☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2017 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from__________ to __________ |
VIRGINIA | 54-1162807 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Large accelerated filer ☑ | Accelerated filer ☐ | Non-accelerated filer ☐ |
Smaller reporting company☐ | Emerging growth company☐ |
Page Numbers | ||||
PART I. | FINANCIAL INFORMATION | |||
Item 1. | Financial Statements | |||
- | ||||
- | ||||
- | ||||
Item 2. | - | |||
Item 3. | ||||
Item 4. | ||||
PART II. | OTHER INFORMATION | |||
Item 1A. | ||||
Item 2. | ||||
Item 6. | ||||
ASSETS | March 31, 2017 | December 31, 2016 | ||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 39,927 | $ | 36,193 | ||||
Accounts receivable, net | 68,709 | 69,789 | ||||||
Inventory, net | 24,855 | 39,043 | ||||||
Prepaid expenses and other | 16,989 | 16,440 | ||||||
Total current assets | 150,480 | 161,465 | ||||||
Investments, including $3,058 and $2,907 carried at fair value | 10,607 | 10,276 | ||||||
Property, plant and equipment, net | 689,948 | 698,122 | ||||||
Other Assets | ||||||||
Intangible assets, net | 443,308 | 454,532 | ||||||
Goodwill | 144,001 | 145,256 | ||||||
Deferred charges and other assets, net | 14,645 | 14,756 | ||||||
Total assets | $ | 1,452,989 | $ | 1,484,407 |
LIABILITIES AND SHAREHOLDERS’ EQUITY | March 31, 2017 | December 31, 2016 | ||||||
Current Liabilities | ||||||||
Current maturities of long-term debt, net of unamortized loan fees | $ | 38,124 | $ | 32,041 | ||||
Accounts payable | 25,390 | 72,810 | ||||||
Advanced billings and customer deposits | 21,029 | 20,427 | ||||||
Accrued compensation | 3,678 | 9,465 | ||||||
Income taxes payable | 3,958 | 435 | ||||||
Accrued liabilities and other | 18,174 | 29,085 | ||||||
Total current liabilities | 110,353 | 164,263 | ||||||
Long-term debt, less current maturities, net of unamortized loan fees | 810,873 | 797,224 | ||||||
Other Long-Term Liabilities | ||||||||
Deferred income taxes | 149,763 | 151,837 | ||||||
Deferred lease payable | 19,230 | 18,042 | ||||||
Asset retirement obligations | 19,386 | 15,666 | ||||||
Retirement plan obligations | 17,892 | 17,738 | ||||||
Other liabilities | 26,057 | 23,743 | ||||||
Total other long-term liabilities | 232,328 | 227,026 | ||||||
Commitments and Contingencies | ||||||||
Shareholders’ Equity | ||||||||
Common stock | 46,083 | 45,482 | ||||||
Retained earnings | 245,965 | 243,624 | ||||||
Accumulated other comprehensive income, net of taxes | 7,387 | 6,788 | ||||||
Total shareholders’ equity | 299,435 | 295,894 | ||||||
Total liabilities and shareholders’ equity | $ | 1,452,989 | $ | 1,484,407 |
Three Months Ended March 31, | ||||||||
2017 | 2016 | |||||||
Operating revenues | $ | 153,880 | $ | 92,571 | ||||
Operating expenses: | ||||||||
Cost of goods and services, exclusive of depreciation and amortization shown separately below | 53,761 | 31,762 | ||||||
Selling, general and administrative, exclusive of depreciation and amortization shown separately below | 40,153 | 21,426 | ||||||
Integration and acquisition expenses | 4,489 | 332 | ||||||
Depreciation and amortization | 44,804 | 17,739 | ||||||
Total operating expenses | 143,207 | 71,259 | ||||||
Operating income | 10,673 | 21,312 | ||||||
Other income (expense): | ||||||||
Interest expense | (9,100 | ) | (1,619 | ) | ||||
Gain on investments, net | 120 | 88 | ||||||
Non-operating income, net | 1,255 | 468 | ||||||
Income before income taxes | 2,948 | 20,249 | ||||||
Income tax expense | 607 | 6,368 | ||||||
Net income | 2,341 | 13,881 | ||||||
Other comprehensive income (loss): | ||||||||
Unrealized gain (loss) on interest rate hedge, net of tax | 599 | (1,048 | ) | |||||
Comprehensive income | $ | 2,940 | $ | 12,833 | ||||
Earnings per share: | ||||||||
Basic | $ | 0.05 | $ | 0.29 | ||||
Diluted | $ | 0.05 | $ | 0.28 | ||||
Weighted average shares outstanding, basic | 49,050 | 48,563 | ||||||
Weighted average shares outstanding, diluted | 49,834 | 49,249 |
Shares | Common Stock | Retained Earnings | Accumulated Other Comprehensive Income, net of tax | Total | |||||||||||||||
Balance, December 31, 2015 | 48,475 | $ | 32,776 | $ | 256,747 | $ | 415 | $ | 289,938 | ||||||||||
Net loss | — | — | (895 | ) | — | (895 | ) | ||||||||||||
Other comprehensive gain, net of tax | — | — | — | 6,373 | 6,373 | ||||||||||||||
Dividends declared ($0.25 per share) | — | — | (12,228 | ) | — | (12,228 | ) | ||||||||||||
Dividends reinvested in common stock | 19 | 524 | — | — | 524 | ||||||||||||||
Stock based compensation | — | 3,506 | — | — | 3,506 | ||||||||||||||
Stock options exercised | 371 | 3,359 | — | — | 3,359 | ||||||||||||||
Common stock issued for share awards | 190 | — | — | — | — | ||||||||||||||
Common stock issued | 2 | 14 | — | — | 14 | ||||||||||||||
Common stock issued to acquire non-controlling interests of nTelos | 76 | 10,400 | — | — | 10,400 | ||||||||||||||
Common stock repurchased | (198 | ) | (5,097 | ) | — | — | (5,097 | ) | |||||||||||
Balance, December 31, 2016 | 48,935 | $ | 45,482 | $ | 243,624 | $ | 6,788 | $ | 295,894 | ||||||||||
Net income | — | — | 2,341 | — | 2,341 | ||||||||||||||
Other comprehensive gain, net of tax | — | — | — | 599 | 599 | ||||||||||||||
Stock based compensation | — | 1,822 | — | — | 1,822 | ||||||||||||||
Common stock issued for share awards | 129 | — | — | — | — | ||||||||||||||
Common stock issued | 1 | 5 | — | — | 5 | ||||||||||||||
Common stock issued to acquire non-controlling interests of nTelos | 76 | — | — | — | — | ||||||||||||||
Common stock repurchased | (43 | ) | (1,226 | ) | — | — | (1,226 | ) | |||||||||||
Balance, March 31, 2017 | 49,098 | $ | 46,083 | $ | 245,965 | $ | 7,387 | $ | 299,435 |
Three Months Ended March 31, | ||||||||
2017 | 2016 | |||||||
Cash Flows From Operating Activities | ||||||||
Net income | $ | 2,341 | $ | 13,881 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation | 37,878 | 17,454 | ||||||
Amortization reflected as operating expense | 6,926 | 285 | ||||||
Amortization reflected as contra revenue | 4,978 | — | ||||||
Amortization reflected as rent expense | 258 | — | ||||||
Provision for bad debt | 420 | 345 | ||||||
Straight line adjustment to management fee revenue | 4,206 | — | ||||||
Stock based compensation expense | 1,566 | 1,048 | ||||||
Deferred income taxes | (2,910 | ) | (1,489 | ) | ||||
Net gain on disposal of equipment | (28 | ) | (15 | ) | ||||
Unrealized gain on investments | (120 | ) | (16 | ) | ||||
Net gains from patronage and equity investments | (200 | ) | (210 | ) | ||||
Amortization of long term debt issuance costs | 1,202 | 132 | ||||||
Other | — | 3,039 | ||||||
Changes in assets and liabilities: | ||||||||
(Increase) decrease in: | ||||||||
Accounts receivable | 1,629 | 2,470 | ||||||
Inventory, net | 14,188 | (267 | ) | |||||
Other assets | (190 | ) | 988 | |||||
Increase (decrease) in: | ||||||||
Accounts payable | (39,399 | ) | 1,895 | |||||
Income taxes payable | 3,523 | 6,981 | ||||||
Deferred lease payable | 1,331 | 208 | ||||||
Other deferrals and accruals | (13,101 | ) | (3,559 | ) | ||||
Net cash provided by operating activities | 24,498 | 43,170 | ||||||
Cash Flows From Investing Activities | ||||||||
Acquisition of property, plant and equipment | (38,587 | ) | (20,537 | ) | ||||
Proceeds from sale of equipment | 117 | 145 | ||||||
Cash distributions from investments | 3 | 45 | ||||||
Additional contributions to investments | (14 | ) | — | |||||
Cash disbursed for acquisition | — | (2,480 | ) | |||||
Net cash used in investing activities | (38,481 | ) | (22,827 | ) |
Three Months Ended March 31, | ||||||||
2017 | 2016 | |||||||
Cash Flows From Financing Activities | ||||||||
Principal payments on long-term debt | $ | (6,062 | ) | $ | (5,750 | ) | ||
Amounts borrowed under debt agreements | 25,000 | — | ||||||
Cash paid for debt issuance costs | — | (1,528 | ) | |||||
Repurchases of common stock | (1,226 | ) | (3,526 | ) | ||||
Proceeds from issuances of common stock | 5 | 2,809 | ||||||
Net cash provided by/(used in) financing activities | 17,717 | (7,995 | ) | |||||
Net increase in cash and cash equivalents | 3,734 | 12,348 | ||||||
Cash and cash equivalents: | ||||||||
Beginning | 36,193 | 76,812 | ||||||
Ending | $ | 39,927 | $ | 89,160 | ||||
Supplemental Disclosures of Cash Flow Information | ||||||||
Cash payments for: | ||||||||
Interest, net of capitalized interest of $577 and $146, respectively | $ | 8,380 | $ | 1,632 | ||||
Income taxes paid, net of refunds received | $ | — | $ | 876 |
1. | Basis of Presentation |
2. | Acquisition of NTELOS Holdings Corp. and Exchange with Sprint |
December 31, 2016 | Purchase Accounting Adjustments | March 31, 2017 | |||||||
Goodwill - Wireline segment | $ | 10 | $ | — | $ | 10 | |||
Goodwill - Cable segment | 104 | — | 104 | ||||||
Goodwill - Wireless segment | 145,142 | (1,255 | ) | 143,887 | |||||
Goodwill as of March 31, 2017 | $ | 145,256 | $ | (1,255 | ) | $ | 144,001 |
March 31, 2016 | ||||
Operating revenues | $ | 173,248 | ||
Income before income taxes | $ | 16,905 |
3. | Property, Plant and Equipment |
March 31, 2017 | December 31, 2016 | |||||||
Plant in service | $ | 1,124,446 | $ | 1,085,318 | ||||
Plant under construction | 61,980 | 73,759 | ||||||
1,186,426 | 1,159,077 | |||||||
Less accumulated amortization and depreciation | 496,478 | 460,955 | ||||||
Net property, plant and equipment | $ | 689,948 | $ | 698,122 |
4. | Earnings per share |
5. | Investments |
3/31/2017 | 12/31/2016 | ||||||
Cost method: | (in thousands) | ||||||
CoBank | $ | 6,296 | $ | 6,177 | |||
Other – Equity in other telecommunications partners | 740 | 742 | |||||
7,036 | 6,919 | ||||||
Equity method: | |||||||
Other | 513 | 450 | |||||
Total other investments | $ | 7,549 | $ | 7,369 |
6. | Financial Instruments |
7. | Derivative Instruments, Hedging Activities and Accumulated Other Comprehensive Income |
Derivatives | ||||||||||
Fair Value as of | ||||||||||
Balance Sheet Location | March 31, 2017 | December 31, 2016 | ||||||||
Derivatives designated as hedging instruments: | ||||||||||
Interest rate swap | ||||||||||
Prepaid expenses and other | $ | 237 | $ | — | ||||||
Deferred charges and other assets, net | 11,958 | 12,118 | ||||||||
Accrued liabilities and other | — | (895 | ) | |||||||
Total derivatives designated as hedging instruments | $ | 12,195 | $ | 11,223 |
Gains on Cash Flow Hedges | Income Tax Expense | Accumulated Other Comprehensive Income | ||||||||||
Balance as of December 31, 2016 | $ | 11,223 | $ | (4,435 | ) | $ | 6,788 | |||||
Other comprehensive income before reclassifications | 541 | (208 | ) | 333 | ||||||||
Amounts reclassified from accumulated other comprehensive income (to interest expense) | 431 | (165 | ) | 266 | ||||||||
Net current period other comprehensive income | 972 | (373 | ) | 599 | ||||||||
Balance as of March 31, 2017 | $ | 12,195 | $ | (4,808 | ) | $ | 7,387 |
March 31, 2017 | December 31, 2016 | ||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net | Gross Carrying Amount | Accumulated Amortization | Net | ||||||||||||||||||
Non-amortizing intangibles: | |||||||||||||||||||||||
Cable franchise rights | $ | 64,334 | $ | — | $ | 64,334 | $ | 64,334 | $ | — | $ | 64,334 | |||||||||||
Railroad crossing rights | 97 | — | 97 | 97 | — | 97 | |||||||||||||||||
64,431 | — | 64,431 | 64,431 | — | 64,431 | ||||||||||||||||||
Finite-lived intangibles: | |||||||||||||||||||||||
Affiliate contract expansion | 284,102 | (19,008 | ) | 265,094 | 284,102 | (14,030 | ) | 270,072 | |||||||||||||||
Acquired subscribers – wireless | 120,855 | (25,387 | ) | 95,468 | 120,855 | (18,738 | ) | 102,117 | |||||||||||||||
Favorable leases - wireless | 16,950 | (1,531 | ) | 15,419 | 16,950 | (1,130 | ) | 15,820 | |||||||||||||||
Acquired subscribers – cable | 25,265 | (24,802 | ) | 463 | 25,265 | (24,631 | ) | 634 | |||||||||||||||
Other intangibles | 3,230 | (797 | ) | 2,433 | 2,212 | (754 | ) | 1,458 | |||||||||||||||
Total finite-lived intangibles | 450,402 | (71,525 | ) | 378,877 | 449,384 | (59,283 | ) | 390,101 | |||||||||||||||
Total intangible assets | $ | 514,833 | $ | (71,525 | ) | $ | 443,308 | $ | 513,815 | $ | (59,283 | ) | $ | 454,532 |
9. | Accrued and Other liabilities |
March 31, 2017 | December 31, 2016 | |||||||
Sales and property taxes payable | $ | 4,742 | $ | 6,628 | ||||
Severance accrual, current portion | 3,553 | 4,267 | ||||||
Asset retirement obligations, current portion | 884 | 5,841 | ||||||
Other current liabilities | 8,995 | 12,349 | ||||||
Accrued liabilities and other | $ | 18,174 | $ | 29,085 |
March 31, 2017 | December 31, 2016 | |||||||
Non-current portion of deferred revenues | $ | 7,735 | $ | 8,933 | ||||
Straight-line management fee waiver | 16,180 | 11,974 | ||||||
Other | 2,142 | 2,836 | ||||||
Other liabilities | $ | 26,057 | $ | 23,743 |
(In thousands) | March 31, 2017 | December 31, 2016 | ||||||
Term loan A-1 | $ | 466,813 | $ | 472,875 | ||||
Term loan A-2 | 400,000 | 375,000 | ||||||
866,813 | 847,875 | |||||||
Less: unamortized loan fees | 17,816 | 18,610 | ||||||
Total debt, net of unamortized loan fees | $ | 848,997 | $ | 829,265 | ||||
Current maturities of long term debt, net of unamortized loan fees | $ | 38,124 | $ | 32,041 | ||||
Long-term debt, less current maturities, net of unamortized loan fees | $ | 810,873 | $ | 797,224 |
• | 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 3.75 to 1.00 from the closing date through December 30, 2018, then 3.25 to 1.00 through December 30, 2019, and 3.00 to 1.00 thereafter; |
• | a minimum debt service coverage ratio, defined as EBITDA minus certain cash taxes divided by the sum of all scheduled principal payments on the Term Loans and scheduled principal payments on other indebtedness plus cash interest expense, greater than 2.00 to 1.00; |
• | the Company must maintain a minimum liquidity balance, defined as availability under the revolver facility plus unrestricted cash and cash equivalents on deposit in a deposit account for which a control agreement has been delivered to the administrative agent under the 2016 credit agreement, of greater than $25 million at all times. |
Actual | Covenant Requirement | ||
Total Leverage Ratio | 2.88 | 3.75 or Lower | |
Debt Service Coverage Ratio | 4.56 | 2.00 or Higher | |
Minimum Liquidity Balance | $113 million | $25 million or Higher |
11. | Segment Information |
Wireless | Cable | Wireline | Other | Eliminations | Consolidated Totals | |||||||||||||||||||
External revenues | ||||||||||||||||||||||||
Service revenues | $ | 108,186 | $ | 26,411 | $ | 5,048 | $ | — | $ | — | $ | 139,645 | ||||||||||||
Other | 6,042 | 2,035 | 6,158 | — | — | 14,235 | ||||||||||||||||||
Total external revenues | 114,228 | 28,446 | 11,206 | — | — | 153,880 | ||||||||||||||||||
Internal revenues | 1,235 | 567 | 7,948 | — | (9,750 | ) | — | |||||||||||||||||
Total operating revenues | 115,463 | 29,013 | 19,154 | — | (9,750 | ) | 153,880 | |||||||||||||||||
Operating expenses | ||||||||||||||||||||||||
Costs of goods and services, exclusive of depreciation and amortization shown separately below | 38,318 | 15,228 | 9,273 | — | (9,058 | ) | 53,761 | |||||||||||||||||
Selling, general and administrative, exclusive of depreciation and amortization shown separately below | 28,464 | 4,858 | 1,676 | 5,847 | (692 | ) | 40,153 | |||||||||||||||||
Integration and acquisition expenses | 3,792 | — | — | 697 | — | 4,489 | ||||||||||||||||||
Depreciation and amortization | 35,752 | 5,788 | 3,132 | 132 | — | 44,804 | ||||||||||||||||||
Total operating expenses | 106,326 | 25,874 | 14,081 | 6,676 | (9,750 | ) | 143,207 | |||||||||||||||||
Operating income (loss) | $ | 9,137 | $ | 3,139 | $ | 5,073 | $ | (6,676 | ) | $ | — | $ | 10,673 |
Wireless | Cable | Wireline | Other | Eliminations | Consolidated Totals | |||||||||||||||||||
External revenues | ||||||||||||||||||||||||
Service revenues | $ | 52,179 | $ | 24,340 | $ | 4,960 | $ | — | $ | — | $ | 81,479 | ||||||||||||
Other | 3,203 | 1,846 | 6,043 | — | 11,092 | |||||||||||||||||||
Total external revenues | 55,382 | 26,186 | 11,003 | — | — | 92,571 | ||||||||||||||||||
Internal revenues | 1,136 | 260 | 7,376 | (8,772 | ) | — | ||||||||||||||||||
Total operating revenues | 56,518 | 26,446 | 18,379 | — | (8,772 | ) | 92,571 | |||||||||||||||||
Operating expenses | ||||||||||||||||||||||||
Costs of goods and services, exclusive of depreciation and amortization shown separately below | 16,578 | 14,647 | 8,643 | — | (8,106 | ) | 31,762 | |||||||||||||||||
Selling, general and administrative, exclusive of depreciation and amortization shown separately below | 11,514 | 5,108 | 1,605 | 3,865 | (666 | ) | 21,426 | |||||||||||||||||
Integration and acquisition expenses | — | — | — | 332 | — | 332 | ||||||||||||||||||
Depreciation and amortization | 8,494 | 6,095 | 3,033 | 117 | — | 17,739 | ||||||||||||||||||
Total operating expenses | 36,586 | 25,850 | 13,281 | 4,314 | (8,772 | ) | 71,259 | |||||||||||||||||
Operating income (loss) | $ | 19,932 | $ | 596 | $ | 5,098 | $ | (4,314 | ) | $ | — | $ | 21,312 |
Three Months Ended March 31, | ||||||||
(in thousands) | 2017 | 2016 | ||||||
Total consolidated operating income | $ | 10,673 | $ | 21,312 | ||||
Interest expense | (9,100 | ) | (1,619 | ) | ||||
Non-operating income, net | 1,375 | 556 | ||||||
Income before income taxes | $ | 2,948 | $ | 20,249 |
(in thousands) | March 31, 2017 | December 31, 2016 | ||||||
Wireless | $ | 1,039,211 | $ | 1,101,716 | ||||
Cable | 220,519 | 218,471 | ||||||
Wireline | 116,390 | 115,282 | ||||||
Other | 1,070,204 | 1,059,898 | ||||||
Combined totals | 2,446,324 | 2,495,367 | ||||||
Inter-segment eliminations | (993,335 | ) | (1,010,960 | ) | ||||
Consolidated totals | $ | 1,452,989 | $ | 1,484,407 |
12. | Income Taxes |
13. | Adoption of New Accounting Principles |
ITEM 2. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
* | The Wireless segment has historically provided 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. Following the acquisition of nTelos on May 6, 2016, the Company’s wireless service area expanded to include south-central and western Virginia, West Virginia, and small portions of Kentucky and Ohio. In these areas, we are the exclusive provider of Sprint-branded wireless mobility communications network products and services on the 800 MHz, 1900 MHz and 2.5 GHz bands. 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 and cable modem internet access 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 central and southern Pennsylvania. |
Three Months Ended March 31, | Change | ||||||||||||||
(in thousands) | 2017 | 2016 | $ | % | |||||||||||
Operating revenues | $ | 153,880 | $ | 92,571 | $ | 61,309 | 66.2 | ||||||||
Operating expenses | 143,207 | 71,259 | 71,948 | 101.0 | |||||||||||
Operating income | 10,673 | 21,312 | (10,639 | ) | (49.9 | ) | |||||||||
Interest expense | (9,100 | ) | (1,619 | ) | (7,481 | ) | 462.1 | ||||||||
Other income, net | 1,375 | 556 | 819 | 147.3 | |||||||||||
Income before taxes | 2,948 | 20,249 | (17,301 | ) | (85.4 | ) | |||||||||
Income tax expense | 607 | 6,368 | (5,761 | ) | (90.5 | ) | |||||||||
Net income | $ | 2,341 | $ | 13,881 | $ | (11,540 | ) | (83.1 | ) |
March 31, 2017 | December 31, 2016 | March 31, 2016 | December 31, 2015 | |||||||||
Retail PCS Subscribers – Postpaid | 717,150 | 722,562 | 315,231 | 312,512 | ||||||||
Retail PCS Subscribers – Prepaid | 243,557 | 236,138 | 142,539 | 142,840 | ||||||||
PCS Market POPS (000) (1) | 5,536 | 5,536 | 2,437 | 2,433 | ||||||||
PCS Covered POPS (000) (1) | 4,836 | 4,807 | 2,230 | 2,224 | ||||||||
CDMA Base Stations (sites) | 1,476 | 1,467 | 556 | 552 | ||||||||
Towers Owned | 196 | 196 | 157 | 158 | ||||||||
Non-affiliate Cell Site Leases | 206 | 202 | 202 | 202 |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Gross PCS Subscriber Additions – Postpaid | 38,701 | 17,356 | |||||
Net PCS Subscriber Additions (Losses) – Postpaid | (5,412 | ) | 2,719 | ||||
Gross PCS Subscriber Additions – Prepaid | 42,168 | 21,231 | |||||
Net PCS Subscriber Additions (Losses) – Prepaid | 7,419 | (301 | ) | ||||
PCS Average Monthly Retail Churn % - Postpaid (2) | 2.05 | % | 1.56 | % | |||
PCS Average Monthly Retail Churn % - Prepaid (2) | 4.86 | % | 5.05 | % |
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 we are authorized to serve under our Sprint PCS affiliate agreements, and Covered POPS are those covered by our network. |
2) | PCS Average Monthly Retail Churn is the average of the monthly subscriber turnover, or churn, calculations for the period. |
(in thousands) | Three Months Ended March 31, | Change | |||||||||||||
2017 | 2016 | $ | % | ||||||||||||
Segment operating revenues | |||||||||||||||
Wireless service revenue | $ | 108,186 | $ | 52,179 | $ | 56,007 | 107.3 | ||||||||
Tower lease revenue | 2,882 | 2,750 | 132 | 4.8 | |||||||||||
Equipment revenue | 3,145 | 1,454 | 1,691 | 116.3 | |||||||||||
Other revenue | 1,250 | 135 | 1,115 | NM | |||||||||||
Total segment operating revenues | 115,463 | 56,518 | 58,945 | 104.3 | |||||||||||
Segment operating expenses | |||||||||||||||
Cost of goods and services, exclusive of depreciation and amortization shown separately below | 38,318 | 16,578 | 21,740 | 131.1 | |||||||||||
Selling, general and administrative, exclusive of depreciation and amortization shown separately below | 28,464 | 11,514 | 16,950 | 147.2 | |||||||||||
Integration and acquisition expenses | 3,792 | — | 3,792 | NM | |||||||||||
Depreciation and amortization | 35,752 | 8,494 | 27,258 | 320.9 | |||||||||||
Total segment operating expenses | 106,326 | 36,586 | 69,740 | 190.6 | |||||||||||
Segment operating income | $ | 9,137 | $ | 19,932 | $ | (10,795 | ) | (54.2 | ) |
(in thousands) | Three Months Ended March 31, | Change | |||||||||||||
Service Revenues | 2017 | 2016 | $ | % | |||||||||||
Postpaid net billings (1) | $ | 92,989 | $ | 45,638 | $ | 47,351 | 103.8 | ||||||||
Sprint fees | |||||||||||||||
Management fee | (7,383 | ) | (3,651 | ) | (3,732 | ) | 102.2 | ||||||||
Net service fee | (7,200 | ) | (3,934 | ) | (3,266 | ) | 83.0 | ||||||||
Waiver of management fee | 7,383 | — | 7,383 | NM | |||||||||||
(7,200 | ) | (7,585 | ) | 385 | (5.1 | ) | |||||||||
Prepaid net billings | |||||||||||||||
Gross billings | 25,945 | 13,083 | 12,862 | 98.3 | |||||||||||
Sprint management fee | (1,557 | ) | (785 | ) | (772 | ) | 98.3 | ||||||||
Waiver of management fee | 1,557 | — | 1,557 | NM | |||||||||||
25,945 | 12,298 | 13,647 | 111.0 | ||||||||||||
Travel and other revenues | 5,636 | 1,828 | 3,808 | 208.3 | |||||||||||
Accounting adjustments | |||||||||||||||
Amortization of expanded affiliate agreement | (4,978 | ) | — | (4,978 | ) | NM | |||||||||
Straight-line adjustment - management fee waiver | (4,206 | ) | — | (4,206 | ) | NM | |||||||||
(9,184 | ) | — | (9,184 | ) | NM | ||||||||||
Total Service Revenues | $ | 108,186 | $ | 52,179 | $ | 56,007 | 107.3 |
March 31, 2017 | December 31, 2016 | March 31, 2016 | December 31, 2015 | |||||||||
Homes Passed (1) | 184,819 | 184,710 | 181,375 | 172,538 | ||||||||
Customer Relationships (2) | ||||||||||||
Video customers | 47,160 | 48,512 | 50,195 | 48,184 | ||||||||
Non-video customers | 30,765 | 28,854 | 26,895 | 24,550 | ||||||||
Total customer relationships | 77,925 | 77,366 | 77,090 | 72,734 | ||||||||
Video | ||||||||||||
Customers (3) | 49,384 | 50,618 | 52,468 | 50,215 | ||||||||
Penetration (4) | 26.7 | % | 27.4 | % | 28.9 | % | 29.1 | % | ||||
Digital video penetration (5) | 77.1 | % | 77.4 | % | 74.8 | % | 77.9 | % | ||||
High-speed Internet | ||||||||||||
Available Homes (6) | 183,935 | 183,826 | 180,814 | 172,538 | ||||||||
Customers (3) | 61,815 | 60,495 | 58,273 | 55,131 | ||||||||
Penetration (4) | 33.6 | % | 32.9 | % | 32.2 | % | 32.0 | % | ||||
Voice | ||||||||||||
Available Homes (6) | 181,198 | 181,089 | 178,077 | 169,801 | ||||||||
Customers (3) | 21,647 | 21,352 | 20,786 | 20,166 | ||||||||
Penetration (4) | 11.9 | % | 11.8 | % | 11.7 | % | 11.9 | % | ||||
Total Revenue Generating Units (7) | 132,846 | 132,465 | 131,527 | 125,512 | ||||||||
Fiber Route Miles | 3,233 | 3,137 | 2,955 | 2,844 | ||||||||
Total Fiber Miles (8) | 100,799 | 92,615 | 80,727 | 76,949 | ||||||||
Average Revenue Generating Units | 132,419 | 131,218 | 129,604 | 124,054 |
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 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) | Three Months Ended March 31, | Change | |||||||||||||
2017 | 2016 | $ | % | ||||||||||||
Segment operating revenues | |||||||||||||||
Service revenue | $ | 26,411 | $ | 24,340 | $ | 2,071 | 8.5 | ||||||||
Other revenue | 2,602 | 2,106 | 496 | 23.6 | |||||||||||
Total segment operating revenues | 29,013 | 26,446 | 2,567 | 9.7 | |||||||||||
Segment operating expenses | |||||||||||||||
Cost of goods and services, exclusive of depreciation and amortization shown separately below | 15,228 | 14,647 | 581 | 4.0 | |||||||||||
Selling, general, and administrative, exclusive of depreciation and amortization shown separately below | 4,858 | 5,108 | (250 | ) | (4.9 | ) | |||||||||
Depreciation and amortization | 5,788 | 6,095 | (307 | ) | (5.0 | ) | |||||||||
Total segment operating expenses | 25,874 | 25,850 | 24 | 0.1 | |||||||||||
Segment operating income | $ | 3,139 | $ | 596 | $ | 2,543 | 426.7 |
March 31, 2017 | Dec. 31, 2016 | March 31, 2016 | Dec. 31, 2015 | |||||||||
Telephone Access Lines (1) | 18,160 | 18,443 | 19,682 | 20,252 | ||||||||
Long Distance Subscribers | 9,134 | 9,149 | 9,377 | 9,476 | ||||||||
Video Customers (2) | 5,201 | 5,264 | 5,232 | 5,356 | ||||||||
DSL and Cable Modem Subscribers (1) | 14,527 | 14,314 | 14,200 | 13,890 | ||||||||
Fiber Route Miles | 1,997 | 1,971 | 1,744 | 1,736 | ||||||||
Total Fiber Miles (3) | 145,060 | 142,230 | 125,559 | 123,891 |
1) | Effective October 1, 2015, we launched cable modem services on our cable plant, and ceased the requirement that a customer have a telephone access line to purchase internet service. As of March 31, 2017, 1,226 customers have purchased cable modem service received via the coaxial cable network. |
2) | The Wireline segment’s video service passes approximately 16,500 homes. |
3) | 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. |
Three Months Ended March 31, | Change | ||||||||||||||
(in thousands) | 2017 | 2016 | $ | % | |||||||||||
Segment operating revenues | |||||||||||||||
Service revenue | $ | 5,602 | $ | 5,537 | $ | 65 | 1.2 | ||||||||
Carrier access and fiber revenues | 12,665 | 11,969 | 696 | 5.8 | |||||||||||
Other revenue | 887 | 873 | 14 | 1.6 | |||||||||||
Total segment operating revenues | 19,154 | 18,379 | 775 | 4.2 | |||||||||||
Segment operating expenses | |||||||||||||||
Cost of goods and services, exclusive of depreciation and amortization shown separately below | 9,273 | 8,643 | 630 | 7.3 | |||||||||||
Selling, general and administrative, exclusive of depreciation and amortization shown separately below | 1,676 | 1,605 | 71 | 4.4 | |||||||||||
Depreciation and amortization | 3,132 | 3,033 | 99 | 3.3 | |||||||||||
Total segment operating expenses | 14,081 | 13,281 | 800 | 6.0 | |||||||||||
Segment operating income | $ | 5,073 | $ | 5,098 | $ | (25 | ) | (0.5 | ) |
• | they do not reflect capital expenditures; |
• | many of the assets being depreciated and amortized will have to be replaced in the future and Adjusted and Continuing OIBDA do not reflect cash requirements for such replacements; |
• | they do not reflect costs associated with share-based awards exchanged for employee services; |
• | they do not reflect interest expense necessary to service interest or principal payments on indebtedness; |
• | they do not reflect gains, losses or dividends on investments; |
• | they do not reflect expenses incurred for the payment of income taxes; and |
• | other companies, including companies in our industry, may calculate Adjusted and Continuing OIBDA differently than we do, limiting its usefulness as a comparative measure. |
Three Months Ended March 31, | ||||||||
(in thousands) | 2017 | 2016 | ||||||
Adjusted OIBDA | $ | 73,541 | $ | 40,416 | ||||
Continuing OIBDA | $ | 64,601 | $ | 40,416 |
Consolidated: | Three Months Ended March 31, | |||||||
(in thousands) | 2017 | 2016 | ||||||
Operating income | $ | 10,673 | $ | 21,312 | ||||
Plus depreciation and amortization | 44,804 | 17,739 | ||||||
Plus (gain) loss on asset sales | (28 | ) | (15 | ) | ||||
Plus share based compensation expense | 1,566 | 1,048 | ||||||
Plus straight line adjustment to management fee waiver | 4,206 | — | ||||||
Plus amortization of intangible netted in revenue | 4,978 | — | ||||||
Plus amortization of intangible netted in rent expense | 258 | — | ||||||
Plus temporary back office costs to support the billing operations through migration (1) | 2,595 | — | ||||||
Plus integration and acquisition related expenses | 4,489 | 332 | ||||||
Adjusted OIBDA | $ | 73,541 | $ | 40,416 | ||||
Less waived management fee | (8,940 | ) | — | |||||
Continuing OIBDA | $ | 64,601 | $ | 40,416 |
Wireless Segment: | Three Months Ended March 31, | |||||||
(in thousands) | 2017 | 2016 | ||||||
Operating income | $ | 9,137 | $ | 19,932 | ||||
Plus depreciation and amortization | 35,752 | 8,494 | ||||||
Plus (gain) loss on asset sales | (24 | ) | 13 | |||||
Plus share based compensation expense | 725 | 271 | ||||||
Plus straight line adjustment to management fee waiver | 4,206 | — | ||||||
Plus amortization of intangible netted in revenue | 4,978 | — | ||||||
Plus amortization of intangible netted in rent expense | 258 | — | ||||||
Plus temporary back office costs to support the billing operations through migration | 2,593 | — | ||||||
Plus integration and acquisition related expenses | 3,792 | — | ||||||
Adjusted OIBDA | $ | 61,417 | $ | 28,710 | ||||
Less waived management fee | (8,940 | ) | — | |||||
Continuing OIBDA | $ | 52,477 | $ | 28,710 |
Cable Segment: | Three Months Ended March 31, | |||||||
(in thousands) | 2017 | 2016 | ||||||
Operating income | $ | 3,139 | $ | 597 | ||||
Plus depreciation and amortization | 5,788 | 6,095 | ||||||
Less gain on asset sales | (23 | ) | (13 | ) | ||||
Plus share based compensation expense | 364 | 358 | ||||||
Adjusted OIBDA and Continuing OIBDA | $ | 9,268 | $ | 7,037 |
Wireline Segment: | Three Months Ended March 31, | |||||||
(in thousands) | 2017 | 2016 | ||||||
Operating income | $ | 5,073 | $ | 5,098 | ||||
Plus depreciation and amortization | 3,132 | 3,033 | ||||||
Plus loss on asset sales | 30 | — | ||||||
Plus share based compensation expense | 146 | 169 | ||||||
Adjusted OIBDA and Continuing OIBDA | $ | 8,381 | $ | 8,300 |
Actual | Covenant Requirement at March 31, 2017 | ||||
Total Leverage Ratio | 2.88 | 3.75 or Lower | |||
Debt Service Coverage Ratio | 4.56 | 2.00 or Higher | |||
Minimum Liquidity Balance | $113 million | $25 million or Higher |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 4. | CONTROLS AND PROCEDURES |
• | Seek, train and retain individuals that have the appropriate skills and experience related to financial reporting and internal control related to (i) complex, significant non-routine transactions; (ii) the preparation of the consolidated statements of cash flows; and (iii) the Company’s internal audit function. |
• | Evaluate and develop where necessary policies and procedures to ensure our personnel are sufficiently knowledgeable about the design, operation and documentation of internal controls over financial reporting related to (i) complex, significant non-routine transactions; (ii) accounting for income taxes; and (iii) the preparation of the consolidated statements of cash flows. |
• | Enhance the design of existing control activities and implement additional control activities to ensure management review controls and other controls (including controls that validate the completeness and accuracy of information, data and assumptions) related to complex, significant non-routine transactions and accounting for income taxes, are properly designed and documented. |
• | Evaluate and enhance the Company’s policies, procedures and control activities over communicating with the Company’s third party experts to ensure complete and accurate information is communicated. |
• | Evaluate and enhance the Company’s monitoring activities to ensure the components of internal control are present and functioning related to (i) complex, significant non-routine transactions; (ii) accounting for income taxes; and (iii) the preparation of the consolidated statements of cash flows. |
PART II. | OTHER INFORMATION |
ITEM 1A. | Risk Factors |
ITEM 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Number of Shares Purchased | Average Price Paid per Share | ||||||
January 1 to January 31 | 43,044 | $ | 28.48 | ||||
February 1 to February 28 | — | $ | — | ||||
March 1 to March 31 | — | $ | — | ||||
Total | 43,044 | $ | 28.48 |
ITEM 6. | Exhibits |
(a) | The following exhibits are filed with this Quarterly Report on Form 10-Q: |
10.54 | Addendum XX to Sprint PCS Management Agreement, dated as of March 9, 2017, by and among Shenandoah Personal Communications, LLC, Sprint Spectrum L.P., Sprint Communications Company, L.P., SprintCom, Inc. and Horizon Personal Communications, LLC, filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed March 15, 2017. | |
31.1 | Certification of President and Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. | |
31.2 | Certification of Vice President - Finance and Chief Financial Officer 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 |
SHENANDOAH TELECOMMUNICATIONS COMPANY | |
(Registrant) |
/s/Adele M. Skolits | |
Adele M. Skolits | |
Vice President - Finance and Chief Financial Officer | |
Date: May 4, 2017 |
Exhibit No. | Exhibit | |
10.54 | Addendum XX to Sprint PCS Management Agreement, dated as of March 9, 2017, by and among Shenandoah Personal Communications, LLC, Sprint Spectrum L.P., Sprint Communications Company, L.P., SprintCom, Inc. and Horizon Personal Communications, LLC, filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed March 15, 2017. | |
Certification of President and Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. | ||
Certification of Vice President - Finance and Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. | ||
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 |
1. | I have reviewed this quarterly report on Form 10-Q of Shenandoah Telecommunications Company; |
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: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
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): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
1. | I have reviewed this quarterly report on Form 10-Q of Shenandoah Telecommunications Company; |
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: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
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): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/S/CHRISTOPHER E. FRENCH | |
Christopher E. French | |
President and Chief Executive Officer | |
May 4, 2017 | |
/S/ADELE M. SKOLITS | |
Adele M. Skolits | |
Vice President - Finance and | |
Chief Financial Officer | |
May 4, 2017 |
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Apr. 26, 2017 |
|
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 Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2017 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 49,109,626 |
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Current Assets | ||
Investments carried at fair value | $ 3,058 | $ 2,907 |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Parenthetical) |
12 Months Ended |
---|---|
Dec. 31, 2016
$ / shares
| |
Statement of Stockholders' Equity [Abstract] | |
Dividends declared per share (in dollars per share) | $ 0.25 |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Other cash flow information: | ||
Capital expenditures | $ 6,400 | $ 1,200 |
Increase in interest rate swaps | 972 | |
Increase in deferred tax liability | 373 | |
Increase in accumulated other comprehensive income | 599 | (1,048) |
Interest paid, capitalized | $ 577 | $ 146 |
Basis of Presentation |
3 Months Ended |
---|---|
Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The interim condensed consolidated financial statements of Shenandoah Telecommunications Company and Subsidiaries (collectively, the “Company”) are unaudited. In the opinion of management, all adjustments necessary for a fair presentation of the interim results have been reflected therein. All such adjustments were of a normal and recurring nature. Prior year amounts have been reclassified in some cases to conform to the current year presentation. These financial statements should be read in conjunction with the audited consolidated financial statements and related notes in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. The accompanying balance sheet information at December 31, 2016 was derived from the audited December 31, 2016 consolidated balance sheet. Operating revenues and income (loss) from operations for any interim period are not necessarily indicative of results that may be expected for the entire year. |
Acquisition of NTELOS Holdings Corp. and Exchange with Sprint |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition of NTELOS Holdings Corp. and Exchange with Sprint | Acquisition of NTELOS Holdings Corp. and Exchange with Sprint On May 6, 2016, the Company completed its previously announced acquisition of NTELOS Holdings Corp. (“nTelos”) for $667.8 million, net of cash acquired. The acquisition was entered into to improve shareholder value through the expansion of the Company's Wireless service area and customer base while strengthening our relationship with Sprint Corporation ("Sprint"). The purchase price was financed by a credit facility arranged by CoBank, ACB, Royal Bank of Canada, Fifth Third Bank, Bank of America, N.A., Capital One, National Association, Citizens Bank N.A., and Toronto Dominion (Texas) LLC. The Company has accounted for the acquisition of nTelos under the acquisition method of accounting, in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805, “Business Combinations”, and has accounted for measurement period adjustments under Accounting Standards Update (“ASU”) 2015-16, “Simplifying the Accounting for Measurement Period Adjustments”. Under the acquisition method of accounting, the total purchase price is allocated to the tangible and intangible assets acquired and liabilities assumed in connection with the acquisition based on their estimated fair values. The preliminary allocation of the purchase price was based upon management’s preliminary valuation of the fair value of tangible and intangible assets acquired and liabilities assumed of nTelos, with the excess recorded as goodwill. During the first quarter of 2017, the Company made adjustments to the preliminary estimates of fair value resulting in immaterial changes to previously estimated fair values of fixed assets, asset retirement obligation liabilities, accounts receivable and deferred taxes. These adjustments resulted in a $1.3 million reduction to goodwill as shown in the table below. The Company continues to review certain tax positions acquired in the nTelos acquisition. Changes in the carrying amount of goodwill during the three months ended March 31, 2017 are shown below (in thousands):
Following are the unaudited pro forma results of the Company for the period ended March 31, 2016, as if the acquisition of nTelos had occurred at the beginning of the period. (in thousands)
In connection with these transactions, the Company incurs costs which include the nTelos back office staff and support functions until the nTelos legacy customers are migrated to the Sprint billing platform; costs of the handsets to be provided to nTelos legacy customers as they migrate to the Sprint billing platform; severance costs for back office and other former nTelos employees who will not be retained permanently; and costs to shut down certain cell sites and related backhaul contracts. We have incurred $7.1 million of these costs in the three months ended March 31, 2017, including $0.1 million reflected in cost of goods and services and $2.5 million reflected in selling, general and administrative costs in the three months ended March 31, 2017. |
Property, Plant and Equipment |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment consisted of the following (in thousands):
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Earnings per share |
3 Months Ended |
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Mar. 31, 2017 | |
Earnings Per Share [Abstract] | |
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 913 thousand and 991 thousand shares and options outstanding at March 31, 2017 and 2016, respectively, 125 thousand and 136 thousand were anti-dilutive, respectively. These shares and options have been excluded from the computations of diluted earnings per share for their respective period. There were no adjustments to net income for either period. |
Investments |
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | Investments Investments include $3.1 million and $2.9 million of investments carried at fair value as of March 31, 2017 and December 31, 2016, respectively, consisting of equity, bond and money market mutual funds. Investments carried at fair value were acquired under a rabbi trust arrangement related to the Company’s nonqualified Supplemental Executive Retirement Plan (the “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. During the three months ended March 31, 2017, the Company recognized $32 thousand in dividend and interest income from investments, and recorded net unrealized gains of $120 thousand on these investments. Fair values for these investments held under the rabbi trust were determined by Level 1 quoted market prices for the underlying mutual funds. At March 31, 2017 and December 31, 2016, other investments, comprised of equity securities which do not have readily determinable fair values, consist of the following:
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Financial Instruments |
3 Months Ended |
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Mar. 31, 2017 | |
Investments, All Other Investments [Abstract] | |
Financial Instruments | Financial Instruments Financial instruments on the condensed consolidated balance sheets that approximate fair value include: cash and cash equivalents, receivables, investments carried at fair value, payables, accrued liabilities, interest rate swaps and variable rate long-term debt. |
Derivative Instruments, Hedging Activities and Accumulated Other Comprehensive Income |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments, Hedging Activities and Accumulated Other Comprehensive Income (Loss) | Derivative Instruments, Hedging Activities and Accumulated Other Comprehensive Income 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 these objectives, 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. The Company entered into a pay-fixed, receive-variable interest rate swap of $174.6 million of notional principal in September 2012. This interest rate swap was designated as a cash flow hedge. The outstanding notional amount of this cash flow hedge was $131.0 million as of March 31, 2017. The outstanding notional amount decreases based upon scheduled principal payments on the 2012 debt. In May 2016, the Company entered into a pay-fixed, receive-variable interest rate swap of $256.6 million of notional principal with three counterparties. This interest rate swap was designated as a cash flow hedge. The outstanding notional amount of this cash flow hedge was $302.4 million as of March 31, 2017. The outstanding notional amount increases based upon draws expected to be made under a portion of the Company's Term Loan A-2 debt and as the 2012 interest rate swap's notional principal decreases, and will decrease as the Company makes scheduled principal payments on the 2016 debt. In combination with the swap entered into in 2012 described above, the Company is hedging approximately 50% of the expected outstanding 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 swaps designated and qualified as a cash flow hedge, are reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. As of March 31, 2017, the Company estimates that $237 thousand will be reclassified as a reduction of interest expense during the next twelve months. The table below presents the fair value of the Company’s derivative financial instrument as well as its classification on the condensed consolidated balance sheet as of March 31, 2017 and December 31, 2016 (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 change in accumulated other comprehensive income by component for the three months ended March 31, 2017 (in thousands):
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Intangible Assets, Net |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets, Net | Intangible Assets, Net Intangible assets consist of the following at March 31, 2017 and December 31, 2016:
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Accrued and Other Liabilities |
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Other Liabilities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued and Other Liabilities | Accrued and Other liabilities Accrued liabilities and other includes the following (in thousands):
Other liabilities include the following (in thousands):
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Long-Term Debt and Revolving Lines of Credit |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt and Revolving Lines of Credit | Long-Term Debt and Revolving Lines of Credit Total debt at March 31, 2017 and December 31, 2016 consists of the following:
As of March 31, 2017, our indebtedness totaled $866.8 million in term loans with an annualized effective interest rate of approximately 3.91% after considering the impact of the interest rate swap contract and unamortized loan costs. The balance consists of the $466.8 million Term Loan A-1 at a variable rate (3.73% as of March 31, 2017) that resets monthly based on one month LIBOR plus a margin of 2.75%, and the $400 million Term Loan A-2 at a variable rate (3.98% as of March 31, 2017) that resets monthly based on one month LIBOR plus a margin of 3.00%. The Term Loan A-1 requires quarterly principal repayments of $6.1 million through June 30, 2017, then increasing to $12.1 million quarterly through June 30, 2020, with further increases at that time through maturity in June 30, 2021. The Term Loan A-2 requires quarterly principal repayments of $10.0 million beginning on September 30, 2018 through March 31, 2023, with the remaining balance due June 30, 2023. 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:
These ratios are generally less restrictive than the covenant ratios the Company had been required to comply with under its previously existing debt arrangements. As shown below, as of March 31, 2017, the Company was in compliance with the financial covenants in its credit agreements.
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Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information 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. Prior to the recent acquisition of nTelos, the Wireless segment had provided 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. With the recent acquisition, the Company's wireless service has expanded to include south-central and western Virginia, West Virginia, and small portions of Kentucky and Ohio. 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 and cable modem 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 central and southern Pennsylvania. Three months ended March 31, 2017 (in thousands)
Three months ended March 31, 2016 (in thousands)
A reconciliation of the total of the reportable segments’ operating income (loss) to consolidated income (loss) before taxes is as follows:
The Company’s assets by segment are as follows:
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Income Taxes |
3 Months Ended |
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Mar. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company files U.S. federal income tax returns and various state and local income tax returns. With few exceptions, years prior to 2013 are no longer subject to examination; net operating losses acquired in the nTelos acquisition are open to examination from 2002 forward. The Company is not subject to any state or federal income tax audits as of March 31, 2017. |
Adoption of New Accounting Principles |
3 Months Ended |
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Mar. 31, 2017 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Adoption of New Accounting Principles | Adoption of New Accounting Principles During the first quarter of 2017, the Company adopted one new accounting principle: Accounting Standards Update ("ASU") No. 2015-11, "Inventory: Simplifying the Measurement of Inventory". This ASU changes the measurement principle for inventory from the lower of cost or market to lower of cost and net realizable value. The ASU also eliminates the requirement for entities to consider replacement cost or net realizable value less an approximately normal profit margin when measuring inventory. The adoption of this ASU did not have a significant impact on our financial statements. |
Subsequent Events |
3 Months Ended |
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Mar. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On March 9, 2017, the Company and Sprint entered into Addendum XX to the Sprint PCS Management Agreement. Addendum XX provides for (i) an expansion of the Company’s “Service Area” (as defined in the Sprint PCS Management Agreement) to include certain areas in Kentucky, Maryland, Ohio and West Virginia (the “Expansion Area”), (ii) certain network build out requirements in the Expansion Area over the next three years, (iii) the Company’s provision of prepaid field sales support to Sprint and its affiliates in the Service Area, (iv) Sprint’s provision of spectrum use to the Company in the Expansion Area, (v) the addition of Horizon Personal Communications, LLC, as a party to the Sprint PCS Management Agreement and the Sprint PCS Services Agreement (collectively, the “Affiliate Agreements”) and (vi) certain other amendments to the Affiliate Agreements. In connection with the execution of Addendum XX, on March 9, 2017, the Company and certain affiliates of Sprint entered into an agreement to, among other things, transfer to Sprint certain customers in the Expansion Area and the underlying customer agreements, and to transition the provision of network coverage in the Expansion Area from Sprint to the Company. The expanded territory includes approximately 500 thousand market POPs and approximately 21 thousand Sprint customers. The Company and Sprint closed on this transaction on April 6, 2017. |
Acquisition of NTELOS Holdings Corp. and Exchange with Sprint (Tables) |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in the Carrying Amount of Goodwill | Changes in the carrying amount of goodwill during the three months ended March 31, 2017 are shown below (in thousands):
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Business Acquisition, Pro Forma Information | Following are the unaudited pro forma results of the Company for the period ended March 31, 2016, as if the acquisition of nTelos had occurred at the beginning of the period. (in thousands)
|
Property, Plant and Equipment (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment | Property, plant and equipment consisted of the following (in thousands):
|
Investments Investments (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of other investments which do not have readily determinable fair values | At March 31, 2017 and December 31, 2016, other investments, comprised of equity securities which do not have readily determinable fair values, consist of the following:
|
Derivative Instruments, Hedging Activities and Accumulated Other Comprehensive Income (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivative Financial Instrument as Well as its Classification on the Consolidated Balance Sheet | The table below presents the fair value of the Company’s derivative financial instrument as well as its classification on the condensed consolidated balance sheet as of March 31, 2017 and December 31, 2016 (in thousands):
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Schedule of Accumulated Other Comprehensive Income (Loss) | The table below presents change in accumulated other comprehensive income by component for the three months ended March 31, 2017 (in thousands):
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Intangible Assets, Net (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Intangible Assets | Intangible assets consist of the following at March 31, 2017 and December 31, 2016:
|
Accrued and Other Liabilities (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Liabilities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Accrued Liabilities and Other | Accrued liabilities and other includes the following (in thousands):
|
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Summary of Other Liabilities | Other liabilities include the following (in thousands):
|
Long-Term Debt and Revolving Lines of Credit (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of long term debt | Total debt at March 31, 2017 and December 31, 2016 consists of the following:
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Financial covenants in credit agreements | As shown below, as of March 31, 2017, the Company was in compliance with the financial covenants in its credit agreements.
As shown below, as of March 31, 2017, the Company was in compliance with the financial covenants in its credit agreements.
|
Segment Information (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Selected Financial Data for Segments | Three months ended March 31, 2017 (in thousands)
Three months ended March 31, 2016 (in thousands)
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Reconciliation of Income (Loss) from Continuing Operations from Segments to Consolidated | A reconciliation of the total of the reportable segments’ operating income (loss) to consolidated income (loss) before taxes is as follows:
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Assets by Segment | The Company’s assets by segment are as follows:
|
Acquisition of NTELOS Holdings Corp. and Exchange with Sprint - Narrative (Details) - Ntelos Holding, Corp - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
May 06, 2016 |
|
Business Acquisition [Line Items] | ||
Consideration transferred, net of cash | $ 667,800 | |
Purchase Accounting Adjustments | $ (1,255) | |
Integration related costs | 7,100 | |
Cost of Sales | ||
Business Acquisition [Line Items] | ||
Integration related costs | 100 | |
Selling, General and Administrative Expenses | ||
Business Acquisition [Line Items] | ||
Integration related costs | $ 2,500 |
Acquisition of NTELOS Holdings Corp. and Exchange with Sprint - Schedule of Goodwill Activity (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2017
USD ($)
| |
Goodwill [Roll Forward] | |
Beginning balance | $ 144,001 |
Ending balance | 145,256 |
Ntelos Holding, Corp | |
Goodwill [Roll Forward] | |
Beginning balance | 144,001 |
Purchase Accounting Adjustments | (1,255) |
Ending balance | 145,256 |
Wireline | Ntelos Holding, Corp | |
Goodwill [Roll Forward] | |
Beginning balance | 10 |
Purchase Accounting Adjustments | 0 |
Ending balance | 10 |
Cable | Ntelos Holding, Corp | |
Goodwill [Roll Forward] | |
Beginning balance | 104 |
Purchase Accounting Adjustments | 0 |
Ending balance | 104 |
Wireless | Ntelos Holding, Corp | |
Goodwill [Roll Forward] | |
Beginning balance | 143,887 |
Purchase Accounting Adjustments | (1,255) |
Ending balance | $ 145,142 |
Acquisition of NTELOS Holdings Corp. and Exchange with Sprint - Schedule of Pro Froma Results (Details) - Ntelos Holding, Corp $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2016
USD ($)
| |
Business Acquisition [Line Items] | |
Operating revenues | $ 173,248 |
Income before income taxes | $ 16,905 |
Property, Plant and Equipment (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Property, plant and equipment [Abstract] | ||
Total property, plant and equipment | $ 1,186,426 | $ 1,159,077 |
Less accumulated amortization and depreciation | 496,478 | 460,955 |
Net property, plant and equipment | 689,948 | 698,122 |
Plant in service | ||
Property, plant and equipment [Abstract] | ||
Total property, plant and equipment | 1,124,446 | 1,085,318 |
Plant under construction | ||
Property, plant and equipment [Abstract] | ||
Total property, plant and equipment | $ 61,980 | $ 73,759 |
Earnings per share (Details) - shares shares in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Shares and options outstanding (in shares) | 913 | 991 |
Options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of diluted earnings per share (in shares) | 125 | 136 |
Investments (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Dec. 31, 2016 |
|
Fair Value Disclosures [Abstract] | |||
Investments carried at fair value | $ 3,058 | $ 2,907 | |
Dividend and interest income from investments | 32 | ||
Net unrealized gains recognized | $ 120 | $ 16 |
Investments - Other Investments (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Investment [Line Items] | ||
Cost method investments | $ 7,036 | $ 6,919 |
Total other investments | 7,549 | 7,369 |
Other Equity Investments | ||
Investment [Line Items] | ||
Other | 513 | 450 |
CoBank | ||
Investment [Line Items] | ||
Cost method investments | 6,296 | 6,177 |
Other Equity Investments | ||
Investment [Line Items] | ||
Cost method investments | $ 740 | $ 742 |
Derivative Instruments, Hedging Activities and Accumulated Other Comprehensive Income - Narrative (Details) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2017
USD ($)
|
May 31, 2016
USD ($)
counterparty
|
Sep. 30, 2012
USD ($)
|
|
Derivative [Line Items] | |||
Percentage of expected outstanding debt | 50.00% | ||
Interest rate swap | Cash Flow Hedge | |||
Derivative [Line Items] | |||
Amount of notional principal interest rate swap | $ 174,600,000 | ||
Notional amount of cash flow hedges | $ 131,000,000.0 | ||
Interest rate swap | Cash Flow Hedge | Three Counterparties | |||
Derivative [Line Items] | |||
Amount of notional principal interest rate swap | $ 256,600,000 | ||
Notional amount of cash flow hedges | 302,400,000.0 | ||
Number of counterparties | counterparty | 3 | ||
Interest Expense | |||
Derivative [Line Items] | |||
Amount reclassified as a reduction to interest expense during next twelve months | $ 237,000 |
Accrued and Other Liabilities - Accrued Liabilities and Other (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Other Liabilities Disclosure [Abstract] | ||
Sales and property taxes payable | $ 4,742 | $ 6,628 |
Severance accrual, current portion | 3,553 | 4,267 |
Asset retirement obligations, current portion | 884 | 5,841 |
Other current liabilities | 8,995 | 12,349 |
Accrued liabilities and other | $ 18,174 | $ 29,085 |
- Other Liabilities (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Other Liabilities Disclosure [Abstract] | ||
Non-current portion of deferred revenues | $ 7,735 | $ 8,933 |
Straight-line management fee waiver | 16,180 | 11,974 |
Other | 2,142 | 2,836 |
Other liabilities | $ 26,057 | $ 23,743 |
Long-Term Debt and Revolving Lines of Credit - Schedule of Long-Term Debt (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Debt Instrument [Line Items] | ||
Long-term debt | $ 866,813 | $ 847,875 |
Less: unamortized loan fees | 17,816 | 18,610 |
Total debt, net of unamortized loan fees | 848,997 | 829,265 |
Current maturities of long term debt, net of unamortized loan fees | 38,124 | 32,041 |
Long-term debt, less current maturities, net of unamortized loan fees | 810,873 | 797,224 |
Term loan A-1 | ||
Debt Instrument [Line Items] | ||
Long-term debt | 466,813 | 472,875 |
Term loan A-2 | ||
Debt Instrument [Line Items] | ||
Long-term debt | $ 400,000 | $ 375,000 |
Long-Term Debt and Revolving Lines of Credit - Schedule of Financial Covenants (Details) |
3 Months Ended |
---|---|
Mar. 31, 2017
USD ($)
| |
Debt Disclosure [Abstract] | |
Covenant requirement, total leverage ratio | 3.75 |
Leverage ratio, actual | 2.88 |
Debt service coverage ratio, actual | 4.56 |
Minimum debt service coverage ratio | 2.00 |
Debt instrument covenants minimum liquidity amount | $ 25,000,000 |
Covenant, liquidity balance, actual | $ 113,000,000 |
Segment Information - Narrative (Details) |
3 Months Ended |
---|---|
Mar. 31, 2017
state
segment
| |
Segment Reporting [Abstract] | |
Number of reportable segments | segment | 3 |
Non Sprint operations, number of states | state | 4 |
Segment Information - Reconciliation of Operating Profit (Loss) from Segments to Consolidated (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Reconciliation of income from continuing operations from segments to consolidated [Abstract] | ||
Total consolidated operating income | $ 10,673 | $ 21,312 |
Interest expense | (9,100) | (1,619) |
Non-operating income, net | 1,375 | 556 |
Income before income taxes | $ 2,948 | $ 20,249 |
Segment Information - Assets by Segment (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Assets | $ 1,452,989 | $ 1,484,407 |
Operating Segments | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Assets | 2,446,324 | 2,495,367 |
Operating Segments | Wireless | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Assets | 1,039,211 | 1,101,716 |
Operating Segments | Cable | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Assets | 220,519 | 218,471 |
Operating Segments | Wireline | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Assets | 116,390 | 115,282 |
Operating Segments | Other Segments | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Assets | 1,070,204 | 1,059,898 |
Intersegment Eliminations | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Assets | $ (993,335) | $ (1,010,960) |
Subsequent Events (Details) - Sprint and Affiliates - Addendum XX to Sprint PCS Management Agreement - Subsequent Event individual_people in Thousands, customer in Thousands |
Apr. 06, 2017
customer
individual_people
|
---|---|
Subsequent Event [Line Items] | |
Market population | individual_people | 500 |
Number of customers | customer | 21 |
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