T
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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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Large accelerated filer
¨
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Accelerated filer
þ
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Non-accelerated filer
¨
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Smaller reporting company
¨
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Document
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Part of Form 10-K into which incorporated
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Proxy Statement relating to Registrant’s 2010 Annual Meeting of Shareholders
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Part III
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TABLE OF CONTENTS
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||||
Item
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Page
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|||
Number
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Number
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|||
PART I
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||||
1.
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5
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|||
1A.
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21
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|||
1B.
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29
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|||
2.
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29
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|||
3.
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30
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|||
4.
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30
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|||
PART II
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||||
5.
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31
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|||
6.
|
33
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|||
7.
|
35
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|||
7A.
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54
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|||
8.
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54
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|||
9.
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54
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|||
9A.
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55
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|||
9B
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55
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|||
PART III
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||||
10.
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56
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|||
11.
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56
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|||
12.
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56
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|||
13.
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57
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|||
14.
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57
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PART IV
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||||
15.
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57
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IT
EM 1.
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BUSINESS
|
Name
|
Title
|
Age
|
Date in Position | |
Christopher E. French
|
President and Chief Executive Officer
|
52
|
April 1988
|
|
Earle A. MacKenzie
|
Executive Vice President and Chief Operating Officer
|
57
|
June 2003
|
|
Adele M. Skolits
|
Vice President – Finance, Chief Financial Officer and Treasurer
|
51
|
September 2007
|
|
David E. Ferguson
|
Vice President of Customer Services
|
64
|
November 1982
|
|
William L. Pirtle
|
Vice President of Sales
|
50
|
April 2004
|
|
Ann E. Flowers
|
General Counsel, Vice President-Legal and Secretary
|
53
|
November 2008
|
|
·
|
inability or unwillingness of subscribers to pay, which would result in involuntary deactivations;
|
|
·
|
subscriber mix and credit class, particularly an increase in sub-prime credit subscribers;
|
|
·
|
competition of products, services and pricing of other providers;
|
|
·
|
inadequate network performance and coverage relative to that provided by competitors in our service area;
|
|
·
|
inadequate customer service;
|
|
·
|
increased prices; and,
|
|
·
|
any future changes by Sprint Nextel or the Company in the products and services offered.
|
|
·
|
Sprint Nextel 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 Nextel could develop products and services, or establish credit policies, that could adversely affect our results of operations;
|
|
·
|
if Sprint Nextel’s costs to perform certain services exceed the costs we expect, subject to limitations under our agreements, Sprint Nextel could seek to increase amounts charged;
|
|
·
|
Sprint Nextel could make decisions that could adversely affect the Sprint Nextel brand names, products or services.
|
|
·
|
the quality of the service provided by another provider during a roaming call may not approximate the quality of the service provided by the Sprint Nextel PCS network;
|
|
·
|
the price of a roaming call off network may not be competitive with prices of other wireless companies for roaming calls;
|
|
·
|
customers may not be able to use Sprint Nextel's advanced features, such as voicemail notification, while roaming; and
|
|
·
|
Sprint Nextel or the carriers providing the service may not be able to provide accurate billing information on a timely basis.
|
·
|
Sprint Nextel does not adequately project the need for handsets, or enter into arrangements for new types of handsets or other customer equipment, for itself, its PCS Affiliates and its other third-party distribution channels, particularly in connection with the transition to new technologies;
|
·
|
Sprint Nextel gives preference to other distribution channels;
|
·
|
we do not adequately project our need for handsets;
|
·
|
Sprint Nextel 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 Nextel and its suppliers or vendors.
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IT
EM 1B.
|
UNRESOLVED STAFF COMMENTS
|
IT
EM 2.
|
PROPERTIES
|
IT
EM 3.
|
LEGAL PROCEEDINGS
|
IT
EM 4.
|
RESERVED
|
IT
EM 5.
|
MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
2009
|
High
|
Low
|
||||||
Fourth Quarter
|
$ | 20.94 | $ | 16.25 | ||||
Third Quarter
|
21.03 | 16.82 | ||||||
Second Quarter
|
24.23 | 17.08 | ||||||
First Quarter
|
28.32 | 17.09 | ||||||
2008
|
High
|
Low
|
||||||
Fourth Quarter
|
$ | 28.05 | $ | 14.50 | ||||
Third Quarter
|
24.20 | 12.72 | ||||||
Second Quarter
|
17.76 | 13.02 | ||||||
First Quarter
|
23.98 | 13.51 |
2004
|
2005
|
2006
|
2007
|
2008
|
2009
|
|
Shenandoah Telecommunications Company
|
100
|
134
|
161
|
250
|
296
|
219
|
Nasdaq U.S. Index
|
100
|
102
|
112
|
122
|
59
|
84
|
Nasdaq Telecommunications Index
|
100
|
95
|
125
|
111
|
64
|
96
|
Number of Shares
Purchased
|
Average Price Paid
per Share
|
|||||||
October 1 to October 31
|
1 | $ | 17.45 | |||||
November 1 to November 30
|
3,643 | $ | 16.97 | |||||
December 1 to December 31
|
2 | $ | 17.76 | |||||
Total
|
3,646 | $ | 16.97 |
IT
EM 6.
|
SELECTED FINANCIAL DATA
|
2009
|
2008
|
2007
|
2006
|
2005
|
||||||||||||||||
Operating revenues
|
$ | 160,616 | $ | 144,424 | $ | 130,365 | $ | 158,894 | $ | 136,766 | ||||||||||
Operating expenses
|
117,789 | 99,213 | 94,091 | 133,565 | 117,549 | |||||||||||||||
Operating income
|
42,827 | 45,211 | 36,274 | 25,329 | 19,217 | |||||||||||||||
Interest expense
|
1,361 | 1,009 | 1,873 | 2,362 | 3,076 | |||||||||||||||
Income taxes
|
17,465 | 17,494 | 14,942 | 14,026 | 6,556 | |||||||||||||||
Net income from continuing operations (a)
|
$ | 25,084 | $ | 26,069 | $ | 21,921 | $ | 20,492 | $ | 10,699 | ||||||||||
Discontinued operations, net of tax (b)
|
(9,992 | ) | (1,924 | ) | (3,361 | ) | (2,729 | ) | (166 | ) | ||||||||||
Cumulative effect of a change in accounting, net of tax
|
- | - | - | (77 | ) | - | ||||||||||||||
Net income
|
$ | 15,092 | $ | 24,145 | $ | 18,560 | $ | 17,686 | $ | 10,533 | ||||||||||
Total assets
|
271,725 | 266,837 | 222,512 | 208,864 | 205,968 | |||||||||||||||
Total debt – including current maturities
|
32,960 | 41,359 | 21,907 | 26,016 | 35,918 | |||||||||||||||
Shareholder Information:
|
||||||||||||||||||||
Shares outstanding
|
23,680,843 | 23,605,467 | 23,508,525 | 23,284,284 | 23,061,135 | |||||||||||||||
Income per share from continuing operations-diluted
|
$ | 1.06 | $ | 1.11 | $ | 0.93 | $ | 0.88 | $ | 0.46 | ||||||||||
Loss per share from discontinued operations-diluted
|
(0.42 | ) | (0.08 | ) | (0.14 | ) | (0.12 | ) | (0.01 | ) | ||||||||||
Loss per share from cumulative effect of a change in accounting (c)
|
- | - | - | - | - | |||||||||||||||
Net income per share-diluted
|
0.64 | 1.03 | 0.79 | 0.76 | 0.45 | |||||||||||||||
Cash dividends per share
|
$ | 0.32 | $ | 0.30 | $ | 0.27 | $ | 0.25 | $ | 0.15 |
|
(a)
|
The 2006 balance shown includes a gain of $6.4 million, net of tax, relating to the disposition of the RTB stock.
|
|
(b)
|
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 for all periods presented. In 2009, the Company recognized an impairment loss of $17.5 million, or $10.7 million net of tax, to write-down the net assets of Converged Services to their estimated fair value.
|
|
(c)
|
The cumulative effect adjustment shown above for 2006 represents approximately ($0.003) per share.
|
|
(d)
|
The decrease in operating revenues and expenses between 2006 and 2007 is due to changes in the settlement of travel and roaming revenues and expenses resulting from the 2007 Amendments to the Company’s management and affiliation agreements with Sprint Nextel.
|
IT
EM 7.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
Dec. 31,
|
Dec. 31,
|
Dec. 31,
|
||||||||||
2009
|
2008
|
2007
|
||||||||||
Retail PCS Subscribers
|
222,818 | 211,462 | 187,303 | |||||||||
PCS Market POPS (000) (1)
|
2,327 | 2,310 | 2,297 | |||||||||
PCS Covered POPS (000) (1)
|
2,033 | 1,931 | 1,814 | |||||||||
PCS Average Monthly Retail Churn % (2)
|
1.99 | % | 1.87 | % | 2.32 | % | ||||||
CDMA Base Stations (sites)
|
476 | 411 | 346 | |||||||||
EVDO-enabled sites
|
334 | 211 | 52 | |||||||||
EVDO Covered POPS (000)
|
1,940 | 1,663 | 624 | |||||||||
Towers
|
140 | 118 | 115 | |||||||||
Telephone Access Lines (3)
|
24,358 | 24,042 | 24,536 | |||||||||
Total Switched Access Minutes (000)
|
81,260 | 90,460 | 92,331 | |||||||||
Originating Switched Access Minutes (000)
|
22,572 | 25,425 | 26,128 | |||||||||
Long Distance Subscribers
|
10,851 | 10,842 | 10,689 | |||||||||
Long Distance Calls (000) (4)
|
7,200 | 7,981 | 7,944 | |||||||||
Total Fiber Miles (5)
|
58,705 | 50,593 | 35,872 | |||||||||
Fiber Route Miles (5)
|
1,558 | 1,109 | 647 | |||||||||
DSL Subscribers (3)
|
10,985 | 9,918 | 8,136 | |||||||||
Dial-up Internet Subscribers
|
3,359 | 4,866 | 7,547 | |||||||||
Cable Segment RGUs(5)
|
24,856 | 26,061 | 8,303 | |||||||||
Employees (full time equivalents)
|
456 | 445 | 411 |
|
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 Nextel agreements, and Covered POPS are those covered by the network’s service area.
|
|
2)
|
PCS Average Monthly Churn is the average of the three monthly subscriber turnover, or churn calculations for the period.
|
|
3)
|
Includes 935 telephone access lines as of December 31, 2009, acquired from North River Telephone Cooperative, and 59 DSL subscribers.
|
|
4)
|
Originated by customers of the Company’s Telephone subsidiary.
|
|
5)
|
The increase in RGUs at December 31, 2008 is primarily a result of the acquisition of cable and internet RGUs from Rapid Communications, LLC, effective December 1, 2008, and the decrease at December 31, 2009, reflects the sale of approximately 1,754 cable and internet RGUs in December 2009. RGU stands for Revenue Generating Unit, and generally means the sum of services to which customers subscribe. The fiber amounts shown for 2008 have been updated to include the approximate amounts acquired in December 2008.
|
Years Ended
|
||||||||||||||||
(in thousands)
|
December 31,
|
Change
|
||||||||||||||
2009
|
2008
|
$ | % | |||||||||||||
Operating revenues
|
$ | 160,616 | $ | 144,424 | $ | 16,192 | 11.2 | |||||||||
Operating expenses
|
117,789 | 99,213 | 18,576 | 18.7 | ||||||||||||
Operating income
|
42,827 | 45,211 | (2,384 | ) | (5.3 | ) | ||||||||||
Other income (expense)
|
(278 | ) | (1,648 | ) | 1,370 | 83.1 | ||||||||||
Income tax expense
|
17,465 | 17,494 | (29 | ) | (0.2 | ) | ||||||||||
Net income from continuing operations
|
$ | 25,084 | $ | 26,069 | $ | (985 | ) | (3.8 | ) |
Years Ended
|
||||||||||||||||
(in thousands)
|
December 31,
|
Change
|
||||||||||||||
2009
|
2008
|
$ | % | |||||||||||||
Segment operating revenues
|
|
|
||||||||||||||
Wireless service revenue
|
$ | 102,196 | $ | 92,149 | $ | 10,047 | 10.9 | |||||||||
Tower lease revenue
|
7,144 | 6,480 | 664 | 10.2 | ||||||||||||
Equipment revenue
|
4,522 | 5,214 | (692 | ) | (13.3 | ) | ||||||||||
Other revenue
|
1,833 | 3,042 | (1,209 | ) | (39.7 | ) | ||||||||||
Total segment operating revenues
|
115,695 | 106,885 | 8,810 | 8.2 | ||||||||||||
Segment operating expenses
|
||||||||||||||||
Cost of goods and services, exclusive of depreciation and amortization shown separately below
|
38,129 | 35,935 | 2,194 | 6.1 | ||||||||||||
Selling, general and administrative, exclusive of depreciation and amortization shown separately below
|
17,098 | 17,623 | (525 | ) | (3.0 | ) | ||||||||||
Depreciation and amortization
|
20,293 | 17,450 | 2,843 | 16.3 | ||||||||||||
Total segment operating expenses
|
75,520 | 71,008 | 4,512 | 6.4 | ||||||||||||
Segment operating income
|
$ | 40,175 | $ | 35,877 | $ | 4,298 | 12.0 |
Years Ended
|
||||||||||||||||
(in thousands)
|
December 31,
|
Change
|
||||||||||||||
2009
|
2008
|
$ | % | |||||||||||||
Segment operating revenues
|
||||||||||||||||
Service revenue
|
$ | 14,193 | $ | 13,715 | $ | 478 | 3.5 | |||||||||
Access revenue
|
11,225 | 12,308 | (1,083 | ) | (8.8 | ) | ||||||||||
Facilities lease revenue
|
14,215 | 13,424 | 791 | 5.9 | ||||||||||||
Equipment revenue
|
148 | 625 | (477 | ) | (76.3 | ) | ||||||||||
Other revenue
|
5,282 | 5,282 | - | - | ||||||||||||
Total segment operating revenues
|
45,063 | 45,354 | (291 | ) | (0.6 | ) | ||||||||||
Segment operating expenses
|
||||||||||||||||
Cost of goods and services, exclusive of depreciation and amortization shown separately below
|
16,773 | 15,585 | 1,188 | 7.6 | ||||||||||||
Selling, general and administrative, exclusive of depreciation and amortization shown separately below
|
7,397 | 7,354 | 43 | 0.6 | ||||||||||||
Depreciation and amortization
|
8,317 | 7,666 | 651 | 8.5 | ||||||||||||
Total segment operating expenses
|
32,487 | 30,605 | 1,882 | 6.1 | ||||||||||||
Segment operating income
|
$ | 12,576 | $ | 14,749 | $ | (2,173 | ) | (14.7 | ) |
Years Ended
|
||||||||||||||||
(in thousands)
|
December 31,
|
Change
|
||||||||||||||
2009
|
2008
|
$ | % | |||||||||||||
|
||||||||||||||||
Segment operating revenues
|
||||||||||||||||
Service revenue
|
$ | 14,257 | $ | 5,592 | $ | 8,665 | 155.0 | |||||||||
Equipment and other revenue
|
1,306 | 541 | 765 | 141.4 | ||||||||||||
Total segment operating revenues
|
15,563 | 6,133 | 9,430 | 153.8 | ||||||||||||
Segment operating expenses
|
||||||||||||||||
Cost of goods and services, exclusive of depreciation and amortization shown separately below
|
12,550 | 4,205 | 8,345 | 198.5 | ||||||||||||
Selling, general and administrative, exclusive of depreciation and amortization shown separately below
|
5,383 | 1,594 | 3,789 | 237.7 | ||||||||||||
Depreciation and amortization
|
3,700 | 1,250 | 2,450 | 196.0 | ||||||||||||
Total segment operating expenses
|
21,633 | 7,049 | 14,584 | 206.9 | ||||||||||||
Segment operating loss
|
$ | (6,070 | ) | $ | (916 | ) | $ | (5,154 | ) | n/m |
Years Ended
|
||||||||||||||||
(in thousands)
|
December 31,
|
Change
|
||||||||||||||
2008
|
2007
|
$ | % | |||||||||||||
Operating revenues
|
$ | 144,424 | $ | 130,365 | $ | 14,059 | 10.8 | |||||||||
Operating expenses
|
99,213 | 94,091 | 5,122 | 5.4 | ||||||||||||
Operating income
|
45,211 | 36,274 | 8,937 | 24.6 | ||||||||||||
Other income (expense)
|
(1,648 | ) | 589 | (2,237 | ) | (379.8 | ) | |||||||||
Income tax expense
|
17,494 | 14,942 | 2,552 | 17.1 | ||||||||||||
Net income from continuing operations
|
$ | 26,069 | $ | 21,921 | $ | 4,148 | 18.9 |
Years Ended
|
||||||||||||||||
(in thousands)
|
December 31,
|
Change
|
||||||||||||||
2008
|
2007
|
$ | % | |||||||||||||
Segment operating revenues
|
|
|
||||||||||||||
Wireless service revenue
|
$ | 92,149 | $ | 80,099 | $ | 12,050 | 15.0 | |||||||||
Tower lease revenue
|
6,480 | 5,917 | 563 | 9.5 | ||||||||||||
Equipment revenue
|
5,214 | 5,015 | 199 | 4.0 | ||||||||||||
Other revenue
|
3,042 | 2,439 | 603 | 24.7 | ||||||||||||
Total segment operating revenues
|
106,885 | 93,470 | 13,415 | 14.4 | ||||||||||||
Segment operating expenses
|
||||||||||||||||
Cost of goods and services, exclusive of depreciation and amortization shown separately below
|
35,935 | 30,205 | 5,730 | 19.0 | ||||||||||||
Selling, general and administrative, exclusive of depreciation and amortization shown separately below
|
17,623 | 15,987 | 1,636 | 10.2 | ||||||||||||
Depreciation and amortization
|
17,450 | 16,254 | 1,196 | 7.4 | ||||||||||||
Total segment operating expenses
|
71,008 | 62,446 | 8,562 | 13.7 | ||||||||||||
Segment operating income
|
$ | 35,877 | $ | 31,024 | $ | 4,853 | 15.6 |
Years Ended
|
||||||||||||||||
(in thousands)
|
December 31,
|
Change
|
||||||||||||||
2008
|
2007
|
$ | % | |||||||||||||
Segment operating revenues
|
||||||||||||||||
Service revenue
|
$ | 13,715 | $ | 13,744 | $ | (29 | ) | (0.2 | ) | |||||||
Access revenue
|
12,308 | 12,476 | (168 | ) | (1.3 | ) | ||||||||||
Facilities lease revenue
|
13,424 | 12,263 | 1,161 | 9.5 | ||||||||||||
Equipment revenue
|
625 | 341 | 284 | 83.3 | ||||||||||||
Other revenue
|
5,282 | 5,297 | (15 | ) | (0.3 | ) | ||||||||||
Total segment operating revenues
|
45,354 | 44,121 | 1,233 | 2.8 | ||||||||||||
Segment operating expenses
|
||||||||||||||||
Cost of goods and services, exclusive of depreciation and amortization shown separately below
|
15,585 | 16,262 | (677 | ) | (4.2 | ) | ||||||||||
Selling, general and administrative, exclusive of depreciation and amortization shown separately below
|
7,354 | 9,293 | (1,939 | ) | (20.9 | ) | ||||||||||
Depreciation and amortization
|
7,666 | 6,138 | 1,528 | 24.9 | ||||||||||||
Total segment operating expenses
|
30,605 | 31,693 | (1,088 | ) | (3.4 | ) | ||||||||||
Segment operating income
|
$ | 14,749 | $ | 12,428 | $ | 2,321 | 18.7 |
Years Ended
|
||||||||||||||||
(in thousands)
|
December 31,
|
Change
|
||||||||||||||
2008
|
2007
|
$ | % | |||||||||||||
|
||||||||||||||||
Segment operating revenues
|
||||||||||||||||
Service revenue
|
$ | 5,592 | $ | 4,573 | $ | 1,019 | 22.3 | |||||||||
Equipment and other revenue
|
541 | 485 | 56 | 11.5 | ||||||||||||
Total segment operating revenues
|
6,133 | 5,058 | 1,075 | 21.3 | ||||||||||||
Segment operating expenses
|
||||||||||||||||
Cost of goods and services, exclusive of depreciation and amortization shown separately below
|
4,205 | 4,161 | 44 | 1.1 | ||||||||||||
Selling, general and administrative, exclusive of depreciation and amortization shown separately below
|
1,594 | 1,660 | (66 | ) | (4.0 | ) | ||||||||||
Depreciation and amortization
|
1,250 | 1,050 | 200 | 19.0 | ||||||||||||
Total segment operating expenses
|
7,049 | 6,871 | 178 | 2.6 | ||||||||||||
Segment operating loss
|
$ | (916 | ) | $ | (1,813 | ) | $ | 897 | 49.5 |
(in thousands)
|
Total
|
Less than 1 year
|
1-3 years
|
4-5 years
|
After 5 years
|
|||||||||||||||
Long-term debt principal (1)
|
$ | 32,960 | $ | 4,561 | $ | 14,503 | $ | 9,756 | $ | 4,140 | ||||||||||
Interest on long–term debt (1)
|
3,534 | 1,352 | 1,598 | 514 | 70 | |||||||||||||||
Retirement plan contributions (2)
|
635 | 635 | - | - | - | |||||||||||||||
Operating leases (3)
|
71,712 | 8,820 | 14,843 | 12,636 | 35,413 | |||||||||||||||
Capital calls on investments
|
300 | 300 | - | - | - | |||||||||||||||
Purchase obligations (4)
|
6,800 | 6,800 | - | - | - | |||||||||||||||
Total obligations
|
$ | 115,941 | $ | 22,468 | $ | 30,944 | $ | 22,906 | $ | 39,623 |
|
1)
|
Includes estimated principal payments and estimated interest payments on the delayed draw term loan based upon outstanding balances and rates in effect at December 31, 2009.
|
|
2)
|
Represents expected contributions to the qualified pension plan.
|
|
3)
|
Amounts include payments over reasonably assured renewals. See Note 14 to the consolidated financial statements appearing elsewhere in this report for additional information.
|
|
4)
|
Represents open purchase orders at December 31, 2009.
|
IT
EM 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
IT
EM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
IT
EM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
IT
EM 9A.
|
CONTROLS AND PROCEDURES
|
IT
EM 9B.
|
OTHER INFORMATION
|
IT
EM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
IT
EM 11.
|
EXECUTIVE COMPENSATION
|
IT
EM 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
|
||||||||||
1995 stock option plan
|
119,215 | $ | 8.71 | - | ||||||||
2005 stock option plan
|
219,267 | $ | 24.27 | 1,067,057 | ||||||||
Total
|
338,482 | $ | 18.79 | 1,067,057 |
IT
EM 13.
|
CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
|
IT
EM 14.
|
PRINCIPAL ACCOUNTING FEES AND SERVICES
|
IT
EM 15.
|
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|
Exhibit
|
||
Number
|
Exhibit Descriptio
n
|
|
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.
|
|
3.2
|
Shenandoah Telecommunications Company Bylaws, as amended, filed as Exhibit 3.2 to the Company’s Current Report on Form 8-K dated November 16, 2009.
|
|
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
|
Shenandoah Telecommunications Company Dividend Reinvestment Plan filed as Exhibit 4.1 to the Company’s Registration Statement on Form S-3 (No. 333-74297).
|
|
4.3
|
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 Stock Incentive Plan filed as Exhibit 4.1 to the Company’s Registration Statement on Form S-8 (No. 333-21733).
|
|
10.2
|
Shenandoah Telecommunications Company Dividend Reinvestment Plan filed as Exhibit 4.4 to the Company’s Registration Statement on Form S-3D (No. 333-74297).
|
|
10.3
|
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.
|
|
10.4
|
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.
|
|
10.5
|
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.
|
|
10.6
|
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.
|
|
10.7
|
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.
|
10.8
|
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.
|
|
10.9
|
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.
|
|
10.10
|
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.
|
|
10.11
|
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.
|
|
10.12
|
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.
|
|
10.13
|
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.
|
|
10.14
|
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.
|
|
10.15
|
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.
|
|
10.16
|
Second Amended and Restated Master Loan Agreement, dated as of November 30, 2004, by and between CoBank, ACB and Shenandoah Telecommunications Company filed as Exhibit 10.16 to the Company’s Current Report on Form 8-K dated December 3, 2004.
|
|
10.17
|
Third Supplement to the Master Loan Agreement dated as Of November 30, 2004, between CoBank, ACB and Shenandoah Telecommunications Company filed as Exhibit 10.17 to the Company’s Current Report on Form 8-K dated December 3, 2004.
|
10.18
|
Second Amendment to the Term Supplement to the Master Loan Agreement dated as Of November 30, 2004, between CoBank, ACB and Shenandoah Telecommunications Company filed as Exhibit 10.18 to the Company’s Current Report on Form 8-K dated December 3, 2004.
|
|
10.19
|
Pledge Agreement dated November 30, 2004 between CoBank, ACB and Shenandoah Telecommunications Company filed as Exhibit 10.19 to the Company’s Current Report on Form 8-K dated December 3, 2004.
|
|
10.20
|
Membership Interest Pledge Agreement dated November 30, 2004 between CoBank, ACB and Shenandoah Telecommunications Company filed as Exhibit 10.20 to the Company’s Current Report on Form 8-K dated December 3, 2004.
|
|
10.21
|
Membership Interest Pledge Agreement dated November 30, 2004 between CoBank, ACB and Shentel Converged Services, Inc. filed as Exhibit 10.21 to the Company’s Current Report on Form 8-K dated December 3, 2004.
|
|
10.22
|
Interest Purchase Agreement dated November 30, 2004 by and among Shentel Converged Services, Inc., NTC Communications LLC and the Interest holders named therein filed as Exhibit 10.22 to the Company’s Current Report on Form 8-K dated January 21, 2005.
|
|
10.23
|
Form of Incentive Stock Option Agreement under the 1996 Shenandoah Telecommunications Company Stock Incentive Plan (for routine formula grants) filed as Exhibit 10.23 to the Company’s Current Report on Form 8-K dated January 21, 2005.
|
|
10.24
|
Forms of Incentive Stock Option Agreement under the 1996 Shenandoah Telecommunications Company Stock Incentive Plan (for newly hired executive employees) filed as Exhibit 10.24 to the Company’s Current Report on Form 8-K dated January 21, 2005
.
|
|
10.25
|
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.
|
|
10.26
|
Description of Compensation of Non-Employee Directors. Filed as Exhibit 10.29 to the Company’s Current Report on Form 8-K dated May 4, 2005.
|
|
10.27
|
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.
|
|
10.28
|
2005 Stock Incentive Plan filed as Exhibit 10.1 to the Company’s Registration Statement on Form S-8 (No. 333-127342).
|
|
10.29
|
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.
|
|
10.30
|
Stock Redemption Agreement dated as of November 10, 2005 among Shenandoah Telephone Company and The Rural Telephone Bank filed as Exhibit 10.30 to the Company’s Report on Form 10-K for the year ended December 31, 2005.
|
10.31
|
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.
|
|
10.32
|
Settlement Agreement and Mutual Release dated March 13, 2007 by and among Sprint Nextel 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.
|
|
10.33
|
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.
|
|
10.34
|
Letter Agreement with CoBank, ACB dated July 1, 2007, filed as Exhibit 10.34 to the Company’s Report on Form 10-Q for the period ended September 30, 2007.
|
|
10.35
|
Letter Agreement with CoBank, ACB dated October 26, 2007 and effective as of July 1, 2007 filed as Exhibit 10.35 to the Company’s Report on Form 10-Q for the period ended September 30, 2007.
|
|
10.36
|
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.
|
|
10.37
|
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.
|
|
10.38
|
Agreement Regarding Amendments to and Consents Regarding Loan Documents between CoBank, ACB and Shenandoah Telecommunications Company, filed as Exhibit 10.38
to the Company’s Current Report on Form 8-K dated November 7, 2008.
|
|
10.39
|
Fourth
Supplement to the Master Loan Agreement dated as of November 30, 2004, between CoBank, ACB and Shenandoah Telecommunications Company,
filed as Exhibit 10.39
to the Company’s Current Report on Form 8-K dated November 7, 2008.
|
|
10.40
|
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.
|
|
10.41
|
Second Agreement Regarding Amendments to Loan Documents and Consent
to the Master Loan Agreement dated as of November 30, 2004, between CoBank, ACB and Shenandoah Telecommunications Company,
filed as Exhibit 10.41
to the Company’s Current Report on Form 8-K dated December 23, 2009.
|
|
*10.42
|
Addendum IX to the Sprint Management Agreement dated as of April 14, 2009, and filed herewith.
|
|
*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.
|
March 8, 2010
|
By: /S/ CHRISTOPHER E. FRENCH
|
|
Christopher E. French, President
|
||
(Duly Authorized Officer)
|
/s/CHRISTOPHER E. FRENCH
|
President & Chief Executive Officer,
|
March 8, 2010
|
Director (Principal Executive Officer)
|
Christopher E. French
|
|
/s/ADELE M. SKOLITS
|
Vice President – Finance and Chief Financial Officer
|
March 8, 2010
|
(Principal Financial Officer and
|
Adele M. Skolits
|
Principal Accounting Officer)
|
/s/DOUGLAS C. ARTHUR
|
Director
|
March 8, 2010
|
|
Douglas C. Arthur
|
|
/s/KEN L. BURCH
|
Director
|
March 8, 2010
|
|
Ken L. Burch
|
|
/s/TRACY FITZSIMMONS
|
Director
|
March 8, 2010
|
|
Tracy Fitzsimmons
|
|
/s/JOHN W. FLORA
|
Director
|
March 8, 2010
|
|
John W. Flora
|
|
/s/ RICHARD L. KOONTZ, JR.
|
Director
|
March 8, 2010
|
|
Richard L. Koontz, Jr.
|
|
/s/DALE S. LAM
|
Director
|
March 8, 2010
|
|
Dale S. Lam
|
|
/s/ JONELLE ST. JOHN
|
Director
|
March 8, 2010
|
|
Jonelle St. John
|
|
/s/JAMES E. ZERKEL II
|
Director
|
March 8, 2010
|
|
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, 2009, 2008 and 2007
|
|
Consolidated Balance Sheets
|
F-4 and F-5
|
Consolidated Statements of Income
|
F-6
|
Consolidated Statements of Shareholders’ Equity and Comprehensive Income
|
F-7 and F-8
|
Consolidated Statements of Cash Flows
|
F-9 and F-10
|
Notes to Consolidated Financial Statements
|
F-11 through F-35
|
ASSETS
|
2009
|
2008
|
||||||
Current Assets
|
||||||||
Cash and cash equivalents
|
$ | 12,054 | $ | 5,240 | ||||
Accounts receivable, net
|
15,058 | 16,131 | ||||||
Vendor credits receivable
|
88 | 5,232 | ||||||
Income taxes receivable
|
5,531 | 7,366 | ||||||
Materials and supplies
|
6,062 | 6,376 | ||||||
Prepaid expenses and other
|
2,416 | 2,283 | ||||||
Assets held for sale
|
10,810 | 28,310 | ||||||
Deferred income taxes
|
616 | 1,483 | ||||||
Total current assets
|
52,635 | 72,421 | ||||||
Investments
|
||||||||
Investments carried at fair value
|
1,990 | 1,440 | ||||||
Other investments
|
6,715 | 6,948 | ||||||
Total investments
|
8,705 | 8,388 | ||||||
Property, Plant and Equipment
|
||||||||
Plant in service
|
373,111 | 323,096 | ||||||
Plant under construction
|
9,116 | 5,076 | ||||||
382,227 | 328,172 | |||||||
Less accumulated amortization and depreciation
|
179,925 | 151,695 | ||||||
Net property, plant and equipment
|
202,302 | 176,477 | ||||||
Other Assets
|
||||||||
Intangible assets, net
|
2,417 | 3,163 | ||||||
Cost in excess of net assets of businesses acquired
|
4,418 | 4,547 | ||||||
Deferred charges and other assets, net
|
1,248 | 1,841 | ||||||
Other assets, net
|
8,083 | 9,551 | ||||||
Total assets
|
$ | 271,725 | $ | 266,837 |
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
2009
|
2008
|
||||||
Current Liabilities
|
||||||||
Current maturities of long-term debt
|
$ | 4,561 | $ | 4,399 | ||||
Accounts payable
|
8,804 | 5,607 | ||||||
Advanced billings and customer deposits
|
6,349 | 5,151 | ||||||
Accrued compensation
|
1,003 | 2,584 | ||||||
Liabilities held for sale
|
858 | 1,013 | ||||||
Accrued liabilities and other
|
3,053 | 5,631 | ||||||
Total current liabilities
|
24,628 | 24,385 | ||||||
Long-term debt, less current maturities
|
28,399 | 36,960 | ||||||
Other Long-Term Liabilities
|
||||||||
Deferred income taxes
|
29,649 | 29,505 | ||||||
Deferred lease payable
|
3,351 | 3,142 | ||||||
Other liabilities
|
10,026 | 6,533 | ||||||
Total other liabilities
|
43,026 | 39,180 | ||||||
Commitments and Contingencies
|
||||||||
Shareholders’ Equity
|
||||||||
Common stock, no par value, authorized 48,000 shares; issued and outstanding 23,681 shares in 2009 and 23,605 shares in 2008
|
17,890 | 16,139 | ||||||
Retained earnings
|
160,230 | 152,706 | ||||||
Accumulated other comprehensive loss, net of tax
|
(2,448 | ) | (2,533 | ) | ||||
Total shareholders’ equity
|
175,672 | 166,312 | ||||||
Total liabilities and shareholders’ equity
|
$ | 271,725 | $ | 266,837 |
2009
|
2008
|
2007
|
||||||||||
|
|
|||||||||||
Operating revenues
|
$ | 160,616 | $ | 144,424 | $ | 130,365 | ||||||
Operating expenses
|
||||||||||||
Cost of goods and services, exclusive of depreciation and amortization shown separately below
|
54,032 | 43,973 | 40,813 | |||||||||
Selling, general and administrative, exclusive of depreciation and amortization shown separately below
|
31,127 | 28,570 | 29,601 | |||||||||
Depreciation and amortization
|
32,630 | 26,670 | 23,677 | |||||||||
Total operating expenses
|
117,789 | 99,213 | 94,091 | |||||||||
Operating income
|
42,827 | 45,211 | 36,274 | |||||||||
Other income (expense)
|
||||||||||||
Interest expense
|
(1,361 | ) | (1,009 | ) | (1,873 | ) | ||||||
Gain (loss) on investments, net
|
124 | (1,410 | ) | 839 | ||||||||
Non-operating income, net
|
959 | 771 | 1,623 | |||||||||
Income from continuing operations before income taxes
|
42,549 | 43,563 | 36,863 | |||||||||
Income tax expense
|
17,465 | 17,494 | 14,942 | |||||||||
Net income from continuing operations
|
25,084 | 26,069 | 21,921 | |||||||||
Discontinued operations:
|
||||||||||||
Loss from operations of Converged Services, net of tax benefits of $6,461, $1,152 and $2,141, respectively
|
(9,992 | ) | (1,924 | ) | (3,361 | ) | ||||||
Net income
|
$ | 15,092 | $ | 24,145 | $ | 18,560 | ||||||
Income per share:
|
||||||||||||
Basic and diluted net income per share:
|
||||||||||||
Net income from continuing operations
|
$ | 1.06 | $ | 1.11 | $ | 0.93 | ||||||
Loss from discontinued Converged Services operations, net of income taxes
|
(0.42 | ) | (0.08 | ) | (0.14 | ) | ||||||
$ | 0.64 | $ | 1.03 | $ | 0.79 | |||||||
Weighted average shares outstanding, basic
|
23,639 | 23,543 | 23,365 | |||||||||
Weighted average shares outstanding, diluted
|
23,701 | 23,609 | 23,497 |
Shares
|
Common Stock
|
Retained Earnings
|
Accumulated Other Comprehensive Income (Loss)
|
Total
|
||||||||||||||||
Balance, December 31, 2006 (as previously reported)
|
23,284 | $ | 11,322 | $ | 124,185 | $ | (1,823 | ) | $ | 133,684 | ||||||||||
Prior period adjustment (see Note 3)
|
- | - | (793 | ) | - | (793 | ) | |||||||||||||
Balance, December 31, 2006, restated
|
23,284 | 11,322 | 123,392 | (1,823 | ) | 132,891 | ||||||||||||||
Comprehensive income:
|
||||||||||||||||||||
Net income
|
- | - | 18,560 | - | 18,560 | |||||||||||||||
Reclassification adjustment for unrealized loss from pension plans included in net income, net of tax
|
- | - | - | 476 | 476 | |||||||||||||||
Net unrealized loss from pension plans, net of tax
|
- | - | - | (392 | ) | (392 | ) | |||||||||||||
Total comprehensive income
|
18,644 | |||||||||||||||||||
Dividends declared ($0.27 per share)
|
- | - | (6,321 | ) | - | (6,321 | ) | |||||||||||||
Dividends reinvested in common stock
|
23 | 518 | - | - | 518 | |||||||||||||||
Common stock repurchased
|
(26 | ) | (636 | ) | - | - | (636 | ) | ||||||||||||
Stock based compensation
|
- | 153 | - | - | 153 | |||||||||||||||
Common stock issued for share awards
|
98 | 2,075 | - | - | 2,075 | |||||||||||||||
Conversion of liability classified awards to equity classified awards
|
- | 55 | - | - | 55 | |||||||||||||||
Common stock issued through exercise of incentive stock options
|
130 | 1,048 | - | - | 1,048 | |||||||||||||||
Net excess tax benefit from stock options exercised
|
- | 156 | - | - | 156 | |||||||||||||||
Balance, December 31, 2007, restated
|
23,509 | $ | 14,691 | $ | 135,631 | $ | (1,739 | ) | $ | 148,583 | ||||||||||
Comprehensive income:
|
||||||||||||||||||||
Net income
|
- | - | 24,145 | - | 24,145 | |||||||||||||||
Reclassification adjustment for unrealized loss from pension plans included in net income, net of tax
|
- | - | - | 137 | 137 | |||||||||||||||
Net unrealized loss from pension plans, net of tax
|
- | - | - | (931 | ) | (931 | ) | |||||||||||||
Total comprehensive income
|
23,351 | |||||||||||||||||||
Dividends declared ($0.30 per share)
|
- | - | (7,070 | ) | - | (7,070 | ) | |||||||||||||
Dividends reinvested in common stock
|
24 | 550 | - | - | 550 | |||||||||||||||
Stock based compensation
|
- | 161 | - | - | 161 | |||||||||||||||
Conversion of liability classified awards to equity classified awards
|
- | 65 | - | - | 65 | |||||||||||||||
Common stock issued through exercise of incentive stock options
|
72 | 597 | - | - | 597 | |||||||||||||||
Net excess tax benefit from stock options exercised
|
- | 75 | - | - | 75 | |||||||||||||||
Balance, December 31, 2008, restated
|
23,605 | $ | 16,139 | $ | 152,706 | $ | (2,533 | ) | $ | 166,312 | ||||||||||
Comprehensive income:
|
||||||||||||||||||||
Net income
|
- | - | 15,092 | - | 15,092 | |||||||||||||||
Reclassification adjustment for unrealized loss from pension plans included in net income, net of tax
|
- | - | - | 55 | 55 | |||||||||||||||
Net unrealized gain from pension plans, net of tax
|
- | - | - | 30 | 30 | |||||||||||||||
Total comprehensive income
|
15,177 | |||||||||||||||||||
Dividends declared ($0.32 per share)
|
- | - | (7,568 | ) | - | (7,568 | ) | |||||||||||||
Dividends reinvested in common stock
|
32 | 560 | - | - | 560 | |||||||||||||||
Stock based compensation
|
- | 676 | - | - | 676 | |||||||||||||||
Conversion of liability classified awards to equity classified awards
|
- | 85 | - | - | 85 | |||||||||||||||
Common stock issued through exercise of incentive stock options
|
44 | 367 | - | - | 367 | |||||||||||||||
Net excess tax benefit from stock options exercised
|
- | 63 | - | - | 63 | |||||||||||||||
Balance, December 31, 2009
|
23,681 | $ | 17,890 | $ | 160,230 | $ | (2,448 | ) | $ | 175,672 |
2009
|
2008
|
2007
|
||||||||||
|
|
|||||||||||
Cash Flows from Operating Activities
|
||||||||||||
Net income
|
$ | 15,092 | $ | 24,145 | $ | 18,560 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||||||
Impairment on assets held for sale
|
17,545 | - | - | |||||||||
Depreciation
|
32,018 | 29,647 | 28,827 | |||||||||
Amortization
|
612 | 491 | 595 | |||||||||
Stock based compensation expense
|
653 | 174 | 2,321 | |||||||||
Excess tax benefits on stock option exercises
|
(63 | ) | (75 | ) | (156 | ) | ||||||
Deferred income taxes
|
957 | 7,733 | (1,377 | ) | ||||||||
Loss on disposal of equipment
|
1,054 | 1,121 | 704 | |||||||||
Gain on sale of cable assets
|
(427 | ) | - | - | ||||||||
Unrealized loss (gain) on investments carried at fair value
|
(580 | ) | 722 | 90 | ||||||||
Net loss on disposal of investments
|
201 | 94 | - | |||||||||
Net (gain) loss from patronage and equity Investments
|
78 | 570 | (1,038 | ) | ||||||||
Other
|
2,777 | (3,837 | ) | (1,007 | ) | |||||||
Changes in assets and liabilities, exclusive of acquired businesses:
|
||||||||||||
(Increase) decrease in:
|
||||||||||||
Accounts receivable
|
1,292 | (3,773 | ) | (727 | ) | |||||||
Materials and supplies
|
470 | (1,662 | ) | (2,165 | ) | |||||||
Increase (decrease) in:
|
||||||||||||
Accounts payable
|
3,178 | (439 | ) | (995 | ) | |||||||
Deferred lease payable
|
205 | 463 | 189 | |||||||||
Other prepaids, deferrals and accruals
|
(989 | ) | (5,300 | ) | (78 | ) | ||||||
Net cash provided by operating activities
|
$ | 74,073 | $ | 50,074 | $ | 43,743 | ||||||
Cash Flows From Investing Activities
|
||||||||||||
Purchase and construction of plant and equipment
|
$ | (53,208 | ) | $ | (65,569 | ) | $ | (29,084 | ) | |||
Proceeds from sales of equipment
|
168 | 611 | 403 | |||||||||
Proceeds from sale of cable assets
|
1,355 | - | - | |||||||||
Cash paid to acquire businesses
|
(601 | ) | (10,886 | ) | - | |||||||
Purchase of investment securities
|
(608 | ) | (551 | ) | (2,872 | ) | ||||||
Proceeds from investment securities
|
611 | 712 | 959 | |||||||||
Net cash used in investing activities
|
$ | (52,283 | ) | $ | (75,683 | ) | $ | (30,594 | ) | |||
(Continued)
|
2009
|
2008
|
2007
|
||||||||||
|
||||||||||||
Cash Flows From Financing Activities
|
||||||||||||
Principal payments on long-term debt
|
$ | (15,399 | ) | $ | (4,248 | ) | $ | (4,109 | ) | |||
Amounts borrowed under debt agreements
|
7,000 | 23,700 | - | |||||||||
Dividends paid
|
(7,007 | ) | (6,520 | ) | (5,803 | ) | ||||||
Repurchase of stock
|
- | - | (636 | ) | ||||||||
Excess tax benefits on stock option exercises
|
63 | 75 | 156 | |||||||||
Proceeds from exercise of incentive stock options
|
367 | 597 | 1,048 | |||||||||
Net cash provided by (used in) financing activities
|
$ | (14,976 | ) | $ | 13,604 | $ | (9,344 | ) | ||||
Net increase (decrease) in cash and cash equivalents
|
$ | 6,814 | $ | (12,005 | ) | $ | 3,805 | |||||
Cash and cash equivalents:
|
||||||||||||
Beginning
|
5,240 | 17,245 | 13,440 | |||||||||
Ending
|
$ | 12,054 | $ | 5,240 | $ | 17,245 | ||||||
Supplemental Disclosures of Cash Flow Information
|
||||||||||||
Cash payments for:
|
||||||||||||
Interest, net of capitalized interest of $541 in 2009, $748 in 2008, and $20 in 2007
|
$ | 1,267 | $ | 938 | $ | 1,912 | ||||||
Income taxes
|
$ | 7,819 | $ | 12,127 | $ | 17,782 |
2009
|
2008
|
2007
|
||||||||||
Balance at beginning of year
|
$ | 127 | $ | 160 | $ | 583 | ||||||
Bad debt expense
|
1,080 | 524 | (439 | ) | ||||||||
Losses charged to allowance
|
(887 | ) | (700 | ) | (148 | ) | ||||||
Recoveries added to allowance
|
10 | 143 | 164 | |||||||||
Balance at end of year
|
$ | 330 | $ | 127 | $ | 160 |
2009
|
2008
|
2007
|
||||||||||
Balance at beginning of year
|
$ | 4,393 | $ | 3,961 | $ | 3,417 | ||||||
Additional liabilities accrued
|
1,227 | 142 | 286 | |||||||||
Accretion expense
|
346 | 290 | 258 | |||||||||
Balance at end of year
|
$ | 5,966 | $ | 4,393 | $ | 3,961 |
CATV Segment
|
All Other Segments
|
Total
|
||||||||||
Balance as of December 31, 2007
|
$ | 3,313 | $ | 6,539 | $ | 9,852 | ||||||
Reclassification to assets held for sale (1)
|
- | (6,539 | ) | (6,539 | ) | |||||||
Acquisition (2)
|
1,234 | - | 1,234 | |||||||||
Balance as of December 31, 2008
|
4,547 | - | 4,547 | |||||||||
Disposition (3)
|
(138 | ) | - | (138 | ) | |||||||
Acquisition (4)
|
- | 9 | 9 | |||||||||
Balance as of December 31, 2009
|
$ | 4,409 | $ | 9 | $ | 4,418 |
|
(1)
|
See Note 2.
|
|
(2)
|
Goodwill resulting from the acquisition of cable system assets from Rapid Communications, LLC (Note 15).
|
|
(3)
|
Allocation of goodwill related to systems, assets and subscribers sold. (Note 15).
|
|
(4)
|
Goodwill resulting from the acquisition of North River Telephone Cooperative (Note 15).
|
2009
|
2008
|
|||||||||||||||||||||||
Gross Carrying Amount
|
Accum-ulated Amort-ization
|
Net
|
Gross Carrying Amount
|
Accum-ulated Amort-ization
|
Net
|
|||||||||||||||||||
Business contracts
|
$ | 203 | $ | (114 | ) | $ | 89 | $ | 203 | $ | (106 | ) | $ | 97 | ||||||||||
Acquired subscriber base
|
2,268 | (569 | ) | 1,699 | 2,436 | (34 | ) | 2,402 | ||||||||||||||||
$ | 2,471 | $ | (683 | ) | $ | 1,788 | $ | 2,639 | $ | (140 | ) | $ | 2,499 |
Year Ending
|
||||
December 31,
|
Amount
|
|||
(in thousands)
|
||||
2010
|
$ | 435 | ||
2011
|
332 | |||
2012
|
253 | |||
2013
|
193 | |||
2014
|
148 |
2009
|
2008
|
2007
|
||||||||||
|
|
|||||||||||
Basic income per share
|
(in thousands, except per share amounts)
|
|||||||||||
Net income
|
$ | 15,092 | $ | 24,145 | $ | 18,560 | ||||||
Weighted average shares outstanding
|
23,639 | 23,543 | 23,365 | |||||||||
Basic income per share
|
$ | 0.64 | $ | 1.03 | $ | 0.79 | ||||||
Effect of stock options outstanding:
|
||||||||||||
Weighted average shares outstanding
|
23,639 | 23,543 | 23,365 | |||||||||
Assumed exercise, at the strike price at the beginning of year
|
174 | 248 | 306 | |||||||||
Assumed repurchase of shares under treasury stock method
|
(112 | ) | ( 182 | ) | (175 | ) | ||||||
Diluted weighted average shares
|
23,701 | 23,609 | 23,497 | |||||||||
Diluted income per share
|
$ | 0.64 | $ | 1.03 | $ | 0.79 |
December 31,
|
||||||||
2009
|
2008
|
|||||||
Assets:
|
||||||||
Property, plant and equipment, net
|
$ | 7,484 | $ | 15,414 | ||||
Goodwill
|
- | 6,539 | ||||||
Intangible assets, net
|
868 | 1,931 | ||||||
Deferred charges
|
1,628 | 3,384 | ||||||
Other assets
|
830 | 1,042 | ||||||
Assets held for sale
|
$ | 10,810 | $ | 28,310 | ||||
Liabilities:
|
||||||||
Other liabilities
|
$ | 858 | $ | 1,013 |
Years Ended December 31,
|
||||||||||||
2009
|
2008
|
2007
|
||||||||||
(in thousands)
|
||||||||||||
Operating revenues
|
$ | 13,717 | $ | 12,863 | $ | 11,214 | ||||||
Loss before income taxes
|
$ | (16,453 | ) | $ | (3,076 | ) | $ | (5,502 | ) |
Consolidated Statements of Income
|
||||||||||||
As Previously Reported
|
Adjustments
|
As Adjusted
|
||||||||||
(in thousands)
|
||||||||||||
Year ended December 31, 2008
|
||||||||||||
Cost of goods and services
|
$ | 43,774 | $ | 199 | $ | 43,973 | ||||||
Depreciation and amortization
|
26,434 | 236 | 26,670 | |||||||||
Total operating expenses
|
98,778 | 435 | 99,213 | |||||||||
Operating income
|
45,646 | (435 | ) | 45,211 | ||||||||
Income from continuing operations before income taxes
|
43,998 | (435 | ) | 43,563 | ||||||||
Income tax expense
|
17,669 | (175 | ) | 17,494 | ||||||||
Net income from continuing operations
|
26,329 | (260 | ) | 26,069 | ||||||||
Net income
|
24,405 | (260 | ) | 24,145 |
As Previously Reported
|
Adjustments
|
As Adjusted
|
||||||||||
(in thousands)
|
||||||||||||
Year ended December 31, 2007
|
||||||||||||
Cost of goods and services
|
$ | 40,624 | $ | 189 | $ | 40,813 | ||||||
Depreciation and amortization
|
23,453 | 224 | 23,677 | |||||||||
Total operating expenses
|
93,678 | 413 | 94,091 | |||||||||
Operating income
|
36,687 | (413 | ) | 36,274 | ||||||||
Income from continuing operations before income taxes
|
37,276 | (413 | ) | 36,863 | ||||||||
Income tax expense
|
15,112 | (170 | ) | 14,942 | ||||||||
Net income from continuing operations
|
22,164 | (243 | ) | 21,921 | ||||||||
Net income
|
18,803 | (243 | ) | 18,560 | ||||||||
Consolidated Balance Sheet
|
||||||||||||
As Previously Reported
|
Adjustments
|
As Adjusted
|
||||||||||
(in thousands)
|
||||||||||||
December 31, 2008
|
||||||||||||
Plant in service
|
$ | 321,044 | $ | 2,052 | $ | 323,096 | ||||||
Accumulated amortization and depreciation
|
150,499 | 1,196 | 151,695 | |||||||||
Net property, plant and equipment
|
175,621 | 856 | 176,477 | |||||||||
Total assets
|
265,981 | 856 | 266,837 | |||||||||
Deferred income taxes
|
30,401 | (896 | ) | 29,505 | ||||||||
Other liabilities
|
3,485 | 3,048 | 6,533 | |||||||||
Total other liabilities
|
37,028 | 2,152 | 39,180 | |||||||||
Retained earnings
|
154,002 | (1,296 | ) | 152,706 | ||||||||
Total shareholders’ equity
|
167,608 | (1,296 | ) | 166,312 | ||||||||
Total liabilities and shareholders’ equity
|
265,981 | 856 | 266,837 | |||||||||
Consolidated Statement of Shareholders’ Equity and Comprehensive Income
|
||||||||||||
As Previously Reported
|
Adjustments
|
As Adjusted
|
||||||||||
(in thousands)
|
||||||||||||
Year ended December 31, 2008
|
||||||||||||
Net income
|
$ | 24,405 | $ | (260 | ) | $ | 24,145 | |||||
Total comprehensive income
|
23,611 | (260 | ) | 23,351 | ||||||||
Retained earnings
|
154,002 | (1,296 | ) | 152,706 | ||||||||
Total stockholders’ equity
|
167,608 | (1,296 | ) | 166,312 | ||||||||
Year ended December 31, 2007
|
||||||||||||
Net income
|
$ | 18,803 | $ | (243 | ) | $ | 18,560 | |||||
Total comprehensive income
|
18,887 | (243 | ) | 18,644 | ||||||||
Retained earnings
|
136,667 | (1,036 | ) | 135,631 | ||||||||
Total stockholders’ equity
|
149,619 | (1,036 | ) | 148,583 | ||||||||
Year ended December 31, 2006
|
||||||||||||
Retained earnings
|
$ | 124,185 | $ | (793 | ) | $ | 123,392 | |||||
Total stockholders’ equity
|
133,684 | (793 | ) | 132,891 |
2009
|
2008
|
|||||||
(in thousands)
|
||||||||
Cash management trust
|
$ | 161 | $ | 178 | ||||
Taxable bond funds
|
165 | 128 | ||||||
Domestic equity funds
|
1,532 | 978 | ||||||
International equity funds
|
132 | 156 | ||||||
$ | 1,990 | $ | 1,440 |
2009
|
2008
|
|||||||
Cost method:
|
(in thousands)
|
|||||||
NECA Services, Inc.
|
$ | 505 | $ | 500 | ||||
CoBank
|
2,141 | 2,007 | ||||||
Other
|
249 | 158 | ||||||
2,895 | 2,665 | |||||||
Equity method:
|
||||||||
South Atlantic Private Equity Fund IV L.P.
|
42 | 117 | ||||||
Magnolia Holding Company, LLC
|
13 | 13 | ||||||
Dolphin Communications Parallel Fund, L.P.
|
134 | 324 | ||||||
Dolphin Communications Fund II, L.P.
|
1,633 | 1,862 | ||||||
Burton Partnership
|
1,749 | 1,680 | ||||||
Virginia Capital, LLC
|
54 | 58 | ||||||
Virginia Independent Telephone Alliance
|
141 | 182 | ||||||
ValleyNet
|
54 | 47 | ||||||
3,820 | 4,283 | |||||||
Total other investments
|
$ | 6,715 | $ | 6,948 |
Estimated Useful Lives
|
2009
|
2008
|
|||||||
(in thousands)
|
|||||||||
Land
|
$ | 1,468 | $ | 1,418 | |||||
Buildings and structures
|
15 – 40 years
|
60,788 | 51,385 | ||||||
Cable and wire
|
15 – 40 years
|
79,061 | 68,749 | ||||||
Equipment and software
|
3 – 16.6 years
|
231,794 | 201,544 | ||||||
$ | 373,111 | $ | 323,096 |
Weighted Average Interest Rate
|
2009
|
2008
|
||||||||||
(in thousands)
|
||||||||||||
CoBank (term loan)
|
Fixed
|
7.49 | % | $ | 13,060 | $ | 17,459 | |||||
CoBank (delayed draw term loan)
|
Variable
|
2.84 | % | 19,700 | 23,700 | |||||||
RUS Development Loan
|
Interest free
|
200 | 200 | |||||||||
32,960 | 41,359 | |||||||||||
Current maturities
|
4,561 | 4,399 | ||||||||||
Total long-term debt
|
$ | 28,399 | $ | 36,960 |
Year
|
Amount
|
|||
(in thousands)
|
||||
2010
|
$ | 4,561 | ||
2011
|
7,915 | |||
2012
|
6,588 | |||
2013
|
5,816 | |||
2014
|
3,940 | |||
Later years
|
4,140 | |||
$ | 32,960 |
2009
|
2008
|
2007
|
||||||||||
(in thousands)
|
||||||||||||
Income tax expense on continuing operations
|
$ | 17,465 | $ | 17,494 | $ | 14,942 | ||||||
Income tax benefit on discontinued operations
|
(6,461 | ) | (1,152 | ) | (2,142 | ) | ||||||
Shareholders’ equity, for compensation expense for tax purposes in excess of amounts recognized for financial reporting purposes
|
(63 | ) | (75 | ) | (156 | ) | ||||||
Accumulated other comprehensive income for unrecognized actuarial losses on pensions
|
55 | (561 | ) | 54 | ||||||||
$ | 10,996 | $ | 15,706 | $ | 12,698 |
Years Ended December 31,
|
||||||||||||
2009
|
2008
|
2007
|
||||||||||
(in thousands)
|
||||||||||||
Current expense
|
||||||||||||
Federal taxes
|
$ | 12,497 | $ | 7,613 | $ | 13,245 | ||||||
State taxes
|
3,973 | 2,919 | 2,451 | |||||||||
Total current provision
|
16,470 | 10,532 | 15,696 | |||||||||
Deferred expense (benefit)
|
||||||||||||
Federal taxes
|
1,787 | 6,488 | (1,475 | ) | ||||||||
State taxes
|
(792 | ) | 474 | 721 | ||||||||
Total deferred provision (benefit)
|
995 | 6,962 | (754 | ) | ||||||||
Income tax expense on continuing operations
|
$ | 17,465 | $ | 17,494 | $ | 14,942 |
Years Ended December 31,
|
||||||||||||
2009
|
2008
|
2007
|
||||||||||
(in thousands)
|
||||||||||||
Computed “expected” tax expense (35%)
|
$ | 14,892 | $ | 15,247 | $ | 12,902 | ||||||
State income taxes, net of federal tax effect
|
2,068 | 2,205 | 2,062 | |||||||||
Other, net
|
505 | 42 | (22 | ) | ||||||||
Income tax expense on continuing operations
|
$ | 17,465 | $ | 17,494 | $ | 14,942 |
2009
|
2008
|
|||||||
Deferred tax assets:
|
(in thousands)
|
|||||||
State net operating loss carryforwards, net of federal tax
|
$ | 684 | $ | 752 | ||||
Impairment loss
|
6,890 | - | ||||||
Lease obligations
|
1,283 | 1,210 | ||||||
Deferred revenues
|
250 | 255 | ||||||
Accrued pension/ERO costs
|
858 | 1,602 | ||||||
Loss on investments, net
|
469 | 329 | ||||||
Accrued compensation costs
|
125 | 121 | ||||||
Inventory reserves
|
188 | 281 | ||||||
Asset retirement obligations
|
2,435 | 1,067 | ||||||
Allowance for doubtful accounts
|
149 | 50 | ||||||
Other, net
|
98 | 104 | ||||||
Total gross deferred tax assets
|
13,429 | 5,771 | ||||||
Less valuation allowance
|
(422 | ) | (221 | ) | ||||
Net deferred tax assets
|
13,007 | 5,550 | ||||||
Deferred tax liabilities:
|
||||||||
Plant-in-service
|
41,879 | 33,204 | ||||||
Deferred activation charges
|
161 | 368 | ||||||
Total gross deferred tax liabilities
|
42,040 | 33,572 | ||||||
Net deferred tax liabilities
|
$ | 29,033 | $ | $28,022 |
2009
|
2008
|
|||||||
Change in benefit obligation:
|
(in thousands)
|
|||||||
Benefit obligation, beginning
|
$ | 12,397 | $ | 11,381 | ||||
Interest cost
|
512 | 512 | ||||||
Actuarial (gain) loss
|
(576 | ) | 1,149 | |||||
Benefits paid
|
(446 | ) | (645 | ) | ||||
Benefit obligation, ending
|
11,887 | 12,397 | ||||||
Change in plan assets:
|
||||||||
Fair value of plan assets, beginning
|
10,147 | 8,957 | ||||||
Actual return on plan assets
|
51 | 35 | ||||||
Benefits paid
|
(446 | ) | (645 | ) | ||||
Contributions made
|
1,500 | 1,800 | ||||||
Fair value of plan assets, ending
|
11,252 | 10,147 | ||||||
Funded status
|
(635 | ) | (2,250 | ) | ||||
Unrecognized net loss
|
3,364 | 3,438 | ||||||
Accrued benefit cost
|
$ | (2,729 | ) | $ | (1,188 | ) | ||
Amounts recognized in the consolidated balance sheets:
|
||||||||
Accrued liabilities and other
|
$ | (635 | ) | $ | (2,250 | ) | ||
Accumulated other comprehensive income
|
3,364 | 3,438 | ||||||
Net amount recognized
|
$ | (2,729 | ) | $ | (1,188 | ) |
2009
|
2008
|
2007
|
||||||||||
Discount rate
|
4.31 | % | 4.00 | % | 4.52 | % | ||||||
Rate of increase in compensation levels
|
- | % | - | % | - | % |
2009
|
2008
|
2007
|
||||||||||
Discount rate
|
4.52 | % | 4.52 | % | 5.00 | % | ||||||
Rate of increase in compensation level
|
- | % | - | % | - | % | ||||||
Expected long-term rate of return on plan assets
|
6.50 | % | 6.50 | % | 6.50 | % |
2009
|
2008
|
|||||||
Asset Category:
|
||||||||
Equity securities
|
2 | % | 6 | % | ||||
Debt securities
|
95 | % | 64 | % | ||||
Cash and cash equivalents
|
3 | % | 30 | % | ||||
100 | % | 100 | % |
2009
|
2008
|
2007
|
||
Dividend rate
|
1.09%
|
1.09%
|
1.41%
|
|
Risk-free interest rate
|
1.88%
|
2.32%
|
4.24%
|
|
Expected lives of options
|
5 years
|
5 years
|
5 years
|
|
Price volatility
|
40.87%
|
40.14%
|
42.03%
|
Options
|
Weighted Average Grant Price Per Option
|
Fair Value Per Option
|
||||||||||
Outstanding December 31, 2006
|
367,962 | $ | 8.36 | |||||||||
Granted
|
60,000 | 20.50 | $ | 7.77 | ||||||||
Cancelled
|
(1,773 | ) | 3.37 | |||||||||
Exercised
|
(129,648 | ) | 3.31 | |||||||||
Outstanding December 31, 2007
|
296,541 | 10.97 | ||||||||||
Granted
|
30,000 | 22.76 | $ | 7.90 | ||||||||
Cancelled
|
(30,000 | ) | 20.50 | |||||||||
Exercised
|
(71,616 | ) | 8.08 | |||||||||
Outstanding December 31, 2008
|
224,925 | 12.20 | ||||||||||
Granted
|
169,047 | 25.26 | $ | 8.73 | ||||||||
Cancelled
|
(9,780 | ) | 25.26 | |||||||||
Exercised
|
(45,710 | ) | 8.92 | |||||||||
Outstanding December 31, 2009
|
338,482 | $ | 18.79 |
Management
Shares
|
Employee
Shares
|
|||||||
Assumptions:
|
||||||||
Dividend rate
|
1.5 | % | 1.5 | % | ||||
Risk free rate
|
4.44 | % | 4.38 | % | ||||
Annual price volatility
|
34 | % | 34 | % | ||||
Derived values:
|
||||||||
Fair value per share
|
$ | 13.20 | $ | 12.20 | ||||
Expected term (years)
|
5.81 | 5.38 |
Year Ending
|
Amount
|
|||
(in thousands)
|
||||
2010
|
$ | 8,820 | ||
2011
|
7,991 | |||
2012
|
6,852 | |||
2013
|
6,480 | |||
2014
|
6,156 | |||
2015 and beyond
|
35,413 | |||
$ | 71,712 |
Year Ending
|
Amount
|
|||
(in thousands)
|
||||
2010
|
$ | 4,145 | ||
2011
|
2,759 | |||
2012
|
1,950 | |||
2013
|
1,355 | |||
2014
|
655 | |||
2015 and beyond
|
276 | |||
$ | 11,140 |
Trade accounts receivable
|
$ | 890 | ||
Property, plant and equipment
|
6,418 | |||
Intangible assets
|
3,110 | |||
Goodwill
|
1,234 | |||
Other assets
|
156 | |||
Total assets
|
$ | 11,808 | ||
Current liabilities
|
$ | 147 | ||
Deferred revenue
|
775 | |||
Total liabilities
|
$ | 922 | ||
Net assets acquired
|
$ | 10,886 |
Year ended December 31, 2009
|
||||||||||||||||||||||||
(In thousands)
|
||||||||||||||||||||||||
Wireless
|
Wireline
|
Cable TV
|
Other
|
Eliminations
|
Consolidated Totals
|
|||||||||||||||||||
External revenues
|
||||||||||||||||||||||||
Service revenues
|
$ | 102,196 | $ | 13,296 | $ | 14,257 | $ | - | $ | - | $ | 129,749 | ||||||||||||
Access charges
|
- | 8,669 | - | - | - | 8,669 | ||||||||||||||||||
Facilities and tower lease
|
4,487 | 6,115 | - | - | - | 10,602 | ||||||||||||||||||
Equipment
|
4,522 | 148 | 204 | - | - | 4,874 | ||||||||||||||||||
Other
|
1,830 | 3,822 | 1,070 | - | - | 6,722 | ||||||||||||||||||
Total external revenues
|
113,035 | 32,050 | 15,531 | - | - | 160,616 | ||||||||||||||||||
Internal revenues
|
2,660 | 13,013 | 32 | - | (15,705 | ) | - | |||||||||||||||||
Total operating revenues
|
115,695 | 45,063 | 15,563 | - | (15,705 | ) | 160,616 | |||||||||||||||||
Operating expenses
|
||||||||||||||||||||||||
Costs of goods and services, exclusive of depreciation and amortization shown separately below
|
38,129 | 16,773 | 12,550 | 310 | (13,730 | ) | 54,032 | |||||||||||||||||
Selling, general and administrative, exclusive of depreciation and amortization shown separately below
|
17,098 | 7,397 | 5,383 | 3,224 | (1,975 | ) | 31,127 | |||||||||||||||||
Depreciation and amortization
|
20,293 | 8,317 | 3,700 | 320 | - | 32,630 | ||||||||||||||||||
Total operating expenses
|
75,520 | 32,487 | 21,633 | 3,854 | (15,705 | ) | 117,789 | |||||||||||||||||
Operating income (loss)
|
40,175 | 12,576 | (6,070 | ) | (3,854 | ) | - | 42,827 | ||||||||||||||||
Non-operating income (expense)
|
262 | 244 | 497 | 1,513 | (1,433 | ) | 1,083 | |||||||||||||||||
Interest expense
|
(301 | ) | (255 | ) | (250 | ) | (1,988 | ) | 1,433 | (1,361 | ) | |||||||||||||
Income (loss) from continuing operations before income taxes
|
40,136 | 12,565 | (5,823 | ) | (4,329 | ) | - | 42,549 | ||||||||||||||||
Income taxes
|
(15,301 | ) | (4,634 | ) | 2,621 | (151 | ) | - | (17,465 | ) | ||||||||||||||
Net income (loss) from continuing operations
|
$ | 24,835 | $ | 7,931 | $ | (3,202 | ) | $ | (4,480 | ) | $ | - | $ | 25,084 | ||||||||||
Total assets
|
$ | 146,228 | $ | 80,668 | $ | 20,240 | $ | 172,069 | $ | (147,480 | ) | $ | 271,725 |
Year
|
Other
|
Wireline
|
Consolidated Totals
|
|||||||||
(in thousands)
|
||||||||||||
2009
|
$ | (313 | ) | $ | 44 | $ | (269 | ) | ||||
2008
|
(759 | ) | 10 | (749 | ) | |||||||
2007
|
840 | 93 | 933 |
(in thousands except per share data)
|
||||||||||||||||||||
For the year ended December 31, 2009
|
First
|
Second
|
Third
|
Fourth
|
Total
|
|||||||||||||||
Operating revenues
|
$ | 40,102 | $ | 40,140 | $ | 40,115 | $ | 40,259 | $ | 160,616 | ||||||||||
Operating income
|
12,012 | 11,638 | 10,569 | 8,608 | 42,827 | |||||||||||||||
Net income from continuing operations
|
6,157 | 6,815 | 6,346 | 5,766 | 25,084 | |||||||||||||||
Net income (loss)
|
(4,213 | ) | 6,740 | 6,307 | 6,258 | 15,092 | ||||||||||||||
Net income from continuing operations per share – basic and diluted
|
$ | 0.26 | $ | 0.29 | $ | 0.27 | $ | 0.24 | $ | 1.06 | ||||||||||
Net income (loss) per share – basic and diluted
|
(0.18 | ) | 0.29 | 0.27 | 0.26 | 0.64 | ||||||||||||||
For the year ended December 31, 2008
|
First
|
Second
|
Third
|
Fourth
|
Total
|
|||||||||||||||
Operating revenues
|
$ | 33,587 | $ | 36,308 | $ | 37,409 | $ | 37,120 | $ | 144,424 | ||||||||||
Operating income
|
9,487 | 13,578 | 12,488 | 9,658 | 45,211 | |||||||||||||||
Net income from continuing operations
|
5,400 | 8,005 | 7,377 | 5,287 | 26,069 | |||||||||||||||
Net income
|
4,727 | 7,185 | 6,742 | 5,491 | 24,145 | |||||||||||||||
Net income from continuing operations per share – basic and diluted
|
$ | 0.23 | $ | 0.34 | $ | 0.31 | $ | 0.22 | $ | 1.11 | ||||||||||
Net income per share – basic and diluted
|
0.20 | 0.31 | 0.29 | 0.23 | 1.03 |
Exhibit
|
||
Number
|
Exhibit Descriptio
n
|
|
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.
|
|
3.2
|
Shenandoah Telecommunications Company Bylaws, as amended, filed as Exhibit 3.2 to the Company’s Current Report on Form 8-K dated November 16, 2009.
|
|
4.1
|
Rights Agreement, dated as of February 8, 2008 between the Company and American Stock Transfer and Trust Company filed as Exhibit 4.1 to the Company's Current Report on Form 8-K, dated January 25, 2008.
|
|
4.2
|
Shenandoah Telecommunications Company Dividend Reinvestment Plan filed as Exhibit 4.1 to the Company’s Registration Statement on Form S-3 (No. 333-74297).
|
|
4.3
|
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 Stock Incentive Plan filed as Exhibit 4.1 to the Company’s Registration Statement on Form S-8 (No. 333-21733).
|
|
10.2
|
Shenandoah Telecommunications Company Dividend Reinvestment Plan filed as Exhibit 4.4 to the Company’s Registration Statement on Form S-3D (No. 333-74297).
|
|
10.3
|
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.
|
|
10.4
|
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.
|
|
10.5
|
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.
|
|
10.6
|
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.
|
10.7
|
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.
|
|
10.8
|
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.
|
|
10.9
|
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.
|
|
10.10
|
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.
|
|
10.11
|
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.
|
|
10.12
|
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.
|
|
10.13
|
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.
|
|
10.14
|
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.
|
|
10.15
|
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.
|
|
10.16
|
Second Amended and Restated Master Loan Agreement, dated as of November 30, 2004, by and between CoBank, ACB and Shenandoah Telecommunications Company filed as Exhibit 10.16 to the Company’s Current Report on Form 8-K dated December 3, 2004.
|
10.17
|
Third Supplement to the Master Loan Agreement dated as Of November 30, 2004, between CoBank, ACB and Shenandoah Telecommunications Company filed as Exhibit 10.17 to the Company’s Current Report on Form 8-K dated December 3, 2004.
|
|
10.18
|
Second Amendment to the Term Supplement to the Master Loan Agreement dated as Of November 30, 2004, between CoBank, ACB and Shenandoah Telecommunications Company filed as Exhibit 10.18 to the Company’s Current Report on Form 8-K dated December 3, 2004.
|
|
10.19
|
Pledge Agreement dated November 30, 2004 between CoBank, ACB and Shenandoah Telecommunications Company filed as Exhibit 10.19 to the Company’s Current Report on Form 8-K dated December 3, 2004.
|
|
10.20
|
Membership Interest Pledge Agreement dated November 30, 2004 between CoBank, ACB and Shenandoah Telecommunications Company filed as Exhibit 10.20 to the Company’s Current Report on Form 8-K dated December 3, 2004.
|
|
10.21
|
Membership Interest Pledge Agreement dated November 30, 2004 between CoBank, ACB and Shentel Converged Services, Inc. filed as Exhibit 10.21 to the Company’s Current Report on Form 8-K dated December 3, 2004.
|
|
10.22
|
Interest Purchase Agreement dated November 30, 2004 by and among Shentel Converged Services, Inc., NTC Communications LLC and the Interest holders named therein filed as Exhibit 10.22 to the Company’s Current Report on Form 8-K dated January 21, 2005.
|
|
10.23
|
Form of Incentive Stock Option Agreement under the 1996 Shenandoah Telecommunications Company Stock Incentive Plan (for routine formula grants) filed as Exhibit 10.23 to the Company’s Current Report on Form 8-K dated January 21, 2005.
|
|
10.24
|
Forms of Incentive Stock Option Agreement under the 1996 Shenandoah Telecommunications Company Stock Incentive Plan (for newly hired executive employees) filed as Exhibit 10.24 to the Company’s Current Report on Form 8-K dated January 21, 2005
.
|
|
10.25
|
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.
|
|
10.26
|
Description of Compensation of Non-Employee Directors. Filed as Exhibit 10.29 to the Company’s Current Report on Form 8-K dated May 4, 2005.
|
|
10.27
|
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.
|
|
10.28
|
2005 Stock Incentive Plan filed as Exhibit 10.1 to the Company’s Registration Statement on Form S-8 (No. 333-127342).
|
|
10.29
|
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.
|
10.30
|
Stock Redemption Agreement dated as of November 10, 2005 among Shenandoah Telephone Company and The Rural Telephone Bank. Filed as Exhibit 10.30 to the Company’s report on Form 10-K for the year ended December 31, 2005.
|
|
10.31
|
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.
|
|
10.32
|
Settlement Agreement and Mutual Release dated March 13, 2007 by and among Sprint Nextel 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.
|
|
10.33
|
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.
|
|
10.34
|
Letter Agreement with CoBank, ACB dated July 1, 2007, filed as Exhibit 10.34 to the Company’s Report on Form 10-Q for the period ended September 30, 2007.
|
|
10.35
|
Letter Agreement with CoBank, ACB dated October 26, 2007 and effective as of July 1, 2007 filed as Exhibit 10.35 to the Company’s Report on Form 10-Q for the period ending September 30, 2007.
|
|
10.36
|
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
|
|
10.37
|
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.
|
|
10.38
|
Agreement Regarding Amendments to and Consents Regarding Loan Documents between CoBank, ACB and Shenandoah Telecommunications Company, filed as Exhibit 10.38
to the Company’s Current Report on Form 8-K dated November 7, 2008.
|
|
10.39
|
Fourth
Supplement to the Master Loan Agreement dated as of November 30, 2004, between CoBank, ACB and Shenandoah Telecommunications Company,
filed as Exhibit 10.39
to the Company’s Current Report on Form 8-K dated November 7, 2008.
|
|
10.40
|
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.
|
|
10.41
|
Second Agreement Regarding Amendments to Loan Documents and Consent
to the Master Loan Agreement dated as of November 30, 2004, between CoBank, ACB and Shenandoah Telecommunications Company,
filed as Exhibit 10.41
to the Company’s Current Report on Form 8-K dated December 23, 2009.
|
Addendum IX to the Sprint Management Agreement dated as of April 14, 2009, filed herewith.
|
||
List of Subsidiaries.
|
||
Consent of KPMG LLP, Independent Registered Public Accounting Firm.
|
||
Certification of President and Chief Executive Officer of Shenandoah Telecommunications Company pursuant to Rule 13a-14(a)under the Securities Exchange Act of 1934.
|
||
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.
|
||
Certifications pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. § 1350.
|
Service
Area BTAs:
|
Altoona,
PA #12
|
(1)
|
Addendum
I dated as of November
5,1999,
|
(2)
|
Addendum
II dated as of August 31, 2000,
|
(3)
|
Addendum
III dated as of September 26, 2001,
|
(4)
|
Addendum
IV dated as of May 22, 2003,
|
(5)
|
Addendum
V dated as of January 30, 2004,
|
(6)
|
Addendum
VI dated as of May 24, 2004,
|
(7)
|
Addendum
VII dated as of March 13, 2007, and
|
(8)
|
Addendum
VIII dated as of September 28,
2007.
|
SPRINT
SPECTRUM L.P.
|
|||
By:
|
/s/ Rob Bryant | ||
Name:
|
Rob Bryant | ||
Title:
|
VP-Operations | ||
WIRELESSCO,
L.P.
|
|||
By:
|
/s/ Rob Bryant | ||
Name:
|
Rob Bryant | ||
Title:
|
VP-Operations | ||
APC
PCS, LLC
|
|||
By:
|
/s/ Rob Bryant | ||
Name:
|
Rob Bryant | ||
Title:
|
VP-Operations | ||
PHILLIECO,
L.P.
|
|||
By:
|
/s/ Rob Bryant | ||
Name:
|
Rob Bryant | ||
Title:
|
VP-Operations | ||
SPRINT
COMMUNICATIONS COMPANY L.P.
|
|||
By:
|
/s/ Rob Bryant | ||
Name:
|
Rob Bryant | ||
Title:
|
VP-Operations |
SHENANDOAH
PERSONAL COMMUNICATIONS COMPANY
|
|||
By:
|
ILLEGIBLE | ||
Name:
|
|||
Title:
|
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
|
|
March
8, 2010
|
|
/S/ADELE M. SKOLITS
|
|
Adele
M. Skolits
|
|
Vice
President – Finance and
|
|
Chief
Financial Officer
|
|
March
8, 2010
|