|
☒
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
For the fiscal year ended December 31, 2019
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
For the transition period from__________ to __________
|
Virginia
|
|
54-1162807
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(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
|
Common Stock (No Par Value)
|
SHEN
|
NASDAQ Global Select Market
|
49,783,639
|
(Title of Class)
|
(Trading Symbol)
|
(Name of Exchange on which Registered)
|
(The number of shares of the registrant's common stock outstanding on February 19, 2020)
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|
|
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SHENANDOAH TELECOMMUNICATIONS COMPANY
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|
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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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|
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|
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1.
|
||
1A.
|
||
1B.
|
||
2.
|
||
3.
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||
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PART II
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|
|
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5.
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||
6.
|
||
7.
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||
7A.
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||
8.
|
||
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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|
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10.
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||
11.
|
||
12.
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||
13.
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||
14.
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||
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PART IV
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|
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15.
|
||
16.
|
•
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our ability to sustain and grow revenues and cash flow from operations by offering wireless, broadband, video, voice, cell tower space, fiber optic network services and other services to residential and commercial customers, to adequately meet the customer demands in our service areas and to maintain and grow our customer base, particularly in the face of increasingly aggressive competition, the need for innovation and the related capital expenditures;
|
•
|
the impact of competition from other market participants, including but not limited to incumbent telephone companies, direct broadcast satellite ("DBS") operators, wireless broadband and telephone providers, digital subscriber line (“DSL”) providers, fiber to the home providers, video provided over the Internet by (i) market participants that have not historically competed in the multichannel video business, (ii) traditional multichannel video distributors, and (iii) content providers that have historically licensed cable networks to multichannel video distributors, and providers of advertising over the Internet;
|
•
|
any adverse change to Sprint’s business, liquidity, financial condition or the potential merger with T-Mobile may materially adversely affect the market price of our common stock or on our operating results;
|
•
|
the pending dispute with Sprint over the resetting of the travel fee could have a material adverse effect on our financial and operating results in our Wireless segment;
|
•
|
general business conditions, economic uncertainty or downturn, unemployment levels and the level of activity in the housing sector;
|
•
|
our ability to obtain programming at reasonable prices or to raise prices to offset, in whole or in part, the effects of higher programming costs;
|
•
|
our ability to develop and deploy new products and technologies including mobile products and any other consumer services and service platforms;
|
•
|
any events that disrupt our networks, information systems or properties and impair our operating activities or our reputation;
|
•
|
the ability to retain and hire key personnel;
|
•
|
the availability and access, in general, of funds to meet our debt obligations prior to or when they become due and to fund our operations and necessary capital expenditures, either through (i) cash on hand, (ii) cash flow, or (iii) access to the capital or credit markets; and
|
•
|
our ability to comply with all covenants in our credit facility, any violation of which, if not cured in a timely manner, could trigger an event of default.
|
ITEM 1.
|
BUSINESS
|
Name
|
Title
|
Age
|
Date in Position
|
Christopher E. French
|
President and Chief Executive Officer
|
62
|
April 1988
|
|
|
|
|
David L. Heimbach
|
Executive Vice President and Chief Operating Officer
|
44
|
May 2018
|
|
|
|
|
James J. Volk
|
Senior Vice President and Chief Financial Officer
|
56
|
June 2019
|
|
|
|
|
Edward H. McKay
|
Senior Vice President Engineering and Operations
|
47
|
January 2019
|
|
|
|
|
Richard W. Mason Jr.
|
Senior Vice President and Head of Business Operations
|
46
|
May 2019
|
|
|
|
|
William L. Pirtle
|
Senior Vice President Sales and Marketing
|
60
|
January 2019
|
|
|
|
|
Thomas A. Whitaker
|
Senior Vice President Corporate Development
|
59
|
January 2019
|
|
|
|
|
Heather K. Banks
|
Vice President and Chief Human Resources Officer
|
46
|
July 2019
|
|
|
|
|
Elaine M. Cheng
|
Vice President and Chief Information Officer
|
47
|
March 2019
|
|
|
|
|
Raymond B. Ostroski
|
General Counsel, Vice President Legal and Corporate Secretary
|
65
|
January 2013
|
|
|
|
|
Chase L. Stobbe
|
Vice President and Chief Accounting Officer
|
36
|
April 2019
|
|
|
|
|
ITEM 1A.
|
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;
|
•
|
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;
|
•
|
we may not be able to realize anticipated synergies or eliminate as many anticipated redundant costs;
|
•
|
our operating and financial systems and controls and information services may not be compatible with those of the companies we may acquire and may not be adequate to support our integration efforts, and any steps we take to improve these systems and controls may not be sufficient;
|
•
|
our business plans and projections used to justify the acquisitions and expansion investments are based on assumptions of revenues per subscriber, penetration rates in specific markets where we operate and expected operating costs. These assumptions may not develop as projected, which may negatively impact our profitability or the value of our intangible assets;
|
•
|
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, 2019, 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;
|
•
|
limit our ability to borrow additional funds to alleviate liquidity constraints, as a result of financial and other restrictive covenants in our credit agreement;
|
•
|
limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; and
|
•
|
place us at a competitive disadvantage relative to companies that have less indebtedness.
|
•
|
incur additional indebtedness and additional liens on our assets;
|
•
|
engage in certain mergers or acquisitions or asset dispositions;
|
•
|
pay dividends, repurchase our securities or make other distributions;
|
•
|
voluntarily prepay other indebtedness;
|
•
|
enter into transactions with affiliated persons;
|
•
|
make certain investments; and
|
•
|
change the nature of our business.
|
•
|
Sprint could price its national plans based on its own objectives and could set price levels or other terms that may not be economically advantageous for us;
|
•
|
Sprint could develop products and services that could adversely affect our results of operations;
|
•
|
if Sprint’s costs to perform certain services exceed the costs they expect, subject to limitations under our Sprint Affiliate Agreement, Sprint could seek to increase the amounts charged to us for such services;
|
•
|
Sprint could make decisions that could adversely affect the Sprint brand names, reputation, or products or services, which could adversely affect our business;
|
•
|
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;
|
•
|
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);
|
•
|
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;
|
•
|
Sprint gives preference to other distribution channels;
|
•
|
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.
|
ITEM 1B.
|
UNRESOLVED STAFF COMMENTS
|
ITEM 2.
|
PROPERTIES
|
ITEM 3.
|
LEGAL PROCEEDINGS
|
ITEM 5.
|
MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
2019
|
|
High
|
|
Low
|
||||
Fourth Quarter
|
|
$
|
41.73
|
|
|
$
|
29.61
|
|
Third Quarter
|
|
41.63
|
|
|
30.70
|
|
||
Second Quarter
|
|
45.27
|
|
|
36.40
|
|
||
First Quarter
|
|
51.18
|
|
|
43.28
|
|
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
|
|
|
2014
|
2015
|
2016
|
2017
|
2018
|
2019
|
||||||||||||
Shenandoah Telecommunications Company
|
$
|
100
|
|
$
|
139
|
|
$
|
178
|
|
$
|
222
|
|
$
|
292
|
|
$
|
277
|
|
NDAQ US
|
$
|
100
|
|
$
|
100
|
|
$
|
114
|
|
$
|
138
|
|
$
|
130
|
|
$
|
171
|
|
NDAQ Telecom Stocks
|
$
|
100
|
|
$
|
104
|
|
$
|
128
|
|
$
|
128
|
|
$
|
119
|
|
$
|
151
|
|
|
Years Ended December 31,
|
||||||||||||||
|
2015
|
2016
|
2017
|
2018
|
2019
|
||||||||||
Cash Dividend
|
$
|
0.24
|
|
$
|
0.25
|
|
$
|
0.26
|
|
$
|
0.27
|
|
$
|
0.29
|
|
($ in thousands, except per share amounts)
|
Number of Shares
Surrendered |
|
Average Price
Paid per Share |
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)
|
|
Approximate Dollar Value that May Yet be Purchased under the Plans or Programs (1)
|
||||||
October 1 to October 31
|
—
|
|
|
$
|
—
|
|
|
N/A
|
|
|
N/A
|
|
|
November 1 to November 30
|
12
|
|
|
$
|
33.66
|
|
|
200,206
|
|
|
$
|
72,772
|
|
December 1 to December 31
|
—
|
|
|
—
|
|
|
204
|
|
|
$
|
72,765
|
|
|
Total
|
12
|
|
|
|
|
|
200,410
|
|
|
$
|
72,765
|
|
ITEM 6.
|
SELECTED FINANCIAL DATA
|
|
Years Ended December 31,
|
||||||||||||||||||
(in thousands, except share and per share amounts)
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue
|
$
|
633,906
|
|
|
$
|
630,854
|
|
|
$
|
611,991
|
|
|
$
|
535,288
|
|
|
$
|
342,485
|
|
Operating expenses
|
536,860
|
|
|
537,608
|
|
|
565,481
|
|
|
512,762
|
|
|
268,399
|
|
|||||
Operating income
|
97,046
|
|
|
93,246
|
|
|
46,510
|
|
|
22,526
|
|
|
74,086
|
|
|||||
Interest expense
|
29,468
|
|
|
34,847
|
|
|
38,237
|
|
|
25,102
|
|
|
7,355
|
|
|||||
Income tax expense (benefit)
|
16,104
|
|
|
15,517
|
|
|
(53,133
|
)
|
|
2,840
|
|
|
27,726
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income (loss)
|
54,935
|
|
|
46,595
|
|
|
66,390
|
|
|
(895
|
)
|
|
40,864
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Shareholder Information:
|
|
|
|
|
|
|
|
|
|
||||||||||
Shares outstanding
|
49,670,603
|
|
|
49,630,119
|
|
|
49,327,671
|
|
|
48,934,708
|
|
|
48,475,132
|
|
|||||
Earnings (loss) per share - basic
|
$
|
1.10
|
|
|
$
|
0.94
|
|
|
$
|
1.35
|
|
|
$
|
(0.02
|
)
|
|
$
|
0.84
|
|
Earnings (loss) per share - diluted
|
$
|
1.10
|
|
|
$
|
0.93
|
|
|
$
|
1.33
|
|
|
$
|
(0.02
|
)
|
|
0.83
|
|
|
Cash dividends per share
|
$
|
0.29
|
|
|
$
|
0.27
|
|
|
$
|
0.26
|
|
|
$
|
0.25
|
|
|
$
|
0.24
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Years Ended December 31,
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
Cash and cash equivalents
|
$
|
101,651
|
|
|
$
|
85,086
|
|
|
$
|
78,585
|
|
|
$
|
36,193
|
|
|
$
|
76,812
|
|
Accounts receivable
|
63,541
|
|
|
54,407
|
|
|
54,184
|
|
|
69,789
|
|
|
29,778
|
|
|||||
Operating lease right-of-use assets
|
392,589
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Property, plant and equipment, net
|
700,114
|
|
|
701,359
|
|
|
686,327
|
|
|
698,122
|
|
|
410,018
|
|
|||||
Deferred charges and other assets
|
53,352
|
|
|
49,891
|
|
|
13,690
|
|
|
14,756
|
|
|
11,504
|
|
|||||
Total assets
|
1,860,691
|
|
|
1,484,766
|
|
|
1,411,860
|
|
|
1,484,407
|
|
|
627,151
|
|
|||||
Total debt - including current maturities
|
720,114
|
|
|
770,242
|
|
|
821,958
|
|
|
829,265
|
|
|
199,661
|
|
|||||
Operating lease liabilities
|
395,006
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total liabilities
|
1,391,269
|
|
|
1,042,519
|
|
|
1,061,638
|
|
|
1,188,513
|
|
|
337,213
|
|
|||||
Total Shareholders' equity
|
469,422
|
|
|
442,247
|
|
|
350,222
|
|
|
295,894
|
|
|
289,938
|
|
ITEM 7.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
|
Year Ended December 31,
|
|
Change
|
||||||||||||||
($ in thousands)
|
|
2019
|
% of Revenue
|
|
2018
|
% of Revenue
|
|
$
|
|
%
|
||||||||
Revenue
|
|
$
|
633,906
|
|
100.0
|
|
|
$
|
630,854
|
|
100.0
|
|
|
3,052
|
|
|
0.5
|
|
Operating expenses
|
|
536,860
|
|
84.7
|
|
|
537,608
|
|
85.2
|
|
|
(748
|
)
|
|
(0.1
|
)
|
||
Operating income
|
|
97,046
|
|
15.3
|
|
|
93,246
|
|
14.8
|
|
|
3,800
|
|
|
4.1
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
|
(29,468
|
)
|
(4.6
|
)
|
|
(34,847
|
)
|
(5.5
|
)
|
|
(5,379
|
)
|
|
(15.4
|
)
|
||
Other income
|
|
3,461
|
|
0.5
|
|
|
3,713
|
|
0.6
|
|
|
(252
|
)
|
|
(6.8
|
)
|
||
Income before taxes
|
|
71,039
|
|
11.2
|
|
|
62,112
|
|
9.8
|
|
|
8,927
|
|
|
14.4
|
|
||
Income tax expense
|
|
16,104
|
|
2.5
|
|
|
15,517
|
|
2.5
|
|
|
587
|
|
|
3.8
|
|
||
Net income
|
|
$
|
54,935
|
|
8.7
|
|
|
$
|
46,595
|
|
7.4
|
|
|
8,340
|
|
|
17.9
|
|
|
|
December 31,
2019 |
|
December 31,
2018 (2) |
|
December 31,
2017 (3) |
|||
Postpaid:
|
|
|
|
|
|
|
|||
Retail PCS total subscribers
|
|
844,194
|
|
|
795,176
|
|
|
736,597
|
|
Retail PCS phone subscribers
|
|
740,958
|
|
|
723,455
|
|
|
678,096
|
|
Retail PCS connected device subscribers
|
|
103,236
|
|
|
71,721
|
|
|
58,501
|
|
Gross PCS total subscriber additions
|
|
235,953
|
|
|
190,334
|
|
|
173,871
|
|
Gross PCS phone additions
|
|
174,237
|
|
|
156,601
|
|
|
150,210
|
|
Gross PCS connected device additions
|
|
61,716
|
|
|
33,733
|
|
|
23,661
|
|
Net PCS total subscriber additions (losses)
|
|
49,018
|
|
|
20,236
|
|
|
(5,032
|
)
|
Net PCS phone additions (losses)
|
|
19,846
|
|
|
12,310
|
|
|
(1,414
|
)
|
Net PCS connected device additions (losses)
|
|
29,172
|
|
|
7,926
|
|
|
(3,618
|
)
|
PCS monthly retail total churn %
|
|
1.92
|
%
|
|
1.82
|
%
|
|
2.04
|
%
|
PCS monthly phone churn %
|
|
1.77
|
%
|
|
1.69
|
%
|
|
1.88
|
%
|
PCS monthly connected device churn %
|
|
3.21
|
%
|
|
3.35
|
%
|
|
3.96
|
%
|
Prepaid:
|
|
|
|
|
|
|
|||
Retail PCS subscribers
|
|
274,012
|
|
|
258,704
|
|
|
225,822
|
|
Gross PCS subscriber additions
|
|
152,098
|
|
|
150,662
|
|
|
151,926
|
|
Net PCS subscriber additions
|
|
15,308
|
|
|
17,191
|
|
|
14,633
|
|
PCS monthly retail churn %
|
|
4.26
|
%
|
|
4.45
|
%
|
|
5.07
|
%
|
|
|
|
|
|
|
|
|||
PCS market POPS (000) (1)
|
|
7,227
|
|
|
7,023
|
|
|
5,942
|
|
PCS covered POP (000) (1)
|
|
6,324
|
|
|
6,109
|
|
|
5,272
|
|
Macro base stations (cell sites)
|
|
1,960
|
|
|
1,853
|
|
|
1,623
|
|
(1)
|
"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.
|
(2)
|
Acquired the Richmond Expansion Area on February 1, 2018 with market POPs of 1,082,000 and covered POPs of 602,000. 2018 net adds results exclude 38,343 postpaid and 15,691 prepaid subscribers acquired.
|
(3)
|
Acquired the Parkersburg Expansion Area on April 6, 2017 with market POPs of 511,000 and covered POPs of 244,000. 2017 net adds results exclude 19,067 postpaid and 4,517 prepaid subscribers acquired.
|
|
|
Year Ended December 31,
|
|
Change
|
||||||||||||||
($ in thousands)
|
|
2019
|
% of Revenue
|
|
2018
|
% of Revenue
|
|
$
|
|
%
|
||||||||
Wireless revenue:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Gross postpaid billings
|
|
$
|
410,532
|
|
92.6
|
|
|
$
|
405,101
|
|
89.9
|
|
|
5,431
|
|
|
1.3
|
|
Allocated bad debt
|
|
(20,428
|
)
|
(4.6
|
)
|
|
(21,866
|
)
|
(4.9
|
)
|
|
(1,438
|
)
|
|
(6.6
|
)
|
||
Amortization of contract asset and other
|
|
(23,337
|
)
|
(5.3
|
)
|
|
(18,742
|
)
|
(4.2
|
)
|
|
4,595
|
|
|
24.5
|
|
||
Sprint management and net service fee
|
|
(64,736
|
)
|
(14.6
|
)
|
|
(63,718
|
)
|
(14.1
|
)
|
|
1,018
|
|
|
1.6
|
|
||
Total postpaid service revenue
|
|
302,031
|
|
68.1
|
|
|
300,775
|
|
66.8
|
|
|
1,256
|
|
|
0.4
|
|
||
Gross prepaid billings
|
|
121,604
|
|
27.4
|
|
|
111,462
|
|
24.7
|
|
|
10,142
|
|
|
9.1
|
|
||
Amortization of contract asset and other
|
|
(60,435
|
)
|
(13.6
|
)
|
|
(52,846
|
)
|
(11.7
|
)
|
|
7,589
|
|
|
14.4
|
|
||
Sprint management fee
|
|
(7,629
|
)
|
(1.7
|
)
|
|
(7,014
|
)
|
(1.6
|
)
|
|
615
|
|
|
8.8
|
|
||
Total prepaid service revenue
|
|
53,540
|
|
12.1
|
|
|
51,602
|
|
11.5
|
|
|
1,938
|
|
|
3.8
|
|
||
Travel and other
|
|
20,160
|
|
4.5
|
|
|
30,572
|
|
6.8
|
|
|
(10,412
|
)
|
|
(34.1
|
)
|
||
Wireless service revenue and other
|
|
375,731
|
|
84.7
|
|
|
382,949
|
|
85.0
|
|
|
(7,218
|
)
|
|
(1.9
|
)
|
||
Equipment revenue
|
|
67,659
|
|
15.3
|
|
|
67,510
|
|
15.0
|
|
|
149
|
|
|
0.2
|
|
||
Total wireless revenue
|
|
443,390
|
|
100.0
|
|
|
450,459
|
|
100.0
|
|
|
(7,069
|
)
|
|
(1.6
|
)
|
||
Wireless operating expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Cost of services
|
|
131,745
|
|
29.7
|
|
|
127,045
|
|
28.2
|
|
|
4,700
|
|
|
3.7
|
|
||
Cost of goods sold
|
|
65,148
|
|
14.7
|
|
|
63,583
|
|
14.1
|
|
|
1,565
|
|
|
2.5
|
|
||
Selling, general and administrative
|
|
42,225
|
|
9.5
|
|
|
46,760
|
|
10.4
|
|
|
(4,535
|
)
|
|
(9.7
|
)
|
||
Depreciation and amortization
|
|
115,731
|
|
26.1
|
|
|
125,067
|
|
27.8
|
|
|
(9,336
|
)
|
|
(7.5
|
)
|
||
Total wireless operating expenses
|
|
354,849
|
|
80.0
|
|
|
362,455
|
|
80.5
|
|
|
(7,606
|
)
|
|
(2.1
|
)
|
||
Wireless operating income
|
|
$
|
88,541
|
|
20.0
|
|
|
$
|
88,004
|
|
19.5
|
|
|
537
|
|
|
0.6
|
|
|
|
December 31,
2019 |
|
December 31, 2018
|
|
December 31, 2017
|
|||
Broadband homes passed (1)
|
|
208,298
|
|
|
201,633
|
|
|
201,410
|
|
Broadband customer relationships (2)
|
|
100,890
|
|
|
95,328
|
|
|
93,162
|
|
|
|
|
|
|
|
|
|||
Video:
|
|
|
|
|
|
|
|
||
RGUs (3)
|
|
53,673
|
|
|
58,672
|
|
|
62,964
|
|
Penetration (4)
|
|
25.8
|
%
|
|
29.1
|
%
|
|
31.3
|
%
|
Digital video penetration (5)
|
|
95.0
|
%
|
|
78.8
|
%
|
|
76.2
|
%
|
Broadband:
|
|
|
|
|
|
|
|
||
RGUs (3)
|
|
84,045
|
|
|
75,389
|
|
|
68,379
|
|
Penetration (4)
|
|
40.3
|
%
|
|
37.4
|
%
|
|
34.0
|
%
|
Voice:
|
|
|
|
|
|
|
|
||
RGUs (3)
|
|
31,380
|
|
|
29,474
|
|
|
24,138
|
|
Penetration (4)
|
|
16.2
|
%
|
|
15.9
|
%
|
|
13.1
|
%
|
Total Cable and Glo Fiber RGUs
|
|
169,098
|
|
|
163,535
|
|
|
155,481
|
|
|
|
|
|
|
|
|
|
||
RLEC homes passed
|
|
25,846
|
|
|
26,782
|
|
|
26,707
|
|
RLEC customer relationships (2)
|
|
10,306
|
|
|
11,226
|
|
|
12,319
|
|
RLEC RGUs:
|
|
|
|
|
|
|
|||
Data RLEC
|
|
7,797
|
|
|
9,104
|
|
|
11,409
|
|
Penetration (4)
|
|
30.2
|
%
|
|
34.0
|
%
|
|
42.7
|
%
|
Voice RLEC
|
|
14,332
|
|
|
15,698
|
|
|
16,930
|
|
Penetration (4)
|
|
55.5
|
%
|
|
58.6
|
%
|
|
63.4
|
%
|
Total RLEC RGUs
|
|
22,129
|
|
|
24,802
|
|
|
28,339
|
|
|
|
|
|
|
|
|
|
||
Total RGUs
|
|
191,227
|
|
|
188,337
|
|
|
183,820
|
|
|
|
|
|
|
|
|
|
||
Fiber route miles
|
|
6,139
|
|
|
5,641
|
|
|
5,429
|
|
Total fiber miles (6)
|
|
320,444
|
|
|
300,200
|
|
|
276,176
|
|
(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. Homes passed have access to video, broadband and voice services.
|
(2)
|
Customer relationships represent the number of billed customers who receive at least one of our services.
|
(3)
|
As of September 30, 2019, the Company revised its methodology for counting RGUs associated with hotels, multiple dwelling units ("MDUs") and certain commercial customers. We now count each dwelling or unit of service as a separate RGU. Prior year information has been recast to reflect our revised methodology. Previously we counted RGUs on an equivalent basis consistent with carriage fee practices.
|
(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)
|
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)
|
|
2019
|
% of Revenue
|
|
2018
|
% of Revenue
|
|
$
|
|
%
|
|||||||
Broadband revenue
|
|
|
|
|
|
|
|
|
|
|
|||||||
Cable, residential and SMB
|
|
$
|
134,187
|
|
69.2
|
|
$
|
124,072
|
|
67.8
|
|
|
10,115
|
|
|
8.2
|
|
Fiber, enterprise and wholesale
|
|
27,714
|
|
14.3
|
|
24,439
|
|
13.3
|
|
|
3,275
|
|
|
13.4
|
|
||
Rural local exchange carrier
|
|
22,966
|
|
11.8
|
|
26,196
|
|
14.3
|
|
|
(3,230
|
)
|
|
(12.3
|
)
|
||
Equipment and other
|
|
9,077
|
|
4.7
|
|
8,413
|
|
4.6
|
|
|
664
|
|
|
7.9
|
|
||
Total broadband revenue
|
|
193,944
|
|
100.0
|
|
183,120
|
|
100.0
|
%
|
|
10,824
|
|
|
5.9
|
|
||
Broadband operating expenses
|
|
|
|
|
|
|
|
|
|
|
|||||||
Cost of services
|
|
76,674
|
|
39.5
|
|
75,066
|
|
41.0
|
|
|
1,608
|
|
|
2.1
|
|
||
Cost of goods sold
|
|
766
|
|
0.4
|
|
376
|
|
0.2
|
|
|
390
|
|
|
103.7
|
|
||
Selling, general, and administrative
|
|
32,679
|
|
16.8
|
|
27,741
|
|
15.1
|
|
|
4,938
|
|
|
17.8
|
|
||
Depreciation and amortization
|
|
41,304
|
|
21.3
|
|
38,317
|
|
20.9
|
|
|
2,987
|
|
|
7.8
|
|
||
Total broadband operating expenses
|
|
151,423
|
|
78.1
|
|
141,500
|
|
77.3
|
|
|
9,923
|
|
|
7.0
|
|
||
Broadband operating income
|
|
$
|
42,521
|
|
21.9
|
|
$
|
41,620
|
|
22.7
|
|
|
901
|
|
|
2.2
|
|
|
|
December 31,
2019 |
|
December 31,
2018 |
|
December 31,
2017 |
|||
Towers owned
|
|
225
|
|
|
208
|
|
|
192
|
|
Tenants (1)
|
|
404
|
|
|
367
|
|
|
363
|
|
Average tenants per tower
|
|
1.8
|
|
|
1.8
|
|
|
1.9
|
|
(1)
|
Includes 201, 174 and 171 intercompany tenants for our Wireless segment as of December 31, 2019, 2018 and 2017, respectively.
|
|
|
Year Ended December 31,
|
|
Change
|
|||||||||||||
($ in thousands)
|
|
2019
|
% of Revenue
|
|
2018
|
% of Revenue
|
|
$
|
|
%
|
|||||||
Tower revenue
|
|
$
|
12,984
|
|
100.0
|
|
$
|
12,196
|
|
100.0
|
%
|
|
788
|
|
|
6.5
|
|
Tower operating expenses
|
|
7,085
|
|
54.6
|
|
7,353
|
|
60.3
|
|
|
(268
|
)
|
|
(3.6
|
)
|
||
Tower operating income
|
|
$
|
5,899
|
|
45.4
|
|
$
|
4,843
|
|
39.7
|
|
|
1,056
|
|
|
21.8
|
|
|
|
Year Ended December 31,
|
|
Change
|
||||||||||||||
($ in thousands)
|
|
2018
|
% of Revenue
|
|
2017
|
% of Revenue
|
|
$
|
|
%
|
||||||||
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
|
|
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
|
|
3,713
|
|
0.6
|
|
|
4,984
|
|
0.8
|
|
|
(1,271
|
)
|
|
(25.5
|
)
|
||
Income 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
|
|
$
|
46,595
|
|
7.4
|
|
|
$
|
66,390
|
|
10.9
|
|
|
(19,795
|
)
|
|
(29.8
|
)
|
|
Year Ended December 31, 2018
|
||||||||||||||
|
|
ASC 606 Impact - CONSOLIDATED
|
|
||||||||||||
($ in thousands, except per share amounts)
|
Prior to Adoption of ASC 606
|
Changes in Presentation (1)
|
Equipment Revenue (2)
|
Deferred Costs (3)
|
As Reported 12/31/18
|
||||||||||
Service revenue and other
|
$
|
632,340
|
|
$
|
(86,637
|
)
|
$
|
—
|
|
$
|
16,753
|
|
$
|
562,456
|
|
Equipment revenue
|
8,298
|
|
—
|
|
60,100
|
|
—
|
|
68,398
|
|
|||||
Total 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
|
76,243
|
|
—
|
|
—
|
|
17,003
|
|
93,246
|
|
|||||
Other expense
|
(31,134
|
)
|
—
|
|
—
|
|
—
|
|
(31,134
|
)
|
|||||
Income tax expense
|
10,926
|
|
—
|
|
—
|
|
4,591
|
|
15,517
|
|
|||||
Net income
|
$
|
34,183
|
|
$
|
—
|
|
$
|
—
|
|
$
|
12,412
|
|
$
|
46,595
|
|
|
|
|
|
|
|
||||||||||
Earnings 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, 2018
|
||||||||||||||
|
|
ASC 606 Impact - WIRELESS
|
|
||||||||||||
($ in thousands)
|
Prior to Adoption of ASC 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
|
|
|||||
Other revenue
|
2,131
|
|
—
|
|
—
|
|
—
|
|
2,131
|
|
|||||
Total revenue
|
460,276
|
|
(86,637
|
)
|
60,100
|
|
16,720
|
|
450,459
|
|
|||||
Cost of services
|
127,045
|
|
—
|
|
—
|
|
—
|
|
127,045
|
|
|||||
Cost of goods sold
|
28,001
|
|
(24,518
|
)
|
60,100
|
|
—
|
|
63,583
|
|
|||||
Selling, general & administrative
|
108,879
|
|
(62,119
|
)
|
—
|
|
—
|
|
46,760
|
|
|||||
Depreciation and amortization
|
125,067
|
|
—
|
|
—
|
|
—
|
|
125,067
|
|
|||||
Total operating expenses
|
388,992
|
|
(86,637
|
)
|
60,100
|
|
—
|
|
362,455
|
|
|||||
Operating income
|
$
|
71,284
|
|
$
|
—
|
|
$
|
—
|
|
$
|
16,720
|
|
$
|
88,004
|
|
|
|
Year Ended December 31,
|
|
Change
|
||||||||||||||
($ in thousands)
|
|
2018
|
% of Revenue
|
|
2017
|
% of Revenue
|
|
$
|
|
%
|
||||||||
Wireless revenue:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Gross postpaid billings
|
|
$
|
405,101
|
|
89.9
|
|
|
$
|
393,571
|
|
88.8
|
|
|
11,530
|
|
|
2.9
|
|
Allocated bad debt
|
|
(21,866
|
)
|
(4.9
|
)
|
|
(21,334
|
)
|
(4.8
|
)
|
|
532
|
|
|
2.5
|
|
||
Amortization of contract asset and other (1)
|
|
(18,742
|
)
|
(4.2
|
)
|
|
—
|
|
—
|
|
|
18,742
|
|
|
100.0
|
|
||
Sprint management and net service fee
|
|
(63,718
|
)
|
(14.1
|
)
|
|
(60,608
|
)
|
(13.7
|
)
|
|
3,110
|
|
|
5.1
|
|
||
Total postpaid service revenue
|
|
300,775
|
|
66.8
|
|
|
311,629
|
|
70.3
|
|
|
(10,854
|
)
|
|
(3.5
|
)
|
||
Prepaid billings (2)
|
|
111,462
|
|
24.7
|
|
|
103,161
|
|
23.3
|
|
|
8,301
|
|
|
8.0
|
|
||
Amortization of contract asset and other (1)
|
|
(52,846
|
)
|
(11.7
|
)
|
|
—
|
|
—
|
|
|
52,846
|
|
|
100.0
|
|
||
Sprint management fee
|
|
(7,014
|
)
|
(1.6
|
)
|
|
(6,189
|
)
|
(1.4
|
)
|
|
825
|
|
|
13.3
|
|
||
Total prepaid service revenue
|
|
51,602
|
|
11.5
|
|
|
96,972
|
|
21.9
|
|
|
(45,370
|
)
|
|
(46.8
|
)
|
||
Travel and other (2)
|
|
30,572
|
|
6.8
|
|
|
24,981
|
|
5.6
|
|
|
(267,000
|
)
|
|
(11.1
|
)
|
||
Wireless service revenue and other
|
|
382,949
|
|
85.0
|
|
|
433,582
|
|
97.9
|
|
|
(50,633
|
)
|
|
(11.7
|
)
|
||
Equipment revenue
|
|
67,510
|
|
15.0
|
|
|
9,467
|
|
2.1
|
|
|
58,043
|
|
|
613.1
|
|
||
Total wireless revenue
|
|
450,459
|
|
100.0
|
|
|
443,049
|
|
100.0
|
|
|
7,410
|
|
|
1.7
|
|
||
Wireless operating expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Cost of services
|
|
127,045
|
|
28.2
|
|
|
125,785
|
|
28.4
|
|
|
1,260
|
|
|
1.0
|
|
||
Cost of goods sold
|
|
63,583
|
|
14.1
|
|
|
22,653
|
|
5.1
|
|
|
40,930
|
|
|
180.7
|
|
||
Selling, general and administrative
|
|
46,760
|
|
10.4
|
|
|
117,561
|
|
26.5
|
|
|
(70,801
|
)
|
|
(60.2
|
)
|
||
Acquisition, integration and migration expenses
|
|
—
|
|
—
|
|
|
10,793
|
|
2.4
|
|
|
(10,793
|
)
|
|
(100.0
|
)
|
||
Depreciation and amortization
|
|
125,067
|
|
27.8
|
|
|
137,725
|
|
31.1
|
|
|
(12,658
|
)
|
|
(9.2
|
)
|
||
Total wireless operating expenses
|
|
362,455
|
|
80.5
|
|
|
414,517
|
|
93.6
|
|
|
(52,062
|
)
|
|
(12.6
|
)
|
||
Wireless operating income
|
|
$
|
88,004
|
|
19.5
|
|
|
$
|
28,532
|
|
6.4
|
|
|
59,472
|
|
|
208.4
|
|
(1)
|
Due to the adoption of ASC 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.
|
(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.
|
|
|
Year Ended December 31,
|
|
Change
|
|||||||||||||
($ in thousands)
|
|
2018
|
% of Revenue
|
|
2017
|
% of Revenue
|
|
$
|
|
%
|
|||||||
Broadband revenue
|
|
|
|
|
|
|
|
|
|
|
|||||||
Cable residential and SMB
|
|
$
|
124,072
|
|
67.8
|
|
$
|
114,122
|
|
65.6
|
|
|
9,950
|
|
|
8.7
|
|
Fiber, enterprise and wholesale
|
|
24,439
|
|
13.3
|
|
24,795
|
|
14.3
|
|
|
(356
|
)
|
|
(1.4
|
)
|
||
Rural local exchange carrier
|
|
26,196
|
|
14.3
|
|
26,813
|
|
15.4
|
|
|
(617
|
)
|
|
(2.3
|
)
|
||
Equipment and other
|
|
8,413
|
|
4.6
|
|
8,251
|
|
4.7
|
|
|
162
|
|
|
2.0
|
|
||
Total broadband revenue
|
|
183,120
|
|
100.0
|
|
173,981
|
|
100.0
|
%
|
|
9,139
|
|
|
5.3
|
|
||
Broadband operating expenses
|
|
|
|
|
|
|
|
|
|
|
|||||||
Cost of services
|
|
75,066
|
|
41.0
|
|
73,331
|
|
42.1
|
|
|
1,735
|
|
|
2.4
|
|
||
Cost of goods sold
|
|
376
|
|
0.2
|
|
133
|
|
0.1
|
|
|
243
|
|
|
182.7
|
|
||
Selling, general, and administrative
|
|
27,741
|
|
15.1
|
|
26,909
|
|
15.5
|
|
|
832
|
|
|
3.1
|
|
||
Depreciation and amortization
|
|
38,317
|
|
20.9
|
|
36,797
|
|
21.2
|
|
|
1,520
|
|
|
4.1
|
|
||
Total broadband operating expenses
|
|
141,500
|
|
77.3
|
|
137,170
|
|
78.8
|
|
|
4,330
|
|
|
3.2
|
|
||
Broadband operating income
|
|
$
|
41,620
|
|
22.7
|
|
$
|
36,811
|
|
21.2
|
|
|
4,809
|
|
|
13.1
|
|
|
|
Year Ended December 31,
|
|
Change
|
||||||||||||
($ in thousands)
|
|
2018
|
% of Revenue
|
|
2017
|
% of Revenue
|
|
$
|
|
%
|
||||||
Tower revenue
|
|
$
|
12,196
|
|
100.0
|
|
$
|
12,029
|
|
100.0
|
|
167
|
|
|
1.4
|
|
Tower operating expenses
|
|
7,353
|
|
60.3
|
|
6,422
|
|
53.4
|
|
931
|
|
|
14.5
|
|
||
Tower operating income
|
|
$
|
4,843
|
|
39.7
|
|
$
|
5,607
|
|
46.6
|
|
(764
|
)
|
|
(13.6
|
)
|
Year Ended December 31, 2019
|
|
|
|
|
|
|
|
|
|
|
||||||||||
(in thousands)
|
|
Wireless
|
|
Broadband
|
|
Tower
|
|
Corporate
|
|
Consolidated
|
||||||||||
Operating income
|
|
$
|
88,541
|
|
|
$
|
42,521
|
|
|
$
|
5,899
|
|
|
$
|
(39,915
|
)
|
|
$
|
97,046
|
|
Depreciation
|
|
96,094
|
|
|
40,831
|
|
|
2,025
|
|
|
593
|
|
|
139,543
|
|
|||||
Amortization of intangible assets
|
|
20,062
|
|
|
473
|
|
|
—
|
|
|
—
|
|
|
20,535
|
|
|||||
OIBDA
|
|
204,697
|
|
|
83,825
|
|
|
7,924
|
|
|
(39,322
|
)
|
|
257,124
|
|
|||||
Share-based compensation expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,817
|
|
|
3,817
|
|
|||||
Adjusted OIBDA
|
|
$
|
204,697
|
|
|
$
|
83,825
|
|
|
$
|
7,924
|
|
|
$
|
(35,505
|
)
|
|
$
|
260,941
|
|
Year Ended December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
||||||||||
(in thousands)
|
|
Wireless
|
|
Broadband
|
|
Tower
|
|
Corporate
|
|
Consolidated
|
||||||||||
Operating income
|
|
$
|
88,004
|
|
|
$
|
41,620
|
|
|
$
|
4,843
|
|
|
$
|
(41,221
|
)
|
|
$
|
93,246
|
|
Depreciation
|
|
100,950
|
|
|
38,140
|
|
|
2,454
|
|
|
567
|
|
|
142,111
|
|
|||||
Amortization of intangible assets
|
|
24,117
|
|
|
177
|
|
|
—
|
|
|
—
|
|
|
24,294
|
|
|||||
OIBDA
|
|
213,071
|
|
|
79,937
|
|
|
7,297
|
|
|
(40,654
|
)
|
|
259,651
|
|
|||||
Share-based compensation expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,959
|
|
|
4,959
|
|
|||||
Adjusted OIBDA
|
|
$
|
213,071
|
|
|
$
|
79,937
|
|
|
$
|
7,297
|
|
|
$
|
(35,695
|
)
|
|
$
|
264,610
|
|
Year Ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
||||||||||
(in thousands)
|
|
Wireless
|
|
Broadband
|
|
Tower
|
|
Corporate
|
|
Consolidated
|
||||||||||
Operating income
|
|
$
|
28,532
|
|
|
$
|
36,811
|
|
|
$
|
5,607
|
|
|
$
|
(24,440
|
)
|
|
$
|
46,510
|
|
Depreciation
|
|
112,559
|
|
|
36,019
|
|
|
1,885
|
|
|
600
|
|
|
151,063
|
|
|||||
Amortization of intangible assets
|
|
25,166
|
|
|
778
|
|
|
—
|
|
|
—
|
|
|
25,944
|
|
|||||
OIBDA
|
|
166,257
|
|
|
73,608
|
|
|
7,492
|
|
|
(23,840
|
)
|
|
223,517
|
|
|||||
Share-based compensation expense
|
|
1,555
|
|
|
1,300
|
|
|
24
|
|
|
701
|
|
|
3,580
|
|
|||||
Adjusted OIBDA
|
|
$
|
167,812
|
|
|
$
|
74,908
|
|
|
$
|
7,516
|
|
|
$
|
(23,139
|
)
|
|
$
|
227,097
|
|
•
|
$11.0 million as the result of a decline in working capital, partially offset by
|
•
|
a $8.3 million increase in net income.
|
•
|
$42.0 million decline in acquisitions. In 2019, the Company acquired Big Sandy Broadband, Inc. for $10.0 million, whereas in 2018 the Company paid $52.0 million to Sprint in order to expand our affiliate area and to acquire certain network assets.
|
•
|
$16.7 million to purchase FCC spectrum licenses for use in the Broadband segment's fixed wireless initiative; and
|
•
|
$2.2 million increase in capital expenditures due primarily to Broadband segment's $19.0 million investment in Glo Fiber and fixed wireless, partially offset by lower wireless and tower capital expenditures.
|
•
|
$7.2 million used to repurchase 200,410 shares of our common stock under the repurchase plan that we initiated in 2019
|
•
|
$1.9 million increase in principal repayments on our term loans
|
•
|
$1.1 million increase in our annual dividend distribution, and offset by
|
•
|
$4.0 million decrease in cash used for financing activities because debt issuance costs that we paid in 2018 did not recur.
|
(in thousands)
|
Total
|
|
Less than 1 year
|
|
1-3 years
|
|
4-5 years
|
|
More than 5 years
|
||||||||||
Long-term debt principal (1)
|
$
|
732,040
|
|
|
$
|
34,122
|
|
|
$
|
71,886
|
|
|
$
|
177,503
|
|
|
$
|
448,529
|
|
Interest on long-term debt (1)
|
119,273
|
|
|
24,207
|
|
|
45,098
|
|
|
35,830
|
|
|
14,138
|
|
|||||
"Pay-fixed" obligations (2)
|
8,514
|
|
|
3,830
|
|
|
4,052
|
|
|
632
|
|
|
—
|
|
|||||
Leases (3)
|
497,322
|
|
|
59,964
|
|
|
129,676
|
|
|
116,293
|
|
|
191,389
|
|
|||||
Purchase obligations (4)
|
19,405
|
|
|
19,308
|
|
|
97
|
|
|
—
|
|
|
—
|
|
|||||
Spectrum payments (5)
|
2,759
|
|
|
108
|
|
|
216
|
|
|
216
|
|
|
2,219
|
|
|||||
Total
|
$
|
1,379,313
|
|
|
$
|
141,539
|
|
|
$
|
251,025
|
|
|
$
|
330,474
|
|
|
$
|
656,275
|
|
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
|
•
|
We increased the number of resources with skills and expertise in technical accounting and internal control over financial reporting, and leveraged external consultants to provide needed capacity in these areas.
|
•
|
Within each priority process area, we performed risk assessment procedures and designed and implemented control activities to address identified risks. The new control activities were designed to address the completeness and accuracy of the data used as well as other information and communication considerations. We further implemented new monitoring controls to verify that new controls in these priority process areas were consistently executed.
|
•
|
We successfully executed this remediation strategy on the priority process areas of revenue, leases, journal entries, income taxes, segment reporting, impairment, and intangible assets.
|
•
|
We implemented new software solutions and tools in the areas of leases, customer life estimation, asset capitalization, bank reconciliations, and asset retirement obligations.
|
•
|
We enhanced our monitoring activities by performing more rigorous period-over-period variance analyses of the Company’s financial results.
|
•
|
We enhanced our information and communication activities by having more frequent discussions with operational personnel regarding significant business transactions and the potential impact of these
|
•
|
We performed and documented a detailed review of key accounting policies.
|
•
|
Property, plant, and equipment and depreciation expense
|
•
|
Purchasing (current liabilities and operating expenses)
|
•
|
Treasury (cash, debt, interest expense, derivatives, and benefit obligations)
|
•
|
Hire, train, and retain individuals with the appropriate skills and experience related to technical accounting, internal control over financial reporting, and the design and implementation of information technology solutions.
|
•
|
Enhance risk assessment and prioritize remediation activities that most significantly reduce the risk that a material misstatement to the consolidated financial statements would not be prevented or detected on a timely basis.
|
•
|
Implement and monitor our phased approach to remediation of control activities in additional process areas.
|
•
|
Enhance information and communication processes through information technology solutions to ensure that information needed for financial reporting is accurate, complete, relevant and reliable, and communicated in a timely manner.
|
•
|
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
|
19,164
|
|
|
$
|
7.01
|
|
|
—
|
|
|
|
|
|
|
|
||||
2014 Equity Incentive Plan
|
6,864
|
|
|
$
|
31.05
|
|
|
2,114,358
|
|
ITEM 13.
|
CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
|
ITEM 14.
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES
|
ITEM 15.
|
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|
|
Page
|
|
|
Consolidated Financial Statements
|
|
|
|
Consolidated Balance Sheets as of December 31, 2019 and 2018
|
|
Consolidated Statements of Comprehensive Income for the years ended December 31, 2019, 2018 and 2017
|
|
Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2019, 2018 and 2017
|
|
Consolidated Statements of Cash Flows for the years ended December 31, 2019, 2018 and 2017
|
|
|
|
Financial Statement Schedule
|
|
|
|
Valuation and Qualifying Accounts
|
|
|
|
•
|
Property, plant, and equipment and depreciation expense
|
•
|
Purchasing (current liabilities and operating expenses)
|
•
|
Treasury (cash, debt, interest expense, derivatives, and benefit obligations)
|
|
2019
|
|
2018
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
101,651
|
|
|
$
|
85,086
|
|
Accounts receivable, net of allowance for doubtful accounts of $533 and $534, respectively
|
63,541
|
|
|
54,407
|
|
||
Income taxes receivable
|
10,306
|
|
|
5,282
|
|
||
Inventory, net of allowances of $66 and $113, respectively
|
5,728
|
|
|
5,265
|
|
||
Prepaid expenses and other
|
57,805
|
|
|
60,162
|
|
||
Total current assets
|
239,031
|
|
|
210,202
|
|
||
Investments
|
12,388
|
|
|
10,788
|
|
||
Property, plant and equipment, net
|
700,114
|
|
|
701,359
|
|
||
Intangible assets, net
|
314,147
|
|
|
366,029
|
|
||
Goodwill
|
149,070
|
|
|
146,497
|
|
||
Operating lease right-of-use assets
|
392,589
|
|
|
—
|
|
||
Deferred charges and other assets
|
53,352
|
|
|
49,891
|
|
||
Total assets
|
$
|
1,860,691
|
|
|
$
|
1,484,766
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Current maturities of long-term debt, net of unamortized loan fees
|
$
|
31,650
|
|
|
$
|
20,618
|
|
Accounts payable
|
40,295
|
|
|
35,987
|
|
||
Advanced billings and customer deposits
|
8,358
|
|
|
7,919
|
|
||
Accrued compensation
|
10,075
|
|
|
9,452
|
|
||
Current operating lease liabilities
|
42,567
|
|
|
—
|
|
||
Accrued liabilities and other
|
14,391
|
|
|
14,563
|
|
||
Total current liabilities
|
147,336
|
|
|
88,539
|
|
||
Long-term debt, less current maturities, net of unamortized loan fees
|
688,464
|
|
|
749,624
|
|
||
Other long-term liabilities:
|
|
|
|
||||
Deferred income taxes
|
136,451
|
|
|
127,453
|
|
||
Deferred lease
|
—
|
|
|
22,436
|
|
||
Asset retirement obligations
|
36,914
|
|
|
28,584
|
|
||
Benefit plan obligations
|
12,675
|
|
|
11,519
|
|
||
Noncurrent operating lease liabilities
|
352,439
|
|
|
—
|
|
||
Other liabilities
|
16,990
|
|
|
14,364
|
|
||
Total other long-term liabilities
|
555,469
|
|
|
204,356
|
|
||
Commitments and contingencies (Note 13)
|
|
|
|
|
|
||
Shareholders’ equity:
|
|
|
|
||||
Common stock, no par value, authorized 96,000; 49,671 and 49,630 issued and outstanding at December 31, 2019 and 2018, respectively
|
—
|
|
|
—
|
|
||
Additional paid in capital
|
42,110
|
|
|
47,456
|
|
||
Retained earnings
|
427,004
|
|
|
386,511
|
|
||
Accumulated other comprehensive income, net of taxes
|
308
|
|
|
8,280
|
|
||
Total shareholders’ equity
|
469,422
|
|
|
442,247
|
|
||
Total liabilities and shareholders’ equity
|
$
|
1,860,691
|
|
|
$
|
1,484,766
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Revenue:
|
|
|
|
|
|
||||||
Service revenue and other
|
$
|
565,063
|
|
|
$
|
562,456
|
|
|
$
|
601,673
|
|
Equipment revenue
|
68,843
|
|
|
68,398
|
|
|
10,318
|
|
|||
Total revenue
|
633,906
|
|
|
630,854
|
|
|
611,991
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Cost of services
|
198,753
|
|
|
194,022
|
|
|
188,721
|
|
|||
Cost of goods sold
|
65,914
|
|
|
63,959
|
|
|
22,786
|
|
|||
Selling, general and administrative
|
112,540
|
|
|
113,222
|
|
|
165,937
|
|
|||
Acquisition, integration and migration expenses
|
—
|
|
|
—
|
|
|
11,030
|
|
|||
Depreciation and amortization
|
159,653
|
|
|
166,405
|
|
|
177,007
|
|
|||
Total operating expenses
|
536,860
|
|
|
537,608
|
|
|
565,481
|
|
|||
Operating income
|
97,046
|
|
|
93,246
|
|
|
46,510
|
|
|||
Other income (expense):
|
|
|
|
|
|
||||||
Interest expense
|
(29,468
|
)
|
|
(34,847
|
)
|
|
(38,237
|
)
|
|||
Other
|
3,461
|
|
|
3,713
|
|
|
4,984
|
|
|||
Income before income taxes
|
71,039
|
|
|
62,112
|
|
|
13,257
|
|
|||
Income tax expense (benefit)
|
16,104
|
|
|
15,517
|
|
|
(53,133
|
)
|
|||
Net income
|
54,935
|
|
|
46,595
|
|
|
66,390
|
|
|||
Other comprehensive income:
|
|
|
|
|
|
||||||
Unrealized (loss) gain on interest rate hedge, net of tax
|
(7,972
|
)
|
|
50
|
|
|
1,442
|
|
|||
Comprehensive income
|
$
|
46,963
|
|
|
$
|
46,645
|
|
|
$
|
67,832
|
|
|
|
|
|
|
|
||||||
Net income per share, basic and diluted:
|
|
|
|
|
|
||||||
Basic net income per share
|
$
|
1.10
|
|
|
$
|
0.94
|
|
|
$
|
1.35
|
|
Diluted net income per share
|
$
|
1.10
|
|
|
$
|
0.93
|
|
|
$
|
1.33
|
|
Weighted average shares outstanding, basic
|
49,811
|
|
|
49,542
|
|
|
49,150
|
|
|||
Weighted average shares outstanding, diluted
|
50,101
|
|
|
50,063
|
|
|
50,026
|
|
|||
Cash dividend declared per share
|
$
|
0.29
|
|
|
$
|
0.27
|
|
|
$
|
0.26
|
|
|
Shares of Common Stock (no par value)
|
Additional Paid in Capital
|
Retained Earnings
|
Accumulated Other Comprehensive Income (Loss)
|
Total
|
|||||||||
Balance, December 31, 2016
|
48,935
|
|
$
|
45,482
|
|
$
|
243,624
|
|
$
|
6,788
|
|
$
|
295,894
|
|
|
|
|
|
|
|
|||||||||
Net income
|
—
|
|
—
|
|
66,390
|
|
—
|
|
66,390
|
|
||||
Other comprehensive gain, 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
|
—
|
|
—
|
|
46,595
|
|
—
|
|
46,595
|
|
||||
Other comprehensive gain, 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
|
|
||||
|
|
|
|
|
|
|||||||||
Net income
|
—
|
|
—
|
|
54,935
|
|
—
|
|
54,935
|
|
||||
Other comprehensive gain (loss), net of tax
|
—
|
|
—
|
|
—
|
|
(7,972
|
)
|
(7,972
|
)
|
||||
Dividends declared ($0.29 per share)
|
—
|
|
—
|
|
(14,442
|
)
|
—
|
|
(14,442
|
)
|
||||
Dividends reinvested in common stock
|
14
|
|
499
|
|
—
|
|
—
|
|
499
|
|
||||
Share repurchases
|
(200
|
)
|
(7,231
|
)
|
—
|
|
—
|
|
(7,231
|
)
|
||||
Stock based compensation
|
184
|
|
4,182
|
|
—
|
|
—
|
|
4,182
|
|
||||
Stock options exercised
|
29
|
|
81
|
|
—
|
|
—
|
|
81
|
|
||||
Common stock issued
|
—
|
|
34
|
|
—
|
|
—
|
|
34
|
|
||||
Shares retired for settlement of employee taxes upon issuance of vested equity awards
|
(62
|
)
|
(2,911
|
)
|
—
|
|
—
|
|
(2,911
|
)
|
||||
Common stock issued to acquire non-controlling interest in nTelos
|
76
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||
Balance, December 31, 2019
|
49,671
|
|
$
|
42,110
|
|
$
|
427,004
|
|
$
|
308
|
|
$
|
469,422
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
54,935
|
|
|
$
|
46,595
|
|
|
$
|
66,390
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation
|
139,543
|
|
|
142,111
|
|
|
151,063
|
|
|||
Amortization of intangible assets
|
20,535
|
|
|
24,294
|
|
|
25,944
|
|
|||
Accretion of asset retirement obligations
|
1,478
|
|
|
1,045
|
|
|
761
|
|
|||
Bad debt expense
|
1,743
|
|
|
1,983
|
|
|
2,179
|
|
|||
Stock based compensation expense, net of amount capitalized
|
3,817
|
|
|
4,959
|
|
|
3,580
|
|
|||
Deferred income taxes
|
11,644
|
|
|
6,208
|
|
|
(54,055
|
)
|
|||
Gain from patronage and investments
|
(4,769
|
)
|
|
(3,113
|
)
|
|
(3,458
|
)
|
|||
Amortization of long-term debt issuance costs
|
3,280
|
|
|
3,666
|
|
|
4,741
|
|
|||
Changes in assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable
|
(7,664
|
)
|
|
239
|
|
|
16,451
|
|
|||
Inventory, net
|
(463
|
)
|
|
439
|
|
|
33,339
|
|
|||
Current income taxes
|
(5,024
|
)
|
|
12,029
|
|
|
(19,138
|
)
|
|||
Operating lease right-of-use assets
|
51,578
|
|
|
—
|
|
|
—
|
|
|||
Waived management fee
|
38,827
|
|
|
37,763
|
|
|
36,056
|
|
|||
Other assets
|
(18,499
|
)
|
|
(16,246
|
)
|
|
1,439
|
|
|||
Accounts payable
|
12,821
|
|
|
(1,377
|
)
|
|
(36,725
|
)
|
|||
Lease liabilities
|
(46,746
|
)
|
|
—
|
|
|
—
|
|
|||
Deferred lease
|
—
|
|
|
4,723
|
|
|
327
|
|
|||
Other deferrals and accruals
|
2,109
|
|
|
329
|
|
|
(5,964
|
)
|
|||
Net cash provided by operating activities
|
$
|
259,145
|
|
|
$
|
265,647
|
|
|
$
|
222,930
|
|
|
|
|
|
|
|
||||||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Capital expenditures
|
$
|
(138,792
|
)
|
|
$
|
(136,641
|
)
|
|
$
|
(146,489
|
)
|
Cash disbursed for acquisitions
|
(10,000
|
)
|
|
(52,000
|
)
|
|
(6,000
|
)
|
|||
Cash disbursed for FCC spectrum licenses
|
(16,742
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from sale of assets and other
|
200
|
|
|
841
|
|
|
994
|
|
|||
Net cash used in investing activities
|
$
|
(165,334
|
)
|
|
$
|
(187,800
|
)
|
|
$
|
(151,495
|
)
|
|
|
|
|
|
|
||||||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Principal payments on long-term debt
|
$
|
(53,197
|
)
|
|
$
|
(51,264
|
)
|
|
$
|
(36,375
|
)
|
Dividends paid, net of dividends reinvested
|
(13,943
|
)
|
|
(12,866
|
)
|
|
(12,257
|
)
|
|||
Repurchase of common stock
|
(7,231
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from revolving credit facility borrowings
|
—
|
|
|
15,000
|
|
|
—
|
|
|||
Proceeds from credit facility borrowings
|
—
|
|
|
—
|
|
|
25,000
|
|
|||
Principal payments on revolving credit facility
|
—
|
|
|
(15,000
|
)
|
|
—
|
|
|||
Taxes paid for equity award issuances
|
(2,911
|
)
|
|
(3,245
|
)
|
|
(5,411
|
)
|
|||
Payments for debt issuance costs
|
—
|
|
|
(3,971
|
)
|
|
—
|
|
|||
Proceeds from exercise of stock options and other
|
36
|
|
|
—
|
|
|
—
|
|
|||
Net cash used in financing activities
|
$
|
(77,246
|
)
|
|
$
|
(71,346
|
)
|
|
$
|
(29,043
|
)
|
Net increase in cash and cash equivalents
|
$
|
16,565
|
|
|
$
|
6,501
|
|
|
$
|
42,392
|
|
Cash and cash equivalents, beginning of period
|
85,086
|
|
|
78,585
|
|
|
36,193
|
|
|||
Cash and cash equivalents, end of period
|
$
|
101,651
|
|
|
$
|
85,086
|
|
|
$
|
78,585
|
|
–
|
Our Wireless segment operates as a Sprint affiliate. We provide wireless network services to Sprint through our affiliate agreement in the Mid-Atlantic region of the U.S.
|
–
|
Our Broadband segment provides broadband, video and voice services to residential and commercial customers in portions of Virginia, West Virginia, Maryland, and Kentucky, via fiber optic and hybrid fiber coaxial (“HFC”) cable. The Broadband segment also leases dark fiber and provides Ethernet and Wavelength fiber optic services to enterprise and wholesale customers throughout the entirety of our service area. The Broadband segment also provides voice and digital subscriber line (“DSL”) telephone services to customers in Virginia’s Shenandoah County as a Rural Local Exchange Carrier (“RLEC”). These integrated networks are connected by a fiber network. This fiber optic network also supports our Wireless segment operations and these intercompany transactions are reported at their market value.
|
–
|
Our Tower segment leases space on 225 owned cell towers to the Company’s Wireless segment and to other wireless communications providers.
|
($ in thousands)
|
December 31, 2019
|
|
December 31, 2018
|
||||
nTelos Pension Plan
|
$
|
6,824
|
|
|
$
|
5,131
|
|
OPEB Plan
|
3,573
|
|
|
3,193
|
|
||
SERP Plan
|
2,278
|
|
|
3,195
|
|
||
Total
|
$
|
12,675
|
|
|
$
|
11,519
|
|
(in thousands)
|
|
2019
|
|
2018
|
||||
Beginning Balance
|
|
$
|
65,674
|
|
|
$
|
51,103
|
|
Contract payments
|
|
77,371
|
|
|
61,156
|
|
||
Contract amortization against revenue
|
|
(58,382
|
)
|
|
(46,585
|
)
|
||
Ending Balance
|
|
$
|
84,663
|
|
|
$
|
65,674
|
|
(in thousands)
|
|
2019
|
|
2018
|
||||
Beginning Balance
|
|
$
|
10,091
|
|
|
$
|
9,841
|
|
Contract payments
|
|
6,518
|
|
|
5,674
|
|
||
Contract amortization
|
|
(5,604
|
)
|
|
(5,424
|
)
|
||
Ending Balance
|
|
$
|
11,005
|
|
|
$
|
10,091
|
|
|
|
Year Ended December, 31 2018
|
||||||||||
(in thousands)
|
|
As Reported
|
|
Balances without Adoption of ASC 606
|
|
Effect of Change Higher/(Lower)
|
||||||
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 ASC 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
|
|
(in thousands)
|
December 31, 2019
|
|
December 31, 2018
|
||||
SERP Investments at fair value
|
2,278
|
|
|
1,779
|
|
||
Cost method investments
|
9,497
|
|
|
8,487
|
|
||
Equity method investments
|
613
|
|
|
522
|
|
||
Total investments
|
$
|
12,388
|
|
|
$
|
10,788
|
|
($ in thousands)
|
Estimated Useful Lives
|
|
December 31,
2019 |
|
December 31,
2018 |
||||
Land
|
|
|
$
|
6,976
|
|
|
$
|
6,723
|
|
Buildings and structures
|
10 - 40 years
|
|
232,730
|
|
|
213,657
|
|
||
Cable and fiber
|
15 - 40 years
|
|
334,260
|
|
|
309,928
|
|
||
Equipment and software
|
3 - 20 years
|
|
867,898
|
|
|
791,401
|
|
||
Plant in service
|
|
|
1,441,864
|
|
|
1,321,709
|
|
||
Plant under construction
|
|
|
56,827
|
|
|
81,409
|
|
||
Total property, plant and equipment
|
|
|
1,498,691
|
|
|
1,403,118
|
|
||
Less: accumulated amortization and depreciation
|
|
|
798,577
|
|
|
701,759
|
|
||
Property, plant and equipment, net
|
|
|
$
|
700,114
|
|
|
$
|
701,359
|
|
(in thousands)
|
December 31, 2019
|
|
December 31, 2018
|
||||
Wireless
|
$
|
146,383
|
|
|
$
|
146,383
|
|
Broadband
|
2,687
|
|
|
114
|
|
||
Total Goodwill
|
$
|
149,070
|
|
|
$
|
146,497
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
(in thousands)
|
Gross
Carrying Amount |
|
Accumulated Amortization and Other
|
|
Net
|
|
Gross
Carrying Amount |
|
Accumulated Amortization and Other
|
|
Net
|
||||||||||||
Indefinite-lived intangibles:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cable franchise rights
|
$
|
64,334
|
|
|
$
|
—
|
|
|
$
|
64,334
|
|
|
$
|
64,334
|
|
|
$
|
—
|
|
|
$
|
64,334
|
|
FCC spectrum licenses
|
13,839
|
|
|
—
|
|
|
13,839
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Railroad crossing rights
|
141
|
|
|
—
|
|
|
141
|
|
|
141
|
|
|
—
|
|
|
141
|
|
||||||
Total indefinite-lived intangibles
|
78,314
|
|
|
—
|
|
|
78,314
|
|
|
64,475
|
|
|
—
|
|
|
64,475
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Finite-lived intangibles:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Sprint affiliate contract expansion - Wireless
|
455,305
|
|
|
(226,712
|
)
|
|
228,593
|
|
|
455,305
|
|
|
(167,830
|
)
|
|
287,475
|
|
||||||
FCC spectrum licenses
|
4,659
|
|
|
(97
|
)
|
|
4,562
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Favorable leases - Wireless
|
—
|
|
|
—
|
|
|
—
|
|
|
15,743
|
|
|
(1,919
|
)
|
|
13,824
|
|
||||||
Acquired subscribers - Cable
|
28,065
|
|
|
(25,600
|
)
|
|
2,465
|
|
|
25,265
|
|
|
(25,250
|
)
|
|
15
|
|
||||||
Other intangibles
|
463
|
|
|
(250
|
)
|
|
213
|
|
|
463
|
|
|
(223
|
)
|
|
240
|
|
||||||
Total finite-lived intangibles
|
488,492
|
|
|
(252,659
|
)
|
|
235,833
|
|
|
496,776
|
|
|
(195,222
|
)
|
|
301,554
|
|
||||||
Total intangible assets
|
$
|
566,806
|
|
|
$
|
(252,659
|
)
|
|
$
|
314,147
|
|
|
$
|
561,251
|
|
|
$
|
(195,222
|
)
|
|
$
|
366,029
|
|
|
|
Estimated Useful Life
|
Affiliate contract expansion - Wireless
|
|
4 - 14 years
|
FCC spectrum licenses
|
|
18 - 20 years
|
Acquired subscribers - Broadband
|
|
3 - 10 years
|
Other intangibles
|
|
15 - 20 years
|
(in thousands)
|
|
December 31,
2019 |
|
December 31,
2018 |
||||
Prepaid rent
|
|
$
|
—
|
|
|
$
|
11,245
|
|
Prepaid maintenance expenses
|
|
3,329
|
|
|
3,981
|
|
||
Interest rate swaps
|
|
1,382
|
|
|
4,930
|
|
||
Wireless contract asset
|
|
44,844
|
|
|
33,323
|
|
||
Broadband contract acquisition and fulfillment costs
|
|
4,898
|
|
|
4,634
|
|
||
Other
|
|
3,352
|
|
|
2,049
|
|
||
Prepaid expenses and other
|
|
$
|
57,805
|
|
|
$
|
60,162
|
|
(in thousands)
|
|
December 31,
2019 |
|
December 31, 2018
|
||||
Interest rate swaps
|
|
$
|
1,252
|
|
|
$
|
8,323
|
|
Wireless contract asset
|
|
39,819
|
|
|
32,351
|
|
||
Broadband contract acquisition and fulfillment costs
|
|
6,107
|
|
|
5,457
|
|
||
Prepaid expenses and other
|
|
6,174
|
|
|
3,760
|
|
||
Deferred charges and other assets
|
|
$
|
53,352
|
|
|
$
|
49,891
|
|
(in thousands)
|
|
December 31, 2019
|
|
December 31, 2018
|
||||
Sales and property taxes payable
|
|
$
|
3,789
|
|
|
$
|
4,281
|
|
Asset retirement obligations
|
|
148
|
|
|
582
|
|
||
Accrued programming costs
|
|
3,023
|
|
|
2,886
|
|
||
Financing leases
|
|
94
|
|
|
—
|
|
||
FCC spectrum license obligations
|
|
105
|
|
|
—
|
|
||
Other current liabilities
|
|
7,232
|
|
|
6,814
|
|
||
Accrued liabilities and other
|
|
$
|
14,391
|
|
|
$
|
14,563
|
|
(in thousands)
|
|
December 31,
2019 |
|
December 31, 2018
|
||||
Noncurrent portion of deferred lease revenue
|
|
$
|
12,449
|
|
|
$
|
12,593
|
|
FCC spectrum license obligations
|
|
1,699
|
|
|
—
|
|
||
Noncurrent portion of financing leases
|
|
1,591
|
|
|
—
|
|
||
Other
|
|
1,251
|
|
|
1,771
|
|
||
Other liabilities
|
|
$
|
16,990
|
|
|
$
|
14,364
|
|
|
Years Ended December 31,
|
||||||||||
(in thousands)
|
2019
|
|
2018
|
|
2017
|
||||||
Balance at beginning of year
|
$
|
29,166
|
|
|
$
|
21,703
|
|
|
$
|
21,507
|
|
Additional liabilities accrued
|
2,741
|
|
|
3,357
|
|
|
2,404
|
|
|||
Changes to prior estimates
|
3,902
|
|
|
3,504
|
|
|
(1,695
|
)
|
|||
Payments
|
(224
|
)
|
|
(443
|
)
|
|
(1,296
|
)
|
|||
Accretion expense
|
1,477
|
|
|
1,045
|
|
|
783
|
|
|||
Balance at end of year
|
$
|
37,062
|
|
|
$
|
29,166
|
|
|
$
|
21,703
|
|
(in thousands)
|
|
December 31, 2018 As Previously Reported
|
|
Effect of the Adoption of ASC 842 (Leases)
|
|
January 1, 2019
As Adjusted |
||||||
Assets
|
|
|
|
|
|
|
||||||
Prepaid expenses and other
|
|
$
|
60,162
|
|
|
$
|
(11,580
|
)
|
|
$
|
48,582
|
|
Property, plant and equipment, net
|
|
701,359
|
|
|
1,789
|
|
|
703,148
|
|
|||
Operating lease right-of-use assets
|
|
—
|
|
|
369,344
|
|
|
369,344
|
|
|||
Intangible assets, net
|
|
366,029
|
|
|
(13,828
|
)
|
|
352,201
|
|
|||
Liabilities
|
|
|
|
|
|
|
||||||
Current operating lease liabilities
|
|
—
|
|
|
38,773
|
|
|
38,773
|
|
|||
Accrued liabilities and other
|
|
14,563
|
|
|
(412
|
)
|
|
14,151
|
|
|||
Deferred Lease
|
|
22,436
|
|
|
(22,436
|
)
|
|
—
|
|
|||
Noncurrent operating lease liabilities
|
|
—
|
|
|
328,156
|
|
|
328,156
|
|
|||
Other liabilities
|
|
14,364
|
|
|
1,644
|
|
|
16,008
|
|
(in thousands)
|
|
Operating Leases
|
|
Finance Leases
|
|
Total
|
||||||
2020
|
|
$
|
59,790
|
|
|
$
|
174
|
|
|
$
|
59,964
|
|
2021
|
|
65,556
|
|
|
174
|
|
|
65,730
|
|
|||
2022
|
|
63,772
|
|
|
174
|
|
|
63,946
|
|
|||
2023
|
|
60,301
|
|
|
174
|
|
|
60,475
|
|
|||
2024
|
|
55,644
|
|
|
174
|
|
|
55,818
|
|
|||
2025 and thereafter
|
|
189,857
|
|
|
1,532
|
|
|
191,389
|
|
|||
Total lease payments
|
|
494,920
|
|
|
2,402
|
|
|
497,322
|
|
|||
Less: Interest
|
|
99,914
|
|
|
717
|
|
|
100,631
|
|
|||
Present value of lease liabilities
|
|
$
|
395,006
|
|
|
$
|
1,685
|
|
|
$
|
396,691
|
|
(in thousands)
|
|
Operating Leases
|
||
2020
|
|
$
|
7,074
|
|
2021
|
|
4,914
|
|
|
2022
|
|
3,902
|
|
|
2023
|
|
2,270
|
|
|
2024
|
|
1,245
|
|
|
2025 and thereafter
|
|
3,853
|
|
|
Total
|
|
$
|
23,258
|
|
(in thousands)
|
December 31,
2019 |
|
December 31,
2018 |
||||
Term loan A-1
|
258,571
|
|
|
287,699
|
|
||
Term loan A-2
|
473,469
|
|
|
497,537
|
|
||
|
732,040
|
|
|
785,236
|
|
||
Less: unamortized loan fees
|
11,926
|
|
|
14,994
|
|
||
Total debt, net of unamortized loan fees
|
$
|
720,114
|
|
|
$
|
770,242
|
|
•
|
a limitation on the Company’s total leverage ratio, calculated as Consolidated EBITDA, as defined by the Credit Facility agreement, 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, calculated as Consolidated EBITDA minus certain cash tax payments divided by the sum of all scheduled principal payments on the Credit Facility plus cash payments for interest, greater than or equal to 2.00 to 1.00;
|
•
|
the Company must maintain a minimum liquidity balance, calculated as availability under the Revolver Facility plus unrestricted cash and cash equivalents, of greater than $25 million at all times.
|
|
Actual
|
|
Covenant Requirement
|
||
Total leverage ratio
|
2.4
|
|
|
3.5 or Lower
|
|
Debt service coverage ratio
|
5.8
|
|
|
2.0 or Higher
|
|
Minimum liquidity balance (in millions)
|
$
|
176.4
|
|
|
$25.0 or Higher
|
|
|
Amount
|
||
(in thousands)
|
|
|
||
2020
|
|
$
|
34,122
|
|
2021
|
|
34,122
|
|
|
2022
|
|
37,764
|
|
|
2023
|
|
172,515
|
|
|
2024
|
|
4,988
|
|
|
2025
|
|
448,529
|
|
|
Total
|
|
$
|
732,040
|
|
(in thousands)
|
|
December 31,
2019 |
|
December 31,
2018 |
||||
Balance sheet location of derivative financial instruments:
|
|
|
|
|
||||
Prepaid expenses and other
|
|
$
|
1,382
|
|
|
$
|
4,930
|
|
Deferred charges and other assets, net
|
|
1,252
|
|
|
8,323
|
|
||
Total derivatives designated as hedging instruments
|
|
$
|
2,634
|
|
|
$
|
13,253
|
|
(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, 2018
|
$
|
13,253
|
|
|
$
|
(4,973
|
)
|
|
$
|
8,280
|
|
Net change in unrealized gain (loss)
|
(6,540
|
)
|
|
1,630
|
|
|
(4,910
|
)
|
|||
Amounts reclassified from accumulated other comprehensive income (loss) to interest expense
|
(4,079
|
)
|
|
1,017
|
|
|
(3,062
|
)
|
|||
Net current period other comprehensive income (loss)
|
(10,619
|
)
|
|
2,647
|
|
|
(7,972
|
)
|
|||
Balance as of December 31, 2019
|
$
|
2,634
|
|
|
$
|
(2,326
|
)
|
|
$
|
308
|
|
|
Years Ended December 31,
|
||||||||||
(in thousands)
|
2019
|
|
2018
|
|
2017
|
||||||
Current (benefit) expense
|
|
|
|
|
|
||||||
Federal taxes
|
$
|
(1,205
|
)
|
|
$
|
2,875
|
|
|
$
|
1,552
|
|
State taxes
|
5,665
|
|
|
6,434
|
|
|
(630
|
)
|
|||
Total current provision
|
4,460
|
|
|
9,309
|
|
|
922
|
|
|||
Deferred expense (benefit)
|
|
|
|
|
|
||||||
Federal taxes
|
12,183
|
|
|
6,708
|
|
|
(52,886
|
)
|
|||
State taxes
|
(539
|
)
|
|
(500
|
)
|
|
(1,169
|
)
|
|||
Total deferred provision
|
11,644
|
|
|
6,208
|
|
|
(54,055
|
)
|
|||
Income tax expense (benefit)
|
$
|
16,104
|
|
|
$
|
15,517
|
|
|
$
|
(53,133
|
)
|
Effective tax rate
|
22.7
|
%
|
|
25.0
|
%
|
|
|
|
Years Ended December 31,
|
||||||||||
(in thousands)
|
2019
|
|
2018
|
|
2017
|
||||||
Expected tax expense at federal statutory
|
$
|
14,918
|
|
|
$
|
13,044
|
|
|
$
|
4,640
|
|
State income taxes, net of federal tax effect
|
4,709
|
|
|
4,748
|
|
|
(1,129
|
)
|
|||
Revaluation of U.S. deferred income taxes
|
—
|
|
|
(760
|
)
|
|
(53,449
|
)
|
|||
Excess tax benefit from share based compensation and other, net
|
(3,523
|
)
|
|
(1,515
|
)
|
|
(3,195
|
)
|
|||
Income tax expense (benefit)
|
$
|
16,104
|
|
|
$
|
15,517
|
|
|
$
|
(53,133
|
)
|
(in thousands)
|
December 31,
2019 |
|
December 31,
2018 |
||||
Deferred tax assets:
|
|
|
|
||||
Leases
|
$
|
106,564
|
|
|
$
|
—
|
|
Asset retirement obligations
|
9,957
|
|
|
7,797
|
|
||
Net operating loss carry-forwards
|
10,071
|
|
|
12,612
|
|
||
Pension liabilities
|
3,161
|
|
|
2,873
|
|
||
Accruals and stock based compensation
|
1,935
|
|
|
6,545
|
|
||
Other
|
1,408
|
|
|
—
|
|
||
Total gross deferred tax assets
|
133,096
|
|
|
29,827
|
|
||
Less valuation allowance
|
—
|
|
|
(862
|
)
|
||
Net deferred tax assets
|
133,096
|
|
|
28,965
|
|
||
|
|
|
|
||||
Deferred tax liabilities:
|
|
|
|
||||
Property, plant and equipment
|
110,297
|
|
|
99,902
|
|
||
Leases
|
105,475
|
|
|
—
|
|
||
Intangible assets
|
27,201
|
|
|
32,727
|
|
||
Prepaid assets and other
|
26,574
|
|
|
23,789
|
|
||
Total gross deferred tax liabilities
|
269,547
|
|
|
156,418
|
|
||
Net deferred tax liabilities
|
$
|
136,451
|
|
|
$
|
127,453
|
|
|
Years Ended December 31,
|
||||||||
(in thousands)
|
2019
|
2018
|
2017
|
||||||
Stock compensation expense
|
$
|
4,182
|
|
$
|
5,367
|
|
$
|
4,184
|
|
Capitalized stock compensation
|
365
|
|
408
|
|
604
|
|
|||
Stock compensation expense, net
|
$
|
3,817
|
|
$
|
4,959
|
|
$
|
3,580
|
|
|
Years Ended December 31,
|
||||||||||
(in thousands, except per share amounts)
|
2019
|
|
2018
|
|
2017
|
||||||
Calculation of net income per share:
|
|
|
|
|
|
||||||
Net income
|
$
|
54,935
|
|
|
$
|
46,595
|
|
|
$
|
66,390
|
|
Basic weighted average shares outstanding
|
49,811
|
|
|
49,542
|
|
|
49,150
|
|
|||
Basic net income per share
|
$
|
1.10
|
|
|
$
|
0.94
|
|
|
$
|
1.35
|
|
|
|
|
|
|
|
||||||
Effect of stock-based compensation awards outstanding:
|
|
|
|
|
|
||||||
Basic weighted average shares outstanding
|
49,811
|
|
|
49,542
|
|
|
49,150
|
|
|||
Effect from dilutive shares and options outstanding
|
290
|
|
|
521
|
|
|
876
|
|
|||
Diluted weighted average shares outstanding
|
50,101
|
|
|
50,063
|
|
|
50,026
|
|
|||
Diluted net income per share
|
$
|
1.10
|
|
|
$
|
0.93
|
|
|
$
|
1.33
|
|
(in thousands)
|
Wireless
|
|
Broadband
|
|
Tower
|
|
Corporate & Eliminations
|
|
Consolidated
|
||||||||||
External revenue
|
|
|
|
|
|
|
|
|
|
||||||||||
Postpaid
|
$
|
302,031
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
302,031
|
|
|
Prepaid
|
53,540
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
53,540
|
|
|||||
Tower lease
|
—
|
|
|
—
|
|
|
6,964
|
|
|
—
|
|
|
6,964
|
|
|||||
Cable, residential and SMB
|
—
|
|
|
134,187
|
|
|
—
|
|
|
—
|
|
|
134,187
|
|
|||||
Fiber, enterprise and wholesale
|
—
|
|
|
20,187
|
|
|
—
|
|
|
—
|
|
|
20,187
|
|
|||||
Rural local exchange carrier
|
—
|
|
|
21,074
|
|
|
—
|
|
|
—
|
|
|
21,074
|
|
|||||
Travel, installation, and other
|
20,160
|
|
|
6,920
|
|
|
—
|
|
|
—
|
|
|
27,080
|
|
|||||
Service revenue and other
|
375,731
|
|
|
182,368
|
|
|
6,964
|
|
|
—
|
|
|
565,063
|
|
|||||
Equipment
|
67,659
|
|
|
1,184
|
|
|
—
|
|
|
—
|
|
|
68,843
|
|
|||||
Total external
|
443,390
|
|
|
183,552
|
|
|
6,964
|
|
|
—
|
|
|
633,906
|
|
|||||
Revenue from other segments
|
—
|
|
|
10,392
|
|
|
6,020
|
|
|
(16,412
|
)
|
|
—
|
|
|||||
Total revenue
|
443,390
|
|
|
193,944
|
|
|
12,984
|
|
|
(16,412
|
)
|
|
633,906
|
|
|||||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cost of services
|
131,745
|
|
|
76,674
|
|
|
3,894
|
|
|
(13,560
|
)
|
|
198,753
|
|
|||||
Cost of goods sold
|
65,148
|
|
|
766
|
|
|
—
|
|
|
—
|
|
|
65,914
|
|
|||||
Selling, general and administrative
|
42,225
|
|
|
32,679
|
|
|
1,166
|
|
|
36,470
|
|
|
112,540
|
|
|||||
Depreciation and amortization
|
115,731
|
|
|
41,304
|
|
|
2,025
|
|
|
593
|
|
|
159,653
|
|
|||||
Total operating expenses
|
354,849
|
|
|
151,423
|
|
|
7,085
|
|
|
23,503
|
|
|
536,860
|
|
|||||
Operating income (loss)
|
$
|
88,541
|
|
|
$
|
42,521
|
|
|
$
|
5,899
|
|
|
$
|
(39,915
|
)
|
|
$
|
97,046
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Capital expenditures
|
$
|
71,744
|
|
|
$
|
60,627
|
|
|
$
|
921
|
|
|
$
|
5,500
|
|
|
$
|
138,792
|
|
(in thousands)
|
Wireless
|
|
Broadband
|
|
Tower
|
|
Corporate & Eliminations
|
|
Consolidated
|
||||||||||
External revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Postpaid
|
$
|
300,775
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
300,775
|
|
|
Prepaid
|
51,602
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
51,602
|
|
|||||
Tower lease
|
—
|
|
|
—
|
|
|
7,180
|
|
|
—
|
|
|
7,180
|
|
|||||
Cable, residential and SMB
|
—
|
|
|
124,072
|
|
|
—
|
|
|
—
|
|
|
124,072
|
|
|||||
Fiber, enterprise and wholesale
|
—
|
|
|
18,218
|
|
|
—
|
|
|
—
|
|
|
18,218
|
|
|||||
Rural local exchange carrier
|
—
|
|
|
23,485
|
|
|
—
|
|
|
—
|
|
|
23,485
|
|
|||||
Travel, installation, and other
|
30,572
|
|
|
6,552
|
|
|
—
|
|
|
—
|
|
|
37,124
|
|
|||||
Service revenue and other
|
382,949
|
|
|
172,327
|
|
|
7,180
|
|
|
—
|
|
|
562,456
|
|
|||||
Equipment
|
67,510
|
|
|
888
|
|
|
—
|
|
|
—
|
|
|
68,398
|
|
|||||
Total external
|
450,459
|
|
|
173,215
|
|
|
7,180
|
|
|
—
|
|
|
630,854
|
|
|||||
Revenue from other segments
|
—
|
|
|
9,905
|
|
|
5,016
|
|
|
(14,921
|
)
|
|
—
|
|
|||||
Total revenue
|
450,459
|
|
|
183,120
|
|
|
12,196
|
|
|
(14,921
|
)
|
|
630,854
|
|
|||||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cost of services
|
127,045
|
|
|
75,066
|
|
|
4,121
|
|
|
(12,210
|
)
|
|
194,022
|
|
|||||
Cost of goods sold
|
63,583
|
|
|
376
|
|
|
—
|
|
|
—
|
|
|
63,959
|
|
|||||
Selling, general and administrative
|
46,760
|
|
|
27,741
|
|
|
778
|
|
|
37,943
|
|
|
113,222
|
|
|||||
Depreciation and amortization
|
125,067
|
|
|
38,317
|
|
|
2,454
|
|
|
567
|
|
|
166,405
|
|
|||||
Total operating expenses
|
362,455
|
|
|
141,500
|
|
|
7,353
|
|
|
26,300
|
|
|
537,608
|
|
|||||
Operating income (loss)
|
$
|
88,004
|
|
|
$
|
41,620
|
|
|
$
|
4,843
|
|
|
$
|
(41,221
|
)
|
|
$
|
93,246
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Capital expenditures
|
$
|
80,010
|
|
|
$
|
43,197
|
|
|
$
|
6,145
|
|
|
$
|
7,289
|
|
|
$
|
136,641
|
|
(in thousands)
|
Wireless
|
|
Broadband
|
|
Tower
|
|
Corporate & Eliminations
|
|
Consolidated
|
||||||||||
External revenue
|
|
|
|
|
|
|
|
|
|
||||||||||
Postpaid
|
$
|
311,629
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
311,629
|
|
|
Prepaid
|
96,972
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
96,972
|
|
|||||
Tower lease
|
—
|
|
|
—
|
|
|
7,080
|
|
|
—
|
|
|
7,080
|
|
|||||
Cable, residential and SMB
|
—
|
|
|
114,122
|
|
|
—
|
|
|
—
|
|
|
114,122
|
|
|||||
Fiber, enterprise and wholesale
|
—
|
|
|
16,600
|
|
|
—
|
|
|
—
|
|
|
16,600
|
|
|||||
Rural local exchange carrier
|
—
|
|
|
24,052
|
|
|
—
|
|
|
—
|
|
|
24,052
|
|
|||||
Travel, installation, and other
|
24,981
|
|
|
6,237
|
|
|
—
|
|
|
—
|
|
|
31,218
|
|
|||||
Service revenue and other
|
433,582
|
|
|
161,011
|
|
|
7,080
|
|
|
—
|
|
|
601,673
|
|
|||||
Equipment
|
9,467
|
|
|
851
|
|
|
—
|
|
|
—
|
|
|
10,318
|
|
|||||
Total external
|
443,049
|
|
|
161,862
|
|
|
7,080
|
|
|
—
|
|
|
611,991
|
|
|||||
Revenue from other segments
|
—
|
|
|
12,119
|
|
|
4,949
|
|
|
(17,068
|
)
|
|
—
|
|
|||||
Total revenue
|
443,049
|
|
|
173,981
|
|
|
12,029
|
|
|
(17,068
|
)
|
|
611,991
|
|
|||||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cost of services
|
125,785
|
|
|
73,331
|
|
|
3,841
|
|
|
(14,236
|
)
|
|
188,721
|
|
|||||
Cost of goods sold
|
22,653
|
|
|
133
|
|
|
—
|
|
|
—
|
|
|
22,786
|
|
|||||
Selling, general and administrative
|
117,561
|
|
|
26,909
|
|
|
696
|
|
|
20,771
|
|
|
165,937
|
|
|||||
Integration and acquisition expenses
|
10,793
|
|
|
—
|
|
|
—
|
|
|
237
|
|
|
11,030
|
|
|||||
Depreciation and amortization
|
137,725
|
|
|
36,797
|
|
|
1,885
|
|
|
600
|
|
|
177,007
|
|
|||||
Total operating expenses
|
414,517
|
|
|
137,170
|
|
|
6,422
|
|
|
7,372
|
|
|
565,481
|
|
|||||
Operating income (loss)
|
$
|
28,532
|
|
|
$
|
36,811
|
|
|
$
|
5,607
|
|
|
$
|
(24,440
|
)
|
|
$
|
46,510
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Capital expenditures
|
$
|
81,729
|
|
|
$
|
57,068
|
|
|
$
|
891
|
|
|
$
|
6,801
|
|
|
$
|
146,489
|
|
|
Years Ended December 31,
|
||||||||||
(in thousands)
|
2019
|
|
2018
|
|
2017
|
||||||
Total consolidated operating income
|
$
|
97,046
|
|
|
$
|
93,246
|
|
|
$
|
46,510
|
|
Interest expense
|
(29,468
|
)
|
|
(34,847
|
)
|
|
(38,237
|
)
|
|||
Other
|
3,461
|
|
|
3,713
|
|
|
4,984
|
|
|||
Income before income taxes
|
$
|
71,039
|
|
|
$
|
62,112
|
|
|
$
|
13,257
|
|
|
Three Months Ended
|
||||||||||||||
(in thousands, except per share data)
|
March 31, 2019
|
|
June 30,
2019 |
|
September 30, 2019
|
|
December 31, 2019
|
||||||||
Revenue
|
$
|
158,843
|
|
|
$
|
158,914
|
|
|
$
|
155,152
|
|
|
$
|
160,997
|
|
Operating income
|
24,787
|
|
|
24,020
|
|
|
25,359
|
|
|
22,880
|
|
||||
Net income
|
13,910
|
|
|
13,150
|
|
|
14,354
|
|
|
13,521
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net income per share - basic
|
$
|
0.28
|
|
|
$
|
0.26
|
|
|
$
|
0.29
|
|
|
$
|
0.27
|
|
Net income per share - diluted
|
$
|
0.28
|
|
|
$
|
0.26
|
|
|
$
|
0.29
|
|
|
$
|
0.27
|
|
|
|
|
|
|
|
|
|
||||||||
|
Three Months Ended
|
||||||||||||||
(in thousands except per share data)
|
March 31, 2018
|
|
June 30,
2018 |
|
September 30, 2018
|
|
December 31, 2018
|
||||||||
Revenue
|
$
|
154,138
|
|
|
$
|
156,501
|
|
|
$
|
158,731
|
|
|
$
|
161,484
|
|
Operating income
|
16,754
|
|
|
21,169
|
|
|
28,329
|
|
|
26,994
|
|
||||
Net income
|
6,583
|
|
|
9,626
|
|
|
15,534
|
|
|
14,852
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net income per share - basic
|
$
|
0.13
|
|
|
$
|
0.19
|
|
|
$
|
0.31
|
|
|
$
|
0.31
|
|
Net income per share - diluted
|
$
|
0.13
|
|
|
$
|
0.19
|
|
|
$
|
0.31
|
|
|
$
|
0.30
|
|
(in thousands)
|
|
Balance at Beginning of Year
|
|
Recoveries added to allowance
|
|
Bad debt expense
|
|
Write-offs
|
|
Balance at End of Year
|
||||||||||
Year Ended December, 31 2019
|
|
|
||||||||||||||||||
Allowance for doubtful accounts
|
|
$
|
534
|
|
|
$
|
649
|
|
|
$
|
1,743
|
|
|
$
|
(2,393
|
)
|
|
$
|
533
|
|
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
|
|
ITEM 16.
|
FORM 10-K SUMMARY
|
Exhibit
Number
|
Exhibit Description
|
|
|
2.1
|
|
|
|
3.1
|
|
|
|
3.2
|
|
|
|
4.1
|
|
|
|
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
|
|
|
|
*21
|
|
|
|
*23.1
|
|
|
|
*31.1
|
|
|
|
*31.2
|
|
|
|
*31.3
|
|
|
|
**32
|
|
|
|
(101)
|
Formatted in XBRL (Extensible Business Reporting Language)
|
|
101.INS
|
XBRL Instance Document - the instance document does not appear in the interactive data filing because its XBRL tags are embedded within the Inline XBRL 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
|
|
|
|
|
104
|
Cover Page Interactive Data File (embedded within the Inline XBRL document)
|
|
|
|
February 26, 2020
|
/S/ CHRISTOPHER E. FRENCH
|
|
Christopher E. French, President & Chief Executive Officer
|
|
(Principal Executive Officer)
|
|
|
/s/CHRISTOPHER E. FRENCH
|
President & Chief Executive Officer,
|
February 26, 2020
|
Director (Principal Executive Officer)
|
Christopher E. French
|
|
|
|
/s/JAMES J. VOLK
|
Senior Vice President – Chief Financial Officer
|
February 26, 2020
|
(Principal Financial Officer)
|
James J. Volk
|
|
|
|
/s/CHASE L. STOBBE
|
Vice President - Chief Accounting Officer
|
February 26, 2020
|
(Principal Accounting Officer)
|
Chase L. Stobbe
|
|
|
|
/s/THOMAS A. BECKETT
|
Director
|
February 26, 2020
|
|
Thomas A. Beckett
|
|
|
|
/s/TRACY FITZSIMMONS
|
Director
|
February 26, 2020
|
|
Tracy Fitzsimmons
|
|
|
|
/s/JOHN W. FLORA
|
Director
|
February 26, 2020
|
|
John W. Flora
|
|
|
|
/s/ RICHARD L. KOONTZ, JR.
|
Director
|
February 26, 2020
|
|
Richard L. Koontz, Jr.
|
|
|
|
/s/DALE S. LAM
|
Director
|
February 26, 2020
|
|
Dale S. Lam
|
|
|
|
/s/KENNETH L. QUAGLIO
|
Director
|
February 26, 2020
|
|
Kenneth L. Quaglio
|
|
|
|
/s/LEIGH ANN SCHULTZ
|
Director
|
February 26, 2020
|
|
Leigh Ann Schultz
|
|
|
|
|
|
|
•
|
Property, plant, and equipment and depreciation expense
|
•
|
Purchasing (current liabilities and operating expenses)
|
•
|
Treasury (cash, debt, interest expense, derivatives, and benefit obligations)
|
|
|
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):
|
|
|
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
|
|
(Principal Executive Officer)
|
|
February 26, 2020
|
|
|
|
/S/JAMES J. VOLK
|
|
James J. Volk
|
|
Senior Vice President – Chief Financial Officer
|
|
(Principal Fincncial Officer)
|
|
February 26, 2020
|
|