x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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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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Large accelerated filer
o
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Accelerated filer
þ
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Non-accelerated filer
o
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Smaller reporting company
o
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Page
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||
Numbers
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||
PART I.
|
FINANCIAL INFORMATION
|
|
Item 1.
|
Financial Statements
|
|
3-4
|
||
5
|
||
6
|
||
7-8
|
||
9-13
|
||
Item 2.
|
14-24
|
|
Item 3.
|
25
|
|
Item 4.
|
26
|
|
PART II.
|
OTHER INFORMATION
|
|
Item 1A.
|
27
|
|
Item 2.
|
27
|
|
Item 6.
|
28
|
|
29
|
||
30
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ASSETS
|
March 31,
2013
|
December 31, 2012
|
||||||
Current Assets
|
||||||||
Cash and cash equivalents
|
$ | 67,095 | $ | 71,086 | ||||
Accounts receivable, net
|
24,566 | 25,274 | ||||||
Income taxes receivable
|
2,239 | 4,705 | ||||||
Materials and supplies
|
7,186 | 9,789 | ||||||
Prepaid expenses and other
|
5,790 | 4,749 | ||||||
Deferred income taxes
|
942 | 832 | ||||||
Total current assets
|
107,818 | 116,435 | ||||||
Investments, including $2,173 and $2,064 carried at fair value
|
8,448 | 8,214 | ||||||
Property, plant and equipment, net
|
370,196 | 365,474 | ||||||
Other Assets
|
||||||||
Intangible assets, net
|
73,783 | 74,942 | ||||||
Deferred charges and other assets, net
|
6,483 | 5,675 | ||||||
Net other assets
|
80,266 | 80,617 | ||||||
Total assets
|
$ | 566,728 | $ | 570,740 |
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
March 31,
2013
|
December 31, 2012
|
||||||
Current Liabilities
|
||||||||
Current maturities of long-term debt
|
$ | 1,238 | $ | 1,977 | ||||
Accounts payable
|
20,500 | 31,729 | ||||||
Advanced billings and customer deposits
|
11,191 | 11,190 | ||||||
Accrued compensation
|
2,277 | 2,671 | ||||||
Accrued liabilities and other
|
9,597 | 10,573 | ||||||
Total current liabilities
|
44,803 | 58,140 | ||||||
Long-term debt, less current maturities
|
230,200 | 230,200 | ||||||
Other Long-Term Liabilities
|
||||||||
Deferred income taxes
|
56,952 | 57,896 | ||||||
Deferred lease payable
|
5,221 | 4,903 | ||||||
Asset retirement obligations
|
5,966 | 5,896 | ||||||
Other liabilities
|
6,570 | 5,857 | ||||||
Total other liabilities
|
74,709 | 74,552 | ||||||
Commitments and Contingencies
|
||||||||
Shareholders’ Equity
|
||||||||
Common stock
|
24,973 | 24,688 | ||||||
Accumulated other comprehensive loss
|
(331 | ) | (863 | ) | ||||
Retained earnings
|
192,374 | 184,023 | ||||||
Total shareholders’ equity
|
217,016 | 207,848 | ||||||
Total liabilities and shareholders’ equity
|
$ | 566,728 | $ | 570,740 |
Three Months Ended
March 31,
|
||||||||
2013
|
2012
|
|||||||
Operating revenues
|
$ | 76,010 | $ | 68,823 | ||||
Operating expenses:
|
||||||||
Cost of goods and services, exclusive of depreciation and amortization shown separately below
|
30,700 | 29,029 | ||||||
Selling, general and administrative, exclusive of depreciation and amortization shown separately below
|
16,129 | 15,170 | ||||||
Depreciation and amortization
|
13,972 | 15,807 | ||||||
Total operating expenses
|
60,801 | 60,006 | ||||||
Operating income
|
15,209 | 8,817 | ||||||
Other income (expense):
|
||||||||
Interest expense
|
(2,152 | ) | (1,795 | ) | ||||
Gain on investments, net
|
148 | 471 | ||||||
Non-operating income, net
|
520 | 188 | ||||||
Income from continuing operations before income taxes
|
13,725 | 7,681 | ||||||
Income tax expense
|
5,374 | 3,273 | ||||||
Net income from continuing operations
|
8,351 | 4,408 | ||||||
Income from discontinued operations, net of tax
(expense) of $0 and $(38), respectively
|
- | 58 | ||||||
Net income
|
$ | 8,351 | $ | 4,466 | ||||
Other comprehensive income:
|
||||||||
Unrealized gain on interest rate hedge, net of tax
|
532 | - | ||||||
Comprehensive income
|
$ | 8,883 | $ | 4,466 | ||||
Basic and diluted net income per share:
|
||||||||
Net income from continuing operations
|
$ | 0.35 | $ | 0.19 | ||||
Net income from discontinued operations
|
- | - | ||||||
Net income
|
$ | 0.35 | $ | 0.19 | ||||
Weighted average shares outstanding, basic
|
23,973 | 23,843 | ||||||
Weighted average shares, diluted
|
24,032 | 23,868 |
Shares
|
Common
Stock
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Income (Loss)
|
Total
|
||||||||||||||||
Balance, December 31, 2011
|
23,838 | $ | 22,043 | $ | 175,616 | $ | - | $ | 197,659 | |||||||||||
Net income
|
- | - | 16,303 | - | 16,303 | |||||||||||||||
Other comprehensive loss, net of tax
|
- | - | - | (863 | ) | (863 | ) | |||||||||||||
Dividends declared ($0.33 per share)
|
- | - | (7,896 | ) | - | (7,896 | ) | |||||||||||||
Dividends reinvested in common stock
|
37 | 493 | - | - | 493 | |||||||||||||||
Stock based compensation
|
- | 1,842 | - | - | 1,842 | |||||||||||||||
Common stock issued through exercise of incentive stock options
|
55 | 404 | - | - | 404 | |||||||||||||||
Common stock issued for share awards
|
45 | - | - | - | - | |||||||||||||||
Common stock issued
|
1 | 10 | - | - | 10 | |||||||||||||||
Common stock repurchased
|
(13 | ) | (143 | ) | - | - | (143 | ) | ||||||||||||
Net excess tax benefit from stock options exercised
|
- | 39 | - | - | 39 | |||||||||||||||
Balance, December 31, 2012
|
23,962 | $ | 24,688 | $ | 184,023 | $ | (863 | ) | $ | 207,848 | ||||||||||
Net income
|
- | - | 8,351 | - | 8,351 | |||||||||||||||
Other comprehensive income, net of tax
|
- | - | - | 532 | 532 | |||||||||||||||
Stock based compensation
|
- | 425 | - | - | 425 | |||||||||||||||
Common stock issued for share awards
|
37 | - | - | - | - | |||||||||||||||
Common stock issued
|
- | 2 | - | - | 2 | |||||||||||||||
Common stock repurchased
|
(11 | ) | (155 | ) | - | - | (155 | ) | ||||||||||||
Net excess tax benefit from stock options exercised
|
- | 13 | - | - | 13 | |||||||||||||||
Balance, March 31, 2013
|
23,988 | $ | 24,973 | $ | 192,374 | $ | (331 | ) | $ | 217,016 |
Three Months Ended
March 31,
|
||||||||
2013
|
2012
|
|||||||
Cash Flows From Operating Activities
|
||||||||
Net income
|
$ | 8,351 | $ | 4,466 | ||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation
|
12,808 | 13,929 | ||||||
Amortization
|
1,164 | 1,878 | ||||||
Provision for bad debt
|
453 | 624 | ||||||
Stock based compensation expense
|
425 | 403 | ||||||
Excess tax benefits on stock awards
|
(30 | ) | - | |||||
Deferred income taxes
|
(1,394 | ) | (5,304 | ) | ||||
Net loss on disposal of equipment
|
100 | 55 | ||||||
Realized (gain) loss on disposal of investments
|
(3 | ) | (48 | ) | ||||
Unrealized (gains) on investments
|
(93 | ) | (161 | ) | ||||
Net (gain) loss from patronage and equity investments
|
(171 | ) | (343 | ) | ||||
Other
|
696 | 229 | ||||||
Changes in assets and liabilities:
|
||||||||
(Increase) decrease in:
|
||||||||
Accounts receivable
|
230 | (704 | ) | |||||
Materials and supplies
|
2,603 | 211 | ||||||
Income taxes receivable
|
2,466 | 11,147 | ||||||
Increase (decrease) in:
|
||||||||
Accounts payable
|
(2,815 | ) | (2,095 | ) | ||||
Deferred lease payable
|
318 | 122 | ||||||
Other prepaids, deferrals and accruals
|
(2,399 | ) | (1,959 | ) | ||||
Net cash provided by operating activities
|
$ | 22,709 | $ | 22,450 | ||||
Cash Flows From Investing Activities
|
||||||||
Purchase and construction of property, plant and equipment
|
$ | (26,024 | ) | $ | (14,831 | ) | ||
Proceeds from sales of assets
|
25 | 1,146 | ||||||
Proceeds from sale of equipment
|
128 | 71 | ||||||
Purchase of investment securities
|
(12 | ) | - | |||||
Proceeds from sale of investment securities
|
45 | 412 | ||||||
Net cash used in investing activities
|
$ | (25,838 | ) | $ | (13,202 | ) |
Three Months Ended
March 31,
|
||||||||
2013
|
2012
|
|||||||
Cash Flows From Financing Activities
|
||||||||
Principal payments on long-term debt
|
$ | (739 | ) | $ | (5,434 | ) | ||
Excess tax benefits on stock awards
|
30 | - | ||||||
Repurchases of stock
|
(155 | ) | (47 | ) | ||||
Proceeds from sale of stock
|
2 | 2 | ||||||
Net cash used in financing activities
|
$ | (862 | ) | $ | (5,479 | ) | ||
Net increase (decrease) in cash and cash equivalents
|
$ | (3,991 | ) | $ | 3,769 | |||
Cash and cash equivalents:
|
||||||||
Beginning
|
71,086 | 15,874 | ||||||
Ending
|
$ | 67,095 | $ | 19,643 | ||||
Supplemental Disclosures of Cash Flow Information
|
||||||||
Cash paid (received) for: | ||||||||
Interest
|
$ | 2,171 | $ | 1,636 | ||||
Income taxes
|
$ | 4,302 | $ | (2,532 | ) |
March 31,
2013
|
December 31, 2012
|
|||||||
Plant in service
|
$ | 592,900 | $ | 586,216 | ||||
Plant under construction
|
29,248 | 25,469 | ||||||
622,148 | 611,685 | |||||||
Less accumulated amortization and depreciation
|
251,952 | 246,211 | ||||||
Net property, plant and equipment
|
$ | 370,196 | $ | 365,474 |
|
Liability Derivatives
|
||||||||
|
|
Fair Value as of
|
|||||||
Balance Sheet
|
March 31,
|
December 31,
|
|||||||
Location
|
2013
|
2012
|
|||||||
Derivatives not designated as hedging instruments:
|
|||||||||
Interest rate swaps
|
Accrued liabilities and other
|
$ | 135 | $ | 239 | ||||
Total derivatives not designated as cash flow hedges
|
$ | 135 | $ | 239 | |||||
Derivatives designated as hedging instruments:
|
|||||||||
Interest rate swaps
|
Accrued liabilities and other
|
$ | 1,559 | $ | 1,613 | ||||
Deferred charges and other assets, net
|
1,007 | 177 | |||||||
Total derivatives designated as hedging instruments
|
$ | 552 | $ | 1,436 |
Gains
and
Losses
on Cash
Flow
Hedges
|
Taxes
|
Accumulated Other Comprehensive Income
|
||||||||||
Balance as of December 31, 2012
|
$ | (1,436 | ) | $ | 573 | $ | (863 | ) | ||||
Other comprehensive income before reclassifications
|
490 | (196 | ) | 294 | ||||||||
Amounts reclassified from accumulated other comprehensive income (to interest expense)
|
394 | (156 | ) | 238 | ||||||||
Net current period other comprehensive income
|
884 | (352 | ) | 532 | ||||||||
Balance as of March 31, 2013
|
$ | (552 | ) | $ | 221 | $ | (331 | ) |
Three months ended March 31, 2013
(In thousands)
|
Wireless
|
Cable
|
Wireline
|
Other
|
Eliminations
|
Consolidated
Totals
|
||||||||||||||||||
External revenues
|
||||||||||||||||||||||||
Service revenues
|
$ | 44,065 | $ | 17,380 | $ | 3,900 | $ | - | $ | - | $ | 65,345 | ||||||||||||
Other
|
3,019 | 2,476 | 5,170 | - | - | 10,665 | ||||||||||||||||||
Total external revenues
|
47,084 | 19,856 | 9,070 | - | - | 76,010 | ||||||||||||||||||
Internal revenues
|
1,073 | 49 | 4,639 | - | (5,761 | ) | - | |||||||||||||||||
Total operating revenues
|
48,157 | 19,905 | 13,709 | - | (5,761 | ) | 76,010 | |||||||||||||||||
Operating expenses
|
||||||||||||||||||||||||
Costs of goods and services, exclusive of depreciation and amortization shown separately below
|
17,530 | 12,289 | 6,099 | - | (5,218 | ) | 30,700 | |||||||||||||||||
Selling, general and administrative, exclusive of depreciation and amortization shown separately below
|
8,771 | 5,438 | 1,709 | 754 | (543 | ) | 16,129 | |||||||||||||||||
Depreciation and amortization
|
6,028 | 5,564 | 2,372 | 8 | - | 13,972 | ||||||||||||||||||
Total operating expenses
|
32,329 | 23,291 | 10,180 | 762 | (5,761 | ) | 60,801 | |||||||||||||||||
Operating income (loss)
|
15,828 | (3,386 | ) | 3,529 | (762 | ) | - | 15,209 |
Three months ended March 31, 2012
(In thousands)
|
Wireless
|
Cable
|
Wireline
|
Other
|
Eliminations
|
Consolidated
Totals
|
||||||||||||||||||
External revenues
|
||||||||||||||||||||||||
Service revenues
|
$ | 38,403 | $ | 16,052 | $ | 3,868 | $ | - | $ | - | $ | 58,323 | ||||||||||||
Other
|
3,451 | 2,456 | 4,593 | - | - | 10,500 | ||||||||||||||||||
Total external revenues
|
41,854 | 18,508 | 8,461 | - | - | 68,823 | ||||||||||||||||||
Internal revenues
|
815 | 75 | 4,449 | - | (5,339 | ) | - | |||||||||||||||||
Total operating revenues
|
42,669 | 18,583 | 12,910 | - | (5,339 | ) | 68,823 | |||||||||||||||||
Operating expenses
|
||||||||||||||||||||||||
Costs of goods and services, exclusive of depreciation and amortization shown separately below
|
16,393 | 12,226 | 5,229 | 17 | (4,836 | ) | 29,029 | |||||||||||||||||
Selling, general and administrative, exclusive of depreciation and amortization shown separately below
|
7,994 | 5,047 | 1,717 | 915 | (503 | ) | 15,170 | |||||||||||||||||
Depreciation and amortization
|
7,757 | 5,852 | 2,173 | 25 | - | 15,807 | ||||||||||||||||||
Total operating expenses
|
32,144 | 23,125 | 9,119 | 957 | (5,339 | ) | 60,006 | |||||||||||||||||
Operating income (loss)
|
10,525 | (4,542 | ) | 3,791 | (957 | ) | - | 8,817 |
Three Months Ended
March 31,
|
||||||||
2013
|
2012
|
|||||||
Total consolidated operating income
|
$ | 15,209 | $ | 8,817 | ||||
Interest expense
|
(2,152 | ) | (1,795 | ) | ||||
Non-operating income (expense), net
|
668 | 659 | ||||||
Income from continuing operations before income taxes
|
$ | 13,725 | $ | 7,681 |
(In thousands)
|
March 31,
2013
|
December 31,
2012
|
||||||
Wireless
|
$ | 178,049 | $ | 179,929 | ||||
Cable
|
198,820 | 202,436 | ||||||
Wireline
|
86,469 | 88,776 | ||||||
Other (includes assets held for sale)
|
462,428 | 458,650 | ||||||
Combined totals
|
925,766 | 929,791 | ||||||
Inter-segment eliminations
|
(359,038 | ) | (359,051 | ) | ||||
Consolidated totals
|
$ | 566,728 | $ | 570,740 |
March
2013
|
December
2012
|
|||||||
CoBank (fixed term loan)
|
$ | 1,183 | $ | 1,876 | ||||
Term Loan A
|
230,000 | 230,000 | ||||||
Other debt
|
255 | 301 | ||||||
231,438 | 232,177 | |||||||
Current maturities
|
1,238 | 1,977 | ||||||
Total long-term debt
|
$ | 230,200 | $ | 230,200 |
|
*
|
The Wireless segment provides digital wireless service to a portion of a four-state area covering the region from Harrisburg, York and Altoona, Pennsylvania, to Harrisonburg, Virginia, as a Sprint PCS Affiliate of Sprint Nextel. 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 Virginia, West Virginia and portions of western Maryland, and leases fiber optic facilities throughout its service area.
|
|
*
|
The Wireline segment provides regulated and unregulated voice services, dial-up and DSL internet access, and long-distance access services throughout Shenandoah County and portions of Rockingham and Augusta Counties, Virginia, and leases fiber optic facilities throughout the northern Shenandoah Valley of Virginia, northern Virginia and adjacent areas along the Interstate 81 corridor, including portions of West Virginia and Maryland.
|
|
*
|
A fourth segment, Other, primarily includes Shenandoah Telecommunications Company, the parent holding company.
|
(in thousands)
|
Three Months Ended
March 31,
|
Change
|
||||||||||||||
2013
|
2012
|
$ | % | |||||||||||||
Operating revenues
|
$ | 76,010 | $ | 68,823 | $ | 7,187 | 10.4 | |||||||||
Operating expenses
|
60,801 | 60,006 | 795 | 1.3 | ||||||||||||
Operating income
|
15,209 | 8,817 | 6,392 | 72.5 | ||||||||||||
Interest expense
|
(2,152 | ) | (1,795 | ) | (357 | ) | (19.9 | ) | ||||||||
Other income (expense)
|
668 | 659 | 9 | 1.4 | ||||||||||||
Income before taxes
|
13,725 | 7,681 | 6,044 | 78.7 | ||||||||||||
Income tax expense
|
5,374 | 3,273 | 2,101 | 64.2 | ||||||||||||
Net income from continuing operations
|
$ | 8,351 | $ | 4,408 | $ | 3,943 | 89.5 |
Mar. 31,
|
Dec. 31,
|
Mar. 31,
|
Dec. 31,
|
|||||||||||||
2013
|
2012
|
2012
|
2011
|
|||||||||||||
Retail PCS Subscribers – Postpaid
|
263,957 | 262,892 | 250,684 | 248,620 | ||||||||||||
Retail PCS Subscribers – Prepaid
|
134,404 | 128,177 | 114,384 | 107,100 | ||||||||||||
PCS Market POPS (000) (1)
|
2,390 | 2,390 | 2,388 | 2,388 | ||||||||||||
PCS Covered POPS (000) (1)
|
2,058 | 2,057 | 2,055 | 2,055 | ||||||||||||
CDMA Base Stations (sites)
|
521 | 516 | 510 | 509 | ||||||||||||
LTE-enabled sites
|
232 | 200 | - | - | ||||||||||||
LTE-covered POPS (000) (1)
|
1,450 | 1,131 | - | - | ||||||||||||
EVDO-enabled sites
|
451 | 444 | 434 | 433 | ||||||||||||
EVDO Covered POPS (000) (1)
|
2,032 | 2,029 | 2,027 | 2,027 | ||||||||||||
Towers, Company owned
|
151 | 150 | 149 | 149 | ||||||||||||
Non-affiliate cell site leases
|
218 | 216 | 219 | 219 |
Three Months Ended
|
||||||||
March 31,
|
||||||||
2013
|
2012
|
|||||||
Gross PCS Subscriber Additions – Postpaid
|
15,824 | 15,966 | ||||||
Net PCS Subscriber Additions – Postpaid
|
1,065 | 2,064 | ||||||
Gross PCS Subscriber Additions – Prepaid
|
21,422 | 19,364 | ||||||
Net PCS Subscriber Additions – Prepaid
|
6,227 | 7,285 | ||||||
PCS Average Monthly Retail Churn % - Postpaid
|
1.87 | % | 1.86 | % | ||||
PCS Average Monthly Retail Churn % - Prepaid
|
3.87 | % | 3.65 | % |
|
1)
|
POPS refers to the estimated population of a given geographic area and is based on information purchased from third parties. Market POPS are those within a market area which the Company is authorized to serve under its Sprint PCS affiliate agreements, and Covered POPS are those covered by the Company’s network.
|
(in thousands)
|
Three Months Ended
March 31,
|
Change
|
||||||||||||||
2013
|
2012
|
$ | % | |||||||||||||
Segment operating revenues
|
|
|
||||||||||||||
Wireless service revenue
|
$ | 44,065 | $ | 38,403 | $ | 5,662 | 14.7 | |||||||||
Tower lease revenue
|
2,562 | 2,251 | 311 | 13.8 | ||||||||||||
Equipment revenue
|
1,331 | 1,530 | (199 | ) | (13.0 | ) | ||||||||||
Other revenue
|
199 | 485 | (286 | ) | (59.0 | ) | ||||||||||
Total segment operating revenues
|
48,157 | 42,669 | 5,488 | 12.9 | ||||||||||||
Segment operating expenses
|
||||||||||||||||
Cost of goods and services, exclusive of depreciation and amortization shown separately below
|
17,530 | 16,393 | 1,137 | 6.9 | ||||||||||||
Selling, general and administrative, exclusive of depreciation and amortization shown separately below
|
8,771 | 7,994 | 777 | 9.7 | ||||||||||||
Depreciation and amortization
|
6,028 | 7,757 | (1,729 | ) | (22.3 | ) | ||||||||||
Total segment operating expenses
|
32,329 | 32,144 | 185 | 0.6 | ||||||||||||
Segment operating income
|
$ | 15,828 | $ | 10,525 | $ | 5,303 | 50.4 |
Mar. 31,
2013
|
Dec. 31,
2012
|
Mar. 31,
2012
|
Dec. 31,
2011
|
|||||||||||||
Homes Passed (1)
|
185,099 | 184,533 | 182,828 | 182,156 | ||||||||||||
Customer Relationships (2)
|
||||||||||||||||
Video customers
|
59,353 | 59,089 | 62,519 | 62,835 | ||||||||||||
Non-video customers
|
16,220 | 15,709 | 13,611 | 12,513 | ||||||||||||
Total customer relationships
|
75,573 | 74,798 | 76,130 | 75,348 | ||||||||||||
Video
|
||||||||||||||||
Customers (3)
|
61,257 | 61,559 | 64,532 | 64,979 | ||||||||||||
Penetration (4)
|
33.1 | % | 33.4 | % | 35.3 | % | 35.7 | % | ||||||||
Digital video penetration (5)
|
39.6 | % | 39.5 | % | 39.7 | % | 39.0 | % | ||||||||
High-speed Internet
|
||||||||||||||||
Available Homes (6)
|
164,789 | 163,273 | 156,791 | 156,119 | ||||||||||||
Customers (3)
|
42,479 | 41,025 | 38,856 | 37,021 | ||||||||||||
Penetration (4)
|
25.8 | % | 25.1 | % | 24.8 | % | 23.7 | % | ||||||||
Voice
|
||||||||||||||||
Available Homes (6)
|
157,409 | 154,552 | 143,907 | 143,235 | ||||||||||||
Customers (3)
|
12,840 | 12,307 | 10,618 | 9,881 | ||||||||||||
Penetration (4)
|
8.2 | % | 8.0 | % | 7.4 | % | 6.9 | % | ||||||||
Total Revenue Generating Units (7)
|
116,576 | 114,891 | 114,006 | 111,881 | ||||||||||||
Total Fiber Miles (8)
|
40,686 | 39,418 | 35,086 | 34,772 | ||||||||||||
Total Route Miles
|
2,116 | 2,077 | 1,998 | 1,990 |
|
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 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. Homes passed in Shenandoah County are excluded from available homes as we do not offer high-speed internet or voice services over our co-axial distribution network in this market.
|
|
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
|
||||||||||||||
2013
|
2012
|
$ | % | |||||||||||||
|
||||||||||||||||
Segment operating revenues
|
||||||||||||||||
Service revenue
|
$ | 17,380 | $ | 16,052 | $ | 1,328 | 8.3 | |||||||||
Equipment and other revenue
|
2,525 | 2,531 | (6 | ) | (0.2 | ) | ||||||||||
Total segment operating revenues
|
19,905 | 18,583 | 1,322 | 7.1 | ||||||||||||
Segment operating expenses
|
||||||||||||||||
Cost of goods and services, exclusive of depreciation and amortization shown separately below
|
12,289 | 12,226 | 63 | 0.5 | ||||||||||||
Selling, general and administrative, exclusive of depreciation and amortization shown separately below
|
5,438 | 5,047 | 391 | 7.7 | ||||||||||||
Depreciation and amortization
|
5,564 | 5,852 | (288 | ) | (4.9 | ) | ||||||||||
Total segment operating expenses
|
23,291 | 23,125 | 166 | 0.7 | ||||||||||||
Segment operating loss
|
$ | (3,386 | ) | $ | (4,542 | ) | $ | 1,156 | 25.5 |
Mar. 31,
|
Dec. 31,
|
Mar. 31,
|
Dec. 31,
|
|||||||||||||
2013
|
2012
|
2012
|
2011
|
|||||||||||||
Wireline Segment
|
||||||||||||||||
Telephone Access Lines
|
22,234 | 22,297 | 22,838 | 23,083 | ||||||||||||
Long Distance Subscribers
|
10,116 | 10,157 | 10,416 | 10,483 | ||||||||||||
DSL Subscribers
|
12,665 | 12,567 | 12,472 | 12,351 | ||||||||||||
Dial-up Internet Subscribers
|
918 | 996 | 1,282 | 1,410 | ||||||||||||
Total Fiber Miles (1)
|
84,365 | 84,107 | 79,225 | 78,523 | ||||||||||||
Fiber Route Miles
|
1,428 | 1,420 | 1,356 | 1,349 |
|
(1)
|
Total 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
|
||||||||||||||
2013
|
2012
|
$ | % | |||||||||||||
Segment operating revenues
|
||||||||||||||||
Service revenue
|
$ | 4,245 | $ | 4,129 | $ | 116 | 2.8 | |||||||||
Access revenue
|
3,248 | 2,993 | 255 | 8.5 | ||||||||||||
Facilities lease revenue
|
5,148 | 5,052 | 96 | 1.9 | ||||||||||||
Equipment and other revenue
|
1,068 | 736 | 332 | 45.1 | ||||||||||||
Total segment operating revenues
|
13,709 | 12,910 | 799 | 6.2 | ||||||||||||
Segment operating expenses
|
||||||||||||||||
Cost of goods and services, exclusive of depreciation and amortization shown separately below
|
6,099 | 5,229 | 870 | 16.6 | ||||||||||||
Selling, general and administrative, exclusive of depreciation and amortization shown separately below
|
1,709 | 1,717 | (8 | ) | (0.5 | ) | ||||||||||
Depreciation and amortization
|
2,372 | 2,173 | 199 | 9.2 | ||||||||||||
Total segment operating expenses
|
10,180 | 9,119 | 1,061 | 11.6 | ||||||||||||
Segment operating income
|
$ | 3,529 | $ | 3,791 | $ | (262 | ) | (6.9 | ) |
|
·
|
it does not reflect capital expenditures;
|
|
·
|
many of the assets being depreciated and amortized will have to be replaced in the future and adjusted OIBDA does not reflect cash requirements for such replacements;
|
|
·
|
it does not reflect costs associated with share-based awards exchanged for employee services;
|
|
·
|
it does not reflect interest expense necessary to service interest or principal payments on indebtedness;
|
|
·
|
it does not reflect expenses incurred for the payment of income taxes and other taxes; and
|
|
·
|
other companies, including companies in our industry, may calculate adjusted OIBDA differently than we do, limiting its usefulness as a comparative measure.
|
(in thousands)
|
Three Months Ended
March 31,
|
|||||||
2013
|
2012
|
|||||||
|
||||||||
Adjusted OIBDA
|
$ | 29,635 | $ | 26,709 |
(in thousands)
|
Three Months Ended
March 31,
|
|||||||
2013
|
2012
|
|||||||
|
|
|||||||
Operating income
|
$ | 15,209 | $ | 8,817 | ||||
Plus depreciation and amortization
|
13,972 | 15,807 | ||||||
Adjusted prepaid results
|
- | 1,695 | ||||||
Plus loss on asset sales
|
82 | 33 | ||||||
Plus share based compensation expense
|
372 | 357 | ||||||
Adjusted OIBDA
|
$ | 29,635 | $ | 26,709 |
(in thousands)
|
Three Months Ended
March 31,
|
|||||||
2013
|
2012
|
|||||||
|
|
|||||||
Operating income
|
$ | 15,828 | $ | 10,525 | ||||
Plus depreciation and amortization
|
6,028 | 7,757 | ||||||
Adjusted prepaid results
|
- | 1,695 | ||||||
Plus loss on asset sales
|
90 | 4 | ||||||
Plus share based compensation expense
|
108 | 104 | ||||||
Adjusted OIBDA
|
$ | 22,054 | $ | 20,085 |
(in thousands)
|
Three Months Ended
March 31,
|
|||||||
2013
|
2012
|
|||||||
|
|
|||||||
Operating loss
|
$ | (3,386 | ) | $ | (4,542 | ) | ||
Plus depreciation and amortization
|
5,564 | 5,852 | ||||||
Plus (gain) loss on asset sales
|
(19 | ) | 9 | |||||
Plus share based compensation expense
|
162 | 149 | ||||||
Adjusted OIBDA
|
$ | 2,321 | $ | 1,468 |
(in thousands)
|
Three Months Ended
March 31,
|
|||||||
2013
|
2012
|
|||||||
|
|
|||||||
Operating income
|
$ | 3,529 | $ | 3,791 | ||||
Plus depreciation and amortization
|
2,372 | 2,173 | ||||||
Plus loss on asset sales
|
12 | 20 | ||||||
Plus share based compensation expense
|
78 | 82 | ||||||
Adjusted OIBDA
|
$ | 5,991 | $ | 6,066 |
Actual
|
Covenant Requirement at
March 31, 2013
|
||
Total Leverage Ratio
|
1.97
|
3.00 or Lower
|
|
Debt Service Coverage Ratio
|
6.65
|
2.50 or Higher
|
|
Equity to Assets Ratio
|
38.3%
|
30.0% or Higher
|
ITEM 4.
|
PART II.
|
OTHER INFORMATION
|
ITEM 1A.
|
Number of Shares
Purchased
|
Average Price Paid per Share
|
|||||||
January 1 to January 31
|
5 | $ | 15.06 | |||||
February 1 to February 28
|
3 | $ | 14.49 | |||||
March 1 to March 31
|
3 | $ | 14.76 | |||||
Total
|
11 | $ | 14.82 |
ITEM 6.
|
10.43
|
Addendum XV dated as of March 11, 2013, to Sprint PCS Management Agreement by and among Sprint Spectrum, L.P., WirelessCo, L.P., APC PCS, LLC, PhillieCo, L.P., Sprint Communications Company L.P. and Shenandoah Personal communications, LLC.
|
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 3, 2013
|
|
Exhibit No
.
|
|
Addendum XV dated as of March 11, 2013, to Sprint PCS Management Agreement by and among Sprint Spectrum, L.P., WirelessCo, L.P., APC PCS, LLC, PhillieCo, L.P., Sprint Communications Company L.P. and Shenandoah Personal communications, LLC.
|
|
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
|
Manager:
|
SHENANDOAH PERSONAL COMMUNICATIONS, LLC
|
Service Area BTAs:
|
Altoona, PA #12
|
|
Hagerstown, MD-Chambersburg, PA-Martinsburg, WV #179
|
|
Harrisburg, PA #181
|
|
Harrisonburg, VA #183
|
|
Washington, DC (Jefferson County, WV only) #471
|
|
Winchester, VA #479
|
|
York-Hanover, PA #483
|
|
(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,
|
|
(8)
|
Addendum VIII dated as of September 28, 2007,
|
|
(9)
|
Addendum IX dated as of April 14, 2009,
|
|
(10)
|
Addendum X dated as of March 15, 2010,
|
|
(11)
|
Addendum XI dated as of July 7, 2010,
|
|
(12)
|
Addendum XII dated as of February 1, 2012;
|
|
(13)
|
Addendum XIII dated as of September 12, 2012; and
|
|
(14)
|
Addendum XIV dated as of November 19, 2012.
|
1.
|
The last paragraph of Section 1.1 of the Management Agreement is amended to read as follows:
|
2.
|
The Schedule of Definitions is revised to including the following:
|
3.
|
Section 2.2.1 (e) is added to the Services Agreement:
|
|
(1)
|
Sprint PCS will own, operate and manage all components of the LTE Data Core. Manager will not have physical access to the LTE Data Core and must comply with all Sprint PCS performance requirements and network security standards relating to the LTE Data Core.
|
|
(2)
|
Sprint PCS may designate additional or fewer LTE Data Core Services if consistent with Sprint’ PCS’ addition or reduction of LTE Data Core Services with respect to the Sprint PCS Network. Sprint PCS must give at least 180 days’ prior written notice to Manager of the deletion or addition of LTE Data Services by providing an amended Schedule 2.1.1-B to Manager in accordance with provisions of Section 9.
|
|
(3)
|
If Sprint PCS determines to no longer offer LTE Data Core Services, the LTE Data Core Services may be discontinued pursuant to the same process set forth in Section 2.1.2 Discontinuance of Services that is applicable to Services.
|
4.
|
Section 3.5 is added to the Service Agreement.
|
SPRINT SPECTRUM L.P.
|
|||
By:
|
/s/ Traci Jovanovic
|
Name: |
Traci Jovanovic
|
|||
Title: |
Vice president
|
WIRELESSCO, L.P.
|
|||
By:
|
/s/ Traci Jovanovic
|
Name: |
Traci Jovanovic
|
|||
Title: |
Vice president
|
APC PCS, LLC
|
|||
By:
|
/s/ Traci Jovanovic
|
Name: |
Traci Jovanovic
|
|||
Title: |
Vice president
|
PHILLIECO, L.P.
|
|||
By:
|
/s/ Traci Jovanovic
|
Name: |
Traci Jovanovic
|
|||
Title: |
Vice president
|
SPRINT COMMUNICATIONS COMPANY L.P.
|
|||
By:
|
/s/ Traci Jovanovic
|
Name: |
Traci Jovanovic
|
|||
Title: |
Vice president
|
SHENANDOAH PERSONAL
|
|||
COMMUNICATIONS, LLC (successor in interest to Shenandoah Personal Communications Company)
|
|||
By:
|
/s/ Christopher E. French
|
Name: |
Christopher E. French
|
|||
Title: |
President
|
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
|
|
Date: May 3, 2013
|
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/ADELE M. SKOLITS
|
|
Adele M. Skolits, Vice President - Finance and Chief Financial Officer
|
|
Date: May 3, 2013
|
/S/CHRISTOPHER E. FRENCH
|
|
Christopher E. French
|
|
President and Chief Executive Officer
|
|
May 3, 2013
|
|
/
S/ADELE M. SKOLITS
|
|
Adele M. Skolits
|
|
Vice President - Finance and
|
|
Chief Financial Officer
|
|
May 3, 2013
|