Orange County-Poughkeepsie Limited Partnership

6 Months Ended

Jun. 30, 2013

Orange County-Poughkeepsie Limited Partnership [Abstract]

Orange County-Poughkeepsie Limited Partnership

NOTE 8: ORANGE COUNTY-POUGHKEEPSIE LIMITED PARTNERSHIP

The Company is a limited partner in the Orange County-Poughkeepsie Limited Partnership (the "O-P") and had an 8.108% equity interest in the O-P as of June 30, 2013 and 2012, which is accounted for under the equity method of accounting. The majority owner and general partner of the O-P is Verizon Wireless of the East L.P.

On May 26, 2011, the Company entered into an agreement with Verizon Wireless of the East LP, the general partner and a limited partner, and Cellco Partnership, the other limited partner, in the O-P to make certain changes to the O-P partnership agreement which, among other things, specifies that the O-P will provide 4G cellular services (the "4G Agreement"). The 4G Agreement converted the O-P's business from a wholesale business to a retail business. The 4G Agreement provides for guaranteed annual cash distributions to the Company from the O-P through 2013. For 2012, the annual cash distribution from the O-P was $13.0 million and for 2013 the annual cash distributions will be $13.0 million. Annual cash distributions are paid in equal quarterly amounts. The 4G Agreement also gives the Company the right (the "Put") to require one of the O-P's limited partners to purchase all the Company's ownership interest in the O-P during April 2013 or April 2014 for an amount equal to the greater of (a) $50 million or (b) the product of five (5) times 0.081081 times the O-P's EBITDA, as defined in the 4G Agreement. The Company did not exercise the Put during April 2013.

The conversion of the O-P from a wholesale business to a retail business in 2011 pursuant to the 4G Agreement increased the cellular service costs and operating expenses incurred by the O-P, which caused a subsequent reduction in the O-P's net income primarily due to the inclusion of sales and marketing expenses. Annual cash distributions the Company receives from the O-P will remain unchanged through 2013 pursuant to the terms of the 4G Agreement.

Pursuant to the equity method of accounting, the Company is required to record the income from the O-P as an increase to the Company's investment account. As a result of receiving the fixed guaranteed cash distributions from the O-P in excess of the Company's cumulative proportionate share of the O-P income, the investment account was reduced to zero during the first six months of 2012. These payments are shown as a return on investment in the investing section of the Condensed Consolidated Statements of Cash Flows. Thereafter, the Company recorded the fixed guaranteed cash distributions that were received from the O-P in excess of the proportionate share of the O-P income directly to the Company's statement of operations as other income. All payments received in excess of the Company's proportionate share of the O-P income are considered a return of investment and is shown in the investing section of the Condensed Consolidated Statements of Cash Flows.

The following summarizes the income statement (unaudited) for the three months ended June 30, 2013 and 2012 that the O-P provided to the Company:

		Three Months Ended
($ in thousands)		June 30, 2013		June 30, 2012
Net sales	$	81,176	$	76,180
Cellular service cost		36,307		34,305
Operating expenses		22,237		20,755
Operating income		22,632		21,120
Other income		4		4
Net income	$	22,636	$	21,124
Company share	$	1,835	$	1,713

The following summarizes the income statement (unaudited) for the six months ended June 30, 2013 and 2012 that the O-P provided to the Company:

		Six Months Ended
($ in thousands)		June 30, 2013		June 30, 2012
Net sales	$	161,068	$	150,416
Cellular service cost		72,287		70,353
Operating expenses		43,635		41,375
Operating income		45,146		38,688
Other income		7		6
Net income	$	45,153	$	38,694
Company share	$	3,661	$	3,137

The following summarizes the balance sheet as of June 30, 2013 (unaudited) and December 31, 2012 that O-P provided to the Company:

			As of
($ in thousands)		June 30, 2013			December 31, 2012
Current assets	$	21,901		$	22,370
Property, plant and equipment, net		41,130			41,072
Total assets	$	63,031		$	63,442
Total liabilities	$	22,590		$	30,162
Partners' capital		40,441			33,280
Total liabilities and partners' capital	$	63,031		$	63,442