Segment Information

9 Months Ended

Sep. 30, 2015

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) 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 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 Pennsylvania.

Three months ended September 30, 2015

(in thousands)

	Wireless		Cable			Wireline		Other			Eliminations			Consolidated Totals
External revenues
Service revenues	$	47,793	$	22,284		$	4,904	$	-		$	-		$	74,981
Other		2,734		1,882			5,615		-			-			10,231
Total external revenues		50,527		24,166			10,519		-			-			85,212
Internal revenues		1,109		251			6,759		-			(8,119	)		-
Total operating revenues		51,636		24,417			17,278		-			(8,119	)		85,212
Operating expenses
Costs of goods and services, exclusive of depreciation and amortization shown separately below		15,572		14,124			8,212		-			(7,338	)		30,570
Selling, general and administrative, exclusive of depreciation and amortization shown separately below		9,027		4,948			1,688		5,553			(781	)		20,435
Depreciation and amortization		9,644		5,948			3,404		122			-			19,118
Total operating expenses		34,243		25,020			13,304		5,675			(8,119	)		70,123
Operating income (loss)	$	17,393	$	(603	)	$	3,974	$	(5,675	)	$	-		$	15,089

Three months ended September 30, 2014

(in thousands)

	Wireless		Cable (1)			Wireline (1)		Other			Eliminations			Consolidated Totals
External revenues
Service revenues	$	48,013	$	19,173		$	4,740	$	-		$	-		$	71,926
Other		3,083		1,799			5,460		-			-			10,342
Total external revenues		51,096		20,972			10,200		-			-			82,268
Internal revenues		1,099		32			5,724		-			(6,855	)		-
Total operating revenues		52,195		21,004			15,924		-			(6,855	)		82,268
Operating expenses
Costs of goods and services, exclusive of depreciation and amortization shown separately below		18,322		14,157			7,078		-			(6,227	)		33,330
Selling, general and administrative, exclusive of depreciation and amortization shown separately below		8,645		5,107			1,533		3,406			(628	)		18,063
Depreciation and amortization		7,895		5,864			2,875		97			-			16,731
Total operating expenses		34,862		25,128			11,486		3,503			(6,855	)		68,124
Operating income (loss)	$	17,333	$	(4,124	)	$	4,438	$	(3,503	)	$	-		$	14,144

Nine months ended September 30, 2015

(in thousands)

	Wireless		Cable			Wireline		Other			Eliminations			Consolidated Totals
External revenues
Service revenues	$	144,917	$	65,802		$	14,543	$	-		$	-		$	225,262
Other		8,611		5,495			15,834		-			-			29,940
Total external revenues		153,528		71,297			30,377		-			-			255,202
Internal revenues		3,319		585			18,950		-			(22,854	)		-
Total operating revenues		156,847		71,882			49,327		-			(22,854	)		255,202
Operating expenses
Costs of goods and services, exclusive of depreciation and amortization shown separately below		47,661		41,378			23,224		-			(20,722	)		91,541
Selling, general and administrative, exclusive of depreciation and amortization shown separately below		26,996		14,924			4,923		13,466			(2,132	)		58,177
Depreciation and amortization		26,089		17,286			9,411		333			-			53,119
Total operating expenses		100,746		73,588			37,558		13,799			(22,854	)		202,837
Operating income (loss)	$	56,101	$	(1,706	)	$	11,769	$	(13,799	)	$	-		$	52,365

Nine months ended September 30, 2014

(in thousands)

	Wireless		Cable (1)			Wireline (1)		Other			Eliminations			Consolidated Totals
External revenues
Service revenues	$	143,112	$	57,028		$	14,255	$	-		$	-		$	214,395
Other		8,653		5,202			15,886		-			-			29,741
Total external revenues		151,765		62,230			30,141		-			-			244,136
Internal revenues		3,283		91			17,202		-			(20,576	)		-
Total operating revenues		155,048		62,321			47,343		-			(20,576	)		244,136
Operating expenses
Costs of goods and services, exclusive of depreciation and amortization shown separately below		55,455		38,969			22,297		-			(18,751	)		97,970
Selling, general and administrative, exclusive of depreciation and amortization shown separately below		24,734		14,487			4,270		10,170			(1,825	)		51,836
Depreciation and amortization		23,162		17,035			8,225		292			-			48,714
Total operating expenses		103,351		70,491			34,792		10,462			(20,576	)		198,520
Operating income (loss)	$	51,697	$	(8,170	)	$	12,551	$	(10,462	)	$	-		$	45,616

(1) Prior year figures have been recast to conform to current year presentation.

A reconciliation of the total of the reportable segments’ operating income to consolidated income before taxes is as follows:

	Three Months Ended September 30,
(in thousands)	2015			2014
Total consolidated operating income	$	15,089		$	14,144
Interest expense		(1,808	)		(2,007	)
Non-operating income, net		180			648
Income before taxes	$	13,461		$	12,785

	Nine Months Ended September 30,
	2015			2014
Total consolidated operating income	$	52,365		$	45,616
Interest expense		(5,663	)		(6,119	)
Non-operating income (expense), net		1,253			1,831
Income before taxes	$	47,955		$	41,328

The Company’s assets by segment are as follows:

(in thousands)	September 30, 2015			December 31, 2014
Wireless	$	243,962		$	218,887
Cable		207,674			201,232
Wireline		98,975			98,081
Other		426,091			446,028
Combined totals		976,702			964,228
Inter-segment eliminations		(356,458	)		(344,986	)
Consolidated totals	$	620,244		$	619,242

During the third quarter of 2015, the Company discovered a programming logic error in its fixed assets system used to calculate depreciation expense.  As a result, the increased depreciation expense by $2.6 million in the third quarter of 2015 ($2.0 million for the nine months ended September 30, 2015) and increased accumulated depreciation by $2.6 million.  Most of the out-of-period depreciation expense correction affected the Company's Wireless segment, by $1.9 million and $1.6 million for the three and nine months ended September 30, 2015, respectively.