☑
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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VIRGINIA
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54-1162807
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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500 Shentel Way, Edinburg, Virginia
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22824
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|
(Address of principal executive offices)
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(Zip Code)
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Common Stock (No Par Value)
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NASDAQ Global Select Market
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|
(Title of Class)
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(Name of Exchange on which Registered)
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Item
Number
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Page
Number
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|
PART I
|
||
1.
|
4
|
|
1A.
|
22
|
|
1B.
|
36
|
|
2.
|
37
|
|
3.
|
37
|
|
4.
|
37
|
|
PART II
|
||
5.
|
38
|
|
6.
|
40
|
|
7.
|
41
|
|
7A.
|
63
|
|
8.
|
63
|
|
9.
|
64
|
|
9A.
|
64
|
|
9B.
|
64
|
|
PART III
|
||
10.
|
65
|
|
11.
|
65
|
|
12.
|
65
|
|
13.
|
66
|
|
14.
|
66
|
|
PART IV
|
||
15.
|
66
|
· | Internet access to customers in the northern Shenandoah Valley and surrounding areas. The Internet service has 12,666 digital subscriber line, or DSL, customers at December 31, 2015. DSL service is available to all customers in the Company’s regulated telephone service area. |
· | Operation of the Maryland, West Virginia and Pennsylvania portions of a fiber optic network along the Interstate 81 corridor. In conjunction with the telephone subsidiary, Shentel Communications, LLC is associated with the ValleyNet fiber optic network. Shentel Communications, LLC’s fiber network also extends south from Harrisonburg, Virginia, through Covington, Virginia, then westward to Charleston, West Virginia. This extension of the fiber network was acquired to connect to and support the Company’s cable business, and the provision of facility leases of fiber optic capacity to end users, in these areas. |
· | Resale of long distance service for calls placed to locations outside the regulated telephone service area by telephone customers. There were 9,476 long distance customers at December 31, 2015. |
· | Facility leases of fiber optic capacity, owned by itself and affiliates, in surrounding counties and into Herndon, Virginia. |
Name
|
Title
|
Age
|
Date in Position | |
Christopher E. French
|
President and Chief Executive Officer
|
58
|
April 1988
|
|
Earle A. MacKenzie
|
Executive Vice President and Chief Operating Officer
|
63
|
June 2003
|
|
Adele M. Skolits
|
Vice President – Finance, Chief Financial Officer and Treasurer
|
57
|
September 2007
|
|
William L. Pirtle
|
Senior Vice President – Marketing and Sales
|
56
|
September 2015
|
|
Raymond B. Ostroski
|
General Counsel, Vice President - Legal and Corporate Secretary
|
61
|
January 2013
|
|
Thomas A. Whitaker
|
Senior Vice President – Operations
|
55
|
September 2015
|
|
Edward H. McKay
|
Senior Vice President –Engineering & Planning
|
43
|
September 2015
|
|
Richard A. Baughman
|
Vice President – Information Technology
|
48
|
June 2010
|
· | acquisitions may place significant strain on our management, financial and other resources by requiring us to expend a substantial amount of time and resources in the pursuit of acquisitions that we may not complete, or to devote significant attention to the various integration efforts of any newly acquired businesses, all of which will require the allocation of limited resources; |
· | acquisitions may not have a positive impact on our cash flows or financial performance, even if acquired companies eventually contribute to an increase in our cash flows or profitability, because the acquisitions may adversely affect our operating results in the short term as a result of transaction-related expenses we will have to pay or the higher operating and administrative expenses we may incur in the periods immediately following an acquisition as we seek to integrate the acquired business into our operations; |
· | we may not be able to eliminate as many redundant costs as we anticipate; |
· | our operating and financial systems and controls and information services may not be compatible with those of the companies we may acquire and may not be adequate to support our integration efforts, and any steps we take to improve these systems and controls may not be sufficient; |
· | our business plans and projections used to justify the acquisitions and expansion investments are based on assumptions of revenues per subscriber, penetration rates in specific markets where we operate, and expected operating costs. These assumptions may not develop as projected, which may negatively impact our profitability; |
· | growth through acquisitions will increase our need for qualified personnel, who may not be available to us or, if they were employed by a business we acquire, remain with us after the acquisition; and |
· | acquired businesses may have unexpected liabilities and contingencies, which could be significant. |
· | increase our vulnerability to general adverse economic and industry conditions, including interest rate fluctuations, because a significant portion of our borrowings may continue to be at variable rates of interest; |
· | require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, dividends and other general corporate purposes; |
· | limit our ability to borrow additional funds to alleviate liquidity constraints, as a result of financial and other restrictive covenants in our credit agreement; |
· | limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; and |
· | place us at a competitive disadvantage relative to companies that have less indebtedness. |
· | incur additional indebtedness and additional liens on our assets; |
· | engage in mergers or acquisitions or dispose of assets; |
· | pay dividends or make other distributions; |
· | voluntarily prepay other indebtedness; |
· | enter into transactions with affiliated persons; |
· | make investments; and |
· | change the nature of our business. |
· | Sprint could price its national plans based on its own objectives and could set price levels or other terms that may not be economically advantageous for us; |
· | Sprint could develop products and services that could adversely affect our results of operations; |
· | if Sprint’s costs to perform certain services exceed the costs they expect, subject to limitations under our agreements, Sprint could seek to increase the amounts charged to us for such services; |
· | Sprint could make decisions that could adversely affect the Sprint brand names, products or services; |
· | Sprint could make technology and network decisions that could greatly increase our capital investment requirements and our operating costs to continue offering the seamless national service we provide; |
· | Sprint could restrict our ability to offer new services needed to remain competitive. This could put us at a competitive disadvantage relative to other wireless service providers if they begin offering new services in our market areas, increasing our churn and reducing our revenues and operating income from wireless services. |
· | the quality of the service provided by another provider while roaming may not approximate the quality of the service provided by the Sprint wireless network; |
· | the price of a roaming call off network may not be competitive with prices of other wireless companies for roaming calls, or may not be “commercially reasonable” (as determined by the FCC); |
· | customers may not be able to use Sprint’s advanced features, such as voicemail notification, while roaming; and |
· | Sprint or the carriers providing the service may not be able to provide accurate billing information on a timely basis. |
· | Sprint does not adequately project the need for handsets, or enter into arrangements for new types of handsets or other customer equipment, for itself, its wireless affiliates and its other third-party distribution channels, particularly in connection with the transition to new technologies; |
· | Sprint gives preference to other distribution channels; |
· | we do not adequately project our need for handsets; |
· | Sprint modifies its handset logistics and delivery plan in a manner that restricts or delays access to handsets; or |
· | there is an adverse development in the relationship between Sprint and its suppliers or vendors. |
· | a 26,500-square foot building that houses the Company's main switching center and technical staff, |
· | a 14,000-square foot building that includes warehouse space and houses operations staff, and |
· | a 10,700-square foot building used for customer services and retail sales. |
ITEM 5. | MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
2015
|
High
|
Low
|
||||||
Fourth Quarter
|
$
|
25.34
|
$
|
20.44
|
||||
Third Quarter
|
21.57
|
15.77
|
||||||
Second Quarter
|
18.22
|
15.29
|
||||||
First Quarter
|
16.45
|
13.78
|
2014
|
High
|
Low
|
||||||
Fourth Quarter
|
$
|
16.00
|
$
|
12.09
|
||||
Third Quarter
|
15.53
|
12.41
|
||||||
Second Quarter
|
16.31
|
12.83
|
||||||
First Quarter
|
16.73
|
11.68
|
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
|||||||||||||||||||
Shenandoah Telecommunications Company
|
100
|
58
|
86
|
147
|
182
|
253
|
||||||||||||||||||
NDAQ US
|
100
|
118
|
137
|
183
|
206
|
207
|
||||||||||||||||||
NDAQ Telecom Stocks
|
100
|
127
|
152
|
172
|
177
|
183
|
Number of
Shares
Purchased
|
Average
Price Paid
per Share
|
|||||||
October 1 to October 31
|
293
|
$
|
23.55
|
|||||
November 1 to November 30
|
3,004
|
24.11
|
||||||
December 1 to December 31
|
283
|
21.17
|
||||||
Total
|
3,580
|
$
|
23.84
|
2015
|
2014
|
2013
|
2012
|
2011
|
||||||||||||||||
Operating revenues
|
$
|
342,485
|
$
|
326,946
|
$
|
308,942
|
$
|
288,075
|
$
|
251,145
|
||||||||||
Operating expenses
|
268,399
|
265,003
|
253,535
|
253,417
|
218,855
|
|||||||||||||||
Operating income
|
74,086
|
61,943
|
55,407
|
34,658
|
32,290
|
|||||||||||||||
Interest expense
|
7,355
|
8,148
|
8,468
|
7,850
|
8,289
|
|||||||||||||||
Income taxes
|
27,726
|
22,151
|
19,878
|
12,008
|
10,667
|
|||||||||||||||
Net income from continuing operations
|
$
|
40,864
|
$
|
33,883
|
$
|
29,586
|
$
|
16,603
|
$
|
13,538
|
||||||||||
Discontinued operations, net of tax (a)
|
-
|
-
|
-
|
(300
|
)
|
(545
|
)
|
|||||||||||||
Net income
|
$
|
40,864
|
$
|
33,883
|
$
|
29,586
|
$
|
16,303
|
$
|
12,993
|
||||||||||
Total assets
|
628,740
|
619,242
|
597,006
|
570,740
|
479,979
|
|||||||||||||||
Total debt – including current maturities
|
201,250
|
224,250
|
230,000
|
231,977
|
180,575
|
|||||||||||||||
Shareholder Information:
|
||||||||||||||||||||
Shares outstanding
|
48,475,132
|
48,264,994
|
48,080,554
|
47,924,220
|
47,675,056
|
|||||||||||||||
Income per share from continuing operations-diluted
|
$
|
0.84
|
$
|
0.70
|
$
|
0.62
|
$
|
0.35
|
$
|
0.28
|
||||||||||
Loss per share from discontinued operations-diluted
|
-
|
-
|
-
|
(0.01
|
)
|
(0.01
|
)
|
|||||||||||||
Net income per share-diluted
|
0.83
|
0.70
|
0.61
|
0.34
|
0.27
|
|||||||||||||||
Cash dividends per share
|
$
|
0.24
|
$
|
0.235
|
$
|
0.18
|
$
|
0.165
|
$
|
0.165
|
(a) | Discontinued operations include the operating results of Converged Services. The Company announced its intention to dispose of Converged Services in September 2008, and reclassified its operating results as discontinued operations. The Company completed the disposition of Converged Services properties during 2013. |
* | The Wireless segment provides digital wireless service as a Sprint PCS Affiliate to a portion of a four-state area covering the region from Harrisburg, York and Altoona, Pennsylvania, to Harrisonburg, Virginia. In this area, the Company is the exclusive provider of wireless mobility communications network products and services on the 800 MHz, 1900 MHz and 2.5 GHz bands under the Sprint brand. This segment also owns cell site towers built on leased land, and leases space on these towers to both affiliates and non-affiliated service providers. |
* | The Cable segment provides video, internet and voice services in franchise areas in portions of Virginia, West Virginia and western Maryland, and leases fiber optic facilities throughout its service area. It does not include video, internet and voice services provided to customers in Shenandoah County, Virginia. |
* | The Wireline segment provides regulated and unregulated voice services, DSL internet access, and long distance access services throughout Shenandoah County and portions of Rockingham, Frederick, Warren and Augusta counties, Virginia. The segment also provides video services in portions of Shenandoah County, and leases fiber optic facilities throughout the northern Shenandoah Valley of Virginia, northern Virginia and adjacent areas along the Interstate 81 corridor through West Virginia, Maryland and portions of Pennsylvania. |
(in thousands)
|
Years Ended
December 31,
|
Change
|
||||||||||||||
2015
|
2014
|
$
|
%
|
|||||||||||||
Operating revenues
|
$
|
342,485
|
$
|
326,946
|
15,539
|
4.8
|
||||||||||
Operating expenses
|
268,399
|
265,003
|
3,396
|
1.3
|
||||||||||||
Operating income
|
74,086
|
61,943
|
12,143
|
19.6
|
||||||||||||
Other expense, net
|
5,496
|
5,909
|
413
|
7.0
|
||||||||||||
Income tax expense
|
27,726
|
22,151
|
5,575
|
25.2
|
||||||||||||
Net income
|
$
|
40,864
|
$
|
33,883
|
6,981
|
20.6
|
Dec. 31,
2015
|
Dec. 31,
2014
|
Dec. 31,
2013
|
||||||||||
Retail PCS Subscribers – Postpaid
|
312,512
|
287,867
|
273,721
|
|||||||||
Retail PCS Subscribers – Prepaid
|
142,840
|
145,162
|
137,047
|
|||||||||
PCS Market POPS (000) (1)
|
2,433
|
2,415
|
2,397
|
|||||||||
PCS Covered POPS (000) (1)
|
2,224
|
2,207
|
2,067
|
|||||||||
CDMA Base Stations (sites)
|
552
|
537
|
526
|
|||||||||
Towers Owned
|
158
|
154
|
153
|
|||||||||
Non-affiliate Cell Site Leases (2)
|
202
|
198
|
217
|
|||||||||
Gross PCS Subscriber Additions – Postpaid
|
77,067
|
72,891
|
66,558
|
|||||||||
Net PCS Subscriber Additions – Postpaid
|
24,645
|
14,146
|
10,829
|
|||||||||
PCS Average Monthly Retail Churn % - Postpaid (3)
|
1.47
|
%
|
1.76
|
%
|
1.75
|
%
|
||||||
Gross PCS Subscriber Additions – Prepaid
|
83,796
|
74,838
|
76,416
|
|||||||||
Net PCS Subscriber Additions (Losses) – Prepaid
|
(2,322
|
)
|
8,115
|
8,870
|
||||||||
PCS Average Monthly Retail Churn % - Prepaid (3)
|
4.93
|
%
|
4.00
|
%
|
4.24
|
%
|
1) | POPS refers to the estimated population of a given geographic area and is based on information purchased from third party sources. Market POPS are those within a market area which the Company is authorized to serve under its Sprint PCS affiliate agreements, and Covered POPS are those covered by the Company’s network. Covered POPS increased in 2014 primarily as a result of the Company’s deployment of the 800 megahertz spectrum at existing cell sites. |
2) | The decrease from December 31, 2013 to December 31, 2014 is primarily a result of termination of Sprint iDEN leases associated with the former Nextel network. |
3) | PCS Average Monthly Retail Churn is the average of the monthly subscriber turnover, or churn, calculations for the period. |
(in thousands)
|
Years Ended
December 31,
|
Change
|
||||||||||||||
2015
|
2014
|
$
|
%
|
|||||||||||||
Segment operating revenues
|
||||||||||||||||
Wireless service revenue
|
$
|
192,752
|
$
|
191,147
|
$
|
1,605
|
0.8
|
|||||||||
Tower lease revenue
|
10,505
|
10,201
|
304
|
3.0
|
||||||||||||
Equipment revenue
|
5,175
|
5,729
|
(554
|
)
|
(9.7
|
)
|
||||||||||
Other revenue
|
369
|
377
|
(8
|
)
|
(2.1
|
)
|
||||||||||
Total segment operating revenues
|
$
|
208,801
|
$
|
207,454
|
$
|
1,347
|
0.6
|
|||||||||
Segment operating expenses
|
||||||||||||||||
Cost of goods and services, exclusive of depreciation and amortization shown separately below
|
63,570
|
73,290
|
(9,720
|
)
|
(13.3
|
)
|
||||||||||
Selling, general and administrative, exclusive of depreciation and amortization shown separately below
|
35,792
|
33,171
|
2,621
|
7.9
|
||||||||||||
Depreciation and amortization
|
34,416
|
31,111
|
3,305
|
10.6
|
||||||||||||
Total segment operating expenses
|
133,778
|
137,572
|
(3,794
|
)
|
(2.8
|
)
|
||||||||||
Segment operating income
|
$
|
75,023
|
$
|
69,882
|
$
|
5,141
|
7.4
|
Dec. 31,
2015
|
Dec. 31,
2014
|
Dec. 31,
2013
|
||||||||||
Homes Passed (1)
|
172,538
|
171,589
|
170,470
|
|||||||||
Customer Relationships (2)
|
||||||||||||
Video customers
|
48,184
|
49,247
|
51,197
|
|||||||||
Non-video customers
|
24,550
|
22,051
|
18,341
|
|||||||||
Total customer relationships
|
72,734
|
71,298
|
69,538
|
|||||||||
Video
|
||||||||||||
Customers (3)
|
50,215
|
52,095
|
53,076
|
|||||||||
Penetration (4)
|
29.1
|
%
|
30.4
|
%
|
31.1
|
%
|
||||||
Digital video penetration (5)
|
77.9
|
%
|
65.9
|
%
|
49.2
|
%
|
||||||
High-speed Internet
|
||||||||||||
Available Homes (6)
|
172,538
|
171,589
|
168,255
|
|||||||||
Customers (3)
|
55,690
|
51,359
|
45,776
|
|||||||||
Penetration (4)
|
32.3
|
%
|
29.9
|
%
|
27.2
|
%
|
||||||
Voice
|
||||||||||||
Available Homes (6)
|
169,801
|
168,852
|
163,282
|
|||||||||
Customers (3)
|
20,166
|
18,262
|
14,988
|
|||||||||
Penetration (4)
|
11.9
|
%
|
10.8
|
%
|
9.2
|
%
|
||||||
Revenue Generating Units (7)
|
126,071
|
121,716
|
113,840
|
|||||||||
Fiber Route Miles
|
2,844
|
2,834
|
2,636
|
|||||||||
Total Fiber Miles (8)
|
76,949
|
72,694
|
69,296
|
|||||||||
Average Revenue Generating Units
|
124,054
|
117,744
|
110,611
|
1) | Homes and businesses are considered passed (“homes passed”) if we can connect them to our distribution system without further extending the transmission lines. Homes passed is an estimate based upon the best available information. |
2) | Customer relationships represent the number of customers who receive at least one of our services. |
3) | Generally, a dwelling or commercial unit with one or more television sets connected to our distribution system counts as one video customer. Where services are provided on a bulk basis, such as to hotels, universities and some multi-dwelling units, the revenue charged to the customer is divided by the rate for comparable service in the local market to determine the number of customer equivalents included in the customer counts shown above. |
4) | Penetration is calculated by dividing the number of customers by the number of homes passed or available homes, as appropriate. |
5) | Digital video penetration is calculated by dividing the number of digital video customers by total video customers. Digital video customers are video customers who receive any level of video service via digital transmission. A dwelling with one or more digital set-top boxes or digital adapters counts as one digital video customer. |
6) | Homes and businesses are considered available (“available homes”) if we can connect them to our distribution system without further extending the transmission lines and if we offer the service in that area. |
7) | Revenue generating units are the sum of video, voice and high-speed internet customers. |
8) | Fiber miles are measured by taking the number of fiber strands in a cable and multiplying that number by the route distance. For example, a 10 mile route with 144 fiber strands would equal 1,440 fiber miles. |
(in thousands)
|
Years Ended
December 31,
|
Change
|
||||||||||||||
2015
|
2014
|
$ |
%
|
|||||||||||||
Segment operating revenues
|
||||||||||||||||
Service revenue (1)
|
$
|
88,980
|
$
|
77,179
|
$
|
11,801
|
15.3
|
|||||||||
Other revenue (1)
|
8,642
|
7,374
|
1,268
|
17.2
|
||||||||||||
Total segment operating revenues
|
$
|
97,622
|
$
|
84,553
|
$
|
13,069
|
15.5
|
|||||||||
Segment operating expenses
|
||||||||||||||||
Cost of goods and services, exclusive of depreciation and amortization shown separately below
|
54,611
|
51,982
|
2,629
|
5.1
|
||||||||||||
Selling, general and administrative, exclusive of depreciation and amortization shown separately below
|
19,412
|
19,521
|
(109
|
)
|
(0.6
|
)
|
||||||||||
Depreciation and amortization
|
23,097
|
23,148
|
(51
|
)
|
(0.2
|
)
|
||||||||||
Total segment operating expenses
|
97,120
|
94,651
|
2,469
|
2.6
|
||||||||||||
Segment operating income (loss)
|
$
|
502
|
$
|
(10,098
|
)
|
$
|
10,600
|
105.0
|
(1) | Prior year service and other revenue amounts have been recast to conform to the current year presentation of video and internet equipment revenues being included in service revenue rather than other revenue. |
Dec. 31,
2015
|
Dec. 31,
2014
|
Dec. 31,
2013
|
||||||||||
Telephone Access Lines (1)
|
20,252
|
21,612
|
22,106
|
|||||||||
Long Distance Subscribers
|
9,476
|
9,571
|
9,851
|
|||||||||
Video Customers(2)
|
5,356
|
5,692
|
6,342
|
|||||||||
DSL and Cable Modem Subscribers (3)
|
13,086
|
12,742
|
12,632
|
|||||||||
Fiber Route Miles
|
1,736
|
1,556
|
1,452
|
|||||||||
Total Fiber Miles (4)
|
123,891
|
86,801
|
84,600
|
1) | Effective October 1, 2015, the Company launched cable modem services on its cable plant, and ceased the requirement that a customer have a telephone access line to purchase DSL service. |
2) | The Wireline segment’s video service passes approximately 16,000 homes. |
3) | 2015 total includes 420 customers served via the coaxial cable network. |
4) | Fiber miles are measured by taking the number of fiber strands in a cable and multiplying that number by the route distance. For example, a 10 mile route with 144 fiber strands would equal 1,440 fiber miles. |
(in thousands)
|
Years Ended
December 31,
|
Change
|
||||||||||||||
2015
|
2014
|
$ |
%
|
|||||||||||||
Segment operating revenues
|
||||||||||||||||
Service revenue (1)
|
$
|
21,880
|
$
|
20,986
|
$
|
894
|
4.3
|
|||||||||
Carrier access and fiber revenues (1)
|
42,303
|
39,202
|
3,101
|
7.9
|
||||||||||||
Other revenue (1)
|
3,237
|
2,847
|
390
|
13.7
|
||||||||||||
Total segment operating revenues
|
$
|
67,420
|
$
|
63,035
|
$
|
4,385
|
7.0
|
|||||||||
Segment operating expenses
|
||||||||||||||||
Cost of goods and services, exclusive of depreciation and amortization shown separately below
|
31,668
|
30,088
|
1,580
|
5.3
|
||||||||||||
Selling, general and administrative, exclusive of depreciation and amortization shown separately below
|
6,612
|
6,009
|
603
|
10.0
|
||||||||||||
Depreciation and amortization
|
12,736
|
11,224
|
1,512
|
13.5
|
||||||||||||
Total segment operating expenses
|
51,016
|
47,321
|
3,695
|
7.8
|
||||||||||||
Segment operating income
|
$
|
16,404
|
$
|
15,714
|
$
|
690
|
4.4
|
(1) | Prior year categories of access revenue and facilities lease revenue have been combined into the new category of carrier access and fiber revenue to conform to current year presentation. Additionally, set-top box revenues included in other revenue in the prior year are now presented within service revenue. |
(in thousands)
|
Years Ended
December 31,
|
Change
|
||||||||||||||
2014
|
2013
|
$
|
%
|
|||||||||||||
Operating revenues
|
$
|
326,946
|
$
|
308,942
|
18,004
|
5.8
|
||||||||||
Operating expenses
|
265,003
|
253,535
|
11,468
|
4.5
|
||||||||||||
Operating income
|
61,943
|
55,407
|
6,536
|
11.8
|
||||||||||||
Other income (expense)
|
5,909
|
(5,943
|
)
|
(34
|
)
|
(0.6
|
)
|
|||||||||
Income tax expense
|
22,151
|
19,878
|
2,273
|
11.4
|
||||||||||||
Net income from continuing operations
|
$
|
33,883
|
$
|
29,586
|
4,297
|
14.5
|
(in thousands)
|
Years Ended
December 31,
|
Change
|
||||||||||||||
2014
|
2013
|
$
|
%
|
|||||||||||||
Segment operating revenues
|
||||||||||||||||
Wireless service revenue
|
$
|
191,147
|
$
|
182,955
|
$
|
8,192
|
4.5
|
|||||||||
Tower lease revenue
|
10,201
|
10,339
|
(138
|
)
|
(1.3
|
)
|
||||||||||
Equipment revenue
|
5,729
|
5,218
|
511
|
9.8
|
||||||||||||
Other revenue
|
377
|
(387
|
)
|
764
|
197.5
|
|||||||||||
Total segment operating revenues
|
$
|
207,454
|
$
|
198,125
|
$
|
9,329
|
4.7
|
|||||||||
Segment operating expenses
|
||||||||||||||||
Cost of goods and services, exclusive of depreciation and amortization shown separately below
|
73,290
|
72,995
|
295
|
0.4
|
||||||||||||
Selling, general and administrative, exclusive of depreciation and amortization shown separately below
|
33,171
|
32,812
|
359
|
1.1
|
||||||||||||
Depreciation and amortization
|
31,111
|
28,177
|
2,934
|
10.4
|
||||||||||||
Total segment operating expenses
|
137,572
|
133,984
|
3,588
|
2.7
|
||||||||||||
Segment operating income
|
$
|
69,882
|
$
|
64,141
|
$
|
5,741
|
9.0
|
(in thousands)
|
Years Ended
December 31,
|
Change
|
||||||||||||||
2014
|
2013
|
$
|
%
|
|||||||||||||
Segment operating revenues
|
||||||||||||||||
Service revenue (1)
|
$
|
77,179
|
$
|
69,782
|
$
|
7,397
|
10.6
|
|||||||||
Other revenue (1)
|
7,374
|
6,090
|
1,284
|
21.1
|
||||||||||||
Total segment operating revenues
|
$
|
84,553
|
$
|
75,872
|
$
|
8,681
|
11.4
|
|||||||||
Segment operating expenses
|
||||||||||||||||
Cost of goods and services, exclusive of depreciation and amortization shown separately below
|
51,982
|
45,767
|
6,215
|
13.6
|
||||||||||||
Selling, general and administrative, exclusive of depreciation and amortization shown separately below
|
19,521
|
19,052
|
469
|
2.5
|
||||||||||||
Depreciation and amortization
|
23,148
|
21,202
|
1,946
|
9.2
|
||||||||||||
Total segment operating expenses
|
94,651
|
86,021
|
8,630
|
10.0
|
||||||||||||
Segment operating loss
|
$
|
(10,098
|
)
|
$
|
(10,149
|
)
|
$
|
51
|
0.5
|
(1) | Prior year service and other revenue amounts have been recast to conform to the current year presentation of video and internet equipment revenues being included in service revenue rather than other revenue. |
(in thousands)
|
Years Ended
December 31,
|
Change
|
||||||||||||||
2014
|
2013
|
$
|
%
|
|||||||||||||
Segment operating revenues
|
||||||||||||||||
Service revenue (1)
|
$
|
20,986
|
$
|
20,244
|
$
|
742
|
3.7
|
|||||||||
Carrier access and fiber revenues (1)
|
39,202
|
36,266
|
2,936
|
8.1
|
||||||||||||
Other revenue (1)
|
2,847
|
2,960
|
(113
|
)
|
(3.8
|
)
|
||||||||||
Total segment operating revenues
|
$
|
63,035
|
$
|
59,470
|
$
|
3,565
|
6.0
|
|||||||||
Segment operating expenses
|
||||||||||||||||
Cost of goods and services, exclusive of depreciation and amortization shown separately below
|
30,088
|
28,603
|
1,485
|
5.2
|
||||||||||||
Selling, general and administrative, exclusive of depreciation and amortization shown separately below
|
6,009
|
5,344
|
665
|
12.4
|
||||||||||||
Depreciation and amortization
|
11,224
|
11,308
|
(84
|
)
|
(0.7
|
)
|
||||||||||
Total segment operating expenses
|
47,321
|
45,255
|
2,066
|
4.6
|
||||||||||||
Segment operating income
|
$
|
15,714
|
$
|
14,215
|
$
|
1,499
|
10.5
|
(1) | Prior year categories of access revenue and facilities lease revenue have been combined into the new category of carrier access and fiber revenue to conform to current year presentation. Additionally, set-top box revenues included in other revenue in the prior year are now presented within service revenue |
· | it does not reflect capital expenditures; |
· | many of the assets being depreciated and amortized will have to be replaced in the future and adjusted OIBDA does not reflect cash requirements for such replacements; |
· | it does not reflect costs associated with share-based awards exchanged for employee services; |
· | it does not reflect interest expense necessary to service interest or principal payments on indebtedness; |
· | it does not reflect gains, losses or dividends on investments; |
· | it does not reflect expenses incurred for the payment of income taxes; and |
· | other companies, including companies in our industry, may calculate adjusted OIBDA differently than we do, limiting its usefulness as a comparative measure. |
Years Ended
December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
(in thousands)
|
||||||||||||
Adjusted OIBDA
|
$
|
150,902
|
$
|
132,144
|
$
|
118,596
|
Years Ended
December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
(in thousands)
|
||||||||||||
Consolidated Results:
|
||||||||||||
Operating income
|
$
|
74,086
|
$
|
61,943
|
$
|
55,407
|
||||||
Plus depreciation and amortization
|
70,702
|
65,890
|
60,722
|
|||||||||
Plus (gain) loss on asset sales
|
235
|
2,054
|
784
|
|||||||||
Plus share based compensation expense
|
2,333
|
2,257
|
1,683
|
|||||||||
Plus nTelos acquisition related expenses
|
3,546
|
-
|
-
|
|||||||||
Adjusted OIBDA
|
$
|
150,902
|
$
|
132,144
|
$
|
118,596
|
Years Ended
December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
(in thousands)
|
||||||||||||
Wireless Segment:
|
||||||||||||
Operating income
|
$
|
75,023
|
$
|
69,882
|
$
|
64,141
|
||||||
Plus depreciation and amortization
|
34,416
|
31,111
|
28,177
|
|||||||||
Plus (gain) loss on asset sales
|
62
|
(101
|
)
|
647
|
||||||||
Plus share based compensation expense
|
554
|
475
|
481
|
|||||||||
Adjusted OIBDA
|
$
|
110,055
|
$
|
101,367
|
$
|
93,446
|
Years Ended
December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
(in thousands)
|
||||||||||||
Cable Segment:
|
||||||||||||
Operating income (loss)
|
$
|
502
|
$
|
(10,098
|
)
|
$
|
(10,149
|
)
|
||||
Plus depreciation and amortization
|
23,097
|
23,148
|
21,202
|
|||||||||
Plus (gain) loss on asset sales
|
45
|
1,500
|
(59
|
)
|
||||||||
Plus share based compensation expense
|
811
|
848
|
735
|
|||||||||
Adjusted OIBDA
|
$
|
24,455
|
$
|
15,398
|
$
|
11,729
|
Years Ended
December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
(in thousands)
|
||||||||||||
Wireline Segment:
|
||||||||||||
Operating income
|
$
|
16,404
|
$
|
15,714
|
$
|
14,215
|
||||||
Plus depreciation and amortization
|
12,736
|
11,224
|
11,308
|
|||||||||
Plus (gain) loss on asset sales
|
169
|
655
|
195
|
|||||||||
Plus share based compensation expense
|
408
|
386
|
356
|
|||||||||
Adjusted OIBDA
|
$
|
29,717
|
$
|
27,979
|
$
|
26,074
|
· | a limitation on the Company’s total leverage ratio, defined as indebtedness divided by earnings before interest, taxes, depreciation and amortization, or EBITDA, of less than or equal to 2.00 to 1.00 thereafter; |
· | a minimum debt service coverage ratio, defined as EBITDA divided by the sum of all scheduled principal payments on the Term Loans and regularly scheduled principal payments on other indebtedness plus cash interest expense, greater than 2.50 to 1.00 at all times; |
· | a minimum equity to assets ratio, defined as consolidated total assets minus consolidated total liabilities, divided by consolidated total assets, of at least 0.35 to 1.00 thereafter, measured at each fiscal quarter end. |
Actual
|
Covenant Requirement
|
||||
Total Leverage Ratio
|
1.35
|
2.00 or Lower
|
|||
Debt Service Coverage Ratio
|
4.24
|
2.50 or Higher
|
|||
Equity to Assets Ratio
|
46.1
|
%
|
35.0% or Higher
|
(in thousands)
|
Total
|
Less than 1
year
|
1-3 years
|
4-5 years
|
After 5 years
|
|||||||||||||||
Long-term debt principal (1)
|
$
|
201,250
|
$
|
23,000
|
$
|
46,000
|
$
|
132,250
|
$
|
-
|
||||||||||
Interest on long–term debt (1)
|
17,495
|
5,141
|
9,054
|
3,300
|
-
|
|||||||||||||||
“Pay fixed” obligations (2)
|
3,410
|
1,038
|
1,705
|
667
|
-
|
|||||||||||||||
Operating leases (3)
|
143,402
|
14,605
|
29,324
|
27,741
|
71,732
|
|||||||||||||||
Purchase obligations (4)
|
15,155
|
13,058
|
2,097
|
-
|
-
|
|||||||||||||||
nTelos Acquisition (5)
|
17,000
|
17,000
|
-
|
-
|
-
|
|||||||||||||||
Total obligations
|
$
|
397,712
|
$
|
73,842
|
$
|
88,180
|
$
|
163,958
|
$
|
71,732
|
1) | Includes principal payments and estimated interest payments on the Term Loan Facility based upon outstanding balances and rates in effect at December 31, 2015. |
2) | Represents the maximum interest payments we are obligated to make under our derivative agreement. Assumes no receipts from the counterparty to our derivative agreement. |
3) | Amounts include payments over reasonably assured renewals. See Note 12 to the consolidated financial statements appearing elsewhere in this report for additional information. |
4) | Represents open purchase orders at December 31, 2015. |
5) | Represents estimated costs to complete the financing arrangements that will be due and payable regardless of whether the transaction closes. Additionally, if the deal closes, the Company expects to incur approximately $15 million in transaction related expenses; if the deal does not close, the Company can expect to incur $25 million in a break-up fee. |
(a)
|
Evaluation of Disclosure Controls and Procedures
|
(b)
|
Management’s Report on Internal Control Over Financial Reporting
|
(c)
|
Changes in Internal Control Over Financial Reporting
|
ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
Number of securities to
be issued upon exercise
of outstanding options
|
Weighted average
exercise price of
outstanding options
|
Number of securities
remaining available for
future issuance
|
||||||||||
2005 stock option plan
|
904,158
|
$
|
7.70
|
-
|
||||||||
2014 stock option plan
|
-
|
-
|
2,824,654
|
Exhibit
Number
|
Exhibit Description
|
2.1
|
Agreement and Plan of Merger, dated as of August 10, 2015, by and among Shenandoah Telecommunications Company, Gridiron Merger Sub, Inc. and NTELOS Holdings Corp., filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K, dated August 11, 2015.
|
3.1
|
Amended and Restated Articles of Incorporation of Shenandoah Telecommunications Company filed as Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the period ending June 30, 2007, as amended by the Articles of Amendment of Shenandoah Telecommunications Company filed as Exhibit 3.3 to the Company’s Current Report on Form 8-K , filed January 5, 2016.
|
3.2
|
Amended and Restated Bylaws of Shenandoah Telecommunications Company, effective September 17, 2012, filed as Exhibit 3.3 to the Company’s Current Report on Form 8-K dated September 18, 2012.
|
4.1
|
Rights Agreement, dated as of February 8, 2008 between the Company and American Stock Transfer & Trust Company filed as Exhibit 4.1 to the Company's Current Report on Form 8-K, dated January 25, 2008.
|
4.2
|
Specimen representing the Common Stock, no par value, of Shenandoah Telecommunications Company, filed as Exhibit 4.3 to the Company’s Report on Form 10-K for the year ended December 31, 2007.
|
10.1
|
Shenandoah Telecommunications Company Dividend Reinvestment Plan filed as Exhibit 4.4 to the Company’s Registration Statement on Form S-3D (No. 333-74297).
|
10.2
|
Settlement Agreement and Mutual Release dated as of January 30, 2004 by and among Sprint Spectrum L.P., Sprint Communications Company L.P., WirelessCo, L.P., APC PCS, LLC, PhillieCo, L.P. and Shenandoah Personal Communications Company and Shenandoah Telecommunications Company, dated January 30, 2004; filed as Exhibit 10.3 to the Company’s Report on Form 10-K for the year ended December 31, 2003.
|
10.3
|
Sprint PCS Management Agreement dated as of November 5, 1999 by and among Sprint Spectrum L.P., WirelessCo, L.P., APC PCS, LLC, PhillieCo, L.P., and Shenandoah Personal Communications Company filed as Exhibit 10.4 to the Company’s Report on Form 10-K for the year ended December 31, 2003.
|
10.4
|
Sprint PCS Services Agreement dated as of November 5, 1999 by and between Sprint Spectrum L.P. and Shenandoah Personal Communications Company filed as Exhibit 10.5 to the Company’s Report on Form 10-K for the year ended December 31, 2003.
|
10.5
|
Sprint Trademark and Service Mark License Agreement dated as of November 5, 1999 by and between Sprint Communications Company, L.P. and Shenandoah Personal Communications Company filed as Exhibit 10.6 to the Company’s Report on Form 10-K for the year ended December 31, 2003.
|
10.6
|
Sprint Spectrum Trademark and Service Mark License Agreement dated as of November 5, 1999 by and between Sprint Spectrum L.P. and Shenandoah Personal Communications Company filed as Exhibit 10.7 to the Company’s Report on Form 10-K for the year ended December 31, 2003.
|
10.7
|
Addendum I to Sprint PCS Management Agreement by and among Sprint Spectrum L.P., WirelessCo, L.P., APC PCS, LLC, PhillieCo, L.P., and Shenandoah Personal Communications Company filed as Exhibit 10.8 to the Company’s Report on Form 10-K for the year ended December 31, 2003.
|
10.8
|
Asset Purchase Agreement dated November 5, 1999 by and among Sprint Spectrum L.P., Sprint Spectrum Equipment Company, L. P., Sprint Spectrum Realty Company, L.P., and Shenandoah Personal Communications Company, serving as Exhibit A to Addendum I to the Sprint PCS Management Agreement and as Exhibit 2.6 to the Sprint PCS Management Agreement filed as Exhibit 10.9 to the Company’s Report on Form 10-K for the year ended December 31, 2003.
|
10.9
|
Addendum II dated August 31, 2000 to Sprint PCS Management Agreement by and among Sprint Spectrum L.P., WirelessCo, L.P., APC PCS, LLC, PhillieCo, L.P., and Shenandoah Personal Communications Company filed as Exhibit 10.10 to the Company’s Report on Form 10-K for the year ended December 31, 2003.
|
10.10
|
Addendum III dated September 26, 2001 to Sprint PCS Management Agreement by and among Sprint Spectrum L.P., WirelessCo, L.P., APC PCS, LLC, PhillieCo, L.P., and Shenandoah Personal Communications Company filed as Exhibit 10.11 to the Company’s Report on Form 10-K for the year ended December 31, 2003.
|
10.11
|
Addendum IV dated May 22, 2003 to Sprint PCS Management Agreement by and among Sprint Spectrum L.P., WirelessCo, L.P., APC PCS, LLC, PhillieCo, L.P., and Shenandoah Personal Communications Company filed as Exhibit 10.12 to the Company’s Report on Form 10-K for the year ended December 31, 2003.
|
10.12
|
Addendum V dated January 30, 2004 to Sprint PCS Management Agreement by and among Sprint Spectrum L.P., WirelessCo, L.P., APC PCS, LLC, PhillieCo, L.P., and Shenandoah Personal Communications Company filed as Exhibit 10.13 to the Company’s Report on Form 10-K for the year ended December 31, 2003.
|
10.13
|
Supplemental Executive Retirement Plan as amended and restated, filed as Exhibit 10.14 to the Company’s Current Report on Form 8-K dated March 23, 2007.
|
10.14
|
Addendum VI dated May 24, 2004 to Sprint PCS Management Agreement by and among Sprint Spectrum L.P., WirelessCo, L.P., APC PCS, LLC, PhillieCo, L.P., and Shenandoah Personal Communications Company filed as Exhibit 10.15 to the Company’s Report on Form 10-Q for the quarterly period ended June 30, 2004.
|
10.15
|
Description of the Shenandoah Telecommunications Company Incentive Plan filed as Exhibit 10.25 to the Company’s Current Report on Form 8-K dated January 21, 2005.
|
10.16
|
Description of Compensation of Non-Employee Directors. Filed as Exhibit 10.26 to the Company’s Current Report on Form 8-K dated May 4, 2005.
|
10.17
|
Description of Management Compensatory Plans and Arrangements. Filed as Exhibit 10.27 to the Company’s current report on Form 8-K dated April 20, 2005.
|
10.18
|
2005 Stock Incentive Plan filed as Exhibit 10.1 to the Company’s Registration Statement on Form S-8 (No. 333-127342).
|
10.19
|
Form of Incentive Stock Option Agreement under the 2005 Stock Incentive Plan filed as Exhibit 10.29 to the Company’s Report on Form 10-K for the year ended December 31, 2005.
|
10.20
|
Addendum VII dated March 13, 2007 to Sprint PCS Management Agreement by and among Sprint Spectrum L.P., Wireless Co., L.P., APC PCS, LLC, Phillieco, L.P., and Shenandoah Personal Communications Company, filed as Exhibit 10.31 to the Company’s Report on Form 10-K for the year ended December 31, 2006.
|
10.21
|
Settlement Agreement and Mutual Release dated March 13, 2007 by and among Sprint Corporation, Sprint Spectrum L.P., Wireless Co., L.P., Sprint Communications Company L.P., APC PCS, LLC, Phillieco, L.P., and Shenandoah Personal Communications Company and Shenandoah Telecommunications, filed as Exhibit 10.32 to the Company’s Report on Form 10-K for the year ended December 31, 2006.
|
10.22
|
Form of Performance Share Award to Executives filed as Exhibit 10.33 to the Company’s Current Report on Form 8-K dated September 20, 2007.
|
10.23
|
Addendum VIII to the Sprint Management Agreement dated November 19, 2007, filed as Exhibit 10.36 to the Company’s Current Report on Form 8-K dated November 20, 2007.
|
10.24
|
Asset Purchase Agreement dated August 6, 2008, between Rapid Communications, LLC, Rapid Acquisition Company, LLC, and Shentel Cable Company, filed as Exhibit 10.37 to the Company’s Report on Form 10-Q for the period ended June 30, 2008.
|
10.25
|
Amendment Number 1 to the Asset Purchase Agreement dated August 6, 2008, between Rapid Communications, LLC, Rapid Acquisition Company, LLC, and Shentel Cable Company, filed as Exhibit 10.40 to the Company’s Current Report on Form 8-K dated November 7, 2008.
|
10.26
|
Addendum IX to the Sprint Management Agreement dated as of April 14, 2009, and filed as Exhibit 10.42 to the Company’s Annual Report on Form 10-K dated March 8, 2010.
|
10.27
|
Asset Purchase Agreement dated as of April 16, 2010, between JetBroadband VA, LLC, Helicon Cable Communications, LLC, JetBroadband WV, LLC, JetBroadband Holdings, LLC, Helicon Cable Holdings, LLC, Shentel Cable Company and Shenandoah Telecommunications Company, filed as Exhibit 10.43 to the Company’s Current Report on Form 8-K, dated April 16, 2010.
|
10.28
|
Addendum X dated March 15, 2010 to Sprint PCS Management Agreement by and among Sprint Spectrum L.P., WirelessCo, L.P., APC PCS, LLC, PhillieCo, L.P., Sprint Communications Company L.P. and Shenandoah Personal Communications Company, filed as Exhibit 10.44 to the Company’s Current Report on Form 10-Q, dated May 7, 2010.
|
10.29
|
Addendum XI dated July 7, 2010 to Sprint PCS Management Agreement by and among Sprint Spectrum L.P., WirelessCo, L.P., APC PCS, LLC, PhillieCo, L.P., Sprint Communications Company L.P. and Shenandoah Personal Communications Company, filed as Exhibit 10.45 to the Company’s Current Report on Form 8-K dated July 8, 2010.
|
10.30
|
Credit Agreement dated as of July 30, 2010, among Shenandoah Telecommunications Company, CoBank, ACB, Branch Banking and Trust Company, Wells Fargo Bank, N.A., and other Lenders, filed as Exhibit 10.46 to the Company’s Current Report on Form 8-K dated July 30, 2010.
|
10.31
|
Second Amendment to the Credit Agreement dated as of July 30, 2010, among Shenandoah Telecommunications Company, CoBank, ACB, Branch Banking and Trust Company, Wells Fargo Bank, N.A., and other Lenders, filed as Exhibit 10.47 to the Company’s Current Report on Form 8-K dated April 29, 2011.
|
10.32
|
Third Amendment to the Credit Agreement dated as of July 30, 2010, among Shenandoah Telecommunications Company, CoBank, ACB, Branch Banking and Trust Company, Wells Fargo Bank, N.A., and other Lenders, filed as Exhibit 10.48 to the Company’s Quarterly Report on Form 10-Q dated August 8, 2011.
|
10.33
|
Letter Agreement modifying section 10.2.7.2 of Addendum X dated March 15, 2010 to Sprint PCS Management Agreement by and among Sprint Spectrum L.P., WirelessCo, L.P., APC PCS, LLC, PhillieCo, L.P., Sprint Communications Company L.P. and Shenandoah Personal Communications Company, filed as Exhibit 10.49 to the Company’s Quarterly Report on Form 10-Q dated August 8, 2011.
|
10.34
|
Fourth Amendment to the Credit Agreement dated as of July 30, 2010, among Shenandoah Telecommunications Company, CoBank, ACB, Branch Banking and Trust Company, Wells Fargo Bank, N.A., and other Lenders, filed as Exhibit 10.50 to the Company’s Quarterly Report on Form 10-Q dated August 8, 2011.
|
10.35
|
Addendum XII dated February 1, 2012 to Sprint PCS Management Agreement by and among Sprint Spectrum L.P., WirelessCo, L.P., APC PCS, LLC, PhillieCo, L.P., Sprint Communications Company L.P. and Shenandoah Personal Communications Company, filed as Exhibit 10.51 to the Company’s Current Report on Form 8-K dated February 2, 2012.
|
10.36
|
Fifth Amendment to the Credit Agreement dated as of July 30, 2010, among Shenandoah Telecommunications Company, CoBank, ACB, Branch Banking and Trust Company, Wells Fargo Bank, N.A., and other Lenders, filed as Exhibit 10.52 to the Company’s Current Report on Form 8-K dated February 2, 2012.
|
10.37
|
Addendum XIII dated September 14, 2012 to Sprint PCS Management Agreement by and among Sprint Spectrum L.P., WirelessCo, L.P., APC PCS, LLC, PhillieCo, L.P., Sprint Communications Company L.P. and Shenandoah Personal Communications, LLC, filed as Exhibit 10.53 to the Company’s Current Report on Form 8-K dated September 17, 2012.
|
10.38
|
Consent and Agreement dated September 14, 2012 related to Sprint PCS Management Agreement by and among Sprint Spectrum L.P., WirelessCo, L.P., APC PCS, LLC, PhillieCo, L.P., Sprint Communications Company L.P. and Shenandoah Personal Communications, LLC, filed as Exhibit 10.54 to the Company’s Current Report on Form 8-K dated September 17, 2012.
|
10.39
|
Amended and Restated Credit Agreement dated as of September 14, 2012, among Shenandoah Telecommunications Company, CoBank, ACB, and other Lenders, filed as Exhibit 10.55 to the Company’s Current Report on Form 8-K dated September 17, 2012.
|
10.40
|
Addendum XIV dated as of November 19, 2012, to Sprint PCS Management Agreement by and among Sprint Spectrum L.P., WirelessCo, L.P., APC PCS, LLC, PhillieCo, L.P., Sprint Communications Company L.P. and Shenandoah Personal Communications, LLC, filed as Exhibit 10.42 to the Company’s Annual Report on Form 10-K dated March 5, 2013.
|
10.41
|
Addendum XV dated as of March 11, 2013, to Sprint PCS Management Agreement by and among Sprint Spectrum, L.P., WirelessCo, L.P., APC PCS, LLC, PhillieCo, L.P., Sprint Communications Company L.P. and Shenandoah Personal communications, LLC, filed as Exhibit 10.43 to the Company’s Quarterly Report on Form 10-Q dated May 3, 2013.
|
10.42
|
First Amendment dated January 30, 2014, to the Amended and Restated Credit Agreement among Shenandoah Telecommunications Company, CoBank, ACB, and other Lenders, filed as Exhibit 10.43 to the Company’s Quarterly Report on Form 10-Q dated May 2, 2014.
|
10.43
|
Joinder Agreement dated January 30, 2014, to the Amended and Restated Credit Agreement among Shenandoah Telecommunications Company, CoBank, ACB, and other Lenders, filed as Exhibit 10.44 to the Company’s Quarterly Report on Form 10-Q dated May 2, 2014.
|
10.44
|
Addendum XVI dated as of December 9, 2013 to Sprint PCS Management Agreement by and among Sprint Spectrum, L.P., WirelessCo, L.P., APC PCS, LLC, PhillieCo, L.P., Sprint Communications Company L.P. and Shenandoah Personal Communications, LLC, filed as Exhibit 10.45 to the Company’s Quarterly Report on Form 10-Q dated May 2, 2014.
|
10.45
|
Addendum XVII dated as of April 11, 2014, to Sprint PCS Management Agreement by and among Sprint Spectrum, L.P., WirelessCo, L.P., APC PCS, LLC, PhillieCo, L.P., Sprint Communications Company L.P. and Shenandoah Personal Communications, LLC, filed as Exhibit 10.46 to the Company’s Quarterly Report on Form 10-Q dated May 2, 2014.
|
10.46
|
2014 Equity Plan filed as Appendix A to the Company’s Definitive Proxy Statement filed on March 13, 2014 (No. 333-196990).
|
10.47
|
Master Agreement dated as of August 10, 2015, by and among SprintCom, Inc. and Shenandoah Personal Communications, LLC, filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated August 11, 2015.
|
10.48
|
Addendum XVIII dated as of August 10, 2015, to Sprint PCS Management Agreement by and among SprintCom, Inc., PhillieCo, L.P., and Shenandoah Personal Communications, LLC, filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K, dated August 11, 2015.
|
10.49
|
Credit Agreement dated as of December 18, 2015, by and among Shenandoah Telecommunications Company, as Borrower, the guarantors party thereto from time to time, CoBank, ACB, as Administrative Agent, and various other agents and lenders named therein, filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, dated December 24, 2015.
|
*21
|
List of Subsidiaries.
|
*23.1
|
Consent of KPMG LLP, Independent Registered Public Accounting Firm.
|
*31.1
|
Certification of President and Chief Executive Officer of Shenandoah Telecommunications Company pursuant to Rule 13a-14(a)under the Securities Exchange Act of 1934.
|
*31.2
|
Certification of Vice President and Chief Financial Officer of Shenandoah Telecommunications Company pursuant to Rule 13a-14(a)under the Securities Exchange Act of 1934.
|
*32
|
Certifications pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. § 1350.
|
(101)
|
Formatted in XBRL (Extensible Business Reporting Language)
|
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema Document | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document |
February 26, 2016
|
/S/ CHRISTOPHER E. FRENCH
|
Christopher E. French, President
|
|
(Duly Authorized Officer)
|
/s/CHRISTOPHER E. FRENCH
|
President & Chief Executive Officer,
|
February 26, 2016
|
Director (Principal Executive Officer)
|
Christopher E. French
|
|
/s/ADELE M. SKOLITS
|
Vice President – Finance and Chief Financial Officer
|
February 26, 2016
|
(Principal Financial Officer and
|
Adele M. Skolits
|
Principal Accounting Officer)
|
/s/DOUGLAS C. ARTHUR
|
Director
|
February 26, 2016
|
|
Douglas C. Arthur
|
|
/s/KEN L. BURCH
|
Director
|
February 26, 2016
|
|
Ken L. Burch
|
|
/s/TRACY FITZSIMMONS
|
Director
|
February 26, 2016
|
|
Tracy Fitzsimmons
|
|
/s/JOHN W. FLORA
|
Director
|
February 26, 2016
|
|
John W. Flora
|
|
/s/ RICHARD L. KOONTZ, JR.
|
Director
|
February 26, 2016
|
|
Richard L. Koontz, Jr.
|
|
/s/DALE S. LAM
|
Director
|
February 26, 2016
|
|
Dale S. Lam
|
|
/s/ JONELLE ST. JOHN
|
Director
|
February 26, 2016
|
|
Jonelle St. John
|
|
/s/JAMES E. ZERKEL II
|
Director
|
February 26, 2016
|
|
James E. Zerkel II
|
Page
|
|
Reports of Independent Registered Public Accounting Firm
|
F-2 and F-3
|
Consolidated Financial Statements for the Years Ended December 31, 2015, 2014 and 2013
|
|
Consolidated Balance Sheets
|
F-4 and F-5
|
Consolidated Statements of Income and Comprehensive Income
|
F-6
|
Consolidated Statements of Shareholders’ Equity
|
F-7 and F-8
|
Consolidated Statements of Cash Flows
|
F-9 and F-10
|
Notes to Consolidated Financial Statements
|
F-11 through F-33
|
ASSETS
|
2015
|
2014
|
||||||
Current Assets
|
||||||||
Cash and cash equivalents
|
$
|
76,812
|
$
|
68,917
|
||||
Accounts receivable, net
|
29,778
|
30,371
|
||||||
Income taxes receivable
|
7,694
|
14,752
|
||||||
Materials and supplies
|
4,183
|
8,794
|
||||||
Prepaid expenses and other
|
8,573
|
4,279
|
||||||
Deferred income taxes
|
907
|
1,211
|
||||||
Total current assets
|
127,947
|
128,324
|
||||||
Investments, including $2,654 and $2,661 carried at fair value
|
10,679
|
10,089
|
||||||
Property, plant and equipment, net
|
410,018
|
405,907
|
||||||
Other Assets
|
||||||||
Intangible assets, net
|
66,993
|
68,260
|
||||||
Deferred charges and other assets, net
|
13,103
|
6,662
|
||||||
Other assets, net
|
80,096
|
74,922
|
||||||
Total assets
|
$
|
628,740
|
$
|
619,242
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
2015
|
2014
|
||||||
Current Liabilities
|
||||||||
Current maturities of long-term debt
|
$
|
23,000
|
$
|
23,000
|
||||
Accounts payable
|
13,009
|
11,151
|
||||||
Advanced billings and customer deposits
|
11,674
|
12,375
|
||||||
Accrued compensation
|
5,915
|
5,466
|
||||||
Accrued liabilities and other
|
7,639
|
7,162
|
||||||
Total current liabilities
|
61,237
|
59,154
|
||||||
Long-term debt, less current maturities
|
178,250
|
201,250
|
||||||
Other Long-Term Liabilities
|
||||||||
Deferred income taxes
|
74,868
|
76,777
|
||||||
Deferred lease payable
|
8,142
|
7,180
|
||||||
Asset retirement obligations
|
7,266
|
6,928
|
||||||
Other liabilities
|
9,039
|
9,607
|
||||||
Total other liabilities
|
99,315
|
100,492
|
||||||
Commitments and Contingencies
|
||||||||
Shareholders’ Equity
|
||||||||
Common stock, no par value, authorized 96,000 shares; issued and outstanding 48,475 shares in 2015 and 48,265 shares in 2014
|
32,776
|
29,712
|
||||||
Accumulated other comprehensive income, net of taxes
|
415
|
1,122
|
||||||
Retained earnings
|
256,747
|
227,512
|
||||||
Total shareholders’ equity
|
289,938
|
258,346
|
||||||
Total liabilities and shareholders’ equity
|
$
|
628,740
|
$
|
619,242
|
2015
|
2014
|
2013
|
||||||||||
Operating revenues
|
$
|
342,485
|
$
|
326,946
|
$
|
308,942
|
||||||
Operating expenses
|
||||||||||||
Cost of goods and services, exclusive of depreciation and amortization shown separately below
|
121,330
|
129,743
|
125,140
|
|||||||||
Selling, general and administrative, exclusive of depreciation and amortization shown below
|
76,367
|
69,370
|
67,673
|
|||||||||
Depreciation and amortization
|
70,702
|
65,890
|
60,722
|
|||||||||
Total operating expenses
|
268,399
|
265,003
|
253,535
|
|||||||||
Operating income
|
74,086
|
61,943
|
55,407
|
|||||||||
Other income (expense)
|
||||||||||||
Interest expense
|
(7,355
|
)
|
(8,148
|
)
|
(8,468
|
)
|
||||||
Gain on investments, net
|
105
|
208
|
756
|
|||||||||
Non-operating income, net
|
1,754
|
2,031
|
1,769
|
|||||||||
Income before income taxes
|
68,590
|
56,034
|
49,464
|
|||||||||
Income tax expense
|
27,726
|
22,151
|
19,878
|
|||||||||
Net income
|
$
|
40,864
|
$
|
33,883
|
$
|
29,586
|
||||||
Other comprehensive income:
|
||||||||||||
Unrealized gain (loss) on interest rate hedge, net of tax
|
(707
|
)
|
(1,472
|
)
|
3,457
|
|||||||
Comprehensive income
|
$
|
40,157
|
$
|
32,411
|
$
|
33,043
|
||||||
Earnings per share:
|
||||||||||||
Basic
|
$
|
0.84
|
$
|
0.70
|
$
|
0.62
|
||||||
Diluted
|
$
|
0.83
|
$
|
0.70
|
$
|
0.61
|
||||||
Weighted average shares outstanding, basic
|
48,388
|
48,198
|
48,002
|
|||||||||
Weighted average shares outstanding, diluted
|
49,024
|
48,720
|
48,230
|
Shares
|
Common
Stock
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Income (Loss)
|
Total
|
||||||||||||||||
Balance, December 31, 2012
|
47,924
|
$
|
24,688
|
$
|
184,023
|
$
|
(863
|
)
|
$
|
207,848
|
||||||||||
Net income
|
-
|
-
|
29,586
|
-
|
29,586
|
|||||||||||||||
Other comprehensive loss, net of tax
|
-
|
-
|
-
|
3,457
|
3,457
|
|||||||||||||||
Dividends declared ($0.18 per share)
|
-
|
-
|
(8,647
|
)
|
-
|
(8,647
|
)
|
|||||||||||||
Dividends reinvested in common stock
|
40
|
475
|
-
|
-
|
475
|
|||||||||||||||
Stock based compensation
|
-
|
1,938
|
-
|
-
|
1,938
|
|||||||||||||||
Common stock issued through exercise of incentive stock options
|
132
|
1,186
|
-
|
-
|
1,186
|
|||||||||||||||
Common stock issued for share awards
|
136
|
-
|
-
|
-
|
-
|
|||||||||||||||
Common stock issued
|
2
|
10
|
-
|
-
|
10
|
|||||||||||||||
Common stock repurchased
|
(154
|
)
|
(1,600
|
)
|
-
|
-
|
(1,600
|
)
|
||||||||||||
Net excess tax benefit from stock options exercised
|
-
|
62
|
-
|
-
|
62
|
|||||||||||||||
Balance, December 31, 2013
|
48,080
|
26,759
|
204,962
|
2,594
|
234,315
|
|||||||||||||||
Net income
|
-
|
-
|
33,883
|
-
|
33,883
|
|||||||||||||||
Other comprehensive income, net of tax
|
-
|
-
|
-
|
(1,472
|
)
|
(1,472
|
)
|
|||||||||||||
Dividends declared ($0.235 per share)
|
-
|
-
|
(11,333
|
)
|
-
|
(11,333
|
)
|
|||||||||||||
Dividends reinvested in common stock
|
39
|
572
|
-
|
-
|
572
|
|||||||||||||||
Stock based compensation
|
-
|
2,624
|
-
|
-
|
2,624
|
|||||||||||||||
Common stock issued through exercise of incentive stock options
|
102
|
1,141
|
-
|
-
|
1,141
|
|||||||||||||||
Common stock issued for share awards
|
162
|
-
|
-
|
-
|
-
|
|||||||||||||||
Common stock issued
|
2
|
6
|
-
|
-
|
6
|
|||||||||||||||
Common stock repurchased
|
(120
|
)
|
(1,785
|
)
|
-
|
-
|
(1,785
|
)
|
||||||||||||
Net excess tax benefit from stock options exercised
|
-
|
395
|
-
|
-
|
395
|
|||||||||||||||
Balance, December 31, 2014
|
48,265
|
29,712
|
227,512
|
1,122
|
258,346
|
Shares
|
Common
Stock
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Income (Loss)
|
Total
|
||||||||||||||||
Net income
|
-
|
$
|
-
|
$
|
40,864
|
$
|
-
|
$
|
40,864
|
|||||||||||
Other comprehensive loss, net of tax
|
-
|
-
|
-
|
(707
|
)
|
(707
|
)
|
|||||||||||||
Dividends declared ($0.24 per share)
|
-
|
-
|
(11,629
|
)
|
-
|
(11,629
|
)
|
|||||||||||||
Dividends reinvested in common stock
|
22
|
544
|
-
|
-
|
544
|
|||||||||||||||
Stock based compensation
|
-
|
2,719
|
-
|
-
|
2,719
|
|||||||||||||||
Common stock issued through exercise of incentive stock options
|
87
|
996
|
-
|
-
|
996
|
|||||||||||||||
Common stock issued for share awards
|
212
|
-
|
-
|
-
|
-
|
|||||||||||||||
Common stock issued
|
1
|
11
|
-
|
-
|
11
|
|||||||||||||||
Common stock repurchased
|
(111
|
)
|
(1,885
|
)
|
-
|
-
|
(1,885
|
)
|
||||||||||||
Net excess tax benefit from stock options exercised
|
-
|
679
|
-
|
-
|
679
|
|||||||||||||||
Balance, December 31, 2015
|
48,475
|
$
|
32,776
|
$
|
256,747
|
$
|
415
|
$
|
289,938
|
2015
|
2014
|
2013
|
||||||||||
Cash Flows from Operating Activities
|
||||||||||||
Net income
|
$
|
40,864
|
$
|
33,883
|
$
|
29,586
|
||||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||||||
Depreciation
|
69,287
|
63,324
|
56,583
|
|||||||||
Amortization
|
1,415
|
2,566
|
4,139
|
|||||||||
Provision for bad debt
|
1,640
|
1,678
|
2,019
|
|||||||||
Stock based compensation expense
|
2,333
|
2,624
|
1,938
|
|||||||||
Excess tax benefits on stock option exercises
|
(679
|
)
|
(395
|
)
|
(101
|
)
|
||||||
Deferred income taxes
|
(451
|
)
|
2,975
|
14,266
|
||||||||
Net loss on disposal of equipment
|
235
|
1,975
|
753
|
|||||||||
Realized loss on disposal of investments
|
20
|
-
|
1
|
|||||||||
Unrealized (gains) loss on investments
|
141
|
51
|
(391
|
)
|
||||||||
Net gains from patronage and equity investments
|
(805
|
)
|
(852
|
)
|
(837
|
)
|
||||||
Amortization of long term debt issuance costs
|
567
|
605
|
609
|
|||||||||
Other
|
93
|
1,515
|
1,663
|
|||||||||
Changes in assets and liabilities:
|
||||||||||||
(Increase) decrease in:
|
||||||||||||
Accounts receivable
|
(1,047
|
)
|
(6,225
|
)
|
(2,594
|
)
|
||||||
Materials and supplies
|
492
|
1,921
|
(927
|
)
|
||||||||
Income taxes receivable
|
7,058
|
1,824
|
(11,871
|
)
|
||||||||
Other assets
|
(6,368
|
)
|
1,055
|
(1,034
|
)
|
|||||||
Increase (decrease) in:
|
||||||||||||
Accounts payable
|
2,753
|
5,040
|
(2,145
|
)
|
||||||||
Deferred lease payable
|
962
|
1,024
|
1,253
|
|||||||||
Other deferrals and accruals
|
811
|
405
|
1,354
|
|||||||||
Net cash provided by operating activities
|
$
|
119,321
|
$
|
114,993
|
$
|
94,264
|
2015
|
2014
|
2013
|
||||||||||
Cash Flows From Investing Activities
|
||||||||||||
Acquisition of property, plant and equipment
|
$
|
(69,679
|
)
|
$
|
(68,232
|
)
|
$
|
(117,028
|
)
|
|||
Proceeds from sale of equipment
|
363
|
551
|
331
|
|||||||||
Proceeds from sales of assets
|
-
|
-
|
25
|
|||||||||
Purchase of investment securities
|
-
|
-
|
(12
|
)
|
||||||||
Cash distributions from investments
|
54
|
43
|
121
|
|||||||||
Net cash used in investing activities
|
$
|
(69,262
|
)
|
$
|
(67,638
|
)
|
$
|
(116,563
|
)
|
|||
Cash Flows From Financing Activities
|
||||||||||||
Principal payments on long-term debt
|
$
|
(23,000
|
)
|
$
|
(5,750
|
)
|
$
|
(1,977
|
)
|
|||
Cash paid for debt issuance costs
|
(7,880
|
)
|
-
|
-
|
||||||||
Dividends paid, net of dividends reinvested
|
(11,085
|
)
|
(10,761
|
)
|
(8,191
|
)
|
||||||
Excess tax benefits on stock option exercises
|
679
|
395
|
101
|
|||||||||
Repurchases of common stock
|
(1,885
|
)
|
(1,785
|
)
|
(1,600
|
)
|
||||||
Proceeds from issuances of common stock
|
1,007
|
1,147
|
1,196
|
|||||||||
Net cash used in financing activities
|
$
|
(42,164
|
)
|
$
|
(16,754
|
)
|
$
|
(10,471
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
$
|
7,895
|
$
|
30,601
|
$
|
(32,770
|
)
|
|||||
Cash and cash equivalents:
|
||||||||||||
Beginning
|
68,917
|
38,316
|
71,086
|
|||||||||
Ending
|
$
|
76,812
|
$
|
68,917
|
$
|
38,316
|
||||||
Supplemental Disclosures of Cash Flow Information
|
||||||||||||
Cash payments for:
|
||||||||||||
Interest, net of capitalized interest of $436 in 2015, $373 in 2014, and $396 in 2013
|
$
|
6,784
|
$
|
7,548
|
$
|
8,077
|
||||||
Income taxes paid, net
|
$
|
21,119
|
$
|
17,233
|
$
|
17,483
|
2015
|
2014
|
2013
|
||||||||||
Balance at beginning of year
|
$
|
762
|
$
|
924
|
$
|
1,113
|
||||||
Bad debt expense
|
1,640
|
1,678
|
2,019
|
|||||||||
Losses charged to allowance
|
(2,586
|
)
|
(2,218
|
)
|
(2,390
|
)
|
||||||
Recoveries added to allowance
|
602
|
378
|
182
|
|||||||||
Balance at end of year
|
$
|
418
|
$
|
762
|
$
|
924
|
2015
|
2014
|
2013
|
||||||||||
Balance at beginning of year
|
$
|
6,928
|
$
|
6,485
|
$
|
5,896
|
||||||
Additional liabilities accrued
|
490
|
403
|
1,189
|
|||||||||
Changes to prior estimates
|
(467
|
)
|
-
|
-
|
||||||||
Payments made
|
(77
|
)
|
(334
|
)
|
(909
|
)
|
||||||
Accretion expense
|
392
|
374
|
309
|
|||||||||
Balance at end of year
|
$
|
7,266
|
$
|
6,928
|
$
|
6,485
|
2015 |
2014
|
|||||||||||||||||||||||
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Net
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
|
Net
|
||||||||||||||||||
Intangible assets subject to amortization:
|
||||||||||||||||||||||||
Business contracts
|
$
|
1,938
|
$
|
(564
|
)
|
$
|
1,374
|
$
|
1,898
|
$
|
(495
|
)
|
$
|
1,403
|
||||||||||
Cable franchise rights
|
-
|
-
|
-
|
122
|
(122
|
)
|
-
|
|||||||||||||||||
Acquired subscriber base
|
25,326
|
(23,805
|
)
|
1,521
|
32,315
|
(29,556
|
)
|
2,759
|
||||||||||||||||
$
|
27,264
|
$
|
(24,369
|
)
|
$
|
2,895
|
34,335
|
$
|
(30,173
|
)
|
$
|
4,162
|
||||||||||||
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
|
$
|
91,362
|
$
|
(24,369
|
)
|
$
|
66,993
|
$
|
98,433
|
$
|
(30,173
|
)
|
$
|
68,260
|
Year Ending
December 31,
|
Amount
|
|||
(in thousands)
|
||||
2016
|
$
|
969
|
||
2017
|
540
|
|||
2018
|
221
|
|||
2019
|
116
|
|||
2020
|
115
|
2015
|
2014
|
2013
|
||||||||||
Basic income per share
|
(in thousands, except per share amounts)
|
|||||||||||
Net income
|
$
|
40,864
|
$
|
33,883
|
$
|
29,586
|
||||||
Weighted average shares outstanding
|
48,388
|
48,198
|
48,002
|
|||||||||
Basic income per share
|
$
|
0.84
|
$
|
0.70
|
$
|
0.62
|
||||||
Effect of stock options outstanding:
|
||||||||||||
Weighted average shares outstanding
|
48,388
|
48,198
|
48,002
|
|||||||||
Assumed exercise, at the strike price at the beginning of year
|
1,302
|
1,410
|
970
|
|||||||||
Assumed repurchase of shares under treasury stock method
|
(666
|
)
|
(888
|
)
|
(742
|
)
|
||||||
Diluted weighted average shares
|
49,024
|
48,720
|
48,230
|
|||||||||
Diluted income per share
|
$
|
0.83
|
$
|
0.70
|
$
|
0.61
|
2015 | 2014 | |||||||
(in thousands)
|
||||||||
Taxable bond funds
|
$
|
24
|
$
|
10
|
||||
Domestic equity funds
|
2,564
|
2,553
|
||||||
International equity funds
|
66
|
98
|
||||||
$
|
2,654
|
$
|
2,661
|
2015
|
2014
|
|||||||
Cost method:
|
(in thousands)
|
|||||||
CoBank
|
$
|
4,137
|
$
|
3,749
|
||||
Other – Equity in other telecommunications partners
|
760
|
755
|
||||||
4,897
|
4,504
|
|||||||
Equity method:
|
||||||||
Private equity limited partnerships
|
2,624
|
2,419
|
||||||
Other
|
504
|
505
|
||||||
3,128
|
2,924
|
|||||||
Total other investments
|
$
|
8,025
|
$
|
7,428
|
Estimated
Useful Lives
|
2015
|
2014
|
|||||||
(in thousands)
|
|||||||||
Land
|
$
|
4,181
|
$
|
3,700
|
|||||
Buildings and structures
|
10 – 40 years
|
108,341
|
103,341
|
||||||
Cable and wire
|
4 – 40 years
|
214,721
|
201,938
|
||||||
Equipment and software
|
2 – 16.7 years
|
391,260
|
366,342
|
||||||
Plant in service
|
$
|
718,503
|
$
|
675,321
|
|||||
Plant under construction
|
36,600
|
18,078
|
|||||||
Total property, plant and equipment
|
755,103
|
693,399
|
|||||||
Less accumulated amortization and depreciation
|
345,085
|
287,492
|
|||||||
Property, plant and equipment, net
|
$
|
410,018
|
$
|
405,907
|
Interest Rate
|
2015
|
2014
|
|||||||||||
(in thousands) | |||||||||||||
CoBank Term Loan
|
Variable
|
2.67
|
%
|
201,250
|
224,250
|
||||||||
Current maturities
|
23,000
|
23,000
|
|||||||||||
Total long-term debt
|
$
|
178,250
|
$
|
201,250
|
· | a limitation on the Company’s total leverage ratio, defined as indebtedness divided by earnings before interest, taxes, depreciation and amortization, or EBITDA, of less than or equal to 2.00 to 1.00 thereafter; |
· | a minimum debt service coverage ratio, defined as EBITDA divided by the sum of all scheduled principal payments on the Term Loans and regularly scheduled principal payments on other indebtedness plus cash interest expense, greater than 2.50 to 1.00 at all times; |
· | a minimum equity to assets ratio, defined as consolidated total assets minus consolidated total liabilities, divided by consolidated total assets, of at least 0.35 to 1.00 thereafter, measured at each fiscal quarter end; |
Actual
|
Covenant Requirement
|
||||
Total Leverage Ratio
|
1.35
|
2.00 or Lower
|
|||
Debt Service Coverage Ratio
|
4.24
|
2.50 or Higher
|
|||
Equity to Assets Ratio
|
46.1
|
%
|
35.0% or Higher
|
Year
|
Amount
|
|||
(in thousands)
|
||||
2016
|
$
|
23,000
|
||
2017
|
23,000
|
|||
2018
|
23,000
|
|||
2019
|
132,250
|
|||
2020
|
-
|
|||
$
|
201,250
|
2015
|
2014
|
2013
|
||||||||||
(in thousands)
|
||||||||||||
Income tax expense on continuing operations
|
$
|
27,726
|
$
|
22,151
|
$
|
19,878
|
||||||
Shareholders’ equity, for compensation expense for tax purposes in excess of amounts recognized for financial reporting purposes
|
(679
|
)
|
(395
|
)
|
(101
|
)
|
||||||
Other comprehensive income for changes in cash flow hedge
|
(476
|
)
|
(993
|
)
|
2,315
|
|||||||
$
|
26,571
|
$
|
20,763
|
$
|
22,092
|
Years Ended December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
(in thousands)
|
||||||||||||
Current expense
|
||||||||||||
Federal taxes
|
$
|
23,579
|
$
|
16,592
|
$
|
3,404
|
||||||
State taxes
|
5,275
|
2,562
|
2,305
|
|||||||||
Total current provision
|
28,854
|
19,154
|
5,709
|
|||||||||
Deferred expense (benefit)
|
||||||||||||
Federal taxes
|
(744
|
)
|
1,636
|
12,317
|
||||||||
State taxes
|
(384
|
)
|
1,361
|
1,852
|
||||||||
Total deferred provision
|
(1,128
|
)
|
2,997
|
14,169
|
||||||||
Income tax expense on continuing operations
|
$
|
27,726
|
$
|
22,151
|
$
|
19,878
|
||||||
Effective tax rate
|
40.4
|
%
|
39.5
|
%
|
40.2
|
%
|
Years Ended December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
(in thousands)
|
||||||||||||
Computed “expected” tax expense (35%)
|
$
|
24,007
|
$
|
19,612
|
$
|
17,312
|
||||||
State income taxes, net of federal tax effect
|
3,179
|
2,550
|
2,702
|
|||||||||
Other, net
|
540
|
(11
|
)
|
(136
|
)
|
|||||||
Income tax expense on continuing operations
|
$
|
27,726
|
$
|
22,151
|
$
|
19,878
|
2015
|
2014
|
|||||||
(in thousands)
|
||||||||
Deferred tax assets:
|
||||||||
Lease obligations
|
$
|
3,109
|
$
|
2,733
|
||||
Deferred activation charges
|
78
|
108
|
||||||
Allowance for doubtful accounts
|
168
|
306
|
||||||
Inventory reserves
|
53
|
189
|
||||||
State net operating loss carry-forwards, net of federal tax
|
717
|
717
|
||||||
Accrued pension costs
|
1,023
|
1,086
|
||||||
Transaction costs
|
538
|
--
|
||||||
Accrued compensation costs
|
1,915
|
1,550
|
||||||
Asset retirement obligations
|
2,922
|
2,790
|
||||||
Intangible assets
|
7,525
|
7,921
|
||||||
Goodwill
|
2,196
|
2,434
|
||||||
Deferred revenues
|
2,289
|
2,691
|
||||||
Total gross deferred tax assets
|
22,533
|
22,525
|
||||||
Less valuation allowance
|
(709
|
)
|
(709
|
)
|
||||
Net deferred tax assets
|
21,824
|
21,816
|
||||||
Deferred tax liabilities:
|
||||||||
Plant and equipment
|
$
|
85,503
|
$
|
87,941
|
||||
Franchise rights
|
9,396
|
7,686
|
||||||
Section 481a deferred revenues
|
-
|
246
|
||||||
Deferred financing costs
|
84
|
106
|
||||||
Prepaid insurance
|
125
|
116
|
||||||
Gain on investments, net
|
401
|
409
|
||||||
Other, net
|
276
|
878
|
||||||
Total gross deferred tax liabilities
|
95,785
|
97,382
|
||||||
Net deferred tax liabilities
|
$
|
73,961
|
$
|
75,566
|
2013
|
||||
Dividend rate
|
2.38%
|
|
||
Risk-free interest rate
|
1.15%
|
|||
Expected lives of options
|
6.14 years
|
|||
Price volatility
|
40.66%
|
Number
of
Options
|
Weighted
Average Grant
Price Per Option
|
Fair Value Per
Option
|
||||||||||
Outstanding December 31, 2012
|
989,376
|
$
|
8.91
|
|||||||||
Granted
|
266,096
|
6.92
|
$
|
2.16
|
||||||||
Cancelled
|
(21,182
|
)
|
12.63
|
|||||||||
Exercised
|
(133,276
|
)
|
8.41
|
|||||||||
Outstanding December 31, 2013
|
1,101,014
|
$
|
8.35
|
|||||||||
Granted
|
-
|
-
|
$
|
N/A
|
||||||||
Cancelled
|
(2,146
|
)
|
12.63
|
|||||||||
Exercised
|
(101,516
|
)
|
11.21
|
|||||||||
Outstanding December 31, 2014
|
997,352
|
$
|
8.05
|
|||||||||
Granted
|
-
|
-
|
$
|
N/A
|
||||||||
Cancelled
|
(6,252
|
)
|
12.63
|
|||||||||
Exercised
|
(86,942
|
)
|
11.46
|
|||||||||
Outstanding December 31, 2015
|
904,158
|
$
|
7.70
|
Stock price (closing price on issue date)
|
$
|
15.01
|
||
Risk-free interest rate (interpolated rate between 2-year and 3-year U.S. treasury rates)
|
0.95%
|
|||
Dividend yield
|
1.57%
|
|||
Performance period
|
2.87 years
|
Shares
|
||||
Outstanding December 31, 2012
|
426,708
|
|||
Granted
|
197,372
|
|||
Cancelled
|
(61,988
|
)
|
||
Vested and issued
|
(135,912
|
)
|
||
Outstanding December 31, 2013
|
426,180
|
|||
Granted
|
181,530
|
|||
Cancelled
|
(10,764
|
)
|
||
Vested and issued
|
(161,674
|
)
|
||
Outstanding December 31, 2014
|
435,272
|
|||
Granted
|
190,258
|
|||
Cancelled
|
(6,736
|
)
|
||
Vested and issued
|
(211,498
|
)
|
||
Outstanding December 31, 2015
|
407,296
|
Year Ending
|
Amount
|
|||
(in thousands)
|
||||
2016
|
$
|
14,605
|
||
2017
|
14,767
|
|||
2018
|
14,557
|
|||
2019
|
14,187
|
|||
2020
|
13,554
|
|||
2021 and beyond
|
71,732
|
|||
$
|
143,402
|
Year Ending
|
Amount
|
|||
(in thousands)
|
||||
2016
|
$
|
4,954
|
||
2017
|
4,186
|
|||
2018
|
3,289
|
|||
2019
|
2,636
|
|||
2020
|
1,858
|
|||
2021 and beyond
|
2,102
|
|||
$
|
19,025
|
Fair Value as of
|
|||||||||
Balance Sheet
Location
|
December 31,
2015
|
December 31,
2014
|
|||||||
Derivatives designated as hedging instruments:
|
|||||||||
Interest rate swaps
|
|||||||||
Accrued liabilities and other
|
$
|
(682
|
)
|
$
|
(1,309
|
)
|
|||
Deferred charges and other assets, net
|
1,370
|
3,180
|
|||||||
Total derivatives designated as hedging instruments
|
$
|
688
|
$
|
1,871
|
Gains and
(Losses) on
Cash Flow
Hedges
|
Income Tax
(Expense)
Benefit
|
Accumulated
Other
Comprehensive
Income
|
||||||||||
Balance as of December 31, 2014
|
$
|
1,871
|
$
|
(749
|
)
|
$
|
1,122
|
|||||
Other comprehensive income (loss) before reclassifications
|
(2,732
|
)
|
1,095
|
(1,637
|
)
|
|||||||
Amounts reclassified from accumulated other comprehensive income (to interest expense)
|
1,549
|
(619
|
)
|
930
|
||||||||
Net current period other comprehensive income (loss)
|
(1,183
|
)
|
476
|
(707
|
)
|
|||||||
Balance as of December 31, 2015
|
$
|
688
|
$
|
(273
|
)
|
$
|
415
|
Wireless
|
Cable
|
Wireline
|
Other
|
Eliminations
|
Consolidated
Totals
|
|||||||||||||||||||
External revenues
|
||||||||||||||||||||||||
Service revenues
|
$
|
192,752
|
$
|
88,980
|
$
|
19,386
|
-
|
-
|
$
|
301,118
|
||||||||||||||
Other revenues
|
11,609
|
7,793
|
21,965
|
-
|
-
|
41,367
|
||||||||||||||||||
Total external revenues
|
204,361
|
96,773
|
41,351
|
-
|
-
|
342,485
|
||||||||||||||||||
Internal revenues
|
4,440
|
849
|
26,069
|
-
|
(31,358
|
)
|
-
|
|||||||||||||||||
Total operating revenues
|
208,801
|
97,622
|
67,420
|
-
|
(31,358
|
)
|
342,485
|
|||||||||||||||||
Operating expenses
|
||||||||||||||||||||||||
Costs of goods and services, exclusive of depreciation and amortization shown separately below
|
63,570
|
54,611
|
31,668
|
-
|
(28,519
|
)
|
121,330
|
|||||||||||||||||
Selling, general and administrative, exclusive of depreciation and amortization shown below
|
35,792
|
19,412
|
6,612
|
17,390
|
(2,839
|
)
|
76,367
|
|||||||||||||||||
Depreciation and amortization
|
34,416
|
23,097
|
12,736
|
453
|
-
|
70,702
|
||||||||||||||||||
Total operating expenses
|
133,778
|
97,120
|
51,016
|
17,843
|
(31,358
|
)
|
268,399
|
|||||||||||||||||
Operating income (loss)
|
$
|
75,023
|
$
|
502
|
$
|
16,404
|
$
|
(17,843
|
)
|
$
|
-
|
$
|
74,086
|
Wireless
|
Cable
|
Wireline
|
Other
|
Eliminations
|
Consolidated
Totals
|
|||||||||||||||||||
External revenues
|
||||||||||||||||||||||||
Service revenues
|
$
|
191,147
|
$
|
77,179
|
$
|
18,919
|
-
|
-
|
$
|
287,245
|
||||||||||||||
Other revenues
|
11,867
|
7,224
|
20,610
|
-
|
-
|
39,701
|
||||||||||||||||||
Total external revenues
|
203,014
|
84,403
|
39,529
|
-
|
-
|
326,946
|
||||||||||||||||||
Internal revenues
|
4,440
|
150
|
23,506
|
-
|
(28,096
|
)
|
-
|
|||||||||||||||||
Total operating revenues
|
207,454
|
84,553
|
63,035
|
-
|
(28,096
|
)
|
326,946
|
|||||||||||||||||
Operating expenses
|
||||||||||||||||||||||||
Costs of goods and services, exclusive of depreciation and amortization shown separately below
|
73,290
|
51,982
|
30,088
|
-
|
(25,617
|
)
|
129,743
|
|||||||||||||||||
Selling, general and administrative, exclusive of depreciation and amortization shown below
|
33,171
|
19,521
|
6,009
|
13,148
|
(2,479
|
)
|
69,370
|
|||||||||||||||||
Depreciation and amortization
|
31,111
|
23,148
|
11,224
|
407
|
-
|
65,890
|
||||||||||||||||||
Total operating expenses
|
137,572
|
94,651
|
47,321
|
13,555
|
(28,096
|
)
|
265,003
|
|||||||||||||||||
Operating income (loss)
|
$
|
69,882
|
$
|
(10,098
|
)
|
$
|
15,714
|
$
|
(13,555
|
)
|
$
|
-
|
$
|
61,943
|
|
Wireless
|
Cable
|
Wireline
|
Other
|
Eliminations
|
Consolidated
Totals
|
||||||||||||||||||
External revenues
|
||||||||||||||||||||||||
Service revenues
|
$
|
182,955
|
$
|
69,782
|
$
|
20,244
|
-
|
-
|
$
|
273,902
|
||||||||||||||
Other revenues
|
10,842
|
5,967
|
19,152
|
-
|
-
|
35,040
|
||||||||||||||||||
Total external revenues
|
193,797
|
75,749
|
39,396
|
-
|
-
|
308,942
|
||||||||||||||||||
Internal revenues
|
4,328
|
123
|
20,074
|
-
|
(24,525
|
)
|
-
|
|||||||||||||||||
Total operating revenues
|
198,125
|
75,872
|
59,470
|
-
|
(24,525
|
)
|
308,942
|
|||||||||||||||||
Operating expenses
|
||||||||||||||||||||||||
Costs of goods and services, exclusive of depreciation and amortization shown separately below
|
72,995
|
45,767
|
28,603
|
-
|
(22,225
|
)
|
125,140
|
|||||||||||||||||
Selling, general and administrative, exclusive of depreciation and amortization shown below
|
32,812
|
19,052
|
5,344
|
12,765
|
(2,300
|
)
|
67,673
|
|||||||||||||||||
Depreciation and amortization
|
28,177
|
21,202
|
11,308
|
35
|
-
|
60,722
|
||||||||||||||||||
Total operating expenses
|
133,984
|
86,021
|
45,255
|
12,800
|
(24,525
|
)
|
253,535
|
|||||||||||||||||
Operating income (loss)
|
$
|
64,141
|
$
|
(10,149
|
)
|
$
|
14,215
|
$
|
(12,800
|
)
|
$
|
-
|
$
|
55,407
|
Years Ended December 31,
|
||||||||||||
(In thousands)
|
2015
|
2014
|
2013
|
|||||||||
Total consolidated operating income
|
$
|
74,086
|
$
|
61,943
|
$
|
55,407
|
||||||
Interest expense
|
(7,355
|
)
|
(8,148
|
)
|
(8,468
|
)
|
||||||
Non-operating income, net
|
1,859
|
2,239
|
2,525
|
|||||||||
Income from continuing operations before income taxes
|
$
|
68,590
|
$
|
56,034
|
$
|
49,464
|
|
December 31,
2015
|
December 31,
2014
|
||||||
Wireless
|
$
|
205,718
|
$
|
218,887
|
||||
Cable
|
209,132
|
201,232
|
||||||
Wireline
|
105,369
|
98,081
|
||||||
Other
|
464,979
|
446,028
|
||||||
Combined totals
|
985,198
|
964,228
|
||||||
Inter-segment eliminations
|
(356,458
|
)
|
(344,986
|
)
|
||||
Consolidated totals
|
$
|
628,740
|
$
|
619,242
|
For the year ended December 31, 2015
|
First
|
Second
|
Third
|
Fourth
|
Total
|
|||||||||||||||
Operating revenues
|
$
|
84,287
|
$
|
85,701
|
$
|
85,212
|
$
|
87,285
|
$
|
342,485
|
||||||||||
Operating income
|
18,526
|
18,750
|
15,089
|
21,721
|
74,086
|
|||||||||||||||
Net income
|
10,286
|
10,474
|
7,996
|
12,108
|
40,864
|
|||||||||||||||
Net income per share – basic
|
0.21
|
0.22
|
0.17
|
0.24
|
0.84
|
|||||||||||||||
Net income per share – diluted
|
0.21
|
0.21
|
0.17
|
0.24
|
0.83
|
|||||||||||||||
For the year ended December 31, 2014
|
First
|
Second
|
Third
|
Fourth
|
Total
|
|||||||||||||||
Operating revenues
|
$
|
80,452
|
$
|
81,416
|
$
|
82,268
|
$
|
82,810
|
$
|
326,946
|
||||||||||
Operating income
|
15,680
|
15,793
|
14,144
|
16,326
|
61,943
|
|||||||||||||||
Net income
|
8,616
|
8,615
|
8,003
|
8,649
|
33,883
|
|||||||||||||||
Net income per share - basic
|
0.18
|
0.18
|
0.16
|
0.18
|
0.70
|
|||||||||||||||
Net income per share - diluted
|
0.18
|
0.18
|
0.16
|
0.18
|
0.70
|
Exhibit
Number
|
Exhibit Description
|
2.1
|
Agreement and Plan of Merger, dated as of August 10, 2015, by and among Shenandoah Telecommunications Company, Gridiron Merger Sub, Inc. and NTELOS Holdings Corp., filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K, dated August 11, 2015.
|
3.1
|
Amended and Restated Articles of Incorporation of Shenandoah Telecommunications Company filed as Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the period ending June 30, 2007, as amended by the Articles of Amendment of Shenandoah Telecommunications Company filed as Exhibit 3.3 to the Company’s Current Report on Form 8-K , filed January 5, 2016.
|
3.2
|
Amended and Restated Bylaws of Shenandoah Telecommunications Company, effective September 17, 2012, filed as Exhibit 3.3 to the Company’s Current Report on Form 8-K dated September 18, 2012.
|
4.1
|
Rights Agreement, dated as of February 8, 2008 between the Company and American Stock Transfer & Trust Company filed as Exhibit 4.1 to the Company's Current Report on Form 8-K, dated January 25, 2008.
|
4.2
|
Specimen representing the Common Stock, no par value, of Shenandoah Telecommunications Company, filed as Exhibit 4.3 to the Company’s Report on Form 10-K for the year ended December 31, 2007.
|
10.1
|
Shenandoah Telecommunications Company Dividend Reinvestment Plan filed as Exhibit 4.4 to the Company’s Registration Statement on Form S-3D (No. 333-74297).
|
10.2
|
Settlement Agreement and Mutual Release dated as of January 30, 2004 by and among Sprint Spectrum L.P., Sprint Communications Company L.P., WirelessCo, L.P., APC PCS, LLC, PhillieCo, L.P. and Shenandoah Personal Communications Company and Shenandoah Telecommunications Company, dated January 30, 2004; filed as Exhibit 10.3 to the Company’s Report on Form 10-K for the year ended December 31, 2003.
|
10.3
|
Sprint PCS Management Agreement dated as of November 5, 1999 by and among Sprint Spectrum L.P., WirelessCo, L.P., APC PCS, LLC, PhillieCo, L.P., and Shenandoah Personal Communications Company filed as Exhibit 10.4 to the Company’s Report on Form 10-K for the year ended December 31, 2003.
|
10.4
|
Sprint PCS Services Agreement dated as of November 5, 1999 by and between Sprint Spectrum L.P. and Shenandoah Personal Communications Company filed as Exhibit 10.5 to the Company’s Report on Form 10-K for the year ended December 31, 2003.
|
10.5
|
Sprint Trademark and Service Mark License Agreement dated as of November 5, 1999 by and between Sprint Communications Company, L.P. and Shenandoah Personal Communications Company filed as Exhibit 10.6 to the Company’s Report on Form 10-K for the year ended December 31, 2003.
|
10.6
|
Sprint Spectrum Trademark and Service Mark License Agreement dated as of November 5, 1999 by and between Sprint Spectrum L.P. and Shenandoah Personal Communications Company filed as Exhibit 10.7 to the Company’s Report on Form 10-K for the year ended December 31, 2003.
|
10.7
|
Addendum I to Sprint PCS Management Agreement by and among Sprint Spectrum L.P., WirelessCo, L.P., APC PCS, LLC, PhillieCo, L.P., and Shenandoah Personal Communications Company filed as Exhibit 10.8 to the Company’s Report on Form 10-K for the year ended December 31, 2003.
|
10.8
|
Asset Purchase Agreement dated November 5, 1999 by and among Sprint Spectrum L.P., Sprint Spectrum Equipment Company, L. P., Sprint Spectrum Realty Company, L.P., and Shenandoah Personal Communications Company, serving as Exhibit A to Addendum I to the Sprint PCS Management Agreement and as Exhibit 2.6 to the Sprint PCS Management Agreement filed as Exhibit 10.9 to the Company’s Report on Form 10-K for the year ended December 31, 2003.
|
10.9
|
Addendum II dated August 31, 2000 to Sprint PCS Management Agreement by and among Sprint Spectrum L.P., WirelessCo, L.P., APC PCS, LLC, PhillieCo, L.P., and Shenandoah Personal Communications Company filed as Exhibit 10.10 to the Company’s Report on Form 10-K for the year ended December 31, 2003.
|
10.10
|
Addendum III dated September 26, 2001 to Sprint PCS Management Agreement by and among Sprint Spectrum L.P., WirelessCo, L.P., APC PCS, LLC, PhillieCo, L.P., and Shenandoah Personal Communications Company filed as Exhibit 10.11 to the Company’s Report on Form 10-K for the year ended December 31, 2003.
|
10.11
|
Addendum IV dated May 22, 2003 to Sprint PCS Management Agreement by and among Sprint Spectrum L.P., WirelessCo, L.P., APC PCS, LLC, PhillieCo, L.P., and Shenandoah Personal Communications Company filed as Exhibit 10.12 to the Company’s Report on Form 10-K for the year ended December 31, 2003.
|
10.12
|
Addendum V dated January 30, 2004 to Sprint PCS Management Agreement by and among Sprint Spectrum L.P., WirelessCo, L.P., APC PCS, LLC, PhillieCo, L.P., and Shenandoah Personal Communications Company filed as Exhibit 10.13 to the Company’s Report on Form 10-K for the year ended December 31, 2003.
|
10.13
|
Supplemental Executive Retirement Plan as amended and restated, filed as Exhibit 10.14 to the Company’s Current Report on Form 8-K dated March 23, 2007.
|
10.14
|
Addendum VI dated May 24, 2004 to Sprint PCS Management Agreement by and among Sprint Spectrum L.P., WirelessCo, L.P., APC PCS, LLC, PhillieCo, L.P., and Shenandoah Personal Communications Company filed as Exhibit 10.15 to the Company’s Report on Form 10-Q for the quarterly period ended June 30, 2004.
|
10.15
|
Description of the Shenandoah Telecommunications Company Incentive Plan filed as Exhibit 10.25 to the Company’s Current Report on Form 8-K dated January 21, 2005.
|
10.16
|
Description of Compensation of Non-Employee Directors. Filed as Exhibit 10.26 to the Company’s Current Report on Form 8-K dated May 4, 2005.
|
10.17
|
Description of Management Compensatory Plans and Arrangements. Filed as Exhibit 10.27 to the Company’s current report on Form 8-K dated April 20, 2005.
|
10.18
|
2005 Stock Incentive Plan filed as Exhibit 10.1 to the Company’s Registration Statement on Form S-8 (No. 333-127342).
|
10.19
|
Form of Incentive Stock Option Agreement under the 2005 Stock Incentive Plan filed as Exhibit 10.29 to the Company’s Report on Form 10-K for the year ended December 31, 2005.
|
10.20
|
Addendum VII dated March 13, 2007 to Sprint PCS Management Agreement by and among Sprint Spectrum L.P., Wireless Co., L.P., APC PCS, LLC, Phillieco, L.P., and Shenandoah Personal Communications Company, filed as Exhibit 10.31 to the Company’s Report on Form 10-K for the year ended December 31, 2006.
|
10.21
|
Settlement Agreement and Mutual Release dated March 13, 2007 by and among Sprint Corporation, Sprint Spectrum L.P., Wireless Co., L.P., Sprint Communications Company L.P., APC PCS, LLC, Phillieco, L.P., and Shenandoah Personal Communications Company and Shenandoah Telecommunications, filed as Exhibit 10.32 to the Company’s Report on Form 10-K for the year ended December 31, 2006.
|
10.22
|
Form of Performance Share Award to Executives filed as Exhibit 10.33 to the Company’s Current Report on Form 8-K dated September 20, 2007.
|
10.23
|
Addendum VIII to the Sprint Management Agreement dated November 19, 2007, filed as Exhibit 10.36 to the Company’s Current Report on Form 8-K dated November 20, 2007.
|
10.24
|
Asset Purchase Agreement dated August 6, 2008, between Rapid Communications, LLC, Rapid Acquisition Company, LLC, and Shentel Cable Company, filed as Exhibit 10.37 to the Company’s Report on Form 10-Q for the period ended June 30, 2008.
|
10.25
|
Amendment Number 1 to the Asset Purchase Agreement dated August 6, 2008, between Rapid Communications, LLC, Rapid Acquisition Company, LLC, and Shentel Cable Company, filed as Exhibit 10.40 to the Company’s Current Report on Form 8-K dated November 7, 2008.
|
10.26
|
Addendum IX to the Sprint Management Agreement dated as of April 14, 2009, and filed as Exhibit 10.42 to the Company’s Annual Report on Form 10-K dated March 8, 2010.
|
10.27
|
Asset Purchase Agreement dated as of April 16, 2010, between JetBroadband VA, LLC, Helicon Cable Communications, LLC, JetBroadband WV, LLC, JetBroadband Holdings, LLC, Helicon Cable Holdings, LLC, Shentel Cable Company and Shenandoah Telecommunications Company, filed as Exhibit 10.43 to the Company’s Current Report on Form 8-K, dated April 16, 2010.
|
10.28
|
Addendum X dated March 15, 2010 to Sprint PCS Management Agreement by and among Sprint Spectrum L.P., WirelessCo, L.P., APC PCS, LLC, PhillieCo, L.P., Sprint Communications Company L.P. and Shenandoah Personal Communications Company, filed as Exhibit 10.44 to the Company’s Current Report on Form 10-Q, dated May 7, 2010.
|
10.29
|
Addendum XI dated July 7, 2010 to Sprint PCS Management Agreement by and among Sprint Spectrum L.P., WirelessCo, L.P., APC PCS, LLC, PhillieCo, L.P., Sprint Communications Company L.P. and Shenandoah Personal Communications Company, filed as Exhibit 10.45 to the Company’s Current Report on Form 8-K dated July 8, 2010.
|
10.30
|
Credit Agreement dated as of July 30, 2010, among Shenandoah Telecommunications Company, CoBank, ACB, Branch Banking and Trust Company, Wells Fargo Bank, N.A., and other Lenders, filed as Exhibit 10.46 to the Company’s Current Report on Form 8-K dated July 30, 2010.
|
10.31
|
Second Amendment to the Credit Agreement dated as of July 30, 2010, among Shenandoah Telecommunications Company, CoBank, ACB, Branch Banking and Trust Company, Wells Fargo Bank, N.A., and other Lenders, filed as Exhibit 10.47 to the Company’s Current Report on Form 8-K dated April 29, 2011.
|
10.32
|
Third Amendment to the Credit Agreement dated as of July 30, 2010, among Shenandoah Telecommunications Company, CoBank, ACB, Branch Banking and Trust Company, Wells Fargo Bank, N.A., and other Lenders, filed as Exhibit 10.48 to the Company’s Quarterly Report on Form 10-Q dated August 8, 2011.
|
10.33
|
Letter Agreement modifying section 10.2.7.2 of Addendum X dated March 15, 2010 to Sprint PCS Management Agreement by and among Sprint Spectrum L.P., WirelessCo, L.P., APC PCS, LLC, PhillieCo, L.P., Sprint Communications Company L.P. and Shenandoah Personal Communications Company, filed as Exhibit 10.49 to the Company’s Quarterly Report on Form 10-Q dated August 8, 2011.
|
10.34
|
Fourth Amendment to the Credit Agreement dated as of July 30, 2010, among Shenandoah Telecommunications Company, CoBank, ACB, Branch Banking and Trust Company, Wells Fargo Bank, N.A., and other Lenders, filed as Exhibit 10.50 to the Company’s Quarterly Report on Form 10-Q dated August 8, 2011.
|
10.35
|
Addendum XII dated February 1, 2012 to Sprint PCS Management Agreement by and among Sprint Spectrum L.P., WirelessCo, L.P., APC PCS, LLC, PhillieCo, L.P., Sprint Communications Company L.P. and Shenandoah Personal Communications Company, filed as Exhibit 10.51 to the Company’s Current Report on Form 8-K dated February 2, 2012.
|
10.36
|
Fifth Amendment to the Credit Agreement dated as of July 30, 2010, among Shenandoah Telecommunications Company, CoBank, ACB, Branch Banking and Trust Company, Wells Fargo Bank, N.A., and other Lenders, filed as Exhibit 10.52 to the Company’s Current Report on Form 8-K dated February 2, 2012.
|
10.37
|
Addendum XIII dated September 14, 2012 to Sprint PCS Management Agreement by and among Sprint Spectrum L.P., WirelessCo, L.P., APC PCS, LLC, PhillieCo, L.P., Sprint Communications Company L.P. and Shenandoah Personal Communications, LLC, filed as Exhibit 10.53 to the Company’s Current Report on Form 8-K dated September 17, 2012.
|
10.38
|
Consent and Agreement dated September 14, 2012 related to Sprint PCS Management Agreement by and among Sprint Spectrum L.P., WirelessCo, L.P., APC PCS, LLC, PhillieCo, L.P., Sprint Communications Company L.P. and Shenandoah Personal Communications, LLC, filed as Exhibit 10.54 to the Company’s Current Report on Form 8-K dated September 17, 2012.
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10.39
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Amended and Restated Credit Agreement dated as of September 14, 2012, among Shenandoah Telecommunications Company, CoBank, ACB, and other Lenders, filed as Exhibit 10.55 to the Company’s Current Report on Form 8-K dated September 17, 2012.
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10.40
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Addendum XIV dated as of November 19, 2012, to Sprint PCS Management Agreement by and among Sprint Spectrum L.P., WirelessCo, L.P., APC PCS, LLC, PhillieCo, L.P., Sprint Communications Company L.P. and Shenandoah Personal Communications, LLC, filed as Exhibit 10.42 to the Company’s Annual Report on Form 10-K dated March 5, 2013.
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10.41
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Addendum XV dated as of March 11, 2013, to Sprint PCS Management Agreement by and among Sprint Spectrum, L.P., WirelessCo, L.P., APC PCS, LLC, PhillieCo, L.P., Sprint Communications Company L.P. and Shenandoah Personal communications, LLC, filed as Exhibit 10.43 to the Company’s Quarterly Report on Form 10-Q dated May 3, 2013.
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10.42
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First Amendment dated January 30, 2014, to the Amended and Restated Credit Agreement among Shenandoah Telecommunications Company, CoBank, ACB, and other Lenders, filed as Exhibit 10.43 to the Company’s Quarterly Report on Form 10-Q dated May 2, 2014.
|
10.43
|
Joinder Agreement dated January 30, 2014, to the Amended and Restated Credit Agreement among Shenandoah Telecommunications Company, CoBank, ACB, and other Lenders, filed as Exhibit 10.44 to the Company’s Quarterly Report on Form 10-Q dated May 2, 2014.
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10.44
|
Addendum XVI dated as of December 9, 2013 to Sprint PCS Management Agreement by and among Sprint Spectrum, L.P., WirelessCo, L.P., APC PCS, LLC, PhillieCo, L.P., Sprint Communications Company L.P. and Shenandoah Personal Communications, LLC, filed as Exhibit 10.45 to the Company’s Quarterly Report on Form 10-Q dated May 2, 2014.
|
10.45
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Addendum XVII dated as of April 11, 2014, to Sprint PCS Management Agreement by and among Sprint Spectrum, L.P., WirelessCo, L.P., APC PCS, LLC, PhillieCo, L.P., Sprint Communications Company L.P. and Shenandoah Personal Communications, LLC, filed as Exhibit 10.46 to the Company’s Quarterly Report on Form 10-Q dated May 2, 2014.
|
10.46
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2014 Equity Incentive Plan filed as Appendix A to the Company’s Definitive Proxy Statement filed on March 13, 2014 (No. 333-196990).
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10.47
|
Master Agreement dated as of August 10, 2015, by and among SprintCom, Inc. and Shenandoah Personal Communications, LLC, filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated August 11, 2015.
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10.48
|
Addendum XVIII dated as of August 10, 2015, to Sprint PCS Management Agreement by and among SprintCom, Inc., PhillieCo, L.P., and Shenandoah Personal Communications, LLC, filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K, dated August 11, 2015.
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10.49
|
Credit Agreement dated as of December 18, 2015, by and among Shenandoah Telecommunications Company, as Borrower, the guarantors party thereto from time to time, CoBank, ACB, as Administrative Agent, and various other agents and lenders named therein, filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, dated December 24, 2015.
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List of Subsidiaries.
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Consent of KPMG LLP, Independent Registered Public Accounting Firm.
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Certification of President and Chief Executive Officer of Shenandoah Telecommunications Company pursuant to Rule 13a-14(a)under the Securities Exchange Act of 1934.
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Certification of Vice President and Chief Financial Officer of Shenandoah Telecommunications Company pursuant to Rule 13a-14(a)under the Securities Exchange Act of 1934.
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Certifications pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. § 1350.
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(101)
|
Formatted in XBRL (Extensible Business Reporting Language)
|
101.INS
|
XBRL Instance Document
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
1. | I have reviewed this annual report on Form 10-K of Shenandoah Telecommunications Company, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d‑15(f)) for the registrant and have: |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
1. | I have reviewed this annual report on Form 10-K of Shenandoah Telecommunications Company, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d‑15(f)) for the registrant and have: |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
/S/CHRISTOPHER E. FRENCH
|
|
Christopher E. French
|
|
President and Chief Executive Officer
|
|
February 26, 2016
|
|
/S/ADELE M. SKOLITS
|
|
Adele M. Skolits
|
|
Vice President – Finance and
|
|
Chief Financial Officer
|
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February 26, 2016
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Document and Entity Information - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Feb. 17, 2016 |
Jun. 30, 2015 |
|
Document and Entity Information [Abstract] | |||
Entity Registrant Name | SHENANDOAH TELECOMMUNICATIONS CO/VA/ | ||
Entity Central Index Key | 0000354963 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 760,000,000 | ||
Entity Common Stock, Shares Outstanding | 48,536,793 | ||
Document Fiscal Year Focus | 2015 | ||
Document Fiscal Period Focus | FY | ||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2015 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Current Assets | ||
Investments at fair value | $ 2,654 | $ 2,661 |
Shareholders' Equity | ||
Common stock, par value (in dollars per share) | $ 0 | $ 0 |
Common stock, shares authorized (in shares) | 96,000 | 96,000 |
Common stock, shares issued (in shares) | 48,475 | 48,265 |
Common stock, shares outstanding (in shares) | 48,475 | 48,265 |
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Parenthetical) - $ / shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
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CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY [Abstract] | |||
Dividends declared per share (in dollars per share) | $ 0.24 | $ 0.235 | $ 0.18 |
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
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Supplemental Disclosures of Cash Flow Information Cash payments for: | |||
Interest, net of capitalized interest | $ 436 | $ 373 | $ 396 |
Other cash flow information: | |||
Exchange of equipment for new equipment purchase | 711 | 863 | 14,533 |
Increase (Decrease) in accounts payable | $ 5,597 | $ 6,492 | $ 7,635 |
Summary of Significant Accounting Policies |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Note 1. Summary of Significant Accounting Policies Description of business: Shenandoah Telecommunications Company and its subsidiaries (collectively, the “Company”) provide wireless personal communications service (“PCS”) under the Sprint brand, and telephone service, cable television, unregulated communications equipment sales and services, and Internet access under the Shentel brand. In addition, the Company leases towers and operates and maintains an interstate fiber optic network. Pursuant to a management agreement with Sprint and its related parties (collectively, “Sprint”), the Company is the exclusive Sprint PCS Affiliate providing wireless mobility communications network products and services on the 800 MHz, 1900 MHz and 2.5 GHz spectrum ranges in the geographic area extending from Altoona, Harrisburg and York, Pennsylvania, south through Western Maryland and the panhandle of West Virginia to Harrisonburg, Virginia. The Company is licensed to use the Sprint brand name in this territory, and operates its network under the Sprint radio spectrum license (See Note 6). The Company's other operations are located in the four-state region surrounding the Northern Shenandoah Valley of Virginia. A summary of the Company's significant accounting policies follows: 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. The Company has no involvement with variable interest entities. The Company accounts for investments over which it has significant influence but not a controlling financial interest using the equity method of accounting. On October 19, 2015, the Board of Directors declared a two-for-one stock split, effective for shareholders of record as of the close of business on December 31, 2015. Shareholders received one additional share of common stock of the Company for each share held on the record date. All share and per share data presented herein for prior periods have been retroactively amended to reflect the effect of the additional shares issued and outstanding as a result of the stock split. 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: The Company considers all temporary cash investments purchased with a maturity of three months or less to be cash equivalents. Cash equivalents included $40.1 million and $40.0 million invested in institutional cash management funds at December 31, 2015 and 2014, respectively. The Company places its temporary cash investments with high credit quality financial institutions. Generally, these investments are in excess of FDIC or SIPC insurance limits. 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, 2015, 2014 and 2013 are summarized below (in thousands):
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 equity 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 fair value using net asset value per share. The Company has elected to recognize unrealized gains and losses on investments carried at fair value in earnings, pursuant to the fair value option in Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 820, Fair Value Measurement. 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. This category includes required investments to obtain services, primarily with CoBank. 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, but less than 50%, 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. Equity method investments include one investment limited partnership and several smaller investments in pooled projects. Property, plant and equipment: Property, plant and equipment is stated at cost less accumulated depreciation and amortization. The Company capitalizes all costs associated with the purchase, deployment and installation of property, plant and equipment, including interest costs 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. Valuation of long-lived assets: Long‑lived assets, such as property, plant, and equipment, and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Fair value: Fair value is defined as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial instruments presented on the consolidated balance sheets for which the carrying value approximates fair value include: cash and cash equivalents, receivables, investments carried at fair value, payables, accrued liabilities, interest rate swaps and variable-rate long-term debt. The Company measures its interest rate swaps at fair value and recognizes such derivative instruments as either assets or liabilities on the Company’s consolidated balance sheet. Changes in the fair value of the swap acquired in 2012 are recognized in other comprehensive income, as this swap was designated as a cash flow hedge for accounting purposes. Changes in the fair value of the swap acquired in 2010 were recognized in interest expense, as the Company did not designate this swap agreement as a cash flow hedge for accounting purposes. This swap expired in 2013. The Company entered into these swaps to manage a portion of its exposure to interest rate movements by converting a portion of its variable rate long-term debt to fixed rate debt. 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. The terms associated with its operating leases, and applicable zoning ordinances of certain jurisdictions, define the Company’s obligations which 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. During the third quarter of 2015, new information was received regarding the cost to remove tower site improvements. The Company recorded an adjustment to the wireless segment asset retirement obligation liabilities to reflect changes in the estimated future cash flows underlying the obligation to remove tower site improvements. Changes in the liability for asset removal obligations for the years ended December 31, 2015, 2014 and 2013 are summarized below (in thousands):
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 an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. The Company carries an immaterial amount of goodwill in the Wireline segment. Intangible assets with indefinite lives, primarily cable franchise rights, are assessed annually, at November 30, for impairment and in interim periods if certain triggering events occur indicating that the carrying value may be impaired. The Company determined that no impairment of Cable segment franchise rights was required for the years ended December 31, 2015, 2014 and 2013. The fair value of cable franchise rights, which is determined by a “greenfield” analysis (Level 3 fair value), was determined to exceed its $64.1 million carrying value by approximately $11.3 million at December 31, 2015, and $5.3 million at December 31, 2014. Intangible assets consist of the following at December 31, 2015 and 2014 (in thousands):
For the years ended December 31, 2015, 2014 and 2013, amortization expense related to intangible assets was approximately $1.4 million, $2.6 million and $4.1 million, respectively. Aggregate amortization expense for intangible assets for the periods shown is expected to be as follows:
Deferred charges and other assets: Deferred charges and other assets consist of derivatives used for hedging purposes and debt issuance costs, which are amortized using the effective yield method over the life of the underlying debt agreement. 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. Participant balances and earnings thereon continue to be maintained for this plan, but no new participants or contributions have been added to the plan since 2010. 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 annual contribution amount. 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 common stock in the plan’s investment portfolio. 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, 2015 and 2014, a valuation allowance against certain state deferred tax assets is necessary, as discussed in Note 5. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company’s policy is to record interest related to unrecognized tax benefits in interest expense and penalties in selling, general, and administrative expenses. 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, since August 2013, a 14% Net Service Fee (increased from 12%), retained by Sprint. Prepaid wireless service revenues are reported net of a 6% Management Fee retained by Sprint. 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 1,312 thousand, 1,394 thousand, and 1,496 thousand shares and options outstanding at December 31, 2015, 2014 and 2013, respectively, 92 thousand, 22 thousand and 258 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, 2015, 2014 and 2013:
Contingencies: The Company is involved in various claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s consolidated financial position, results of operations, or liquidity. Recently Issued Accounting Standards: In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers”, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. In August 2015, the FASB issued ASU No. 2015-14, delaying the effective date of ASU 2014-09. As amended, the new standard is effective for the Company on January 1, 2018. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting. In February 2015, the FASB issued ASU No. 2015-2, “Consolidation (Topic 820): Amendments to the Consolidation Analysis”. The ASU provides a revised consolidation model for all reporting entities to use in evaluating whether they should consolidate certain legal entities. All legal entities will be subject to reevaluation under this revised consolidation model. The revised consolidation model, among other things, (i) modifies the evaluation of whether limited partnerships and similar legal entities are VIEs or voting interest entities, (ii) eliminates the presumption that a general partner should consolidate a limited partnership, and (iii) modifies the consolidation analysis of reporting entities that are involved with VIEs through fee arrangements and related party relationships. ASU 2015-2 is effective for fiscal years, and interim reporting periods within those fiscal years, beginning after September 1, 2016 (fiscal 2017). The Company is still evaluating what impact, if any, this ASU will have on the Company’s consolidated financial position, results of operations or cash flows. In April 2015, the FASB issued ASU No. 2015-03, “Simplifying the Presentation of Debt Issuance Costs”, which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. This ASU requires retrospective adoption and will be effective for the Company beginning on January 1, 2016. Early adoption is permitted. The Company has not elected to early adopt and does not expect this adoption to have a material impact on its consolidated financial statements. In November 2015, the FASB issued ASU No. 2015-17, “Balance Sheet Classification of Deferred Taxes”, to simplify the presentation of deferred income taxes by requiring deferred tax assets and liabilities to be classified as noncurrent on the balance sheet. The amendments in this update are effective for financial statements issued for annual periods beginning after December 15, 2016. Early adoption is permitted. The Company will not elect to early adopt and does not expect this adoption to have a material impact on its consolidated financial statements. |
Investments |
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Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | Note 2. Investments The Company has three classifications of investments: investments carried at fair value, investments carried at cost, and equity method investments. See Note 1 for definitions of each classification of investment. At December 31, 2015 and 2014, investments carried at fair value consisted of:
Investments carried at fair value were acquired under a rabbi trust arrangement related to the Company’s SERP. The Company purchases investments in the trust to mirror the investment elections of participants in the SERP; gains and losses on the investments in the trust are reflected as increases or decreases in the liability owed to the participants. The Company recorded unrealized losses of $141 thousand and $51 thousand in 2015 and 2014, respectively, and unrealized gains of $391 thousand during 2013. Dividends received from the investment totaled $134 thousand, $184 thousand, and $74 thousand during 2015, 2014 and 2013, respectively. Fair values for these investments are determined by quoted market prices (“Level 1 fair values”) for the underlying mutual funds, which may be based upon net asset value. At December 31, 2015 and 2014, other investments, comprised of equity securities which do not have readily determinable fair values, consist of the following:
The Company’s investment in CoBank increased $388 thousand and $406 thousand in the years ended December 31, 2015 and 2014, respectively, due to the ongoing patronage earned from the outstanding investment and loan balances the Company has with CoBank. In the year ended December 31, 2015, the Company received distributions from its investments totaling $30 thousand in cash. Equity method investments had a net gain of $266 thousand in the year ended December 31, 2015. During 2015, the Company accepted an offer for the sale of the remaining shares of VA Capital, LLC, an equity method investment. As a result of the transaction, the Company received $24 thousand in proceeds from the sale and recorded a loss totaling $20 thousand on the remaining investment. There were no sales of investments during 2014 while sales in 2013 resulted in a $1 thousand realized loss. The Company’s ownership interests in the remaining equity method investees were unchanged during 2015. |
Property, Plant and Equipment |
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Property, Plant and Equipment | Note 3. Property, Plant and Equipment Property, plant and equipment consisted of the following at December 31, 2015 and 2014:
The Company traded in certain base station PCS equipment for 4G LTE base station equipment in 2015 and 2014, and received credits of $711 thousand and $863 thousand, respectively, against the fair value purchase price of the new equipment. The Company adjusted depreciation on equipment to be traded in so that the net book value at trade-in approximated the credit to be received. |
Long-Term Debt and Revolving Lines of Credit |
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Long-Term Debt and Revolving Lines of Credit | Note 4. Long-Term Debt and Revolving Lines of Credit Total debt consists of the following at December 31, 2015 and 2014:
On September 14, 2012, the Company executed an Amended and Restated Credit Agreement with CoBank and with the participation of 16 additional Farm Credit institutions, for the purpose of refinancing the Company’s existing outstanding debt, funding capital expenditures to upgrade the Company’s wireless network in conjunction with Sprint’s wireless network upgrade project known as Network Vision, and other corporate needs. The Amended and Restated Credit Agreement provides for three facilities, a Term Loan Facility, a Revolver Facility, and an Incremental Term Loan Facility. The Term Loan Facility requires quarterly principal repayments of $5.75 million which began on December 31, 2014, with the remaining expected balance of approximately $120.75 million due at maturity on September 30, 2019. The Term Loan Facility bears interest at 30-day LIBOR, currently 0.42%, plus a spread determined by the Company’s Total Leverage Ratio, currently 2.25%. The Company may elect to use rates other than the 30-day LIBOR as the base, but does not currently expect to do so. The Revolver Facility provides for $50 million in immediate availability for future capital expenditures and general corporate needs. In addition, the Amended and Restated Credit Agreement permits the Company to enter into one or more Incremental Term Loan Facilities, or to increase the Revolver Facility, in the aggregate principal amount not to exceed $100 million subject to compliance with certain covenants. No draw has been made or is currently contemplated under either of these facilities. When and if a draw is made, the maturity date and interest rate options would be substantially identical to the Term Loan Facility. Repayment provisions would be agreed to at the time of each draw under the Incremental Term Loan Facility. The Amended and Restated Credit Agreement contains affirmative and negative covenants customary to secured credit facilities, including covenants restricting the ability of the Company and its subsidiaries, subject to negotiated exceptions, to incur additional indebtedness and additional liens on their assets, engage in mergers or acquisitions, dispose of assets, pay dividends or make other distributions, voluntarily prepay other indebtedness, enter into transactions with affiliated persons, make investments, and change the nature of the Company’s and its subsidiaries’ businesses. Indebtedness outstanding under any of the facilities may be accelerated by an Event of Default, as defined in the Amended and Restated Credit Agreement. The Facilities are secured by a pledge by the Company of its stock in its subsidiaries, a guarantee by the Company’s subsidiaries other than Shenandoah Telephone Company, and a security interest in all of the assets of the guarantors. The Company is subject to certain financial covenants to be measured on a trailing twelve month basis each calendar quarter unless otherwise specified. These covenants include:
As shown below, as of December 31, 2015, the Company was in compliance with the financial covenants in its credit agreements.
The Amended and Restated Credit Agreement required the Company to obtain interest rate protection within 90 days of the amendment date for at least 33% of the aggregate principal balance of the Term Loan then outstanding, for not less than three years after such date. In September 2012, the Company entered into a pay fixed, receive variable interest rate swap (the 2012 swap) agreement covering approximately 76% of the outstanding principal of the Term Loan balance through its maturity. The 2012 swap fixes the effective rate on this portion of the debt at 1.13% over our margin, currently 2.25%, for an effective fixed rate of 3.38% at December 31, 2015. The Company has applied hedge accounting to this swap agreement. See Note 13 for additional information on hedging transactions. The aggregate maturities of long-term debt for each of the five years subsequent to December 31, 2015 are as follows:
The Company has no fixed rate debt instruments as of December 31, 2015. The estimated fair value of the variable rate debt approximates its carrying value. The fair value of the Company’s interest rate swap was an asset of $688 thousand and $1.9 million at December 31, 2015 and 2014, respectively. The Company receives patronage credits from CoBank and certain of its affiliated Farm Credit institutions, which are not reflected in the stated rates shown above. Patronage credits are a distribution of profits of CoBank as approved by its Board of Directors. During the first quarters of 2015, 2014 and 2013, the Company received patronage credits on its outstanding CoBank debt balance. The Company accrued $1.5 million in non-operating income in the year ended December 31, 2015, in anticipation of the early 2016 distribution of the credits by CoBank. Patronage credits have historically been paid in a mix of cash and shares of CoBank stock. The 2015 payout mix was 75% cash and 25% shares. Merger-Related Financing Transaction In connection with the Merger and the Sprint Transactions (as defined in Note 16), on December 18, 2015, the Company entered into a credit agreement (the “New Credit Agreement”) with various banks and other financial institutions party thereto (the “Lenders”) and CoBank, ACB, as administrative agent for the Lenders. The Credit Agreement provides for three facilities: (i) a five-year revolving credit facility of up to $75 million, (ii) a five-year term loan facility of up to $485 million and (iii) a seven-year term loan facility (with two years of interest-only payments) of up to $400 million (collectively, the “Facilities”), which the Company expects to use to pay the Merger Consideration (as defined in Note 16), to finance the network upgrades required by the Sprint Transactions, to refinance, in full, all indebtedness outstanding under the Company’s existing credit agreement, to repay all existing indebtedness of nTelos (as defined in Note 16), to pay fees and expenses in connection with the Merger and for working capital, capital expenditures and other corporate purposes of the Company and its subsidiaries (and, following the consummation of the Merger, of nTelos and its subsidiaries). The Company will be the borrower under the New Credit Agreement. The availability of the Facilities is subject to the satisfaction or waiver of certain conditions set forth in the New Credit Agreement, including, among other things, the consummation of the Merger on or before June 28, 2016. The commitments of the Lenders with respect to the Facilities will terminate if the consummation of the Merger and the initial funding of the Facilities does not occur on or prior to June 28, 2016. Subsequent to the closing of the nTelos transaction, the Company’s future requirements for debt service will increase, due to incremental interest on the larger outstanding loan balances, and increased amortization requirements to pay down the loan balances, compared to the terms of our existing debt arrangements. |
Income Taxes |
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Income Taxes | Note 5. Income Taxes Total income taxes for the years ended December 31, 2015, 2014 and 2013 were allocated as follows:
The Company and its subsidiaries file income tax returns in several jurisdictions. The provision for the federal and state income taxes attributable to income from continuing operations consists of the following components:
A reconciliation of income taxes determined by applying the federal and state tax rates to income from continuing operations is as follows for the years ended December 31, 2015, 2014 and 2013:
The effective rates vary among the years presented primarily due to state income taxes. Changes in the mix of income and/or losses among the Company’s subsidiaries, which file separate state returns for various states, result in variations in the effective tax rates. Net deferred tax assets and liabilities consist of the following temporary differences at December 31, 2015 and 2014:
In assessing the ability to realize deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon generating future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods for which the deferred tax assets are deductible, management believes it more likely than not that the state net operating loss carry-forwards from Converged Services will not be realized. The Company has a deferred tax asset of $717 thousand related to various state net operating losses, and carries this asset at $8 thousand, net of the valuation allowance of $709 thousand. As of December 31, 2015 and 2014, the Company had no unrecognized tax benefits. It is the Company’s policy to record interest and penalties related to unrecognized tax benefits in income before taxes. The Company files U.S. federal income tax returns and various state and local income tax returns. With few exceptions, years prior to 2012 are no longer subject to examination. The Company is not currently subject to state or federal income tax audits as of December 31, 2015. |
Significant Contractual Relationship |
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Significant Contractual Relationship [Abstract] | |
Significant Contractual Relationship | Note 6. Significant Contractual Relationship In 1999, the Company executed a Management Agreement (the “Agreement”) with Sprint whereby the Company committed to construct and operate a PCS network using CDMA air interface technology. Under the Agreement, the Company was the exclusive PCS Affiliate of Sprint providing wireless mobility communications network products and services on the 1900 MHz band in its territory which extends from Altoona, York and Harrisburg, Pennsylvania, and south along the Interstate 81 corridor through Western Maryland, the panhandle of West Virginia, to Harrisonburg, Virginia. The Company is authorized to use the Sprint brand in its territory, and operate its network under Sprint’s radio spectrum licenses. As an exclusive PCS Affiliate of Sprint, the Company has the exclusive right to build, own and maintain its portion of Sprint’s nationwide PCS network, in the aforementioned areas, to Sprint’s specifications. The term of the Agreement was initially set for 20 years and was automatically renewable for three 10-year options, unless terminated by either party under provisions outlined in the Agreement. Upon non-renewal by either party, the Company has either the right or the obligation to sell the business at 80% of “Entire Business Value” (“EBV”) as defined in the Agreement. EBV is defined as i) the fair market value of a going concern paid by a willing buyer to a willing seller; ii) valued as if the business will continue to utilize existing brands and operate under existing agreements; and, iii) valued as if Manager (Shentel) owns the spectrum. Determination of EBV is made by an independent appraisal process. The Agreement has been amended numerous times, most recently during 2015. During 2012, the Company amended its Agreement with Sprint in order to build a 4G LTE network in the Company’s service area. In addition to adding 4G services to the Company’s network, the Company received access to additional 1900 and 800 MHz spectrum, extended the initial term of the contract five years from 2019 to 2024 and set the maximum contract length at 45 years. The agreement also increased the cap on the Net Service Fee related to postpaid revenues. Effective August 1, 2013, the Net Service Fee increased to its 14% maximum. There is also a management fee of 8% on postpaid revenues which has remained constant for the life of the contract. During 2013, the Company amended its Agreement with Sprint in order to allow Sprint to recover the capital costs incurred in providing the Company hardware and software components of the network. These components control and direct LTE traffic between LTE devices in the Company’s service area and the internet, in order to assure interoperability of the Company’s network with Sprint’s PCS network. The Company pays a one-time fee of $9.23 per incremental LTE device activated in the Company’s service area. The Company incurred $1.1 million, $1.1 million and $1.3 million of these fees during 2015, 2014 and 2013, respectively. During 2014, the Company amended its Agreement with Sprint in order to allow the Company’s PCS stores to begin participating in Sprint’s handset financing programs, whereby Sprint enters into a financing agreement with the subscriber and the subscriber receives a handset from Sprint. The equipment revenue from the subscriber, the handset expense and any related bad debt are Sprint’s responsibility and are not recorded by the Company. During 2015, effective January 1, 2016, the Company amended its Agreement with Sprint in order to better allocate certain costs covered by the Net Service Fee and extended the initial term to 2029. The Net Service Fee was reduced to 8.6%, and certain costs and revenues previously included within the Net Service Fee were broken out of the Net Service Fee and will be separately settled in the future. Separately settled revenues primarily consist of revenues associated with Sprint’s wholesale subscribers using the Company’s network and net travel revenue. In addition, the Company will be charged for the costs of subsidized handsets sold through Sprint’s national channels as well as commissions paid by Sprint to third-party resellers in our service territory. The Company does not expect this treatment to result in a significant change in wireless postpaid results, though it will increase total revenue and total operating expenses. Under the Sprint agreements, Sprint provides the Company significant support services such as customer service, billing, collections, long distance, national network operations support, inventory logistics support, use of the Sprint brand names, national advertising, national distribution and product development. Cost of equipment transactions between the Company and Sprint relate to inventory purchased and subsidized costs of handsets. These costs also included transactions related to subsidized costs on handsets and commissions paid to Sprint for sales of handsets through Sprint’s national distribution programs. The Company's PCS subsidiary is dependent upon Sprint’s ability to execute certain functions such as billing, customer care, collections and other operating activities under the Company's agreements with Sprint. Due to the high degree of integration within many of the Sprint systems, and the Company’s dependency on these systems, in many cases it would be difficult for the Company to perform these services in-house or to outsource the services to another provider. If Sprint is unable to perform any such service, the change could result in increased operating expenses and have an adverse impact on the Company's operating results and cash flow. In addition, the Company's ability to attract and maintain a sufficient customer base is critical to generating positive cash flow from operations and profits for its PCS operation. Changes in technology, increased competition, or economic conditions in the wireless industry or the economy in general, individually and/or collectively, could have an adverse effect on the Company's financial position and results of operations. |
Related Party Transactions |
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Dec. 31, 2015 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 7. Related Party Transactions ValleyNet, an equity method investee of the Company, resells capacity on the Company’s fiber network under an operating lease agreement. Facility lease revenue from ValleyNet was approximately $2.7 million, $3.0 million and $3.0 million in the years ended December 31, 2015, 2014 and 2013, respectively. At both December 31, 2015 and 2014, the Company had accounts receivable from ValleyNet of approximately $0.2 million. The Company's PCS operating subsidiary leases capacity through ValleyNet. Payment for usage of these facilities was $2.4 million, $2.3 million and $1.7 million in the years ended December 31, 2015, 2014 and 2013, respectively. |
Retirement Plans |
12 Months Ended |
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Dec. 31, 2015 | |
Retirement Plans [Abstract] | |
Retirement Plans | Note 8. Retirement Plans The Company maintains a defined contribution 401(k) plan. The Company's matching and employer discretionary contributions to the defined contribution 401(k) plan were approximately $2.6 million, $2.5 million and $2.3 million for the years ended December 31, 2015, 2014 and 2013, respectively. The Company maintains an unfunded, nonqualified Supplemental Executive Retirement Plan (the “SERP”) for named executives. In 2010, the Company curtailed future participation in the SERP. Current participants may remain in the SERP and continue to earn returns (either gains or losses) on invested balances, but the Company will make no further contributions to the SERP and no new participants will be eligible to join the SERP. In order to provide some protection to the participants, the Company created a rabbi trust to hold assets sufficient to pay obligations under the SERP. Assets within the trust were invested to mirror participant elections as to investment options (a mix of stock and bond mutual funds); investment income, gains and losses in the trust were used to determine investment returns on the participants’ balances in the SERP. At December 31, 2015 and 2014, the total liability due to participants in the SERP was $2.7 million and $2.7 million, respectively. |
Stock Incentive Plans |
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Stock Incentive Plans [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Incentive Plans | Note 9. Stock Incentive Plans The Company maintains two shareholder-approved Company Stock Incentive Plans allowing for the grant of equity based incentive compensation to essentially all employees. The 2005 Plan authorized grants of up to 2,880,000 shares over a ten-year period beginning in 2005. The term of the 2005 Plan expired in February 2014; outstanding awards will continue to vest and options may continue to be exercised, but no additional awards will be granted under the 2005 Plan. The 2014 Plan authorizes grants of up to an additional 3,000,000 shares over a ten-year period beginning in 2014. Under these Plans, grants may take the form of stock awards, awards of options to acquire stock, stock appreciation rights, and other forms of equity based compensation; both options to acquire stock and stock awards were granted. The option price for all grants has been the current market price at the time of the grant. Option Awards The Company did not grant stock options during 2015 or 2014. During 2013, the Company granted stock options to certain management employees. These grants consisted of incentive and non-qualified stock options, vesting 25% annually on the first through fourth anniversaries of the grant date, and having a maximum ten year life. In addition, during 2013 the Company granted stock options to a then recently hired officer. This grant consisted of both incentive and non-qualified stock options, vesting 25% annually on the third, fourth, fifth and sixth anniversaries of the grant date, and having a maximum seven year life. These grants were accounted for as equity-classified stock options. The fair values of these grants were estimated at the respective grant dates using a Black-Scholes option-pricing model with the following weighted-average assumptions:
Volatility is based on the historical volatility of the price of the Company’s stock over the expected term of the options. The expected term represents the period of time that the options granted are expected to be outstanding. The risk free rate is based on the U.S. Treasury yield curve, in effect at the date the fair value of the options is calculated, with an equivalent term. Management has made an estimate of expected forfeitures and recognizes compensation costs only for those awards expected to vest. Compensation cost recognized in 2015, 2014 and 2013 totaled $142 thousand, $452 thousand and $612 thousand, respectively, and the income tax benefit for option-based compensation arrangements recognized in 2015, 2014 and 2013 was $29 thousand, $78 thousand and $134 thousand, respectively. A summary of outstanding options at December 31, 2015, 2014 and 2013, and changes during the years ended on those dates, is as follows:
There were options for 904,158 shares outstanding at December 31, 2015 at a weighted average price of $7.70 per share, an aggregate intrinsic value of $12.5 million and a weighted-average remaining contractual life of 5.2 years. There were options for 665,340 shares exercisable at December 31, 2015 at a weighted average exercise price of $8.15 per share, an aggregate intrinsic value of $8.9 million and a weighted-average remaining contractual life of 4.6 years. The aggregate intrinsic value represents the total pretax intrinsic value of in-the-money options, based on the Company’s closing stock price of $21.53 as of December 31, 2015. During 2015, the total fair value of options vested was $0.3 million; the total intrinsic value of options exercised was $0.7 million. The total cash received as a result of employee stock option exercises was $1.0 million. The tax benefit realized from these exercises was $0.2 million. As of December 31, 2015, the total compensation cost related to non-vested options not yet recognized is $0.1 million, which will be recognized over a weighted-average period of 2.0 years. Stock Awards In September 2007, the Company granted 136,260 performance shares to all members of the Board of Directors and essentially all employees during 2007. Directors and senior management in the aggregate were granted 46,808 performance shares (“management shares”); all other employees in the aggregate were granted 89,452 performance shares (“employee shares”). Management shares can vest at the fifth, sixth, seventh or eighth anniversary of the grant date if, for the thirty day period ending on the day prior to the respective anniversary date, the average closing price of a share of the Company’s common stock exceeds a defined target price. The target price for each anniversary date is equal to the grant date market price ($10.25 per share) plus $0.82 for each year since the grant date. Shares will vest only if the target price is achieved and the recipient has remained employed through, or reached normal retirement age before, the anniversary date that the target price is achieved on. No shares have vested under these awards. In September 2013, employee shares expired without vesting and were cancelled. The Company estimated expected forfeitures of 40% for management shares and 35% for employee shares. During 2011, the Company revised its estimate of management share forfeitures to 15%, adding $48 thousand to recorded compensation expense. During 2013, the Company finalized its adjustment for employee share forfeitures to 39%, which lowered recorded compensation expense by $40 thousand. In September 2015, the management shares vested, and 37,826 shares were distributed and a final adjustment for management share forfeitures was posted, which reduced compensation expense by $37 thousand. In February 2013, 2014 and 2015, the Company made grants of 124,566, 135,562 and 79,946 non-vested shares to 18, 22 and 21 management employees, respectively. The 2013 shares vest 25% annually. The 2014 and 2015 shares vest 25% annually; however, if an employee reaches the age of 55, has achieved 10 years of service with the Company and retires, the unvested shares are not forfeited. The first year of vesting for the 2015 shares is on the one-year anniversary of the issue date. The awards were valued at the market price of the Company’s common stock on the date of grant ($6.92, $13.00 and $15.01 per share, respectively). The Company also made grants of non-vested shares to the non-employee members of the Company’s Board of Directors. The Company granted 23,120, 12,304 and 31,984 shares in 2013, 2014 and 2015, respectively, valued at the market price of the Company’s common stock on the grant date ($6.92, $13.00 and $15.01 per share, respectively). The 2013 and 2014 shares vest 33% annually, while the 2015 shares fully vest after one year. In February 2015, the Company made grants of 48,576 non-vested share units to eight management employees. These grants were made under a Relative Total Shareholder Return (“RTSR”) plan structure. Under this structure, the Company’s stock performance over a three year period ended December 31, 2017, will be compared to a group of 38 peer companies, and a payout will be determined based upon the Company’s performance relative to the performance of the peer group. The payout could range anywhere from zero shares awarded, up to 150% of the granted share units, or 72,858 shares. The fair value of the grant ($15.66) was determined as of the grant date using a Monte Carlo simulation. The following assumptions were utilized in the valuation:
In May 2013, 2014 and 2015, the Company made grants of non-vested shares to select other employees. In May 2013, the Company granted 49,686 shares, of which 19,134 were vested and distributed immediately. In May 2014, the Company granted 33,664 shares, of which 9,390 were vested and distributed immediately. In May 2015, the Company granted 29,752 shares, of which 10,180 were vested and distributed immediately. The remaining shares in each award vest in various schedules over four years. Beginning with the 2015 shares, if an employee reaches the age of 55, has achieved 10 years of service with the Company and retires, the unvested shares are not forfeited. The awards were valued at the market price of the Company’s common stock on the date of grant ($8.74, $12.83 and $17.23 per share in 2013, 2014 and 2015, respectively). A summary of outstanding share grants at December 31, 2015, 2014, and 2013, and changes during the years ended on those dates, is as follows:
Compensation cost recognized for share awards during 2015, 2014 and 2013, was $2.6 million, $2.2 million and $1.3 million, respectively. The income tax benefit for share-based compensation arrangements was $1.3 million, $0.9 million, and $0.5 million for 2015, 2014 and 2013, respectively. As of December 31, 2015, the total compensation cost related to non-vested share awards not yet recognized is $1.5 million which will be recognized over a weighted-average period of 2.0 years. |
Major Customer |
12 Months Ended |
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Dec. 31, 2015 | |
Major Customer [Abstract] | |
Major Customer | Note 10. Major Customer The Company has one major customer relationship with Sprint that is a significant source of revenue. Approximately 56% of total operating revenues for the year ended December 31, 2015, 58% of total operating revenues for the year ended December 31, 2014, and 59% of total operating revenues for the year ended December 31, 2013, were generated by or through Sprint and its customers using the Company's portion of Sprint’s nationwide PCS network. No other customer relationship generated more than 1.0% of the Company’s total operating revenues for the years ended December 31, 2015, 2014 or 2013. |
Shareholder Rights Plan |
12 Months Ended |
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Dec. 31, 2015 | |
Shareholder Rights Plan [Abstract] | |
Shareholder Rights Plan | Note 11. Shareholder Rights Plan Effective as of February 8, 2008, the Board of Directors adopted a Shareholder Rights Plan (the “Plan”) to replace an expiring plan which was adopted in 1998. Under certain circumstances, holders of each right (granted at one right per share of outstanding common stock) will be entitled to purchase for $20 one half a share of the Company’s common stock (or, in certain circumstances, $40 worth of cash, property or other securities of the Company for $20). The rights are neither exercisable nor traded separately from the Company’s common stock. The rights are only exercisable if a person or group becomes or attempts to become, the beneficial owner of 15% or more of the Company’s common stock. Under the terms of the Plan, such a person or group would not be entitled to the benefits of the rights. The Plan provides that the Board of Directors may redeem the outstanding rights at any time for $.0005 per right, and except with respect to the redemption price of the rights, any of the provisions of the Rights Agreement may be amended by the Board of Directors of the Company. The Plan provides for the Board of Directors to appoint a committee (the “TIDE Committee”) that is comprised of independent directors of the Company to review and evaluate the Shareholder Rights Plan in order to consider whether it continues to be in the interest of the Company and its shareholders at least every three years. Following each such review, the TIDE Committee will communicate its conclusions to the full Board of Directors, including any recommendation as to whether the Plan should be modified or the Rights should be redeemed. In January 2014, the TIDE Committee recommended to the full Board of Directors, and the Board of Directors approved, that the Plan be maintained as originally adopted. The purchase price applicable to each right and the redemption price have been adjusted under the terms of the Plan to reflect the two-for-one stock split implemented by the Company. |
Lease Commitments |
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Lease Commitments | Note 12. Lease Commitments The Company leases land, buildings and tower space under various non-cancelable agreements, which expire between the years 2016 and 2040 and require various minimum annual rental payments. These leases typically include renewal options and escalation clauses. In general, tower leases have five or ten year initial terms with four renewal terms of five years each. The other leases generally contain certain renewal options for periods ranging from five to twenty years. Future minimum lease payments under non-cancelable operating leases, including renewals that are reasonably assured at the inception of the lease, with initial variable lease terms in excess of one year as of December 31, 2015, are as follows:
The Company’s total rent expense was $16.9 million, $16.1 million, and $15.6 million for the years ended December 31, 2015, 2014 and 2013, respectively. As lessor, the Company has leased buildings, tower space and telecommunications equipment to other entities under various non-cancelable agreements, which require various minimum annual payments. The total minimum rental receipts at December 31, 2015 are as follows:
The Company’s total rent income was $6.3 million, $6.0 million, and $5.6 million for the years ended December 31, 2015, 2014 and 2013, respectively. Total rent income includes month-to-month leases which are excluded from the table above. |
Derivative Instruments and Hedging Activities |
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Derivative Instruments and Hedging Activities | Note 13. Derivative Instruments and Hedging Activities The Company’s objectives in using interest rate derivatives are to add stability to cash flows and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps (both those designated as cash flow hedges as well as those not designated as cash flow hedges) involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. In August 2010, the Company entered into a pay fixed, receive variable interest rate swap of $63.3 million of notional principal. This interest rate swap was not designated as a cash flow hedge. Changes in the fair value of interest rate swaps not designated as cash flow hedges were recorded in interest expense each reporting period. This swap expired in July 2013. Changes in fair value recorded in interest expense for the year ended December 31, 2013 was a decrease of $239 thousand. The Company entered into a pay fixed, receive variable interest rate swap of $174.6 million of initial notional principal in September 2012. This interest rate swap was designated as a cash flow hedge. The total outstanding notional amount of cash flow hedges was $152.8 million and $170.3 million as of December 31, 2015 and 2014, respectively. The outstanding notional amount decreases as the Company makes scheduled principal payments on the debt. The effective portion of changes in the fair value of interest rate swaps designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The Company uses its derivatives to hedge the variable cash flows associated with existing variable-rate debt. The ineffective portion of the change in fair value of the derivative is recognized directly in earnings through interest expense. No hedge ineffectiveness was recognized during any of the periods presented. Amounts reported in accumulated other comprehensive income related to the interest rate swap designated and that qualify as cash flow hedges are reclassified to interest expense as interest payments are accrued on the Company’s variable-rate debt. As of December 31, 2015, the Company estimates that $0.7 million will be reclassified as an increase to interest expense during the next twelve months due to the interest rate swap since the hedge interest rate exceeds the variable interest rate on the debt. The table below presents the fair value of the Company’s derivative financial instruments as well as its classification on the consolidated balance sheet as of December 31, 2015 and 2014 (in thousands):
The fair value of interest rate swaps is determined using a pricing model with inputs that are observable in the market (Level 2 fair value inputs). The table below presents changes in accumulated other comprehensive income by component for the twelve months ended December 31, 2015 (in thousands):
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Segment Reporting |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting | Note 14. Segment Reporting Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker. The Company has three reportable segments, which the Company operates and manages as strategic business units organized by lines of business: (1) Wireless, (2) Cable, and (3) Wireline. A fourth segment, Other, primarily includes Shenandoah Telecommunications Company, the parent holding company. The Wireless segment provides digital wireless service to a portion of a four-state area covering the region from Harrisburg, York and Altoona, Pennsylvania, to Harrisonburg, Virginia, as a Sprint PCS Affiliate. This segment also owns cell site towers built on leased land, and leases space on these towers to both affiliates and non-affiliated service providers. The Cable segment provides video, internet and voice services in Virginia, West Virginia and Maryland, and leases fiber optic facilities throughout southern Virginia and West Virginia. It does not include video, internet and voice services provided to customers in Shenandoah County, Virginia. The Wireline segment provides regulated and unregulated voice services, DSL internet access, and long distance access services throughout Shenandoah County and portions of Rockingham, Frederick, Warren and Augusta counties, Virginia. The segment also provides video services in portions of Shenandoah County, and leases fiber optic facilities throughout the northern Shenandoah Valley of Virginia, northern Virginia and adjacent areas along the Interstate 81 corridor through West Virginia, Maryland and portions of Pennsylvania. Prior year service and other revenue amounts in the Cable segment have been recast to conform to the current year presentation of video and internet equipment revenues being included in service revenue rather than other revenue. For the Wireline segment, prior year categories of access revenue, facilities lease revenue and equipment revenue have been combined into the new category of carrier access and fiber revenue to conform to current year presentation. Additionally, set-top box revenues included in other revenue in the prior year are now presented within service revenue. Year ended December 31, 2015 (In thousands)
Year ended December 31, 2014 (In thousands)
Year ended December 31, 2013 (In thousands)
A reconciliation of the total of the reportable segments’ operating income to consolidated income from continuing operations before income taxes is as follows:
The Company’s assets by segment are as follows: (In thousands)
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Quarterly Results (unaudited) |
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Quarterly Results (unaudited) [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Results (unaudited) | Note 15. Quarterly Results (unaudited) The following table shows selected quarterly results for the Company. (in thousands except per share data)
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Subsequent Events |
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Dec. 31, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 16. Subsequent Events Pending Acquisition of nTelos On August 10, 2015, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Gridiron Merger Sub, Inc., a wholly-owned subsidiary of the Company (“Merger Sub”), and NTELOS Holdings Corp. (“nTelos”), pursuant to which, subject to certain conditions, at the effective time of the Merger (as defined below), Merger Sub will merge with and into nTelos, with nTelos surviving the merger as the Company’s wholly-owned subsidiary (the “Merger”). Under the terms of the Merger Agreement, which has been approved by the stockholders of nTelos and unanimously approved by the boards of directors of the Company and nTelos, at the effective time of the Merger, each share of common stock, par value $0.01 per share, of nTelos (“nTelos Common Stock”) issued and outstanding immediately prior to the effective time of the Merger (other than shares held by the Company, nTelos and any subsidiaries (which will be cancelled) and shares owned by stockholders who properly exercised and perfected a demand for appraisal rights under Delaware law), will be converted into the right to receive $9.25 in cash, without interest (the “Merger Consideration”). This results in a total equity value of nTelos of approximately $208 million, after including shares and other equity-based awards expected to vest on change of control. In accordance with the Merger Agreement, the Company will repay all existing indebtedness of nTelos as of the closing of the Merger, which was approximately $520 million as of December 31, 2015. The completion of the Merger is subject to the satisfaction or waiver of certain conditions, including the approval of the transaction by the Federal Communications Commission and the consummation of the Sprint Transactions (as defined below). The Company expects the Merger to close at the end of the first quarter, or the early part of the second quarter, of 2016. On February 26, 2016, the Company entered into a letter agreement with nTelos pursuant to which the parties agreed to extend the date after which either the Company or nTelos may terminate the Merger Agreement, from February 29, 2016 to June 28, 2016, as permitted by the Merger Agreement. While the parties believe that closing will occur at the end of the first quarter or early in the second quarter, the purpose of the extension is to allow the parties additional time to satisfy certain conditions in order to complete the Merger, which would not have been satisfied by the end of February 29, 2016. The Company expects to use a portion of the net proceeds from the Facilities (as defined in Note 4) to fund the Merger Consideration, refinance, in full, all indebtedness outstanding under the Company’s existing credit agreement, repay all existing indebtedness of nTelos and pay fees and expenses in connection with the Merger. Operating results for the year ended December 31, 2015 included transaction costs totaling $2.7 million and financing costs totaling $7.9 million related to the Merger. Transaction costs were recorded to general and administrative expenses and financing costs were recorded to deferred charges and other assets as deferred financing costs. Pending Sprint Transactions In connection with the execution of the Merger Agreement, on August 10, 2015, Shenandoah Personal Communications, LLC, a subsidiary of the Company, and SprintCom, Inc. (“SprintCom”), an affiliate of Sprint Corporation, entered into a Master Agreement (the “Master Agreement”) and, along with certain affiliates of Sprint Corporation, entered into Addendum XVIII to the Sprint PCS Management Agreement (the “Affiliate Addendum”). The closing of the transactions contemplated by the Master Agreement and the effectiveness of certain provisions of the Affiliate Addendum (the “Sprint Transactions”) will occur simultaneously with, and are conditioned upon, the consummation of the Merger. These transactions include transferring all acquired spectrum assets and customers to Sprint, immediately cancelling nTelos’ wholesale services agreement with Sprint, expanding the Company’s affiliate service territory to include virtually all of nTelos’ western markets, transferring certain leases for Sprint’s retail stores located in the expanded territory to us, and incorporating all of nTelos’ and Sprint’s customers in this expanded territory into the Company’s wireless subscriber base. Operating results for the year ended December 31, 2015 included transaction costs totaling $0.8 million related to the Sprint Transactions. Transaction costs were recorded to general and administrative expenses. |
Summary of Significant Accounting Policies (Policies) |
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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. The Company has no involvement with variable interest entities. The Company accounts for investments over which it has significant influence but not a controlling financial interest using the equity method of accounting. On October 19, 2015, the Board of Directors declared a two-for-one stock split, effective for shareholders of record as of the close of business on December 31, 2015. Shareholders received one additional share of common stock of the Company for each share held on the record date. All share and per share data presented herein for prior periods have been retroactively amended to reflect the effect of the additional shares issued and outstanding as a result of the stock split. |
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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. |
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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. Cash equivalents included $40.1 million and $40.0 million invested in institutional cash management funds at December 31, 2015 and 2014, respectively. The Company places its temporary cash investments with high credit quality financial institutions. Generally, these investments are in excess of FDIC or SIPC insurance limits. |
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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, 2015, 2014 and 2013 are summarized below (in thousands):
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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 equity 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 fair value using net asset value per share. The Company has elected to recognize unrealized gains and losses on investments carried at fair value in earnings, pursuant to the fair value option in Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 820, Fair Value Measurement. 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. This category includes required investments to obtain services, primarily with CoBank. 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, but less than 50%, 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. Equity method investments include one investment limited partnership and several smaller investments in pooled projects. |
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Property, plant and equipment: | Property, plant and equipment: Property, plant and equipment is stated at cost less accumulated depreciation and amortization. The Company capitalizes all costs associated with the purchase, deployment and installation of property, plant and equipment, including interest costs 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. |
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Valuation of long-lived assets: | Valuation of long-lived assets: Long‑lived assets, such as property, plant, and equipment, and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. |
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Fair value: | Fair value: Fair value is defined as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial instruments presented on the consolidated balance sheets for which the carrying value approximates fair value include: cash and cash equivalents, receivables, investments carried at fair value, payables, accrued liabilities, interest rate swaps and variable-rate long-term debt. The Company measures its interest rate swaps at fair value and recognizes such derivative instruments as either assets or liabilities on the Company’s consolidated balance sheet. Changes in the fair value of the swap acquired in 2012 are recognized in other comprehensive income, as this swap was designated as a cash flow hedge for accounting purposes. Changes in the fair value of the swap acquired in 2010 were recognized in interest expense, as the Company did not designate this swap agreement as a cash flow hedge for accounting purposes. This swap expired in 2013. The Company entered into these swaps to manage a portion of its exposure to interest rate movements by converting a portion of its variable rate long-term debt to fixed rate debt. |
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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. The terms associated with its operating leases, and applicable zoning ordinances of certain jurisdictions, define the Company’s obligations which 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. During the third quarter of 2015, new information was received regarding the cost to remove tower site improvements. The Company recorded an adjustment to the wireless segment asset retirement obligation liabilities to reflect changes in the estimated future cash flows underlying the obligation to remove tower site improvements. Changes in the liability for asset removal obligations for the years ended December 31, 2015, 2014 and 2013 are summarized below (in thousands):
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Goodwill and intangible assets: | 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 an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. The Company carries an immaterial amount of goodwill in the Wireline segment. Intangible assets with indefinite lives, primarily cable franchise rights, are assessed annually, at November 30, for impairment and in interim periods if certain triggering events occur indicating that the carrying value may be impaired. The Company determined that no impairment of Cable segment franchise rights was required for the years ended December 31, 2015, 2014 and 2013. The fair value of cable franchise rights, which is determined by a “greenfield” analysis (Level 3 fair value), was determined to exceed its $64.1 million carrying value by approximately $11.3 million at December 31, 2015, and $5.3 million at December 31, 2014. Intangible assets consist of the following at December 31, 2015 and 2014 (in thousands):
For the years ended December 31, 2015, 2014 and 2013, amortization expense related to intangible assets was approximately $1.4 million, $2.6 million and $4.1 million, respectively. Aggregate amortization expense for intangible assets for the periods shown is expected to be as follows:
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Deferred charges and other assets: | Deferred charges and other assets: Deferred charges and other assets consist of derivatives used for hedging purposes and debt issuance costs, which are amortized using the effective yield method over the life of the underlying debt agreement. |
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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. Participant balances and earnings thereon continue to be maintained for this plan, but no new participants or contributions have been added to the plan since 2010. 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 annual contribution amount. 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 common stock in the plan’s investment portfolio. |
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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, 2015 and 2014, a valuation allowance against certain state deferred tax assets is necessary, as discussed in Note 5. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company’s policy is to record interest related to unrecognized tax benefits in interest expense and penalties in selling, general, and administrative expenses. |
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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, since August 2013, a 14% Net Service Fee (increased from 12%), retained by Sprint. Prepaid wireless service revenues are reported net of a 6% Management Fee retained by Sprint. |
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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 1,312 thousand, 1,394 thousand, and 1,496 thousand shares and options outstanding at December 31, 2015, 2014 and 2013, respectively, 92 thousand, 22 thousand and 258 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, 2015, 2014 and 2013:
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Contingencies: | Contingencies: The Company is involved in various claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s consolidated financial position, results of operations, or liquidity. |
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Recently Issued Accounting Standards: | Recently Issued Accounting Standards: In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers”, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. In August 2015, the FASB issued ASU No. 2015-14, delaying the effective date of ASU 2014-09. As amended, the new standard is effective for the Company on January 1, 2018. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting. In February 2015, the FASB issued ASU No. 2015-2, “Consolidation (Topic 820): Amendments to the Consolidation Analysis”. The ASU provides a revised consolidation model for all reporting entities to use in evaluating whether they should consolidate certain legal entities. All legal entities will be subject to reevaluation under this revised consolidation model. The revised consolidation model, among other things, (i) modifies the evaluation of whether limited partnerships and similar legal entities are VIEs or voting interest entities, (ii) eliminates the presumption that a general partner should consolidate a limited partnership, and (iii) modifies the consolidation analysis of reporting entities that are involved with VIEs through fee arrangements and related party relationships. ASU 2015-2 is effective for fiscal years, and interim reporting periods within those fiscal years, beginning after September 1, 2016 (fiscal 2017). The Company is still evaluating what impact, if any, this ASU will have on the Company’s consolidated financial position, results of operations or cash flows. In April 2015, the FASB issued ASU No. 2015-03, “Simplifying the Presentation of Debt Issuance Costs”, which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. This ASU requires retrospective adoption and will be effective for the Company beginning on January 1, 2016. Early adoption is permitted. The Company has not elected to early adopt and does not expect this adoption to have a material impact on its consolidated financial statements. In November 2015, the FASB issued ASU No. 2015-17, “Balance Sheet Classification of Deferred Taxes”, to simplify the presentation of deferred income taxes by requiring deferred tax assets and liabilities to be classified as noncurrent on the balance sheet. The amendments in this update are effective for financial statements issued for annual periods beginning after December 15, 2016. Early adoption is permitted. The Company will not elect to early adopt and does not expect this adoption to have a material impact on its consolidated financial statements. |
Summary of Significant Accounting Policies (Tables) |
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Summary of Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Allowance for Doubtful Accounts for Trade Accounts Receivable | Changes in the allowance for doubtful accounts for trade accounts receivable for the years ended December 31, 2015, 2014 and 2013 are summarized below (in thousands):
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Changes in Liability for Asset Removal Obligations | Changes in the liability for asset removal obligations for the years ended December 31, 2015, 2014 and 2013 are summarized below (in thousands):
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Intangible Assets | Intangible assets consist of the following at December 31, 2015 and 2014 (in thousands):
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Amortization Expense for Intangible Assets | Aggregate amortization expense for intangible assets for the periods shown is expected to be as follows:
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Computation of Basic and Diluted Earnings per Share | The following tables show the computation of basic and diluted earnings per share for the years ended December 31, 2015, 2014 and 2013:
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Investments (Tables) |
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Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments Carried at Fair Value | At December 31, 2015 and 2014, investments carried at fair value consisted of:
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Other Investments | At December 31, 2015 and 2014, other investments, comprised of equity securities which do not have readily determinable fair values, consist of the following:
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Property, Plant and Equipment (Tables) |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment | Property, plant and equipment consisted of the following at December 31, 2015 and 2014:
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Long-Term Debt and Revolving Lines of Credit (Tables) |
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Long-Term Debt and Revolving Lines of Credit [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-term Debt | Total debt consists of the following at December 31, 2015 and 2014:
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Financial Covenants in Credit Agreements | As shown below, as of December 31, 2015, the Company was in compliance with the financial covenants in its credit agreements.
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Maturities of Long-term Debt | The aggregate maturities of long-term debt for each of the five years subsequent to December 31, 2015 are as follows:
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Income Taxes (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Allocation of Income Tax Expense | Total income taxes for the years ended December 31, 2015, 2014 and 2013 were allocated as follows:
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Components of Federal and State Income Taxes | The provision for the federal and state income taxes attributable to income from continuing operations consists of the following components:
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Reconciliation of Income Taxes | A reconciliation of income taxes determined by applying the federal and state tax rates to income from continuing operations is as follows for the years ended December 31, 2015, 2014 and 2013:
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Deferred Tax Assets and Liabilities | Net deferred tax assets and liabilities consist of the following temporary differences at December 31, 2015 and 2014:
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Stock Incentive Plans (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Award [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Outstanding Options | A summary of outstanding options at December 31, 2015, 2014 and 2013, and changes during the years ended on those dates, is as follows:
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Share Grant Activity | A summary of outstanding share grants at December 31, 2015, 2014, and 2013, and changes during the years ended on those dates, is as follows:
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Stock Options [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Award [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options Valuation Assumptions | The fair values of these grants were estimated at the respective grant dates using a Black-Scholes option-pricing model with the following weighted-average assumptions:
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Non Vested Shares [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Award [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options Valuation Assumptions | The following assumptions were utilized in the valuation:
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Lease Commitments (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||
Lease Commitments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
Future Minimum Lease Payments | Future minimum lease payments under non-cancelable operating leases, including renewals that are reasonably assured at the inception of the lease, with initial variable lease terms in excess of one year as of December 31, 2015, are as follows:
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Future Minimum Payments Receivable | The total minimum rental receipts at December 31, 2015 are as follows:
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Derivative Instruments and Hedging Activities (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivative Financial Instruments as well as its Classification on the Consolidated Balance Sheet | The table below presents the fair value of the Company’s derivative financial instruments as well as its classification on the consolidated balance sheet as of December 31, 2015 and 2014 (in thousands):
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Schedule of Accumulated Other Comprehensive Income (Loss) | The table below presents changes in accumulated other comprehensive income by component for the twelve months ended December 31, 2015 (in thousands):
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Segment Reporting (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Selected Financial Data for Segments | For the Wireline segment, prior year categories of access revenue, facilities lease revenue and equipment revenue have been combined into the new category of carrier access and fiber revenue to conform to current year presentation. Additionally, set-top box revenues included in other revenue in the prior year are now presented within service revenue. Year ended December 31, 2015 (In thousands)
Year ended December 31, 2014 (In thousands)
Year ended December 31, 2013 (In thousands)
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Reconciliation of Income from Continuing Operations from Segments to Consolidated | A reconciliation of the total of the reportable segments’ operating income to consolidated income from continuing operations before income taxes is as follows:
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Assets by Segment | The Company’s assets by segment are as follows: (In thousands)
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Quarterly Results (unaudited) (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Results (unaudited) [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Quarterly Financial Information | The following table shows selected quarterly results for the Company. (in thousands except per share data)
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Summary of Significant Accounting Policies, Earnings per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
Sep. 30, 2014 |
Jun. 30, 2014 |
Mar. 31, 2014 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
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Earnings Per Share [Abstract] | |||||||||||
Stock options outstanding (in shares) | 1,312 | 1,394 | 1,312 | 1,394 | 1,496 | ||||||
Antidilutive shares and options excluded from computation of earnings per share (in shares) | 92 | 92 | 258 | ||||||||
Net income | $ 12,108 | $ 7,996 | $ 10,474 | $ 10,286 | $ 8,649 | $ 8,003 | $ 8,615 | $ 8,616 | $ 40,864 | $ 33,883 | $ 29,586 |
Weighted average shares outstanding (in shares) | 48,388 | 48,198 | 48,002 | ||||||||
Basic income per share (in dollars per share) | $ 0.24 | $ 0.17 | $ 0.22 | $ 0.21 | $ 0.18 | $ 0.16 | $ 0.18 | $ 0.18 | $ 0.84 | $ 0.70 | $ 0.62 |
Effect of stock options outstanding [Abstract] | |||||||||||
Assumed exercise, at the strike price at the beginning of year (in shares) | 1,302 | 1,410 | 970 | ||||||||
Assumed repurchase of shares under treasury stock method (in shares) | (666) | (888) | (742) | ||||||||
Diluted weighted average shares (in shares) | 49,024 | 48,720 | 48,230 | ||||||||
Diluted income per share (in dollars per share) | $ 0.24 | $ 0.17 | $ 0.21 | $ 0.21 | $ 0.18 | $ 0.16 | $ 0.18 | $ 0.18 | $ 0.83 | $ 0.70 | $ 0.61 |
Significant Contractual Relationship (Details) $ in Millions |
12 Months Ended | 29 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2015
USD ($)
Megahertz
Renewal
$ / shares
|
Dec. 31, 2014
USD ($)
|
Dec. 31, 2013
USD ($)
|
Dec. 31, 2015
Megahertz
|
|
Significant Contractual Relationship [Line Items] | ||||
Additional term of contract | 5 years | |||
Initial term of contract | 20 years | |||
Number of contract renewals | Renewal | 3 | |||
Length of renewals | 10 years | |||
Right or obligation to sell business | 80.00% | |||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Expected future net service fee | 8.60% | 14.00% | ||
One-time fee per device for the amended Sprint agreement | $ / shares | 9.23 | |||
Service fees incurred during the period | $ | $ 1.1 | $ 1.1 | $ 1.3 | |
Management fee on post paid services | 8.00% | |||
Minimum [Member] | ||||
Significant Contractual Relationship [Line Items] | ||||
Megahertz spectrum used | 800 | 800 | ||
Maximum [Member] | ||||
Significant Contractual Relationship [Line Items] | ||||
Megahertz spectrum used | 1,900 | 1,900 | ||
Additional term of contract | 45 years |
Related Party Transactions (Details) - ValleyNet [Member] - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Related Party Transaction [Line Items] | |||
Revenue from related parties | $ 2.7 | $ 3.0 | $ 3.0 |
Accounts receivable from related parties | 0.2 | 0.2 | |
Expenses from transactions with related party | $ 2.4 | $ 2.3 | $ 1.7 |
Retirement Plans (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
401 (k) Plan [Member] | |||
Defined Contribution Plans [Line Items] | |||
Contribution to plan | $ 2.6 | $ 2.5 | $ 2.3 |
SERP [Member] | |||
Defined Contribution Plans [Line Items] | |||
Liability due to participants | $ 2.7 | $ 2.7 |
Major Customer (Details) - Operating Revenues [Member] - Sprint Nextel [Member] - Customer |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Concentration Risk [Line Items] | |||
Number of major customers | 1 | ||
Concentration risk | 56.00% | 58.00% | 59.00% |
Maximum [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk | 1.00% | 1.00% | 1.00% |
Shareholder Rights Plan (Details) |
12 Months Ended | ||
---|---|---|---|
Oct. 19, 2015 |
Dec. 31, 2015 |
Feb. 08, 2008
$ / shares
shares
|
|
Shareholder Rights Plan [Abstract] | |||
Number of rights granted per share owned (in shares) | shares | 1 | ||
Price per half share of common stock (in dollars per share) | $ 20 | ||
Alternate price per half share of common stock (in dollars per share) | $ 40 | ||
Beneficial ownership that triggers the shareholder rights, Minimum | 15.00% | ||
Redemption price of rights (in dollars per right) | $ 0.005 | ||
Time period for independent directors to review the Shareholders' Rights Plan | 3 years | ||
Stock split ratio | 2 | 2 |
Quarterly Results (unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
Sep. 30, 2014 |
Jun. 30, 2014 |
Mar. 31, 2014 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Quarterly Results (unaudited) [Abstract] | |||||||||||
Operating revenues | $ 87,285 | $ 85,212 | $ 85,701 | $ 84,287 | $ 82,810 | $ 82,268 | $ 81,416 | $ 80,452 | $ 342,485 | $ 326,946 | $ 308,942 |
Operating income | 21,721 | 15,089 | 18,750 | 18,526 | 16,326 | 14,144 | 15,793 | 15,680 | 74,086 | 61,943 | 55,407 |
Net income | $ 12,108 | $ 7,996 | $ 10,474 | $ 10,286 | $ 8,649 | $ 8,003 | $ 8,615 | $ 8,616 | $ 40,864 | $ 33,883 | $ 29,586 |
Net income per share - basic (in dollars per share) | $ 0.24 | $ 0.17 | $ 0.22 | $ 0.21 | $ 0.18 | $ 0.16 | $ 0.18 | $ 0.18 | $ 0.84 | $ 0.70 | $ 0.62 |
Net income per share - diluted (in dollars per share) | $ 0.24 | $ 0.17 | $ 0.21 | $ 0.21 | $ 0.18 | $ 0.16 | $ 0.18 | $ 0.18 | $ 0.83 | $ 0.70 | $ 0.61 |
Subsequent Events (Details) - USD ($) $ / shares in Units, $ in Thousands |
Aug. 10, 2015 |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|---|
Subsequent Event [Line Items] | |||
Common stock, par value (in dollars per share) | $ 0 | $ 0 | |
NTELOS Holdings Corporation [Member] | |||
Subsequent Event [Line Items] | |||
Common stock, par value (in dollars per share) | $ 0.01 | ||
Share price (in dollars per share) | $ 9.25 | ||
Total equity value | $ 208,000 | ||
Total debt outstanding | $ 520,000 | ||
Transaction cost | 2,700 | ||
Financing cost | 7,900 | ||
Sprint Com [Member] | General and Administrative Expenses [Member] | |||
Subsequent Event [Line Items] | |||
Transaction cost | $ 800 |
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