must be present to win
BRING THIS BOOK TO THE ANNUAL MEETING for registration, door prizes & a chance to win the $800 progressive cash prize!
Annual Meeting Ellendale School Gym Thursday, October 17th 6 p.m.
READi TECH
P.O. Box 69 Ellendale, ND 58436
2018
THIS IS DRN COUNTRY
COOPERATIVE ANNUAL REPORT
Official Notice of Annual Meeting Please take notice pursuant to the bylaws of the Cooperative, the 69th Annual Meeting of the members will be held at the Ellendale Public School Gymnasium, Ellendale, ND at 6 p.m., in the City of Ellendale, in the County of Dickey, State of North Dakota on the 17th day of October 2019 at 6 p.m. for the following purposes: 1. To elect three Directors from Districts 7, 8 and 11. The names listed below are the names that were nominated by the Nominating Committee on Aug. 28, 2019: District 7 (Nelvik & Venturia exchanges)— Ralph Neu, Ashley District 8 (Forbes & Merricourt exchanges)— Paul Olson, Forbes District 11 (Oakes, Forman, Gwinner & Lisbon exchanges)—Rod Buck, Oakes Nominations by petition: None 2. To present and consider the reports of Officers, Directors and Committees. 3. To transact such business as may properly come before the members at the time.
Schedule of Events 4:30 pm
Doors Open Registration Complimentary Meal - South Gym Musical Entertainment - North Gym
6:00 pm
Meeting Called to Order Welcome Presentation of Colors National Anthem Invocation Introduction of Guests President's Report GM/CEO Report Service Awards Secretary's Report Financial Report Unfinished Business New Business Election of Directors & Results —Fallon Kelly, DRN Attorney Drawing for Door Prizes Adjournment
OUR MISSION To furnish high-quality communications to consumers at competitive prices which will ensure long-term viability.
FUN THINGS ABOUT OUR TERRITORY Lisbon is home to the ND Veteran's Home.
Former NFL Buffalo Bill's player Phil Hansen is an Oakes native.
There are approximately 110 Wind Towers Whitestone Hill, southeast of Kulm, is the location of the fiercest clash between Indians & white soldiers in ND.
Service Dogs for America is located Jud. The world’s largest hamburger was eaten in Rutland, North Dakota, in 1982. It weighed 3,591 pounds and more than 8,000 people were invited to the meal.
The Carroll House in Fullerton is listed on the National Register of Historic places. Fort Ransom was established in 1867 to protect overland travel from Minnesota to Montana.
THANK YOU FOR ATTENDING THE ANNUAL MEETING!
THIS IS
COUNTRY
7,931 5,644
58
6,841
4,549
CO-OP MEMBERS
SQUARE MILES SERVED
INTERNET CUSTOMERS
32
EXCHANGES
2018 BY THE NUMBERS INFORMATION Access Lines 8,442 Internet 6,841 Cable TV 4,077
FIBER MILES
ACCESS LINE DATA Access Lines 8,442 Route Miles - Fiber 4,549 Access Lines per router mile 1.86 Square Miles Served 5,644
PLANT STATISTICS Telecommunications plant in service (thousands) $85,946 Investment per access $10,181 Investment per dollar of revenue $3.48 12
FULL TIME EMPLOYEES
2018 Annual Meeting Minutes The sixty-eighth Annual Meeting of the Members of Dickey Rural Telephone Cooperative was held October 18, 2018 at 6:00 p.m. at the Ellendale Public School in the City of Ellendale, County of Dickey, State of North Dakota, pursuant to notice of meeting sent to all cooperative members, and a copy of the Notice with the Affidavit of Mailing is attached to these Minutes. The dinner was served prior to the meeting. President Ralph Neu then called the meeting to order with Arden Falk acting as Secretary of the meeting. President Ralph Neu then gave his welcome and introduced special guests. The secretary reported the number of members present. The members present constituted a quorum, and in accordance with the Bylaws, the meeting was duly opened. At the door, each member was presented with a copy of the Notice of the Meeting, and a copy of the Minutes of the October 19, 2017 annual meeting of the members. Upon motion duly made and seconded, the Minutes were approved. President Neu then directed the Secretary to annex these to the Minutes of the meeting, which are to be duly filed. DRN President Ralph Neu and General Manager Robert K. Johnson presented the president/manager’s report, which was duly read, received, and placed on file. The next order of business was the Secretary/ Treasurer’s report. This was read, received, and placed on file.
The Financial Report was then presented by Financial Manager Troy Radermacher. There was no unfinished business. The cooperative’s attorney, Fallon Kelly, next conducted the election of directors, stating that three (3) directors were up for re-election for a term of three (3) years each. The directors up for re-election and who were all nominated by the nominating committee, were introduced as Arden Falk for District 3, Sid Meidinger for District 4 and Lana Schlecht for District 10. There having been no nominations by petition for District 3, Arden Falk was unanimously re-elected as director for three (3) years. There having been no nominations by petition for District 4, Sid Meidinger was unanimously re-elected as director for three (3) years. There having been one nomination for Dan Girard by petition for District 10, there was next held a contested election for District 10 between incumbent Lana Schlecht and challenger Dan Girard. Each candidate was given several minutes to address the membership. The election was then held. Dan Girard received 87 votes and Lana Schlecht received 84 votes. Dan Girard was elected to the Board member position for District 10 and immediately took his office for a term of three (3) years. There being nothing further to come before the cooperative, President Neu declared the meeting adjourned. Arden Falk Secretary/Treasurer
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President/GM Report Summary Welcome to Dickey Rural Telephone Cooperative’s 69th Annual Meeting. The DRN Board of Directors and staff are very excited to share the strong results from 2018. Thank you for your continued support as DRN continues to improve and expand its services. This is DRN Country.
$
• 2018 closed out with a net margin of $4.5 million and total revenues of $24,695,024 - an increase of $1,311,248 from 2017.
Jacob Parker
Jennifer Peterson
Dean Rithmiller
Brenda Sand
ReadiTech Network Assistant
Executive Assistant
Michele Peterson Troy Radermacher Integrated Systems Specialist
Business & Accounting Manager
Jason Rall
Richard Reis
Outside Network Operations Specialist
ReadiTech Network Analyst
• This solid performance motivated the Board to pay out $3.2 million capital credits to members in December 2018. • To continue to provide the fastest and best Internet service, continual improvements are made to our fiber network. • 145 miles of 96 fiber were placed to complete phase 3 of a 3-phase fiber project that totaled 475 miles.
Outside Network Operations Specialist
Customer Care & Technical Support Supervisor
Kent Schimke
CEO/General Manager
Michelle Schroeder Mary Lou Sundby Marketing Specialist
Business Development Specialist
Darwin Swartz
Outside Network Operations Specialist
• Due to regulatory changes, DRN is now able to offer broadband only. • A free gig-capable Internet router continues to be offered to customers who subscribe to 100 MG or higher providing essential cybersecurity for customers. Vernon Swartz
• A nationwide search was completed for a new CEO/GM due to Robert Johnson's retirement. The Board of Directors selected Kent Schimke as the new CEO/GM.
Outside Network Operations Specialist
Outside Network Operations Specialist
Matt Thorpe
Customer Care Specialist
Sam Toyne
Sue Urlacher
Gordy Van De Venter
Matthew Watkins
April Weight
Lori Young
Patrick Young
Scott Young
Accountant
Outside Network Operations Specialist
Kristi Walden
Technical Support Analyst
• North Dakota Association of Telephone Cooperatives changes name to the Broadband Association of North Dakota or BAND. • The change reflects how we are no longer simply telephone companies but are state-of-the-art technology companies committed to providing members with the most advanced telecommunications/broadband services in the nation.
The DRN Board of Directors, management, and employees are committed to build and grow cooperative partnerships and relationships to continue to provide our members the most cost effective, reliable, state-of-the-art services. Because of your patronage, the cooperative spirit lives on and continues to grow in DRN country. Your patronage and support drives our commitment to serve our members like the family, friends, and neighbors we are as the DRN Cooperative. 2
Technical Support Analyst
Customer Care Specialist
Accountant
Outside Network Operations Specialist
ReadiTech Network Analyst
Russ Zinter
Inside Network Operations Specialist
Employee not pictured: Lorri Kingzett, Accountant
EMPLOYEE SERVICE AWARDS Ralph Neu President District 7
Kent Schimke
CEO/General Manager
20 YEARS
JoDel Henningsen
15 YEARS
Vern Swartz Darwin Swartz Jason Rall
Patrick Young Lori Young
5 YEARS
Jacob Herman
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Employees
Travis Anliker Sales Manager
Sonja Bommersbach HR Manager
Board of Directors
Angel Caro
Technical Support Analyst
Chad Chapin
Outside Network Operations Specialist
Samuel Engel Technical Support Analyst
Terri Engel Accountant
Ralph Neu President District 7
Kelly Fischer ReadiTech Network Analyst
Jeff Goehring
Inside Network Operations Specialist
Brent Grueneich
Facilities Maintenance Technician
Crystal Grueneich Accountant
Barb Hardy Accountant
Customer Care Specialist
Multimedia Specialist
Inside Network Operations Specialist
Gage Holmstrom ReadiTech Network Assistant
Brandon Huber ReadiTech Network Assistant
Vice President District 2
Arden Falk
Secretary/Treasurer District 3
DISTRICT 3 Kathryn Verona Fort Ransom DISTRICT 4 Fredonia Jud DISTRICT 6 Crete Milnor
Marketing Manager
District 4
Jacob Herman
Ralph Greer
Janell Hauck
Sid Meidinger
JoDel Henningsen Pamela Henningsen
DISTRICT 2 Dickey Litchville Marion
Myron Yagow District 6
Paul Olson District 8
DISTRICT 7 Nelvik Venturia DISTRICT 8 Forbes Merricourt
James Jenkins
Outside Network Operations Specialist
DISTRICT 9 Fullerton Guelph Brunno Kinzler Tyson Johnson
Outside Network Operations Specialist
Robert Meyer Network Services Assistant
10
Charles Kingzett Inside Network Operations Specialist
Donnah Mosley
Inside Network Operations Specialist
Bobbi Jo Kronberg Customer Care Specialist
Kari Nishek
ReadiTech Business Intelligence Manager
Jacob Lematta
Outside Network Operations Specialist
Haylee O'Brien Customer Care Specialist
David Malsam ReadiTech Network Analyst
Maya Orwig
Technical Support Analyst
Andy Meyer
District 9
Dan Girard District 10
ReadiTech IT Supervisor
Mike Ost
Outside Network Operations Specialist
Fallon Kelly Attorney
Kent Schimke
CEO/General Manager
Rod Buck District 11
DISTRICT 10 Ellendale Ashley Kulm Edgeley LaMoure DISTRICT 11 Oakes Forman Gwinner Lisbon 3
Secretary-Treasurer/Accounting Manager Report Summary Welcome to the 69th Annual Meeting of Dickey Rural Telephone Cooperative. It is our pleasure and duty to provide you with the financial statements for 2018. The Board of Directors met at 12 regular meetings and one special meeting during the past year. In addition to the regularly scheduled monthly meetings, various directors attended state, regional and national meetings vital to the cooperative and rural telecommunication services. All action taken by the board at their meetings is recorded in the minutes book, which is up to date and open for inspection by cooperative members at the headquarters location in Ellendale, ND. The balance sheet and operating statement contained in this annual report were prepared from our audited books and recorded by Moss Adams, LLP. These reports, along with our statistical information and data, will give you a detailed presentation of the present financial condition of the company as well as how it did during the past year. Total revenues for 2018 were $24,695,024 an increase of $1,311,248 from the previous year. Net margins were $4,538,031 a decrease of $985,181 from 2017. The reason for this decrease is we sold our 700mhz spectrum which resulted in a gain on sale of $1,693,426 in 2017.
Revenues
During 2018, a total of $21,135.31 in principal and $796.57 in interest was paid on the cooperative's debt to the federal government. Total Rural Utilities Services (RUS) payments made through December 31, 2018 amounted to $28,873,812; $20,411,898 in principal and $8,461,914 in interest.
Customers
Dickey Rural Telephone Cooperative has refunded a total of $26,010,866 in capital credits since 1995. Capital credits paid out in 2018 were $3,227,799. • General retirements paid in 2018=$3,000,437 • Estate retirements in 2018=$227,362 In the past, DRTC has invested in several businesses that have shown to be profitable to the company which continued in 2018. • Dakota Carrier Network (DCN) realized a profit of $921,724 for our share and returned $379,372 of our original capital investment. • Verizon Wireless Partnership paid a dividend of $1,279,000 for our share of the distribution. • Our share of North Dakota Long Distance (NOLD) net income was $63,200. • USConnect paid a dividend of $162,000 for our share of the distribution.
Expenses
We are pleased to report yet another year of solid financial performance. In closing, we thank you, the members for your patronage and for attending our 69th Annual Meeting. Arden Falk, Secretary/Treasurer Troy Radermacher, Accounting Manager
In 2018, the company invested $5,419,032 in various plant upgrades throughout the service area. Arden Falk
4
Secretary/Treasurer District 3
Troy Radermacher Business & Accounting Manager
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Consolidated Statement of Income
OPERATING REVENUES Wireline Internet Television Miscellaneous
Years Ended December 31, 2018 2017 $ 12,921,993 3,692,290 4,240,647 3,840,094
$ 12,410,530 3,725,556 3,754,326 3,493,364
OPERATING EXPENSES Plant specific operations Plant nonspecific operations Depreciation and amortization Customer operations Corporate operations Other operating taxes Non-regulated
24,695,024 23,383,776 4,565,844 472,943 5,366,246 1,457,326 2,081,428 98,146 8,607,332
4,339,888 566,905 5,055,786 1,454,334 2,109,103 94,761 7,650,085
Operating margins
22,649,265
21,270,862
2,045,759
2,112,914
OTHER INCOME (EXPENSE) Interest and dividend income Interest expense Investment (expense) income Other non-operating expense Gain from sale of assets Impairment of investment Amortization of plant adjustment Amortization of goodwill Income from affiliates
1,680,999 (797) (71,963) (52,525) 125,000 - - (136,012) 920,128
1,254,737 (1,214) 277,532 (10,961) 1,693,426 (613,197) (168,781) (136,012) 823,633
2,464,830
3,119,163
4,510,589
5,232,077
Margins before income taxes
INCOME TAX BENEFIT
8
Net margins
(27,442) (291,135) $ 4,538,031
Independent Auditor's Report Report on the Financial Statements—We have audited the accompanying consolidated financial statements of Dickey Rural Telephone Cooperative and Subsidiaries (Cooperative), which comprise the consolidated balance sheets as of December 31, 2018 and 2017, and the related consolidated statements of income, members’ equity, and cash flows for the years then ended, and the related notes to the consolidated financial statements. Management’s Responsibility for the Financial Statements—Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility—Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated 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 consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion—In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Dickey Rural Telephone Cooperative and its subsidiaries as of December 31, 2018 and 2017, and the results of their operations and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Moss Adams LLP Spokane, Washington April 23, 2019
$ 5,523,212
5
Consolidated Balance Sheets ASSETS
Consolidated Balance Sheets LIABILITIES AND MEMBERS EQUITY Years Ended December 31,
Years Ended December 31, 2018 2017 CURRENT ASSETS Cash and cash equivalents $5,881,086 Investments in certificates of deposit 14,671,966 Subscriber accounts receivable, net of allowance for doubtful accounts of $5,646 in 2018 and $8,540 in 2017 3,218 Settlement and access accounts receivable 904,382 Income tax receivable 227,657 Other accounts receivable 236,247 Materials and supplies 342,922 Other current assets 952,785
Total current assets
NON-CURRENT ASSETS Investment in affiliates Investment in non-affiliates Goodwill, net Other non-current assets
PROPERTY, PLANT, AND EQUIPMENT Regulated telecommunications plant in service Regulated telecommunications plant under construction Non-regulated plant in service Less accumulated depreciation and amortization
6
23,220,263
$6,401,078 12,723,905 75,569 1,102,593 280,044 506,364 355,219 21,444,772
5,500,998 4,642,342 679,963 1,384,921
5,060,248 4,251,399 815,975 1,751,153
12,208,224
11,878,775
85,946,407 - 4,083,051
81,472,264 290,064 4,049,313
90,029,458 53,292,988
85,811,641 48,681,033
36,736,470
37,130,608
$72,164,957
$70,454,155
2018
2017
CURRENT LIABILITIES Accounts payable, general Other accrued liabilities Income taxes payable Current maturities of long-term debt
$699,744 470,534 - 18,132
$280,358 481,783 13,611 4,442
1,188,410
780,194
5,078
28,443
NON-CURRENT LIABILITIES Other deferred credits Deferred income tax
281,620 2,586,759
289,192 2,712,494
2,868,379
3,001,686
68,103,090
66,643,832
$ 72,164,957
$ 70,454,155
Total current liabilities
LONG-TERM DEBT, net of current maturities
Total non-current liabilities
MEMBERS' EQUITY
7