Expire Meetings Attended This year Fees Paid During Year Leonard May O. Box 269 Rockland , Idaho 83271 Marilyn May O. Box 269 Rockland, Idaho 83271 May- May- Name of Chairman of the Board: Name of Secretary (or Clerk) of Board: Number of Meetings of the Board during the year: Leonard May Marilyn May MANAGERS List the name of each person who performed management duties for the Company during the year, and the total wages and bonuses paid to those persons: (Do not include Director fees in these amounts. Name Title Wages and Bonuses Paid President - Treasurer Vice Pres.- Secretary 359. 102. Leonard May Marilyn May Rev 3/02 Page 2 NOTES TO THE FINANCIAL STATEMENTS Please provide important information such as changes in accounting or depreciation practices extensions or additions to the system; disposal of any substantial portion of the property of the utility; reorganization, mergers, or consolidations with other companies; leases executed; other contracts or agreements entered into; changes made in articles of incorporation or amendments; the occurrence of contingency losses or gains. SEE ACCOMPANYING NOTES Rev 3102 Page 3 DIRECT COMMUNICATIONS ROCKLAND, INe. , NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31 , 2002 AND 2001 ~OTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION Direct Communications Rockland, Inc. (Company) is a full service telecommunications provider whose main office is located in Rockland, Idaho. The service area of the Company consists of Southeastern Idaho and South-central Idaho. The Company provides local exchange service as well as providing access services for intrastate and interstate carriers. The mission of the Company is to provide its customers with reliable, convenient and equitable telecommunications service, delivered by employees who are dedicated to customer satisfaction. BASIS OF ACCOUNTING The Company is subject to the accounting and reporting rules and regulations of the Rural Utilities Service (RUS). The Company follows the Federal Communications Commission Uniform System of Accounts prescribed for Class B Telecommunications Utilities as modified by RUS. The accounting policies conform to generally accepted accounting principles as applied in the case ofregulatedtelecommunication utilities. Rates charged to customers are established by the Board of Directors and approved by the Idaho Public Utility Commission. The Idaho Public Utility Commission regulates all utility activity in the State of Idaho. PLANT, EQUIPMENT AND DEPRECIATION Plant is recorded at cost. The cost of additions to plant includes contracted work, direct labor and materials and allocable overheads. When units of property are retired, sold or otherwise disposed of in the ordinary course of business, their average book cost less net salvage is charged to accumulated depreciation. Repairs and the replacement and renewal of items determined to be less than units of property are charged to maintenance. The provision for depreciation is based upon a straight-line method which is applied to groups of assets according to class. The rate is determined by RUS recommendation which is based on an estimation useful lives for each asset group. The final rates are approved by the IdahoPublic Utilities Commission. INVENTO RlES Inventories of materials and supplies are valued at moving average cost. Items determined to be obsolete are written off. - 7- DIRECT COMMUNICATIONS ROCKLAND, INc. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31 , 2002 AND 200l NOTE 1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) FINANCIAL INSTRUMENTS (continued) The fair value of the Company s frnancial instruments approximates carrying value. Fair values were estimated based on quoted market prices and on current rates offered to the Company for debt with similar terms and maturities. CREDIT RISK Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of debt agreements. Concentrations of credit risk with respect to trade receivables are limited due to the Company s large number of customers. DEFERRED CREDITS Deferred credits consist entirely of deferred tax liabilities which are considered to be long-term. INVESTMENT IN AFFILIATED COMPANIES Investment in affiliated companies represents an investment in stock of the CIT Communications Inc., System Seven, RTFC Capital Certificates, NRTC 220 MHZ Wire, and other items. The investments are recorded at cost. CASH AND CASH EQUIVALENTS All highly liquid investments with a maturity of six months or less from date of purchase are considered cash equivalents. Such items include money market savings accounts and certificates of deposit. TEMPORARY INVESTMENTS All investments are reported in accordance with SF AS 115 and are classified as trading securities. Trading securities are debt and equity securities that are held principally for the purpose of selling them in the near future. The Company reports these securities at fair market value, with unrealized gains and losses included in earnings. 10- " - NOTE 6. NOTE 7. DIRECT COMMUNICATIONS ROCKLAND, INc. NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31 , 2002 AND 2001 COMPENSATION AGREEMENT , ' In 1979, the Company entered into a compensation agreement with a fol111er stockholder and employee, providing for payments of retirement benefits of $4 800 annually, beginning January 1 1980, and continuing for the lifetime of the employee, but, in any event, for a period certain of ten years. Such benefit shall be increased annually by the proportional increases in the Consumer Price Index for the metropolitan area of Boise, Idaho. The amount paid under this contract was $0 for 2002 and $1 995 for 2001. RELATED PARTY TRANSACTIONS The Company had various transactions with CIT Communications, Inc. The Company s president and majority shareholder has an approximate 5.95% interest in CIT. The Company has invested $160 861 in the common stock of CIT, which approximates a 10. interest. The Company has entered into the following related party transactions during 2002 and 2001: I Direct Communications Internet, Inc. This Company is a wholly-owned subsidiary of Direct Communications Star West, Inc. and charges the company for internet services, which the Company in turn charges to its customers who have signed up for these services. The net effect on the Company is zero because the Companies record the income for the charges and expense the charges from the internet provider. The income and expense are eliminated at year end. The amount paid during 2002 and 2001 amounted to $48 000 and $107 908 respectively. The Company also loaned $ 13 685 during 2002 and $50 000 during 2001. The balance outstanding at December31 , 2002, was $49,397. 2 Direct Communications Long Distance, LC The Company entered into an agreement with Direct Communications Long Distance, LC which is 100% owned by Direct Communications Star West. Inc. The agreement is for long distance services to the Company. $57 869 was paid in 2002 and $54 523 was paid in 2001. 3 Direct Communications Star West, Inc. This company is owned 50% by the officers of the Company. Services are provided to the Company for after hours calling, personnel management, marketing and rent of the building used by the Company. The amounts paid during 2002 and 2001 were to $123 012 and $ 1 16 598 respectively. 4 Other transactions include rent, marketing services and computer consulting. The amounts spent in 2002 and 2001 were $73 608 and $22 655, respectively. 15- DIRECT COMMUNICATIONS ROCKLAND, INC. NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31 , 2002 AND 2001 NOTE 8.LINE OF CREDIT The Company has an unsecured line of credit from the Rural Telephone Finance Cooperative (RTFC) with a maximum limit of $1 500 000 expiring November 2005. The credit line bears interest at prime plus 1.5%. During the years ended December 31 , 2002 and 2001 , there were borrowings of $0 and $0 against this line of credit. The line of credit agreement provides that no payment of cash dividends can be made while a- loan balance remains outstanding without RTFC approval, and the balance outstanding must be reduced to $-0- for 5 working days each year based on the date of the first outstanding advance. At December 31 2002, the balance was $0. NOTE 9.CONCENTRATIONS OF CREDIT RISK -CASH BALANCES The Company maintains most of its cash accounts in commercial banks located in Idaho. Accounts are guaranteed by the Federal Deposit Insurance Corporation (FDIC) up to $100 000. A summary of the total insured and uninsured cash balances follows: 2002 2001 Total cash held (bank balance)360 321 401 000 Portion insured by FDIC (120 303)(270 988) Uninsured cash balances 240 018 130 012 Credit sales are made to the Company s customers in the ordinary course of business. Generally, these sales are unsecured. NOTE 10. ACCOUNTS RECEIVABLE The Company had the following accounts receivable at December 31 , 2002 and 2001: 2002 2001 Unbilled amounts 790 19,790 Billed to customers 183 025 108 848 Bad debt reserve 500)(12 815) 193 315 115 823 Interexchange carriers and other 741 418 443 564 ' - 934 733 559 387 16- DIRECT COMMUNICATIONS ROCKLAND, INc. NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31 , 2002 AND 2001 NOTE-il. TEMPORARY INVESTMENTS Temporary cash investments consist of amounts invested in certificates of deposit, mutual funds and stocks. They are categorized as trading securities. 2002 2001 Amortized Fair Amortized Fair Cost Value Cost Value Trading Securities 171 312 171 125 75,746 194 The unrealized gain (loss) on trading securities was $(635) and $55 for the years ended December 31 2002 and 2001, respectively. Realized gains (losses) in 2002 and 2001 were $0 and $0. NOTE 12. COMPREHENSIVE INCOME The Company had no components of comprehensive income required to be disclosed under Statement of Financial Accounting Standards (SF AS) 130. NOTE 13. SETTLEMENTS The Company participates in cost recovery pools nationally and in the State of Idaho. The Company has significantly invested in plant over the past three years and is expecting recoveries from the pools to cover the increased costs. 17- BALANCE SHEET Assets and Other Debits Balance Balance Increase Beginning at End Title of Account of Year of Year (Decrease) Current Assets 1120 Cash and Equivalents 1130 Cash 162 672 607 (145 065) 1140 Special Cash Deposits 6,401 586 185 1150 Working Cash Advances 300 300 1160 Temporary Investments 76,194 181 631 105,437 1180 Telecommunications Accts. Receivable 128 637 202 815 178 1181 Accts. Rec. Allow. -Telecommunications (12 815)500)315 1190 Other Accounts Receivable 442 331 772 925 330 594 1191 Accounts Receivable Allow. - Other (32 658)(32 658) 1200 Notes Receivable 889 397 508 1201 Notes Receivable Allowance 1210 Interest & Dividends Receivable 233 150 (83) 1220 Material and Supplies 261 335 287 044 709 1280 Prepayments 1290 Prepaid Rents 1300 Prepaid Taxes 180 20,410 770) 1310 Prepaid Insurance 013 565 552 1320 Prepaid Directory Expenses 1330 Other Prepayments 1350 Other Current Assets Noncurrent Assets 1401 Investment in Affiliated Companies 708 005 923 510 215 505 1402 Investment in Nonaffiliated Companies 1406 Nonregulated Investments 1407 Unamortized Debt Issuance Expense 1408 Sinking Funds 1410 Other Noncurrent Assets 787 787 1438 Deferred Maintenance & Retirements 1439 Deferred Charges 1500 Other Jurisdiction Assets - Net Property, Plant and Equipment 2001 Telecommunications Plants in Service 19,455 923 032 058 576 135 2002 Prop. Held for Future Telecom. Use 2003 Telecom. Plant under Constr. - Short Term 304 159 746 122,442 2004 Telecom. Plant under Constr. - Long Term 2005 Telecom. Plant Adjustment 2006 Nonoperating Plant 176 943 176 943 2007 Goodwill Depreciation and Amortization Accounts 3100 Accumulated Depreciated 695 810 780 580 084 770 3200 Accum. Depre. - Held for Future Use 3300 Accumulated Depreciation - Nonoperating 3400 Accumulated Amortization - Tangible 3410 Accum. Amort. - Capitalized Leases 3420 Accum. Amort. - Leasehold Improvements 3500 Accumulated Amortization - Intangible 3600 Accumulated Amortization - Other TOTAL ASSETS 871 524 074 737 203 213 Rev 3/02 Page 4 BALANCE SHEET Liabilities & Stockholders' Equity Balance Balance Increase Beginning at End Title of Account of Year of Year (Decrease) Current Liabilities 4010 Accounts Payable 255 101 766 512 4020 Notes Payable 4030 Advance Billings and Payments 044 782 262) 4040 Customer Deposits 850 950 100 4050 Current Maturities - Long -Term Debt 955 889 2,404 559 551 330) 4060 Current Maturities - Capital leases 4070 Income Taxes - Accrued 4080 Other Taxes - Accrued 756 728 972 4100 Net Current Defer. Oper. Income Taxes 4110 Net Current Defer. Nonoper. Income Taxes 4120 Other Accrued Liabilities 892 817 925 4130 Other Current Liabilities Long-Term Debt 4210 Funded Debt 929 708 897 884 968 176 4220 Premium on Long-Term Debt 4230 Discount on Long-Term Debt 4240 Reacquired Debt 4250 Obligations Under Capital Leases 4260 Advances from Affiliated Companies 4270 Other Long-Term Debt 104 202 153 923 721 Other Liabilities & Deferred Credits 4310 Other Long-Term Liabilities 4320 Unamort. Oper. Invest. Tax Credits - Net 4330 Unamort. Nonoper. Invest. Tax Credits - Net 4340 Net Noncurrent Defer. Oper. Income Taxes 276 225 532 605 256 380 4350 Net Noncur. Defer. Nonoper. Income Taxes 4360 Other Deferred Credits 4370 Other Juris. Liab. & Def. Credits - Net Stockholders' Equity 4510 Capital Stock 000 000 4520 Additional Paid-In Capital 4530 Treasury Stock 4540 Other Capital 4550 Retained Earnings 332 704 749 723 417 019 TOTAL LlAB. & OTHER CREDITS 871 524 074 737 203 213 Rev 3102 Page 5 AN A L Y S I S O F T E L E C O M M U N I C A T I O N S P L A N T I N S E R V I C E TO T A L C o m p a n y B a s i s Ba l a n c e Pl a n t Tr a n s f e r s Ba l a n c e Be g i n n i n g Ad d i t i o n s Re t i r e d an d En d of Y e a r Du r i n g y e a r or S o l d Ad j u s t m e n t s of Y e a r An a l y s i s o f T e l e c o m m u n i c a t i o n s P l a n t i n S e r v i c e 21 1 1 La n d 10 9 , 56 4 10 9 , 56 4 21 1 2 Mo t o r V e h i c l e s 20 4 66 5 07 0 60 2 25 3 , 13 3 21 1 3 Ai r c r a f t 21 1 4 Sp e c i a l P u r p o s e V e h i c l e s 69 5 21 0 34 , 4 8 5 21 1 5 Ga r a g e W o r k E q u i p m e n t 10 5 , 4 5 4 77 2 10 , 09 6 11 4 77 8 21 1 6 Ot h e r W o r k E q u i p m e n t 67 0 , 18 2 34 , 06 8 50 , 84 9 65 3 , 4 0 1 21 2 1 Bu i l d i n g s 51 4 27 7 83 8 33 7 51 7 77 8 21 2 2 Fu r n i t u r e 11 7 65 6 59 4 65 , 18 0 21 2 3 Of f i c e E q u i p m e n t 17 4 91 4 11 , 55 0 88 8 18 1 14 4 75 7 21 2 4 Ge n e r a l P u r p o s e C o m p u t e r s 32 2 69 8 76 1 13 3 , 38 6 20 6 , 07 3 22 1 1 An a l o g E l e c t r o n i c S w i t c h i n g 22 1 2 Di g i t a l E l e c t r o n i c S w i t c h i n g 52 6 10 4 91 9 (1 2 27 7 ) 52 2 74 6 22 1 5 El e c t r o - Me c h a n i c a l S w i t c h i n g 22 2 0 Op e r a t o r S y s t e m s 22 3 1 Ra d i o S y s t e m s 22 3 2 Ci r c u i t E q u i p m e n t 75 4 69 8 59 0 , 66 1 34 5 35 9 23 1 1 St a t i o n A p p a r a t u s 23 2 1 Cu s t o m e r P r e m i s e s W i r i n g 23 4 1 La r g e P r i v a t e B r a n c h E x c h a n g e s 23 5 1 Pu b l i c T e l e p h o n e T e r m i n a l E q u i p m e n t 23 6 2 Ot h e r T e r m i n a l E q u i p m e n t 24 1 1 Po l e s 24 2 1 Ae r i a l C a b l e 24 2 2 Un d e r g r o u n d C a b l e 24 2 3 Bu r i e d C a b l e 96 7 , 55 5 24 9 06 4 80 4 24 2 4 Su b m a r i n e C a b l e 24 2 6 In t r a b u i l d i n g N e t w o r k C a b l e 24 3 1 Ae r i a l W i r e 24 4 1 Co n d u i t S y s t e m s 26 8 1 Ca p i t a l L e a s e s 26 8 2 Le a s e h o l d I m p r o v e m e n t s 26 9 0 In t a n g i b l e s 17 6 94 3 17 6 94 3 TO T A L P L A N T A C C O U N T S 63 2 86 6 85 4 77 3 27 8 63 7 20 9 , 00 1 Re v 3 / 0 2 Pa g e 6 An a l y s i s o f T e l e c o m m u n i c a t i o n s P l a n t i n S e r v i c e 21 1 1 la n d 21 1 2 Mo t o r V e h i c l e s 21 1 3 Ai r c r a f t 21 1 4 Sp e c i a l P u r p o s e V e h i c l e s 21 1 5 Ga r a g e W o r k E q u i p m e n t 21 1 6 Ot h e r W o r k E q u i p m e n t 21 2 1 Bu i l d i n g s 21 2 2 Fu r n i t u r e 21 2 3 Of f i c e E q u i p m e n t 21 2 4 Ge n e r a l P u r p o s e C o m p u t e r s 22 1 1 An a l o g E l e c t r o n i c S w i t c h i n g 22 1 2 Di g i t a l E l e c t r o n i c S w i t c h i n g 22 1 5 E l e c t r o - Me c h a n i c a l S w i t c h i n g 22 2 0 Op e r a t o r S y s t e m s 22 3 1 Ra d i o S y s t e m s 22 3 2 Ci r c u i t E q u i p m e n t 23 1 1 St a t i o n A p p a r a t u s 23 2 1 Cu s t o m e r P r e m i s e s W i r i n g 23 4 1 la r g e P r i v a t e Br a n c h E x c h a n g e s 23 5 1 Pu b l i c T e l e p h o n e T e r m i n a l E q u i p m e n t 23 6 2 Ot h e r T e r m i n a l E q u i p m e n t 24 1 1 Po l e s 24 2 1 Ae r i a l C a b l e 24 2 2 Un d e r g r o u n d C a b l e 24 2 3 Bu r i e d C a b l e 24 2 4 Su b m a r i n e C a b l e 24 2 6 In t r a b u i l d i n g N e t w o r k C a b l e 24 3 1 Ae r i a l W i r e 24 4 1 Co n d u i t S y s t e m s 26 8 1 Ca p i t a l l e a s e s 26 8 2 le a s e h o l d I m p r o v e m e n t s 26 9 0 In t a n g i b l e s TO T A L P L A N T A C C O U N T S Re v 3 / 0 2 AN A L Y S I S O F T E L E C O M M U N I C A T I O N S P L A N T A C C O U N T S ID A H O O p e r a t i o n s O n l y Ba l a n c e Be g i n n i n g of Y e a r Ad d i t i o n s Du r i n g Y e a r Pl a n t Re t i r e d or S o l d Tr a n s f e r s an d Ad j u s t m e n t s Ba l a n c e En d of Y e a r SA M E A S T O T A L CO M P A N Y Pa g e 7 AN A L Y S I S O F E N T R I E S I N A C C U M U L A T E D D E P R E C I A T I O N Ac c o u n t 3 1 0 0 TO T A L C o m p a n y B a s i s Ba l a n c e Cr e d i t s Re t i r e m e n t s Ba l a n c e Be g i n n i n g De p r e c i a t i o n Du r i n g an d En d of Y e a r Ra t e Ye a r Ad j u s t m e n t s of Y e a r An a l y s i s o f E n t r i e s i n A c c u m u l a t e d D e p r e c i a t i o n 21 1 2 Mo t o r V e h i c l e s 15 4 99 1 25 . 32 , 4 0 8 (3 2 50 0 ) 15 4 89 9 21 1 3 Ai r c r a f t 21 1 4 Sp e c i a l P u r p o s e V e h i c l e s 23 , 64 4 10 . 72 9 21 0 ) 16 2 21 1 5 Ga r a g e W o r k E q u i p m e n t 99 3 12 . 68 1 (7 7 2 ) 29 , 90 2 21 1 6 Ot h e r W o r k E q u i p m e n t 35 9 , 30 6 12 . 78 , 04 1 (4 9 , 36 5 ) 38 7 98 2 21 2 1 Bu i l d i n g s 19 6 03 9 23 9 27 4 ) 24 5 00 4 21 2 2 Fu r n i t u r e 22 5 12 . 10 3 32 8 21 2 3 Of f i c e E q u i p m e n t 51 9 12 . 07 1 (4 3 , 88 8 ) 70 3 21 2 4 Ge n e r a l P u r p o s e C o m p u t e r s 24 9 37 0 20 . 30 6 (1 3 3 38 6 ) 13 6 29 0 22 1 1 An a l o g E l e c t r o n i c S w i t c h i n g 22 1 2 Di g i t a l E l e c t r o n i c S w i t c h i n g 24 3 13 2 12 . 17 6 , 78 5 (1 0 38 0 ) 1, 4 0 9 53 7 22 1 5 El e c t r o - Me c h a n i c a l S w i t c h i n g 22 2 0 Op e r a t o r S y s t e m s 22 3 1 Ra d i o S y s t e m s 22 3 2 Ci r c u i t E q u i p m e n t 77 4 18 2 12 . 18 6 61 0 96 0 79 2 23 1 1 St a t i o n A p p a r a t u s 23 2 1 Cu s t o m e r P r e m i s e s W i r i n g 23 4 1 La r g e P r i v a t e B r a n c h E x c h a n g e s 23 5 1 Pu b l i c T e l e p h o n e T e r m i n a l E q u i p m e n t 23 6 2 Ot h e r T e r m i n a l E q u i p m e n t 24 1 1 Po l e s 24 2 1 Ae r i a l C a b l e 24 2 2 Un d e r g r o u n d C a b l e 24 2 3 Bu r i e d C a b l e 17 5 14 9 69 3 56 7 86 8 71 6 24 2 4 Su b m a r i n e C a b l e 24 2 6 In t r a b u i l d i n g N e t w o r k C a b l e 24 3 1 Ae r i a l W i r e 24 4 1 Co n d u i t S y s t e m s TO T A L 28 3 55 0 28 9 53 8 (2 8 2 77 4 ) 29 0 31 4 Pl e a s e l i s t i n d i v i d u a l d e p r e c i a t i o n r a t e f o r e a c h a c c o u n t . Re v 3 / 0 2 Pa g e 8 AN A L Y S I S O F E N T R I E S I N A C C U M U L A T E D D E P R E C I A T I O N Ac c o u n t 3 1 0 0 An a l y s i s o f E n t r i e s i n A c c u m u l a t e d D e p r e c i a t i o n 21 1 2 M o t o r V e h i c l e s 21 1 3 A i r c r a f t 21 1 4 S p e c i a l P u r p o s e V e h i c l e s 21 1 5 G a r a g e W o r k E q u i p m e n t 21 1 6 O t h e r W o r k E q u i p m e n t 21 2 1 B u i l d i n g s 21 2 2 F u r n i t u r e 21 2 3 O f f i c e E q u i p m e n t 21 2 4 G e n e r a l P u r p o s e C o m p u t e r s 22 1 1 A n a l o g E l e c t r o n i c S w i t c h i n g 22 1 2 D i g i t a l E l e c t r o n i c S w i t c h i n g 22 1 5 E l e c t r o - Me c h a n i c a l S w i t c h i n g 22 2 0 O p e r a t o r S y s t e m s 22 3 1 R a d i o S y s t e m s 22 3 2 C i r c u i t E q u i p m e n t 23 1 1 S t a t i o n A p p a r a t u s 23 2 1 C u s t o m e r P r e m i s e s W i r i n g 23 4 1 L a r g e P r i v a t e B r a n c h E x c h a n g e s 23 5 1 P u b l i c T e l e p h o n e T e r m i n a l E q u i p m e n t 23 6 2 O t h e r T e r m i n a l E q u i p m e n t 24 1 1 P o l e s 24 2 1 A e r i a l C a b l e 24 2 2 U n d e r g r o u n d C a b l e 24 2 3 B u r i e d C a b l e 24 2 4 S u b m a r i n e C a b l e 24 2 6 I n t r a b u i l d i n g N e t w o r k C a b l e 24 3 1 A e r i a l W i r e 24 4 1 C o n d u i t S y s t e m s TO T A L Pl e a s e l i s t i n d i v i d u a l d e p r e c i a t i o n r a t e f o r e a c h a c c o u n t . Re v 3 / 0 2 ID A H O O p e r a t i o n s O n l y Ba l a n c e Be g i n n i n g of Y e a r De p r e c i a t i o n Ra t e Cr e d i t s Du r i n g Ye a r Re t i r e m e n t s an d Ad j u s t m e n t s Ba l a n c e En d of Y e a r SA M E A S T O T A L CO M P A N Y Pa g e 9 INVESTMENTS Report below the investments in Accounts 1401, 1402 and 1406. Identify each investment as to the account in which included. Minor amounts in Account 1406 may be grouped by classes. DescrictionDateA.cauired CIT COMMUNICATIONS 1991 RTFC CERTIFICATES 1993,, & 96 ASSOCIATED NETWORK PART 1998 NRTC'S 220 MHz WIRELESS 1999 SYRINGA NETWORK 2000 NECA SERVICES 2000 NEWSTREETS, INC. 2002 RTB STOCK 2002 Totals Book Cost of Investments Disposed of ThiS\l.ear Book Cost of Investments Held at End of 160861 186352 800 75,918 407,409 000 000 170 923,510 RECEIVABLES Itemize amounts show in Accounts 1180, 1190 and 1200. For notes receivable list each note separately and include the maturity date and interest rate. Minor amounts in Account 1210 may be combined. Name of canv CUSTOMERS INTEREXCHANGE CARRIERS AND OTHERS DIRECT INTERNET, APRIL 2006, 6% Amount at End of Year Notes Accounts ceivable Receivable 193,315 741,418 49,397 Totals Rev 3/02 397934733 Page 10 NOTES PAYABLE For Notes Payable, list each note separately and include the maturity date and interest rate. Name of CreditorDate of Note Interest NONE Totals ACCOUNTS PAYABLE Report below all Accounts Payable amounting to more than $100. Name of Creditor SEE ATTACHED LISTING Due Date Totals Rev 3102Page 11 Face Amount Amount ACCOUNTS PAYABLE NAME OF CREDITOR Computer Technology, Inc. Direct Internet Employee Flex Plan Federal Excise Tax Givens & Pursley Gundersen True Value GVNW, Inc. Idaho Child Support Idaho Power Idaho Sales Tax Idaho Assistance Fund Iliuminet K.v.S.1. - AM Mid-State Consultants Mower Office Systems Neca Services Paris County Store Power County Clerk (E911) Pro - Flame, Inc. Schmidt Oil Services Management Corp. Telecom Consulting Services Qwest Unbilled Toll Valley Office Systems Vaughn Smith Construction Vermeer Great Basin, Inc. Wiggins & Co, All others under $100 AMOUNT 103. 15,585. 383. 915. 342. 261. 773. 189. 145. 602. 261. 710.40 125. 249. 178.48 737. 841. 417. 333. 811.44 198. 293. 240. 790. 775. 805. 654. 650, 392.45 101 766. LO N G - T E R M D E B T Ac c o u n t s 4 2 1 0 , 4 2 4 0 , 4 2 5 0 , 4 2 6 0 , 4 2 7 0 a n d 4 3 1 0 Li s t t h e r e q u i r e d d a t a f o r e a c h o b l i g a t i o n i n c l u d e d i n t h e s e a c c o u n t s , g r o u p i n g t h e m b y a c c o u n t n u m b e r a n d s h o w i n g t o t a l s f o r e a c h a c c o u n t . If a n y o b l i g a t i o n s m a t u r e s e r i a l l y o r o t h e r w i s e a t v a r i o u s d a t e s , g i v e p a r t i c u l a r s i n a n o t e . Da t e Da t e Fa c t Pr e m i u m Di s c o u n Cl a s s & S e r i e s Am o u n t Ou t s t a n d i n g Ye a r In t e r e s t f o r y e a r of O b l i g a t i o n Is s u e Ma t u r i t y Au t h o r i z e d Ye a r - En d To t a l Am o r t i z e d Ra t e Am o u n t CA T E R P I L L A R F I N A N C E 19 9 7 20 0 2 81 1 14 % 60 5 RT F C 19 9 4 20 0 9 46 5 30 5 16 6 02 7 65 % 86 2 RT F C 19 9 5 20 1 2 03 0 20 2 21 2 00 6 VA R I E S 13 4 34 7 RU S 19 7 9 20 1 1 60 8 , 4 2 1 71 8 55 2 00 % 39 0 85 2 RU S 19 9 0 20 1 2 08 0 , 58 3 7, 4 7 3 64 1 00 % CA S E F I N A N C E 19 9 9 20 0 5 00 0 79 6 90 % 63 7 RT F C - C o n s t r u c t i o n L o a n 19 9 9 20 0 2 90 0 00 0 59 8 12 9 V A R I E S 13 5 94 6 LE O N A R D M A Y 20 0 2 20 0 3 00 0 00 0 70 % FO R D C R E D I T 20 0 1 20 0 5 00 0 12 8 00 % RT B 20 0 2 20 1 7 39 8 00 0 13 4 08 7 05 % 97 6 13 , 4 5 6 , 36 6 71 5 , 22 5 Re v 3 1 0 2 Pa g e 1 2 CAPITAL STOCK Report below the particulars called for concerning common and preferred stock at end of year designating separate series of any general class. Show totals separately for common and preferred. For each class of preferred stock, show the dividend rate and whether dividends are cumulative or noncumulative. Show details in a footnote of capital stock sold during the year. Include number of shares consideration received , premium or discount, and expenses incurred. Class. & Series of Stoc COMMON Rev 3/02 Number of Shares thorized 000 Par Value Der Share $1. Page 13 Outstanding per Balance Sheet Shares Amount 000 $50 000, INCOME & RETAINED EARNINGS STATEMENT Item Total Company Idaho Only Total Operating Income (from page 15) Total Operating Expenses (from page 17) 7100 Other Operating Income and Expense 7210 Operating Investment Tax Credits-Net 7220 Operating Federal Income Taxes 7230 Operating State and Local Income Taxes 7240 Operating Other Taxes 7250 Provision for Deferred Operating Income Taxes-Net7200 Operating Taxes (Total) 7310 Dividend Income 7320 Interest Income 7330 Income from Sinking and Other Funds 7340 Allowance for Funds Used During Construction 7350 Gains1Losses from the Disposition of Certain Property 7360 Other Nonoperating Income 7370 Special Charges7300 Nonoperating Income and Expense 7410 Nonoperating Investment Tax Credits-Net 7420 Nonoperating Federal Income Taxes 7430 Nonoperating State and Local Income Taxes 7440 Nonoperating Other Taxes 7450 Provision for Deferred Nonoperating Income Taxes-Net7400 Nonoperating Taxes 7510 Interest on Funded Debt 7520 Interest Expense-Capital Leases 7530 Amortization of Debt Issuance Expense 7540 Other Interest Deductions7500 Interest and Related Items 7610 Extraordinary Income Credits 7620 Extraordinary Income Charges 7630 Current Income Tax Effect of Extraordinary Items-Net 7640 Provision for Deferred Income Tax Effect of Extraordinary Items-Net7600 Extraordinary Items 7910 Income Effect of Jurisdictional Ratemaking Differences-Net 7990 Nonregulated Net Income AMOUNT TRANSFERRED TO RETAINED EARNINGS Rev 3/02 847,661 323 143 (24 065) 24,456 659 137,444 213 136 386 630 929 (14,440) (15 132) 299) 820 (1,122) 711 984 166 716 150 841 417 019 Page 14 SAME TOTAL OPERATING REVENUES Item Total Company Idaho Only . To what account were they booked? 5082. . To what account were they booked? 5084. Local Network Services Revenues 5001 Basic Area Revenue 5002 Optional Extended Area Revenue 5003 Cellular Mobile Revenue 5004 Other Mobile Services Revenue 5010 Public Telephone Revenue 5040 Local Private Line Revenue 5050 Customer Premises Revenue 5060 Other Local Exchange Revenue 5069 Other Local Exchange Settlements Network Access Services Revenues 5081 End User Revenue (SLC) 5082 Switched Access Revenue (Interstate) 5083 Special Access Revenue 5084 State Access Revenue (Intrastate) Long Distance Network Services Revenues 5100 Long Distance Message Revenue - All MisceIlaneous Revenues 5230 Directory Revenue 5240 Rent Revenue 5250 Corporate Operations Revenue 5261 Special Billing Arrangements Revenue 5262 Customer Operations Revenue 5263 Plant Operations Revenue 5264 Other Incidental Regulated Revenue 5269 Other Revenue Settlements 5270 Carrier Billing & Collection Revenue UncoIlectible Revenues 5301 Uncollectible Revenue - Telecommunications 5302 Uncollectible Revenue - Other TOTAL OPERATING REVENUES Please identify the following revenues: NECA USF $ 363157 State USF 221,847 Rev 3/02 435,947 SAME TOT AL 951 108,698 878 880 795 301,006 306 144 946 22,439 (132 307) 847 661 Page 15 OPERATING REVENUES Item Total Company Idaho Only Plant Specific Operations Expense 6110 Network Support Expenses 6112 Motor Vehicle Expense 6113 Aircraft Expense 6114 Special Purpose Vehicles Expense 6115 Garage Work Equipment Expense 6116. Other Work Equipment Expense 6120 General Support Expenses 6121 Land and Building Expenses 6122 Furniture and Artworks Expense 6123 Office Equipment Expense 6124 General Purpose Computers Expense 6210 Central Office Switching Expenses 6211 Analog Electronic Expense 6212 Digital Electronic Expense 6215 Electro-Mechanical Expense 6220 Operators System Expense 6230 Central Office Transmission Expenses 6231 Radio Systems Expense 6232 Circuit Equipment Expense 6310 Information Origination/Termination Expense 6311 Station Apparatus Expense 6341 Large Private Branch Exchange Expense 6351 Public Telephone Terminal Equipment Expense 6362 Other Terminal Equipment Expense 6410 Cable and Wire Facilities Expenses 6411 Pole Expense 6421 Aerial Cable Expense 6422 Underground Cable Expense 6423 Buried Cable Expense 6424 Submarine Cable Expense 6425 Deep Sea Cable Expense 6426 Intrabuilding Network Cable Expense 6431 Aerial Wire Expense 6441 Conduit Systems Expense TOTAL PLANT SPECIFIC OPERATIONS EXPENSE Rev 3/02 371 126 067 343 127,456 116 644 105,506 735 601 504 050 752 Page 16 SAME TOTAL OPERATING REVENUES Item Total Company Idaho Only Plant Nonspecific Operations Expense 6510 Other Property/PlantJEquipment Expenses 6511 Property Held for Future Telecomm. Use Expenses 6512 Provisioning Expense 6530 Network Operations Expense 6531 Power Expense 6532 Network Administration Expense 6533 Testing Expense 6534 Plant Operations Administration Expense 6535 Engineering Expense 6540 Access Expense 6560 Depreciation and Amortization Expenses 6561 Depreciation Expense-Telecom. Plant in Service 6562 Depreciation Expense-Property Held for Future Use 6563 Amortization Expense - Tangible 6564 Amortization Expense - Intangible 6565 Amortization Expense - Other Total Plant Nonspecific Operations Expenses Customer Operations Expense 6610 Marketing 6611 Product Management 6612 Sales 6613 Product Advertising 6620 Services 6621 Call Completion Services 6622 Number Services 6623 Customer Services Total Customer Operations Expense Corporate Operations Expense 6710 Executive and Planning 6711 Executive 6712 Planning 6720 General and Administrative 6721 Accounting and Finance 6722 External Relations 6723 Human Resources 6724 Information Management 6725 Legal 6726 Procurement 6727 Research and Development 6728 Other General and Administrative 6790 Provision for Uncollectible Notes Receivable Total Corporate Operations Expense TOTAL OPERATING EXPENSES Rev 3/02 198 26,843 60,984 270,383 78,006 1,445,440 19,789 197 184 223 206,209 254 231 269,131 601 48,688 18,301 791 620 743 323 143 Page 17 SAME TOT AL CE N T R A L O F F I C E D A T A as o f D e c e m b e r 3 1 , 20 0 2 (u n l e s s o t h e r w i s e i n d i c a t e d ) Na m e o f C e n t r a l O f f i c e : AR B O N Pr e f i x ( e s ) : 33 5 Ce n t r a l O f f i c e S w i t c h Ty p e : NS S T R O M G - CA R L S O N D C O RL S Ch e c k a l l t h a t a p p l y : St a n d A l o n e Ho s t Re m o t e . 1 - Ch e c k o n e : Di g i t a l . 1 - An a l o g - Ch e c k o n e : El e c t r o n i c . 1 - El e c t r o - Me c h a n i c a l Ot h e r : Ac c e s s L i n e C a p a c i t y De s i g n : 18 0 Ac c e s s L i n e s i n U s e Cu s t o m e r L i n e s : 10 9 (I n c l u d e C e n t r e x , P A L , S e m i - Pu b . In s t a l l e d 1 E q u i p p e d : 13 8 Pu b l i c T e l e p h o n e Li n e s - - - - 1 - Co m p a n y O f f i c i a l Li n e s ~ - Co m p a n y T e s t Li n e s 3 - Cl a s s i f i c a t i o n o f C u s t o m e r A c c e s s Re s i d e n c e Bu s i n e s s Mu l t i - Si n g l e L i n e Mu l t i - Si n g l e L i n e To t a l Li n e Mu l t i - Su b t o t a l Ce n t r e x Li n e Mu l t i - Su b t o t a l Re s i d e n c e Pa r t y Pa r t y Pa r t y Re s i d e n c e Pa r t y Pa r t y Pa r t y Bu s i n e s s & B u s i n e s s Be g i n n i n g o f Y e a r 10 0 Ne w C o n n e c t s Di s c o n n e c t s En d o f Y e a r 10 9 Fo r e i g n E x c h a n g e : Di a l T o n e f r o m t h i s C . :~ - Di a l T o n e f r o m a n o t h e r C . :~ - Di r e c t o r y L i s t i n g s : Nu m b e r o f C u s t o m e r s w i t h N o n p u b l i s h e d o r No n l i s t e d : J - Cu s t o m C a l l i n g : Nu m b e r o f c u s t o m e r s w i t h a t l e a s t o n e fe a t u r e : . - M To t a l n u m b e r o f f e a t u r e s s u b s c r i b e d to : J - Re v 3 / 0 2 Pa g e 1 8 CE N T R A L O F F I C E D A T A as o f D e c e m b e r 3 1 , 20 0 2 (u n l e s s o t h e r w i s e i n d i c a t e d ) Na m e o f C e n t r a l O f f i c e : PA R I S Pr e f i x ( e s ) : 94 5 Ce n t r a l O f f i c e S w i t c h Ty p e : SI E M E N S S T R O M B E R G - C A R L S O N D C O Ch e c k a l l t h a t a p p l y : St a n d A l o n e Ho s t Re m o t e Ch e c k o n e : Di g i t a l ~ - An a l o g - Ch e c k o n e : El e c t r o n i c ~ - El e c t r o - Me c h a n i c a l Ot h e r : Ac c e s s L i n e C a p a c i t y De s i g n : 15 2 0 Ac c e s s L i n e s i n U s e Cu s t o m e r L i n e s : 98 5 (I n c l u d e C e n t r e x , P A L , S e m i - Pu b . In s t a l l e d 1 E q u i p p e d : 14 4 2 Pu b l i c T e l e p h o n e Li n e s J - Co m p a n y O f f i c i a l Li n e s - - - - 1 - Co m p a n y T e s t L i n e s Cl a s s i f i c a t i o n o f C u s t o m e r A c c e s s Be g i n n i n g o f Y e a r Ne w C o n n e c t s Di s c o n n e c t s Re s i d e n c e Mu l t i - Si n g l e L i n e Li n e Mu l t i - Su b t o t a l pa r t y pa r t y Pa r t y Re s i d e n c e 83 3 83 3 20 8 20 8 16 8 16 8 87 3 87 3 Bu s i n e s s Mu l t i - Si n g l e L i n e To t a l Ce n t r e x Li n e Mu l t i - Su b t o t a l Re s i d e n c e A. R . Pa r t y Pa r t y Pa r t y Bu s i n e s s & B u s i n e s s 10 8 10 8 94 1 21 5 17 1 11 2 11 2 98 5 En d o f Y e a r Fo r e i g n E x c h a n g e : Di a l T o n e f r o m t h i s C , :~ - Di a l T o n e f r o m a n o t h e r C . :~ - Di r e c t o r y L i s t i n g s : Nu m b e r o f C u s t o m e r s w i t h N o n p u b l i s h e d o r No n l i s t e d : ~ - Cu s t o m C a l l i n g : Nu m b e r o f c u s t o m e r s w i t h a t l e a s t o n e f e a t u r e : 32 3 To t a l n u m b e r o f f e a t u r e s s u b s c r i b e d to : - - 1 2 - Re v 3 / 0 2 Pa g e 1 8 CE N T R A L O F F I C E D A T A as o f D e c e m b e r 3 1 , 20 0 2 (u n l e s s o t h e r w i s e i n d i c a t e d ) Na m e o f C e n t r a l O f f i c e RO C K L A N D Pr e f i x ( e s ) : 54 8 Ce n t r a l O f f i c e S w i t c h Ty p e : SI E M E N S S T R O M B E R G - C A R L S O N D C O Ch e c k a l l t h a t a p p l y : St a n d A l o n e . . . . A - Ho s t . . . . A - . Re m o t e Ch e c k o n e : Di g i t a l . . . . A - An a l o g - Ch e c k o n e : El e c t r o n i c . . . . A - El e c t r o - Me c h a n i c a l Ot h e r : Ac c e s s L i n e C a p a c i t y De s i g n : 72 0 Ac c e s s L i n e s i n U s e Cu s t o m e r L i n e s 31 1 (I n c l u d e C e n t r e x , P A L , S e m i - Pu b . In s t a l l e d 1 E q u i p p e d : 64 8 Pu b l i c T e l e p h o n e Li n e s J - Co m p a n y O f f i c i a l Li n e s J - Co m p a n y T e s t Li n e s ~ - Cl a s s i f i c a t i o n o f C u s t o m e r A c c e s s Re s i d e n c e Bu s i n e s s Mu l t i - Si n g l e L i n e Mu l t i - Si n g l e L i n e To t a l Li n e Mu l t i - Su b t o t a l Ce n t r e x Li n e Mu l t i - Su b t o t a l Re s i d e n c e Pa r t y pa r t y Pa r t y Re s i d e n c e NA R . Pa r t y Pa r t y Pa r t y Bu s i n e s s & B u s i n e s s Be g i n n i n g o f Y e a r 25 4 25 4 10 3 10 3 35 7 Ne w C o n n e c t s Di s c o n n e c t s En d o f Y e a r 23 6 23 6 31 1 Fo r e i g n E x c h a n g e : Di a l T o n e f r o m t h i s C . :~ - Di a l T o n e f r o m a n o t h e r C . :~ - Di r e c t o r y L i s t i n g s : Nu m b e r o f C u s t o m e r s w i t h N o n p u b l i s h e d o r No n l i s t e d : ~ Cu s t o m C a l l i n g : Nu m b e r o f c u s t o m e r s w i t h a t l e a s t o n e fe a t u r e : ~ - To t a l n u m b e r o f f e a t u r e s s u b s c r i b e d to : - 1 1 - Re v 3 / 0 2 Pa g e 1 8 Lo c a l E x c h a n g e AR B O N RO C K L A N D PA R I S Re v 3 / 0 2 20 0 2 NU M B E R O F C A L L S C O M P L E T E D B Y C U S T O M E R S D U R I N G ( Y e a r ) Av e r a g e # of C u s t o m e r Li n e s i n U s e 10 9 32 3 10 2 7 Lo c a l C a l l s Nu m b e r Av g J (1 0 0 0 s ) Li n e Pa g e 1 9 To l l C a l l s O r i g i n a t e d ( T o t a l o f a l l C a r r i e r s ) Av g J In t r a s t a t e In t e r s t a t e To t a l Li n e 29 2 77 6 06 8 31 3 13 6 13 3 67 4 16 2 81 0 50 4 61 1 48 5 , 57 5 52 5 , 18 6 51 1 ANNUAL REPORT FOR SMALL TELEPHONE COMPANIES YEAR ENDED DECEMBER 31 20.112 . CUSTOMER RELATIONS RULES COMPLIANCE Rule IDAPA 31.21.01.603 Rule IDAPA 31.41.01.105 Please provide copies of: mmarv of Customer Relations Rules for Telephone Corporations daho Teleohone Solicitation Act Notification Method of Notification: Mailed separately to customers Yes No Included in directory Yes-A- No Date of notification Paris in January, Rockland & Arbon in June Alternate method of notification Local newspaper annually Rule IDAPA 31.41.01.403, Record of Complaints: Number received by Company 264 Category of complaints (if known): Deposit Disputes Charges on Bill 220 Denial/Termination Quality or Availability of Service Carrier Selection/Assignment Miscellaneous Rev 3/02 Page 20 CERTIFICATE State of Idaho ) ss County of , the undersigned Leonard May and Bruce Steed of the Direct Communications Rockland Inc.utility, on our oath do severally say that the foregoing return has been prepared under our direction, from the original books, papers , and records of said utility; that we have carefully examined same, and declare the same to be a correct statement of the business affairs of said utility for the period covered by the return in respect to each and every matter and thing therein set forth, to the best of our knowledge, information and belief. J-tM (OOiC9fo in Charge of Accounts) Subscribed and Sworn to Before Me this c;? th day of ---.A ~ , (Year) ~ 00 3 ~"v.'t\!btary' , ~ ,"'\ OTA \I .... ~.:::::: ' ,... . - g f --.~ 1 1 ~mi~~Pir J /1 ~ ~~);' '.....u~ ?. '" ,' ~ ~:1~. ......("\~ ~~/':'(::' OF \v '..\\~ '11111111111 \1\\\\\\\\ , (Year) ~ 00 ~ Rev 3102 gd kl excel/j n elsonl anu Irpts/telan n ualrpt Page 21