ceo's report - west river telecom

21 WEST RIVER TELECOM 2011 ANNUAL REPORT

Michael Grimm2011Annual

MeetingEntertainer

June 3, 2011

Luncheon ...................................................................................................10:30 a.m. - 1:00 p.m.

Registration ................................................................................................11:00 a.m. - 1:00 p.m.

Entertainment by Michael Grimm, Hazen ................................................12:00 p.m. - 12:45 p.m.

Presentation of Colors ................................................. American Legion Clark Grosz Post 189

The National Anthem ..................................................................... Taylor Hougum-Carr, Hazen

Call to Order ....................................................................................................... Matt Erhardt, Jr.

Invocation .............................................................. Pastor Walt Wolff, Peace Lutheran, Hazen

Welcome ................................................................................... Mark Nygard, Mayor of Hazen

Appoint Parliamentarian ................................................................................... Matt Erhardt, Jr.

Report of Credentials Committee ................................Credentials Committee Chairperson

Reading of Meeting Notice and Proof of Mailing ...................................................Theo Reich

Approval of Minutes .......................................................................................... Matt Erhardt, Jr.

Drawing for Prizes

Report on Voting Procedure .......................................................................Patrick A. Donovan

Election of Directors ........................................................................................... Matt Erhardt, Jr.

President’s Report .............................................................................................. Matt Erhardt, Jr.

Report on By-law change (s) ......................................................................Patrick A. Donovan

Drawing for Prizes

COO/Financial Manager’s Report ..................................................................... Bonnie Krause

Recognition of Guests & Introduction of Board ............................................. Matt Erhardt, Jr.

Drawing for Prizes

CEO’s Report ...............................................................................................................Mick Grosz

Service Awards ............................................................................................................Mick Grosz

Matt Erhardt, Jr.

Drawing for Prizes

Unfinished Business ............................................................................................. Matt Erhardt, Jr.

New Business ....................................................................................................... Matt Erhardt, Jr.

Election Results ................................................................Credentials Committee Chairperson

Adjournment ....................................................................................................... Matt Erhardt, Jr.

Grand Prize Drawing

59th Annual Membership Meeting


Michael Grimm2011Annual

MeetingEntertainer

June 4, 2010

The 58th Annual Meeting of the members of West River Telecommunications Cooperative was called to order by President Erhardt at the Hazen High School Auditorium in Hazen, North Dakota, at 1:10 o’clock p.m. MDT on June 4, 2010, pursuant to Notice duly given.

Pastor John Fanella gave the invocation, which was followed by a welcome from Delmar Schramm, President of the Board of Commissioners of the City of Hazen.

Patrick A. Donovan, West River Telecommunications Cooperative’s attorney, was appointed as parliamentarian for the meeting by President Erhardt.

Mel Beckler, a member of the Credentials Committee, reported that 386 members had registered for the meeting, and a quorum was declared present. He also informed the members that the Credentials Committee had met earlier to consider and had approved all proceedings related to the Director nominee petitions and election to be conducted at today’s meeting.

The reading of the Notice of Meeting and Proof of Mailing was dispensed with upon motion duly made, seconded and carried.

The reading of the minutes of the last meeting was dispensed with, and such minutes were approved upon motion duly made, seconded and carried.

The election of directors was the next topic on the agenda. Attorney Donovan explained the voting procedures. The members were told that two of the seven Director positions were open. In District One, Brittany Lelm is the sole petitioner and nominee for election. In District Three, Matt Erhardt, Jr. is the only candidate. Both are incumbent Directors. The chair was vacated by President Erhardt and Vice President Vollmuth continued with the election procedures.

A motion was made, seconded and carried declaring that Brittany Lelm, as the sole candidate for her position, be elected to a three year term on the Board of Directors representing District One.

A motion was made, seconded and carried declaring that Matt Erhardt, Jr., as the sole candidate for his position, be elected to a three year term on the Board of Directors representing District Three.

President Erhardt then presented his report to the members.

Attorney Donovan reported on Bylaw changes.

COO/Financial Manager Bonnie Krause presented the financial report and this report was approved upon motion duly made, seconded and carried.

CEO/General Manager Grosz then presented his report to the members.

Service awards were presented.

President Erhardt then called for unfinished business and there was none. Next, he called for new business. No new business was brought before the assembly.

There being no other or further business, the meeting was duly adjourned upon motion made, seconded and carried at 2:09 p.m.

59th Annual Membership Meeting Minutes of58th Annual Meeting of West River Telecommunications Cooperative


Matt Erhardt, Jr.President

Mick GroszCEO

On behalf of the Board of Directors, Management and the Employees at West River Telecommunications, welcome to our 59th Annual Membership meeting.

West River had another successful year in 2010. During the construction season, we finished the upgrades to our outside plant. Now virtually every subscriber has high quality digital phone service and access to high speed internet. This has taken several years to complete and several millions of dollars to achieve. This was all done without borrowing any money. With our strong financial condition, we were able to complete these projects with our own cash. Which leads me to the next order of business; this was our best year for margins in West River’s history. This allows us to retire capital credits to you, the members, approximately $2.5 million.

It is mixed emotions to have CEO Grosz announce his intentions to retire. It will be sad to see him leave West River as he has been very dedicated to this industry His knowledge and work ethic have been greatly appreciated by not just the Board but also by his peers. We wish him all the best in whatever he decides to do, whether it is getting back in the political arena, just going golfing or traveling the globe. He will be missed.

Even though West River faces many challenges, I am confident of the future. With your support and the dedication, ability and hard work of management and the employees, West River will continue to provide state of the art high quality services it enjoys today well into the future.

On behalf of the Board of Directors, the CEO/Manager, Staff and Employees, once again welcome, thank you for your patronage and hope to see you again next year.

Thank you for attending our 59th Annual Meeting.

Matt Erhardt, Jr.

President’s Report

“this was our best year for margins in West River’s history. This allows us to retire capital credits to you,

the members, approximately $2.5 million.”


Matt Erhardt, Jr.President

Mick GroszCEO

President’s Report CEO’s Report

Greetings and welcome to the 59th Annual Membership Meeting of West River Telecommunications Cooperative.

The past year was a successful one for WRT. We pretty much finished our upgrades to enable us to provide terrestrial broadband to all but a small handful of customers. We increased the capacity of our ring to accommodate the growth of internet usage. We will continue to do so again this year. It is a major effort and expense to stay ahead of the capacity needs of our customers.

We had a successful year financially. Our net margins were the highest in history. Most of the net margins are due to our participation in cellular partnerships. The foresight of WRT to participate in these partnerships to the fullest is paying huge dividends.

The FCC began the process of transitioning from supporting voice based networks to supporting broadband based networks. The cost for us to provide broadband is greater than it is to provide voice only networks. WRT, and other rural telecommunications companies, rely on support from the Universal Service Fund and other high cost funds to provide services at reasonable rates. All of those support mechanisms are being looked at by the FCC.

If those support mechanisms are reduced or eliminated the ability for WRT to provide service at affordable prices in rural areas will be jeopardized. The Board and management, in conjunction with other telcos, are working hard to ensure that the FCC does not leave rural America behind.

This will be my last report to the membership of WRT. I have announced my intentions to retire sometime prior to the next Annual Membership meeting. It has been a privilege and honor to have the opportunity to manage a great company.

Working for the member-owners of WRT has been a pleasure. Working with the members, Board and employees of WRT has been one of the best experiences of my life.

The member-owners of WRT have been loyal customers of WRT throughout the years. The member support I have enjoyed throughout my years as manager is greatly appreciated. Our number one goal at WRT is to provide for the telecommunications needs of our members with quality service at affordable rates.

The Board of Directors is a very dedicated group of individuals. They work hard to understand and provide for the telecommunications needs of our members. It takes much study and research to anticipate the future needs of customers and then provide for those needs in a timely manner. I very much appreciate the guidance and support the Board has provided me through the years.

The employees of WRT are second to none. The heart and soul of any company are the employees. WRT employees are well educated in their fields. WRT employees are dedicated to providing our customers with the best service possible. I have never worked with a better group of people.

My time has come to move on. I am confident that WRT will be here far into the future to provide for all of your telecommunication needs. The people that make WRT work will still be here for you.

Mick Grosz


District 4Ray Carlson

WRT Directorsare elected

to 3 year terms

District 7Randal

Christmann

District 7David J.

Lundstrom

District 7Lee

Reiser, Jr.

Matt Erhardt, Jr.President - District 3

Nick VollmuthVice President - District 5

Theo ReichSecretary/Treasurer - Dist. 2

Ray CarlsonDirector - District 4

Randy ChristmannDirector - District 7

Harley OversethDirector - District 6

Mick GroszCEO

Patrick A. DonovanAttorney

WRT Service Map

Brittany LelmDirector - District 1

Board of Directors/CEO/Attorney


District 4Ray Carlson

WRT Directorsare elected

to 3 year terms

District 7Randal

Christmann

District 7David J.

Lundstrom

District 7Lee

Reiser, Jr.

Board of Director Candidates


2010 2009

ASSETSCurrent Assets

Cash and cash equivalents $ 8,612,331 $ 5,353,507

Temporary investments in certificates of deposits 1,902,523 4,740,843

Investments in held-to-maturity securities - current 20,849,864 9,022,447

Telecommunications receivable, net 254,540 199,128

Other accounts receivable 1,356,535 1,623,415

Interest receivable 82,581 102,786

Materials and supplies 1,728,213 1,582,522

Other prepayments 168,440 196,933

Total current assets 34,955,027 22,821,581

Investments and Noncurrent Assets

Temporary investments in certificates of deposits 878,000 1,382,642

Investments in held-to-maturity securities 3,740,461 6,699,310

Investments in equity method investments 15,618,528 15,301,458

Other investments 2,154,030 2,425,057

Nonregulated investments 377,398 280,540

Other noncurrent assets 75,311 98,509

Total investments and noncurrent assets 22,843,728 26,187,516

Telecommunications Plant

In service 106,795,661 102,975,915

Under construction 52,764 872,800

Plant adjustment 7,383,187 7,383,187

Total investment in plant 114,231,612 111,231,902

Less accumulated depreciation and amortization 75,684,593 71,754,496

Net plant 38,547,019 39,477,406

$ 96,345,774 $ 88,486,503

Balance SheetsDECEMBER 31, 2010 AND 2009

10% CASHBACK for every dollar spent in 2010


2010 2009

LIABILITIES AND EQUITIES

Current Liabilities

Current maturities of long-term debt $ 1,463,000 $ 1,390,000

Accounts payable 682,883 979,507

Customer deposits 123,729 113,864

Advanced billing and payments 9,276 7,942

Accrued income taxes 116,857 28,960

Accrued taxes - other 468,657 484,571

Other current liabilities 731,537 705,483

Total current liabilities 3,595,939 3,710,327

Long-Term Debt, Less

Current Maturities 1,828,436 3,749,783

Other Liabilities

Deferred compensation reserve 74,382 95,495

Deferred income taxes 2,283,487 2,220,661

Total other liabilities 2,357,869 2,316,156

Equities

Patronage capital 53,526,311 50,899,268

Other equities 35,037,219 27,810,969

Total equities 88,563,530 78,710,237

$ 96,345,774 $ 88,486,503

Balance SheetsDECEMBER 31, 2010 AND 2009

Over 7000 Customers are saving money with WRT Bundles

WEST RIVER TELECOM 2011 ANNUAL REPORT 109

4% Nonreg. Sales & Lease3% Internet Expense

13% Local Network

Revenue 2010

Revenue Distribution 2010

3% Nonreg. Sales & Lease4% Misc.5% Internet & DSL3% Long Distance

35% Dividends, Interestand Equity Earnings

37% Network Access& Federal Support

39% Net Margin

1% InterestExpense

15% Depreciation & Amortization

6% Corporate Operations

4% Customer Operations

9% Taxes

19% Plant Expense

2010 2009OPERATING REVENUES Local network services $ 4,306,660 $ 4,531,797 Network access services 12,392,555 11,122,611 Long distance network services 1,022,664 1,078,406 Miscellaneous 1,194,293 1,188,698 Telecom operating revenue 18,916,172 17,921,512 Internet revenue 1,842,055 1,751,581 Nonregulated sale and lease revenue 1,127,009 1,038,990 Total operating revenues 21,885,236 20,712,083

Operating Expenses Plant specific operations 4,400,125 4,485,880 Plant nonspecific operations 1,853,496 1,690,009 Depreciation 4,645,896 4,456,386 Customer operations 1,278,055 1,311,895 Corporate operations 2,045,702 2,080,804 Operating taxes, other 244,588 237,200 Telecom operating expenses 14,467,862 14,262,174 Internet expenses 1,046,192 1,078,581 Nonregulated sale and lease expense 1,485,410 1,403,481 Total operating expense 16,999,464 16,744,236

Net Operating Margin 4,885,772 3,967,847

Nonoperating Margin Interest income 683,713 894,558 Dividend income 2,317,005 1,568,432 Amortization of plant adjustment (492,213) (492,213) AFUDC 33,660 53,078 Equity earnings 8,913,276 7,897,971 Other nonoperating expense (53,540) (62,298) Net nonoperating margin 11,401,901 9,859,528

Net Margin Before Interest and Income Taxes 16,287,673 13,827,375

Interest Expense and Related Items 491,030 584,435

Net Margin Before Income Taxes 15,796,643 13,242,940

Provision for Income Taxes 2,751,423 2,581,783

Net Margin $ 13,045,220 $ 10,661,157

Statements of OperationsDECEMBER 31, 2010 AND 2009

WEST RIVER TELECOM 2011 ANNUAL REPORT 109

4% Nonreg. Sales & Lease3% Internet Expense

13% Local Network

Revenue 2010

Revenue Distribution 2010

3% Nonreg. Sales & Lease4% Misc.5% Internet & DSL3% Long Distance

35% Dividends, Interestand Equity Earnings

37% Network Access& Federal Support

39% Net Margin

1% InterestExpense

15% Depreciation & Amortization

6% Corporate Operations

4% Customer Operations

9% Taxes

19% Plant Expense

EideBailly LLP

Certified Public Accountants & Consultants

The Members

West River Telecommunications Cooperative

Hazen, ND 58545

We have audited, in accordance with

auditing standards generally accepted in

the United States of America, the balance

sheets of West River Telecommunications

Cooperative as of December 31, 2010

and 2009, and the related statements of

operations, equities and cash flows for the

years then ended, and in our report, dated April

4, 2011, we expressed an unqualified opinion

on those financial statements. In our opinion,

the information set forth in the accompanying

condensed financial statements is fairly stated

in all material respects in relation to the financial

statements from which it has been derived.

Completed financial statements are on file at the

Cooperative’s office.

April 4, 2011

Sioux Falls, South Dakota

Audit Report

Revenue Stats

Ranae Schmidt15 yearsMick Grosz

25 years

Lasy Bosch5 years


Lasy BoschPersonnel Dir/Safety Coordinator

Bonnie KrauseCOO/ Financial Manager

Bruce MohlPlant Accountant

Bev HuberOffice Accountant

Tani GoodwinAccountant/ AP

Corey LeintzPayroll/ Plant Accountant

Shirley BreimeierCABS Coordinator

Jane SchrammAccounting Clerk

Beth KrauseMarketing Manager

Linda TerfehrMember Services Coordinator

AC

CO

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MA

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MAINTENANC

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Mick GroszCEO

Loretta BeckmanExecutive Assistant

Jerry LangBuilding Maint. Rep.

WRT Employees

WRT has approximately 13,000 subscribers

Over 16,600 access lines

Ranae Schmidt15 yearsMick Grosz

25 years

Lasy Bosch5 years


Ranae SchmidtCustomer Service Mgr.

Jeff HaydenComputer Programmer

Debbie MorastCSR-Beulah

Jodi AipperspachCustomer Service Rep

Shannon SilbernagelCSR-Mobridge

Lanet DuncanCSR-Mobridge

Roxanne GeurtsCustomer Service Rep

Kim GragerCSR-Accts Receivable

Marsha SwansonCashier/ Receptionist

Sharon SchmaltzCashier/ Receptionist

CU

STO

MER

SER

VIC

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Lisa RottCustomer Service Rep

CU

STO

MER

SER

VIC

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UST

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Tyson GrinsteinnerInternet/ Data Tech

IN

TE

RN

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CU

STO

MER

SER

VIC

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Riley EideInternet/ Data Tech

Trista DeWittCustomer Service Rep

Trent LeapaldtInternet/ Data Tech

Sheldon DacarInternet/ Data Tech

WRT Employees

WRT has offices in Hazen, Beulah & Mobridge


Jody Murschel15 years

Allan Mautz15 years

Aaron Wick10 years

Bob Fitzgerald5 years

Shannon Rask5 years

Lyle Walth15 years

Randy Davis

15 years

Blaine LemerPlant Manager

Rockne BonsnessSales Representative

Stacy HintzOSP Clerk

Frankie BuchertOSP Clerk

Cheryl LazierOSP Clerk

Blair MeierOutside Plant Facilities Mgr.

Jacob ReinhardtConstruction

Allen HaiderOutside Plant Facilities Ass’t Mgr.

Allan MautzConstruction

Bob FitzgeraldConstruction

Steven KnudsonRight-of-Way Agent

Aaron WickC.O./ Network Tech

PL

AN

TP

LA

NT

Craig SmithC.O./ Network Manager

Larry WiegeC.O./ Network Foreman

Robert MettlerC.O./ Network Tech

Gene WolfC.O./ Network Tech

Kip HammargrenC.O./ Network Tech

Darroll AasC.O./ Network Tech

Phil QuastC.O./ Network Tech

Jody MurschelC.O./ Network Tech

Shannon RaskPlant Clerk

NE

TW

OR

KN

ET

WO

RK

NE

TW

OR

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PL

AN

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WRT Employees


Jody Murschel15 years

Allan Mautz15 years

Aaron Wick10 years

Bob Fitzgerald5 years

Shannon Rask5 years

Lyle Walth15 years

Randy Davis

15 years

Tim JohnsonI & R Manager

Patrick O’NeilComb. Tech. – Beulah

LaMar GoetzComb. Tech. – Washburn

Duane EllweinComb. Tech. – Hazen

Dave FisherComb. Tech. – Center

Tom BeeryComb. Tech. – Hazen

Dale HeidComb. Tech. – Beulah

Tom HierComb. Tech. – Glen Ullin

Darrell BelisleComb. Tech. – Turtle Lake

Kelly MaasComb. Tech. - Hazen

Tom IversonComb. Tech. – Elgin

Mike DegensteinComb. Tech. – Hazen

Randy DavisComb. Tech. – New Salem

Lyle WalthComb. Tech. – Mobridge

Joe BauerInstaller – McLaughlin

Jerry GraffComb. Tech. – McLaughlin

Rod SilvaInstaller – Fort Yates

Jackson HagenInstaller – McClusky

Casey BlohmInstaller – Hazen

INS

TALL

& R

EP

AIR

Devon MittleiderInstaller – McLaughlin

Jeff HansonInstaller – Hazen

INS

TALL

& R

EP

AIR

INS

TALL

& R

EP

AIR

INS

TALL

& R

EP

AIR

INS

TALL

& R

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Darren LeierInstaller – Hazen

Donna QuastCustomer Service Rep.

Julie HochsprungCustomer Service Rep.

WRT Employees

West River Telecom www.westriv.com

101 W Main • Hazen ND 58545701.748.2211

... great People

... great Service

... great Results

ceo's report - west river telecom

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