Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2016 | Apr. 20, 2016 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | SHENANDOAH TELECOMMUNICATIONS CO/VA/ | |
Entity Central Index Key | 354,963 | |
Current Fiscal Year End Date | --12-31 | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 48,768,965 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2016 |
UNAUDITED CONSOLIDATED BALANCE
UNAUDITED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Current Assets | ||
Cash and cash equivalents | $ 89,160 | $ 76,812 |
Accounts receivable, net | 27,012 | 29,778 |
Income taxes receivable | 712 | 7,694 |
Materials and supplies | 4,450 | 4,183 |
Prepaid expenses and other | 7,623 | 8,573 |
Deferred income taxes | 0 | 907 |
Total current assets | 128,957 | 127,947 |
Investments, including $2,706 and $2,654 carried at fair value | 10,860 | 10,679 |
Property, plant and equipment, net | 410,949 | 410,018 |
Other Assets | ||
Intangible assets, net | 67,283 | 66,993 |
Deferred charges and other assets, net | 11,323 | 11,514 |
Other assets, net | 78,606 | 78,507 |
Total assets | 629,372 | 627,151 |
Current Liabilities | ||
Current maturities of long-term debt, net of unamortized loan fees | 22,508 | 22,492 |
Accounts payable | 10,720 | 13,009 |
Advanced billings and customer deposits | 11,981 | 11,674 |
Accrued compensation | 2,037 | 5,915 |
Accrued liabilities and other | 7,767 | 7,639 |
Total current liabilities | 55,013 | 60,729 |
Long-term debt, less current maturities, net of unamortized loan fees | 171,535 | 177,169 |
Other Long-Term Liabilities | ||
Deferred income taxes | 71,767 | 74,868 |
Deferred lease payable | 8,349 | 8,142 |
Asset retirement obligations | 7,412 | 7,266 |
Other liabilities | 12,027 | 9,039 |
Total other long-term liabilities | $ 99,555 | $ 99,315 |
Commitments and Contingencies | ||
Shareholders' Equity | ||
Common stock | $ 33,274 | $ 32,776 |
Accumulated other comprehensive income (loss), net of taxes | (633) | 415 |
Retained earnings | 270,628 | 256,747 |
Total shareholders' equity | 303,269 | 289,938 |
Total liabilities and shareholders' equity | $ 629,372 | $ 627,151 |
UNAUDITED CONSOLIDATED BALANCE3
UNAUDITED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Current Assets | ||
Investments at fair value | $ 2,706 | $ 2,654 |
UNAUDITED CONSOLIDATED STATEMEN
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS) [Abstract] | ||
Operating revenues | $ 92,571 | $ 84,287 |
Operating expenses: | ||
Cost of goods and services, exclusive of depreciation and amortization shown separately below | 31,762 | 30,691 |
Selling, general and administrative, exclusive of depreciation and amortization shown separately below | 21,758 | 18,733 |
Depreciation and amortization | 17,739 | 16,337 |
Total operating expenses | 71,259 | 65,761 |
Operating income | 21,312 | 18,526 |
Other income (expense): | ||
Interest expense | (1,619) | (1,915) |
Gain on investments, net | 88 | 102 |
Non-operating income, net | 468 | 432 |
Income before income taxes | 20,249 | 17,145 |
Income tax expense | 6,368 | 6,859 |
Net income | 13,881 | 10,286 |
Other comprehensive income: | ||
Unrealized loss on interest rate hedge, net of tax | (1,048) | (907) |
Comprehensive income | $ 12,833 | $ 9,379 |
Earnings per share: | ||
Basic (in dollars per share) | $ 0.29 | $ 0.21 |
Diluted (in dollars per share) | $ 0.28 | $ 0.21 |
Weighted average shares outstanding, basic (in shares) | 48,563 | 48,306 |
Weighted average shares outstanding, diluted (in shares) | 49,249 | 48,902 |
UNAUDITED CONSOLIDATED STATEME5
UNAUDITED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Common Stock [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Total |
Balance at Dec. 31, 2014 | $ 29,712 | $ 227,512 | $ 1,122 | $ 258,346 |
Balance (in shares) at Dec. 31, 2014 | 48,265 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income | $ 0 | 40,864 | 0 | 40,864 |
Other comprehensive loss, net of tax | 0 | 0 | (707) | (707) |
Dividends declared ($0.24 per share) | 0 | (11,629) | 0 | (11,629) |
Dividends reinvested in common stock | $ 544 | 0 | 0 | 544 |
Dividends reinvested in common stock (in shares) | 22 | |||
Stock based compensation | $ 2,719 | 0 | 0 | 2,719 |
Common stock issued through exercise of incentive stock options | $ 996 | 0 | 0 | 996 |
Common stock issued through exercise of incentive stock options (in shares) | 87 | |||
Common stock issued for share awards | $ 0 | 0 | 0 | 0 |
Common stock issued for share awards (in shares) | 212 | |||
Common stock issued | $ 11 | 0 | 0 | 11 |
Common stock issued (in shares) | 1 | |||
Common stock repurchased | $ (1,885) | 0 | 0 | (1,885) |
Common stock repurchased (in shares) | (111) | |||
Net excess tax benefit from stock options exercised | $ 679 | 0 | 0 | 679 |
Balance at Dec. 31, 2015 | $ 32,776 | 256,747 | 415 | 289,938 |
Balance (in shares) at Dec. 31, 2015 | 48,475 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income | $ 0 | 13,881 | 0 | 13,881 |
Other comprehensive loss, net of tax | 0 | 0 | (1,048) | (1,048) |
Stock based compensation | 1,215 | 0 | 0 | 1,215 |
Common stock issued through exercise of incentive stock options | $ 2,806 | 0 | 0 | 2,806 |
Common stock issued through exercise of incentive stock options (in shares) | 298 | |||
Common stock issued for share awards | $ 0 | 0 | 0 | 0 |
Common stock issued for share awards (in shares) | 156 | |||
Common stock issued | $ 3 | 0 | 0 | 3 |
Common stock issued (in shares) | 1 | |||
Common stock repurchased | $ (3,526) | 0 | 0 | (3,526) |
Common stock repurchased (in shares) | (161) | |||
Balance at Mar. 31, 2016 | $ 33,274 | $ 270,628 | $ (633) | $ 303,269 |
Balance (in shares) at Mar. 31, 2016 | 48,769 |
UNAUDITED CONSOLIDATED STATEME6
UNAUDITED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Parenthetical) | 12 Months Ended |
Dec. 31, 2015$ / shares | |
UNAUDITED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY [Abstract] | |
Dividends declared per share (in dollars per share) | $ 0.24 |
UNAUDITED CONSOLIDATED STATEME7
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Cash Flows From Operating Activities | ||
Net income | $ 13,881 | $ 10,286 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 17,454 | 15,931 |
Amortization | 285 | 406 |
Provision for bad debt | 345 | 321 |
Stock based compensation expense | 1,048 | 825 |
Excess tax benefits on stock awards | 0 | (357) |
Deferred income taxes | (1,489) | (1,610) |
Net (gain) loss on disposal of equipment | (15) | 11 |
Unrealized gains on investments | (16) | (38) |
Net gains from patronage and equity investments | (210) | (202) |
Amortization of long term debt issuance costs | 132 | 146 |
Other | 3,039 | 226 |
(Increase) decrease in: | ||
Accounts receivable | 2,470 | 1,773 |
Materials and supplies | (267) | (1,467) |
Income taxes receivable | 6,981 | 9,319 |
Other assets | 988 | (3,896) |
Increase (decrease) in: | ||
Accounts payable | 1,895 | (5,827) |
Deferred lease payable | 208 | 249 |
Other deferrals and accruals | (3,559) | (2,275) |
Net cash provided by operating activities | 43,170 | 23,821 |
Cash Flows From Investing Activities | ||
Acquisition of property, plant and equipment | (20,537) | (9,500) |
Proceeds from sale of equipment | 145 | 24 |
Cash distributions from investments | 45 | 0 |
Cash disbursed for acquisition | (2,480) | 0 |
Net cash used in investing activities | (22,827) | (9,476) |
Cash Flows From Financing Activities | ||
Principal payments on long-term debt | (5,750) | (5,750) |
Cash paid for debt issuance costs | (1,528) | 0 |
Excess tax benefits on stock awards | 0 | 357 |
Repurchases of common stock | (3,526) | (763) |
Proceeds from issuances of common stock | 2,809 | 46 |
Net cash used in financing activities | (7,995) | (6,110) |
Net increase in cash and cash equivalents | 12,348 | 8,235 |
Cash and cash equivalents: | ||
Beginning | 76,812 | 68,917 |
Ending | 89,160 | 77,152 |
Cash payments for: | ||
Interest | 1,632 | 1,905 |
Income taxes paid (refunded) | $ 876 | $ (850) |
UNAUDITED CONSOLIDATED STATEME8
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Other cash flow information: | ||
Capital expenditures | $ 1.2 | $ 2.2 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2016 | |
Basis of Presentation [Abstract] | |
Basis of Presentation | 1. Basis of Presentation The interim consolidated financial statements of Shenandoah Telecommunications Company and Subsidiaries (collectively, the “Company”) are unaudited. In the opinion of management, all adjustments necessary for a fair presentation of the interim results have been reflected therein. All such adjustments were of a normal and recurring nature. These statements should be read in conjunction with the audited consolidated financial statements and related notes in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. The balance sheet information at December 31, 2015 was derived from the audited December 31, 2015 consolidated balance sheet. |
Property, Plant and Equipment
Property, Plant and Equipment | 3 Months Ended |
Mar. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | 2. Property, Plant and Equipment Property, plant and equipment consisted of the following (in thousands): March 31, 2016 December 31, 2015 Plant in service $ 736,146 $ 718,503 Plant under construction 36,981 36,600 773,127 755,103 Less accumulated amortization and depreciation 362,178 345,085 Net property, plant and equipment $ 410,949 $ 410,018 |
Earnings per share
Earnings per share | 3 Months Ended |
Mar. 31, 2016 | |
Earnings per share [Abstract] | |
Earnings per share | 3. Earnings per share Basic net income per share was computed on the weighted average number of shares outstanding. Diluted net income per share was computed under the treasury stock method, assuming the conversion as of the beginning of the period, for all dilutive stock options. Of thousand and thousand shares and options outstanding at , respectively, 136 thousand and 168 thousand were anti-dilutive, respectively. These shares and options have been excluded from the computations of diluted earnings per share for their respective period. There were no adjustments to net income for either period. |
Investments Carried at Fair Val
Investments Carried at Fair Value | 3 Months Ended |
Mar. 31, 2016 | |
Investments Carried at Fair Value [Abstract] | |
Investments Carried at Fair Value | 4. Investments Carried at Fair Value Investments include $2.7 million of investments carried at fair value at both March 31, 2016 and December 31, 2015, consisting of equity, bond and money market mutual funds. Investments carried at fair value were acquired under a rabbi trust arrangement related to the Company’s nonqualified Supplemental Executive Retirement Plan (the “SERP”). The Company purchases investments in the trust to mirror the investment elections of participants in the SERP; gains and losses on the investments in the trust are reflected as increases or decreases in the liability owed to the participants. During the three months ended March 31, 2016, the Company recognized $64 thousand in dividend and interest income from investments, and recorded net unrealized gains of $16 thousand on these investments. Fair values for these investments held under the rabbi trust were determined by Level 1 quoted market prices for the underlying mutual funds. |
Financial Instruments
Financial Instruments | 3 Months Ended |
Mar. 31, 2016 | |
Financial Instruments [Abstract] | |
Financial Instruments | 5. Financial Instruments Financial instruments on the consolidated balance sheets that approximate fair value include: cash and cash equivalents, receivables, investments carried at fair value, payables, accrued liabilities, interest rate swaps and variable rate long-term debt. |
Derivative Instruments, Hedging
Derivative Instruments, Hedging Activities and Accumulated Other Comprehensive Income | 3 Months Ended |
Mar. 31, 2016 | |
Derivative Instruments, Hedging Activities and Accumulated Other Comprehensive Income [Abstract] | |
Derivative Instruments, Hedging Activities and Accumulated Other Comprehensive Income | 6. Derivative Instruments, Hedging Activities and Accumulated Other Comprehensive Income The Company’s objectives in using interest rate derivatives are to add stability to cash flows and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps (both those designated as cash flow hedges as well as those not designated as cash flow hedges) involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The Company entered into a pay-fixed, receive-variable interest rate swap of $174.6 million of notional principal in September 2012. This interest rate swap was designated as a cash flow hedge. The total outstanding notional amount of the cash flow hedge million as of March 31, 2016. The outstanding notional amount decreases as the Company makes scheduled principal payments on the debt. The effective portion of changes in the fair value of interest rate swaps designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The Company uses its derivatives to hedge the variable cash flows associated with existing variable-rate debt. The ineffective portion of the change in fair value of the derivative is recognized directly in earnings through interest expense. No hedge ineffectiveness was recognized during any of the periods presented. Amounts reported in accumulated other comprehensive income related to the interest rate swap designated and that qualifies as a cash flow hedge are reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. As of March 31, 2016, the Company estimates that $ million will be reclassified as an to interest expense during the next twelve months due to the interest rate swap since the hedge interest rate exceeds the variable interest rate on the debt. The table below presents the fair value of the Company’s derivative financial instrument as well as its classification on the consolidated balance sheet as of March 31, 2016 and December 31, 2015 (in thousands): Derivatives Fair Value as of Balance Sheet March 31, December 31, Derivatives designated as hedging instruments: Interest rate swap Accrued liabilities and other $ (822 ) $ (682 ) Other liabilities (243 ) - Deferred charges and other assets, net - 1,370 Total derivatives designated as hedging instruments $ (1,065 ) $ 688 The fair value of interest rate swaps is determined using a pricing model with inputs that are observable in the market (level 2 fair value inputs). The table below presents change in accumulated other comprehensive income (loss) by component for the three months ended March 31, 2016 (in thousands): Gains and (Losses) on Cash Flow Hedges Income Tax (Expense) Benefit Accumulated Other Comprehensive Income (Loss) Balance as of December 31, 2015 $ 688 $ (273 ) $ 415 Other comprehensive loss before reclassifications (2,020 ) 812 (1,208 ) Amounts reclassified from accumulated other comprehensive income (to interest expense) 267 (107 ) 160 Net current period other comprehensive loss (1,753 ) 705 (1,048 ) Balance as of March 31, 2016 $ (1,065 ) $ 432 $ (633 ) |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2016 | |
Segment Information [Abstract] | |
Segment Information | 7. Segment Information Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker. The Company has three reportable segments, which the Company operates and manages as strategic business units organized by lines of business: (1) Wireless, (2) Cable, and (3) Wireline. A fourth segment, Other, primarily includes Shenandoah Telecommunications Company, the parent holding company. The Wireless segment provides digital wireless service to a portion of a four-state area covering the region from Harrisburg, York and Altoona, Pennsylvania, to Harrisonburg, Virginia, as a Sprint PCS Affiliate. This segment also owns cell site towers built on leased land, and leases space on these towers to both affiliates and non-affiliated service providers. The Cable segment provides video, internet and voice services in Virginia, West Virginia and Maryland, and leases fiber optic facilities throughout southern Virginia and West Virginia. It does not include video, internet and voice services provided to customers in Shenandoah County, Virginia. The Wireline segment provides regulated and unregulated voice services, DSL internet access, and long distance access services throughout Shenandoah County and portions of Rockingham, Frederick, Warren and Augusta counties, Virginia. The segment also provides video and cable modem services in portions of Shenandoah County, and leases fiber optic facilities throughout the northern Shenandoah Valley of Virginia, northern Virginia and adjacent areas along the Interstate 81 corridor through West Virginia, Maryland and portions of central and southern Pennsylvania. Three months ended March 31, 2016 (in thousands) Wireless Cable Wireline Other Eliminations Consolidated Totals External revenues Service revenues $ 52,179 $ 24,340 $ 4,960 $ - $ - $ 81,479 Other 3,203 1,846 6,043 - - 11,092 Total external revenues 55,382 26,186 11,003 - - 92,571 Internal revenues 1,136 260 7,376 - (8,772 ) - Total operating revenues 56,518 26,446 18,379 - (8,772 ) 92,571 Operating expenses Costs of goods and services, exclusive of depreciation and amortization shown separately below 16,578 14,647 8,643 - (8,106 ) 31,762 Selling, general and administrative, exclusive of depreciation and amortization shown separately below 11,514 5,108 1,605 4,197 (666 ) 21,758 Depreciation and amortization 8,494 6,095 3,033 117 - 17,739 Total operating expenses 36,586 25,850 13,281 4,314 (8,772 ) 71,259 Operating income (loss) $ 19,932 $ 596 $ 5,098 $ (4,314 ) $ - $ 21,312 Three months ended March 31, 2015 (in thousands) Wireless Cable Wireline Other Eliminations Consolidated Totals External revenues Service revenues $ 48,375 $ 21,401 $ 4,750 $ - $ - $ 74,526 Other 3,030 1,762 4,969 - - 9,761 Total external revenues 51,405 23,163 9,719 - - 84,287 Internal revenues 1,104 148 5,866 - (7,118 ) - Total operating revenues 52,509 23,311 15,585 - (7,118 ) 84,287 Operating expenses Costs of goods and services, exclusive of depreciation and amortization shown separately below 16,187 13,618 7,334 17 (6,465 ) 30,691 Selling, general and administrative, exclusive of depreciation and amortization shown separately below 9,052 4,892 1,498 3,944 (653 ) 18,733 Depreciation and amortization 7,831 5,480 2,924 102 - 16,337 Total operating expenses 33,070 23,990 11,756 4,063 (7,118 ) 65,761 Operating income (loss) $ 19,439 $ (679 ) $ 3,829 $ (4,063 ) $ - $ 18,526 A reconciliation of the total of the reportable segments’ operating income to consolidated income before taxes is as follows: Three Months Ended March 31, (in thousands) 2016 2015 Total consolidated operating income $ 21,312 $ 18,526 Interest expense (1,619 ) (1,915 ) Non-operating income, net 556 534 Income before taxes $ 20,249 $ 17,145 The Company’s assets by segment are as follows: (in thousands) March 31, 2016 December 31, 2015 Wireless $ 197,989 $ 205,718 Cable 209,992 209,132 Wireline 107,334 105,369 Other 481,886 463,390 Combined totals 997,201 983,609 Inter-segment eliminations (367,829 ) (356,458 ) Consolidated totals $ 629,372 $ 627,151 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2016 | |
Income Taxes [Abstract] | |
Income Taxes | 8. Income Taxes The Company files U.S. federal income tax returns and various state and local income tax returns. With few exceptions, years prior to 2012 are no longer subject to examination. The Company is not subject to any state or federal income tax audits as of March 31, 2016. |
Adoption of New Accounting Prin
Adoption of New Accounting Principles | 3 Months Ended |
Mar. 31, 2016 | |
Adoption of New Accounting Principles [Abstract] | |
Adoption of New Accounting Principles | 9. Adoption of New Accounting Principles Effective in the first quarter of 2016, the Company adopted three recent accounting principles, Accounting Standards Update 2015-03, “Interest – Imputation of Interest” (ASU 2015-03), ASU 2015-17, “Balance Sheet Classification of Deferred Taxes”, and ASU 2016-09, “Improvements to Employee Share-based Payment Accounting”. ASU 2015-03 requires that premiums, discounts, and loan fees and costs associated with long term debt be reflected as a reduction of the outstanding debt balance. Previous guidance had treated such loan fees and costs as a deferred charge on the balance sheet. As a result of implementing ASU 2015-03, the Company reclassified $1.6 million of unamortized loan fees and costs included in deferred charges and other assets as of December 31, 2015 to long-term debt. Approximately $0.5 million was allocated to current maturities of long-term debt, and $1.1 million to long term debt. Total assets, as well as total liabilities and shareholders’ equity, were also reduced by the same $1.6 million. There was no impact on the statements of income or cash flows. ASU 2015-17 simplifies accounting for deferred taxes by eliminating the requirement to present deferred tax assets and liabilities as current and non-current in a classified balance sheet. Due to the immaterial balance of current deferred tax assets ($0.9 million as of December 31, 2015), the Company has elected to apply this guidance prospectively, and thus prior periods have not been retrospectively adjusted. ASU 2016-09 simplifies certain provisions related to the accounting for the tax effects of stock-based compensation transactions. In particular for the Company, it eliminates the requirement to determine for each award whether the difference between book compensation and tax compensation results in an excess tax benefit or a tax deficiency, which generally speaking, result in an entry to additional paid-in-capital. Under the new guidance, all tax effects for exercised or vested awards are recognized as discrete items in income tax expense. The new guidance also allows an employer to withhold shares to cover more than the minimum statutory withholding taxes (but not more than the maximum statutory withholding requirements) without causing an equity-classified award to become a liability classified award. The other provisions of the new guidance are either not applicable or have no significant impact on the Company’s accounting for stock-based compensation transactions. The Company has elected to early adopt the new guidance and apply it prospectively to tax effects on share-based compensation transactions. |
Acquisition of NTELOS Holdings
Acquisition of NTELOS Holdings Corporation | 3 Months Ended |
Mar. 31, 2016 | |
Acquisition of NTELOS Holdings Corporation [Abstract] | |
Acquisition of NTELOS Holdings Corporation | 10. Acquisition of NTELOS Holdings Corporation On August 11, 2015, the Company announced that it had entered into a definitive agreement to acquire NTELOS Holdings Corporation ("nTelos") for $9.25 per share in cash for a total equity value of approximately $208 million, after including shares expected to vest on change of control. At closing, the Company will pay off nTelos' outstanding debt, which was $520 million at December 31, 2015. Under the terms of the agreement, the Company will acquire all of nTelos' stock and operations including wireless network assets, retail stores and approximately 298,000 retail subscribers in the nTelos Western Markets. The Company will complete nTelos' plans to close down its Eastern Markets. Concurrent with the signing of the agreement with nTelos, the Company and Sprint Corporation ("Sprint") entered into a series of agreements, including an Addendum to the Shentel Affiliate Agreement and related agreements, whereby the Company and Sprint will, among other things, exchange certain assets in the nTelos Western Markets. The Company will convert nTelos’ retail wireless customers into Sprint branded affiliate customers. Sprint will transition its existing retail wireless operations in the nTelos footprint, including approximately 280,000 Sprint retail customers homed in the nTelos footprint, to Sprint branded affiliate customers. These existing Sprint retail customers, in combination with the nTelos customers, will enable the Company to serve approximately 570,000 additional customers under its affiliate arrangement with Sprint. As part of the transaction, the Company and Sprint have also agreed to extend their Affiliate relationship by five years through 2029. Sprint will receive certain spectrum assets of nTelos, and has agreed to reduce the 8% and 6% Management Fee portions of the retained revenues that would otherwise be due to Sprint under the Affiliate Agreement by $252 million over an expected period of five to six years. On April 15, 2016, the transaction received its remaining regulatory approval from the Federal Communications Commission. The Company, Sprint and nTelos expect that closing will take place in May 2016. The Company will finance the nTelos acquisition and network upgrade with $960 million in credit facilities (including term loans totaling $885 million and a revolver of $75 million) from a syndicate of lenders. Proceeds will be used to finance the transaction and refinance the Company’s existing outstanding indebtedness. This commitment is fully underwritten by CoBank, ACB; Royal Bank of Canada; and Fifth Third Bank. Upon the closing of the merger, the Company expects to have total long-term debt outstanding of approximately $785 million. The revolver and an additional $100 million in a delayed draw term loan are not expected to be drawn at close. During the three months ended March 31, 2016 and 2015, the Company has incurred $0.3 million and $0.1 million, respectively, of expenses associated with the planned acquisition of nTelos. |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | Property, plant and equipment consisted of the following (in thousands): March 31, 2016 December 31, 2015 Plant in service $ 736,146 $ 718,503 Plant under construction 36,981 36,600 773,127 755,103 Less accumulated amortization and depreciation 362,178 345,085 Net property, plant and equipment $ 410,949 $ 410,018 |
Derivative Instruments, Hedgi20
Derivative Instruments, Hedging Activities and Accumulated Other Comprehensive Income (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Derivative Instruments, Hedging Activities and Accumulated Other Comprehensive Income [Abstract] | |
Schedule of Derivative Financial Instrument as Well as its Classification on the Consolidated Balance Sheet | The table below presents the fair value of the Company’s derivative financial instrument as well as its classification on the consolidated balance sheet as of March 31, 2016 and December 31, 2015 (in thousands): Derivatives Fair Value as of Balance Sheet March 31, December 31, Derivatives designated as hedging instruments: Interest rate swap Accrued liabilities and other $ (822 ) $ (682 ) Other liabilities (243 ) - Deferred charges and other assets, net - 1,370 Total derivatives designated as hedging instruments $ (1,065 ) $ 688 |
Schedule of Accumulated Other Comprehensive Income (Loss) | The table below presents change in accumulated other comprehensive income (loss) by component for the three months ended March 31, 2016 (in thousands): Gains and (Losses) on Cash Flow Hedges Income Tax (Expense) Benefit Accumulated Other Comprehensive Income (Loss) Balance as of December 31, 2015 $ 688 $ (273 ) $ 415 Other comprehensive loss before reclassifications (2,020 ) 812 (1,208 ) Amounts reclassified from accumulated other comprehensive income (to interest expense) 267 (107 ) 160 Net current period other comprehensive loss (1,753 ) 705 (1,048 ) Balance as of March 31, 2016 $ (1,065 ) $ 432 $ (633 ) |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Segment Information [Abstract] | |
Selected Financial Data for Segments | The segment also provides video and cable modem services in portions of Shenandoah County, and leases fiber optic facilities throughout the northern Shenandoah Valley of Virginia, northern Virginia and adjacent areas along the Interstate 81 corridor through West Virginia, Maryland and portions of central and southern Pennsylvania. Three months ended March 31, 2016 (in thousands) Wireless Cable Wireline Other Eliminations Consolidated Totals External revenues Service revenues $ 52,179 $ 24,340 $ 4,960 $ - $ - $ 81,479 Other 3,203 1,846 6,043 - - 11,092 Total external revenues 55,382 26,186 11,003 - - 92,571 Internal revenues 1,136 260 7,376 - (8,772 ) - Total operating revenues 56,518 26,446 18,379 - (8,772 ) 92,571 Operating expenses Costs of goods and services, exclusive of depreciation and amortization shown separately below 16,578 14,647 8,643 - (8,106 ) 31,762 Selling, general and administrative, exclusive of depreciation and amortization shown separately below 11,514 5,108 1,605 4,197 (666 ) 21,758 Depreciation and amortization 8,494 6,095 3,033 117 - 17,739 Total operating expenses 36,586 25,850 13,281 4,314 (8,772 ) 71,259 Operating income (loss) $ 19,932 $ 596 $ 5,098 $ (4,314 ) $ - $ 21,312 Three months ended March 31, 2015 (in thousands) Wireless Cable Wireline Other Eliminations Consolidated Totals External revenues Service revenues $ 48,375 $ 21,401 $ 4,750 $ - $ - $ 74,526 Other 3,030 1,762 4,969 - - 9,761 Total external revenues 51,405 23,163 9,719 - - 84,287 Internal revenues 1,104 148 5,866 - (7,118 ) - Total operating revenues 52,509 23,311 15,585 - (7,118 ) 84,287 Operating expenses Costs of goods and services, exclusive of depreciation and amortization shown separately below 16,187 13,618 7,334 17 (6,465 ) 30,691 Selling, general and administrative, exclusive of depreciation and amortization shown separately below 9,052 4,892 1,498 3,944 (653 ) 18,733 Depreciation and amortization 7,831 5,480 2,924 102 - 16,337 Total operating expenses 33,070 23,990 11,756 4,063 (7,118 ) 65,761 Operating income (loss) $ 19,439 $ (679 ) $ 3,829 $ (4,063 ) $ - $ 18,526 |
Reconciliation of Income from Continuing Operations from Segments to Consolidated | A reconciliation of the total of the reportable segments’ operating income to consolidated income before taxes is as follows: Three Months Ended March 31, (in thousands) 2016 2015 Total consolidated operating income $ 21,312 $ 18,526 Interest expense (1,619 ) (1,915 ) Non-operating income, net 556 534 Income before taxes $ 20,249 $ 17,145 |
Assets by Segment | The Company’s assets by segment are as follows: (in thousands) March 31, 2016 December 31, 2015 Wireless $ 197,989 $ 205,718 Cable 209,992 209,132 Wireline 107,334 105,369 Other 481,886 463,390 Combined totals 997,201 983,609 Inter-segment eliminations (367,829 ) (356,458 ) Consolidated totals $ 629,372 $ 627,151 |
Property, Plant and Equipment22
Property, Plant and Equipment (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Property, plant and equipment [Abstract] | ||
Total property, plant and equipment | $ 773,127 | $ 755,103 |
Less accumulated amortization and depreciation | 362,178 | 345,085 |
Net property, plant and equipment | 410,949 | 410,018 |
Plant in Service [Member] | ||
Property, plant and equipment [Abstract] | ||
Total property, plant and equipment | 736,146 | 718,503 |
Plant under Construction [Member] | ||
Property, plant and equipment [Abstract] | ||
Total property, plant and equipment | $ 36,981 | $ 36,600 |
Earnings per share (Details)
Earnings per share (Details) - shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Earnings per share [Abstract] | ||
Shares and options outstanding (in shares) | 991 | 1,443 |
Options [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of diluted earnings per share (in shares) | 136 | 168 |
Investments Carried at Fair V24
Investments Carried at Fair Value (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Investments Carried at Fair Value [Abstract] | |||
Investments at fair value | $ 2,706 | $ 2,654 | |
Dividend and interest income from investments | 64 | ||
Net unrealized gains recognized | $ 16 | $ 38 |
Derivative Instruments, Hedgi25
Derivative Instruments, Hedging Activities and Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2012 | |
Derivative Instruments, Hedging Activities and Accumulated Other Comprehensive Income [Abstract] | |||
Notional amount of cash flow hedges | $ 148,400 | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||
Accumulated Other Comprehensive Income (Loss), net of tax | 415 | ||
Accumulated Other Comprehensive Income (Loss), net of tax | (633) | ||
Interest Rate Swap [Member] | |||
Derivatives, Fair Value [Line Items] | |||
Amount of notional principal interest rate swap | $ 174,600 | ||
Gains and (Losses) on Cash Flow Hedges [Member] | |||
Accumulated Other Comprehensive Income Loss Before Tax [Abstract] | |||
Accumulated Other Comprehensive Income (Loss), before Tax | 688 | ||
Other comprehensive loss before reclassifications, before tax | (2,020) | ||
Amounts reclassified from accumulated other comprehensive income (to interest expense), before tax | 267 | ||
Net current period other comprehensive loss, before tax | (1,753) | ||
Accumulated Other Comprehensive Income (Loss), before Tax | (1,065) | ||
Accumulated Other Comprehensive Income Loss, Tax [Abstract] | |||
Accumulated Other Comprehensive Income (Loss), tax | (273) | ||
Other comprehensive income before reclassifications, tax | 812 | ||
Amounts reclassified From accumulated other comprehensive income (to interest expense), tax | (107) | ||
Net current period other comprehensive loss | 705 | ||
Accumulated Other Comprehensive Income (Loss), tax | 432 | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||
Accumulated Other Comprehensive Income (Loss), net of tax | 415 | ||
Other comprehensive income before reclassifications, net of tax | (1,208) | ||
Amounts reclassified from accumulated other comprehensive income (to interest expense), net of tax | 160 | ||
Net current period other comprehensive loss, net of tax | (1,048) | ||
Accumulated Other Comprehensive Income (Loss), net of tax | (633) | ||
Interest Expense [Member] | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Amount reclassified as an increase to interest expense during next twelve months | 800 | ||
Designated as Hedging Instrument [Member] | Interest Rate Swap [Member] | |||
Derivatives, Fair Value [Line Items] | |||
Derivative Assets (Liabilities), at Fair Value, Net | (1,065) | $ 688 | |
Designated as Hedging Instrument [Member] | Accrued Liabilities and Other [Member] | Interest Rate Swap [Member] | |||
Derivatives, Fair Value [Line Items] | |||
Derivatives Liabilities, Fair Value | (822) | (682) | |
Designated as Hedging Instrument [Member] | Other Liabilities [Member] | Interest Rate Swap [Member] | |||
Derivatives, Fair Value [Line Items] | |||
Derivatives Liabilities, Fair Value | (243) | 0 | |
Designated as Hedging Instrument [Member] | Deferred Charges and Other Assets, Net [Member] | Interest Rate Swap [Member] | |||
Derivatives, Fair Value [Line Items] | |||
Derivative Assets, Fair Value | $ 0 | $ 1,370 |
Segment Information (Details)
Segment Information (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2016USD ($)SegmentState | Mar. 31, 2015USD ($) | Dec. 31, 2015USD ($) | |
Segment Information [Abstract] | |||
Number of reportable segments | Segment | 3 | ||
Non Sprint operations, number of states | State | 4 | ||
External revenues [Abstract] | |||
Service revenues | $ 81,479 | $ 74,526 | |
Other | 11,092 | 9,761 | |
Total external revenues | 92,571 | 84,287 | |
Internal revenues | 0 | 0 | |
Total operating revenues | 92,571 | 84,287 | |
Operating expenses [Abstract] | |||
Cost of goods and services, exclusive of depreciation and amortization shown separately below | 31,762 | 30,691 | |
Selling, general and administrative, exclusive of depreciation and amortization shown separately below | 21,758 | 18,733 | |
Depreciation and amortization | 17,739 | 16,337 | |
Total operating expenses | 71,259 | 65,761 | |
Operating income (loss) | 21,312 | 18,526 | |
Reconciliation of income from continuing operations from segments to consolidated [Abstract] | |||
Total consolidated operating income | 21,312 | 18,526 | |
Interest expense | (1,619) | (1,915) | |
Non-operating income, net | 556 | 534 | |
Income before income taxes | 20,249 | 17,145 | |
Assets by segment [Abstract] | |||
Assets | 629,372 | $ 627,151 | |
Error Correction [Abstract] | |||
Depreciation | 17,454 | 15,931 | |
Accumulated depreciation | 362,178 | 345,085 | |
Wireless [Member] | |||
Assets by segment [Abstract] | |||
Assets | 197,989 | 205,718 | |
Cable [Member] | |||
Assets by segment [Abstract] | |||
Assets | 209,992 | 209,132 | |
Wireline [Member] | |||
Assets by segment [Abstract] | |||
Assets | 107,334 | 105,369 | |
Other [Member] | |||
Assets by segment [Abstract] | |||
Assets | 481,886 | 463,390 | |
Total Segments [Member] | |||
Assets by segment [Abstract] | |||
Assets | 997,201 | 983,609 | |
Reportable Segments [Member] | Wireless [Member] | |||
External revenues [Abstract] | |||
Service revenues | 52,179 | 48,375 | |
Other | 3,203 | 3,030 | |
Total external revenues | 55,382 | 51,405 | |
Internal revenues | 1,136 | 1,104 | |
Total operating revenues | 56,518 | 52,509 | |
Operating expenses [Abstract] | |||
Cost of goods and services, exclusive of depreciation and amortization shown separately below | 16,578 | 16,187 | |
Selling, general and administrative, exclusive of depreciation and amortization shown separately below | 11,514 | 9,052 | |
Depreciation and amortization | 8,494 | 7,831 | |
Total operating expenses | 36,586 | 33,070 | |
Operating income (loss) | 19,932 | 19,439 | |
Reconciliation of income from continuing operations from segments to consolidated [Abstract] | |||
Total consolidated operating income | 19,932 | 19,439 | |
Reportable Segments [Member] | Cable [Member] | |||
External revenues [Abstract] | |||
Service revenues | 24,340 | 21,401 | |
Other | 1,846 | 1,762 | |
Total external revenues | 26,186 | 23,163 | |
Internal revenues | 260 | 148 | |
Total operating revenues | 26,446 | 23,311 | |
Operating expenses [Abstract] | |||
Cost of goods and services, exclusive of depreciation and amortization shown separately below | 14,647 | 13,618 | |
Selling, general and administrative, exclusive of depreciation and amortization shown separately below | 5,108 | 4,892 | |
Depreciation and amortization | 6,095 | 5,480 | |
Total operating expenses | 25,850 | 23,990 | |
Operating income (loss) | 596 | (679) | |
Reconciliation of income from continuing operations from segments to consolidated [Abstract] | |||
Total consolidated operating income | 596 | (679) | |
Reportable Segments [Member] | Wireline [Member] | |||
External revenues [Abstract] | |||
Service revenues | 4,960 | 4,750 | |
Other | 6,043 | 4,969 | |
Total external revenues | 11,003 | 9,719 | |
Internal revenues | 7,376 | 5,866 | |
Total operating revenues | 18,379 | 15,585 | |
Operating expenses [Abstract] | |||
Cost of goods and services, exclusive of depreciation and amortization shown separately below | 8,643 | 7,334 | |
Selling, general and administrative, exclusive of depreciation and amortization shown separately below | 1,605 | 1,498 | |
Depreciation and amortization | 3,033 | 2,924 | |
Total operating expenses | 13,281 | 11,756 | |
Operating income (loss) | 5,098 | 3,829 | |
Reconciliation of income from continuing operations from segments to consolidated [Abstract] | |||
Total consolidated operating income | 5,098 | 3,829 | |
Reportable Segments [Member] | Other [Member] | |||
External revenues [Abstract] | |||
Service revenues | 0 | 0 | |
Other | 0 | 0 | |
Total external revenues | 0 | 0 | |
Internal revenues | 0 | 0 | |
Total operating revenues | 0 | 0 | |
Operating expenses [Abstract] | |||
Cost of goods and services, exclusive of depreciation and amortization shown separately below | 0 | 17 | |
Selling, general and administrative, exclusive of depreciation and amortization shown separately below | 4,197 | 3,944 | |
Depreciation and amortization | 117 | 102 | |
Total operating expenses | 4,314 | 4,063 | |
Operating income (loss) | (4,314) | (4,063) | |
Reconciliation of income from continuing operations from segments to consolidated [Abstract] | |||
Total consolidated operating income | (4,314) | (4,063) | |
Eliminations [Member] | |||
External revenues [Abstract] | |||
Service revenues | 0 | 0 | |
Other | 0 | 0 | |
Total external revenues | 0 | 0 | |
Internal revenues | (8,772) | (7,118) | |
Total operating revenues | (8,772) | (7,118) | |
Operating expenses [Abstract] | |||
Cost of goods and services, exclusive of depreciation and amortization shown separately below | (8,106) | (6,465) | |
Selling, general and administrative, exclusive of depreciation and amortization shown separately below | (666) | (653) | |
Depreciation and amortization | 0 | 0 | |
Total operating expenses | (8,772) | (7,118) | |
Operating income (loss) | 0 | 0 | |
Reconciliation of income from continuing operations from segments to consolidated [Abstract] | |||
Total consolidated operating income | 0 | $ 0 | |
Assets by segment [Abstract] | |||
Assets | $ (367,829) | $ (356,458) |
Adoption of New Accounting Pr27
Adoption of New Accounting Principles (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Adoption of New Accounting Principles [Abstract] | |
Unamortized loan fees and costs | $ 1.6 |
Unamortized loan allocation to long-term debt current maturities | 0.5 |
Unamortized loan allocation to long-term debt | 1.1 |
Reduction in total assets and liabilities and shareholders' equity | 1.6 |
Deferred tax assets | $ 0.9 |
Acquisition of NTELOS Holding28
Acquisition of NTELOS Holdings Corporation (Details) $ / shares in Units, $ in Millions | Aug. 11, 2015USD ($)Customer$ / shares | Mar. 31, 2016USD ($)Customer | Mar. 31, 2015USD ($) | Dec. 31, 2015USD ($) |
Business Acquisition [Line Items] | ||||
Total debt outstanding | $ 785 | |||
Expected to drawn amount after closing of the merger | $ 100 | |||
NTELOS Holdings Corporation [Member] | ||||
Business Acquisition [Line Items] | ||||
Share price (in dollars per share) | $ / shares | $ 9.25 | |||
Total equity value | $ 208 | |||
Number of retail subscribers acquire | Customer | 298,000 | |||
Total debt outstanding | $ 520 | |||
Number of sprint retail customers homed to sprint branded customers | Customer | 280,000 | |||
Number of additional customers to serve under affiliate agreement with sprint | Customer | 570,000 | |||
Term of affiliate relationship agreement with sprint | 5 years | |||
Management fee on post paid services | 8.00% | |||
Management fee on prepaid services | 6.00% | |||
Amount of retained revenue reduced by Sprint under the affiliate agreement | $ 252 | |||
Amount of expenses associated with acquisition | 0.3 | $ 0.1 | ||
NTELOS Holdings Corporation [Member] | Credit Facilities [Member] | ||||
Business Acquisition [Line Items] | ||||
Amount finance for acquisition and network upgrade by entity | 960 | |||
NTELOS Holdings Corporation [Member] | Term Loan [Member] | ||||
Business Acquisition [Line Items] | ||||
Amount finance for acquisition and network upgrade by entity | 885 | |||
NTELOS Holdings Corporation [Member] | Revolver [Member] | ||||
Business Acquisition [Line Items] | ||||
Amount finance for acquisition and network upgrade by entity | $ 75 | |||
NTELOS Holdings Corporation [Member] | Minimum [Member] | ||||
Business Acquisition [Line Items] | ||||
Expected period to reduce the retained revenues under the affiliate agreement | 5 years | |||
NTELOS Holdings Corporation [Member] | Maximum [Member] | ||||
Business Acquisition [Line Items] | ||||
Expected period to reduce the retained revenues under the affiliate agreement | 6 years |