EXHIBIT 99.2
R&B COMMUNICATIONS, INC.
Condensed Consolidated Balance Sheets
September 30, 2000
(Unaudited) December 31, 1999
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ASSETS
Current Assets
Cash and cash equivalents.................................... $ 7,122,100 $ 8,218,177
Accounts receivable.......................................... 3,023,749 3,834,561
Materials and supplies....................................... 501,796 354,878
Prepaid expenses and other................................... 119,838 230,094
Income tax receivable........................................ 2,680,774 2,680,774
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13,448,257 15,318,484
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Securities and Investments........................................ 12,447,688 18,811,889
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Property and Equipment
Land and building............................................ 4,484,422 4,497,672
Network plant and equipment.................................. 26,372,856 21,231,445
Furniture, fixtures and other equipment...................... 14,284,971 14,954,217
Radio spectrum licenses...................................... 926,376 926,376
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Total in service....................... 46,068,625 41,609,710
Under construction........................................... 568,309 -
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46,636,934 41,609,710
Less accumulated depreciation................................ 19,049,813 16,594,851
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27,587,121 25,014,859
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Other Assets
Cash surrender value of life insurance....................... 1,441,412 3,749,035
Radio spectrum licenses and license deposits ................ 958,546 958,546
Deferred charges............................................. 81,547 59,548
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2,481,505 4,767,129
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$ 55,964,571 $ 63,912,361
======================= ======================
See Notes to Condensed Consolidated Financial Statements.
R&B COMMUNICATIONS, INC.
Condensed Consolidated Balance Sheets
September 30, 2000
(unaudited) December 31, 1999
---------------------- ----------------------
Liabilities and Shareholders' Equity
Current Liabilities
Current maturities of long-term debt................... $ 401,354 $ 385,627
Recognized losses in excess of investment in
PCS ventures......................................... 3,076,187 3,100,000
Accounts payable....................................... 1,494,211 1,493,424
Customers' deposits.................................... 19,072 26,483
Advance billings....................................... 610,783 702,649
Accrued payroll........................................ 72,565 118,023
Accrued interest....................................... - 15,610
Other accrued liabilities.............................. 843,085 707,328
Dividend payable....................................... - 221,022
---------------------- ----------------------
6,517,257 6,770,166
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Long-Term Debt, net of current maturities................... 7,254,522 7,520,082
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Long-Term Liabilities
Deferred income taxes.................................. 4,177,617 10,100,000
Recognized losses in excess of investment in
PCS ventures ..................................... 9,836,462 2,078,690
Deferred compensation.................................. 1,997,000 1,772,000
Unamortized investment tax credits..................... 74,777 109,463
---------------------- ----------------------
16,085,856 14,060,153
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Shareholders' Equity
Common stock, no par................................... 616,690 616,690
Retained earnings...................................... 19,505,294 24,845,542
Unrealized gain on securities available for sale, net.. 5,984,952 10,099,728
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26,106,936 35,561,960
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$ 55,964,571 $ 63,912,361
====================== ======================
See Notes to Condensed Consolidated Financial Statements.
R&B COMMUNICATIONS, INC.
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended Nine Months Ended
------------------------------------- --------------------------------------
September 30, September 30, September 30, September 30,
2000 1999 2000 1999
---------------- ----------------- ----------------- -----------------
Operating Revenues
Wireline communications............ $ 3,957,376 $ 3,522,400 $ 11,783,475 $ 10,716,194
Wireless communications............ 282,341 388,016 1,112,254 1,127,924
Other communications services...... 268,116 222,987 736,037 621,737
---------------- ----------------- ----------------- -----------------
4,507,833 4,133,403 13,631,766 12,465,855
---------------- ----------------- ----------------- -----------------
Operating Expenses
Maintenance and support............ 1,460,668 950,568 3,917,240 2,649,291
Depreciation and amortization...... 893,463 701,281 2,556,995 2,059,859
Customer operations................ 812,785 726,559 2,337,871 2,000,083
Corporate operations............... 814,962 591,875 2,604,679 1,799,462
---------------- ----------------- ----------------- -----------------
3,981,878 2,970,283 11,416,785 8,508,695
---------------- ----------------- ----------------- -----------------
Operating Income....................... 525,955 1,163,120 2,214,981 3,957,160
Other Income (Expenses)
Interest and dividend income....... 89,188 79,523 250,845 213,557
Other expenses, principally interest (108,350) (111,819) (336,502) (656,034)
Equity loss from PCS investees
VA PCS Alliance................... (3,637,598) (1,298,138) (6,476,162) (4,151,906)
WV PCS Alliance................... (1,486,086) (981,102) (4,579,499) (2,840,458)
Equity income from other wireless ..
investees......................... 82,500 85,386 235,910 238,386
Gain on sale of equity securities.. - 202,633 - 202,633
---------------- ----------------- ----------------- -----------------
(4,534,391) (860,397) (8,690,427) (3,036,662)
---------------- ----------------- ----------------- -----------------
Income Tax Benefit...................... 1,740,313 337,582 3,350,179 306,130
---------------- ----------------- ----------------- -----------------
Net Loss................................ $ (2,794,078) $ (522,815) $ (5,340,248) $ (2,730,532)
================ ================= ================= ==================
Net loss per common share - basic and $ (45.367) $ (8.477) $ (86.595) $ (44.276)
diluted.............................
Average shares outstanding - basic and
diluted............................. 61,669 61,671 61,669 61,671
See Notes to Condensed Consolidated Financial Statements.
R&B COMMUNICATIONS, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended
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September 30, September 30,
2000 1999
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Cash Flows From Operating Activities
Net loss................................................................... $ (5,340,248) $ (2,730,532)
Adjustments to reconcile net loss
to net cash provided by operating activities:
Depreciation and amortization.......................................... 2,556,995 2,059,859
Deferred tax benefit................................................... (3,350,179) (1,325,942)
Share of equity loss from equity method investees...................... 10,819,751 6,753,978
Changes in assets and liabilities from operations:
(Increase) decrease in accounts receivable............................. 810,812 (3,090,864)
(Increase) decrease in materials and supplies.......................... (146,918) 30,435
Decrease in income tax receivable...................................... - 2,217,649
(Increase) decrease in other assets.................................... 23,833 (49,297)
Increase in accounts payable........................................... 787 1,819,179
Increase in other accrued liabilities.................................. 292,278 295,167
Decrease in advance billings........................................... (91,866) (47,512)
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Net cash provided by operating activities.............................. 5,575,245 5,932,120
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Cash Flows From Investing Activities
Purchases of property, equipment and other assets.......................... (5,064,833) (2,858,859)
Purchase of channels....................................................... - (215,760)
Proceeds from sale of equity securities.................................... - 675,302
Investments in PCS Alliances............................................... (3,321,702) (1,781,702)
Investment in securities................................................... (121,555) -
(Increase) decrease in cash surrender value of officer's life insurance.... 2,307,623 (61,222)
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Net cash used in investing activities.................................. (6,200,467) (4,242,241)
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Cash Flows From Financing Activities
Cash dividends............................................................. (221,022) (199,501)
Payments on long-term debt................................................. (249,833) (308,721)
Redemption of common stock................................................. - (20)
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Net cash used in financing activities.................................. (470,855) (508,242)
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Increase (decrease) in cash and cash equivalents....................... (1,096,077) 1,181,637
Cash and Cash Equivalents:
Beginning.................................................................. 8,218,177 6,909,613
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Ending..................................................................... $ 7,122,100 $ 8,091,250
==================== ==================
See Notes to Condensed Consolidated Financial Statements.
R&B COMMUNICATIONS, INC.
Condensed Consolidated Statement of Shareholders' Equity
Accumulated
Common Stock Other Total
---------------------- Retained Comprehensive Shareholders'
Shares Amount Earnings Income Equity
------ ------ -------- -------------- -------------
Balance, December 31, 1998............. 61,671 $ 616,710 $ 29,241,142 $ 1,400,050 $ 31,257,902
Comprehensive income:..................
Net loss............................ (439,403)
Unrealized gain on securities
available for sale, net of $323,963
deferred tax effect................. 528,572
Comprehensive income................ 89,169
------- -------- ----------- --------- -----------
Balance, March 31, 1999................ 61,671 616,710 28,801,739 1,928,622 31,347,071
Comprehensive income:
Net loss.......................... (1,768,314)
Unrealized gain on securities
available for sale, net of $140,699
deferred tax effect............... 229,561
Comprehensive income.............. (1,538,753)
Redemption of common stock........ (2) (20) (20)
------- -------- ----------- --------- -----------
Balance, June 30, 1999................. 61,669 616,690 27,033,425 2,158,183 29,808,298
Comprehensive income:
Net loss.......................... (522,815)
Unrealized loss on securities
available for sale, net of $76,119
deferred tax effect............... (124,195)
Comprehensive income.............. (647,010)
------- -------- ----------- --------- -----------
Balance, September 30, 1999............ 61,669 $ 616,690 $ 26,510,610 $ 2,033,988 $ 29,161,288
======= ======== =========== ========= ===========
Comprehensive income for nine months
ended September 30, 1999.......... $ 2,096,594
===========
Balance, December 31, 1999............. 61,669 $ 616,690 $ 24,845,542 $10,099,728 $ 35,561,960
Comprehensive income:
Net loss............................ (1,226,139)
Unrealized loss on securities available
for sale, net of $533,056 deferred tax
effect.............................. (731,151)
Comprehensive income................ (1,957,290)
------- -------- ----------- --------- -----------
Balance, March 31, 2000................ 61,669 616,690 23,619,403 9,368,577 33,604,670
Comprehensive income:..................
Net loss............................ (1,320,031)
Unrealized gain on securities
available for sale, net of $89,227
deferred tax effect................. 145,579
Comprehensive income................ (1,174,452)
------- -------- ----------- --------- -----------
Balance, June 30, 2000................. 61,669 616,690 22,299,372 9,514,156 32,430,218
Comprehensive income:
Net loss............................ (2,794,078)
Unrealized loss on securities
available for sale, net of $2,163,061
deferred tax effect................. (3,529,204)
Comprehensive income................ (6,323,282)
------- -------- ----------- --------- -----------
Balance, September 30, 2000............ 61,669 $ 616,690 $ 19,505,294 $ 5,984,952 $ 26,106,936
======= ======== =========== ========= ===========
Comprehensive income for nine months
ended September 30, 2000.......... $ (9,455,024)
===========
See Notes to Condensed Consolidated Financial Statements.
R&B COMMUNICATIONs, INC.
Notes to conDensed consolidated financial statements
(1) In the opinion of the Company, the accompanying condensed consolidated
financial statements, which are unaudited except for the condensed
consolidated balance sheet dated December 31, 1999, which is derived
from audited financial statements, contain all adjustments (consisting
of only normal recurring accruals) necessary to present fairly the
financial position as of September 30, 2000 and December 31, 1999 and
the results of operations for the three and nine month periods ended
September 30, 2000 and 1999 and cash flows for the nine months ended
September 30, 2000 and 1999. The results of operations for the nine
months ended September 30, 2000 and 1999 are not necessarily indicative
of the results to be expected for the full year.
(2) The Company has five primary business segments that have separable
management focus and infrastructures and offer different products and
services. These segments are described in more detail in Note 2 of the
Company's 1999 Financial Statements. Summarized financial information
concerning the Company's reportable segments is shown in the following
table. The "Corporate and other" column includes certain unallocated
corporate items which are not considered separate reportable segments.
Network Wireless Corporate
(in thousands) Telephone and CLEC Internet Wireless Cable and other Total
- ----------------------------------------------------------------------------------------------------------------
For the three months ended September 30, 2000
Revenues $2,116 $1,846 $ 200 $ 122 $ 175 $ 49 $4,508
EBITDA 634 767 32 18 3 (35) 1,419
Depreciation &
amortization 472 238 23 25 122 13 893
- ----------------------------------------------------------------------------------------------------------------
For the three months ended September 30, 1999
Revenues $ 2,072 $ 1,444 $ 153 $ 227 $ 183 $ 54 $ 4,133
EBITDA 1,072 678 31 104 1 (21) 1,865
Depreciation &
amortization 368 160 19 23 119 13 702
- ----------------------------------------------------------------------------------------------------------------
As of and for the nine months ended September 30, 2000
Revenues $6,359 $5,330 $ 583 $ 679 $ 530 $ 151 $13,632
EBITDA 2,099 2,408 (79) 286 22 36 4,772
Depreciation &
amortization 1,340 675 63 76 364 39 2,557
Total segment
assets 31,659 12,627 1,012 511 2,191 7,964 55,964
- ----------------------------------------------------------------------------------------------------------------
For the nine months ended September 30, 1999
Revenues $ 6,563 $ 4,167 $ 437 $ 619 $ 542 $ 137 $ 12,465
EBITDA 3,598 2,063 36 274 10 36 6,017
Depreciation &
amortization 1,096 454 57 60 355 38 2,060
- ----------------------------------------------------------------------------------------------------------------
(3) Basic net loss per share was computed by dividing net loss by the
weighted average number of common shares outstanding during the period.
The Company has no potential common stock outstanding, such as stock
options, warrants or convertible debt; furthermore, a net loss was
incurred for the periods presented. Therefore, basic and diluted net
income per share are the same.
(4) The Company has a 26% common ownership interest in Virginia PCS
Alliance, L.C. ("VA Alliance"), a provider of personal communications
services (PCS) serving a 1.6 million populated area in central and
western Virginia. On July 25, 2000, the Company converted its preferred
interest to common interest, increasing it's common interest from 21% to
26%.
The Company has a 34% common ownership interest in West Virginia PCS
Alliance, L.C. ("WV Alliance"), a provider of PCS serving a 2.0 million
populated area in West Virginia and parts of eastern Kentucky,
southwestern Virginia and eastern Ohio.
Summarized financial information for the VA Alliance and WV Alliance
("Alliances"), both of which are accounted for under the equity method,
are as follows (dollar amounts in millions):
VA Alliance WV Alliance
(in thousands) September 30, 2000 December 31, 1999 September 30, 2000 December 31, 1999
- --------------------- ------------------ ----------------- ------------------ -----------------
Current assets................... $ 8,364 $ 9,241 $ 4,489 $ 2,367
Noncurrent assets................ 106,097 111,601 57,067 51,130
Current liabilities.............. 8,007 7,633 3,434 3,076
Long-term debt................... 106,454 131,478 57,458 51,125
Redeemable preferred interest.... - 15,192 - -
VA Alliance WV Alliance
For the Three Months Ended September 30, For the Three Months Ended September 30,
---------------------------------------- ----------------------------------------
2000 1999 2000 1999
---- ---- ---- ----
Net sales.................... $ 6,300 $ 3,642 $ 3,957 $ 875
Gross profit ................ 3,627 2,077 1,760 173
Net loss applicable to
common owners.............. (14,845) (5,924) (3,888) (3,146)
Company's share of net loss.. (3,637) (1,298) (1,486) (981)
VA Alliance WV Alliance
For the Nine Months Ended September 30, For the Nine Months Ended September 30,
--------------------------------------- ---------------------------------------
2000 1999 2000 1999
---- ---- ---- ----
Net sales.................... $ 16,728 $ 9,824 $ 9,871 $ 1,473
Gross profit ................ 9,590 5,407 3,401 71
Net loss applicable to
common owners.............. (28,492) (18,914) (12,442) (8,594)
Company's share of net loss.. (6,476) (4,152) (4,579) (2,840)
The Company has entered into guaranty agreements whereby the Company is
committed to provide guarantees of up to $30.8 million of the
Alliance's debt and redeemable preferred obligations. Such guarantees
become effective as obligations are incurred by the Alliances. At
September 30, 2000, the Company has guaranteed $28.6 million of the
Alliances' obligations.
(5) Income taxes
The provision for income taxes differs from the amount of income tax
determined by applying the applicable Federal statutory rate to earnings
before income taxes as a result of State minimum income taxes and
franchise taxes, non-deductible expenses and additional expense
resulting from a tax exam completed during the second quarter of 1999.
(6) Merger with NTELOS Inc.
On June 16, 2000, the Company's Board of Directors approved an agreement
and plan of merger with NTELOS Inc. ("NTELOS"). Shareholders of the
Company and shareholders of NTELOS approved the transaction on December
6 and December 4, 2000, respectively. Under the terms of the agreement,
shareholders of the Company will receive approximately 3.7 million
shares of NTELOS common stock in exchange for 100% of the Company's
outstanding common stock. This transaction is subject to regulatory
approval and will be accounted for using the purchase method of
accounting.