Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2013

Summary of Significant Accounting Policies [Abstract]

Principles of consolidation:

Principles of consolidation:  The consolidated financial statements include the accounts of all wholly owned subsidiaries.  All significant intercompany balances and transactions have been eliminated in consolidation.

Use of estimates:

Use of estimates:  Management of the Company has made a number of estimates and assumptions related to the reporting of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods.  Management reviews its estimates, including those related to recoverability and useful lives of assets as well as liabilities for income taxes and pension benefits.  Changes in facts and circumstances may result in revised estimates, and actual results could differ from those reported estimates.

Cash and cash equivalents:

Cash and cash equivalents:  The Company considers all temporary cash investments purchased with a maturity of three months or less to be cash equivalents.  The Company places its temporary cash investments with high credit quality financial institutions.  At times, these investments may be in excess of FDIC insurance limits. Cash equivalents were comprised of $20.0 million of institutional cash management funds and $20.0 million of U.S. Treasury bills at December 31, 2013 and 2012, respectively.

Accounts receivable:

Accounts receivable: Accounts receivable are recorded at the invoiced amount and do not bear interest.  The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable.  The Company determines the allowance based on historical write-off experience and industry and local economic data.  The Company reviews its allowance for doubtful accounts monthly.  Past due balances meeting specific criteria are reviewed individually for collectability.  All other balances are reviewed on a pooled basis.  Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.  Accounts receivable are concentrated among customers within the Company's geographic service area and large telecommunications companies.  Changes in the allowance for doubtful accounts for trade accounts receivable for the years ended December 31, 2013, 2012 and 2011 are summarized below (in thousands):

	2013			2012			2011
Balance at beginning of year	$	1,113		$	838		$	460
Bad debt expense		2,019			2,870			3,243
Losses charged to allowance		(2,390	)		(2,854	)		(3,304	)
Recoveries added to allowance		182			259			439
Balance at end of year	$	924		$	1,113		$	838

Investments:

Investments: The classifications of debt and equity securities are determined by management at the date individual investments are acquired.  The appropriateness of such classification is periodically reassessed.  The Company monitors the fair value of all investments, and based on factors such as market conditions, financial information and industry conditions, the Company will reflect impairments in values as is warranted.  The classification of those securities and the related accounting policies are as follows:

Investments Carried at Fair Value: Investments in stock and bond mutual funds and investment trusts held within the Company’s rabbi trust, which is related to the Company’s unfunded Supplemental Executive Retirement Plan, are reported at net asset value, which approximates fair value.  Unrealized gains and losses are recognized in earnings.

Investments Carried at Cost:  Investments in common stock in which the Company does not have a significant ownership (less than 20%) and for which there is no ready market, are carried at cost.  Information regarding investments carried at cost is reviewed for evidence of impairment in value.  Impairments are charged to earnings and a new cost basis for the investment is established.

Equity Method Investments:  Investments in partnerships and in unconsolidated corporations where the Company's ownership is 20% or more, or where the Company otherwise has the ability to exercise significant influence, are reported under the equity method.  Under this method, the Company's equity in earnings or losses of investees is reflected in earnings.  Distributions received reduce the carrying value of these investments.  The Company recognizes a loss when there is a decline in value of the investment which is other than a temporary decline.

Materials and supplies:

Materials and supplies:  New and reusable materials are carried in inventory at the lower of average cost or market value.  Inventory held for sale, such as telephones and accessories, are carried at the lower of average cost or market value.  Non-reusable material is carried at estimated salvage value.

Property, plant and equipment:

Property, plant and equipment:  Property, plant and equipment is stated at cost.  The Company capitalizes all costs associated with the purchase, deployment and installation of property, plant and equipment, including interest on major capital projects during the period of their construction.  Expenditures, including those on leased assets, which extend the useful life or increase its utility, are capitalized.  Maintenance expense is recognized when repairs are performed.  Depreciation is calculated on the straight-line method over the estimated useful lives of the assets. Depreciation and amortization is not included in the income statement line items “Cost of goods and services” or “Selling, general and administrative.”  Depreciable lives are assigned to assets based on their estimated useful lives.  Leasehold improvements are depreciated over the lesser of their useful lives or respective lease terms. The Company takes technology changes into consideration as it assigns the estimated useful lives, and monitors the remaining useful lives of asset groups to reasonably match the remaining economic life with the useful life and makes adjustments when necessary.

Fair value:

Fair value: Financial instruments presented on the consolidated balance sheets that approximate fair value include:  cash and cash equivalents, receivables, investments carried at fair value, payables, accrued liabilities, interest rate swaps and long-term debt.

Asset retirement obligations:

Asset retirement obligations: The Company records the fair value of an asset retirement obligation as a liability in the period in which it incurs a legal obligation associated with the retirement of tangible long-lived assets that results from acquisition, construction, development and/or normal use of the assets.  The Company also records a corresponding asset, which is depreciated over the life of the tangible long-lived asset.  Subsequent to the initial measurement of the asset retirement obligation, the obligation is adjusted at the end of each period to reflect the passage of time and changes in the estimated future cash flows underlying the obligation.  The Company records the retirement obligation on towers owned and cell site improvements where there is a legal obligation to remove the tower or cell site improvements and restore the site to its original condition, as required by certain operating leases and applicable zoning ordinances of certain jurisdictions, at the time the Company discontinues its use.  The obligations are estimated and vary based on the size of the towers.  The Company’s cost to remove the tower or cell site improvements is amortized over the life of the tower or cell site assets.  Changes in the liability for asset removal obligations for the years ended December 31, 2013, 2012 and 2011 are summarized below (in thousands):

	2013			2012			2011
Balance at beginning of year	$	5,896		$	7,610		$	6,542
Additional liabilities accrued		1,189			1,148			556
Changes to prior estimates		-			(2,265	)		-
Payments made		(909	)		(846	)		-
Accretion expense		309			249			512
Balance at end of year	$	6,485		$	5,896		$	7,610

Cost in excess of net assets of businesses acquired (goodwill) and intangible assets:

Cost in excess of net assets of businesses acquired (goodwill) and intangible assets:  In connection with the acquisition of a business, a portion of the purchase price may be allocated to identifiable intangible assets with indefinite lives, such as franchise rights, and goodwill, which is the excess of the total purchase price over the fair values of the net tangible and identifiable intangible assets.  Goodwill and intangible assets with indefinite lives are assessed annually, at November 30, for impairment and in interim periods if certain events occur indicating that the carrying value may be impaired. No impairments were required to be recorded in the year ended December 31, 2011.  In the fourth quarter of 2012, the Company determined that goodwill in the Cable segment had become impaired, and an impairment charge of $11.0 million was recognized.  The Company determined that no impairment of Cable segment franchise rights was required for the years ended December 31, 2013 or 2012.  The fair value of cable franchise rights, which is determined by a “greenfield” analysis, was determined to exceed its $64.1 million carrying value by approximately $6.1 million at December 31, 2013, up from $3.4 million of excess fair value at December 31, 2012.

The following table presents the goodwill balance allocated by segment and changes in the balances for the years ended December 31, 2013 and 2012 (in thousands):

	CATV Segment			Wireline Segment		Total
Balance as of December 31, 2011	$	10,952		$	10	$	10,962
Impairment recognized		(10,952	)		-		(10,952	)
Balance as of December 31, 2012	$	-		$	10	$	10
No activity		-			-		-
Balance as of December 31, 2013	$	-		$	10	$	10

Intangible assets consist of the following at December 31, 2013 and 2012 (in thousands):

	2013							2012
	Gross Carrying Amount		Accum- ulated  Amort- ization			Net		Gross Carrying Amount		Accum- ulated Amort- ization			Net
Intangible assets subject to amortization:
Business contracts	$	2,069	$	(479	)	$	1,590	$	2,069	$	(354	)	$	1,715
Cable franchise rights		122		(122	)		-		122		(122	)		-
Acquired subscriber base		32,325		(27,197	)		5,128		32,325		(23,206	)		9,119
	$	34,516	$	(27,798	)	$	6,718	$	34,516	$	(23,682	)	$	10,834

Non-amortizing intangible assets:

Cable franchise rights	$	64,059	$	-		$	64,059	$	64,059	$	-		$	64,059
Railroad crossing rights		39		-			39		39		-			39
	$	64,098	$	-		$	64,098	$	64,098	$	-		$	64,098
Total intangibles	$	98,614	$	(27,798	)	$	70,816	$	98,614	$	(23,682	)	$	74,932

For the years ended December 31, 2013, 2012 and 2011, amortization expense related to intangible assets was approximately $4.1 million, $6.5 million and $10.4 million, respectively. During 2012, the Company determined that, beginning in early 2013, it would not continue to provide service under two franchises acquired in 2010, and the Company reclassified and began amortizing the franchise rights associated with these markets over the expected remaining period during which services would be provided.

Aggregate amortization expense for intangible assets for the periods shown is expected to be as follows:

Year Ending December 31,	Amount
	(in thousands)
2014	$	2,566
2015		1,411
2016		943
2017		514
2018		196

Retirement plans:

Retirement plans:  The Company maintains a Supplemental Executive Retirement Plan (“SERP”) for selected employees.  This is an unfunded defined contribution plan.  The Company created and funded a rabbi trust to hold assets equal to the liabilities under this plan.  The Company ceased making employer contributions to this plan during 2010.  Participant balances and earnings on them continue to be maintained for this plan.

The Company maintains a defined contribution 401(k) plan under which substantially all employees may defer a portion of their earnings on a pretax basis, up to the allowable federal maximum.  The Company may make matching and discretionary contributions to this plan.

Neither the rabbi trust nor the defined contribution 401(k) plan directly holds Company stock in the plan’s portfolio.

Income taxes:

Income taxes:  Income taxes are accounted for under the asset and liability method.  Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences 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.  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 Company evaluates the recoverability of tax assets generated on a state-by-state basis from net operating losses apportioned to that state.  Management uses a more likely than not threshold to make that determination and has concluded that at December 31, 2013 and 2012, a valuation allowance against certain state deferred tax assets is necessary, as discussed in Note 6.

Revenue recognition:

Revenue recognition: The Company recognizes revenue when persuasive evidence of an arrangement exists, services have been rendered or products have been delivered, the price to the buyer is fixed and determinable and collectability is reasonably assured.  Revenues are recognized by the Company based on the various types of transactions generating the revenue.  For services, revenue is recognized as the services are performed. For equipment sales, revenue is recognized when the sales transaction is complete.

Under the Sprint Management Agreement, postpaid wireless service revenues are reported net of an 8% Management Fee and a 12% Net Service Fee for 2011, 2012 and early 2013, retained by Sprint.  The Net Service Fee increased to its 14% maximum effective August 1, 2013.  Prepaid wireless service revenues are reported net of a 6% Management Fee retained by Sprint.  See Note 7 for additional information about the Management Fee and Net Service Fee.

The Company enters into revenue arrangements that may involve multiple revenue-generating activities, i.e., the delivery or performance of multiple products, services, and/or rights to use assets.  In accounting for these arrangements, separate contracts with the same party, entered into at or near the same time, will be presumed to be a bundled transaction, and the consideration will be measured and allocated to the separate units based on their relative fair values.  The Company has evaluated each arrangement entered into by the Company for each sales channel, and the Company continues to monitor arrangements with its sales channels to determine if any changes in revenue recognition need to be made.  Substantially all of the activation fee revenue recognized at the time a related wireless handset is sold is classified as equipment revenue.

Earnings per share:

Earnings per share:  Basic net income per share was computed on the weighted average number of shares outstanding.  Diluted net income per share was computed under the treasury stock method, assuming the conversion as of the beginning of the period, for all dilutive stock options.  Of 748 thousand, 661 thousand, and 503 thousand shares and options outstanding at December 31, 2013, 2012 and 2011, respectively, 129 thousand, 343 thousand and 352 thousand were anti-dilutive, respectively.  These options have been excluded from the computation of diluted earnings per share shown below.  There were no adjustments to net income in the computation of diluted earnings per share for any of the years presented.

The following tables show the computation of basic and diluted earnings per share for the years ended December 31, 2013, 2012 and 2011:

	2013			2012			2011
	(in thousands, except per share amounts)
Basic income per share
Net income	$	29,586		$	16,303		$	12,993
Weighted average shares outstanding		24,001			23,877			23,781
Basic income per share	$	1.23		$	0.68		$	0.55
Effect of stock options outstanding:
Weighted average shares outstanding		24,001			23,877			23,781
Assumed exercise, at the strike price at the beginning of year		485			343			231
Assumed repurchase of shares under treasury stock method		(371	)		(201	)		(186	)
Diluted weighted average shares		24,115			24,019			23,826
Diluted income per share	$	1.23		$	0.68		$	0.55