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☑
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31,2018
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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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For the transition period from__________ to __________
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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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SHENANDOAH TELECOMMUNICATIONS COMPANY
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TABLE OF CONTENTS
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Item
Number
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Page
Number
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PART I
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1.
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1A.
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1B.
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2.
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3.
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4.
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PART II
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5.
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6.
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7.
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7A.
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||
8.
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||
9.
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9A.
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9B.
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||
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PART III
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10.
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11.
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12.
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13.
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14.
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PART IV
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15.
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ITEM 1.
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BUSINESS
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Name
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Title
|
Age
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Date in Position
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Christopher E. French
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President and Chief Executive Officer
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61
|
April 1988
|
|
|
|
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David L. Heimbach
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Executive Vice President and Chief Operating Officer
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43
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May 2018
|
|
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James F. Woodward
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Senior Vice President – Finance and Chief Financial Officer
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59
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November 2017
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|
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William L. Pirtle
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Senior Vice President – Sales and Marketing
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59
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January 2019
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|
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Thomas A. Whitaker
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Senior Vice President – Fiber Operations
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58
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January 2019
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|
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Edward H. McKay
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Senior Vice President – Engineering and Operations
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46
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January 2019
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|
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Raymond B. Ostroski
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General Counsel, Vice President - Legal and Corporate Secretary
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64
|
January 2013
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ITEM 1A.
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RISK FACTORS
|
•
|
acquisitions may place significant strain on our management, financial and other resources by requiring us to expend a substantial amount of time and resources in the pursuit of acquisitions that we may not complete, or to devote significant attention to the various integration efforts of any newly acquired businesses, all of which will require the allocation of limited resources;
|
•
|
acquisitions may not have a positive impact on our cash flows or financial performance;
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•
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even if acquired companies eventually contribute to an increase in our cash flows or financial performance, such acquisitions may adversely affect our operating results in the short term as a result of transaction-related expenses we will have to pay or the higher operating and administrative expenses we may incur in the periods immediately following an acquisition as we seek to integrate the acquired business into our operations;
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•
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we may not be able to realize anticipated synergies or eliminate as many anticipated redundant costs;
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•
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our operating and financial systems and controls and information services may not be compatible with those of the companies we may acquire and may not be adequate to support our integration efforts, and any steps we take to improve these systems and controls may not be sufficient;
|
•
|
our business plans and projections used to justify the acquisitions and expansion investments are based on assumptions of revenues per subscriber, penetration rates in specific markets where we operate and expected
|
•
|
growth through acquisitions will increase our need for qualified personnel, who may not be available to us or, if they were employed by a business we acquire, remain with us after the acquisition; and
|
•
|
acquired businesses may have unexpected liabilities and contingencies, which could be significant.
|
•
|
increase our vulnerability to general adverse economic and industry conditions, including interest rate increases, because as of
December 31, 2018
, a significant portion of our borrowings were, and may continue to be, subject to variable rates of interest;
|
•
|
require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, dividends and other general corporate purposes;
|
•
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limit our ability to borrow additional funds to alleviate liquidity constraints, as a result of financial and other restrictive covenants in our credit agreement;
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•
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limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; and
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•
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place us at a competitive disadvantage relative to companies that have less indebtedness.
|
•
|
incur additional indebtedness and additional liens on our assets;
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•
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engage in certain mergers or acquisitions or asset dispositions;
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•
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pay dividends or make other distributions;
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•
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voluntarily prepay other indebtedness;
|
•
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enter into transactions with affiliated persons;
|
•
|
make certain investments; and
|
•
|
change the nature of our business.
|
•
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Sprint could price its national plans based on its own objectives and could set price levels or other terms that may not be economically advantageous for us;
|
•
|
Sprint could develop products and services that could adversely affect our results of operations;
|
•
|
if Sprint’s costs to perform certain services exceed the costs they expect, subject to limitations under our Sprint Affiliate Agreement, Sprint could seek to increase the amounts charged to us for such services;
|
•
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Sprint could make decisions that could adversely affect the Sprint brand names, reputation, or products or services, which could adversely affect our business;
|
•
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Sprint could make technology and network decisions that could greatly increase our capital investment requirements and our operating costs to continue offering the seamless service we provide;
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•
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Sprint could restrict our ability to offer new services needed to remain competitive. This could put us at a competitive disadvantage relative to other wireless service providers if those other wireless service providers begin offering those new services in our market areas, increasing our churn, adversely affecting our ability to obtain new subscribers and reducing our revenues and operating income from wireless services; and
|
•
|
Sprint may not be able to provide the amount of spectrum that is necessary to adequately operate our business.
|
•
|
the quality of the service provided by another provider while roaming may not approximate the quality of the service provided by the Sprint wireless network;
|
•
|
the price of a roaming call off network may not be competitive with prices of other wireless companies for roaming calls, or may not be “commercially reasonable” (as determined by the FCC);
|
•
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customers may not be able to use Sprint’s advanced features, such as voicemail notification, while roaming; and
|
•
|
Sprint or the carriers providing the service may not be able to provide accurate billing information on a timely basis.
|
•
|
Sprint does not adequately project the need for wireless handsets, or enter into arrangements for new types of wireless handsets or other customer equipment, for itself, its wireless affiliates and its other third-party distribution channels, particularly in connection with the transition to new technologies;
|
•
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Sprint gives preference to other distribution channels;
|
•
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we do not adequately project our need for wireless handsets;
|
•
|
Sprint modifies its wireless handset logistics and delivery plan in a manner that restricts or delays access to wireless handsets; or
|
•
|
there is an adverse development in the relationship between Sprint and its suppliers or vendors.
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ITEM 1B.
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UNRESOLVED STAFF COMMENTS
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ITEM 2.
|
PROPERTIES
|
•
|
a 26,500-square foot building in Edinburg, Virginia that houses the Company's main switching center and technical staff,
|
•
|
a 14,000-square foot building in Edinburg, Virginia that includes warehouse space and houses operations staff,
|
•
|
a 10,700-square foot building in Edinburg, Virginia used for customer services and retail sales,
|
•
|
a 17,500-square foot building in Waynesboro, Virginia that houses a switching and data center and technical staff,
|
•
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a 15,500-square foot building in Waynesboro, Virginia that houses operational staff,
|
•
|
a 4,000-square foot building in Waynesboro, Virginia used for retail sales, and
|
•
|
a 15,600-square foot building in Clifton Forge, Virginia that is leased to a third party.
|
ITEM 3.
|
LEGAL PROCEEDINGS
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ITEM 4.
|
MINE SAFETY DISCLOSURES
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ITEM 5.
|
MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
2018
|
|
High
|
|
Low
|
||||
Fourth Quarter
|
|
$
|
51.41
|
|
|
$
|
34.74
|
|
Third Quarter
|
|
39.40
|
|
|
31.10
|
|
||
Second Quarter
|
|
39.65
|
|
|
29.93
|
|
||
First Quarter
|
|
38.60
|
|
|
30.00
|
|
2017
|
|
High
|
|
Low
|
||||
Fourth Quarter
|
|
$
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39.92
|
|
|
$
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32.65
|
|
Third Quarter
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|
38.58
|
|
|
28.06
|
|
||
Second Quarter
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32.48
|
|
|
27.21
|
|
||
First Quarter
|
|
30.64
|
|
|
25.67
|
|
|
2013
|
2014
|
2015
|
2016
|
2017
|
2018
|
||||||||||||
Shenandoah Telecommunications Company
|
$
|
100
|
|
$
|
124
|
|
$
|
172
|
|
$
|
220
|
|
$
|
275
|
|
$
|
361
|
|
NDAQ US
|
$
|
100
|
|
$
|
112
|
|
$
|
113
|
|
$
|
128
|
|
$
|
155
|
|
$
|
147
|
|
NDAQ Telecom Stocks
|
$
|
100
|
|
$
|
103
|
|
$
|
106
|
|
$
|
132
|
|
$
|
132
|
|
$
|
123
|
|
|
Number of Shares
Surrendered |
|
Average Price
Paid per Share |
|||
October 1 to October 31
|
250
|
|
|
$
|
38.43
|
|
November 1 to November 30
|
38,207
|
|
|
49.03
|
|
|
December 1 to December 31
|
267
|
|
|
47.40
|
|
|
Total
|
38,724
|
|
|
$
|
48.95
|
|
ITEM 6.
|
SELECTED FINANCIAL DATA
|
|
Years Ended December 31,
|
||||||||||||||||||
(in thousands, except share and per share amounts)
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
Operating revenue
|
$
|
630,854
|
|
|
$
|
611,991
|
|
|
$
|
535,288
|
|
|
$
|
342,485
|
|
|
$
|
326,946
|
|
Operating expenses
|
537,608
|
|
|
565,481
|
|
|
512,762
|
|
|
268,399
|
|
|
265,003
|
|
|||||
Operating income (loss)
|
93,246
|
|
|
46,510
|
|
|
22,526
|
|
|
74,086
|
|
|
61,943
|
|
|||||
Interest expense
|
34,847
|
|
|
38,237
|
|
|
25,102
|
|
|
7,355
|
|
|
8,148
|
|
|||||
Income tax expense (benefit)
|
15,517
|
|
|
(53,133
|
)
|
|
2,840
|
|
|
27,726
|
|
|
22,151
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income (loss)
|
46,595
|
|
|
66,390
|
|
|
(895
|
)
|
|
40,864
|
|
|
33,883
|
|
|||||
Total assets
|
1,484,766
|
|
|
1,411,860
|
|
|
1,484,407
|
|
|
627,151
|
|
|
619,242
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Total debt - including current maturities
|
770,242
|
|
|
821,958
|
|
|
829,265
|
|
|
199,661
|
|
|
224,250
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Shareholder Information:
|
|
|
|
|
|
|
|
|
|
||||||||||
Shares outstanding
|
49,630,119
|
|
|
49,327,671
|
|
|
48,934,708
|
|
|
48,475,132
|
|
|
48,264,994
|
|
|||||
Earnings (loss) per share - basic
|
$
|
0.94
|
|
|
$
|
1.35
|
|
|
$
|
(0.02
|
)
|
|
$
|
0.84
|
|
|
$
|
0.70
|
|
Earnings (loss) per share - diluted
|
$
|
0.93
|
|
|
$
|
1.33
|
|
|
$
|
(0.02
|
)
|
|
$
|
0.83
|
|
|
0.70
|
|
|
Cash dividends per share
|
$
|
0.27
|
|
|
$
|
0.26
|
|
|
$
|
0.25
|
|
|
$
|
0.24
|
|
|
$
|
0.24
|
|
ITEM 7.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
Wireless provides digital wireless mobile service as a Sprint PCS Affiliate in a multi-state area covering large portions of central and western Virginia, south-central Pennsylvania, West Virginia, and portions of Maryland, North Carolina, Kentucky, and Ohio, "our wireless network coverage area". In these areas, we are the exclusive provider of Sprint-branded wireless mobility communications network products and services on the 800 MHz, 1900 MHz and 2.5 GHz spectrum bands. Wireless also owns
208
cell site towers built on leased and owned land, and leases space on these towers to both affiliates and non-affiliated third party wireless service providers.
|
•
|
Cable provides video, broadband and voice services in franchise areas in portions of Virginia, West Virginia, and western Maryland, and leases fiber optic facilities throughout its service area.
|
•
|
Wireline provides regulated and unregulated voice services, internet broadband, long distance access services, and leases fiber optic facilities throughout portions of Virginia, West Virginia, Maryland, and Pennsylvania.
|
•
|
Additionally, our Other operations are represented by Shenandoah Telecommunications Company, the parent holding company, that provides investing and management services to the Company's subsidiaries.
|
|
Year Ended December 31, 2018
|
||||||||||||||
|
|
Topic 606 Impact - CONSOLIDATED
|
|
||||||||||||
($ in thousands, except per share amounts)
|
Prior to Adoption of Topic 606
|
Changes in Presentation (1)
|
Equipment Revenue (2)
|
Deferred Costs (3)
|
As Reported 12/31/2018
|
||||||||||
Service revenue and other
|
$
|
632,340
|
|
$
|
(86,637
|
)
|
$
|
—
|
|
$
|
16,753
|
|
$
|
562,456
|
|
Equipment revenue
|
8,298
|
|
—
|
|
60,100
|
|
—
|
|
68,398
|
|
|||||
Total operating revenue
|
640,638
|
|
(86,637
|
)
|
60,100
|
|
16,753
|
|
630,854
|
|
|||||
Cost of services
|
193,860
|
|
—
|
|
—
|
|
162
|
|
194,022
|
|
|||||
Cost of goods sold
|
28,377
|
|
(24,518
|
)
|
60,100
|
|
—
|
|
63,959
|
|
|||||
Selling, general & administrative
|
175,753
|
|
(62,119
|
)
|
—
|
|
(412
|
)
|
113,222
|
|
|||||
Depreciation and amortization
|
166,405
|
|
—
|
|
—
|
|
—
|
|
166,405
|
|
|||||
Total operating expenses
|
564,395
|
|
(86,637
|
)
|
60,100
|
|
(250
|
)
|
537,608
|
|
|||||
Operating income (loss)
|
76,243
|
|
—
|
|
—
|
|
17,003
|
|
93,246
|
|
|||||
Other income (expense)
|
(31,134
|
)
|
—
|
|
—
|
|
—
|
|
(31,134
|
)
|
|||||
Income tax expense (benefit)
|
10,926
|
|
—
|
|
—
|
|
4,591
|
|
15,517
|
|
|||||
Net income (loss)
|
$
|
34,183
|
|
$
|
—
|
|
$
|
—
|
|
$
|
12,412
|
|
$
|
46,595
|
|
|
|
|
|
|
|
||||||||||
Earnings (loss) per share
|
|
|
|
|
|
||||||||||
Basic
|
$
|
0.69
|
|
|
|
$
|
0.25
|
|
$
|
0.94
|
|
||||
Diluted
|
$
|
0.68
|
|
|
|
$
|
0.25
|
|
$
|
0.93
|
|
||||
Weighted average shares outstanding, basic
|
49,542
|
|
|
|
|
49,542
|
|
||||||||
Weighted average shares outstanding, diluted
|
50,063
|
|
|
|
|
50,063
|
|
|
|
Year Ended December 31,
|
|
Change
|
||||||||||||||
($ in thousands)
|
|
2018
|
% of Revenue
|
|
2017
|
% of Revenue
|
|
$
|
|
%
|
||||||||
Operating revenue
|
|
$
|
630,854
|
|
100.0
|
|
|
$
|
611,991
|
|
100.0
|
|
|
18,863
|
|
|
3.1
|
|
Operating expenses
|
|
537,608
|
|
85.2
|
|
|
565,481
|
|
92.4
|
|
|
(27,873
|
)
|
|
(4.9
|
)
|
||
Operating income (loss)
|
|
93,246
|
|
14.8
|
|
|
46,510
|
|
7.6
|
|
|
46,736
|
|
|
100.5
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
|
(34,847
|
)
|
(5.5
|
)
|
|
(38,237
|
)
|
(6.2
|
)
|
|
(3,390
|
)
|
|
(8.9
|
)
|
||
Other income (expense), net
|
|
3,713
|
|
0.6
|
|
|
4,984
|
|
0.8
|
|
|
(1,271
|
)
|
|
(25.5
|
)
|
||
Income (loss) before taxes
|
|
62,112
|
|
9.8
|
|
|
13,257
|
|
2.2
|
|
|
48,855
|
|
|
368.5
|
|
||
Income tax expense (benefit)
|
|
15,517
|
|
2.5
|
|
|
(53,133
|
)
|
(8.7
|
)
|
|
68,650
|
|
|
129.2
|
|
||
Net income (loss)
|
|
$
|
46,595
|
|
7.4
|
|
|
$
|
66,390
|
|
10.9
|
|
|
(19,795
|
)
|
|
(29.8
|
)
|
|
|
Year Ended December 31,
|
|
Change
|
||||||||||||||
($ in thousands)
|
|
2017
|
% of Revenue
|
|
2016
|
% of Revenue
|
|
$
|
|
%
|
||||||||
Operating revenue
|
|
$
|
611,991
|
|
100.0
|
|
|
$
|
535,288
|
|
100.0
|
|
|
76,703
|
|
|
14.3
|
|
Operating expenses
|
|
565,481
|
|
92.4
|
|
|
512,762
|
|
95.8
|
|
|
52,719
|
|
|
10.3
|
|
||
Operating income (loss)
|
|
46,510
|
|
7.6
|
|
|
22,526
|
|
4.2
|
|
|
23,984
|
|
|
106.5
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other income (expense), net
|
|
(33,253
|
)
|
(5.4
|
)
|
|
(20,581
|
)
|
(3.8
|
)
|
|
12,672
|
|
|
61.6
|
|
||
Income (loss) before taxes
|
|
13,257
|
|
2.2
|
|
|
1,945
|
|
0.4
|
|
|
11,312
|
|
|
581.6
|
|
||
Income tax expense (benefit)
|
|
(53,133
|
)
|
(8.7
|
)
|
|
2,840
|
|
0.5
|
|
|
(55,973
|
)
|
|
(1,970.9
|
)
|
||
Net income (loss)
|
|
$
|
66,390
|
|
10.8
|
|
|
$
|
(895
|
)
|
(0.2
|
)
|
|
67,285
|
|
|
7,517.9
|
|
|
Year Ended December 31, 2018
|
||||||||||||||
|
|
Topic 606 Impact - WIRELESS
|
|
||||||||||||
($ in thousands)
|
Prior to Adoption of Topic 606
|
Changes in Presentation (1)
|
Equipment Revenue (2)
|
Deferred Costs (3)
|
As Reported 12/31/2018
|
||||||||||
Service revenue
|
$
|
450,735
|
|
$
|
(86,637
|
)
|
$
|
—
|
|
$
|
16,720
|
|
$
|
380,818
|
|
Equipment revenue
|
7,410
|
|
—
|
|
60,100
|
|
—
|
|
67,510
|
|
|||||
Tower and other revenue
|
14,327
|
|
—
|
|
—
|
|
—
|
|
14,327
|
|
|||||
Total operating revenue
|
472,472
|
|
(86,637
|
)
|
60,100
|
|
16,720
|
|
462,655
|
|
|||||
Cost of services
|
131,166
|
|
—
|
|
—
|
|
—
|
|
131,166
|
|
|||||
Cost of goods sold
|
28,001
|
|
(24,518
|
)
|
60,100
|
|
—
|
|
63,583
|
|
|||||
Selling, general & administrative
|
109,657
|
|
(62,119
|
)
|
—
|
|
—
|
|
47,538
|
|
|||||
Depreciation and amortization
|
127,521
|
|
—
|
|
—
|
|
—
|
|
127,521
|
|
|||||
Total operating expenses
|
396,345
|
|
(86,637
|
)
|
60,100
|
|
—
|
|
369,808
|
|
|||||
Operating income (loss)
|
$
|
76,127
|
|
$
|
—
|
|
$
|
—
|
|
$
|
16,720
|
|
$
|
92,847
|
|
|
|
December 31,
2018 (3) |
|
December 31,
2017 (4) |
|
December 31,
2016 (5) |
|||
Postpaid:
|
|
|
|
|
|
|
|||
Retail PCS subscribers - postpaid
|
|
795,176
|
|
|
736,597
|
|
|
722,562
|
|
Gross PCS subscriber additions - postpaid
|
|
190,334
|
|
|
173,871
|
|
|
132,593
|
|
Net PCS subscriber additions (losses) - postpaid
|
|
58,579
|
|
|
14,035
|
|
|
5,085
|
|
PCS average monthly retail churn % - postpaid
|
|
1.82
|
%
|
|
2.04
|
%
|
|
1.84
|
%
|
Prepaid:
|
|
|
|
|
|
|
|||
Retail PCS subscribers - prepaid (1)
|
|
258,704
|
|
|
225,822
|
|
|
206,672
|
|
Gross PCS subscriber additions - prepaid (1)
|
|
150,662
|
|
|
151,926
|
|
|
102,352
|
|
Net PCS subscriber additions (losses) - prepaid (1)
|
|
32,882
|
|
|
19,150
|
|
|
(58,643
|
)
|
PCS average monthly retail churn % - prepaid (1)
|
|
4.45
|
%
|
|
5.07
|
%
|
|
6.72
|
%
|
|
|
|
|
|
|
|
|||
PCS market POPS (000) (2)
|
|
7,023
|
|
|
5,942
|
|
|
5,536
|
|
PCS covered POP (000) (2)
|
|
6,109
|
|
|
5,272
|
|
|
4,807
|
|
CDMA base stations (sites)
|
|
1,853
|
|
|
1,623
|
|
|
1,467
|
|
Towers owned
|
|
208
|
|
|
192
|
|
|
196
|
|
Non-affiliate cell site leases
|
|
193
|
|
|
192
|
|
|
202
|
|
(1)
|
As of September 2017, the Company is no longer including Lifeline subscribers to be consistent with Sprint's policy. Historical customer counts have been adjusted accordingly.
|
(2)
|
"POPS" refers to the estimated population of a given geographic area. Market POPS are those within a market area which we are authorized to serve under our Sprint PCS affiliate agreements, and Covered POPS are those covered by our network. The data source for POPS is U.S. census data. Historical periods previously referred to other third party population data and have been recast to refer to U.S. census data.
|
(3)
|
Beginning February 1, 2018 includes Richmond Expansion Area except for gross PCS subscriber additions.
|
(4)
|
Beginning April 6, 2017 includes Parkersburg Expansion Area except for gross PCS subscriber additions.
|
(5)
|
Beginning May 6, 2016 includes acquired nTelos Area except for gross PCS subscriber additions.
|
|
|
February 1,
2018 |
|
April 6,
2017 |
|
May 6,
2016 |
|||
|
|
Expansion Area
|
|
Expansion Area
|
|
nTelos Area
|
|||
PCS subscribers - postpaid
|
|
38,343
|
|
|
19,067
|
|
|
404,965
|
|
PCS subscribers - prepaid (1)
|
|
15,691
|
|
|
4,517
|
|
|
154,944
|
|
Acquired PCS market POPS (000)
|
|
1,082
|
|
|
511
|
|
|
3,099
|
|
Acquired PCS covered POPS (000)
|
|
602
|
|
|
244
|
|
|
2,298
|
|
Acquired CDMA base stations (sites) (2)
|
|
105
|
|
|
—
|
|
|
868
|
|
Towers
|
|
—
|
|
|
—
|
|
|
20
|
|
Non-affiliate cell site leases
|
|
—
|
|
|
—
|
|
|
10
|
|
(1)
|
Excludes Lifeline subscribers.
|
(2)
|
As of
December 31, 2018
we have shut down
107
overlap sites associated with the nTelos Area.
|
|
|
Year Ended December 31,
|
|
Change
|
||||||||||||
($ in thousands)
|
|
2018
|
% of Revenue
|
|
2017
|
% of Revenue
|
|
$
|
|
%
|
||||||
Wireless operating revenue
|
|
|
|
|
|
|
|
|
|
|
||||||
Wireless service revenue
|
|
$
|
380,818
|
|
82.3
|
|
$
|
431,184
|
|
94.7
|
|
(50,366
|
)
|
|
(11.7
|
)
|
Tower lease revenue
|
|
11,622
|
|
2.5
|
|
11,604
|
|
2.5
|
|
18
|
|
|
0.2
|
|
||
Equipment revenue
|
|
67,510
|
|
14.6
|
|
9,467
|
|
2.1
|
|
58,043
|
|
|
613.1
|
|
||
Other revenue
|
|
2,705
|
|
0.6
|
|
2,823
|
|
0.7
|
|
(118
|
)
|
|
(4.2
|
)
|
||
Total wireless operating revenue
|
|
462,655
|
|
100.0
|
|
455,078
|
|
100.0
|
|
7,577
|
|
|
1.7
|
|
||
Wireless operating expenses
|
|
|
|
|
|
|
|
|
|
|
||||||
Cost of services
|
|
131,166
|
|
28.4
|
|
129,626
|
|
28.5
|
|
1,540
|
|
|
1.2
|
|
||
Cost of goods sold
|
|
63,583
|
|
13.7
|
|
22,653
|
|
5.0
|
|
40,930
|
|
|
180.7
|
|
||
Selling, general and administrative
|
|
47,538
|
|
10.3
|
|
118,257
|
|
26.0
|
|
(70,719
|
)
|
|
(59.8
|
)
|
||
Acquisition, integration and migration expenses
|
|
—
|
|
—
|
|
10,793
|
|
2.4
|
|
(10,793
|
)
|
|
(100.0
|
)
|
||
Depreciation and amortization
|
|
127,521
|
|
27.6
|
|
139,610
|
|
30.7
|
|
(12,089
|
)
|
|
(8.7
|
)
|
||
Total wireless operating expenses
|
|
369,808
|
|
79.9
|
|
420,939
|
|
92.5
|
|
(51,131
|
)
|
|
(12.1
|
)
|
||
Wireless operating income (loss)
|
|
$
|
92,847
|
|
20.1
|
|
$
|
34,139
|
|
7.5
|
|
58,708
|
|
|
172.0
|
|
|
|
Year Ended December 31,
|
|
Change
|
||||||||||
($ in thousands)
|
|
2018
|
|
2017
|
|
$
|
|
%
|
||||||
Wireless service revenue:
|
|
|
|
|
|
|
|
|
||||||
Postpaid billings (1)
|
|
$
|
383,235
|
|
|
$
|
372,237
|
|
|
10,998
|
|
|
3.0
|
|
Amortization of deferred contract and other costs (3)
|
|
(18,742
|
)
|
|
—
|
|
|
18,742
|
|
|
100.0
|
|
||
Management fee
|
|
(30,749
|
)
|
|
(29,857
|
)
|
|
892
|
|
|
3.0
|
|
||
Net service fee
|
|
(32,969
|
)
|
|
(30,751
|
)
|
|
2,218
|
|
|
7.2
|
|
||
Total postpaid service revenue
|
|
300,775
|
|
|
311,629
|
|
|
(10,854
|
)
|
|
(3.5
|
)
|
||
Prepaid billings (2)
|
|
111,462
|
|
|
103,161
|
|
|
8,301
|
|
|
8.0
|
|
||
Amortization of deferred contract and other costs (3)
|
|
(52,846
|
)
|
|
—
|
|
|
52,846
|
|
|
100.0
|
|
||
Sprint management fee
|
|
(7,014
|
)
|
|
(6,189
|
)
|
|
825
|
|
|
13.3
|
|
||
Total prepaid service revenue
|
|
51,602
|
|
|
96,972
|
|
|
(45,370
|
)
|
|
(46.8
|
)
|
||
Travel and other revenue (2)
|
|
28,441
|
|
|
22,583
|
|
|
5,858
|
|
|
25.9
|
|
||
Total service revenue
|
|
$
|
380,818
|
|
|
$
|
431,184
|
|
|
(50,366
|
)
|
|
(11.7
|
)
|
(1)
|
Postpaid net billings are defined under the terms of the affiliate contract with Sprint to be the gross billings to customers within our wireless network coverage area less billing credits and adjustments and allocated write-offs of uncollectible accounts.
|
(2)
|
The Company includes Lifeline subscribers revenue within travel and other revenue to be consistent with Sprint. The above table reflects the reclassification of the related Assurance Wireless prepaid revenue from prepaid gross billings to travel and other revenue.
|
(3)
|
Due to the adoption of Topic 606, costs reimbursed to Sprint for commission and acquisition cost incurred in their national sales channel are recorded as a reduction of revenue and amortized over the period of benefit. Additionally, costs reimbursed to Sprint for the support of their prepaid customer base are recorded as a reduction of revenue. These costs were previously recorded in cost of goods sold, and selling, general and administrative.
|
|
|
Year Ended December 31,
|
|
Change
|
||||||||||||
($ in thousands)
|
|
2017
|
% of Revenue
|
|
2016
|
% of Revenue
|
|
$
|
|
%
|
||||||
Wireless operating revenue
|
|
|
|
|
|
|
|
|
|
|
||||||
Wireless service revenue
|
|
$
|
431,184
|
|
94.7
|
|
$
|
359,769
|
|
92.5
|
|
71,415
|
|
|
19.9
|
|
Tower lease revenue
|
|
11,604
|
|
2.5
|
|
11,279
|
|
2.9
|
|
325
|
|
|
2.9
|
|
||
Equipment revenue
|
|
9,467
|
|
2.1
|
|
10,674
|
|
2.7
|
|
(1,207
|
)
|
|
(11.3
|
)
|
||
Other revenue
|
|
2,823
|
|
0.7
|
|
7,031
|
|
1.9
|
|
(4,208
|
)
|
|
(59.8
|
)
|
||
Total wireless operating revenue
|
|
455,078
|
|
100.0
|
|
388,753
|
|
100.0
|
|
66,325
|
|
|
17.1
|
|
||
Wireless operating expenses
|
|
|
|
|
|
|
|
|
|
|
||||||
Cost of goods and services
|
|
152,279
|
|
33.5
|
|
133,113
|
|
34.2
|
|
19,166
|
|
|
14.4
|
|
||
Selling, general and administrative
|
|
118,257
|
|
26.0
|
|
95,851
|
|
24.7
|
|
22,406
|
|
|
23.4
|
|
||
Acquisition, integration and migration expenses
|
|
10,793
|
|
2.4
|
|
25,927
|
|
6.7
|
|
(15,134
|
)
|
|
(58.4
|
)
|
||
Depreciation and amortization
|
|
139,610
|
|
30.7
|
|
107,621
|
|
27.7
|
|
31,989
|
|
|
29.7
|
|
||
Total wireless operating expenses
|
|
420,939
|
|
92.5
|
|
362,512
|
|
93.2
|
|
58,427
|
|
|
16.1
|
|
||
Wireless operating income (loss)
|
|
$
|
34,139
|
|
7.5
|
|
$
|
26,241
|
|
6.8
|
|
7,898
|
|
|
30.1
|
|
|
|
Year Ended December 31,
|
|
Change
|
|||||||||
($ in thousands)
|
|
2017
|
|
2016
|
|
$
|
|
%
|
|||||
Wireless service revenue:
|
|
|
|
|
|
|
|
|
|||||
Postpaid billings (1)
|
|
$
|
372,237
|
|
|
$
|
314,579
|
|
|
57,658
|
|
|
18.3
|
Management fee
|
|
(29,857
|
)
|
|
(25,543
|
)
|
|
4,314
|
|
|
16.9
|
||
Net service fee
|
|
(30,751
|
)
|
|
(22,953
|
)
|
|
7,798
|
|
|
34.0
|
||
Total postpaid service revenue
|
|
311,629
|
|
|
266,083
|
|
|
45,546
|
|
|
17.1
|
||
Prepaid billings (2)
|
|
103,161
|
|
|
80,056
|
|
|
23,105
|
|
|
28.9
|
||
Sprint management fee
|
|
(6,189
|
)
|
|
(4,960
|
)
|
|
1,229
|
|
|
24.8
|
||
Total prepaid service revenue
|
|
96,972
|
|
|
75,096
|
|
|
21,876
|
|
|
29.1
|
||
Travel and other revenue (2)
|
|
22,583
|
|
|
18,590
|
|
|
3,993
|
|
|
21.5
|
||
Total service revenue
|
|
$
|
431,184
|
|
|
$
|
359,769
|
|
|
71,415
|
|
|
19.9
|
|
|
December 31, 2018
|
|
December 31, 2017
|
|
December 31, 2016
|
|||
Homes passed (1)
|
|
185,133
|
|
|
184,910
|
|
|
184,710
|
|
Customer relationships (2)
|
|
|
|
|
|
|
|||
Video users
|
|
41,269
|
|
|
44,269
|
|
|
48,512
|
|
Non-video customers
|
|
38,845
|
|
|
33,559
|
|
|
28,854
|
|
Total customer relationships
|
|
80,114
|
|
|
77,828
|
|
|
77,366
|
|
Video
|
|
|
|
|
|
|
|||
Customers (3)
|
|
43,600
|
|
|
46,613
|
|
|
50,618
|
|
Penetration (4)
|
|
23.6
|
%
|
|
25.2
|
%
|
|
27.4
|
%
|
Digital video penetration (5)
|
|
78.8
|
%
|
|
76.2
|
%
|
|
77.4
|
%
|
Broadband
|
|
|
|
|
|
|
|||
Available homes (6)
|
|
185,133
|
|
|
184,910
|
|
|
183,826
|
|
Users (3)
|
|
68,179
|
|
|
63,918
|
|
|
60,495
|
|
Penetration (4)
|
|
36.8
|
%
|
|
34.6
|
%
|
|
32.9
|
%
|
Voice
|
|
|
|
|
|
|
|||
Available homes (6)
|
|
185,133
|
|
|
182,379
|
|
|
181,089
|
|
Users (3)
|
|
23,366
|
|
|
22,555
|
|
|
21,352
|
|
Penetration (4)
|
|
12.6
|
%
|
|
12.4
|
%
|
|
11.8
|
%
|
Total revenue generating units (7)
|
|
135,145
|
|
|
133,086
|
|
|
132,465
|
|
Fiber route miles
|
|
3,514
|
|
|
3,356
|
|
|
3,137
|
|
Total fiber miles (8)
|
|
138,648
|
|
|
122,011
|
|
|
92,615
|
|
Average revenue generating units
|
|
133,109
|
|
|
132,759
|
|
|
131,218
|
|
(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 billed 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 users by the number of homes passed or available homes, as appropriate.
|
(5)
|
Digital video penetration is calculated by dividing the number of digital video users by total video users. Digital video users are video customers who receive any level of video service via digital transmission. A dwelling with one or more digital set-top boxes or digital adapters counts as one digital video user.
|
(6)
|
Homes and businesses are considered available (“available homes”) if we can connect them to our distribution system without further extending the transmission lines and if we offer the service in that area.
|
(7)
|
Revenue generating units are the sum of video, voice and high-speed internet users.
|
(8)
|
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.
|
|
|
Year Ended December 31,
|
|
Change
|
||||||||||||
($ in thousands)
|
|
2018
|
% of Revenue
|
|
2017
|
% of Revenue
|
|
$
|
|
%
|
||||||
Cable operating revenue
|
|
|
|
|
|
|
|
|
|
|
||||||
Service revenue
|
|
$
|
114,917
|
|
89.1
|
|
$
|
107,338
|
|
90.1
|
|
7,579
|
|
|
7.1
|
|
Equipment revenue
|
|
695
|
|
0.5
|
|
724
|
|
0.6
|
|
(29
|
)
|
|
(4.0
|
)
|
||
Other revenue
|
|
13,291
|
|
10.4
|
|
11,100
|
|
9.3
|
|
2,191
|
|
|
19.7
|
|
||
Total cable operating revenue
|
|
128,903
|
|
100.0
|
|
119,162
|
|
100.0
|
|
9,741
|
|
|
8.2
|
|
||
Cable operating expenses
|
|
|
|
|
|
|
|
|
|
|
||||||
Cost of services
|
|
59,935
|
|
46.5
|
|
59,335
|
|
49.8
|
|
600
|
|
|
1.0
|
|
||
Cost of goods sold
|
|
295
|
|
0.2
|
|
14
|
|
—
|
|
281
|
|
|
2,007.1
|
|
||
Selling, general, and administrative
|
|
20,274
|
|
15.7
|
|
19,999
|
|
16.8
|
|
275
|
|
|
1.4
|
|
||
Depreciation and amortization
|
|
24,644
|
|
19.1
|
|
23,968
|
|
20.1
|
|
676
|
|
|
2.8
|
|
||
Total cable operating expenses
|
|
105,148
|
|
81.6
|
|
103,316
|
|
86.7
|
|
1,832
|
|
|
1.8
|
|
||
Cable operating income (loss)
|
|
$
|
23,755
|
|
18.4
|
|
$
|
15,846
|
|
13.3
|
|
7,909
|
|
|
49.9
|
|
|
|
Year Ended December 31,
|
|
Change
|
|||||||||||
($ in thousands)
|
|
2017
|
% of Revenue
|
|
2016
|
% of Revenue
|
|
$
|
|
%
|
|||||
Cable operating revenue
|
|
|
|
|
|
|
|
|
|
|
|||||
Service revenue
|
|
$
|
107,338
|
|
90.1
|
|
$
|
99,070
|
|
91.1
|
|
8,268
|
|
|
8.3
|
Other revenue
|
|
11,824
|
|
9.9
|
|
9,664
|
|
8.9
|
|
2,160
|
|
|
22.4
|
||
Total cable operating revenue
|
|
119,162
|
|
100.0
|
|
108,734
|
|
100.0
|
|
10,428
|
|
|
9.6
|
||
Cable operating expenses
|
|
|
|
|
|
|
|
|
|
|
|||||
Cost of goods and services
|
|
59,349
|
|
49.8
|
|
58,581
|
|
53.9
|
|
768
|
|
|
1.3
|
||
Selling, general, and administrative
|
|
19,999
|
|
16.8
|
|
19,248
|
|
17.7
|
|
751
|
|
|
3.9
|
||
Depreciation and amortization
|
|
23,968
|
|
20.1
|
|
23,908
|
|
22.0
|
|
60
|
|
|
0.3
|
||
Total cable operating expenses
|
|
103,316
|
|
86.7
|
|
101,737
|
|
93.6
|
|
1,579
|
|
|
1.6
|
||
Cable operating income (loss)
|
|
$
|
15,846
|
|
13.3
|
|
$
|
6,997
|
|
6.4
|
|
8,849
|
|
|
126.5
|
|
December 31, 2018
|
|
December 31, 2017
|
|
December 31, 2016
|
|||
Long distance subscribers
|
9,452
|
|
|
9,078
|
|
|
9,149
|
|
Video customers (1)
|
4,742
|
|
|
5,019
|
|
|
5,264
|
|
Broadband customers
|
14,464
|
|
|
14,353
|
|
|
14,314
|
|
Fiber route miles
|
2,127
|
|
|
2,073
|
|
|
1,971
|
|
Total fiber miles (2)
|
161,552
|
|
|
154,165
|
|
|
142,230
|
|
|
|
Year Ended December 31,
|
|
Change
|
||||||||||||
($ in thousands)
|
|
2018
|
% of Revenue
|
|
2017
|
% of Revenue
|
|
$
|
|
%
|
||||||
Wireline operating revenue
|
|
|
|
|
|
|
|
|
|
|
||||||
Service revenue
|
|
$
|
23,274
|
|
30.2
|
|
$
|
22,645
|
|
28.6
|
|
629
|
|
|
2.8
|
|
Carrier access and fiber revenue
|
|
50,438
|
|
65.4
|
|
53,078
|
|
67.0
|
|
(2,640
|
)
|
|
(5.0
|
)
|
||
Equipment revenue
|
|
193
|
|
0.3
|
|
127
|
|
0.2
|
|
66
|
|
|
52.0
|
|
||
Other revenue
|
|
3,237
|
|
4.1
|
|
3,403
|
|
4.2
|
|
(166
|
)
|
|
(4.9
|
)
|
||
Total wireline operating revenue
|
|
77,142
|
|
100.0
|
|
79,253
|
|
100.0
|
|
(2,111
|
)
|
|
(2.7
|
)
|
||
Wireline operating expenses
|
|
|
|
|
|
|
|
|
|
|
||||||
Cost of services
|
|
38,056
|
|
49.3
|
|
38,417
|
|
48.5
|
|
(361
|
)
|
|
(0.9
|
)
|
||
Costs of goods sold
|
|
81
|
|
0.1
|
|
119
|
|
0.2
|
|
(38
|
)
|
|
(31.9
|
)
|
||
Selling, general, and administrative
|
|
7,467
|
|
9.7
|
|
6,923
|
|
8.7
|
|
544
|
|
|
7.9
|
|
||
Depreciation and amortization
|
|
13,673
|
|
17.7
|
|
12,829
|
|
16.2
|
|
844
|
|
|
6.6
|
|
||
Total wireline operating expenses
|
|
59,277
|
|
76.8
|
|
58,288
|
|
73.5
|
|
989
|
|
|
1.7
|
|
||
Wireline operating income (loss)
|
|
$
|
17,865
|
|
23.2
|
|
$
|
20,965
|
|
26.5
|
|
(3,100
|
)
|
|
(14.8
|
)
|
|
|
Year Ended December 31,
|
|
Change
|
|||||||||||
($ in thousands)
|
|
2017
|
% of Revenue
|
|
2016
|
% of Revenue
|
|
$
|
|
%
|
|||||
Wireline operating revenue
|
|
|
|
|
|
|
|
|
|
|
|||||
Service revenue
|
|
$
|
22,645
|
|
28.6
|
|
$
|
21,917
|
|
29.2
|
|
728
|
|
|
3.3
|
Carrier access and fiber revenue
|
|
53,078
|
|
67.0
|
|
49,532
|
|
66.1
|
|
3,546
|
|
|
7.2
|
||
Other revenue
|
|
3,530
|
|
4.4
|
|
3,525
|
|
4.7
|
|
5
|
|
|
0.1
|
||
Total wireline operating revenue
|
|
79,253
|
|
100.0
|
|
74,974
|
|
100.0
|
|
4,279
|
|
|
5.7
|
||
Wireline operating expenses
|
|
|
|
|
|
|
|
|
|
|
|||||
Costs of goods and services
|
|
38,536
|
|
48.6
|
|
36,259
|
|
48.4
|
|
2,277
|
|
|
6.3
|
||
Selling, general, and administrative
|
|
6,923
|
|
8.7
|
|
6,474
|
|
8.6
|
|
449
|
|
|
6.9
|
||
Depreciation and amortization
|
|
12,829
|
|
16.2
|
|
11,717
|
|
15.6
|
|
1,112
|
|
|
9.5
|
||
Total wireline operating expenses
|
|
58,288
|
|
73.5
|
|
54,450
|
|
72.6
|
|
3,838
|
|
|
7.0
|
||
Wireline operating income (loss)
|
|
$
|
20,965
|
|
26.5
|
|
$
|
20,524
|
|
27.4
|
|
441
|
|
|
2.1
|
•
|
they do not reflect capital expenditures;
|
•
|
they do not reflect the impacts of adoption of Topic 606;
|
•
|
many of the assets being depreciated and amortized will have to be replaced in the future and Adjusted OIBDA and Continuing OIBDA do not reflect cash requirements for such replacements;
|
•
|
they do not reflect costs associated with share-based awards exchanged for employee services;
|
•
|
they do not reflect interest expense necessary to service interest or principal payments on indebtedness;
|
•
|
they do not reflect gains, losses or dividends on investments;
|
•
|
they do not reflect expenses incurred for the payment of income taxes; and
|
•
|
other companies, including companies in our industry, may calculate Adjusted OIBDA and Continuing OIBDA differently than we do, limiting its usefulness as a comparative measure.
|
Year Ended December 31, 2018
|
(in thousands)
|
|
Wireless
|
|
Cable
|
|
Wireline
|
|
Other
|
|
Consolidated
|
||||||||||
Operating income
|
|
$
|
92,847
|
|
|
$
|
23,755
|
|
|
$
|
17,865
|
|
|
$
|
(41,221
|
)
|
|
$
|
93,246
|
|
|
Impact of ASC topic 606
|
|
(15,048
|
)
|
|
(74
|
)
|
|
(197
|
)
|
|
—
|
|
|
(15,319
|
)
|
||||||
Depreciation and amortization
|
|
127,521
|
|
|
24,644
|
|
|
13,673
|
|
|
567
|
|
|
166,405
|
|
||||||
Share-based compensation expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,959
|
|
|
4,959
|
|
||||||
Benefit received from the waived management fee (1)
|
|
37,763
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
37,763
|
|
||||||
Amortization of intangibles netted in rent expense
|
|
342
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
342
|
|
||||||
Actuarial (gains) losses on pension plans
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,688
|
)
|
|
(1,688
|
)
|
||||||
Adjusted OIBDA
|
|
243,425
|
|
|
48,325
|
|
|
31,341
|
|
|
(37,383
|
)
|
|
285,708
|
|
||||||
Waived management fee
|
|
(37,763
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(37,763
|
)
|
||||||
Continuing OIBDA
|
|
$
|
205,662
|
|
|
$
|
48,325
|
|
|
$
|
31,341
|
|
|
$
|
(37,383
|
)
|
|
$
|
247,945
|
|
Year Ended December 31, 2017
|
(in thousands)
|
|
Wireless
|
|
Cable
|
|
Wireline
|
|
Other
|
|
Consolidated
|
||||||||||
Operating income
|
|
$
|
34,139
|
|
|
$
|
15,846
|
|
|
$
|
20,965
|
|
|
$
|
(24,440
|
)
|
|
$
|
46,510
|
|
|
Depreciation and amortization
|
|
139,610
|
|
|
23,968
|
|
|
12,829
|
|
|
600
|
|
|
177,007
|
|
||||||
(Gain) loss on asset sales
|
|
214
|
|
|
(243
|
)
|
|
79
|
|
|
68
|
|
|
118
|
|
||||||
Share-based compensation expense
|
|
1,579
|
|
|
916
|
|
|
384
|
|
|
701
|
|
|
3,580
|
|
||||||
Benefit received from the waived management fee (1)
|
|
36,056
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
36,056
|
|
||||||
Amortization of intangibles netted in rent expense
|
|
1,528
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,528
|
|
||||||
Temporary back-office costs to support the billing operations through migration (2)
|
|
6,459
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
6,460
|
|
||||||
Actuarial gains on pension plans
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,387
|
)
|
|
(1,387
|
)
|
||||||
Integration and acquisition related expenses, and other
|
|
10,793
|
|
|
—
|
|
|
—
|
|
|
237
|
|
|
11,030
|
|
||||||
Adjusted OIBDA
|
|
230,378
|
|
|
40,487
|
|
|
34,257
|
|
|
(24,220
|
)
|
|
280,902
|
|
||||||
Waived management fee
|
|
(36,056
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(36,056
|
)
|
||||||
Continuing OIBDA
|
|
$
|
194,322
|
|
|
$
|
40,487
|
|
|
$
|
34,257
|
|
|
$
|
(24,220
|
)
|
|
$
|
244,846
|
|
Year Ended December 31, 2016
|
(in thousands)
|
|
Wireless
|
|
Cable
|
|
Wireline
|
|
Other
|
|
Consolidated
|
||||||||||
Operating income
|
|
$
|
26,241
|
|
|
$
|
6,997
|
|
|
$
|
20,524
|
|
|
$
|
(31,236
|
)
|
|
$
|
22,526
|
|
|
Depreciation and amortization
|
|
107,621
|
|
|
23,908
|
|
|
11,717
|
|
|
439
|
|
|
143,685
|
|
||||||
(Gain) loss on asset sales
|
|
(131
|
)
|
|
156
|
|
|
(27
|
)
|
|
(47
|
)
|
|
(49
|
)
|
||||||
Share-based compensation expense
|
|
1,309
|
|
|
756
|
|
|
347
|
|
|
609
|
|
|
3,021
|
|
||||||
Benefit received from the waived management fee (1)
|
|
24,596
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24,596
|
|
||||||
Amortization of intangibles netted in rent expense
|
|
728
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
728
|
|
||||||
Temporary back-office costs to support the billing operations through migration (2)
|
|
13,843
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,843
|
|
||||||
Actuarial gains on pension plans
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,460
|
)
|
|
(4,460
|
)
|
||||||
Integration and acquisition related expenses, and other
|
|
25,927
|
|
|
—
|
|
|
—
|
|
|
16,305
|
|
|
42,232
|
|
||||||
Adjusted OIBDA
|
|
200,134
|
|
|
31,817
|
|
|
32,561
|
|
|
(18,390
|
)
|
|
246,122
|
|
||||||
Waived management fee
|
|
(24,596
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(24,596
|
)
|
||||||
Continuing OIBDA
|
|
$
|
175,538
|
|
|
$
|
31,817
|
|
|
$
|
32,561
|
|
|
$
|
(18,390
|
)
|
|
$
|
221,526
|
|
1)
|
Under our amended affiliate agreement, Sprint agreed to waive the Management Fees charged on both postpaid and prepaid revenues, up to $4.2 million per month, until the total amount waived reaches approximately $255.6 million, which is expected to occur in 2022.
|
2)
|
Represents back-office expenses required to support former nTelos subscribers that migrated to Sprint back-office systems.
|
•
|
a limitation on the Company’s total leverage ratio, defined as indebtedness divided by earnings before interest, taxes, depreciation and amortization, or EBITDA, of less than or equal to 3.50 to 1.00 from December 31, 2018 through December 31, 2019, then 3.25 to 1.00 through December 31, 2021, and 3.00 to 1.00 thereafter;
|
•
|
a minimum debt service coverage ratio, defined as EBITDA minus certain cash taxes divided by the sum of all scheduled principal payments on the Term Loans and other indebtedness plus cash interest expense, greater than or equal to 2.00 to 1.00;
|
•
|
the Company must maintain a minimum liquidity balance, defined as availability under the revolver facility plus unrestricted cash and cash equivalents on deposit in a deposit account for which a control agreement has been delivered to the administrative agent under the 2016 credit agreement, of greater than $25 million at all times.
|
|
Actual
|
|
Covenant Requirement
|
||
Total leverage ratio
|
2.54
|
|
|
3.50 or Lower
|
|
Debt service coverage ratio
|
3.63
|
|
|
2.00 or Higher
|
|
Minimum liquidity balance (in millions)
|
$
|
159.0
|
|
|
$25.0 or Higher
|
(in thousands)
|
Total
|
|
Less than 1 year
|
|
1-3 years
|
|
4-5 years
|
|
More than 5 years
|
||||||||||
Long-term debt principal (1)
|
$
|
785,236
|
|
|
$
|
23,197
|
|
|
$
|
68,244
|
|
|
$
|
221,198
|
|
|
$
|
472,597
|
|
Interest on long-term debt (1)
|
198,295
|
|
|
34,474
|
|
|
65,004
|
|
|
58,215
|
|
|
40,602
|
|
|||||
"Pay-fixed" obligations (2)
|
12,695
|
|
|
4,312
|
|
|
6,300
|
|
|
2,083
|
|
|
—
|
|
|||||
Operating leases (3)
|
425,544
|
|
|
55,050
|
|
|
104,423
|
|
|
97,573
|
|
|
168,498
|
|
|||||
Purchase obligations (4)
|
38,252
|
|
|
24,463
|
|
|
13,789
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
1,460,022
|
|
|
$
|
141,496
|
|
|
$
|
257,760
|
|
|
$
|
379,069
|
|
|
$
|
681,697
|
|
|
|
Estimated Useful Life
|
Affiliate contract expansion
|
|
4 - 14 years
|
Favorable and unfavorable leases - wireless
|
|
1 - 28 years
|
Acquired subscribers - cable
|
|
3 - 10 years
|
Other intangibles
|
|
15 - 20 years
|
ITEM 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
ITEM 9A.
|
CONTROLS AND PROCEDURES
|
(a)
|
Evaluation of Disclosure Controls and Procedures
|
(b)
|
Management’s Report on Internal Control Over Financial Reporting
|
i.
|
Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
|
ii.
|
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and
|
iii.
|
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.
|
•
|
The Company did not have a sufficient number of trained resources with assigned responsibility and accountability for the design, operation and documentation of internal control over financial reporting.
|
•
|
The Company did not have an effective risk assessment process that identified and assessed necessary changes in the application of U.S. generally accepted accounting principles, financial reporting processes and the design and effective operation of internal controls.
|
•
|
The Company did not have an effective information and communication process that identified and assessed the source of reliable information necessary for financial accounting and reporting.
|
•
|
The Company did not have effective monitoring activities to assess the operation of internal control.
|
(c)
|
Management’s Remediation Plan
|
•
|
Continue to seek, train and retain individuals that have the appropriate skills and experience related to designing, operating and documenting internal control over financial reporting.
|
•
|
Monitor compliance and continue to enhance policies and procedures developed and implemented during
2018
to ensure that effective risk assessments are performed to identify and assess necessary changes in the application of U.S. generally accepted accounting principles, financial reporting processes and the design and effective operation of internal controls.
|
•
|
Monitor compliance and continue to enhance policies and procedures developed and implemented during
2018
to ensure that information needed for financial accounting and reporting purposes and to support the performance of key controls is accurate, complete, relevant and reliable, and communicated in a timely manner.
|
•
|
Continue to evaluate and enhance the Company’s monitoring activities to ensure the components of internal control are present and functioning related to all business processes.
|
•
|
Continue to report regularly to the audit committee on the progress and results of the remediation plan, including the identification, status and resolution of internal control deficiencies.
|
ITEM 9B.
|
OTHER INFORMATION
|
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
ITEM 11.
|
EXECUTIVE COMPENSATION
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
|
Number of securities to be issued upon exercise of outstanding options
|
|
Weighted average exercise price of outstanding options
|
|
Number of securities remaining available for future issuance
|
||||
2005 Stock Incentive Plan
|
47,970
|
|
|
$
|
6.65
|
|
|
—
|
|
|
|
|
|
|
|
||||
2014 Equity Incentive Plan
|
13,388
|
|
|
$
|
33.02
|
|
|
2,204,820
|
|
ITEM 13.
|
CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
|
ITEM 14.
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES
|
ITEM 15.
|
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|
Exhibit
Number
|
Exhibit Description
|
|
|
2.1
|
|
|
|
3.1
|
|
|
|
3.2
|
|
|
|
4.1
|
|
|
|
4.2
|
|
|
|
10.1
|
|
|
|
10.2
|
|
|
|
10.3
|
|
|
|
10.4
|
|
|
|
10.5
|
10.6
|
|
|
|
10.7
|
|
|
|
10.8
|
|
|
|
10.9
|
|
|
|
10.10
|
|
|
|
10.11
|
|
|
|
10.12
|
|
|
|
10.13
|
|
|
|
10.14
|
|
|
|
10.15
|
|
|
|
10.16
|
10.17
|
|
|
|
10.18
|
|
|
|
10.19
|
|
|
|
10.20
|
|
|
|
10.21
|
|
|
|
10.22
|
|
|
|
10.23
|
|
|
|
10.24
|
|
|
|
10.25
|
|
|
|
10.26
|
10.27
|
|
|
|
10.28
|
|
|
|
10.29
|
|
|
|
10.30
|
|
|
|
10.31
|
|
|
|
10.32
|
|
|
|
10.33
|
|
|
|
10.34
|
|
|
|
10.35
|
|
|
|
10.36
|
10.37
|
|
|
|
10.38
|
|
|
|
10.39
|
|
|
|
10.40
|
|
|
|
10.41
|
|
|
|
10.42
|
|
|
|
10.43
|
|
|
|
10.44
|
|
|
|
10.45
|
|
|
|
10.46
|
|
|
|
10.47
|
|
|
|
10.48
|
10.50
|
|
|
|
10.51
|
|
|
|
10.52
|
|
|
|
10.53
|
|
|
|
10.54
|
|
|
|
10.55
|
|
|
|
10.56
|
|
|
|
10.57
|
|
|
|
*10.58
|
|
|
|
*10.59
|
|
|
|
*10.60
|
|
|
|
*21
|
|
|
|
*23.1
|
|
|
|
*31.1
|
|
|
|
*31.2
|
|
|
|
**32
|
|
|
|
(101)
|
Formatted in XBRL (Extensible Business Reporting Language)
|
|
101.INS
|
XBRL Instance Document
|
|
|
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
February 28, 2019
|
/S/ CHRISTOPHER E. FRENCH
|
|
Christopher E. French, President & Chief Executive Officer
|
|
(Principal Executive Officer)
|
|
|
/s/CHRISTOPHER E. FRENCH
|
President & Chief Executive Officer,
|
February 28, 2019
|
Director (Principal Executive Officer)
|
Christopher E. French
|
|
|
|
/s/JAMES F. WOODWARD
|
Senior Vice President – Finance and Chief Financial Officer
|
February 28, 2019
|
(Principal Financial Officer and
|
James F. Woodward
|
Principal Accounting Officer)
|
|
|
/s/THOMAS A. BECKETT
|
Director
|
February 28, 2019
|
|
Thomas A. Beckett
|
|
|
|
/s/TRACY FITZSIMMONS
|
Director
|
February 28, 2019
|
|
Tracy Fitzsimmons
|
|
|
|
/s/JOHN W. FLORA
|
Director
|
February 28, 2019
|
|
John W. Flora
|
|
|
|
/s/ RICHARD L. KOONTZ, JR.
|
Director
|
February 28, 2019
|
|
Richard L. Koontz, Jr.
|
|
|
|
/s/DALE S. LAM
|
Director
|
February 28, 2019
|
|
Dale S. Lam
|
|
|
|
/s/KENNETH L. QUAGLIO
|
Director
|
February 28, 2019
|
|
Kenneth L. Quaglio
|
|
|
|
/s/LEIGH ANN SCHULTZ
|
Director
|
February 28, 2019
|
|
Leigh Ann Schultz
|
|
|
|
/s/JAMES E. ZERKEL II
|
Director
|
February 28, 2019
|
|
James E. Zerkel II
|
|
|
Page
|
F-2
|
|
|
|
Consolidated Financial Statements
|
|
|
|
Consolidated Balance Shee
ts as of December 31, 2018 and 2017
|
F-4
|
Consolidated Statements of Operations and Comprehensive Income for the years ended December 31, 2018, 2017 and 2016
|
F-6
|
Consolidated Statements of Shareholders’ Equity
for the years ended December 31, 2018, 2017 and 2016
|
F-7
|
Consolidated Statements of Cash Flows
for the years ended December 31, 2018, 2017 and 2016
|
F-8
|
F-10
|
|
|
|
Financial Statement Schedule
|
|
|
|
Valuation and Qualifying Accounts
|
F-38
|
|
|
•
|
The Company did not have a sufficient number of trained resources with assigned responsibility and accountability for the design, operation, and documentation of internal control over financial reporting.
|
•
|
The Company did not have an effective risk assessment process that identified and assessed necessary changes in the application of U.S. generally accepted accounting principles, financial reporting processes, and the design and effective operation of internal controls.
|
•
|
The Company did not have an effective information and communication process that identified and assessed the source of reliable information necessary for financial accounting and reporting.
|
•
|
The Company did not have effective monitoring activities to assess the operation of internal control.
|
|
2018
|
|
2017
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
85,086
|
|
|
$
|
78,585
|
|
Accounts receivable, net
|
54,407
|
|
|
54,184
|
|
||
Income taxes receivable
|
5,282
|
|
|
17,311
|
|
||
Inventory, net
|
5,265
|
|
|
5,704
|
|
||
Prepaid expenses and other
|
60,162
|
|
|
17,111
|
|
||
Total current assets
|
210,202
|
|
|
172,895
|
|
||
Investments
|
10,788
|
|
|
11,472
|
|
||
Property, plant and equipment, net
|
701,359
|
|
|
686,327
|
|
||
Other assets:
|
|
|
|
||||
Intangible assets, net
|
366,029
|
|
|
380,979
|
|
||
Goodwill
|
146,497
|
|
|
146,497
|
|
||
Deferred charges and other assets, net
|
49,891
|
|
|
13,690
|
|
||
Total assets
|
$
|
1,484,766
|
|
|
$
|
1,411,860
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Current maturities of long-term debt, net of unamortized loan fees
|
$
|
20,618
|
|
|
$
|
64,397
|
|
Accounts payable
|
35,987
|
|
|
28,953
|
|
||
Advanced billings and customer deposits
|
7,919
|
|
|
21,153
|
|
||
Accrued compensation
|
9,452
|
|
|
9,167
|
|
||
Accrued liabilities and other
|
14,563
|
|
|
13,914
|
|
||
Total current liabilities
|
88,539
|
|
|
137,584
|
|
||
Long-term debt, less current maturities, net of unamortized loan fees
|
749,624
|
|
|
757,561
|
|
||
Other long-term liabilities:
|
|
|
|
||||
Deferred income taxes
|
127,453
|
|
|
100,879
|
|
||
Deferred lease
|
22,436
|
|
|
15,782
|
|
||
Asset retirement obligations
|
28,584
|
|
|
21,211
|
|
||
Retirement plan obligations
|
11,519
|
|
|
13,328
|
|
||
Other liabilities
|
14,364
|
|
|
15,293
|
|
||
Total other long-term liabilities
|
204,356
|
|
|
166,493
|
|
||
Commitments and contingencies (Note 13)
|
|
|
|
|
|
||
Shareholders’ equity:
|
|
|
|
||||
Common stock, no par value, authorized 96,000; 49,630 and 49,328 issued and outstanding at December 31, 2018 and 2017, respectively
|
—
|
|
|
—
|
|
||
Additional paid in capital
|
47,456
|
|
|
44,787
|
|
||
Retained earnings
|
386,511
|
|
|
297,205
|
|
||
Accumulated other comprehensive income (loss), net of taxes
|
8,280
|
|
|
8,230
|
|
||
Total shareholders’ equity
|
442,247
|
|
|
350,222
|
|
||
Total liabilities and shareholders’ equity
|
$
|
1,484,766
|
|
|
$
|
1,411,860
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Operating revenue:
|
|
|
|
|
|
||||||
Service revenue and other
|
$
|
562,456
|
|
|
$
|
601,673
|
|
|
$
|
523,748
|
|
Equipment revenue
|
68,398
|
|
|
10,318
|
|
|
11,540
|
|
|||
Total operating revenue
|
630,854
|
|
|
611,991
|
|
|
535,288
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Cost of services
|
194,022
|
|
|
188,721
|
|
|
163,969
|
|
|||
Cost of goods sold
|
63,959
|
|
|
22,786
|
|
|
29,551
|
|
|||
Selling, general and administrative
|
113,222
|
|
|
165,937
|
|
|
133,325
|
|
|||
Acquisition, integration and migration expenses
|
—
|
|
|
11,030
|
|
|
42,232
|
|
|||
Depreciation and amortization
|
166,405
|
|
|
177,007
|
|
|
143,685
|
|
|||
Total operating expenses
|
537,608
|
|
|
565,481
|
|
|
512,762
|
|
|||
Operating income (loss)
|
93,246
|
|
|
46,510
|
|
|
22,526
|
|
|||
Other income (expense):
|
|
|
|
|
|
||||||
Interest expense
|
(34,847
|
)
|
|
(38,237
|
)
|
|
(25,102
|
)
|
|||
Gain (loss) on investments, net
|
(275
|
)
|
|
564
|
|
|
271
|
|
|||
Non-operating income (loss), net
|
3,988
|
|
|
4,420
|
|
|
4,250
|
|
|||
Income (loss) before income taxes
|
62,112
|
|
|
13,257
|
|
|
1,945
|
|
|||
Income tax expense (benefit)
|
15,517
|
|
|
(53,133
|
)
|
|
2,840
|
|
|||
Net income (loss)
|
46,595
|
|
|
66,390
|
|
|
(895
|
)
|
|||
Other comprehensive income (loss):
|
|
|
|
|
|
||||||
Unrealized gain (loss) on interest rate hedge, net of tax
|
50
|
|
|
1,442
|
|
|
6,373
|
|
|||
Comprehensive income (loss)
|
$
|
46,645
|
|
|
$
|
67,832
|
|
|
$
|
5,478
|
|
|
|
|
|
|
|
||||||
Net income (loss) per share, basic and diluted:
|
|
|
|
|
|
||||||
Basic net income (loss) per share
|
$
|
0.94
|
|
|
$
|
1.35
|
|
|
$
|
(0.02
|
)
|
Diluted net income (loss) per share
|
$
|
0.93
|
|
|
$
|
1.33
|
|
|
$
|
(0.02
|
)
|
Weighted average shares outstanding, basic
|
49,542
|
|
|
49,150
|
|
|
48,807
|
|
|||
Weighted average shares outstanding, diluted
|
50,063
|
|
|
50,026
|
|
|
48,807
|
|
|||
Cash dividend declared per share
|
$
|
0.27
|
|
|
$
|
0.26
|
|
|
$
|
0.25
|
|
|
Shares of Common Stock (no par value)
|
Additional Paid in Capital
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Income (Loss)
|
Total
|
|||||||||
Balance, December 31, 2015
|
48,475
|
|
$
|
32,776
|
|
$
|
256,747
|
|
$
|
415
|
|
$
|
289,938
|
|
|
|
|
|
|
|
|||||||||
Net income (loss)
|
—
|
|
—
|
|
(895
|
)
|
—
|
|
(895
|
)
|
||||
Other comprehensive gain (loss), net of tax
|
—
|
|
—
|
|
—
|
|
6,373
|
|
6,373
|
|
||||
Dividends declared ($0.25 per share)
|
—
|
|
—
|
|
(12,228
|
)
|
—
|
|
(12,228
|
)
|
||||
Dividends reinvested in common stock
|
19
|
|
524
|
|
—
|
|
—
|
|
524
|
|
||||
Stock based compensation
|
—
|
|
3,506
|
|
—
|
|
—
|
|
3,506
|
|
||||
Common stock issued through exercise of incentive stock options
|
371
|
|
3,359
|
|
—
|
|
—
|
|
3,359
|
|
||||
Common stock issued for share awards
|
190
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||
Common stock issued
|
2
|
|
14
|
|
—
|
|
—
|
|
14
|
|
||||
Common stock issued to acquire non-controlling interest in nTelos
|
76
|
|
10,400
|
|
—
|
|
—
|
|
10,400
|
|
||||
Shares retired for settlement of employee taxes upon issuance of vested equity awards
|
(198
|
)
|
(5,097
|
)
|
—
|
|
—
|
|
(5,097
|
)
|
||||
Balance, December 31, 2016
|
48,935
|
|
45,482
|
|
243,624
|
|
6,788
|
|
295,894
|
|
||||
|
|
|
|
|
|
|||||||||
Net income (loss)
|
—
|
|
—
|
|
66,390
|
|
—
|
|
66,390
|
|
||||
Other comprehensive gain (loss), net of tax
|
—
|
|
—
|
|
—
|
|
1,442
|
|
1,442
|
|
||||
Dividends declared ($0.26 per share)
|
—
|
|
—
|
|
(12,809
|
)
|
—
|
|
(12,809
|
)
|
||||
Dividends reinvested in common stock
|
15
|
|
552
|
|
—
|
|
—
|
|
552
|
|
||||
Stock based compensation
|
154
|
|
4,184
|
|
—
|
|
—
|
|
4,184
|
|
||||
Stock options exercised
|
363
|
|
2,394
|
|
—
|
|
—
|
|
2,394
|
|
||||
Common stock issued
|
1
|
|
21
|
|
—
|
|
—
|
|
21
|
|
||||
Shares retired for settlement of employee taxes upon issuance of vested equity awards
|
(216
|
)
|
(7,846
|
)
|
—
|
|
—
|
|
(7,846
|
)
|
||||
Common stock issued to acquire non-controlling interest in nTelos
|
76
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||
Balance, December 31, 2017
|
49,328
|
|
44,787
|
|
297,205
|
|
8,230
|
|
350,222
|
|
||||
|
|
|
|
|
|
|||||||||
Change in accounting principle - adoption of accounting standard (Note 3)
|
—
|
|
—
|
|
56,097
|
|
—
|
|
56,097
|
|
||||
Net income (loss)
|
—
|
|
—
|
|
46,595
|
|
—
|
|
46,595
|
|
||||
Other comprehensive gain (loss), net of tax
|
—
|
|
—
|
|
—
|
|
50
|
|
50
|
|
||||
Dividends declared ($0.27 per share)
|
—
|
|
—
|
|
(13,386
|
)
|
—
|
|
(13,386
|
)
|
||||
Dividends reinvested in common stock
|
11
|
|
520
|
|
—
|
|
—
|
|
520
|
|
||||
Stock based compensation
|
206
|
|
5,367
|
|
—
|
|
—
|
|
5,367
|
|
||||
Stock options exercised
|
113
|
|
787
|
|
—
|
|
—
|
|
787
|
|
||||
Common stock issued
|
1
|
|
26
|
|
—
|
|
—
|
|
26
|
|
||||
Shares retired for settlement of employee taxes upon issuance of vested equity awards
|
(105
|
)
|
(4,031
|
)
|
—
|
|
—
|
|
(4,031
|
)
|
||||
Common stock issued to acquire non-controlling interest in nTelos
|
76
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||
Balance, December 31, 2018
|
49,630
|
|
$
|
47,456
|
|
$
|
386,511
|
|
$
|
8,280
|
|
$
|
442,247
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
46,595
|
|
|
$
|
66,390
|
|
|
$
|
(895
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation
|
142,111
|
|
|
151,063
|
|
|
123,995
|
|
|||
Amortization
|
24,294
|
|
|
25,944
|
|
|
19,690
|
|
|||
Amortization reflected as rent expense in cost of services
|
342
|
|
|
1,528
|
|
|
728
|
|
|||
Bad debt expense
|
1,983
|
|
|
2,179
|
|
|
2,456
|
|
|||
Stock based compensation expense, net of amount capitalized
|
4,959
|
|
|
3,580
|
|
|
3,021
|
|
|||
Waived management fee
|
37,763
|
|
|
36,056
|
|
|
24,596
|
|
|||
Deferred income taxes
|
6,208
|
|
|
(54,055
|
)
|
|
(52,875
|
)
|
|||
(Gain) loss on investments
|
275
|
|
|
(450
|
)
|
|
(143
|
)
|
|||
Net (gain) loss from patronage and equity investments
|
(3,388
|
)
|
|
(3,008
|
)
|
|
(795
|
)
|
|||
Amortization of long-term debt issuance costs
|
3,666
|
|
|
4,741
|
|
|
3,914
|
|
|||
Net benefit from retirement plans
|
(1,688
|
)
|
|
(1,388
|
)
|
|
(4,396
|
)
|
|||
Accrued interest and other
|
—
|
|
|
416
|
|
|
1,414
|
|
|||
Changes in assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable
|
239
|
|
|
16,451
|
|
|
14,581
|
|
|||
Inventory, net
|
439
|
|
|
33,339
|
|
|
(30,288
|
)
|
|||
Income taxes receivable
|
12,029
|
|
|
(19,138
|
)
|
|
7,694
|
|
|||
Other assets
|
(16,246
|
)
|
|
1,439
|
|
|
5,273
|
|
|||
Accounts payable
|
(1,377
|
)
|
|
(36,725
|
)
|
|
42,496
|
|
|||
Income taxes payable
|
—
|
|
|
—
|
|
|
435
|
|
|||
Deferred lease
|
4,723
|
|
|
327
|
|
|
4,273
|
|
|||
Other deferrals and accruals
|
2,720
|
|
|
(5,759
|
)
|
|
(3,648
|
)
|
|||
Net cash provided by (used in) operating activities
|
$
|
265,647
|
|
|
$
|
222,930
|
|
|
$
|
161,526
|
|
|
|
|
|
|
|
||||||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Acquisition of property, plant and equipment
|
$
|
(136,641
|
)
|
|
$
|
(146,489
|
)
|
|
$
|
(173,231
|
)
|
Proceeds from sale of assets
|
840
|
|
|
980
|
|
|
5,510
|
|
|||
Cash disbursed for acquisition, net of cash acquired
|
(52,000
|
)
|
|
(6,000
|
)
|
|
(657,354
|
)
|
|||
Release of restricted cash
|
—
|
|
|
—
|
|
|
2,167
|
|
|||
Cash distributions (contributions) from investments and other
|
1
|
|
|
14
|
|
|
2,895
|
|
|||
Net cash provided by (used in) investing activities
|
$
|
(187,800
|
)
|
|
$
|
(151,495
|
)
|
|
$
|
(820,013
|
)
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
(Continued)
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Principal payments on long-term debt
|
$
|
(51,264
|
)
|
|
$
|
(36,375
|
)
|
|
$
|
(213,793
|
)
|
Proceeds from revolving credit facility borrowings
|
15,000
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from credit facility borrowings
|
—
|
|
|
25,000
|
|
|
860,000
|
|
|||
Principal payments on revolving credit facility
|
(15,000
|
)
|
|
—
|
|
|
—
|
|
|||
Payments for debt issuance costs
|
(3,971
|
)
|
|
—
|
|
|
(14,910
|
)
|
|||
Dividends paid, net of dividends reinvested
|
(12,866
|
)
|
|
(12,257
|
)
|
|
(11,705
|
)
|
|||
Taxes paid for equity award issuances
|
(3,245
|
)
|
|
(5,411
|
)
|
|
(5,097
|
)
|
|||
Proceeds from issuance of common stock
|
—
|
|
|
—
|
|
|
3,373
|
|
|||
Net cash provided by (used in) financing activities
|
$
|
(71,346
|
)
|
|
$
|
(29,043
|
)
|
|
$
|
617,868
|
|
Net increase (decrease) in cash and cash equivalents
|
$
|
6,501
|
|
|
$
|
42,392
|
|
|
$
|
(40,619
|
)
|
Cash and cash equivalents, beginning of period
|
78,585
|
|
|
36,193
|
|
|
76,812
|
|
|||
Cash and cash equivalents, end of period
|
$
|
85,086
|
|
|
$
|
78,585
|
|
|
$
|
36,193
|
|
|
|
|
|
|
|
||||||
Supplemental Disclosures of Cash Flow Information
|
|
|
|
|
|
||||||
Cash payments for:
|
|
|
|
|
|
||||||
Interest, net of capitalized interest of $1,556; $1,559 and $1,374 in 2018, 2017 and 2016, respectively
|
$
|
33,034
|
|
|
$
|
33,495
|
|
|
$
|
21,187
|
|
Income tax (refunds received) paid, net
|
$
|
(2,721
|
)
|
|
$
|
20,066
|
|
|
$
|
44,983
|
|
Capital expenditures payable
|
$
|
23,501
|
|
|
$
|
7,254
|
|
|
$
|
14,386
|
|
|
|
Estimated Useful Life
|
Affiliate contract expansion
|
|
4 - 14 years
|
Favorable and unfavorable leases - wireless
|
|
1 - 28 years
|
Acquired subscribers - cable
|
|
3 - 10 years
|
Other intangibles
|
|
15 - 20 years
|
(in thousands)
|
2018
|
2017
|
2016
|
||||||
Stock compensation expense
|
$
|
5,367
|
|
$
|
4,184
|
|
$
|
3,506
|
|
Capitalized stock compensation
|
408
|
|
604
|
|
485
|
|
|||
Stock compensation expense, net
|
4,959
|
|
3,580
|
|
3,021
|
|
|||
|
|
|
|
||||||
Excess tax benefits, net of deficiencies
|
$
|
1,523
|
|
$
|
3,314
|
|
$
|
1,709
|
|
(in thousands)
|
|
Wireless
|
|
Cable
|
|
Wireline
|
|
Consolidated
|
||||||||
Wireless service
|
|
$
|
380,818
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
380,818
|
|
Equipment
|
|
67,510
|
|
|
695
|
|
|
193
|
|
|
68,398
|
|
||||
Business, residential and enterprise
|
|
—
|
|
|
117,836
|
|
|
42,445
|
|
|
160,281
|
|
||||
Tower and other
|
|
14,327
|
|
|
10,372
|
|
|
34,504
|
|
|
59,203
|
|
||||
Total revenue
|
|
462,655
|
|
|
128,903
|
|
|
77,142
|
|
|
668,700
|
|
||||
Internal revenue
|
|
(5,016
|
)
|
|
(4,706
|
)
|
|
(28,124
|
)
|
|
(37,846
|
)
|
||||
Total operating revenue
|
|
$
|
457,639
|
|
|
$
|
124,197
|
|
|
$
|
49,018
|
|
|
$
|
630,854
|
|
(in thousands)
|
|
Balance at December 31, 2017
|
|
Adjustments due to Topic 606
|
|
Balance at January 1, 2018
|
||||||
Assets
|
|
|
|
|
|
|
||||||
Prepaid expenses and other
|
|
$
|
17,111
|
|
|
$
|
29,876
|
|
|
$
|
46,987
|
|
Deferred charges and other assets, net
|
|
13,690
|
|
|
31,071
|
|
|
44,761
|
|
|||
Liabilities
|
|
|
|
|
|
|
||||||
Advanced billing and customer deposits
|
|
21,153
|
|
|
(14,302
|
)
|
|
6,851
|
|
|||
Deferred income taxes
|
|
100,879
|
|
|
20,352
|
|
|
121,231
|
|
|||
Other long-term liabilities
|
|
15,293
|
|
|
(1,200
|
)
|
|
14,093
|
|
|||
Retained earnings
|
|
297,205
|
|
|
56,097
|
|
|
353,302
|
|
|
|
Year Ended December, 31 2018
|
||||||||||
(in thousands)
|
|
As Reported
|
|
Balances without Adoption of Topic 606
|
|
Effect of Change Higher/(Lower)
|
||||||
Operating revenue:
|
|
|
|
|
|
|
||||||
Service revenue and other
|
|
$
|
562,456
|
|
|
$
|
632,340
|
|
|
$
|
(69,884
|
)
|
Equipment revenue
|
|
68,398
|
|
|
8,298
|
|
|
60,100
|
|
|||
Operating expenses:
|
|
|
|
|
|
|
||||||
Cost of services
|
|
194,022
|
|
|
193,860
|
|
|
162
|
|
|||
Cost of goods sold
|
|
63,959
|
|
|
28,377
|
|
|
35,582
|
|
|||
Selling, general and administrative
|
|
113,222
|
|
|
175,753
|
|
|
(62,531
|
)
|
|
|
As of December 31, 2018
|
||||||||||
(in thousands)
|
|
As Reported
|
|
Balances without Adoption of Topic 606
|
|
Effect of Change Higher/(Lower)
|
||||||
Assets
|
|
|
|
|
|
|
||||||
Prepaid expenses and other
|
|
$
|
60,162
|
|
|
$
|
22,204
|
|
|
$
|
37,958
|
|
Deferred charges and other assets, net
|
|
49,891
|
|
|
12,083
|
|
|
37,808
|
|
|||
Liabilities
|
|
|
|
|
|
|
||||||
Advanced billing and customer deposits
|
|
7,919
|
|
|
24,414
|
|
|
(16,495
|
)
|
|||
Deferred income taxes
|
|
127,453
|
|
|
103,404
|
|
|
24,049
|
|
|||
Other long-term liabilities
|
|
14,364
|
|
|
15,550
|
|
|
(1,186
|
)
|
|||
Retained earnings
|
|
386,511
|
|
|
319,926
|
|
|
66,585
|
|
Note 4.
|
Acquisitions
|
($ in thousands)
|
|
Estimated Useful Life (in years)
|
|
February 1, 2018
|
||
Affiliate contract expansion
|
|
12
|
|
$
|
45,148
|
|
Prepayment of tangible assets
|
|
N/A
|
|
6,497
|
|
|
Off-market leases - favorable
|
|
16.5
|
|
3,665
|
|
|
Off-market leases - unfavorable
|
|
4.2
|
|
(3,310
|
)
|
|
Total
|
|
|
|
$
|
52,000
|
|
(in thousands)
|
Purchase Price Allocation
|
||
Accounts receivable
|
$
|
47,234
|
|
Inventory
|
4,572
|
|
|
Restricted cash
|
2,167
|
|
|
Investments
|
1,501
|
|
|
Prepaid expenses and other assets
|
14,835
|
|
|
Building held for sale
|
4,950
|
|
|
Property, plant and equipment
|
227,247
|
|
|
Spectrum licenses
|
198,200
|
|
|
Acquired subscribers - wireless
|
205,946
|
|
|
Favorable lease intangible assets
|
17,029
|
|
|
Goodwill
|
146,383
|
|
|
Other long term assets
|
10,843
|
|
|
Total assets acquired
|
$
|
880,907
|
|
|
|
||
Accounts payable
|
8,543
|
|
|
Advanced billings and customer deposits
|
12,477
|
|
|
Accrued expenses
|
23,141
|
|
|
Capital lease liability
|
418
|
|
|
Deferred tax liabilities
|
129,291
|
|
|
Retirement benefits
|
19,198
|
|
|
Other long-term liabilities
|
20,085
|
|
|
Total liabilities assumed
|
$
|
213,153
|
|
|
|
||
Net assets acquired
|
$
|
667,754
|
|
(in thousands)
|
|
|
|
Year Ended
December 31, 2016 |
||
Operating revenues
|
|
|
|
$
|
646,769
|
|
Income (loss) before income taxes
|
|
|
|
$
|
2,989
|
|
•
|
changes in nTelos' reported revenues from cancelling nTelos' wholesale contract with Sprint;
|
•
|
the incorporation of the Sprint-homed customers formerly serviced under the wholesale agreement into the Company’s affiliate service territory under the Company’s affiliate agreement with Sprint;
|
•
|
the effect of other changes to revenues and expenses due to various provisions of the affiliate agreement and the elimination of non-recurring transaction related expenses incurred by the Company and nTelos;
|
•
|
the elimination of certain nTelos operating costs associated with billing and care that are covered under the fees charged by Sprint under the affiliate agreement;
|
•
|
historical depreciation expense was reduced for the fair value adjustment decreasing the basis of property, plant and equipment; this decrease was offset by a shorter estimated useful life to conform to the Company’s standard policy and the acceleration of depreciation on certain equipment; and
|
•
|
incremental amortization due to the affiliate contract expansion intangible asset.
|
•
|
an increase in the price to be paid by Sprint from
80%
to
90%
of the entire business value if the affiliate agreement is not renewed;
|
•
|
extension of the affiliate agreement with Sprint by five years to 2029;
|
•
|
expanded territory in the nTelos service area;
|
•
|
rights to serve all future Sprint customers in the affiliate service territory;
|
•
|
the Company's commitment to upgrade certain coverage and capacity in its newly acquired service area; and
|
•
|
a reduction of the management fee charged by Sprint under the amended affiliate agreement; not to exceed
$4.2 million
in an individual month until the total waived fee equals approximately
$255.6 million
.
|
|
|
December 31,
|
||
($ in thousands)
|
|
2018
|
|
2017
|
Sprint
|
|
$43,227
|
|
$43,405
|
% of total accounts receivable
|
|
79%
|
|
80%
|
|
|
Year Ended December 31,
|
||||
|
|
2018
|
|
2017
|
|
2016
|
Sprint
|
|
68%
|
|
72%
|
|
69%
|
|
Years Ended December 31,
|
||||||||||
(in thousands, except per share amounts)
|
2018
|
|
2017
|
|
2016
|
||||||
Calculation of net income (loss) per share:
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
46,595
|
|
|
$
|
66,390
|
|
|
$
|
(895
|
)
|
Basic weighted average shares outstanding
|
49,542
|
|
|
49,150
|
|
|
48,807
|
|
|||
Basic net income (loss) per share
|
$
|
0.94
|
|
|
$
|
1.35
|
|
|
$
|
(0.02
|
)
|
|
|
|
|
|
|
||||||
Effect of stock options outstanding:
|
|
|
|
|
|
||||||
Basic weighted average shares outstanding
|
49,542
|
|
|
49,150
|
|
|
48,807
|
|
|||
Effect from dilutive shares and options outstanding
|
521
|
|
|
876
|
|
|
—
|
|
|||
Diluted weighted average shares outstanding
|
50,063
|
|
|
50,026
|
|
|
48,807
|
|
|||
Diluted net income (loss) per share
|
$
|
0.93
|
|
|
$
|
1.33
|
|
|
$
|
(0.02
|
)
|
|
Years Ended December 31,
|
|||||||
(in thousands)
|
2018
|
|
2017
|
|
2016
|
|||
Awards excluded from the computation of diluted net income (loss) per share because their inclusion would have been anti-dilutive
|
33
|
|
|
21
|
|
|
800
|
|
(in thousands)
|
December 31, 2018
|
|
December 31, 2017
|
||||
Domestic equity funds
|
$
|
1,409
|
|
|
$
|
2,856
|
|
International equity funds
|
370
|
|
|
423
|
|
||
Total investments carried at fair value
|
1,779
|
|
|
3,279
|
|
||
|
|
|
|
||||
CoBank
|
7,705
|
|
|
6,818
|
|
||
Equity in other telecommunications partners
|
782
|
|
|
811
|
|
||
Total investments carried at cost
|
8,487
|
|
|
7,629
|
|
||
|
|
|
|
||||
Other
|
522
|
|
|
564
|
|
||
Total equity method investments
|
522
|
|
|
564
|
|
||
|
|
|
|
||||
Total investments
|
$
|
10,788
|
|
|
$
|
11,472
|
|
(in thousands)
|
For the year ended December, 31 2018
|
||||||||||||||
Balance sheet location:
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Prepaid expenses and other
|
|
|
|
|
|
|
|
||||||||
Interest rate swaps
|
$
|
—
|
|
|
$
|
4,930
|
|
|
$
|
—
|
|
|
$
|
4,930
|
|
Deferred charges and other assets, net:
|
|
|
|
|
|
|
|
||||||||
Interest rate swaps
|
—
|
|
|
8,323
|
|
|
—
|
|
|
8,323
|
|
||||
Total
|
$
|
—
|
|
|
$
|
13,253
|
|
|
$
|
—
|
|
|
$
|
13,253
|
|
(in thousands)
|
For the year ended December, 31 2017
|
||||||||||||||
Balance sheet location:
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Cash and cash equivalents
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
150
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
150
|
|
Prepaid expenses and other
|
|
|
|
|
|
|
|
||||||||
Interest rate swaps
|
—
|
|
|
2,411
|
|
|
—
|
|
|
2,411
|
|
||||
Deferred charges and other assets, net:
|
|
|
|
|
|
|
|
||||||||
Interest rate swaps
|
—
|
|
|
10,776
|
|
|
—
|
|
|
10,776
|
|
||||
Total
|
$
|
150
|
|
|
$
|
13,187
|
|
|
$
|
—
|
|
|
$
|
13,337
|
|
($ in thousands)
|
Estimated Useful Lives
|
|
December 31,
2018 |
|
December 31,
2017 |
||||
Land
|
|
|
$
|
6,723
|
|
|
$
|
6,418
|
|
Buildings and structures
|
10 - 40 years
|
|
213,657
|
|
|
195,540
|
|
||
Cable and wire
|
4 - 40 years
|
|
309,928
|
|
|
286,999
|
|
||
Equipment and software
|
2 - 17 years
|
|
791,401
|
|
|
730,228
|
|
||
Plant in service
|
|
|
1,321,709
|
|
|
1,219,185
|
|
||
Plant under construction
|
|
|
81,409
|
|
|
62,202
|
|
||
Total property, plant and equipment
|
|
|
1,403,118
|
|
|
1,281,387
|
|
||
Less accumulated amortization and depreciation
|
|
|
701,759
|
|
|
595,060
|
|
||
Property, plant and equipment, net
|
|
|
$
|
701,359
|
|
|
$
|
686,327
|
|
(in thousands)
|
December 31, 2018
|
|
December 31, 2017
|
||||
Wireless
|
$
|
146,383
|
|
|
$
|
146,383
|
|
Cable
|
104
|
|
|
104
|
|
||
Wireline
|
10
|
|
|
10
|
|
||
Total Goodwill
|
$
|
146,497
|
|
|
$
|
146,497
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
(in thousands)
|
Gross
Carrying Amount |
|
Accumulated Amortization and Other
|
|
Net
|
|
Gross
Carrying Amount |
|
Accumulated Amortization and Other
|
|
Net
|
||||||||||||
Non-amortizing intangibles:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cable franchise rights
|
$
|
64,334
|
|
|
$
|
—
|
|
|
$
|
64,334
|
|
|
$
|
64,334
|
|
|
$
|
—
|
|
|
$
|
64,334
|
|
Railroad crossing rights
|
141
|
|
|
—
|
|
|
141
|
|
|
141
|
|
|
—
|
|
|
141
|
|
||||||
Total non-amortizing intangibles
|
64,475
|
|
|
—
|
|
|
64,475
|
|
|
64,475
|
|
|
—
|
|
|
64,475
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Finite-lived intangibles:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Affiliate contract expansion - Wireless
|
455,305
|
|
|
(167,830
|
)
|
|
287,475
|
|
|
410,157
|
|
|
(105,964
|
)
|
|
304,193
|
|
||||||
Favorable leases - Wireless
|
15,743
|
|
|
(1,919
|
)
|
|
13,824
|
|
|
13,103
|
|
|
(1,222
|
)
|
|
11,881
|
|
||||||
Acquired subscribers - Cable
|
25,265
|
|
|
(25,250
|
)
|
|
15
|
|
|
25,265
|
|
|
(25,100
|
)
|
|
165
|
|
||||||
Other intangibles
|
463
|
|
|
(223
|
)
|
|
240
|
|
|
463
|
|
|
(198
|
)
|
|
265
|
|
||||||
Total finite-lived intangibles
|
496,776
|
|
|
(195,222
|
)
|
|
301,554
|
|
|
448,988
|
|
|
(132,484
|
)
|
|
316,504
|
|
||||||
Total intangible assets
|
$
|
561,251
|
|
|
$
|
(195,222
|
)
|
|
$
|
366,029
|
|
|
$
|
513,463
|
|
|
$
|
(132,484
|
)
|
|
$
|
380,979
|
|
Year Ending December 31,
|
|
Total
|
|
Amount Reflected as Rent Expense
|
|
Amount Reflected as Amortization Expense
|
||||||
(in thousands)
|
|
|
|
|
|
|
||||||
2019
|
|
$
|
21,094
|
|
|
$
|
991
|
|
|
$
|
20,103
|
|
2020
|
|
18,193
|
|
|
965
|
|
|
17,228
|
|
|||
2021
|
|
15,477
|
|
|
953
|
|
|
14,524
|
|
|||
2022
|
|
14,015
|
|
|
935
|
|
|
13,080
|
|
|||
2023
|
|
13,794
|
|
|
924
|
|
|
12,870
|
|
|||
thereafter
|
|
61,816
|
|
|
9,056
|
|
|
52,760
|
|
|||
Total
|
|
$
|
144,389
|
|
|
$
|
13,824
|
|
|
$
|
130,565
|
|
(in thousands)
|
|
December 31,
2018 |
|
December 31,
2017 |
||||
Balance sheet location of derivative financial instruments:
|
|
|
|
|
||||
Prepaid expenses and other
|
|
$
|
4,930
|
|
|
$
|
2,411
|
|
Deferred charges and other assets, net
|
|
8,323
|
|
|
10,776
|
|
||
Total derivatives designated as hedging instruments
|
|
$
|
13,253
|
|
|
$
|
13,187
|
|
(in thousands)
|
Gains (Losses) on
Cash Flow Hedges |
|
Income Tax
(Expense) Benefit |
|
Accumulated
Other Comprehensive Income (Loss), net of taxes |
||||||
Balance as of December 31, 2017
|
$
|
13,187
|
|
|
$
|
(4,957
|
)
|
|
$
|
8,230
|
|
Net change in unrealized gain (loss)
|
3,384
|
|
|
(804
|
)
|
|
2,580
|
|
|||
Amounts reclassified from accumulated other comprehensive income (loss) to interest expense
|
(3,318
|
)
|
|
788
|
|
|
(2,530
|
)
|
|||
Net current period other comprehensive income (loss)
|
66
|
|
|
(16
|
)
|
|
50
|
|
|||
Balance as of December 31, 2018
|
$
|
13,253
|
|
|
$
|
(4,973
|
)
|
|
$
|
8,280
|
|
Note 12.
|
Other Assets and Accrued Liabilities
|
(in thousands)
|
|
December 31,
2018 |
|
December 31,
2017 |
||||
Prepaid rent
|
|
$
|
11,245
|
|
|
$
|
10,519
|
|
Prepaid maintenance expenses
|
|
3,981
|
|
|
3,062
|
|
||
Interest rate swaps
|
|
4,930
|
|
|
2,411
|
|
||
Deferred contract costs
|
|
37,957
|
|
|
—
|
|
||
Other
|
|
2,049
|
|
|
1,119
|
|
||
Prepaid expenses and other
|
|
$
|
60,162
|
|
|
$
|
17,111
|
|
(in thousands)
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
Sales and property taxes payable
|
|
$
|
4,281
|
|
|
$
|
3,872
|
|
Severance
|
|
—
|
|
|
1,028
|
|
||
Asset retirement obligations
|
|
582
|
|
|
492
|
|
||
Accrued programming costs
|
|
2,886
|
|
|
2,805
|
|
||
Other current liabilities
|
|
6,814
|
|
|
5,717
|
|
||
Accrued liabilities and other
|
|
$
|
14,563
|
|
|
$
|
13,914
|
|
|
Years Ended December 31,
|
||||||||||
(in thousands)
|
2018
|
|
2017
|
|
2016
|
||||||
Balance at beginning of year
|
$
|
21,703
|
|
|
$
|
21,507
|
|
|
$
|
7,266
|
|
Liabilities acquired in acquisition
|
—
|
|
|
—
|
|
|
14,056
|
|
|||
Additional liabilities accrued
|
3,357
|
|
|
2,404
|
|
|
157
|
|
|||
Changes to prior estimates
|
3,504
|
|
|
(1,695
|
)
|
|
—
|
|
|||
Payments
|
(443
|
)
|
|
(1,296
|
)
|
|
(609
|
)
|
|||
Accretion expense
|
1,045
|
|
|
783
|
|
|
637
|
|
|||
Balance at end of year
|
$
|
29,166
|
|
|
$
|
21,703
|
|
|
$
|
21,507
|
|
Year Ending
|
|
Amount
|
||
(in thousands)
|
|
|
||
2019
|
|
$
|
55,050
|
|
2020
|
|
53,100
|
|
|
2021
|
|
51,323
|
|
|
2022
|
|
49,573
|
|
|
2023
|
|
48,000
|
|
|
2024 and after
|
|
168,498
|
|
|
|
|
$
|
425,544
|
|
Year Ending
|
|
Amount
|
||
(in thousands)
|
|
|
||
2019
|
|
$
|
7,067
|
|
2020
|
|
6,109
|
|
|
2021
|
|
4,042
|
|
|
2022
|
|
2,914
|
|
|
2023
|
|
1,345
|
|
|
2024 and after
|
|
4,400
|
|
|
|
|
$
|
25,877
|
|
(in thousands)
|
December 31,
2018 |
|
December 31,
2017 |
||||
Term loan A-1
|
287,699
|
|
|
436,500
|
|
||
Term loan A-2
|
497,537
|
|
|
400,000
|
|
||
|
785,236
|
|
|
836,500
|
|
||
Less: unamortized loan fees
|
14,994
|
|
|
14,542
|
|
||
Total debt, net of unamortized loan fees
|
$
|
770,242
|
|
|
$
|
821,958
|
|
|
|
|
|
||||
Current maturities of long-term debt, net of current unamortized loan fees
|
$
|
20,618
|
|
|
$
|
64,397
|
|
Long-term debt, less current maturities, net of unamortized loan fees
|
$
|
749,624
|
|
|
$
|
757,561
|
|
•
|
a limitation on the Company’s total leverage ratio, defined as indebtedness divided by earnings before interest, taxes, depreciation and amortization, or EBITDA, of less than or equal to
3.50
to 1.00 from December 31, 2018 through December 31, 2019, then
3.25
to 1.00 through December 31, 2021, and
3.00
to 1.00 thereafter;
|
•
|
a minimum debt service coverage ratio, defined as EBITDA minus certain cash taxes divided by the sum of all scheduled principal payments on the Term Loans and other indebtedness plus cash interest expense, greater than or equal to
2.00
to 1.00;
|
•
|
the Company must maintain a minimum liquidity balance, defined as availability under the Revolver Facility plus unrestricted cash and cash equivalents on deposit in a deposit account for which a control agreement has been delivered to the administrative agent under the 2016 credit agreement, of greater than
$25 million
at all times.
|
|
Actual
|
|
Covenant Requirement
|
||
Total leverage ratio
|
2.54
|
|
|
3.50 or Lower
|
|
Debt service coverage ratio
|
3.63
|
|
|
2.00 or Higher
|
|
Minimum liquidity balance (in millions)
|
$
|
159.0
|
|
|
$25.0 or Higher
|
Year Ending
|
|
Amount
|
||
(in thousands)
|
|
|
||
2019
|
|
$
|
23,197
|
|
2020
|
|
34,122
|
|
|
2021
|
|
34,122
|
|
|
2022
|
|
37,764
|
|
|
2023
|
|
183,434
|
|
|
2024 and after
|
|
472,597
|
|
|
Total
|
|
$
|
785,236
|
|
|
Years Ended December 31,
|
||||||||||
(in thousands)
|
2018
|
|
2017
|
|
2016
|
||||||
Consolidated Statements of Operations and Comprehensive Income
|
|
|
|
|
|
||||||
Facility lease revenue
|
$
|
1,677
|
|
|
$
|
2,201
|
|
|
$
|
2,384
|
|
Cost of goods and services
|
3,362
|
|
|
3,673
|
|
|
3,067
|
|
|||
|
|
|
|
|
|
||||||
(in thousands)
|
December 31,
2018 |
|
December 31,
2017 |
|
|
||||||
Consolidated Balance Sheet
|
|
|
|
|
|
||||||
Account receivable related to ValleyNet
|
$
|
253
|
|
|
$
|
180
|
|
|
|
||
Accounts payable related to ValleyNet
|
173
|
|
|
303
|
|
|
|
|
Years Ended December 31,
|
||||||||||
(in thousands)
|
2018
|
|
2017
|
|
2016
|
||||||
Income tax (benefit) expense
|
$
|
15,517
|
|
|
$
|
(53,133
|
)
|
|
$
|
2,840
|
|
Other comprehensive income for changes in cash flow hedge
|
16
|
|
|
522
|
|
|
4,162
|
|
|||
|
$
|
15,533
|
|
|
$
|
(52,611
|
)
|
|
$
|
7,002
|
|
|
Years Ended December 31,
|
||||||||||
(in thousands)
|
2018
|
|
2017
|
|
2016
|
||||||
Current expense
|
|
|
|
|
|
||||||
Federal taxes
|
$
|
2,875
|
|
|
$
|
1,552
|
|
|
$
|
44,779
|
|
State taxes
|
6,434
|
|
|
(630
|
)
|
|
10,936
|
|
|||
Total current provision
|
9,309
|
|
|
922
|
|
|
55,715
|
|
|||
Deferred expense (benefit)
|
|
|
|
|
|
||||||
Federal taxes
|
6,708
|
|
|
(52,886
|
)
|
|
(47,056
|
)
|
|||
State taxes
|
(500
|
)
|
|
(1,169
|
)
|
|
(5,819
|
)
|
|||
Total deferred provision
|
6,208
|
|
|
(54,055
|
)
|
|
(52,875
|
)
|
|||
Income tax expense (benefit)
|
$
|
15,517
|
|
|
$
|
(53,133
|
)
|
|
$
|
2,840
|
|
Effective tax rate
|
25.0
|
%
|
|
(400.8
|
)%
|
|
146.0
|
%
|
|
Years Ended December 31,
|
||||||||||
(in thousands)
|
2018
|
|
2017
|
|
2016
|
||||||
Computed "expected" tax expense
|
$
|
13,044
|
|
|
$
|
4,640
|
|
|
$
|
681
|
|
State income taxes, net of federal tax effect
|
4,748
|
|
|
(1,129
|
)
|
|
6
|
|
|||
Changes in state DTL for mergers
|
—
|
|
|
—
|
|
|
3,320
|
|
|||
Excess share based compensation
|
(1,254
|
)
|
|
(3,314
|
)
|
|
(1,709
|
)
|
|||
Nondeductible merger expenses
|
—
|
|
|
—
|
|
|
801
|
|
|||
Revaluation of U.S. deferred income taxes
|
(760
|
)
|
|
(53,449
|
)
|
|
—
|
|
|||
Other, net
|
(261
|
)
|
|
119
|
|
|
(259
|
)
|
|||
Income tax expense (benefit)
|
$
|
15,517
|
|
|
$
|
(53,133
|
)
|
|
$
|
2,840
|
|
(in thousands)
|
December 31,
2018 |
|
December 31,
2017 |
||||
Deferred tax assets:
|
|
|
|
||||
Deferred revenue
|
$
|
—
|
|
|
$
|
3,907
|
|
Net operating loss carry-forwards
|
12,612
|
|
|
14,983
|
|
||
Accruals and reserves
|
6,545
|
|
|
5,189
|
|
||
Pension benefits
|
2,873
|
|
|
3,556
|
|
||
Asset retirement obligations
|
7,797
|
|
|
4,608
|
|
||
Total gross deferred tax assets
|
29,827
|
|
|
32,243
|
|
||
Less valuation allowance
|
(862
|
)
|
|
(862
|
)
|
||
Net deferred tax assets
|
28,965
|
|
|
31,381
|
|
||
|
|
|
|
||||
Deferred tax liabilities:
|
|
|
|
||||
Deferred revenue
|
19,554
|
|
|
—
|
|
||
Plant-in-service
|
99,666
|
|
|
89,494
|
|
||
Intangible assets
|
32,963
|
|
|
37,682
|
|
||
Interest rate swaps
|
3,339
|
|
|
3,511
|
|
||
Other, net
|
896
|
|
|
1,573
|
|
||
Total gross deferred tax liabilities
|
156,418
|
|
|
132,260
|
|
||
Net deferred tax liabilities
|
$
|
127,453
|
|
|
$
|
100,879
|
|
•
|
Wireless provides digital wireless service as a Sprint PCS Affiliate to a portion of a multi-state area covering large portions of central and western Virginia, south-central Pennsylvania, West Virginia, and portions of Maryland, North Carolina, Kentucky, and Ohio. In these areas, we are the exclusive provider of Sprint-branded wireless mobility communications network products and services on the 800 MHz, 1900 MHz and 2.5 GHz spectrum bands. Wireless also owns
208
cell site towers built on leased and owned land, and leases space on these towers to both affiliates and non-affiliated third party wireless service providers.
|
•
|
Cable provides video, broadband and voice services in franchise areas in portions of Virginia, West Virginia and western Maryland, and leases fiber optic facilities throughout its service area. It does not include video, broadband and voice services provided to customers in Shenandoah County, Virginia.
|
•
|
Wireline provides regulated and unregulated voice services, internet broadband, long distance access services, and leases fiber optic facilities throughout portions of Virginia, West Virginia, Maryland and Pennsylvania.
|
•
|
Other operations are represented by Shenandoah Telecommunications Company, the parent holding company that provides investing and management services to its subsidiaries.
|
(in thousands)
|
Wireless
|
|
Cable
|
|
Wireline
|
|
Other
|
|
Eliminations
|
|
Consolidated
|
||||||||||||
External revenue
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Service revenue
|
$
|
380,818
|
|
|
$
|
114,917
|
|
|
$
|
21,521
|
|
|
—
|
|
|
—
|
|
|
$
|
517,256
|
|
||
Equipment revenue
|
67,510
|
|
|
695
|
|
|
193
|
|
|
—
|
|
|
—
|
|
|
68,398
|
|
||||||
Other
|
9,311
|
|
|
8,585
|
|
|
27,304
|
|
|
—
|
|
|
—
|
|
|
45,200
|
|
||||||
Total external revenue
|
457,639
|
|
|
124,197
|
|
|
49,018
|
|
|
—
|
|
|
—
|
|
|
630,854
|
|
||||||
Internal revenue
|
5,016
|
|
|
4,706
|
|
|
28,124
|
|
|
—
|
|
|
(37,846
|
)
|
|
—
|
|
||||||
Total operating revenue
|
462,655
|
|
|
128,903
|
|
|
77,142
|
|
|
—
|
|
|
(37,846
|
)
|
|
630,854
|
|
||||||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cost of services
|
131,166
|
|
|
59,935
|
|
|
38,056
|
|
|
—
|
|
|
(35,135
|
)
|
|
194,022
|
|
||||||
Cost of goods sold
|
63,583
|
|
|
295
|
|
|
81
|
|
|
—
|
|
|
—
|
|
|
63,959
|
|
||||||
Selling, general and administrative
|
47,538
|
|
|
20,274
|
|
|
7,467
|
|
|
40,654
|
|
|
(2,711
|
)
|
|
113,222
|
|
||||||
Depreciation and amortization
|
127,521
|
|
|
24,644
|
|
|
13,673
|
|
|
567
|
|
|
—
|
|
|
166,405
|
|
||||||
Total operating expenses
|
369,808
|
|
|
105,148
|
|
|
59,277
|
|
|
41,221
|
|
|
(37,846
|
)
|
|
537,608
|
|
||||||
Operating income (loss)
|
$
|
92,847
|
|
|
$
|
23,755
|
|
|
$
|
17,865
|
|
|
$
|
(41,221
|
)
|
|
$
|
—
|
|
|
$
|
93,246
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Capital Expenditures
|
$
|
86,146
|
|
|
$
|
26,640
|
|
|
$
|
16,566
|
|
|
$
|
7,289
|
|
|
$
|
—
|
|
|
$
|
136,641
|
|
(in thousands)
|
Wireless
|
|
Cable
|
|
Wireline
|
|
Other
|
|
Eliminations
|
|
Consolidated
|
||||||||||||
External revenue
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Service revenue
|
$
|
431,184
|
|
|
$
|
107,338
|
|
|
$
|
20,388
|
|
|
—
|
|
|
—
|
|
|
$
|
558,910
|
|
||
Equipment revenue
|
9,467
|
|
|
724
|
|
|
127
|
|
|
—
|
|
|
—
|
|
|
10,318
|
|
||||||
Other
|
9,478
|
|
|
7,855
|
|
|
25,430
|
|
|
—
|
|
|
—
|
|
|
42,763
|
|
||||||
Total external revenue
|
450,129
|
|
|
115,917
|
|
|
45,945
|
|
|
—
|
|
|
—
|
|
|
611,991
|
|
||||||
Internal revenue
|
4,949
|
|
|
3,245
|
|
|
33,308
|
|
|
—
|
|
|
(41,502
|
)
|
|
—
|
|
||||||
Total operating revenue
|
455,078
|
|
|
119,162
|
|
|
79,253
|
|
|
—
|
|
|
(41,502
|
)
|
|
611,991
|
|
||||||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cost of services
|
129,626
|
|
|
59,335
|
|
|
38,417
|
|
|
39
|
|
|
(38,696
|
)
|
|
188,721
|
|
||||||
Cost of goods sold
|
22,653
|
|
|
14
|
|
|
119
|
|
|
—
|
|
|
—
|
|
|
22,786
|
|
||||||
Selling, general and administrative
|
118,257
|
|
|
19,999
|
|
|
6,923
|
|
|
23,564
|
|
|
(2,806
|
)
|
|
165,937
|
|
||||||
Integration and acquisition expenses
|
10,793
|
|
|
—
|
|
|
—
|
|
|
237
|
|
|
—
|
|
|
11,030
|
|
||||||
Depreciation and amortization
|
139,610
|
|
|
23,968
|
|
|
12,829
|
|
|
600
|
|
|
—
|
|
|
177,007
|
|
||||||
Total operating expenses
|
420,939
|
|
|
103,316
|
|
|
58,288
|
|
|
24,440
|
|
|
(41,502
|
)
|
|
565,481
|
|
||||||
Operating income (loss)
|
$
|
34,139
|
|
|
$
|
15,846
|
|
|
$
|
20,965
|
|
|
$
|
(24,440
|
)
|
|
$
|
—
|
|
|
$
|
46,510
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Capital Expenditures
|
$
|
82,620
|
|
|
$
|
34,487
|
|
|
$
|
22,581
|
|
|
$
|
6,801
|
|
|
$
|
—
|
|
|
$
|
146,489
|
|
(in thousands)
|
Wireless
|
|
Cable
|
|
Wireline
|
|
Other
|
|
Eliminations
|
|
Consolidated
|
||||||||||||
External revenue
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Service revenue
|
$
|
359,769
|
|
|
$
|
99,070
|
|
|
$
|
19,646
|
|
|
—
|
|
|
—
|
|
|
$
|
478,485
|
|
||
Equipment revenue
|
10,674
|
|
|
736
|
|
|
130
|
|
|
—
|
|
|
—
|
|
|
11,540
|
|
||||||
Other
|
13,690
|
|
|
7,191
|
|
|
24,382
|
|
|
—
|
|
|
—
|
|
|
45,263
|
|
||||||
Total external revenue
|
384,133
|
|
|
106,997
|
|
|
44,158
|
|
|
—
|
|
|
—
|
|
|
535,288
|
|
||||||
Internal revenue
|
4,620
|
|
|
1,737
|
|
|
30,816
|
|
|
—
|
|
|
(37,173
|
)
|
|
—
|
|
||||||
Total operating revenue
|
388,753
|
|
|
108,734
|
|
|
74,974
|
|
|
—
|
|
|
(37,173
|
)
|
|
535,288
|
|
||||||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cost of services
|
103,840
|
|
|
58,290
|
|
|
36,272
|
|
|
—
|
|
|
(34,433
|
)
|
|
163,969
|
|
||||||
Cost of goods sold
|
29,273
|
|
|
291
|
|
|
(13
|
)
|
|
—
|
|
|
—
|
|
|
29,551
|
|
||||||
Selling, general and administrative
|
95,851
|
|
|
19,248
|
|
|
6,474
|
|
|
14,492
|
|
|
(2,740
|
)
|
|
133,325
|
|
||||||
Integration and acquisition expenses
|
25,927
|
|
|
—
|
|
|
—
|
|
|
16,305
|
|
|
—
|
|
|
42,232
|
|
||||||
Depreciation and amortization
|
107,621
|
|
|
23,908
|
|
|
11,717
|
|
|
439
|
|
|
—
|
|
|
143,685
|
|
||||||
Total operating expenses
|
362,512
|
|
|
101,737
|
|
|
54,450
|
|
|
31,236
|
|
|
(37,173
|
)
|
|
512,762
|
|
||||||
Operating income (loss)
|
$
|
26,241
|
|
|
$
|
6,997
|
|
|
$
|
20,524
|
|
|
$
|
(31,236
|
)
|
|
$
|
—
|
|
|
$
|
22,526
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Capital Expenditures
|
$
|
123,400
|
|
|
$
|
32,400
|
|
|
$
|
20,200
|
|
|
$
|
(2,769
|
)
|
|
$
|
—
|
|
|
$
|
173,231
|
|
|
Years Ended December 31,
|
||||||||||
(in thousands)
|
2018
|
|
2017
|
|
2016
|
||||||
Total consolidated operating income (loss)
|
$
|
93,246
|
|
|
$
|
46,510
|
|
|
$
|
22,526
|
|
Interest expense
|
(34,847
|
)
|
|
(38,237
|
)
|
|
(25,102
|
)
|
|||
Gain (loss) on investments, net
|
(275
|
)
|
|
564
|
|
|
271
|
|
|||
Non-operating income (loss), net
|
3,988
|
|
|
4,420
|
|
|
4,250
|
|
|||
Income (loss) before income taxes
|
$
|
62,112
|
|
|
$
|
13,257
|
|
|
$
|
1,945
|
|
|
Three Months Ended
|
||||||||||||||
(in thousands, except per share data)
|
March 31, 2018
|
|
June 30,
2018 |
|
September 30, 2018
|
|
December 31, 2018
|
||||||||
Operating revenue
|
$
|
154,138
|
|
|
$
|
156,501
|
|
|
$
|
158,731
|
|
|
$
|
161,484
|
|
Operating income (loss)
|
16,754
|
|
|
21,169
|
|
|
28,329
|
|
|
26,994
|
|
||||
Net income (loss)
|
6,583
|
|
|
9,626
|
|
|
15,534
|
|
|
14,852
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net income (loss) per share - basic
|
$
|
0.13
|
|
|
$
|
0.19
|
|
|
$
|
0.31
|
|
|
$
|
0.31
|
|
Net income (loss) per share - diluted
|
$
|
0.13
|
|
|
$
|
0.19
|
|
|
$
|
0.31
|
|
|
$
|
0.30
|
|
|
|
|
|
|
|
|
|
||||||||
|
Three Months Ended
|
||||||||||||||
(in thousands except per share data)
|
March 31, 2017
|
|
June 30,
2017 |
|
September 30, 2017
|
|
December 31, 2017
|
||||||||
Operating revenue
|
$
|
154,125
|
|
|
$
|
153,867
|
|
|
$
|
152,382
|
|
|
$
|
151,617
|
|
Operating income (loss)
|
10,673
|
|
|
8,252
|
|
|
9,475
|
|
|
18,110
|
|
||||
Net income (loss)
|
2,341
|
|
|
(80
|
)
|
|
3,534
|
|
|
60,595
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net income (loss) per share - basic
|
$
|
0.05
|
|
|
$
|
—
|
|
|
$
|
0.07
|
|
|
$
|
1.23
|
|
Net income (loss) per share - diluted
|
$
|
0.05
|
|
|
$
|
—
|
|
|
$
|
0.07
|
|
|
$
|
1.21
|
|
|
As of January 1, 2018
|
||||||||||
(in thousands)
|
As Reported
|
|
Correction of Error
|
|
As Adjusted
|
||||||
Prepaid expenses and other
|
$
|
53,688
|
|
|
$
|
(6,701
|
)
|
|
$
|
46,987
|
|
Deferred charges and other assets, net
|
29,797
|
|
|
14,964
|
|
|
44,761
|
|
|||
Deferred income taxes
|
119,030
|
|
|
2,201
|
|
|
121,231
|
|
|||
Retained earnings
|
347,240
|
|
|
6,062
|
|
|
353,302
|
|
|
As of March 31, 2018
|
||||||||||
(in thousands)
|
As Reported
|
|
Correction of Error
|
|
As Adjusted
|
||||||
Prepaid expenses and other
|
$
|
64,200
|
|
|
$
|
(5,741
|
)
|
|
$
|
58,459
|
|
Deferred charges and other assets, net
|
33,934
|
|
|
16,410
|
|
|
50,344
|
|
|||
Deferred income taxes
|
115,809
|
|
|
2,853
|
|
|
118,662
|
|
|||
Retained earnings
|
352,069
|
|
|
7,816
|
|
|
359,885
|
|
|
As of June 30, 2018
|
||||||||||
(in thousands)
|
As Reported
|
|
Correction of Error
|
|
As Adjusted
|
||||||
Prepaid expenses and other
|
$
|
64,163
|
|
|
$
|
(4,756
|
)
|
|
$
|
59,407
|
|
Deferred charges and other assets, net
|
34,021
|
|
|
17,896
|
|
|
51,917
|
|
|||
Deferred income taxes
|
111,125
|
|
|
3,522
|
|
|
114,647
|
|
|||
Retained earnings
|
359,893
|
|
|
9,618
|
|
|
369,511
|
|
|
For the Three Months Ended March 31, 2018
|
||||||||||
(in thousands)
|
As Reported
|
|
Correction of Error
|
|
As Adjusted
|
||||||
Service revenue and other
|
$
|
134,153
|
|
|
$
|
2,406
|
|
|
$
|
136,559
|
|
Income tax expense (benefit)
|
1,176
|
|
|
652
|
|
|
1,828
|
|
|||
Net income (loss)
|
4,829
|
|
|
1,754
|
|
|
6,583
|
|
|||
Earnings per share - basic
|
$
|
0.10
|
|
|
$
|
0.03
|
|
|
$
|
0.13
|
|
Earnings per share - diluted
|
$
|
0.10
|
|
|
$
|
0.03
|
|
|
$
|
0.13
|
|
|
For the Three Months Ended June 30, 2018
|
||||||||||
(in thousands)
|
As Reported
|
|
Correction of Error
|
|
As Adjusted
|
||||||
Service revenue and other
|
$
|
138,021
|
|
|
$
|
2,471
|
|
|
$
|
140,492
|
|
Income tax expense (benefit)
|
2,862
|
|
|
669
|
|
|
3,531
|
|
|||
Net income (loss)
|
7,824
|
|
|
1,802
|
|
|
9,626
|
|
|||
Earnings per share - basic
|
$
|
0.16
|
|
|
$
|
0.03
|
|
|
$
|
0.19
|
|
Earnings per share - diluted
|
$
|
0.16
|
|
|
$
|
0.03
|
|
|
$
|
0.19
|
|
|
For the Six Months Ended June 30, 2018
|
||||||||||
(in thousands)
|
As Reported
|
|
Correction of Error
|
|
As Adjusted
|
||||||
Service revenue and other
|
$
|
272,174
|
|
|
$
|
4,877
|
|
|
$
|
277,051
|
|
Income tax expense (benefit)
|
4,038
|
|
|
1,321
|
|
|
5,359
|
|
|||
Net income (loss)
|
12,653
|
|
|
3,556
|
|
|
16,209
|
|
|||
Earnings per share - basic
|
$
|
0.26
|
|
|
$
|
0.07
|
|
|
$
|
0.33
|
|
Earnings per share - diluted
|
$
|
0.25
|
|
|
$
|
0.07
|
|
|
$
|
0.32
|
|
(in thousands)
|
|
Balance at Beginning of Year
|
|
Recoveries added to allowance
|
|
Bad debt expense
|
|
Losses charged to allowance
|
|
Balance at End of Year
|
||||||||||
Year Ended December, 31 2018
|
|
|
||||||||||||||||||
Allowance for doubtful accounts
|
|
$
|
466
|
|
|
$
|
631
|
|
|
$
|
1,983
|
|
|
$
|
(2,546
|
)
|
|
$
|
534
|
|
Year Ended December, 31 2017
|
|
|
||||||||||||||||||
Allowance for doubtful accounts
|
|
$
|
759
|
|
|
$
|
616
|
|
|
$
|
2,179
|
|
|
$
|
(3,088
|
)
|
|
$
|
466
|
|
Year Ended December, 31 2016
|
|
|
||||||||||||||||||
Allowance for doubtful accounts
|
|
$
|
418
|
|
|
$
|
628
|
|
|
$
|
2,456
|
|
|
$
|
(2,743
|
)
|
|
$
|
759
|
|
Exhibit
Number
|
Exhibit Description
|
|
|
2.1
|
|
|
|
3.1
|
|
|
|
3.2
|
|
|
|
4.1
|
|
|
|
4.2
|
|
|
|
10.1
|
|
|
|
10.2
|
|
|
|
10.3
|
|
|
|
10.4
|
|
|
|
10.5
|
10.6
|
|
|
|
10.7
|
|
|
|
10.8
|
|
|
|
10.9
|
|
|
|
10.10
|
|
|
|
10.11
|
|
|
|
10.12
|
|
|
|
10.13
|
|
|
|
10.14
|
|
|
|
10.15
|
|
|
|
10.16
|
10.17
|
|
|
|
10.18
|
|
|
|
10.19
|
|
|
|
10.20
|
|
|
|
10.21
|
|
|
|
10.22
|
|
|
|
10.23
|
|
|
|
10.24
|
|
|
|
10.25
|
|
|
|
10.26
|
10.27
|
|
|
|
10.28
|
|
|
|
10.29
|
|
|
|
10.30
|
|
|
|
10.31
|
|
|
|
10.32
|
|
|
|
10.33
|
|
|
|
10.34
|
|
|
|
10.35
|
|
|
|
10.36
|
10.37
|
|
|
|
10.38
|
|
|
|
10.39
|
|
|
|
10.40
|
|
|
|
10.41
|
|
|
|
10.42
|
|
|
|
10.43
|
|
|
|
10.44
|
|
|
|
10.45
|
|
|
|
10.46
|
|
|
|
10.47
|
|
|
|
10.48
|
10.50
|
|
|
|
10.51
|
|
|
|
10.52
|
|
|
|
10.53
|
|
|
|
10.54
|
|
|
|
10.55
|
|
|
|
10.56
|
|
|
|
10.57
|
|
|
|
*10.58
|
|
|
|
*10.59
|
|
|
|
*10.60
|
|
|
|
*21
|
|
|
|
*23.1
|
|
|
|
*31.1
|
|
|
|
*31.2
|
|
|
|
**32
|
|
|
|
(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
|
|
|
|
|
•
|
The Company did not have a sufficient number of trained resources with assigned responsibility and accountability for the design, operation, and documentation of internal control over financial reporting.
|
•
|
The Company did not have an effective risk assessment process that identified and assessed necessary changes in the application of U.S. generally accepted accounting principles, financial reporting processes, and the design and effective operation of internal controls.
|
•
|
The Company did not have an effective information and communication process that identified and assessed the source of reliable information necessary for financial accounting and reporting.
|
•
|
The Company did not have effective monitoring activities to assess the operation of internal control.
|
|
|
1.
|
I have reviewed this annual report on Form 10-K of Shenandoah Telecommunications Company, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e
))
and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d‑15(f)) for the registrant and have:
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
|
1.
|
I have reviewed this annual report on Form 10-K of Shenandoah Telecommunications Company, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d‑15(f)) for the registrant and have:
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
|
|
/S/CHRISTOPHER E. FRENCH
|
|
Christopher E. French
|
|
President and Chief Executive Officer
|
|
February 28, 2019
|
|
|
|
/S/JAMES F. WOODWARD
|
|
James F. Woodward
|
|
Senior Vice President – Finance and Chief Financial Officer
|
|
February 28, 2019
|
|