1
Exhibit (a)(1)
World Communications, Inc.
Consolidated Financial Statements
with Supplemental Material
Years Ended December 31, 1994 and 1993
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World Communications, Inc.
Contents
Independent Auditors' Report 1
Consolidated Financial Statements
Balance sheets 2
Statements of income 3
Statements of stockholders' equity 4
Statements of cash flows 5
Summary of accounting policies 6-7
Notes to consolidated financial statements 8-14
Supplemental Material
Consolidating balance sheet - 1994 15
Consolidating statement of income - 1994 16
Consolidating balance sheet - 1993 17
Consolidating statement of income - 1993 18
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BDO Seidman
Accountants and Consultants
720 Olive Street, Suite 2300
St. Louis, Missouri 63101
Telephone:(314) 231-7575
Fax:(314) 621-6891
Independent Auditors' Report
Board of Directors
World Communications, Inc.
St. Louis, Missouri
We have audited the accompanying consolidated balance sheets of World
Communications, Inc. (the Company) as of December 31, 1994, and the related
consolidated statements of income, stockholders' equity, and cash flows for the
year then ended. These consolidated financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audit. The financial
statements of World Communications, Inc. as of December 31, 1993 were audited
by other auditors whose report dated April 22, 1994, expressed an unqualified
opinion on those statements.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examIning, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of World
Communications, Inc. as of December 31, 1994 and the results of their
operations and their cash flows for the year then ended in conformity with
generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the consolidated
financial statements taken as a whole. The consolidating information included
in the supplemental material presented for purposes of additional analysis of
the consolidated financial statements rather than to present the financial
position and results of operations of the individual companies. The
consolidating information has been subjected to the auditing procedures applied
in the audits of the consolidated financial statements and, in our opinion, is
fairly presented in all material respects in relation to the consolidated
financial statements taken as a whole.
St. Louis, Missouri
April 7, 1995 (except for Note 3
which is May 10, 1995)
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Consolidated Financial Statements
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5
December 31 1994 1993
Assets
Current
Cash $ 184,112 $ 186,894
Accounts receivable, less allowance for doubtful
accounts of $46,500 and $41,000, at December 31,
1994 and 1993, respectively 486,073 361,307
Prepaid expenses 93,969 45,024
Other current assets 3,029 479
Total Current Assets 767,183 593,704
Operating Equipment (Note 5)
Telecommunication equipment 5,344,296 3,767,232
Telephone equipment held for installation 225,151 159,976
5,569,447 3,927,208
Less accumulated depreciation and amortization (2,015,225) (1,491,212)
3,554,222 2,435,996
Leasehold Improvements, Equipment, Furniture and
Fixtures (Note 5), net of accumulated depreciation and
amortization of $131,954 and $90,851 at December 31,
1994 and 1993, respectively 284,358 152,363
Intangible Assets (Note 2)
Site license contracts, net 534,375 82,333
Agreements not to compete, net 294,167 12,500
Total Intangible Assets 828,542 94,833
Other Assets 228,701 99,359
$ 5,663,006 $ 3,376,255
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World Communications, Inc.
Consolidated Balance Sheets
December 31, 1994 1993
Liabilities and Stockholders' Equity
Current
Accounts payable $ 495,492 $ 326,398
Accrued expenses 405,305 257,292
Current maturities of deferred revenue 40,000 40,000
Current maturities of long-term debt:
Notes payable (Note 3) 551,926 98,166
Obligations under capital lease (Note 5) 477,416 285,944
Total Current Liabilities 1,970,139 1,007,800
Deferred Revenue, less current maturities 7,562 50,994
Long-term Debt, less current maturities
Notes payable (Note 3) 1,512,694 1,069,237
Obligations under capital lease (Note 5) 925,794 580,491
Subordinated convertible debentures (Note 4) 1,140,000 680,000
Total Liabilities 5,556,189 3,388,522
Commitments and Contingencies (Notes 4 and 5)
Stockholders' Equity (Note 8)
Common stock, $.01 par - shares authorized, 500,000;
issued and outstanding, 269,938 in 1994 and 1993 2,699 2,699
Additional paid-in capital 476,951 476,951
Accumulated deficit (372,833) (491,917)
Total Stockholders' Equity 106,817 (12,267)
$ 5,663,006 $ 3,376,255
<FN>
See accompanying independent auditors' report, summary of
accounting policies and notes to consolidated financial statements.
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World Communications, Inc.
Consolidated Statements of Income
Years Ended December 31. 1994 1993
Revenue
Coin calls $2,783,519 $2,324,646
Non-coin calls 4,689,651 4,444,086
Other 61,746 86,618
7,534,916 6,855,350
Cost of Revenues
Line access charges 3,272,195 2,950,299
Commissions 869,656 791,052
Service and collection 848,980 841,094
Depreciation and amortization 570,038 567,308
5,560,869 5,149,753
Gross Profit 1,974,047 1,705,597
Selling, General and Administrative Expenses 1,583,076 1,143,574
Operating Income 390,971 562,023
Other Income (Expense)
Interest expense (380,253) (328,781)
Gain on sale of assets 67,256 154,823
Other income 41,110 19,661
Total Other Income (Expense) (271,887) (154,297)
Income before Taxes on Income 119,084 407,726
Taxes on Income (Note 6) - -
Net Income $ 119,084 $ 407,726
<FN>
See accompanying independent auditors' report, summary, of
accounting policies and notes to consolidated financial statements.
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World Communications, Inc.
Consolidated Statements of Stockholders' Equity
Additional Total
Common paid-in Accumulated stockholders'
stock capital deficit equity (deficit)
Balance, January 1, 1993 $2,689 $466,961 $(899,643) $(429,993)
Issuance of 1,000 shares of
$.01 par
value common stock 10 9,990 - 10,000
Net income - 407,726 407,726
Balance, December 31, 1993 2,699 476,951 (491,917) (12,267)
Net income - 119,084 119,084
Balance, December 31, 1994 $2,699 $476,951 $(372,833) $106,817
<FN>
See accompanying independent auditors' report, summary of
accounting policies and notes to consolidated financial statements.
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World Communications, Inc.
Consolidated Statements of Cash Flows
Years Ended December 31, 1994 1993
Operating Activities
Net income $ 119,084 $ 407,726
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 653,695 625,511
Gain on sale of property and equipment (67,256) (154,823)
Changes in assets and liabilities:
Accounts receivable (124,766) 25,743
Prepaid, other current assets and other assets (192,490) (47,421)
Accounts payable 169,094 (137,566)
Accrued expenses 78,013 (22,697)
Deferred revenue (43,432) 79,513
Cash Provided by Operating Activities 591,942 775,986
Investing Activities
Acquisitions of telecommunication equipment,
site licenses and agreements not to compete
Purchases of telecommunication equipment, leasehold (1,126,618) (271,800)
improvements and office furniture and equipment (616,039) (492,372)
Proceeds from sale of equipment 164,352 249,200
Cash Used in Investing Activities (1,578,305) (514,972)
Financing Activities
Net borrowings (payments) under line of credit agreements 140,805 (100,000)
Principal payments on notes payable to bank (151,958) (297,515)
Principal payments on notes payable to stockholders (259,000) (450,594)
Principal payments on capital lease obligations (325,636) (337,860)
Proceeds from issuance of notes payable to bank 954,370 -
Proceeds from issuance of notes payable to stockholders 250,000 622,685
Proceeds from issuance of subordinated convertible debentures 375,000 269,000
ProCeeds from sale of common stock - 10,000
Cash Provided by (Used in) Financing Activities 983,581 (284,284)
Decrease in Cash (2,782) (23,270)
Cash, beginning of year 186,894 210,164
Cash, end of year $ 184,112 $ 186,894
<FN>
See accompanying independent auditors' report, summary of
accounting policies and notes to consolidated financial statements.
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World Communications, Inc.
Summary of Accounting Policies
Principles of The consolidated financial statements include the
Consolidation accounts of World Communications, Inc. and its
wholly-owned subsidiaries, Northern Florida Telephone
Corporation (North Florida) and West Texas
Communications, Inc. (West Texas) (collectively, the
Company) through the date of its disposition, June 1,
1993. West Texas was incorporated in June 1988, and
North Florida was acquired in April 1990. All
significant intercompany balances and transactions
have been eliminated in consolidation.
Revenue Recognition The Company's principal sources of revenue are monies
received from long distance operator services,
commissions, phone vending (coin calls), and
dial-around revenue. Long distance operator services
revenue is reported at the gross amount with expenses
reflected in cost of revenue. Commissions, which
represent similar earnIngs, are recorded at their net
amount received as gross revenue and expense details
are not provided to the Company. Dial-around revenue
is included in commissions and consists of payments of
$6 to $9 per phone per month received from long-
distance carriers as payment for connection and call
transfer services.
Operating Telephone equipment held for installation is carried
Equipment at lower of cost or market and consists principally of
telephones and related parts and supplies. Once
installed, the equipment is recorded in property and
equipment and depreciated.
Telecommunication equipment is stated at cost. The
Company capitalizes, as part of the cost of the
telecommunication equipment, the cost of initial
installation. Equipment held under capital leases is
initially recorded at the lower of fair market value
of the equipment or the present value of minimum lease
payments at the inception of the lease. Repairs and
maintenance are expensed as incurred.
Depreciation of operating equipment is computed using
the straight- line method over the estimated useful
life of the asset. Equipment held under capital leases
is amortized using the straight-line method over the
estimated useful life of the respective asset as the
leases contain bargain purchase options. The estimated
useful lives range from four to ten years.
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World Communications, Inc.
Summary of Accounting Policies
Intangible Assets Intangible assets consist of costs allocated to site
license contracts and covenants not to compete. Site
license contracts represent the value assigned to
purchased contracts as a result of acquired equipment.
These contracts are valued at the lower of cost or
approximate gross profit remaining on the contracts at
the acquisition date.
Amortization for site license contracts is computed
using the straight-line method over the estimated life
of the contracts, estimated to be four years. The
covenants not to compete are being amortized over the
life of the respective agreements.
Income Taxes Effective January 1, 1993, the Company adopted
Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" (FAS 109). Under the
asset and liability method FAS 109, deferred tax
assets and liabilities are recognized for the future
tax consequences attributable to the difference
between financial statement carrying amounts of
existing assets and liabilities and their respective
tax bases. Deferred 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.
Under FAS 109, the effect on deferred tax assets and
liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date.
The cumulative effect of a change in method of
accounting for income taxes as of January 1, 1993 was
not material to the overall presentation of the
Company's consolidated financial statements.
Cash and Cash For purposes of the statements of cash flows, the
Equivalents Company considers all highly liquid debt instruments
purchased with a maturity of three months or less to
be cash equivalents.
Reclassifications Certain changes in the presentation of the accounts of
the December 31, 1993 financial statements have been
made to conform to the December 31, 1994 presentation.
These changes have had no effect on net income for the
periods presented.
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World Communications, Inc.
Notes to Consolidated Financial Statements
1. Business The principal business activity of the Company is the
installation and service of pay telephones. The
Company began operations in March 1988. At December
31, 1994, the Company had approximately 2,600
telephones operating in eight states.
2. Acquisitions and Acquisitions
Dispositions
During the years ended December 31, 1994 and 1993, the
Company acquired certain assets of various independent
payphone operators including the following:
Amount
allocated to
Purchase intangibles
Acquisition date Selling company price acquired
Year ended December 31,
1994:
October 1994 Advanced Projects, Inc. $464,000 $257,600
November 1994 Florida Telephone $640,000 $422,700
Year ended December 31,
1993:
February 1993 Phone Masters, Inc. $272,000 $106,500
The purchase method of accounting was used to record
each of the above acquisitions. Accordingly, the
purchase price was allocated to the assets acquired
based on the estimated fair values at the purchase
dates. Operating results for the respective companies
have been included in the Company's results of
operations from the respective purchase dates.
Dispositions
On June 1, 1993, the Company completed the sale of
substantially all of the assets of West Texas to an
unrelated entity. The Company received approximately
$249,000 in cash and recorded a gain on the sale of
approximately $144,000. The funds were utilized to
reduce certain outstanding bank debt.
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World Communications, Inc.
Notes to Consolidated Financial Statements
3. Notes Payable At December 31, 1994 and 1993, notes payable consist
of the following:
December 31, 1994 1993
$500,000 line of credit, principal due
September 1995, interest payable monthly
at the bank's prime lending rate (8.5% at
December 31, 1994) plus 1% $ 315,805 $ -
$200,000 line of credit, principal due April
1995, interest payable monthly at the bank's
prime lending rate plus 1.75% - 100,000
$75,000 line of credit, principal due April
1995, interest payable monthly at the bank's
prime lending rate plus 1 % - 75,000
Promissory notes payable to bank, interest
rate at bank's prime lending rate plus 1%,
principal and interest payable in monthly
installments ranging from $999 to $5,971,
with payment of the remaining principal
balance at maturity in August 1995 749,807 848,403
Promissory notes payable to bank, interest
rate at bank's prime lending rate plus 1 %,
principal and interest payable in monthly
installments ranging from $5,362 to $5,971,
with payment of the remaining principal
balance at maturity in November 2001 949,008 -
Note payable to various stockholders with no
specified principal payment terms, interest
payable monthly at prime plus 3% (Note 7) 50,000 144,000
2,064,620 1,167,403
Less current maturities 551,926 98,166
$1,512,694 $1,069,237
The Company's debt is secured by substantially all of
the assets of the Company, the related telephone site
license contracts and personal guarantees of officers
and stockholders of the Company.
Subsequent to year end, the Company renewed the
promissory notes payable to bank maturing in August
1995. Terms under the new agreements require monthly
principal payments of $8,877 plus interest at the
bank's prime lending rate plus 1 % with payment of the
remaining principal balance at maturity in May 1998.
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World Communications, Inc.
Notes to Consolidated Financial Statements
The aggregate maturities of long-term debt are as follows:
Year Ending December 31,
1995 $ 551,926
1996 287,612
1997 237,612
1998 575,774
1999 134,328
Thereafter 277,368
$2,064,620
4. Subordinated The Company has issued two separate series of
Convertible subordinated convertible debentures (the debentures)
Debentures during 1994 and 1993 to various stockholders bearing
interest at .10% payable twice annually. The
debentures issued in 1994 mature in five years and
are callable by the Company at any time following the
date of issuance. The holders may convert these
debentures into common stock at a conversion rate of
$10 per share at any time prior to the redemption of
these debentures.
The debentures issued in 1993 also mature in five
years and are callable by the Company at any time
following the date of issuance. The holders may
convert these debentures into common stock at a
conversion rate of $6 per share at any time prior to
the redemption of these debentures.
For both the 1994 and 1993 debentures, if called
within three years of issuance, the debentures shall
be redeemed at 102% of face value.
At December 31, 1994 and 1993, the outstanding balance
of the debentures were $1,140,000 and $680,000,
respectively.
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World Communications, Inc.
Notes to Consolidated Financial Statements
5. Leases Capital Leases
The Company leases telephone equipment and telephone
equipment held for installation from third parties
under capital lease agreements. Terms of the leases
include monthly payments ranging from approximately
$26 to $4,300 with final installments payable through
April 1998. The gross amount of telephone equipment,
related costs, related accumulated amortization and
telephone equipment held for installation recorded
under the capital leases is as follows:
1994 1993
Telecommunication equipment $1,789,432 $ 1,832,996
Other equipment 192,239 67,208
1,981,671 1,900,204
Less accumulated amortization (315,836) (683,683)
$1,665,835 $1,216,521
Future minimum lease payments under capital lease
agreements at December 31, 1994 are as follows:
Year Ending December 31.
1995 $ 634,188
1996 570,609
1997 458,036
1998 40,033
Total minimum lease payments 1,702,866
Less amounts representing interest (299,656)
Present value of future minimum lease payments 1,403,210
Less current maturities 477,416
$ 925,794
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World Communications, Inc.
Notes to Consolidated Financial Statements
Amortization of assets held under capital leases is
included within depreciation and amortization expense.
Operating Leases
At December 31, 1994, the Company was committed to an
operating lease of its St. Louis Office through June
30, 1999 and of its Florida office through March 31,
1997.
Total rent expense under all operating leases was
$76,766 and $38,721 for the years ended December 31,
1994 and 1993, respectively.
Future minimum lease payments under an operating lease
agreement at December 311994 are as follows:
1995 $ 61,489
1996 68,831
1997 69,719
1998 72,561
1999 36,917
Total $309,517
6. Taxes on The Company adopted FAS 109 as of January 1, 1993.
Income There was no effect on pretax income from applying FAS
109 for the year ended December 31, 1993.
Income tax expense (benefit) differed from the amounts
computed by applying the blended U.S. Federal and
state income tax rate of 36% to income before
provision for income taxes as a result of the
following:
1994 1993
Computed "expected" tax expense $ 42,870 $ 146,781
Increase in income tax expense (benefit)
resulting from:
Other - 8,442
Utilization of net operating loss and
contribution carryforward (42,870) (155,223)
$ - $ -
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World Communications, Inc.
Notes to Consolidated Financial Statements
The tax effects of temporary differences that give
rise to significant portions of the deferred tax
assets are presented below:
1994 1993
Deferred tax assets:
Net operating loss carryforwards $83,000 $131,000
Less valuation allowance 83,000 131,000
Net Deferred Tax Assets $ - $ -
At December 31, 1994, the Company has net operating
loss carry forwards for Federal income tax purposes
of approximately $245,000, which are available to
offset future Federal taxable amounts. Net operating
loss carryforwards begin to expire in 2005.
7. Related Party A law firm in which certain partners are stockholders
Transactions of the Company provided legal services amounting of
approximately $47,000 and $45,000 for the years ended
December 31, 1994 and 1993, respectively.
See Notes 3 and 4 relating to notes payable and
subordinated debt with stockholders. It is the
stockholders intent not to request repayment of the
notes payable in 1995.
8. Subsequent On January 16, 1995, the Company's Board of Directors
Events authorized an increase in the authorized shares of
common stock from 500,000 to 1,000,000.
In February of 1995, the Company acquired
substantially all the assets of Acuquik Pay Phones,
Inc. for a purchase price of $275,000. Approximately
$132,000 was allocated to intangibles acquired. In
conjunction with this acquisition, the Company issued
a promissory note payable to a financial institution
in the amount of $245,000. Terms of this agreement
require monthly principal payments of $2,920 plus
interest at the bank's prime lending rate plus 1% with
payment of the remaining principal balance at maturity
in February 1998.
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World Communications, Inc.
Notes to Consolidated Financial Statements
9. Supplemental The Company paid $373,866 and $345,565 for interest in
Cash Flow the years ended December 31, 1994 and 1993,
Information respectively.
Non-cash Transactions
For the years ended December 31, 1994 and 1993,
capital lease obligations of $910,411 and $398,677,
respectively, were incurred when the Company entered
into leases for telephone equipment, related costs and
vehicles. Accordingly, capital expenditures exclude
assets recorded under the capital lease obligations.
In 1994 and 1993, approximately $85,000 and $411,000,
in stockholder and related party debt was converted
into subordinated convertible debentures,
respectively. The effects of this transaction have
been excluded from the statement of cash flows.
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Supplemental Material
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Northern
World Florida
Communications, Telephone
December 31, 1994 Inc. Corporation Combined Eliminations Consolidated
Assets
Current
Cash $ 120,166 $ 63,946 $ 184,112 $ - $ 184,112
Accounts receivable, net 430,106 55,967 486,073 - 486,073
Intercompany receivables 1,156,588 - 1,156,588 (1,156,588)
Prepaid expenses 84,042 9,927 93,969 - 93,969
Other current assets 2,850 179 3,029 - 3,029
Total Current Assets 1,793,752 130,019 1,923,771 (1,156,588) 767,183
Operating Equipment
Telecommunication equipment 4,062,613 1,281,683 5,344,296 - 5,344,296
Telephone equipment held for installation 165,336 59,815 225,151 - 225,151
4,227,949 1,341,498 5,569,447 - 5,569,447
Less accumulated depreciation and amortization (1,578,038) (437,187) (2,015,225) - (2,015,225)
2,649,911 904,311 3,554,222 - 3,554,222
Leasehold Improvements, Equipment, Furniture
and Fixtures, net of accumulated depreciation
and amortization 257,736 26,622 284,358 - 284,358
Investment in Subsidiary (486,769) (486,769) 486,769
Intangible Assets
Site license contracts, net 56,329 478,046 534,375 - 534,375
Agreements not to compete, net 2,500 291,667 294,167 - 294,167
58,829 769,713 828,542 - 828,542
Other Assets 218,149 10,552 228,701 - 228,701
$ 4,491,608 $1,841,217 $ 6,332,825 $ (669,819) $ 5,663,006
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World Communications, Inc.
Supplemental Consolidating Balance Sheet
Northern
World Florida
Communications, Telephone
December 31, 1994 Inc. Corporation Combined Eliminations Consolidated
Liabilities and Stockholders' Equity
Current
Accounts payable $ 413,264 $ 82,228 $ 495,492 $ - $ 495,492
Intercompany payables 618,149 538,439 1,156,588 1,156,588
Accrued expenses 250,283 155,022 405,305 - 405,305
Current maturities of deferred revenue 40,000 - 40,000 - 40,000
Current maturities of long-term debt:
Notes payable 343,634 208,292 551,926 - 551,926
Obligations under capital lease 434,897 42,519 477,416 - 477,416
Total Current Liabilities 2,100,227 1,026,500 3,126,727 1,156,588 1,970,139
Deferred Revenue, less current maturities 7,562 - 7,562 7,562
Long-term Debt, less current maturities
Notes payable 228,257 1,284,437 1,512,694 - 1,512,694
Obligations under capital lease 908,747 17,047 925,794 - 925,794
Subordinated convertible debentures 1,140,000 1,140,000 - 1,140,000
Total Liabilities 4,384,793 2,327,984 6,712,777 1,156,588 5,556,189
Stockholders' Equity
Common stock 2,699 1,000 3,699 1,000 2,699
Additional paid-in capital 476,951 - 476,951 - 476,951
Accumulated deficit 372,833 (487,768) (860,601) (487,768) (372,833)
Total Stockholders' Equity 106,817 (486,768) (379,951) (486,768) 106,817
$ 4,491,610 $1,841,216 $ 6,332,826 $ 669,820 $ 5,663,006
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World Communications, Inc.
Supplemental Consolidating Statement of Income
Northern
World Florida
Communications, Telephone
Year Ended December 31, 1994 Inc. Corporation Combined Eliminations Consolidated
Revenue
Coin calls $2,112,629 $ 670,890 $2,783,519 $ - $2,783,519
Non-coin calls 4,243,795 445,856 4,689,651 - 4,689,651
Other 61,683 63 61,746 - 61,746
6,418,107 1,116,809 7,534,916 - 7,534,916
Cost of Revenues
Line access charges 2,736,266 535,929 3.272,195 - 3,272,195
Commissions 748,663 120,993 869,656 - 869,656
Service and collection
Depreciation and amortization 678,350 170,630 848,980 848,980
437,416 132,622 570,038 - 570,038
4,600,695 960,174 5,560,869 - 5,560,869
Gross Profit 1,817,412 156,635 1,974,047 - 1,974,047
Selling, General and Administrative Expenses 1,392,886 190,190 1,583,076 - 1,583,076
Operating Income (Loss) 424,526 (33,555) 390,971 - 390,971
Other Income (Expense)
Interest expense (296,753) (83,500) (380,253) - (380,253)
Gain on sale of assets 65,632 1,624 67,256 - 67,256
Equity in subsidiary (223,731) - (223,731) (223,731) -
Other income 149,410 108,300 41,110 41,110
Net Income (Loss) $ 119,084 $ (223,731) $ (104,647) $(223,731) $ 119,084
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Northern
World Florida
Communications, Telephone
December 31, 1993 Inc. Corporation Combined Eliminations Consolidated
Assets
Current
Cash $ 133,080 $ 53,814 $ 186,894 $ - $ 186,894
Accounts receivable, net 297,147 64,160 361,307 - 361,307
Intercompany receivables 151,079 - 151,079 (151,079)
Prepaid expenses 41,928 3,096 45,024 - 45,024
Other current assets 300 179 479 - 479
Total Current Assets 623,534 121,249 744,783 (151,079) 593,704
Operating Equipment
Telecommunication equipment 2,944,307 822,925 3,767,232 - 3,767,232
Telephone equipment held for installation 120,264 39,712 159,976 - 159,976
3,064,571 862,637 3,927,208 - 3,927,208
Less accumulated depreciation and amortization (1,171,501) (319,711) (1,491,212) - (1,491,212)
1,893,070 542,926 2,435,996 - 2,435,996
Leasehold Improvements, Equipment, Furniture
and Fixtures, net of accumulated depreciation
and amortization 139,477 12,886 152,363 - 152,363
Investment in Subsidiary (263,037) - (263,037) 263,037
Intangible Assets
Site license contracts, net 82,333 - 82,333 - 82,333
Agreements not to compete, net 12,500 - 12,500 - 12,500
94,833 - 94,833 - 94,833
Other Assets 89,944 9,414 99,358 - 99,358
$ 2,577,821 $ 686,475 $ 3,264,296 $ 111,958 $ 3,376,254
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World Communications, Inc.
Supplemental Consolidating Balance Sheet
Northern
World Florida
Communications, Telephone
December 31, 1993 Inc. Corporation Combined Eliminations Consolidated
Liabilities and Stockholders' Equity
Current
Accounts payable $ 262,560 $ 63,838 $ 326,398 $ - $ 326,398
Intercompany payables - 151,079 151,079 151,079
Accrued expenses 205,233 52,059 257,292 - 257,292
Current maturities of deferred revenue 40,000 - 40,000 - 40,000
Current maturities of long-term debt:
Notes payable 27,160 71,006 98,166 - 98,166
Obligations under capital lease 237,460 48,484 285,944 - 285,944
Total Current Liabilities 772,413 386,466 1,158,879 151,079 1,007,800
Deferred Revenue, less current maturities 50,994 - 50,994 - 50,994
Long-term Debt, less current maturities
Notes payable 525,085 544,152 1,069,237 - 1,069,237
Obligations under capital lease 561,596 18,895 580,491 - 580,491
Subordinated convertible debentures 680,000 - 680,000 - 680,000
Total Liabilities 2,590,088 949,513 3,539,601 151,079 3,388,522
Stockholders' Equity
Common stock 2,699 1,000 3,699 1,000 2,699
Additional paid-in capital 476,951 - 476,951 - 476,951
Accumulated deficit (491,917) (264,037) (755,954) (264,037) (491,917)
Total Stockholders' Equity (12,267) (263,037) (275,304) (263,037) (12,267)
$ 2,577,821 $ 686,476 $ 3,264,297 $(111,958) $ 3,376,255
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World Communications, Inc.
Supplemental Consolidating Statement of Income
Northern
World Florida West Texas
Communications, Telephone Communications,
Year Ended December 31, 1994 Inc. Corporation Inc. Combined Eliminations Consolidated
Revenue
Coin calls $1,537,755 $ 719,030 $ 67,861 $2,324,646 $ - $2,324,646
Non-coin calls 3,840,875 579,382 23,829 4,444,086 - 4,444,086
Other 83,050 2,284 1,284 86,618 - 86,618
5,461,680 1,300,696 92,974 6,855,350 - 6,855,350
Cost of Revenues
Line access charges 2,457,240 462,560 30,499 2,950,299 - 2,950,299
Commissions 589,569 183,157 18,326 791,052 - 791,052
Service and collection 642,802 179,940 18,352 841,094 - 841,094
Depreciation and amortization 360,609 188,699 18,000 567,308 - 567,308
4,050,220 1,014,356 85,177 5,149,753 - 5,149,753
Gross Profit 1,411,460 286,340 7,797 1,705,597 - 1,705,597
Selling, General and Administrative
Expenses 996,427 137,895 9,252 1,143,574 - 1,143,574
Operating Income (Loss) 415,033 148,445 (1,455) 562,023 - 562,023
Other Income (Expense)
Interest expense (264,532) (64,249) - (328,781) - (328,781)
Gain on sale of equipment 10,791 - 144,032 154,823 - 154,823
Equity in subsidiary 109,265 - - 109,265 (109,265) -
Other income 137,169 (107,508) (10,000) 19,661 - 19,661
Net Income (Loss) $ 407,726 $ (23,312) $132,577 $ 516,991 $(109,265) $ 407,726
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