x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the quarterly period ended September 30, 2011
|
o
|
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
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
Large accelerated filer ¨ | Accelerated filer þ | Non-accelerated filer ¨ | Smaller reporting company ¨ |
ASSETS
|
September 30,
2011
|
December 31, 2010
|
||||||
Current Assets
|
||||||||
Cash and cash equivalents
|
$ | 21,862 | $ | 27,453 | ||||
Accounts receivable, net
|
20,915 | 20,634 | ||||||
Income taxes receivable
|
6,470 | 2,576 | ||||||
Materials and supplies
|
5,310 | 6,360 | ||||||
Prepaid expenses and other
|
3,932 | 3,770 | ||||||
Assets held for sale
|
6,967 | 9,305 | ||||||
Deferred income taxes
|
620 | 702 | ||||||
Total current assets
|
66,076 | 70,800 | ||||||
Investments, including $2,041 and $2,287 carried at fair value
|
8,453 | 9,090 | ||||||
Property, plant and equipment, net
|
300,110 | 280,051 | ||||||
Other Assets
|
||||||||
Intangible assets, net
|
83,201 | 90,389 | ||||||
Cost in excess of net assets of businesses acquired
|
10,962 | 10,962 | ||||||
Deferred charges and other assets, net
|
4,339 | 5,145 | ||||||
Net other assets
|
98,502 | 106,496 | ||||||
Total assets
|
$ | 473,141 | $ | 466,437 |
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
September 30, 2011
|
December 31, 2010
|
||||||
Current Liabilities
|
||||||||
Current maturities of long-term debt
|
$ | 21,911 | $ | 14,823 | ||||
Accounts payable
|
7,790 | 12,237 | ||||||
Advanced billings and customer deposits
|
10,022 | 8,067 | ||||||
Accrued compensation
|
2,627 | 3,278 | ||||||
Liabilities held for sale
|
1,017 | 910 | ||||||
Accrued liabilities and other
|
7,590 | 5,583 | ||||||
Total current liabilities
|
50,957 | 44,898 | ||||||
Long-term debt, less current maturities
|
164,087 | 180,289 | ||||||
Other Long-Term Liabilities
|
||||||||
Deferred income taxes
|
41,901 | 35,902 | ||||||
Deferred lease payable
|
4,056 | 3,734 | ||||||
Asset retirement obligations
|
6,905 | 6,542 | ||||||
Other liabilities
|
4,656 | 4,767 | ||||||
Total other liabilities
|
57,518 | 50,945 | ||||||
Commitments and Contingencies
|
||||||||
Shareholders’ Equity
|
||||||||
Common stock
|
21,086 | 19,833 | ||||||
Retained earnings
|
179,493 | 170,472 | ||||||
Total shareholders’ equity
|
200,579 | 190,305 | ||||||
Total liabilities and shareholders’ equity
|
$ | 473,141 | $ | 466,437 |
Three Months Ended September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Operating revenues
|
62,657 | $ | 53,233 | $ | 184,640 | $ | 137,192 | |||||||||
Operating expenses:
|
||||||||||||||||
Cost of goods and services, exclusive of depreciation and amortization shown separately below
|
25,514 | 21,265 | 76,792 | 50,601 | ||||||||||||
Selling, general and administrative, exclusive of depreciation and amortization shown separately below
|
14,199 | 14,180 | 41,438 | 32,770 | ||||||||||||
Depreciation and amortization
|
13,774 | 12,202 | 42,155 | 28,927 | ||||||||||||
Total operating expenses
|
53,487 | 47,647 | 160,385 | 112,298 | ||||||||||||
Gain on sale of directory
|
- | 4,000 | - | 4,000 | ||||||||||||
Operating income
|
9,170 | 9,586 | 24,255 | 28,894 | ||||||||||||
Other income (expense):
|
||||||||||||||||
Interest expense
|
(2,003 | ) | (2,416 | ) | (6,668 | ) | (2,992 | ) | ||||||||
Gain (loss) on investments, net
|
(250 | ) | (11 | ) | (499 | ) | (153 | ) | ||||||||
Non-operating income, net
|
195 | 275 | 703 | 543 | ||||||||||||
Income from continuing operations before income taxes
|
7,112 | 7,434 | 17,791 | 26,292 | ||||||||||||
Income tax expense
|
3,497 | 3,229 | 8,070 | 10,994 | ||||||||||||
Net income from continuing operations
|
3,615 | 4,205 | 9,721 | 15,298 | ||||||||||||
Earnings (loss) from discontinued operations, net of tax (expense) benefit of $392, $109, $436 and $(41), respectively
|
(613 | ) | (171 | ) | (700 | ) | 62 | |||||||||
Net income
|
$ | 3,002 | $ | 4,034 | $ | 9,021 | $ | 15,360 | ||||||||
Basic and diluted income (loss) per share:
|
||||||||||||||||
Net income from continuing operations
|
$ | 0.15 | $ | 0.17 | $ | 0.41 | $ | 0.65 | ||||||||
Net earnings (loss) from discontinued operations
|
(0.02 | ) | - | (0.03 | ) | - | ||||||||||
Net income
|
$ | 0.13 | $ | 0.17 | $ | 0.38 | $ | 0.65 | ||||||||
Weighted average shares outstanding, basic
|
23,781 | 23,738 | 23,773 | 23,724 | ||||||||||||
Weighted average shares, diluted
|
23,823 | 23,883 | 23,823 | 23,799 |
Shares |
Common
Stock
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Income (Loss)
|
Total
|
||||||||||||||||
Balance, December 31, 2009
|
23,681 | $ | 17,890 | $ | 160,230 | $ | (2,448 | ) | $ | 175,672 | ||||||||||
Comprehensive income:
|
||||||||||||||||||||
Net income
|
- | - | 18,075 | - | 18,075 | |||||||||||||||
Reclassification adjustment for unrealized loss from pension plans included in net income, net of tax
|
- | - | - | 2,596 | 2,596 | |||||||||||||||
Net unrealized gain from pension plans, net of tax
|
- | - | - | (148 | ) | (148 | ) | |||||||||||||
Total comprehensive income
|
20,523 | |||||||||||||||||||
Dividends declared ($0.33 per share)
|
- | - | (7,833 | ) | - | (7,833 | ) | |||||||||||||
Dividends reinvested in common stock
|
29 | 520 | - | - | 520 | |||||||||||||||
Stock-based compensation
|
- | 792 | - | - | 792 | |||||||||||||||
Common stock issued through exercise of incentive stock options
|
57 | 561 | - | - | 561 | |||||||||||||||
Net excess tax benefit from stock options exercised
|
- | 70 | - | - | 70 | |||||||||||||||
Balance, December 31, 2010
|
23,767 | $ | 19,833 | $ | 170,472 | $ | - | $ | 190,305 | |||||||||||
Comprehensive income:
|
||||||||||||||||||||
Net income
|
- | - | 9,021 | - | 9,021 | |||||||||||||||
Total comprehensive income
|
9,021 | |||||||||||||||||||
Stock-based compensation
|
- | 1,335 | - | - | 1,335 | |||||||||||||||
Common stock issued for share awards
|
19 | - | - | - | - | |||||||||||||||
Common stock repurchased
|
(5 | ) | (92 | ) | - | - | (92 | ) | ||||||||||||
Common stock issued
|
- | 10 | - | - | 10 | |||||||||||||||
Balance, September 30, 2011
|
23,781 | $ | 21,086 | $ | 179,493 | $ | - | $ | 200,579 |
Nine Months Ended
September 30,
|
||||||||
2011
|
2010
|
|||||||
Cash Flows From Operating Activities
|
||||||||
Net income
|
$ | 9,021 | $ | 15,360 | ||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Non-cash impairment charge
|
645 | - | ||||||
Depreciation
|
33,732 | 26,040 | ||||||
Amortization
|
8,423 | 2,887 | ||||||
Provision for bad debt
|
2,559 | 844 | ||||||
Stock based compensation expense
|
1,335 | 539 | ||||||
Pension settlement and curtailment expenses
|
- | 3,964 | ||||||
Excess tax benefits on stock option exercises
|
- | (70 | ) | |||||
Deferred income taxes
|
6,081 | 152 | ||||||
Net (gain) loss on disposal of equipment
|
(1,035 | ) | 316 | |||||
Realized (gain) on sale of directory
|
- | (4,000 | ) | |||||
Realized loss on disposal of investments
|
27 | 147 | ||||||
Unrealized (gains) losses on investments
|
236 | (229 | ) | |||||
Net (gain) loss from patronage and equity investments
|
13 | 67 | ||||||
Other
|
51 | 576 | ||||||
Changes in assets and liabilities:
|
||||||||
(Increase) decrease in:
|
||||||||
Accounts receivable
|
(2,876 | ) | (4,031 | ) | ||||
Materials and supplies
|
1,050 | 707 | ||||||
Income taxes receivable
|
(3,894 | ) | 5,531 | |||||
Increase (decrease) in:
|
||||||||
Accounts payable
|
(4,449 | ) | (841 | ) | ||||
Deferred lease payable
|
319 | 237 | ||||||
Income taxes payable
|
- | 512 | ||||||
Other prepaids, deferrals and accruals
|
3,283 | 4,989 | ||||||
Net cash provided by operating activities
|
$ | 54,521 | $ | 53,697 | ||||
Cash Flows From Investing Activities
|
||||||||
Purchase and construction of property, plant and equipment
|
$ | (52,505 | ) | $ | (33,940 | ) | ||
Cash paid for acquisition of business
|
- | (147,613 | ) | |||||
Cash received on sale of directory
|
- | 4,000 | ||||||
Cash paid to acquire prepaid subscriber rights
|
- | (6,884 | ) | |||||
Proceeds from sale of assets
|
1,170 | - | ||||||
Proceeds from sale of equipment
|
60 | 503 | ||||||
Purchase of investment securities
|
(84 | ) | (114 | ) | ||||
Proceeds from sale of investment securities
|
444 | 54 | ||||||
Net cash used in investing activities
|
$ | (50,915 | ) | $ | (183,994 | ) |
Nine Months Ended
September 30,
|
||||||||
2011
|
2010
|
|||||||
Cash Flows From Financing Activities
|
||||||||
Principal payments on long-term debt
|
$ | (9,115 | ) | $ | (25,595 | ) | ||
Amounts borrowed under debt agreements
|
- | 189,800 | ||||||
Cash paid for debt issuance costs
|
- | (3,445 | ) | |||||
Excess tax benefits on stock option exercises
|
- | 70 | ||||||
Repurchases of stock
|
(92 | ) | - | |||||
Proceeds from exercise of incentive stock options
|
10 | 557 | ||||||
Net cash provided by (used in) financing activities
|
$ | (9,197 | ) | $ | 161,387 | |||
Net increase (decrease) in cash and cash equivalents
|
$ | (5,591 | ) | $ | 31,090 | |||
Cash and cash equivalents:
|
||||||||
Beginning
|
27,453 | 12,054 | ||||||
Ending
|
$ | 21,862 | $ | 43,144 | ||||
Supplemental Disclosures of Cash Flow Information
|
||||||||
Cash payments for:
|
||||||||
Interest
|
$ | 5,600 | $ | 2,392 | ||||
Income taxes
|
$ | 5,447 | $ | 5,225 |
September 30, 2011
|
December 31, 2010
|
|||||||
Assets held for sale:
|
||||||||
Property, plant and equipment, net
|
$ | 4,966 | $ | 6,614 | ||||
Intangible assets, net
|
640 | 706 | ||||||
Deferred charges
|
670 | 1,310 | ||||||
Other assets
|
691 | 675 | ||||||
$ | 6,967 | $ | 9,305 | |||||
Liabilities:
|
||||||||
Other liabilities
|
$ | 1,017 | $ | 910 |
Three Months Ended
|
|||||||
September 30,
|
|||||||
2011
|
2010
|
||||||
Operating revenues
|
$ | 2,531 | $ | 2,816 | |||
Earnings (loss) before income taxes
|
$ | (1,005 | ) | $ | (280 | ) |
Nine Months Ended
|
|||||||
September 30,
|
|||||||
2011
|
2010
|
||||||
Operating revenues
|
$ | 8,868 | $ | 9,358 | |||
Earnings (loss) before income taxes
|
$ | (1,136 | ) | $ | 103 |
September 30, 2011
|
December 31, 2010
|
|||||||
Plant in service
|
$ | 516,853 | $ | 466,658 | ||||
Plant under construction
|
18,775 | 25,515 | ||||||
535,628 | 492,173 | |||||||
Less accumulated amortization and depreciation
|
235,518 | 212,122 | ||||||
Net property, plant and equipment
|
$ | 300,110 | $ | 280,051 |
Three months ended September 30, 2011
(In thousands)
|
Wireless
|
Wireline
|
Cable TV
|
Other
|
Eliminations
|
Consolidated
Totals
|
||||||||||||||||||
External revenues
|
||||||||||||||||||||||||
Service revenues
|
$ | 34,403 | $ | 3,604 | $ | 14,532 | $ | - | $ | - | $ | 52,539 | ||||||||||||
Other
|
3,286 | 4,829 | 2,003 | - | - | 10,118 | ||||||||||||||||||
Total external revenues
|
37,689 | 8,433 | 16,535 | - | - | 62,657 | ||||||||||||||||||
Internal revenues
|
800 | 3,994 | 83 | - | (4,877 | ) | - | |||||||||||||||||
Total operating revenues
|
38,489 | 12,427 | 16,618 | - | (4,877 | ) | 62,657 | |||||||||||||||||
Operating expenses
|
||||||||||||||||||||||||
Costs of goods and services, exclusive of depreciation and amortization shown separately below
|
12,667 | 4,887 | 12,082 | 36 | (4,158 | ) | 25,514 | |||||||||||||||||
Selling, general and administrative, exclusive of depreciation and amortization shown separately below
|
7,028 | 1,891 | 5,271 | 728 | (719 | ) | 14,199 | |||||||||||||||||
Depreciation and amortization
|
5,868 | 2,156 | 5,692 | 58 | - | 13,774 | ||||||||||||||||||
Total operating expenses
|
25,563 | 8,934 | 23,045 | 822 | (4,877 | ) | 53,487 | |||||||||||||||||
Operating income (loss)
|
12,926 | 3,493 | (6,427 | ) | (822 | ) | - | 9,170 |
Three months ended September 30, 2010
(In thousands)
|
Wireless
|
Wireline
|
Cable TV
|
Other
|
Eliminations
|
Consolidated
Totals
|
||||||||||||||||||
External revenues
|
||||||||||||||||||||||||
Service revenues
|
$ | 28,624 | $ | 3,596 | $ | 10,663 | $ | - | $ | - | $ | 42,883 | ||||||||||||
Other
|
4,341 | 4,715 | 1,294 | - | - | 10,350 | ||||||||||||||||||
Total external revenues
|
32,965 | 8,311 | 11,957 | - | - | 53,233 | ||||||||||||||||||
Internal revenues
|
763 | 3,375 | 14 | - | (4,152 | ) | - | |||||||||||||||||
Total operating revenues
|
33,728 | 11,686 | 11,971 | - | (4,152 | ) | 53,233 | |||||||||||||||||
Operating expenses
|
||||||||||||||||||||||||
Costs of goods and services, exclusive of depreciation and amortization shown separately below
|
12,236 | 4,318 | 8,318 | 56 | (3,663 | ) | 21,265 | |||||||||||||||||
Selling, general and administrative, exclusive of depreciation and amortization shown separately below
|
5,886 | 1,828 | 6,200 | 755 | (489 | ) | 14,180 | |||||||||||||||||
Depreciation and amortization
|
6,401 | 2,000 | 3,746 | 55 | - | 12,202 | ||||||||||||||||||
Total operating expenses
|
24,523 | 8,146 | 18,264 | 866 | (4,152 | ) | 47,647 | |||||||||||||||||
Gain on sale of directory
|
- | 4,000 | - | - | - | 4,000 | ||||||||||||||||||
Operating income (loss)
|
9,205 | 7,540 | (6,293 | ) | (866 | ) | - | 9,586 |
Nine months ended September 30, 2011
(In thousands)
|
Wireless
|
Wireline
|
Cable TV
|
Other
|
Eliminations
|
Consolidated
Totals
|
||||||||||||||||||
External revenues
|
||||||||||||||||||||||||
Service revenues
|
$ | 100,413 | $ | 10,850 | $ | 43,594 | $ | - | $ | - | $ | 154,857 | ||||||||||||
Other
|
9,687 | 13,906 | 6,190 | - | - | 29,783 | ||||||||||||||||||
Total external revenues
|
110,100 | 24,756 | 49,784 | - | - | 184,640 | ||||||||||||||||||
Internal revenues
|
2,391 | 12,021 | 199 | - | (14,611 | ) | - | |||||||||||||||||
Total operating revenues
|
112,491 | 36,777 | 49,983 | - | (14,611 | ) | 184,640 | |||||||||||||||||
Operating expenses
|
||||||||||||||||||||||||
Costs of goods and services, exclusive of depreciation and amortization shown separately below
|
39,671 | 14,238 | 35,441 | 100 | (12,658 | ) | 76,792 | |||||||||||||||||
Selling, general and administrative, exclusive of depreciation and amortization shown separately below
|
21,225 | 5,558 | 14,134 | 2,474 | (1,953 | ) | 41,438 | |||||||||||||||||
Depreciation and amortization
|
18,242 | 6,260 | 17,478 | 175 | - | 42,155 | ||||||||||||||||||
Total operating expenses
|
79,138 | 26,056 | 67,053 | 2,749 | (14,611 | ) | 160,385 | |||||||||||||||||
Operating income (loss)
|
33,353 | 10,721 | (17,070 | ) | (2,749 | ) | - | 24,255 |
Nine months ended September 30, 2010
(In thousands)
|
Wireless
|
Wireline
|
Cable TV
|
Other
|
Eliminations
|
Consolidated
Totals
|
||||||||||||||||||
External revenues
|
||||||||||||||||||||||||
Service revenues
|
$ | 81,415 | $ | 10,595 | $ | 17,955 | $ | - | $ | - | $ | 109,965 | ||||||||||||
Other
|
10,309 | 14,852 | 2,066 | - | - | 27,227 | ||||||||||||||||||
Total external revenues
|
91,724 | 25,447 | 20,021 | - | - | 137,192 | ||||||||||||||||||
Internal revenues
|
2,268 | 10,076 | 37 | - | (12,381 | ) | - | |||||||||||||||||
Total operating revenues
|
93,992 | 35,523 | 20,058 | - | (12,381 | ) | 137,192 | |||||||||||||||||
Operating expenses
|
||||||||||||||||||||||||
Costs of goods and services, exclusive of depreciation and amortization shown separately below
|
32,108 | 13,075 | 16,152 | 188 | (10,922 | ) | 50,601 | |||||||||||||||||
Selling, general and administrative, exclusive of depreciation and amortization shown separately below
|
14,808 | 6,994 | 9,957 | 2,470 | (1,459 | ) | 32,770 | |||||||||||||||||
Depreciation and amortization
|
16,927 | 5,860 | 5,945 | 195 | - | 28,927 | ||||||||||||||||||
Total operating expenses
|
63,843 | 25,929 | 32,054 | 2,853 | (12,381 | ) | 112,298 | |||||||||||||||||
Gain on sale of directory
|
- | 4,000 | - | - | - | 4,000 | ||||||||||||||||||
Operating income (loss)
|
30,149 | 13,594 | (11,996 | ) | (2,853 | ) | - | 28,894 |
Three Months Ended
September 30,
|
||||||||
2011
|
2010
|
|||||||
Total consolidated operating income
|
$ | 9,170 | $ | 9,586 | ||||
Interest expense
|
(2,003 | ) | (2,416 | ) | ||||
Non-operating income (expense), net
|
(55 | ) | 264 | |||||
Income from continuing operations before income taxes
|
$ | 7,112 | $ | 7,434 |
Nine Months Ended
September 30,
|
||||||||
2011
|
2010
|
|||||||
Total consolidated operating income
|
$ | 24,255 | $ | 28,894 | ||||
Interest expense
|
(6,668 | ) | (2,992 | ) | ||||
Non-operating income (expense), net
|
204 | 390 | ||||||
Income from continuing operations before income taxes
|
$ | 17,791 | $ | 26,292 |
(In thousands)
|
September 30,
2011
|
December 31,
2010
|
||||||
Wireless
|
$ | 135,428 | $ | 124,854 | ||||
Wireline
|
82,195 | 78,552 | ||||||
Cable TV
|
207,087 | 208,039 | ||||||
Other (includes assets held for sale)
|
393,878 | 393,340 | ||||||
Combined totals
|
818,588 | 804,785 | ||||||
Inter-segment eliminations
|
(345,447 | ) | (338,348 | ) | ||||
Consolidated totals
|
$ | 473,141 | $ | 466,437 |
(In thousands)
|
September
2011
|
December
2010
|
||||||
CoBank (fixed term loan)
|
$ | 5,157 | $ | 6,984 | ||||
Term Loan A
|
180,310 | 187,428 | ||||||
Other debt
|
531 | 700 | ||||||
185,998 | 195,112 | |||||||
Current maturities
|
21,911 | 14,823 | ||||||
Total long-term debt
|
$ | 164,087 | $ | 180,289 |
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
*
|
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 of Sprint Nextel. 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 Wireline segment provides regulated and unregulated voice services, dial-up and DSL internet access, and long-distance access services throughout Shenandoah County and portions of Rockingham and Augusta Counties, Virginia, and leases fiber optic facilities, throughout the northern Shenandoah Valley of Virginia, northern Virginia and adjacent areas along the Interstate 81 corridor, including portions of West Virginia and Maryland.
|
|
*
|
The Cable TV segment provides video, internet and voice services in franchise areas throughout Virginia, West Virginia and Maryland.
|
|
*
|
A fourth segment, Other, primarily includes Shenandoah Telecommunications Company, the parent holding company, as well as certain general and administrative costs historically charged to Converged Services that cannot be allocated to discontinued operations.
|
(in thousands)
|
Three Months Ended
September 30,
|
Change
|
||||||||||||||
2011
|
2010
|
$ | % | |||||||||||||
Operating revenues
|
$ | 62,657 | $ | 53,233 | $ | 9,424 | 17.7 | |||||||||
Operating expenses
|
53,487 | 47,647 | 5,840 | 12.3 | ||||||||||||
Gain on sale of directory
|
- | 4,000 | (4,000 | ) | (100.0 | ) | ||||||||||
Operating income
|
9,170 | 9,586 | (416 | ) | (4.3 | ) | ||||||||||
Interest expense
|
(2,003 | ) | (2,416 | ) | 413 | (17.1 | ) | |||||||||
Other income (expense)
|
(55 | ) | 264 | (319 | ) | (120.8 | ) | |||||||||
Income before taxes
|
7,112 | 7,434 | (322 | ) | (4.3 | ) | ||||||||||
Income tax expense
|
3,497 | 3,229 | 268 | 8.3 | ||||||||||||
Net income from continuing operations
|
$ | 3,615 | $ | 4,205 | $ | (590 | ) | (14.0 | ) |
(in thousands)
|
Nine Months Ended
September 30,
|
Change
|
||||||||||||||
2011
|
2010
|
$ | % | |||||||||||||
Operating revenues
|
$ | 184,640 | $ | 137,192 | $ | 47,448 | 34.6 | |||||||||
Operating expenses
|
160,385 | 112,298 | 48,087 | 42.8 | ||||||||||||
Gain on sale of directory
|
- | 4,000 | (4,000 | ) | (100.0 | ) | ||||||||||
Operating income
|
24,255 | 28,894 | (4,639 | ) | (16.1 | ) | ||||||||||
Interest expense
|
(6,668 | ) | (2,992 | ) | (3,676 | ) | 122.9 | |||||||||
Other income (expense)
|
204 | 390 | (186 | ) | (47.7 | ) | ||||||||||
Income before taxes
|
17,791 | 26,292 | (8,501 | ) | (32.3 | ) | ||||||||||
Income tax expense
|
8,070 | 10,994 | (2,924 | ) | (26.6 | ) | ||||||||||
Net income from continuing operations
|
$ | 9,721 | $ | 15,298 | $ | (5,577 | ) | (36.5 | ) |
Sept. 30,
|
Dec. 31,
|
Sept. 30,
|
Dec. 31,
|
|||
2011
|
2010
|
2010
|
2009
|
|||
Retail PCS Subscribers – Postpaid (1)
|
243,548
|
234,809
|
230,612
|
222,818
|
||
Retail PCS Subscribers – Prepaid
|
98,272
|
66,956
|
56,203
|
n/a
|
||
PCS Market POPS (000) (2)
|
2,397
|
2,337
|
2,339
|
2,327
|
||
PCS Covered POPS (000) (2)
|
2,114
|
2,049
|
2,052
|
2,033
|
||
CDMA Base Stations (sites)
|
508
|
496
|
484
|
476
|
||
EVDO-enabled sites
|
402
|
381
|
346
|
334
|
||
EVDO Covered POPS (000) (2)
|
2,053
|
1,981
|
1,960
|
1,940
|
||
Towers, Company owned
|
149
|
146
|
142
|
140
|
||
Non-affiliate cell site leases
|
219
|
216
|
211
|
196
|
Three Months Ended
|
Nine Months Ended
|
|||||
September 30,
|
September 30,
|
|||||
2011
|
2010
|
2011
|
2010
|
|||
Gross PCS Subscriber Additions – Postpaid
|
16,126
|
16,716
|
46,285
|
48,587
|
||
Net PCS Subscriber Additions – Postpaid
|
2,686
|
3,175
|
8,739
|
7,794
|
||
Gross PCS Subscriber Additions – Prepaid
|
19,545
|
14,289
|
65,579
|
14,289
|
||
Net PCS Subscriber Additions – Prepaid (3)
|
6,940
|
6,296
|
31,316
|
6,296
|
||
PCS Average Monthly Retail Churn % - Postpaid
|
1.85%
|
1.88%
|
1.69%
|
1.82%
|
||
PCS Average Monthly Retail Churn % - Prepaid (4)
|
4.43%
|
5.02%
|
4.50%
|
5.02%
|
1)
|
Postpaid subscriber counts for December 31, 2010 have been reduced by 888 to exclude certain rate plans incorrectly counted as subscribers in the latter months of 2010.
|
2)
|
POPS refers to the estimated population of a given geographic area and is based on information purchased from third parties. Market POPS are those within a market area which the Company is authorized to serve under its Sprint PCS affiliate agreements, and Covered POPS are those covered by the Company’s network.
|
3)
|
Net Prepaid Additions excludes 49,885 subscribers purchased July 1, 2010.
|
4)
|
Prepaid churn for 2010 reflects results for the three months ended September 30, 2010 in both the three months and nine months ended September 30, 2010, columns shown above. Prepaid activity initiated effective July 1, 2010.
|
(in thousands)
|
Three Months Ended
September 30,
|
Change
|
||||||||||||||
2011
|
2010
|
$ | % | |||||||||||||
Segment operating revenues
|
|
|
||||||||||||||
Wireless service revenue
|
$ | 34,403 | $ | 28,624 | $ | 5,779 | 20.2 | |||||||||
Tower lease revenue
|
2,302 | 2,078 | 224 | 10.8 | ||||||||||||
Equipment revenue
|
1,107 | 1,712 | (605 | ) | (35.3 | ) | ||||||||||
Other revenue
|
677 | 1,314 | (637 | ) | (48.5 | ) | ||||||||||
Total segment operating revenues
|
38,489 | 33,728 | 4,761 | 14.1 | ||||||||||||
Segment operating expenses
|
||||||||||||||||
Cost of goods and services, exclusive of depreciation and amortization shown separately below
|
12,667 | 12,236 | 431 | 3.5 | ||||||||||||
Selling, general and administrative, exclusive of depreciation and amortization shown separately below
|
7,028 | 5,886 | 1,142 | 19.4 | ||||||||||||
Depreciation and amortization
|
5,868 | 6,401 | (533 | ) | (8.3 | ) | ||||||||||
Total segment operating expenses
|
25,563 | 24,523 | 1,040 | 4.2 | ||||||||||||
Segment operating income
|
$ | 12,926 | $ | 9,205 | $ | 3,721 | 40.4 |
(in thousands)
|
Nine Months Ended
September 30,
|
Change
|
||||||||||||||
2011
|
2010
|
$ | % | |||||||||||||
Segment operating revenues
|
|
|
||||||||||||||
Wireless service revenue
|
$ | 100,413 | $ | 81,415 | $ | 18,998 | 23.3 | |||||||||
Tower lease revenue
|
6,677 | 6,032 | 645 | 10.7 | ||||||||||||
Equipment revenue
|
3,735 | 4,218 | (483 | ) | (11.5 | ) | ||||||||||
|
1,666 | 2,327 | (661 | ) | (28.4 | ) | ||||||||||
Total segment operating revenues
|
112,491 | 93,992 | 18,499 | 19.7 | ||||||||||||
Segment operating expenses
|
||||||||||||||||
Cost of goods and services, exclusive of depreciation and amortization shown separately below
|
39,671 | 32,108 | 7,563 | 23.6 | ||||||||||||
Selling, general and administrative, exclusive of depreciation and amortization shown separately below
|
21,225 | 14,808 | 6,417 | 43.3 | ||||||||||||
Depreciation and amortization
|
18,242 | 16,927 | 1,315 | 7.8 | ||||||||||||
Total segment operating expenses
|
79,138 | 63,843 | 15,295 | 24.0 | ||||||||||||
Segment operating income
|
33,353 | $ | 30,149 | $ | 3,204 | 10.6 |
Sept. 30,
2011
|
Dec. 31,
2010(1)
|
Sept. 30,
2011
|
Dec. 31,
2010(1)
|
|||
Homes Passed (2)
|
181,351
|
178,763
|
171,662
|
56,268
|
||
Video
|
||||||
Customers (3)
|
66,179
|
67,235
|
64,524
|
23,022
|
||
Penetration (4)
|
36.5%
|
37.6%
|
37.6%
|
40.9%
|
||
Digital video customers (5)
|
25,083
|
22,855
|
22,556
|
6,487
|
||
Digital video penetration (5)
|
37.9%
|
34.0%
|
35.0%
|
28.2%
|
||
High-speed Internet
|
||||||
Available Homes (6)
|
155,120
|
144,099
|
136,998
|
25,748
|
||
Customers (3)
|
35,651
|
31,832
|
27,621
|
2,525
|
||
Penetration (4)
|
23.0%
|
22.1%
|
20.2%
|
9.8%
|
||
Voice
|
||||||
Available Homes (6)
|
142,236
|
118,652
|
118,627
|
-
|
||
Customers (3)
|
8,842
|
6,340
|
5,206
|
22
|
||
Penetration (4)
|
6.2%
|
5.3%
|
4.4%
|
n/a
|
||
Revenue Generating Units (7)
|
135,755
|
128,262
|
119,907
|
32,056
|
||
Total Fiber Miles
|
34,690
|
31,577
|
29,388
|
4,558
|
||
Fiber Route Miles (8)
|
1,985
|
1,389
|
1,294
|
403
|
|
1)
|
In March 2011, the Company transferred five properties from its Converged Services subsidiary to Shentel Cable. Operating results for these 5 properties had been included in discontinued operations in prior periods. The Company has reclassified their operating results to continuing operations for all prior periods, and the customer counts for prior periods have been revised to include customers at these properties. As of December 31, 2010, these properties included 233 video customers, 449 internet customers, and 14 voice customers. Customer counts for prior periods were not significantly different for these properties. The Company also increased the number of internet customers as of December 31, 2010 by 503 customers, due to a computational error. In July 2010, the Company acquired cable operations covering approximately 115 thousand video homes passed, 101 thousand high-speed internet available homes, and 85 thousand voice available homes. These systems served approximately 41 thousand video subscribers, 21 thousand high-speed internet subscribers, and 3 thousand voice subscribers. In December 2010, the Company acquired two small systems covering approximately 7 thousand video homes passed, approximately 3 thousand video customers and 1 thousand high-speed internet customers.
|
|
2)
|
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.
|
|
3)
|
Generally, a dwelling or commercial unit with one or more television sets connected to our distribution system counts as one video customer. Where services are provided on a bulk basis, such as to hotels and some multi-dwelling units, the revenue charged to the customer is divided by the rate for comparable service in the local market to determine the number of customer equivalents included in the customer counts shown above.
|
|
4)
|
Penetration is calculated by dividing the number of customers by the number of homes passed or available homes, as appropriate.
|
|
5)
|
Digital video customers are those who receive any level of video service via digital transmission. A dwelling with one or more digital set-top boxes counts as one digital video customer. Digital video penetration is calculated by dividing the number of digital video customers by total video customers.
|
|
6)
|
Homes and businesses are considered available (“available homes”) if we can connect them to our distribution system without further extending the transmission lines and if we offer the service in that area. Homes passed in Shenandoah County are excluded from available homes as we do not offer high-speed internet or voice services over our co-axial distribution network in this market.
|
|
7)
|
Revenue generating units are the sum of video, digital video, voice and high-speed internet customers. Consistent with industry practices, each digital video customer counts as two revenue generating units.
|
|
8)
|
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.
|
(in thousands) |
Three Months Ended
September 30,
|
Change
|
||||||||||||||
2011
|
2010
|
$ | % | |||||||||||||
|
||||||||||||||||
Segment operating revenues
|
||||||||||||||||
Service revenue
|
$ | 14,542 | $ | 10,663 | $ | 3,879 | 36.4 | |||||||||
Equipment and other revenue
|
2,076 | 1,308 | 768 | 58.7 | ||||||||||||
Total segment operating revenues
|
16,618 | 11,971 | 4,647 | 38.8 | ||||||||||||
Segment operating expenses
|
||||||||||||||||
Cost of goods and services, exclusive of depreciation and amortization shown separately below
|
12,082 | 8,318 | 3,764 | 45.3 | ||||||||||||
Selling, general and administrative, exclusive of depreciation and amortization shown separately below
|
5,271 | 6,200 | (929 | ) | (15.0 | ) | ||||||||||
Depreciation and amortization
|
5,692 | 3,746 | 1,946 | 51.9 | ||||||||||||
Total segment operating expenses
|
23,045 | 18,264 | 4,781 | 26.2 | ||||||||||||
Segment operating loss
|
$ | (6,427 | ) | $ | (6,293 | ) | $ | (134 | ) | 2.1 |
(in thousands)
|
Nine Months Ended
September 30,
|
Change
|
||||||||||||||
2011
|
2010
|
$ | % | |||||||||||||
|
||||||||||||||||
Segment operating revenues
|
||||||||||||||||
Service revenue
|
$ | 43,604 | $ | 17,955 | $ | 25,649 | 142.9 | |||||||||
Equipment and other revenue
|
6,379 | 2,103 | 4,276 | 203.3 | ||||||||||||
Total segment operating revenues
|
49,983 | 20,058 | 29,925 | 149.2 | ||||||||||||
Segment operating expenses
|
||||||||||||||||
Cost of goods and services, exclusive of depreciation and amortization shown separately below
|
35,441 | 16,152 | 19,289 | 119.4 | ||||||||||||
Selling, general and administrative, exclusive of depreciation and amortization shown separately below
|
14,134 | 9,957 | 4,177 | 42.0 | ||||||||||||
Depreciation and amortization
|
17,478 | 5,945 | 11,533 | 194.0 | ||||||||||||
Total segment operating expenses
|
67,053 | 32,054 | 34,999 | 109.2 | ||||||||||||
Segment operating loss
|
$ | (17,070 | ) | $ | (11,996 | ) | $ | (5,074 | ) | 42.3 |
Sept. 30,
|
Dec. 31,
|
Sept. 30,
|
Dec. 31,
|
|||||||||||||
2011
|
2010
|
2010
|
2009
|
|||||||||||||
Wireline Segment
|
||||||||||||||||
Telephone Access Lines
|
23,288 | 23,706 | 23,848 | 24,358 | ||||||||||||
Long Distance Subscribers
|
10,559 | 10,667 | 10,750 | 10,851 | ||||||||||||
DSL Subscribers
|
12,242 | 11,946 | 11,774 | 10,985 | ||||||||||||
Dial-up Internet Subscribers
|
1,543 | 2,190 | 2,403 | 3,359 | ||||||||||||
Total Fiber Miles (1)
|
76,749 | 71,118 | 69,253 | 53,511 | ||||||||||||
Fiber Route Miles
|
1,331 | 1,267 | 1,236 | 837 |
|
(1)
|
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.
|
(in thousands)
|
Three Months Ended
September 30,
|
Change
|
||||||||||||||
2011
|
2010
|
$ | % | |||||||||||||
Segment operating revenues
|
||||||||||||||||
Service revenue
|
$ | 4,081 | $ | 3,846 | $ | 235 | 6.1 | |||||||||
Access revenue
|
3,135 | 3,104 | 31 | 1.0 | ||||||||||||
Facilities lease revenue
|
4,520 | 3,542 | 978 | 27.6 | ||||||||||||
Equipment revenue
|
13 | 16 | (3 | ) | (18.8 | ) | ||||||||||
Other revenue
|
678 | 1,178 | (500 | ) | (42.4 | ) | ||||||||||
Total segment operating revenues
|
12,427 | 11,686 | 741 | 6.3 | ||||||||||||
Segment operating expenses
|
||||||||||||||||
Cost of goods and services, exclusive of depreciation and amortization shown separately below
|
4,887 | 4,318 | 569 | 13.2 | ||||||||||||
Selling, general and administrative, exclusive of depreciation and amortization shown separately below
|
1,891 | 1,828 | 63 | 3.4 | ||||||||||||
Depreciation and amortization
|
2,156 | 2,000 | 156 | 7.8 | ||||||||||||
Total segment operating expenses
|
8,934 | 8,146 | 788 | 9.7 | ||||||||||||
Gain on sale of directory
|
- | 4,000 | (4,000 | ) | (100.0 | ) | ||||||||||
Segment operating income
|
$ | 3,493 | $ | 7,540 | $ | (4,047 | ) | (53.7 | ) |
(in thousands)
|
Nine Months Ended
September 30,
|
Change
|
||||||||||||||
2011
|
2010
|
$ | % | |||||||||||||
Segment operating revenues
|
||||||||||||||||
Service revenue
|
$ | 12,057 | $ | 11,324 | $ | 733 | 6.5 | |||||||||
Access revenue
|
10,000 | 9,965 | 35 | 0.4 | ||||||||||||
Facilities lease revenue
|
12,238 | 10,647 | 1,591 | 14.9 | ||||||||||||
Equipment revenue
|
31 | 45 | (14 | ) | (31.1 | ) | ||||||||||
Other revenue
|
2,451 | 3,542 | (1,091 | ) | (30.8 | ) | ||||||||||
Total segment operating revenues
|
36,777 | 35,523 | 1,254 | 3.5 | ||||||||||||
Segment operating expenses
|
||||||||||||||||
Cost of goods and services, exclusive of depreciation and amortization shown separately below
|
14,238 | 13,075 | 1,163 | 8.9 | ||||||||||||
Selling, general and administrative, exclusive of depreciation and amortization shown separately below
|
5,558 | 6,994 | (1,436 | ) | (20.5 | ) | ||||||||||
Depreciation and amortization
|
6,260 | 5,860 | 400 | 6.8 | ||||||||||||
Total segment operating expenses
|
26,056 | 25,929 | 127 | 0.5 | ||||||||||||
Gain on sale of directory
|
- | 4,000 | (4,000 | ) | (100.0 | ) | ||||||||||
Segment operating income
|
$ | 10,721 | $ | 13,594 | $ | (2,873 | ) | (21.1 | ) |
|
·
|
it does not reflect capital expenditures;
|
|
·
|
the assets being depreciated and amortized will often have to be replaced in the future and adjusted OIBDA does not reflect cash requirements for such replacements;
|
|
·
|
it does not reflect costs associated with share-based awards exchanged for employee services;
|
|
·
|
it does not reflect interest expense necessary to service interest or principal payments on indebtedness;
|
|
·
|
it does not reflect expenses incurred for the payment of income taxes and other taxes; and
|
|
·
|
other companies, including companies in our industry, may calculate adjusted OIBDA differently than we do, limiting its usefulness as a comparative measure.
|
(in thousands)
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
||||||||||||||
2011
|
2010
|
2011
|
2010 | |||||||||||||
Adjusted OIBDA | $ | 22,231 | $ | 21,105 | $ | 66,510 | $ | 61,277 |
(in thousands)
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
|
|
|||||||||||||||
Operating income
|
$ | 9,170 | $ | 9,586 | $ | 24,255 | $ | 28,894 | ||||||||
Plus depreciation and amortization
|
13,774 | 12,202 | 42,155 | 28,927 | ||||||||||||
OIBDA
|
22,944 | 21,788 | 66,410 | 57,821 | ||||||||||||
Less gain on sale of directory
|
- | (4,000 | ) | - | (4,000 | ) | ||||||||||
Less (gain) loss on asset sales
|
(1,146 | ) | 7 | (1,035 | ) | (24 | ) | |||||||||
Plus pension settlement and curtailment expense
|
- | - | - | 3,781 | ||||||||||||
Plus business acquisition expenses
|
- | 3,050 | - | 3,160 | ||||||||||||
Plus share based compensation expense
|
433 | 260 | 1,335 | 539 | ||||||||||||
Adjusted OIBDA
|
$ | 22,231 | $ | 21,105 | $ | 66,510 | $ | 61,277 |
(in thousands)
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
|
|
|||||||||||||||
Operating income
|
$ | 12,926 | $ | 9,205 | $ | 33,353 | $ | 30,149 | ||||||||
Plus depreciation and amortization
|
5,868 | 6,401 | 18,242 | 16,927 | ||||||||||||
OIBDA
|
18,794 | 15,606 | 51,595 | 47,076 | ||||||||||||
Less (gain) loss on asset sales
|
(1,280 | ) | - | (1,264 | ) | (99 | ) | |||||||||
Plus pension settlement and curtailment expense
|
- | - | - | 1,014 | ||||||||||||
Plus share based compensation expense
|
121 | 83 | 371 | 183 | ||||||||||||
Adjusted OIBDA
|
$ | 17,635 | $ | 15,689 | $ | 50,702 | $ | 48,174 |
(in thousands)
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
|
|
|||||||||||||||
Operating income (loss)
|
$ | (6,427 | ) | $ | (6,293 | ) | $ | (17,070 | ) | $ | (11,996 | ) | ||||
Plus depreciation and amortization
|
5,692 | 3,746 | 17,478 | 5,945 | ||||||||||||
OIBDA
|
(735 | ) | (2,547 | ) | 408 | (6,051 | ) | |||||||||
Less (gain) loss on asset sales
|
12 | 4 | 87 | 6 | ||||||||||||
Plus pension settlement and curtailment expense
|
- | - | - | 597 | ||||||||||||
Plus business acquisition expenses
|
- | 3,050 | - | 3,160 | ||||||||||||
Plus share based compensation expense
|
164 | 73 | 499 | 129 | ||||||||||||
Adjusted OIBDA
|
$ | (559 | ) | $ | 580 | $ | 994 | $ | (2,159 | ) |
(in thousands)
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
|
|
|||||||||||||||
Operating income
|
$ | 3,493 | $ | 7,540 | $ | 10,721 | $ | 13,594 | ||||||||
Plus depreciation and amortization
|
2,156 | 2,000 | 6,260 | 5,860 | ||||||||||||
OIBDA
|
5,649 | 9,540 | 16,981 | 19,454 | ||||||||||||
Less gain on sale of directory
|
- | (4,000 | ) | - | (4,000 | ) | ||||||||||
Less (gain) loss on asset sales
|
122 | 3 | 142 | 69 | ||||||||||||
Plus pension settlement and curtailment expense
|
- | - | - | 1,960 | ||||||||||||
Plus share based compensation expense
|
96 | 64 | 296 | 142 | ||||||||||||
Adjusted OIBDA
|
$ | 5,867 | $ | 5,607 | $ | 17,419 | $ | 17,625 |
Actual
|
Covenant Requirement at
September 30, 2011
|
|||
Total Leverage Ratio
|
2.16 |
2.50 or Lower
|
||
Debt Service Coverage Ratio
|
4.35 |
2.25 or Higher
|
||
Equity to Assets Ratio
|
42.4% |
35.0% or Higher
|
||
Fixed Charge Coverage Ratio
|
0.82 |
0.75 or Higher
|
||
Minimum Liquidity Balance
|
$70.2M |
$15.0M or Higher
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1A.
|
Risk Factors
|
ITEM 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Number of Shares
Purchased
|
Average Price Paid per Share
|
|||||||
July 1 to July 31
|
1 | $ | 17.02 | |||||
August 1 to August 31
|
2 | $ | 13.64 | |||||
September 1 to September 30
|
2 | $ | 12.46 | |||||
Total
|
5 | $ | 13.91 |
ITEM 6.
|
Exhibits
|
10.49
|
Letter Agreement modifying section 10.2.7.2 of Addendum X dated March 15, 2010 to Sprint PCS Management Agreement by and among Sprint Spectrum L.P., WirelessCo, L.P., APC PCS, LLC, PhillieCo, L.P., Sprint Communications Company L.P. and Shenandoah Personal Communications Company.
|
10.50
|
Fourth Amendment to the Credit Agreement dated as of July 30, 2010, among Shenandoah Telecommunications Company, CoBank, ACB, Branch Banking and Trust Company, Wells Fargo Bank, N.A., and other Lenders.
|
31.1
|
Certification of President and Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
|
31.2
|
Certification of Vice President - Finance and Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
|
32
|
Certifications pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. § 1350.
|
(101) Formatted in XBRL (Extensible Business Reporting Language)
|
101.INS
|
XBRL Instance Document
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
SHENANDOAH TELECOMMUNICATIONS COMPANY | |||
(Registrant) | |||
/s/Adele M. Skolits | |||
Adele M. Skolits | |||
Vice President - Finance and Chief Financial Officer | |||
Date: November 8, 2011 |
Exhibit No.
|
Exhibit
|
|
10.49
|
Letter Agreement modifying section 10.2.7.2 of Addendum X dated March 15, 2010 to Sprint PCS Management Agreement by and among Sprint Spectrum L.P., WirelessCo, L.P., APC PCS, LLC, PhillieCo, L.P., Sprint Communications Company L.P. and Shenandoah Personal Communications Company.
|
|
10.50
|
Fourth Amendment to the Credit Agreement dated as of July 30, 2010, among Shenandoah Telecommunications Company, CoBank, ACB, Branch Banking and Trust Company, Wells Fargo Bank, N.A., and other Lenders.
|
|
Certification of President and Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
|
|
Certification of Vice President - Finance and Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
|
|
Certifications pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. 1350.
|
|
(101) | Formatted in XBRL (Extensible Business Reporting Language) |
|
101.INS | XBRL Instance Document |
|
101.SCH | XBRL Taxonomy Extension Schema Document |
|
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document |
|
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document |
|
101.LAB | XBRL Taxonomy Extension Label Linkbase Document |
|
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
Sprint Nextel
|
Jeff D. Hallock
|
|
6480 Sprint Parkway
|
VP, National Channels
|
|
KSOPHMO510-5A275
|
||
Overland Park, KS 66251
|
||
Phone: (913) 735-1051 Fax 913-523-0021
|
SPRINT SPECTRUM L.P. | |||
By: | /s/ Jeff Hallock | ||
Name: | Jeff Hallock | ||
Title: | VP, National Channels | ||
WIRELESSCO, L.P. | |||
By: | /s/ Jeff Hallock | ||
Name: | Jeff Hallock | ||
Title: | VP, National Channels | ||
APC PCS, LLC | |||
By: | /s/ Jeff Hallock | ||
Name: | Jeff Hallock | ||
Title: | VP, National Channels | ||
PHILLIECO, L.P. | |||
By: | /s/ Jeff Hallock | ||
Name: | Jeff Hallock | ||
Title: | VP, National Channels | ||
SPRINT COMMUNICATIONS COMPANY L.P. | |||
By: | /s/ Jeff Hallock | ||
Name: | Jeff Hallock | ||
Title: | VP, National Channels | ||
NEXTEL COMMUNICATIONS, INC. | |||
By: | /s/ Jeff Hallock | ||
Name: | Jeff Hallock | ||
Title: | VP, National Channels |
SHENANDOAH PERSONAL COMMUNICATIONS COMPANY | |||
By: | |||
Name: | |||
Title: |
Date
|
Covenant
|
Closing Date through June 30, 2011
|
0.80:1.00
|
July 1, 2011 through December 31, 2011
|
0.75:1.00
|
January 1, 2012 through December 31, 2012
|
0.80:1.00
|
January 1, 2013 through December 31, 2013
|
0.90:1.00
|
January 1, 2014 and thereafter
|
1.00:1.00
|
I,
|
Christopher E. French, certify that:
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Shenandoah Telecommunications Company;
|
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:
|
|
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
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):
|
|
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/S/ CHRISTOPHER E. FRENCH | |||
Christopher E. French, President and Chief Executive Officer | |||
Date: November 8, 2011 |
|
I, Adele M. Skolits, certify that:
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Shenandoah Telecommunications Company;
|
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:
|
|
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
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):
|
|
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ADELE M. SKOLITS | |||
Adele M. Skolits, Vice President - Finance and Chief Financial Officer | |||
Date: November 8, 2011 |
/S/CHRISTOPHER E. FRENCH | |||
Christopher E. French
|
|||
President and Chief Executive Officer
|
|||
November 8, 2011 | |||
/S/ADELE M. SKOLITS | |||
Adele M. Skolits | |||
Vice President - Finance and | |||
Chief Financial Officer | |||
November 8, 2011 |
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) In Thousands | Sep. 30, 2011 | Dec. 31, 2010 |
---|---|---|
Current Assets | ||
Investments at fair value | $ 2,041 | $ 2,287 |
Document And Entity Information (USD $) | 9 Months Ended | ||
---|---|---|---|
Sep. 30, 2011 | Oct. 21, 2011 | Jun. 30, 2010 | |
Entity Registrant Name | SHENANDOAH TELECOMMUNICATIONS CO/VA/ | ||
Entity Central Index Key | 0000354963 | ||
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 | Accelerated Filer | ||
Entity Public Float | $ 397,000,000 | ||
Entity Common Stock, Shares Outstanding | 23,786,193 | ||
Document Fiscal Year Focus | 2011 | ||
Document Fiscal Period Focus | Q3 | ||
Document Type | 10-Q | ||
Amendment Flag | false | ||
Document Period End Date | Sep. 30, 2011 |
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Earnings per share | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Earnings per share [Abstract] | |
Earnings per share | 4. Earnings per share Basic net income (loss) per share was computed on the weighted average number of shares outstanding. Diluted net income (loss) 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 511 thousand and 383 thousand shares and options outstanding at September 30, 2011 and 2010, respectively, 363 thousand and 213 thousand were anti-dilutive, respectively. These 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. |
Long-Term Debt | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt | 9. Long-Term Debt As of September 30, 2011 and December 31, 2010, the Company's outstanding long-term debt consisted of the following:
As of September 30, 2011, the Company was in compliance with the covenants in its Credit Agreement. |
Financial Instruments | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Financial instruments reported at fair value [Abstract] | |
Financial Instruments | 6. 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, and long-term debt. Due to the relatively short time frame to maturity of the Company's fixed rate debt, fair value approximates its carrying value. The Company measures its interest rate swap at fair value based on information provided by the counterparty and recognizes it as a liability on the Company's condensed consolidated balance sheet. Changes in the fair value of the swap are recognized in interest expense, as the Company did not designate the swap agreement as a cash flow hedge for accounting purposes. |
Segment Information | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 makers. The Company has three reportable segments, which the Company operates and manages as strategic business units organized by lines of business: (1) Wireless, (2) Wireline, and (3) Cable TV. A fourth segment, Other, primarily includes Shenandoah Telecommunications Company, the parent holding company as well as certain general and administrative costs historically charged to Converged Services that cannot be allocated to discontinued operations. 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 of Sprint Nextel. 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 Wireline segment provides regulated and unregulated voice services, dial-up and DSL internet access, and long distance access services throughout Shenandoah County and portions of northwestern Augusta County, Virginia, and leases fiber optic facilities throughout the northern Shenandoah Valley of Virginia, northern Virginia and adjacent areas along the Interstate 81 corridor, including portions of West Virginia and Maryland. The Cable TV segment provides video, internet and voice services in Virginia, West Virginia and Maryland. It includes the operations acquired from JetBroadBand, LLC, since July 30, 2010, and the operations acquired from Suddenlink since November 30, 2010. The financial information below includes revenues and related expenses billed by one segment of the Company to another segment within the Company. These internal revenues and related expenses are eliminated in order to arrive at the consolidated total revenues and expenses as shown below. All individual segment financial results include these internal revenues and expenses, which are only eliminated at the consolidated level. Selected financial data for each segment is as follows:
A reconciliation of the total of the reportable segments' operating income to consolidated income from continuing operations before income taxes is as follows:
The Company's assets by segment are as follows:
|
Investments carried at fair value | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Investments carried at fair value [Abstract] | |
Investments carried at fair value | 5. Investments Carried at Fair Value Investments include $2.0 million and $2.3 million of investments carried at fair value as of September 30, 2011 and December 31, 2010, respectively, consisting of equity, bond and money market mutual funds. These investments were acquired under a rabbi trust arrangement related to a non-qualified supplemental retirement plan maintained by the Company. During the nine months ended September 30, 2011, the Company recognized $27 thousand in net losses on dispositions of investments, recognized $17 thousand in dividend and interest income from investments, and recognized net unrealized losses of $236 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. |
Basis of Presentation | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Basis of Presentation [Abstract] | |
Basis of Presentation | 1. Basis of Presentation The interim condensed 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 consolidated financial statements and related notes in the Company's Annual Report on Form 10-K for the year ended December 31, 2010. The balance sheet information at December 31, 2010 was derived from the audited December 31, 2010 consolidated balance sheet. Operating revenues and income from operations for any interim period are not necessarily indicative of results that may be expected for the entire year. |
Discontinued operations | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Discontinued operations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued operations | 2. Discontinued Operations In September 2008, the Company announced its intention to sell its Converged Services operation, and the related assets and liabilities were reclassified as held for sale in the consolidated balance sheet and the historical operating results were reclassified as discontinued operations. Depreciation and amortization on long-lived assets was also discontinued. During 2009 and 2010, the Company determined that the fair value of Converged Services had declined. Accordingly, the Company recorded an impairment loss of $17.5 million ($10.7 million, net of taxes) as of March 31, 2009, and recorded an additional impairment loss of $1.9 million ($1.1 million, net of taxes) as of December 31, 2010, to reduce the carrying value of these assets to their estimated fair value less cost to sell. Enhancements to the physical assets since the impairment recorded at December 31, 2010, have been capitalized and immediately expensed during 2011, in the amount of $0.2 million and $0.4 million in the three months and nine months ended September 30, 2011, respectively. During the first quarter of 2011, the Company made the decision to transfer service contracts and related equipment for five Converged Services' properties that were within the Shentel Cable franchised cable footprint and could be serviced by the Company's nearby cable headends. These properties, with an aggregate net book value of approximately $0.4 million, were transferred to Shentel Cable and have been reclassified from discontinued operations for all prior periods. The Company recorded an adjustment to depreciation expense of $0.1 million to reduce the carrying value of the assets transferred to the lower of their carrying value net of the impairment charge or the carrying value as if depreciation had been recorded on these assets at all times. During the second quarter of 2011, the Company sold service contracts and related equipment for seven Converged Services' properties to a third-party purchaser, receiving cash proceeds of $0.9 million (with an additional $0.1 million in proceeds placed in escrow for twelve months). The total proceeds approximated the carrying value of the assets sold. During the third quarter of 2011, the Company sold service contracts and related equipment for two Converged Services' properties to third party purchasers, receiving cash proceeds of $0.3 million. The total proceeds approximated the carrying value of the assets sold. At September 30, 2011, negotiations with potential purchasers continue. Based upon indications of interest made by potential buyers in recent months, the Company has determined that the fair value of Converged Services has declined. Accordingly, the Company recorded an impairment loss of $0.6 million ($0.4 million, net of taxes) as of September 30, 2011, to reduce the carrying value of these assets to their estimated fair value less cost to sell. Assets and liabilities held for sale consisted of the following:
Discontinued operations included the following amounts of operating revenue and income (loss) before income taxes:
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Subsequent Events | 9 Months Ended |
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Sep. 30, 2011 | |
Subsequent Events [Abstract] | |
Subsequent Events | 10. Subsequent Events On October 17, 2011, the Company's Board of Directors declared a dividend of $0.33 per share payable on December 1, 2011, to shareholders of record as of November 9, 2011. The Company expects to pay out approximately $7.8 million excluding the effect of dividend reinvestments. In November 2011, the Company executed two asset purchase agreements to sell certain Converged Services properties to two buyers for a total of $4.7 million. The Company closed on the sale of some of these properties and received $2.2 million on November 7, 2011. Two additional closings are expected in the next 60 to 90 days following receipt of consents necessary for the transfer of the properties. The Company continues to negotiate with purchasers on the remaining Converged Services properties. |
Property, Plant and Equipment | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment | 3. Property, Plant and Equipment Property, plant and equipment consisted of the following:
During the third quarter of 2011, the Company traded in certain PCS equipment for equipment with additional capacity and received credits of $2.2 million against the purchase price of the new equipment. The Company recognized a gain of $1.4 million on the trade-in. |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Parenthetical) (USD $) In Thousands | 3 Months Ended | 9 Months Ended | ||
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Sep. 30, 2011 | Sep. 30, 2010 | Sep. 30, 2011 | Sep. 30, 2010 | |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||
Earnings (loss) from discontinued operations tax (expenses) benefit | $ 392 | $ 109 | $ 436 | $ (41) |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME (Parenthetical) (Retained Earnings [Member], USD $) | 12 Months Ended |
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Dec. 31, 2010 | |
Retained Earnings [Member] | |
Dividends declared per share (in dollars per share) | $ 0.33 |
Income taxes | 9 Months Ended |
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Sep. 30, 2011 | |
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 2008 are no longer subject to examination. The Company is under audit in the state of Maryland for the 2007, 2008 and 2009 tax years. No other state or federal income tax audits were in process as of September 30, 2011. |