20140701Mud Lake Telephone FCC Form 481.pdf

RECTIVT i]
?01\ JUL - | Plt tZr 28
ur, r,?Hu*Cdiit* r i s I o r I
GVNW CONSULTING, INC.
2270 LA MONTANA WAY (80918)
P.O. BOX 25969 (80936)
COLORADO SPRINGS, CO
TEL. [phone]
FAX [phone]
www.gvnw.com
July 1 ,2014
Jean Jewell
ldaho Public Utilities Commission
472W. Washington
Boise, lD 83702
Email: [e-mail]
RE: Case No. GNR-T-14-01 Informational Filing of Federal Communications
Commission (FCC) Form 481 - Carrier Annual Report for Mud Lake Telephone
Cooperative Association
Dear Ms. Jewell
Pursuant to Case No. GNR-T-14-01 Mud Lake Telephone Cooperative Association
(Mud Lake) submits the attached compliance documents: 1) Federal Communications
Commission (FCC) Form 481 (Attachment A); and 2) Notarized Officer Affidavit
regarding federal high-cost support (Attachment B).
Please direct any questions to Andy Schein at 719.594.5820 or by email at
[e-mail].
Sincerely,
Form 481 - Carrier Annual Reporting
FCClorD4tl
oME Control No. 306G0986/OMS Conrol No. l06G0U9
,ulv20li
<010> Studv Area Code
Page 1
<015> Studv Area Name HUD NS TS: CMP
<020> Proqram Year 2 015
<030> contact Name: Person USAC should contact
with ouestions about this data Randy Neal
<035> ContactTelephone Number: 2081745401 ex!
Number ot the person identitied in data line <030>
<039> contad Email Address:
Email ol the oerson identiti€d in data line <O3O> Rheadlhuilake.ner
<100>
<200>
<210>
<300>
<310>
Seruice Quality lmprovement Reporting
Outage ReportinB (voice)
l--?-h..- .t'.ck box ir no
Unfulfilled 5eruice Requests
Detail on Attempts (voice)
Unfulfilled Service Requests (broadband)
Detail on Attempts (broadband)
<400> Number of Complaints per
d.sdpnv. do.um.nl
<430> Number of Complaints per 1,000 customers (broadband)
<440> Fixed l-------------l<450> Mobile @----------l
<soo> Service Quality Standards & consumerProtection Rules Compliance
Fixed
Mobile
47222rID5i0.pdf
<320>
<330>
<410>
<420>
<510>
<500>
<610>
<700>
<710>
<800>
<900>
<1000>
<1010>
< 1100>
Company Price ( con plet e oft d.h e d wo t k s h ert)
(.ompl e te o lto eh e d wo t k th. c t )
l.o n pl. te o ttu.h e d wa t k th ee t)
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company Price Offerings (broadband)
Operating Companies and Affiliates
TribalLandofferings(Y/N)? O OVoice Seruices Rate Comparability
Terrestrial Backhaul (Y/N)?(il not,.h..l to indi.ote...til.otiodl
l. on pl e t. d tt o c h e d wat ksh..t )
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<1200> Terms and conditlon for Lifeline Customers
<2000>
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4722271D112 l\{ud Lake Telephone Company
FIVE YEAR SER\IICE QUALITY IMPROVEMENT PLAN
PRXAMBLE
Mud Lake Telephone Cooperative Association ("Mud Lake") has carefully developed its irnprovernent
plan, concentrating on the delivery and continuation of a robust network r.vhich provides, at a rninimurn,
the federally required voice and broadband connectivity as stipulated by regulatory rule.
Mud Lake advises that this improvement plan has been carefully crafted, matching rneasured network
deploynent, improvernent and quality service levels rvith known frnancial irnplications of the FCC's
USFACC Transformation Order upon the Cotnpany's support cash-flows. The uncertainty of such cash
florvs being received in later years as a result of current and potential regulatory action on rural rate-of-
return carriers has resulted in the Company taking a balanced, yet realistic, approach.
The envirorunent in which the Cornpany operates rernains dynamic, not static. As a result, Mud Lake
reserves the opportunity to rnodify its plan in response to changing rnarket demands as well as future
regulatory decisions, and their impacts upon the Cornpany's financial viability in providing quality services.
Mud Lake will re-evaluate this plan on an annual basis. Action, however, may also be taken abruptly on
the presented plan for both current and later years in the event of evolving regulatory conditions and/or
changes in technology (vendor)-driven support. All adjustments to the irnprovement plan in this document
will be reflected and explained in subsequent annual reports.
OVERVIEW
Mud Lake is an Eligible Telecommunications Carrier (ETC) providing Universal Service supported
services to approximately 1200 customers in trvo counties covering approximately 3500 square ntiles.
Consistent with Conunission requiretnents, this Service Quality lmprovernent Plan addresses only Mud
Lake's regulated ETC operations.r A detailed description of Mud Lake's plans for the provision of the
supported services in the five (5) year period starting with Year 2015 through 2019 is provided herein.
Per the Universal Service Adnrinistrative Cornpany (USAC), during the calendar year 2013, Mud Lake
received a total of $343,233 in USF support funds. The breakdorvn of the funding for the year was;
. $128,913 High Cost Loop Support. $ -41,922 Local Switching Support. $ 12,702 Connect Arnerica Fund-Intercarrier Conrpensation Support. $243,540 lnterstate Common Line Supporto $ -0- Safety Net Additive
All funds were used in 2013 to: (l) rnaintain, upgrade, and improve the Company's network; and (2) cover
its operating expenses as necessary to permit it to offer a high level ofservice for both voice and broadband
throughout its service area.
tPer 47 C.F.R. $ 54.314, federal USF support, "will be used only for the provision, maintenance, and upgrading of
facilitiesandservicesforwhichthesupportisintended." Ifinvestmentsorexpensesareforserviceareaslargerthan
the supported service areas, then allocations ofthe expenditures are required.
fune 2014 Page 1 ofS
472227LD112 Mud Lake Telephone Company
Mud Lake Telephone Company started in 1952 to provide regulated telephone services to residential and
business customers. It is a local exchange carrier currently ernploying 7 individuals and providing
telecomrnunications services rvith five exchanges covering all ofClark County and about 25% ofJefferson
County.
In addition to serving residents and businesses in the area, Mud Lake also serves the local anchor institutions
which consists of 2 schools, I library, 2 ciry and county offices, I health clinic and I fire station. The
schools and library currently receive lOrnbps/lrnbps broadband service with the other anchor institutions
receiving from l.5Mbps/lrnbps to 5 Mbps/l Mbps. By the end of 2015 fiber will be installed to all retnote
cabinets, thereby providing easier access to higher speeds.
The Cornpany has a long history of providing reliable quality service with no outages or dorvntime. Service
requests and clunges for telephone service and broadband are typically rnet within 24 hours. Build-out and
rnaintenance project budgets and deadlines are also consistently rnet. Wireless services of AT&T, Verizon
Wireless and T-Mobile provide the only cornpetition in the area.
DEMOGRAPHTCS
Mud Lake's Idaho serving area includes Clark County and approximately 25Yo of Jefferson County. Their
serving area consists of fannlands, desert and mountains. This variety of geography includes Natural hot
springs with 120" water temperatures and crystal clear rvater of 32. used by a water bottling plant. It has
an elevation of 5,000 to 6,500 feet with peaks up to 10,000 feet. All outside plant facilities are buried
underground to uraiutaiu the beauty of the area, to cornply with strict envirorunental standards and to
withstand the vagaries of nature. The lava rock, whiclr cover 6A%o of the area, presents difficult construction
challenges for the underground installation aud of course, the harsh winters prevent any construction at all.
There is a calcium rnine in the area, but Mud Lake's serving area prirnarily consists of agricultural lands
rvhere important subsistence crops are grown, such as potatoes, barley and alfalfa. Mud Lake has 1200
access lines sewing the scattered population of approximately 7,595. 399 customers also receive
broadband services.
According to the U.S. Census Bureau the2012 rnedian household income for Clark County is $35,833 and
for Jefferson County, $52,980. Clark per capita incorne is approximately $18,906, Jefferson is $19,712.
Person below the poverty level in Clark is 14.2o/o and in Jefferson, I I %. Mud Lake has a total of 36 Lifeline
subscribers.
Mud Lake's serving area covers approxirnately 3500 square rniles with over 9,761 route rniles of copper
and fiber cable. The cornpany is currently serving about 1200 subscribers at year end 2013. This
approxirnates a subscriber density (average of access lines per square mile) of 0.34 subscribers per square
rnile. Tlre Cornpany also served 399 broadband custorners as of 12137/2013. Mud Lake is able to provide
broadbandservicetol00%ofitsservingareaifprovidedwithareasonablerequest. DSLspeedsareoffered
at l0 Mbps down/l Mbps up. By the end of 2015, all of the remote cabinet nodes in the Company's netrvork
will be fiber fed. Mud Lake also provides a fixed wireless broadband solution to the remote locations in
the serving area. Mud Lake participates in the Syringa state wide ring which provides redundancy and also
provides access to the internet and the outside world.
Mud Lake' subscribers have taken advantage of the broadband offerings. Currently 317 custorners are
subscribing to Asymrnetrical DSL speeds of less than 1.5 Mbps dolvn aud 1.5 Mbps up; 70 subscribe to
speeds of I .5 to 2 Mbps down and 1.5 Mbps up; and 12 subsctibe to speeds of 3 to 4 Mbps down and I .5
Mbps up.
fune 2014 Page 2 of 5
472227tD112 Mud Lake Telephone Company
ln the last couple ofyears, the emphasis has been on expanding the reach offiber throughout the network.
Nearly all renrote cabinet nodes are fiber fed. By the end of 201 5, all nodes will be fed by fiber. Fiber has
been extended to the main large business, Larson Farms and to all the schools in the area. New Calix
equipment has been installed as rvell as Cisco routers. Mud Lake is cornrnitted to serving its entire area
rvith the latest technology and highest speeds.
IMPROVEMENT PLANS BY YEAR (2015-2019 inclusive)
Summary descriptions of network irnprovements planned for the next five (5) years in accordance rvith Part
5a.202(a)(l)(ii) and Part 54.3 I 3(a)( I ) by year and by exchange are presented belorv. Detailed expenditures
are surnmarized in the attached Excel worksheet (Attachment l). Where available, area and subscribers
ilnpacted by the irnprovernents are identified in the rvorksheet. Costs are broken out by voice and broadband
service.
SUMMARY DISCUSSION OF PLANS BY YEAR
201 s
TERRATON EXCHANGE
The Company intends to use intenral cash florvs to replace existing copper with approxirnately four miles
of fiber to connect the Oldham Road remote cabinet to the Mud Lake netrvork in the 2nd quarter of 201 5.
The project is estimated to cost $30,000 and will impact an area of approxirnately 100 square miles and a
population of 120.
HAMER EXCHANGE
The Cornpany intends to use intemal cash flows to replace existing copper with approxiurately three rniles
of fiber to connect the Black Road remote cabinet to the Mud Lake nefwork in the 3rd quarter of 2015.
The project is estimated to cost $25,000 and will impact an area of approximately 100 square rniles a
population of around 120. The Place Road rernote cabinet will be upgraded with new access equipment
and approximately three miles of fiber connecting it to Mud Lake's network in the 3d quarter for an
estimated combined cost of $65,000. This upgrade rvill impact an area of approxirnately 100 square rniles
and a population of 120.
DUBOIS EXCHANGE
The Company intends to use internal cash flows to replace existing copper rvith approximately one-half
rnile of fiber to connect the Silver Sage remote cabinet to the Mud Lake network in the 2nd quarter of
2015. The project is estirnated to cost $20,000 and will impact a population of 120 within a 100 square
mile area. Phase one of the FTTH project will be cornpleted in the 4th quarter for an estimated cost of
$25,000. Approxirnately 800 people will be irnpacted by this new project in a 4 square rnile area. The
Cornpany u,ill also install one-half mile of frber to connect two schools to the netrvork for an estimated
cost of $20,000. The schools have a combined student and teacher population of approxirnately 700 over
a I rnile area.
fune 2014 Page 3 of5
472227tD112 Mud Lake Telephone Company
NETWORK WIDE IMPROVEMENTS
The Company plans to upgrade and expand its network by first designing and engineering then installing
remote cabinets and fiber backbone facilities throughout the service area. The completion date for the
first phase is estirnated to be in the 4th quarter or 2015 for an estimated cost of $25,000. When cornplete,
this upgrade will provide access to rnore efficient service and higher speeds to the service area's
population of 7,595 impact rvithin an area of about 3500 square rniles. ln 2015 Mud Lake expects to
spend $5,000 on miscellaneous improvements
2016
TERRATON EXCHANGE
The Company will begin a FTTH project in the Terraton and Mud Lake areas for an estimated cost of
$25,000. This project will provide fiber service to approxirnately 750 people within a l2 square rnile area
and will be cornpleted in the 4d'quarter.
DUBOIS EXCHANGE
The Company will continue the FTTH project for an estirnated cost of $ 100,000 and lvill impact a
population of approxirnately 120 within a 100 square urile area.
NETWORK WIDE IMPROVEMENTS
The Company rvill continue its plans to upgrade and expand its network by installing remote cabinets and
fiber backbone facilities throughout the service area. The completion date for the fiber installation is
estirnated to be in the 3rd quarter for 2016 for an estimated cost of $I00,000. When cornplete, this
upgrade will provide access to lnore efficient service and higher speeds to the service area's population of
7,595 impact within an area of about 3500 square miles. In 2016 Mud Lake expects to spend $5,000 on
miscellaneous irnprovements
2017
DUBOIS EXCHANGE
The Courpauy rvill complete the FTTH project for an estimated cost of $100,000 and will irnpact a
population of approxirnately 120 rvithin a 100 square rnile area.
NETWORK WIDE IMPROVEMENTS
The Cornpany rvill purchase a service truck iu the 2nd quarter for $40,000. The truck will provide service
to the entire 3500 square mile area and impact the total population of 7,595. The Company will continue
its plans to upgrade and expand its network by installing remote cabinets throughout the service area. The
completion date for the cabinet installation is estimated to be in the 4th quarter of 2017 for an estimated
cost of $ 160,000. When complete, this upgrade will provide access to rnore efficient service and higher
speeds to the service area's population of 7,595 irnpact within an area of about 3500 square rniles. In
2017 Mud Lake expects to spend $5,000 on rniscellaneous irnprovements
201 8
TERRATON EXCHANGE
The Company will continue its FTTH project in the Terraton and Mud Lake areas for an estimated cost of
$150,000. This project rvill provide fiber service to approximately 750 people within a 12 square mile
area and lvill be cornpleted in the 3rd quarter.
lune 2014 Page 4 of 5
4722271D112 Mud Lake Telephone Company
NETWORK V/IDE IMPROVEMENTS
The Company will cornplete its current plans to upgade and expand its network by installing additional
remote cabinets throughout the service area. The cornpletion date for the cabinet installation is estimated
to be in the 4th quarter for 201 8 for an estimated cost of $ 160,000. When complete, this upgrade rvill
provide access to rnore effrcient service and higher speeds to the service area's population of7,595
irnpact within an area of about 3500 square miles. In 2018 Mud Lake expects to spend $5,000 on
miscellaneous improvements
20r9
TERRATON EXCHANGE
The Cornpany will cornplete its FTIH project in the Terraton and Mud Lake areas for an estimated cost
of $ I 50,000. This project will provide fiber service to approxirnately 750 people within a l2 square rnile
area and rvill be completed in the 3rd quarter.
NETWORK WIDE MPROVEMENTS
In 2019 Mud Lake expects to spend 55,000 on miscellaneous improvements
June 2014 Page 5 ofS
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472227tDsr0
Service Quality Standards &
Consumer Protection Rules
Consumer Protection
Voice and Broadband
Mud Lake cornplies with the requirements of 47CFR Part 64 Subpart U, Customer Proprietary Network
Information and the Federal Trade Cornmission Red Flag Rules to prevent identity threat. A rnanual for
each of those programs is in place and is part of the employees' handbook. Ernployee training is
conducted annually and new hires are instructed on the prograrns as required by theirjob functions.
Service Quality Standards
Voice
Mud Lake cornplies with the service standards as required by the state regulatory commission. Mud Lake
is cornmitted to providing the highest quatity service to its customers.
Broadband
Mud Lake cornplies with the service standards as established by state regulatory cornmission. Mud
Lake follorvs the service standards noted in NECATariff#S and is committed to provide the highest
quality service to its broadband customers.
472227tD610
Description of Functionality
in Emergency Situations
Back-up Porver for Both Voice and Broadband Services
Mud Lake Telephone prides itself on updating and maintaining all its plant and equipment to
prevent outages before they happen. Ifoutages do happen, the Company has 24-hour on call staff
and alarm reporting systems in place that send notifications to the 24 hour personnel monitoring
these systems. The Cornpany certifies that it follows best practices that are designed to allow them
to remain functional in an emergency situation through the use of back-up power to ensure
functionality in the event of a limited commercial power failure.
Mud Lake utilizes battery back-up systems and standby generators in its cenfial offices. This
enables Mud Lake to maintain porver during an outage of at least 4 to 8 hours with battery back-
up, and for 48 hours utilizing stored fuel. Mud Lake also uses its portable gas powered generator
to support the remote cabinets in the network in the event of an extended power outage.
The Company perfonns exercises to test disaster preparedness on each site's back-up power
systems which are tested weekly. Major transport facilities arc also tested periodically to ensure
failover reliability.
Ability to reroute traffic/data arouud damaeed facilities
Mud Lake Telephone has a folded ring architecture, so it has some redundancy in rerouting
exchange traffic between its five exchanges in case of darnaged CWF facilities. The five year
improvement plan incoryorates additional fiber improvements that will rnake this a full fiber ring
architecture/network with complete redundancy in between its exchanges.
The Cornpany is also a partner of the Idaho Syringa Network, which provides a fiber ring
throughout southem Idaho and Mud Lake's study area. Being on the Syringa ring network provides
the Company the capability of re-routing interexchange traffic and providing continuous service in
emergency situations due to damaged facilities.
Capabilitv to manaee faffic/data spikes resultins from emereencv situations
Mud Lake's trunk routes are monitored by Central Office equipment for usage utilization and
management. Mud Lake Telephone takes no responsibility for the capabilities of interconnected
networks to manage traffic spikes resulting from emergency situations, but will continue its best
efforts for its networks during such events.
472227rD1010
Voice Services Rate Comparability
As evidenced by the data provided in line 700 ofthis Form 481, Mud Lakes's voice service
pricing is no more than2 standard deviations above the national average urban rate ($46.96) as
announced by the Wireline Competition Bureau on March 20,2014 (DA l4-384)
472227tDtzto
MUD LAKE TELEPHONE COOPERATIVE ASSOCIATION
LIFELIN E ASSISTANCE PROGRAM
The Lifeline Telephone Assistance Program provides for a discount off of Mud Lake's regular recurring
monthly rate and services for the provision of local residential service for certain low-income customers
The Lifeline Telephone Assistance Program discount is only available to low-income customers who
meet eligibility requirements established by the Federal Communications Commission.
The Federal Communications Commission national ellgibility criteria include subscribers with a
household income of 135 percent of the federal poverty level or participation in one of the following
programs: Supplemental Nutrition Assistance Program, Medicaid, Temporary Aid to Needy Famllies,
Supplemental Security lncome, Low lncome Home Energy Assistance Program, National Free Lunch or
Federal Public Housing Assistance.
Eligible Lifeline customers will receive a monthly discount of 59.25 through the Federal Communications
Commission's Lifeline Program and a S2,50 monthly discount through the ldaho Telephone Service
Assistance Program on the regular Company rates for residential service. Only one telephone number
per household is eligible for a Lifeline discount.
A Lifeline customer may not be disconnected from local service solely for non-payment of toll charges,
but the Lifeline customer must continue to pay the local service rates and charges.
Toll blocking is available at no charge to a qualifying Lifeline customers. lf a qualifying Lifeline customer
voluntarily elects toll blocking service from the Company, where that service is available, the customer
will not be required to pay a deposit, if otherwise applicable, to initiate seryice.
TO APPLY: Potential Lifeline customers must contact a Community Action Partnership office or an ldaho
Department of Health and Welfare Regional Office to determine their eligibility to participate in the
program.
472227rDBPa6 Cl. ()r.riEN'tr'urEr_rjN & t-1o., Lx.Ir.
r'i.l::.r.i I'rrii' .l ;r.r;:i,::.t. <l' l',:;r;',:jri:r;r.
Muo Larn TBrnpHoNE CoopnRATrYE
AssocrATroN, INC. AND SunsrorARY
C oNs oLTDATEo FrueNCrAL SrerruENTs
ToenrHER wrrH
INnTpnNDENT Auprrons' RnpoRT
DBcnnaBER 31, 2013
lhptnJ rtri ttur!tt,o!str. (lr'rrinl rn eiu, ttltn:{. '
MUD LAKE TELEPHONE COOPERATIVE ASSOCIATION,INC. AND SUBSIDIARY
CONTENTS
I NDEPENDENT AUDITORS' REPORT
CONSOLIDATED FI NANCIAL STATEMENTS:
Balance Sheet
Statement of Operations
Statement of Comprehensive lncome
Statement of Members' Equity
Statement of Cash Flows
Notes to Consolidated Financial Statements
IN DEPENDENT AUDITORS' REPORT ON
SUPPLEMENTARY I NFORMATION
SUPPLEMENTARY I NFORMATION:
Consolidating Schedules:
Balance Sheet lnformation
Statement of Operations lnformation
Paqe
1
2
3
4
5
6
7-14
'15
16
17
ffiE' tlt-lir:i.l 'l'ulilr-Erhi {& {jo". L-'1"n.
INDEPENDENT AUDITORS' REPORT
Board of Directors
Mud Lake Telephone Cooperative Association, lnc. and Subsidiary
Dubois, ldaho
We have audited the accompanying financial statements of Mud Lake Telephone Cooperative
Association, lnc. and Subsidiary, which comprise the balance sheet as of December 31,2013 and
2A12, and the related consolidated statements of operations, comprehensive income, members'
equity and cash flows for the years then ended, and the related notes to the financial statements.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this
includes the design, implementation, and maintenance of intemal control relevantto the preparation
and fair presentation of financial statements that are free from material misstatement, whether due
to fraud or error.
Auditors' Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We
conducted our audits in accordance with auditing standards generally accepted in the United States
of America. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor's judgment,
including the assessment of the risks of material misstatement of the financial statements, whether
due to fraud or error. ln making those risk assessments, the auditor considers internal control
relevant to the entity's preparation and fair presentation of the financial statements in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express
no such opinion. An audit also includes evaluating the appropriateness of accounting policies used
and the reasonableness of significant accounting estimates made by management, as well as
evaluating the overall presentation of the financial statements,
We believe that the audit evidence we have obtalned is sufficient and appropriate to provide a basis
for our audit opinion.
Opinion
ln our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the financial position of Mud Lake Telephone Cooperative Association, lnc. and
Subsidiary as of December 31, 2013 and 2A12, and the consolidated results of their operations and
their cash flows for the years then ended in conformity with accounting principles generally
accepted in the United States of America.
St. Paul, Minnesota
June 25, 2014
Qli"r*4rr "-An
n+ Co, u )-d
1
; i r;.. I
MUD LAKE TELEPHONE COOPERATIVE ASSOCIATION, INC. AND SUBSIDIARY
CONSOLIDATED BALA,NCE SHEET
DECEMBER 31,2013 AND 2012
ASSETS
CURRENT ASSETS:
Cash
Certificates of Deposit
lnvestment Securities
Due from Customers, Less Allowance of $7,614
Other Accounts Receivable
lncome Taxes Receivable
Materials and Supplies
Propane lnventory
Prepaid Expenses
Total Current Assets
INVESTMENTS AND OTHER ASSETS:
Certificates of Deposit
lnvestment Securities
Other lnvestments
Deferred Charges
Total lnvestments and Other Assets
PROPEiTY, PLANT AND EQUIPMENT:
ln Service
Plant Under Construction
Total Property, Plant and Equipment
Less Accumulated Depreciation
Net Property, Plant and Equipment
TOTALASSETS
LIABILITIES AND MEMBERS' EQUITY
CURRENT LIABILITIES:
Accounts Payable
Advance Billings and Payments
Total Current Liabilities
MEMBERS'EQUITY:
Patronage Capital
Other Equity (Deficit)
Accumulated Other Comprehensive lncome
Total Members'Equity
TOTAL LIABILITIES AND MEMBERS' EOUITY
2012
$ 1,907,596
1,452,199
146,947
287,901
24,990
82,801
59,119
15,820
3,977,373
331,000
1,096,872
3,035,186
391,089
4,854,147
9,233,260
38,375
9,271,635
6,142,480
3,129,'155
$ 't2,943,775 $ 11,960,675
$ 3e5,553
1 '15,799
511,352
13,304,944
(2,035,168)
179,547
11,449,323
2013
$ 1,815,328
513,296
'181,384
217,046
1 93,671
25,087
91,839
48,492
3,096,143
655,663
1,542,775
3,838,579
391,089
-614-28-165'
9,903,966
27,524
9,931,490
6,501,954
3,429,526
$ 339,991
100,426
500,417
'|.4,025,274
(1,688,043)
106,127
-214-5358
$ 12,943,775 $ 11,960,675
The accompanying notes are an integral part of the consolidated financial sfaternenfs.
2
MUD LAKE TELEPHONE COOPERATIVE ASSOCIATION, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
YEARS ENDED DECEMBER 31,2013 AND 2012
OPERATING REVENUES:
Local Network
Network Access
lnternel Services
Propane Sales
Rent Revenue
Other Services
Miscellaneous
Uncollectibles, Net
Total Operating Revenues
OPERATING EXPENSES:
Plant, Maintenance and Access
Depreciation
Customer
Corporate
Other Taxes
Costs of Good Sold - Propane
Other Operating - Propane
Total Operating Expenses
OPERATING MARGIN
OTHER INCOME AND EXPENSES:
lnterest, Dividends and Securities Sales
Equity in lnvestment Earnings
Miscellaneous
Net Other lncome and Expenses
NET MARGINS BEFORE INCOMETAX EXPENSE
INCOME TAx EXPENSE
NET MARGINS
$ 204,A22
1,053,324
272,459
973,592
89,048
43,731
10,162
14,992
2,661,230
512,424
359,633
112,657
235,572
77,352
683,533
261,138
2,242,409
2012
$ 154,932
1,029,194
266,776
941,436
80,079
29,508
17,694
(8,723)
2,510,896
555,058
378,252
142,488
224,354
36,900
636,871
249,212
2,223,135
418,821 287,761
50,878
1,597,A27
(2,875l'
1,645,030
2,063,851
65,048
1,381,807
(5,250)
1,441,605
1,729,366
3,524
$ 2,063,85'f $ 1,725,842
The accompanying notes are an integral part of the consolidated financial statements.
3
MUD LAKE TELEPHONE COOPERATIVE ASSOGIATION, INC. AND SUBSIDIARY
STATEMENT OF COMPREHENSIVE INGOME
YEARS ENDED DECEMBER 31, 2013 AND 2012
20'122013
NET MARGINS
OTHER COMPREHENSTVE INCOME (LOSS):
Unrealized Gain (Loss) on Available-for-Sale Securities
Reclasslfi cation Adjustment for Losses
Recognized in Net Margin
Other Comprehenslve lncome (Loss)
COMPREHENSIVE INCOME
$ 2,063,851
(73,733)
313
-TEfro)
$ 1,ggo,rBl
$ 1,725,842
14,518
3,983
18,501
$ 1,744,343
The accompanylng notes are an lntegral part of the consolidated financialstatements.
4
MUD LAKE TELEPHONE COOPERATIVE ASSOCIATION, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF MEMBERS' EQUITY
YEARS ENDED DECEMBER 31,2013 AND 2012
OtherPatronage Equity
Accumulaled
Other
ComprehensiveCapital (Deficit) lncome Total
BALANCE on December 31, 2011
Net Marglns
Other Comprehensive lncome
Retirement of Palronage Capital
Change in Unclaimed Capitat Credits
BALANCE on December 31,2012
Net Margins
Adjustment of Prior Year Margin Allocation
Miscellaneous
Other Comprehensive Loss
Retirement of Patronage Capital
Change in Unclaimed Capital Credits
BALANCE on December 31,2013
$ 12,382,266 $ (2,085,249) $ 161,046
1,725,842
18,501
(803,164)
13,304,944
2,063,851
(301,997)
50,081
(2,035,168)
(73,4201
.1,041,524)
44,948
$ 14,025,274 $ (1,688,043) $ 106,127
$ 10,458,063
1,725,842
18,501
(80s,164)
50,08'l
11,449,323
2,063,851
180
(73,4201
(1,041,524)
44,948
$ 12,443,358
The accompanying notes are an integral part of the consolidated financial statements.
5
MUD LAKE TELEPHONE COOPERATIVE ASSOCIATION,INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
YEARS ENDED DECEMBER 31,2013 AND 2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Margins
Adjustments to Reconcile Net Margins to Net Cash
Provided By Operating Activities:
Depreciatlon
Equity in lnvestment Earnings
Distributions from Stock and LLC lnvestments
Loss on Sale of lnvestment Securities
Changes in Assets and Liabilities:
Due from Customers
Other Accounts Receivable
lncome Taxes Receivable
Propane lnventory
Prepaid Expenses
Accounts Payable
Advance Billings and Payments
Net Cash Provided By Operating Activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to Property, Plant and Equipment
(lncrease) Decrease in Materials and Supplies
Purchase of Certificates of Deposits
Sale of Certificates of Deposits
Purchase of lnvestment Securities
Sale of lnvestment Securities
Purchase of Other lnvestments
Net Cash Provided By (Used ln) lnvesting Activities
CASH FLOWS FROM FINANCING ACTIVITIES:
lncrease in Other Equity
Retirements of Patronage Capital
Net Cash Used ln Financing Activities
NET CHANGE IN CASH
CASH at Beginning of Year
CASH at End of Year
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION:
Net Cash Payments (Refunded) for lncome Taxes
lncrease in Other Accounts Receivable for Property,
Plant and Equipment
2013
$ 2,063,851
359,633
(1,597,027)
795,911
313
(70,099)
94,230
(e7)
10,627
15,820
4,438
(15,373)
1,662,227
(660,004)
(9,038)
(476,097)
1,090,337
(801,020)
100,000
(2,2771
(758,099)
45,128
(1,041,524)
(9e6,s96)
(92,2681
1,907,596
$ 1,815,328
2012
$ 1,725,842
378,252
(1,381,807)
1,023,325
3,983
80,897
68,719
100,310
(7,553)
(2,114)
(148,736)
894
1,842,012
(421,357)
14,969
(421,005)
981,400
(100,860)
200,000
(2,375)
250,772
s0,081
(803,164)
(753,083)
1,339,701
567,895
$ 1,907,596
$ (e6,786)
88,000
The accompanying notes are an integral part of the consolidated financial statements.
6
MUD LAKE TELEPHONE COOPERATIVE ASSOCIATION, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
The Company's principal llne of business is providing local telephone service and access to
long-distance telephone service through its local exchange network. The revenues reported on the
statement of operations reflect the relative importance of each type of service. The principal market
for these services are local residential and business customers residing in the exchanges the
Company serves in ldaho. The Company also provides internet services. The subsidiary of the
Company provides propane distribution services in Clark and Jefferson Counties of ldaho.
Basis of Accounting
The consolidated financial statements have been prepared in conformity with accounting principles
generally accepted in the United States of America including certain accounting practices
prescribed by the Federal Communications Commission (FCC) and the state regulatory commission
in ldaho.
Accounting Estimates
The presentation of financial statements in conformity with accounting principles generally accepted
in the United States of America requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenues and expenses, and disclosure of
contingent assets and liabilities as of the date of the financial statements. Actual results could differ
from those estimates.
Subsequent Events
ln preparing these financial statements, the Company has evaluated for recognition or disclosure
the events ortransactions that occurred through June 25,2014, the date the financial statements
were available to be issued. Subsequent to year-end, the Company sold a portion of its 700 Mhz
spectrum (included in deferred charges) for $420,000. The gain on the portion sold will be
recognized in2014.
Consolidation
The consolidated financial statements include the accounts of the Company and its wholly-owned
subsidiary, High Plains Propane, LLC (HPP). All significant intercompany transactions and
accounts have been eliminated.
Gertificates of Deposit
Short-term interest bearing investments are generally those with maturities of less than one year but
greater than three months when purchased. Certificates with maturity dates beyond one year are
classified as noncurrent assets. These investments are readily convertible to cash and are stated at
cost, whlch approximates fair value.
Receivables
Receivables are stated at the amount the Company expects to collect from outstanding balances.
The Company provides for probable uncollectible amounts through a charge to earnings and credits
to the valuation allowances based on its assessment of the current status of individual accounts.
Balances that are still outstanding after the Company has used reasonable collection efforts are
written off through charges to the valuation allowance and credits to receivable accounts. Changes
in the valuation allowance have not been material to the financial statements.
MUD LAKE TELEPHONE GOOPERATIVE ASSOCIATION, INC. AND SUBSIDIARY
NOTES TO CONSOLIDA,TED FINANCIAL STATEMENTS
NoTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
lnventories
Materials and supplies are recorded at average cost, Propane inventory is valued at lower of cost
or market.
lnvestment Securities
Readily marketable investments in debt securities are classified as available-for-sale and are
reported at fair value with unrealized gains and losses recorded in other comprehensive income.
Unrealized losses are charged against earnings when a decline in fair value betow the cost basis is
determined to be other-thantemporary. Realized gains and losses on dispositions are based on
the net proceeds and the adjusted book value of the securities sold, using the specific identification
method.
Other lnvestments
The Company follows the equity method of accounting for holdings of 20% to 50% of the voting
stock of other operating companies. The equity method is also used for limited liability company
interests of greater than 3%. Under the equity method, the Company's investment reflects the
original cost and recognition of the Company's share of undistributed earnings or losses of the
entity. Other long-term investments are accounted for under the cost method of accounting. This
method requires the Company to periodicatly evaluate whether non-temporary decreases in values
of the investments have occurred, and if so, to write the investments down to net realizable values.
As the Company is exempt from disclosing estimated fair values, the Company does not estimate
fair values for cost method investments if there are no identified events or changes in circumstances
that may have a significant adverse effect on the fair values.
Property and Depreciation
Property and equipment are recorded at original cost. Additions, improvements or major renewals
are capitalized. lf the assets are sold, retired or otherurise disposed of in the ordinary course of
business, the cost net of removal costs and salvage is charged to accumulated depreciation, and
the original cost is removed from the asset accounts.
Depreciation is computed using the straight-line method based on estimated service or remaining
useful lives of the various classes of depreciable assets. The composite depreciation rates are as
follows:
Telecommunications Plant
Nonregulated Equipment
Propane Plant
Patronage Capital
Revenues in excess of operating costs and expenses from the furnishing of communications
services, amounts earned from patronage sourced investments, and income (loss) from the
Company's propane distribution operations are assigned to patrons on a patronage basis.
Patronage losses are carried forward to future years to offset future patronage allocations. All other
amounts received from interest income and other nonpatronage sourced operations in excess of
costs and expenses that are not needed to offset current or prior losses may be allocated to patrons
or set aside as an unallocated reserve. The amount of any potential patronage margins is allocated
and communicated to the membership upon approval by the Board of Directors and completion of
the annual income tax return filing.
2013
3.1%
6.4
7.3
2012
3.6Yo
6.9
7.4
MUD LAKE TELEPHONE GOOPERATIVE ASSOGIATION, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFIGANT ACCOUNTING POLICIES (Continued)
Revenue Recognition
Revenues are recognized when earned. Local service and originating intrastate access services
are based on tariffs filed with the state regulatory commission and retained by the Company.
lnterstate and terminating intrastate access revenues are billed based on tariffs filed with the FCC,
reported to the National Exchange Carrier Association, and distributed based on average schedule
settlements which 'include eligible funds governed by the Universal Service Administrative
Company, Non-regulated revenue for broadband, customer premise equipment, and other
miscellaneous services is highly competitive and based on open market conditions. Revenue on
sales of propane is recognized when propane is delivered to their customers.
Presentation of Taxes Collected From Customers
Sales, excise, and other taxes are imposed on most of the Company's sales to nonexempt
customers. The Company collects the taxes from customers and remits the entire amounts to the
governmental authorities. The Company's accounting policy is to exclude the taxes collected and
remitted from revenues and expenses.
lncome Taxes
The Company is a cooperative organized and operated on a nonprofit basis, but flles income tax
retums as a taxable cooperative as explained in Note 6.
The provision for income taxes consists of an amount for taxes currently payable and a provision for
tax consequences deferred to future periods. Deferred income taxes are recognized for the future
tax consequences attributable to differences between the f,nancial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred income tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. Valuation allowances
are established, when necessary, to reduce deferred tax assets to the amounts expected to be
realized.
The Company reviews income tax positions taken or expected to be taken in income tax returns to
determine if there are any income tax uncertainties. The Company recognizes tax benefits from
uncertain tax positions only if it is more likely than not that the tax positions will be sustained on
examination by taxing authorities, based on the technical merits of the position. The Company has
identified no income tax uncertainties.
The Company's federal and state income tax returns are open to examination fortax years 2010
through 2012.
MUD LAKE TELEPHONE COOPERATIVE ASSOCIATION, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTTNG POLICIES (Gontinued)
Fair Value Measurements
Under generally accepted accounting principles fair value is the price that would be received to sell
an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date. The accounting standards establish a three-level fair value hierarchy that
prioritizes information used in developing assumptions when pricing an asset or liability as follows:
Level 1 - Observable inputs such as quoted prices in active markets;
Level 2 - lnputs, other than quoted prices in active markets, that are observable either directly or
indirectly; and,
Level 3 - Unobservable inputs where there is little or no market data, which requires the reporting
entity to develop its own assumptions.
The Company uses observable market data, when available, in making fair value measurements.
Fair value measurements are classified according to the lowest level input that is significant to the
valuation.
The Company holds certain assets that are required to be measured at fair value on a recuning
basis. The fair value of the Company's investment securities were determined based on Level 2
inputs. The fair value of these investment securities is estimated as the present value of expected
future cash inflows, taking into account (1) the type of security, its terms, and any underlying
collateral, (2) the seniority level of the debt security, and (3) quotes received from brokers and
pricing services. ln applying the valuation model, significant inputs include the probability of default
for debt securities, the estimated prepayment rate, and the projected yield based on estimated
future market rates for similar securities.
NOTE 2 . INVESTMENT SECUR]TIES AND ACCUMULATED OTHER COMPREHENSIVE
INCOME
The cost and fair value of investment securities available-for-sale at December 31 , 2013 and 2012
were:
2013
Description
Gross Gross
Unrealized Unrealized FairGost Gains Losses Value
U.S. Governmenl Securities
Municipal Bonds
Total
Description
$ 807,960
810,072
$ - $ 925,884(1',1,7971 798,275
$ 1,618,032 $ 117,924 $ (11,797) $ 1,724,159
2012
$ 117,924
Gross
Unrealized
Gains
GrossUnrealized Fair
Value
$ e17,s25 q__llgf4z
10
U.S. Government Securities $ - $ 1,0s6,872
MUD LAKE TELEPHONE COOPERATIVE ASSOCIATION, INC. AND SUBSIDIARY
NOTES TO CONSOL]DATED FINANCIAL STATEMENTS
NOTE 2 . INVESTMENT SECURITIES AND ACCUMULATED OTHER COMPREHENSIVE INGOME
(Continued)
Proceeds from sales and maturities of investment securities available-for-sale during 2013 and 2012 were
$100,000 and $200,000, respectively. Losses of $313 and $3,983 on available-for-sale securities were
recorded in 2013 and 2012.
The contractual maturities of the debt securities as of December 31, 2013 are as follows:
0-5 years -$1,343,767;6-10 years -$224,279; and over 10 years -$156,113.
NOTE 3 . OTHER INVESTMENTS
Other investments are recorded at cost or cost plus equity in undistributed eamings and losses and consist of
the following:
Equity Method:
Teton Cellular,
lnc. - 24.591o
Syringa Networks,
LLC - 4.48%
Cost Method:
Patronage Capital
Other
Total
$ 49 $7.051,772
430,574 987,136
$ (7,444,371)
(30 1,1 48)
Total
2013
$ 2,074,560
1,628,286
55,667
80,066
Total
2012
$ 1,497,4U
1,404,246
53,390
80,066
Prior
Cumulative 2012Cost lncome lncome
Less2013 Cumulativelncome Distributions
$ 1,126,603 $ 1,340,507
255,204 256,520
s5,667
80,066
$ 566,356 $ 8,038,e08 S 1,381,807 $1,597,027 $ (7,745,519) $ 3,838,579 $ 3,035,186
Teton Cellular, lnc. is a 51% owner of Teton Cellular of ldaho, Limited Partnership (LP). Teton Cellular of ldaho
LP is a 43.11% owner of ldaho 6-Clark LP which provides wireless phone service in ldaho. Teton Cellular of
ldaho LP was a 66.67% owner of ldaho 6-Clark LP in 201 1, but the ownership percentage was dlluted in 2012
when an Alltel operating unit that was previously reported separately was merged into ldaho 6-Clark LP in 2012.
Syringa Networks, LLC provides fiberoptic broadband in ldaho and into adjoining states. ln 2012, Syringa
Networks, LLC purchased 100% of Syringa Wireless, LLC. Syringa Wireless, LLC is a wholly owned subsidiary
of Syringa Networks, LLC that provides wireless personal communications services in southern and eastern
ldaho. The summarized financial information below for 2012 includes the operations of Syringa Wireless, LLC
from the date of purchase through December 31,2012.
11
MUD LAKE TELEPHONE COOPERATIVE ASSOCIATION, INC..AND SUBSIDI.A,RY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 - OTHER INVESTMENTS (Contlnued)
Summarized audited financial information for ldaho 6-Clark LP and Syringa Networks, LLC as of
December 3'1, 2013 and 2012 and the years then ended is as follows:
Idaho 6 Clark LP Syringa Networks, LLC
2013 2012 2013 2012
Revenues
Operating lncome
Net lncome
Assets
Liabilities
Equity
$ 164,447,000 $ 151,915,000 $ s4,067,678 $ 45,003,533
The Company leases fiber, capacity, and equipment to Syringa Networks, LLC under
month-to-month agreements. The charges are based on contract rates. Rent revenue for these
leases were $89,049 in 2013 and $80,079 in 2012.
The Company also leases fiber, capaciV, and equipment from Syringa Networks, LLC under
month-to-month agreements. Rental expense for these leases were $154,909 in 2013 and
$165,937 in2012.
NOTE 4. PROPERTY, PLANT AND EQUIPMENT
lnvestment in property, plant and equipment is as follows:
38,312,000
38,355,000
58,716,000
10,167,000
48,549,000
Telecommunications Plant:
ln Service
Plant Under Construction
Accumulated Depreciation
Nel
Nonregulated Telecommunications Equipment:
ln Service
Accumulated Depreciation
Net
Propane Plant:
ln Service
Accumulated Depreciation
Net
Totals:
ln Service
Plant Under Construction
Accumulated Depreciation
Net
33,693,000
33,732,000
56,627,000
9,833,000
46,794,000
Service Life
(Years)
5.0 to 21.0
5.0 to 15,0
5.0 to 30.0
4,779,339
5,83s,810
$ 8,199,966
27,524
(5,868,389)
2,359,1 01
1,136,390
(272,7711
863,619
9,903,966
27,524
(6,501,964)
$ 3,429,526
4,818,953
5,706,463
1,108,916
(191,460)
917,456
9,233,260
38,375
(6,142,480)
$ 3,'t29,155
82,272,432 71,468,47545,704,1s1 39,973,88536,568,301 31,494,590
2013 2012
$ 7,616,326
38,375
(5,623,039)
2,031,662
567,610 508,018(360,804) (327,981)206,806 190,037
12
MUD LAKE TELEPHONE COOPERATIVE ASSOCIATION, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5. PATRONAGE CAPITAL
Patronage capital consists of:
Assignable
Assigned to Date
Total
Less Retired to Date
Balance at End of Year
2013
$ 2,063,951
27,362,020
2012
$ 1,725,842
25,938,1 75
NOTE6-INCOMETAXES
The Company's tax status is determined by whether or not 85% or more of its revenues are
membership sourced as outlined by IRS rules. lf the Company meets the 85% requirement, it is a
tax-exempt cooperative, and the Company is subject to income tax only on net unrelated businessincome. Otherwise, as a non-exempt cooperative, income tax is paid on taxable income from
non-patronage sources such as investment income. The Company generally will not pay income
tax on net margins from patronage sources, provided the margins are allocated to members as
capital credits on a timely basis. ln certain circumstances, the Alternative Minimum Tax may be
applied to patronage sources of income. For 2013 and 2012, the Company was a non-exempt
cooperative. The subsidiary, High Plains Propane, LLC is considered a disregarded entity for tax
return purposes.
The provision for income tax expense includes the following components:
2013 2012
Cunent Expense $ - $______gt?1
The difference between the federal statutory rate of 34% and the effective rate reflected in the
income tax provision is primarily the result of non-taxable, patronage sourced income and losses in
2013 and 2012.
The components of defened income taxes at December 31, 2013 and2012 are as follows:
2013 2412
Deferred Tax Assets:
Net Operating Loss
ldaho lnvestment Tax Credlt
ldaho Broadband Equipment Investment Tax Credit
Less Valuation Allowance
Net Deferred Tax Assets
29,425,871 27,664,01715,400,597 14,359,073
$14,025,24 $ 13,304,944
$ 52,395 $ 54,448128,068 125,35022,296 11,532(202,7591 (191,330)
$-$-
The valuation allowance has been recorded due to the uncertainty of realization of the benefits
associated with its deferred tax assets in future tax returns. Future events and changes in
circumstances could cause this valuation allowance to change.
Federal and state income tax return operating loss carryovers as of December 31 , 2013 were
approximately $272,000 and $180,000 and will begin to explre in 2026.
ldaho lnvestment Tax Credits and ldaho Broadband Equipment lnvestment Tax Credits are
available to off-set ldaho income tax liability. These credits do not have an expiration date.
13
MUD LAKE TELEPHONE COOPERATIVE ASSOGIATION, INC, AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7 - UNCLAIMED CAPITAL CREDITS
lncluded in cash is $20,000 of restricted cash as required by State of ldaho unclaimed property
statute. The Board of Directors has designated this amount for funding scholarships to local
students.
NOTE 8. RETIREMENT PLAN
The Company has a 401(k) savings plan with National Telephone Cooperative Association
available for all full-time employees. The Company contributes 5% of the base salary of each
employee, and $79.17 per pay period tothe savings plan. Employees are required to contribute a
minimum of 3% to the plans. 401 (k) expense was $22,847 in 2013 and $22,982 in 2012.
The Company's subsidiary HPP has a 401(k) matching plan. HPP contributes 3% match of the
base salary of each employee. Employees are required to contribute a minimum of 3% to the
plans. Pension expense was $3,633 In 2013 and $3,297 in 2012.
NOTE 9. CONCENTRATIONS
Financial instruments which potentially subject the Company to mncentrations of credit risk consist
principally of cash, certificates of deposit and trade receivables. The Company places its cash and
certificates of deposit with high credit quality financial institutions and, by policy, limits the amount of
credit exposure to any one financial institution. Concentrations of credit risk with respect to trade
receivables are limited due to the Company's large number of customers. The Company had a
credit risk concentration as a result of depositing $893,267 of interest bearing accounts in excess of
FDIC coverage limitations of $250,000 within a single local credit union at December 31,2013.
ln October 2011, the FCC approved an Order on lntercarrier Compensation and Universal Service
Fund (USF) reform and announced the issuance of a Further Notice of Proposed Rulemaking on
long-term USF reform and transition toward a National Broadband Plan. The Order required the
transition of carrier access rates to zero over a nine year transitlon period; however in an aftempt to
ease the transition the access revenue was frozen based on 201 1 revenue and wlll be reduced by
approxlmately five percent annually during the transition period. The Order also addresses local
service rates by establishing benchmarks for high cost support eligibility to prevent USF from
supporting artificially low end user rates. Additional reporting and oversight requirements continue
to be implemented on an annual basis. ln 2013 and 2012,1he Company received 41o/o and 40% oI
its revenues from network access, including assistance provided by the Federal Universal Service
Fund.
A significant portion of the Company's revenues are collected from long distance caniers in the
telephone industry, and consequently, the Company is directly affected by the financial well being of
the industry. The continued decline of access rates and elimination of wireless access based on
enacted regulation have reduced the amount of disputes between the Company and the long
distance carriers resulting in a significant reduction ln credit risk. Also, the credit risk associated
with accounts receivable is minimized due to the large number of long distance carriers, and
historically, credit losses have not been significant.
14
INDEPENDENT AUDITORS' REPORT ON SUPPLEMENTARY INFORMATION
Board of Directors
Mud Lake Telephone Cooperative Association, lnc. and Subsidiary
Dubois, ldaho
We have audited the consolidated financial statements of Mud Lake Telephone Cooperative
Association, lnc. and subsidiary, as of and forthe years ended December 31,2013 and 2012, and
our report thereon dated June 25,2014, which expressed an unmodified opinlon on those financial
statements, appears on page 1. Ouraudits were conducted forthe purpose of forming an opinion
on the consolidated financial statements as a whole.
The consolidating information on pages 16 and 17 are presented for purposes of additional analysis
of the consolidated financial statements rather than to present the financial position, results of
operations, and cash flows of the individual companies, and it is not a required part of the
consolidated financial statements. Such information is the responsibility of management and was
derived from and relates directly to the underlying accounting and other records used to prepare the
consolidated financial statements. The consolidating information has been subjected to the auditing
procedures applied in the audit of the consolidated financial statements and certain additional
procedures, including comparing and reconciling such information directly to the underlying
accounting and other records used to prepare the consolidated financial statements or to the
consolidated financial statements themselves, and other additional procedures in accordance with
auditing standards generally accepted in the United States of America. ln our opinion, the
consolidating information is fairly stated in all material respects in relation to the consolidated
financial statements as a whole.
Qlb*r*'-Ant e-PtdL* Co, r- TJ
St. Paul, Minnesota
June 25,2014
15
MUD LAKE TELEPHONE COOPERATIVE ASSOCIATION, INC. AND SUBSIDIARY
CONSOLIDATING BALANCE SHEET INFORMATION
YEAR ENDED DECEMBER 31,2013
ASSETS
Mud LakeElimlnations Telephone High Plainsand Cooperative Propane,Gonsolidated Reclassifications Association LLC
CURRENT ASSETS;
Cash
Certificates of Deposit
lnvestment Securities
Due from Customers
Other Accounts Receivable
lncome Taxes Receivable
Materials and Supplies
Propane lnventory
Total Current Assets
INVESTMENTS AND OTHER ASSETS:
Certificates of Deposit
lnvestment Securities
Other lnvestments
Defered Charges
Total lnvestments and Other Assets
PROPERTY, PLANT AND EQUIPMENT;
ln Service
Under Construction
Less Accumulated Depreciation
Net Property, Plant and Equipment
TOTAL ASSETS
CURRENT LIABILITIES:
Checks in Excess of Available Cash Balance $
Accounts Payable
Advance Billings and Payments
Total Current Liabillties
MEMBERS'EQUITY:
Contributed Capital
Accumulated Deficit
Patronage Capital
Other Equity (Deficit)
Accumulaled Other Comprehensive lncome
Total Members'Equlty
TOTAL LIABILITIES AND MEMBERS' EQUIry
$ (83,147) $ 1,8e8,475 $
513,296
181,38475,320 141,726
193,671
25,087
91,839
$ 1,815,328
513,296
1 81,384
217,046
193,671
25,087
91,839
48,492
3,096,143 (83,147) 2,979,072
48,492
190,218
655,663
1,542,775
3,838,579
391,089
6,428,106
9,903,966
27,524
6,501,964
3,429,526
399,991
100,426
5O0,417
14,025,27;
(1,688,043)
$ 12,943,775
16
655,663
1,542,775
4,770,483
7,360,010 80,065
8,767,576 1 ,1 36,390
27,5246,229,193 272,7712,565,907 863,619
$ 12,943,775 $ (1,095,116) $ 12,904,989 $ 1,133,902
LIABILITIES AND MEMBERS' EQUITY
(1,01 1,969)
rlpilE6s-)
- $ (83,147)
(83,1 47)
(1,473,950)
461,981
14,025,274
(1,688,043)
106,127- "i{060) -l:ll;.:;.r 1,01 1,969
$
379,514
82,117
461,631
$ 83,147
20,477
18,309
1 21 ,933
1,473,950
(461,s81)
$ (1,095,116) $ 12,904,989 $ 1,133,s02
MUD LAKE TELEPHONE GOOPERATIVE ASSOGIATION, INC. AND SUBSIDIARY
CONSOLIDATING STATEMENT OF OPERATIONS INFORMATION
YEAR ENDED DECEMBER 31, 2013
OPERATING REVENUES:
Local Network
Network Access
lnternet Services
Propane Sales
Rent Revenue
Other Services
Miscellaneous
Uncollectibles, Net
Total Operating Revenues
OPERATING EXPENSES:
Plant, Maintenance and Access
Depreciation
Customer
Corporate
Other Taxes
Costs of Good Sold - Propane
Other Operating - Propane
Total Operating Expenses
OPERATING MARGIN (LOSS)
OTHER INCOME AND EXPENSES:
lnterest, Dividends and Securities Sales
Equity in lnvestment Eamings
Equlty in Loss of Subsidiary
Miscellaneous
Net Other lncome and Expenses
NET MARGTNS (LOSS)BEFORE INCOME TAX
INCOME TAX EXPENSE
NET MARGTNS (LOSS)
Consolldated
$ 204,022
'1,053,324
272,459
973,592
89,048
43,731
10,162
'14,892
2,661,230
$ 204,022 $
1,0s3,324
272,459
s0,606
s0,606
50,606
$ 50,606
48,994
't,597,027
(50,606)
(2,875\
1,592,540
2,063,851
973,592
973,592
81,31 1
683,633
261,'t38
1,026,082
1,884
1,884
(50,606)
-------.----:
89,048
43,731
10,162
14,892
1,687,638
512,424
278,322
112,657
235,572
77.352
1,216,327
47 1 ,311 (52,490)
$ 2,063,851 $ (s0,606)
512,424
359,633
112,657
235,572
77,352
683,533
261,138
2,242,409
4',t8,821
50,878
1,597,027
2,063,851
$ 2,063,851
Eliminations
Mud Lake
Telephone
Cooperatlve
Association
High Plains
Propane,
LLC
A6/26/2AL4 i,o:21 IZAB3T4EEES
Onliue Cenification System - E-Filc - USAC.org
USAC
MUD LAKE TELEPHONE PAGE AL/81.
Page I of1
Univcnol Serui:r Arinlni*'alc (bmpany
USAC Hohc i HiOtr Coa prwran i !6Bh Toob I Fornr.lgl
CONFIRTIATION
COnBratulatiors. Your Fntrg ha' be€o s-rlqdsssfully Cedfled,
Filing I $ras succes5fully certlfled on Thu 26 lun 14 11:28i16 AM EDT.by rrnEad@mudlake,net .
sAc: 172U7
sPfl i 143002519
Carrier Nlrne i MUD I-AKE TEL COOP
Program Year :2015
Fclurtr to.a81 SeaEti
il L.B7.2olr. Univr4rl srryicc Ad{rintllEtiE Camr{ny, All Stghk F.Eilc(t wsth! &P'tue;yPotri$
hrhe. //hcli r rniversalseivice.org/ocs/qert/confirmationjsf 6/26/2014
- Reportlnt Cerrier FCC Form 461
OMB Control No. 3060.G86/OMB Cont ol No. 306&0819
Julv20ljl
Colleetlonform
<010> Studv Ar.e CodE
<015> StudvArea Name MCD re TEL CM?
<020> P,oe..m Yrar
<030> Contact N.m. - P..son USAC ahould contect r.g.rdlngthii data Randy Meai
<035> ContactTelephofi.Numbcr-Numbcrofpctionid.ntifiedindrtalinc<030> 20437{s{ol exE.
<o39> contact Email Address - Email Addrcsr of o.rson identified in data line <030>
TO BE COMPTETED BY THE REPORTING CARRIER, IF THE REPORTING CARRIER IS FILING ANNUAL REPORTING ON IT5 OWN BEHALF:
Certification of Officer as to the Accuracy of the Oata Reported for the Annual Reporting for CAF or Ll Reclplents
certily that I am an ofiicer ol the leportlnt carricri my respoNibilltlcs includg€nslrlnt the rccur.cy o, the rnnual leporting requlrem€nts tor unlversal reryl(r rsppoil
ecipients; and, to the brt of my knowledge, th! lnformation report€d on this fqm and ln any ett chmcntt 15 ac(urate,
{ame of Remrtinc CarriE.. SUD Hg TEL COOP
iEnatureof Authorized61l;..., GERTTPTED ONLTNE Drte 06/2€/20a4
,rinted name oI Authorized officer: Randy
'itle or position of Authorized oflicer: Geoetal l{anage!
Offi.Er. 2083745{01 exc.
,tudv Area Code of Reoorting Carrier: 47222 Filins Due DEte for this lotm: 01 /o\ /2014
P.rion5willfullymakingfallcliatem.nttonthlstormcanbepunilhedbylln.o.forf.iturrundar!h.CommunlcltlofiAdot1934,47U5.c.9!50?,503(bl,ortinrorlmpriJohrnl
underTith l8 olih. [rnir.d 5tar.3 Ccde, 18 U.S.C, 5 1001
Paz.12
.Atent/Caric,fCC Form481
OMB Ctrtrol No. 306&o986lOMB Conltol No. 3O€o-0819Collectlon form
2013
Area Name MfD UKE AEL COOP
-Numb.roloerionidentifiedindataliha<030> 2083745401 ex!
<039> Contact Email Address - Email Addre55 of perss identifled in data line <030> Rnead,lnuclake. ne!
TO 8E COMPTETED 8Y THE REPORTIN6 CARRIER, IF AN A6ENT 15 FILIN6 ANNUAI. REPORTS ON THE CARRIER'S BEHALF:
TO BE COMPTETED BY THE AUTHORIZED AGENT:
Certification of Officer to Authorize an Agent to File Annual R€ports for CAF or U Recipients on Behalf of Reporting Carrier
iity lhat (Name ot ls authollaed to submlt tho lnfo.mstion roportod on bohall ofihe teportinE cari€r.
csrtlty that I am an otlicor ol tho Epo.ting crrri€r; my r.sponsibilitios lnclud. Bn!uring th. .ccur.cy ot the .nnual data nporling r.qulromrntg provid.d to th€ authotiz.d
t; and, io lh! bo$t ol my knowlodgo, thE reports and data provided to tho authorizod agont is accurai€.
Jam. of R.oodin! Crrri!r:
iiEnature of Authodred Ofrlcer:Oate:
trint.d n.me ol Authorizcd Officer
'itl.I offi..r
. numbEr of Autho.ired Offic.r:
;tudv Area Code of R Carrier:FilinE Due Date forthis form
underTille l8 olthe Unltad lralas Cod€, 18 U.S.c 6 1001
Certification of Atent Authorized to File Annual Reports for CAF or Ll Recipients on Behalf of Reporting Carrier
h6 datt ilpo,ted hscln barld on data provlded by th. repo*iry .arier; End, to th! bert of my knowledge, the lnformltlon rlloned hrrcln l5 sc.utate.
d A!!nt or Em6lovr. ofA!.nt:
e ofAuthorized Aeentor EmElove. ofAEent:Date
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The tdaho t\rblic t.ltilities Commission C)rdcr No. 298,1I rcquircs thot l;ligihlc -lclrconrnrunications (larrrr'rs ccflit.r
that il is complianr rvith applicable srn'ice qualitl' standards and crrnsunter protcction rrrlcs: and [:] Cs must
demonstrate the abilitl'to remain functionul in ctrr-'ryencies. In addition. thc (bmmissir:ln must lllc an anlual
certifieation *irh &e I-ISAC and thc F'CC that all federal high-cost supprrt provided h []-l'Cs rlithin the Slate ()f
Idaho *tlt bc uscd onl,'., for the provision. maintenance. and upgrading of facilities and senice.*; lor rvhich the
suppo$ i* iilended- Acolrdingll'. the undersigned states and vcrifies under oath the following:
l. I aru sn officer of Mud [,ake Tllephone Cooperative Association. an eligible lelecomnrunications carrier firr
rcceiving federal universal service supFx)rt under section 214(e) ofthe I'elecomnrunications Act ol 1996 in
thc sate of ldaho.
2- I am familiar with the Company's da1'-today operations in the siate of ldaho and with the State's sel ice
qualiry standards and consumet pxrtection rules as set forth in Commission Ordcr No. 29841.
3. Mud Lake Telephone Cooperative Association is complying with applicable selice quality standards aad
mrtumerprotection rules cf the Federal Comnrunications Comrnission and the Idaho Puhlic Utilities
Commission.
4. I ceiliry to tbc Commission that the company is able to remain functional in emergencies as sel forth in
Cqnmission Order No. 29841 and in 47 C.F.R. 54.201 (aX2).
5. I also ccrti$ that all ,ideral universal serviee $upporl funds received by Mud Lake Telephone Cooperative
Association during the crrrent calendar year will bc u$ed in a manner consislfi{ \*ith seetion 254(e} that
is, fior &c irovisio4 maintanancet and upgrading of facilities and senrices for $'hich the suppofl is
htcaded. Ihc mrpary will continue to comply for the period of January 1,2015" through Dec.ernber 31.
2015, to bc eligible for Hcral univssal senries fund support.
6. This vsificatioa aad a$&vit is povidcd b the Idabo Publie Utilities Commission to enable rhe IPUC tostify to the FCC thd &rat univergal acrviee suport received by the eligible cariers in the staie will be
usd in a maans onsfuient with Se*ioa 254(e) of theTelccommunications Act.
,.--,.-:. -. :. -:L::*-.- -r -l l'
Notary Public for -Tl-rr',or' .resiOingat 1;rd*Gl, fD
My Commisrion opir*[-g--9-+.:-]5-
-Tt,rl,^ pnl a,r.,,p,.n,.I rf
,ate
SUBSCRIBED AND SWORN to before me this *b dayor Jk^{* .}$(4-- -
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