Orange County-Poughkeepsie Limited Partnership

12 Months Ended

Dec. 31, 2013

Orange County-Poughkeepsie Limited Partnership [Abstract]

Orange County-Poughkeepsie Limited Partnership

NOTE 10: ORANGE COUNTY-POUGHKEEPSIE LIMITED PARTNERSHIP

The Company is a limited partner in the Orange County-Poughkeepsie Limited Partnership ("O-P") and has an 8.108% limited partnership interest as of December 31, 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 LP ("Verizon").

On May 26, 2011, the Company entered into an agreement with Verizon 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 provides that the O-P's business will be converted from a wholesale business to a retail business. The 4G Agreement provided for guaranteed annual cash distributions to the Company from the O-P through 2013. For the years ended December 31, 2013, 2012 and 2011, the Company received annual cash distributions from the O-P of $13.0 million, $13.0 million and $13.6 million, respectively. The 4G Agreement also gives the Company the right (the "Put") to require Verizon to purchase all of the Company's ownership interest in the O-P during April 2013 or April 2014 for an amount equal to the greater of (a) $50.0 million or (b) the product of five (5) times 0.081081 times the O-P's EBITDA, as defined in the 4G Agreement for the calendar year preceding the exercise of the Put.

The Company currently intends to exercise the Put option in April 2014. The gross proceeds of the Put are expected to be $50.0 million and are expected to be used to pay taxes on the related gain, repay outstanding senior debt, fund working capital needs and support growth initiatives.

Pursuant to the equity method accounting of the Company's investment income, the Company is required to record the income from the O-P as an increase to the Company's investment account. The Company is required to apply the cash payments made under the 4G Agreement as a return on its investment when received. As a result of receiving the fixed guaranteed cash distributions from the O-P in excess of the Company's proportionate share of the O-P income, the investment account was reduced to zero within the first six months of 2012. 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.

The following summarizes the income statement for the years ended December 31, 2013, 2012 and 2011 that O-P provided to the Company:

		For the Years Ended December 31,
($ in thousands)		2013		2012		2011(1)
Net revenue	$	331,278	$	310,416	$	273,340
Cellular service cost		156,699		151,712		122,142
Operating expenses		84,927		81,152		53,832
Operating income		89,652		77,552		97,366
Other income		27		14		40
Net income	$	89,679	$	77,566	$	97,406
Company share	$	7,271	$	6,290	$	7,898

(1) The twelve months ended December 31, 2011 income statement represents five months of the O-P operating as a wholesale business and seven months of the O-P operating as a retail business in accordance with Amendment 6 to the O-P Limited Partnership Agreement effective May 1, 2011.

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

		As of December 31,
($ in thousands)		2013		2012
Current assets	$	23,351	$	22,370
Property, plant and equipment, net		41,646		41,072
Other Assets		365		-
Total assets	$	65,362	$	63,442
Total liabilities	$	17,887	$	30,162
Partners' capital		47,475		33,280
Total liabilities and partners' capital	$	65,362	$	63,442