Exhibit 99.2
ARVIG TELCOM, INC. AND SUBSIDIARIES
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CONSOLIDATED BALANCE SHEET
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(Unaudited)
September 30, 1993 December 31, 1992
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ASSETS
CURRENT ASSETS:
Cash and Cash Equivalents $ 4,779,838 $ 4,080,262
Marketable Securities 2,138,575 1,962,359
Due from Customers, Net of Allowance for
Doubtful Accounts of $238,000 and $145,000 3,078,743 2,786,467
Income Taxes Receivable 130,237 338,191
Other Accounts Receivable 1,453,752 1,260,512
Inventories 326,841 345,272
Prepaid Expenses 151,361 162,965
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Total Current Assets 12,059,347 10,936,028
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INVESTMENTS AND OTHER ASSETS:
Notes Receivable 442,123 344,202
Investments 3,022,799 2,703,111
Noncompete Covenants, Net of Amortization
of $1,301,239 and $882,720 1,188,840 1,607,360
Excess of Cost Over Net Assets of
Consolidated Subsidiaries, Net of
Amortization of $491,490 and $470,624 621,332 642,198
Other Intangibles, Net of Amortization
of $241,935 and $166,956 528,919 603,898
Other Assets 496,639 294,486
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Total Investments and Other Assets 6,300,652 6,195,255
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PROPERTY, PLANT AND EQUIPMENT:
Telecommunications Plant in Service 43,357,719 42,619,407
Cable Television Plant in Service 3,352,426 3,278,931
Other Property 2,929,221 3,511,706
Plant Under Construction 2,230,704 376,990
Accumulated Depreciation (22,408,717) (20,459,171)
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Net Property, Plant and Equipment 29,461,353 29,327,863
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TOTAL ASSETS $ 47,821,352 $ 46,459,146
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ARVIG TELCOM, INC. AND SUBSIDIARIES
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CONSOLIDATED BALANCE SHEET
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(Unaudited)
September 30, 1993 December 31, 1992
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current Portion of Long-Term Debt $ 1,332,271 $ 1,330,000
Accounts Payable 3,860,619 3,003,707
Accrued Taxes 253,155 240,866
Accrued Pension 324,431 278,344
Other Current Liabilities 1,154,706 795,653
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Total Current Liabilities 6,925,182 5,648,570
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LONG-TERM DEBT 19,499,180 20,706,510
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DEFERRED CREDITS AND LIABILITIES:
Investment Tax Credits 639,291 730,805
Income Taxes 3,358,919 2,988,153
Other Liabilities 16,185 19,773
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Total Deferred Credits and Liabilities 4,014,395 3,738,731
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STOCKHOLDERS' EQUITY:
Common Stock - Class A Voting, $1 Par Value
500,000 Shares Authorized, 4,370 Shares
Issued and Outstanding 4,370 4,370
Common Stock - Class B Voting, $1 Par Value,
500,000 Shares Authorized, 39,330 Shares
Issued and Outstanding 39,330 39,330
Retained Earnings 17,338,895 16,321,635
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Total Stockholders' Equity 17,382,595 16,365,335
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TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 47,821,352 $ 46,459,146
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ARVIG TELCOM, INC. AND SUBSIDIARIES
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CONSOLIDATED STATEMENT OF INCOME
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UNAUDITED
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Nine Months Ended Nine Months Ended
September 30, 1993 September 30, 1992
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REVENUES:
Long-Distance Carrier Services $ 17,574,122 $ 16,428,934
Long Exchange Company Services 7,750,444 6,866,565
Cable Television Services 713,314 652,834
Other Services 637,706 555,315
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Total Revenues 26,675,586 24,503,648
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COST AND EXPENSES:
Cost of Long-Distance Carrier Services 12,047,401 11,309,183
Maintenance and Rents 2,207,666 2,032,763
Depreciation and Amortization 3,271,922 3,257,210
Sales, Marketing and Customer Services 1,962,696 2,320,305
General and Administrative 3,651,791 3,475,626
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Total Costs and Expenses 23,141,476 22,395,087
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OPERATING INCOME 3,534,110 2,108,561
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OTHER INCOME 213,300 298,524
INTEREST EXPENSE (890,635) (912,732)
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INCOME BEFORE INCOME TAXES 2,856,775 1,494,353
INCOME TAXES 1,184,015 515,970
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NET INCOME $ 1,672,760 $ 978,383
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WEIGHTED AVERAGE COMMON SHARES 43,700 43,700
EARNINGS PER COMMON SHARE $ 38.28 $ 22.39
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DIVIDENDS PER COMMON SHARE $ 15.00 $ 10.00
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ARVIG TELCOM, INC. AND SUBSIDIARIES
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CONSOLIDATED STATEMENT OF CASH FLOWS
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UNAUDITED
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Nine Months Ended Nine Months Ended
September 30, 1993 September 30, 1992
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 1,672,760 $ 978,383
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Depreciation and Amortization 3,271,922 3,257,210
Loss (Gain) from Cellular Partnerships (93,949) 41,184
Changes in Assets and Liabilities:
(Increase) Decrease in:
Due from Customers (292,276) (723,091)
Income Taxes Receivable 207,954 (162,198)
Other Accounts Receivable (193,240) 171,408
Inventories 18,431 (36,018)
Prepaid Expenses 11,604 (82,703)
Increase (Decrease) in:
Accounts Payable 856,912 1,849,493
Accrued Taxes 12,289 (37,183)
Accrued Pension 46,087 23,262
Other Current Liabilities 359,053 40,974
Deferred Investment Tax Credits (91,514) (91,689)
Deferred Income Taxes 370,766 (101,281)
Other Liabilities (3,588) 1,392
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Net Cash Provided By Operating
Activities 6,153,211 5,129,143
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CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to Property, Plant
and Equipment, Net (2,891,047) (4,450,379)
Purchase of Investments (137,309) (210,498)
Purchase of Marketable Securities (176,216) (816,415)
Investment in Cellular Partnership (88,430) (124,480)
Issuance of Note Receivable (100,000) --
Collection of Note Receivable 2,079 --
(Increase) Decrease in Other Assets (202,153) (73,389)
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Net Cash Used in Investing Activities (3,593,076) (5,675,161)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Issuance of Long-Term Debt 308,950 3,811,234
Principal Payments of Long-Term Debt (1,514,009) (912,475)
Dividends Paid (655,500) (437,000)
Principal Payments of Notes Payable -- (59,374)
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Net Cash Provided By Financing
Activities (1,860,559) 2,402,385
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NET INCREASE IN CASH AND CASH EQUIVALENTS 699,576 1,856,367
CASH AND CASH EQUIVALENTS
At Beginning of Year 4,080,262 2,375,026
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CASH AND CASH EQUIVALENTS
At September 30, 1993 $ 4,779,838 $ 4,231,393
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ARVIG TELCOM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The consolidated financial statements included herein have
been prepared by the Company, without audit, pursuant to the
rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures
normally included in financial statements prepared in
accordance with generally accepted accounting principles have
been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the
disclosures are adequate to make the information presented not
misleading. It is suggested that these consolidated financial
statements be read in conjunction with the consolidated
financial statements and the notes thereto included in the
Company's latest annual report.
The accompanying unaudited consolidated financial statements
contain all adjustments (consisting of only normal recurring
items) necessary to present fairly the financial position as
of September 30, 1993, and the results of operations and cash
flows for the nine months ended September 30, 1993 and 1992.
The results of operations for the nine months ended September
30, 1993 and 1992, are not necessarily indicative of the
results to be expected for the full year.
2. Effective January 1, 1993, the Company adopted Statement of
Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("SFAS 109"). SFAS 109 requires companies to record
all deferred tax liabilities or assets for the deferred tax
consequences of all temporary differences. Additionally, the
statement requires that deferred tax balances be adjusted to
reflect new tax rates when they are enacted into law. The
cumulative effect of the implementation of SFAS 109 on years
prior to 1993 is estimated to have no material effect on net
income. Income tax expense for 1993 reflects the new method
of accounting; income tax expense for 1992 has not been
restated. The cumulative effect of adopting SFAS 109 did not
materially effect net income or income tax expense for the
nine months ended September 30, 1993.
3. On December 14, 1993, Telephone and Data Systems, Inc., an
Iowa corporation (TDS), Arvig Acquisition Corp., a Minnesota
corporation and wholly-owned subsidiary of TDS (TDS Sub.) and
Arvig Telcom, Inc. signed an agreement and plan of merger
providing for the merger of the TDS Sub into the Company,
which would result in the Company becoming a wholly-owned
subsidiary of TDS. The agreement and plan of merger includes
certain closing conditions precedent to consummation of the
transaction.