UNITED STATES OF AMERICA
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2019 | |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from__________ to __________ | |
Commission File No.: 000-09881
SHENANDOAH TELECOMMUNICATIONS COMPANY
(Exact name of registrant as specified in its charter)
VIRGINIA | 54-1162807 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
500 Shentel Way, Edinburg, Virginia 22824
(Address of principal executive offices) (Zip Code)
(540) 984-4141
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
Common Stock (No Par Value) | SHEN | NASDAQ Global Select Market | |
(Title of Class) | (Trading Symbol) | (Name of Exchange on which Registered) | (The number of shares of the registrant’s common stock outstanding on April 30, 2019) |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☑ | Accelerated filer ☐ | Non-accelerated filer ☐ | Smaller reporting company☐ | Emerging growth company☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☑
SHENANDOAH TELECOMMUNICATIONS COMPANY
INDEX
Page Numbers | ||||
PART I. | FINANCIAL INFORMATION | |||
Item 1. | Financial Statements | |||
- | ||||
Item 2. | - | |||
Item 3. | ||||
Item 4. | ||||
PART II. | OTHER INFORMATION | |||
Item 1A. | ||||
Item 2. | ||||
Item 6. | ||||
SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES | ||||||||
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(in thousands) | ||||||||
March 31, 2019 | December 31, 2018 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | $ | ||||||
Accounts receivable, net of allowance for doubtful accounts of $464 and $534, respectively | ||||||||
Income taxes receivable | ||||||||
Inventory, net of allowances of $81 and $113, respectively | ||||||||
Prepaid expenses and other | ||||||||
Total current assets | ||||||||
Investments | ||||||||
Property, plant and equipment, net | ||||||||
Intangible assets, net | ||||||||
Goodwill | ||||||||
Operating lease right-of-use assets | ||||||||
Deferred charges and other assets | ||||||||
Total assets | $ | $ | ||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Current maturities of long-term debt, net of unamortized loan fees | $ | $ | ||||||
Accounts payable | ||||||||
Advanced billings and customer deposits | ||||||||
Accrued compensation | ||||||||
Income taxes payable | ||||||||
Current operating lease liabilities | ||||||||
Accrued liabilities and other | ||||||||
Total current liabilities | ||||||||
Long-term debt, less current maturities, net of unamortized loan fees | ||||||||
Other long-term liabilities: | ||||||||
Deferred income taxes | ||||||||
Deferred lease | — | |||||||
Asset retirement obligations | ||||||||
Retirement plan obligations | ||||||||
Noncurrent operating lease liabilities | ||||||||
Other liabilities | ||||||||
Total other long-term liabilities | ||||||||
Shareholders’ equity: | ||||||||
Common stock, no par value, authorized 96,000; 49,844 and 49,630 issued and outstanding at March 31, 2019 and December 31, 2018, respectively | ||||||||
Additional paid in capital | ||||||||
Retained earnings | ||||||||
Accumulated other comprehensive income (loss), net of taxes | ||||||||
Total shareholders’ equity | ||||||||
Total liabilities and shareholders’ equity | $ | $ | ||||||
See accompanying notes to unaudited condensed consolidated financial statements.
3
SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES | |||||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) | |||||||||||
(in thousands, except per share amounts) | |||||||||||
Three Months Ended March 31, | |||||||||||
Operating revenue: | 2019 | 2018 | |||||||||
Service revenue and other | $ | $ | |||||||||
Equipment revenue | |||||||||||
Total operating revenue | |||||||||||
Operating expenses: | |||||||||||
Cost of services | |||||||||||
Cost of goods sold | |||||||||||
Selling, general and administrative | |||||||||||
Depreciation and amortization | |||||||||||
Total operating expenses | |||||||||||
Operating income (loss) | |||||||||||
Other income (expense): | |||||||||||
Interest expense | ( | ) | ( | ) | |||||||
Gain (loss) on investments, net | ( | ) | |||||||||
Non-operating income (loss), net | |||||||||||
Income (loss) before income taxes | |||||||||||
Income tax expense (benefit) | |||||||||||
Net income (loss) | |||||||||||
Other comprehensive income (loss): | |||||||||||
Unrealized gain (loss) on interest rate hedge, net of tax | ( | ) | |||||||||
Comprehensive income (loss) | $ | $ | |||||||||
Net income (loss) per share, basic and diluted: | |||||||||||
Basic net income (loss) per share | $ | $ | |||||||||
Diluted net income (loss) per share | $ | $ | |||||||||
Weighted average shares outstanding, basic | |||||||||||
Weighted average shares outstanding, diluted | |||||||||||
See accompanying notes to unaudited condensed consolidated financial statements.
4
SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES | |||||||||||||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY | |||||||||||||||||||
(in thousands, except per share amounts) | |||||||||||||||||||
Shares of Common Stock (no par value) | Additional Paid in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total | |||||||||||||||
Balance, December 31, 2017 | $ | $ | $ | $ | |||||||||||||||
Change in Accounting Principle - Adoption of ASU 2014-09 | — | — | — | ||||||||||||||||
Net income (loss) | — | — | — | ||||||||||||||||
Other comprehensive gain (loss), net of tax | — | — | — | ||||||||||||||||
Stock based compensation | — | — | |||||||||||||||||
Stock options exercised | — | — | |||||||||||||||||
Common stock issued | — | — | — | ||||||||||||||||
Shares retired for settlement of employee taxes upon issuance of vested equity awards | ( | ) | ( | ) | — | — | ( | ) | |||||||||||
Common stock issued to acquire non-controlling interest in nTelos | — | — | — | ||||||||||||||||
Balance, March 31, 2018 | $ | $ | $ | $ | |||||||||||||||
Balance, December 31, 2018 | $ | $ | $ | $ | |||||||||||||||
Change in Accounting Principle - Adoption of ASU 2016-02, Leases | — | ||||||||||||||||||
Net income (loss) | — | — | — | ||||||||||||||||
Other comprehensive gain (loss), net of tax | — | — | — | ( | ) | ( | ) | ||||||||||||
Stock based compensation | — | — | |||||||||||||||||
Stock options exercised | — | — | |||||||||||||||||
Common stock issued | — | — | — | ||||||||||||||||
Shares retired for settlement of employee taxes upon issuance of vested equity awards | ( | ) | ( | ) | — | — | ( | ) | |||||||||||
Common stock issued to acquire non-controlling interest in nTelos | — | — | — | ||||||||||||||||
Balance, March 31, 2019 | $ | $ | $ | $ | |||||||||||||||
See accompanying notes to unaudited condensed consolidated financial statements.
5
SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES | ||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(in thousands) | ||||||||
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Cash flows from operating activities: | ||||||||
Net income (loss) | $ | $ | ||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
Depreciation | ||||||||
Amortization | ||||||||
Bad debt expense | ||||||||
Stock based compensation expense, net of amount capitalized | ||||||||
Waived management fee | ||||||||
Deferred income taxes | ( | ) | ( | ) | ||||
(Gain) loss on investments | ( | ) | ||||||
Net (gain) loss from patronage and equity investments | ( | ) | ( | ) | ||||
Amortization of long-term debt issuance costs | ||||||||
Net benefit from retirement plans | ( | ) | ||||||
Accrued interest and other | ||||||||
Changes in assets and liabilities: | ||||||||
Accounts receivable | ( | ) | ||||||
Inventory, net | ( | ) | ( | ) | ||||
Current income taxes | ||||||||
Operating lease right-of-use assets | — | |||||||
Other assets | ( | ) | ( | ) | ||||
Accounts payable | ||||||||
Lease liabilities | ( | ) | — | |||||
Deferred lease | ||||||||
Other deferrals and accruals | ( | ) | ( | ) | ||||
Net cash provided by (used in) operating activities | ||||||||
Cash flows from investing activities: | ||||||||
Capital expenditures | ( | ) | ( | ) | ||||
Cash disbursed for acquisitions | ( | ) | ( | ) | ||||
Proceeds from sale of assets | ||||||||
Cash distributions (contributions) from investments and other | ( | ) | ||||||
Net cash provided by (used in) investing activities | ( | ) | ( | ) | ||||
Cash flows from financing activities: | ||||||||
Principal payments on long-term debt | ( | ) | ( | ) | ||||
Proceeds from revolving credit facility borrowings | ||||||||
Principal payments on revolving credit facility | ( | ) | ||||||
Proceeds from exercises of stock options | ||||||||
Taxes paid for equity award issuances | ( | ) | ( | ) | ||||
Net cash provided by (used in) financing activities | ( | ) | ( | ) | ||||
Net increase (decrease) in cash and cash equivalents | ( | ) | ( | ) | ||||
Cash and cash equivalents, beginning of period | ||||||||
Cash and cash equivalents, end of period | $ | $ | ||||||
See accompanying notes to unaudited condensed consolidated financial statements.
6
SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 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 in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial reporting and as required by Rule 10-01 of Regulation S-X. Accordingly, the unaudited condensed consolidated financial statements may not include all of the information and notes required by GAAP for audited financial statements. The information contained herein should be read in conjunction with the audited financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2018.
There have been no developments related to recently issued accounting standards, including the expected dates of adoption and estimated effects on the Company's unaudited condensed consolidated financial statements and note disclosures, from those disclosed in the Company's 2018 Annual Report on Form 10-K, that would be expected to impact the Company except for the following:
The Company adopted ASU No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220), as of January 1, 2019. The Company elected not to reclassify stranded income tax effects from accumulated other comprehensive income (OCI) to retained earnings and has implemented this election as its accounting policy as of January 1, 2019. The Company utilizes the portfolio approach as its policy to release the income tax effects from accumulated OCI as the entire portfolio is liquidated, sold or extinguished.
Note 2. Leases
The Company leases various cell sites, warehouses, retail stores, and office facilities for use in our business. These agreements include fixed rental payments as well as variable rental payments, such as those based on relevant inflation indices. The accounting lease term includes optional renewal periods that we are reasonably certain to exercise based on our assessment of relevant contractual and economic factors. The related lease payments are discounted at lease commencement using the Company's incremental borrowing rate in order to measure the lease liability and ROU asset.
The incremental borrowing rate is determined using a portfolio approach based on the rate of interest that the Company would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term. The Company uses the observable unsecured borrowing rate and risk-adjusts that rate to approximate a collateralized rate. Under the new lease standard, leases are remeasured upon the occurrence of certain events or modifications.
Adoption of the new lease standard did not materially impact the Company's consolidated net earnings, cash flows, liquidity or loan covenants.
7
(in thousands) | December 31, 2018 As Previously Reported | Effect of the Adoption of ASC Topic 842 (Leases) | January 1, 2019 As Adjusted | |||||||||
Assets | ||||||||||||
Prepaid expenses and other | $ | $ | ( | ) | $ | |||||||
Property, plant and equipment, net | ||||||||||||
Operating lease right-of-use assets | ||||||||||||
Intangible assets, net | ( | ) | ||||||||||
Liabilities | ||||||||||||
Current operating lease liabilities | ||||||||||||
Accrued liabilities and other | ( | ) | ||||||||||
Deferred Lease | ( | ) | ||||||||||
Noncurrent operating lease liabilities | ||||||||||||
Other liabilities | ||||||||||||
In addition to recognizing the operating lease liabilities and right-of-use assets, Topic 842 also reclassified prepaid and deferred rent balances, off-market leases, and lease incentives into the right-of-use assets.
(in thousands) | Three Months Ended March 31, 2019 | |||
Sublease income from operating leases | $ | |||
Operating lease expense | $ | |||
Amortization of lease assets | ||||
Interest on lease liabilities | ||||
Subtotal finance lease cost | ||||
Net lease expense | $ | |||
(in thousands) | Three Months Ended March 31, 2019 | |||
Operating cash flows from leases | $ | |||
Leased assets obtained in exchange for new operating lease liabilities | ||||
8
March 31, 2019 | |||
Weighted-average remaining lease term (years) | |||
Operating leases | |||
Finance leases | |||
Weighted-average discount rate | |||
Operating leases | % | ||
Finance leases | % | ||
(in thousands) | Operating Leases | Finance Leases | Total | |||||||||
2019 | $ | $ | $ | |||||||||
2020 | ||||||||||||
2021 | ||||||||||||
2022 | ||||||||||||
2023 | ||||||||||||
2024 and thereafter | ||||||||||||
Total lease payments | ||||||||||||
Less: Interest | ||||||||||||
Present value of lease liabilities | $ | $ | $ | |||||||||
The Company's finance lease liabilities are presented in the accrued liabilities and other and the other liabilities lines of the condensed consolidated balance sheet. The related finance lease assets are included in the property, plant and equipment line.
Our commitments under leases existing as of December 31, 2018 were approximately $55.1 million for the year ending December 31, 2019, $104.4 million in total for the years ending December 31, 2020 and 2021, $97.6 million in total for the years ending December 31, 2022 and 2023 and $168.5 million in total for years thereafter.
The Company is also the lessor on agreements to lease assets such as collocation space on cell towers and dedicated fiber-optic strands to third parties. These agreements were accounted for as operating leases both before and after adoption of the new lease standard. The new lease standard did not have a significant impact on the recognition of revenue associated with these agreements. The following table summarizes the total minimum rental receipts under lease agreements at March 31, 2019:
(in thousands) | Operating Leases | ||||
2019 | $ | ||||
2020 | |||||
2021 | |||||
2022 | |||||
2023 | |||||
2024 and thereafter | |||||
Total sublease income | $ | ||||
Note 3. Revenue from Contracts with Customers
9
earned was as follows:
Three Months Ended March 31, 2019 | ||||||||||||||||
(in thousands) | Wireless | Cable | Wireline | Consolidated | ||||||||||||
Wireless service | $ | $ | $ | $ | ||||||||||||
Equipment | ||||||||||||||||
Business, residential and enterprise | ||||||||||||||||
Tower and other | ||||||||||||||||
Total revenue | ||||||||||||||||
Internal revenue | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Total operating revenue | $ | $ | $ | $ | ||||||||||||
Three Months Ended March 31, 2018 | ||||||||||||||||
(in thousands) | Wireless | Cable | Wireline | Consolidated | ||||||||||||
Wireless service | $ | $ | $ | $ | ||||||||||||
Equipment | ||||||||||||||||
Business, residential and enterprise | ||||||||||||||||
Tower and other | ||||||||||||||||
Total revenue | ||||||||||||||||
Internal revenue | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Total operating revenue | $ | $ | $ | $ | ||||||||||||
The majority of the Company's revenue is earned through providing network access to Sprint under the affiliate agreement. Wireless service revenue is variable based on billed revenue to Sprint’s subscribers in the Company's affiliate area, less applicable fees retained by Sprint.
The Company's revenue related to Sprint’s postpaid customers is the amount that Sprint bills its postpaid subscribers, reduced by customer credits, write-offs of receivables, and 8 % management and 8.6 % service fees. The Company is also charged for the costs of subsidized handsets sold through Sprint’s national channels as well as commissions paid by Sprint to third-party resellers in the Company's service territory.
The Company's revenue related to Sprint’s prepaid customers is the amount that Sprint bills its prepaid subscribers, reduced by costs to acquire and support the customers, based on national averages for Sprint’s prepaid programs, and a 6 % management fee.
The Company considers Sprint, rather than Sprint's subscribers, to be the customer and the Company's performance obligation is to provide Sprint a series of continuous network access services. The reimbursement to Sprint for the costs of handsets sold through Sprint’s national channels, as well as commissions paid by Sprint to third-party resellers in our service territory represent consideration payable to a customer. These reimbursements are initially recorded as a contract asset and are subsequently recognized as a reduction of revenue over the expected benefit period between 21 and 53 months.
On January 1, 2018, the Company recorded a wireless contract asset of approximately $51.1 million. As of December 31, 2018, the wireless contract asset balance was $65.7 million. During the three months ended March 31, 2019, payments that increased the wireless contract asset balance totaled $18.2 million and amortization reflected as a reduction of revenue totaled approximately $13.5 million. The wireless contract asset balance as of March 31, 2019 was approximately $70.4 million.
Wireless equipment
The Company owns and operates Sprint-branded retail stores within its geographic territory from which the Company sells equipment, primarily wireless handsets, and service to Sprint subscribers. The Company's equipment is predominantly sold to subscribers through Sprint's equipment financing plans. Under the equipment financing plans, Sprint purchases the equipment from the Company and resells the equipment to their subscribers. The Company is the principal in these equipment financing transactions, as it controls and bears the risk of ownership of the inventory prior to sale, and accordingly, revenue and handset costs are recorded on a gross basis, and the corresponding cost of the equipment is recorded separately to cost of goods sold.
10
Business, residential and enterprise
The Company earns revenue in the Cable and Wireline segments from business, residential, and enterprise customers where the performance obligations are to provide cable and telephone network services, sell and lease equipment and wiring services, and lease fiber-optic cable capacity. The Company's arrangements are generally composed of contracts that are cancellable at the customer’s discretion without penalty at any time. As there are multiple performance obligations in these arrangements, the Company recognizes revenue based on the standalone selling price of each distinct good or service. The Company generally recognizes this revenue over time as customers simultaneously receive and consume the benefits of the service, with the exception of equipment sales and home wiring which are recognized as revenue at a point in time when control transfers and when installation is complete, respectively.
Installation fees are allocated to services and are recognized ratably over the longer of the contract term or the period the unrecognized portion of the fee remains material to the contract, typically 10 and 11 months for Cable and Wireline customers, respectively. Additionally, the Company incurs commission and installation costs related to in-house employees and third-party vendors which are capitalized and amortized over the expected benefit period which is approximately 44 months and 72 months for Cable and Wireline, respectively.
Tower / Other
Tower revenue consists primarily of tower space leases accounted for under Topic 842, Leases, and Other revenue includes network access-related charges for service provided to customers across the segments.
Future performance obligations
On March 31, 2019, the Company had approximately $3.5 million allocated to unsatisfied performance obligations, which is exclusive of contracts with original expected duration of one year or less. The Company expects to recognize approximately $0.6 million of this amount as revenue during the remainder of 2019, $0.7 million in 2020, an additional $0.7 million by 2021 and the balance thereafter.
Contract acquisition costs and costs to fulfill contracts
Capitalized contract costs represent contract fulfillment costs and contract acquisition costs which include commissions and installation costs in our Cable and Wireline segments. Capitalized contract costs are amortized on a straight-line basis over the contract term plus expected renewals. The Company elected to apply the practical expedient to expense contract acquisition costs when incurred, if the amortization period would be twelve months or less. The amortization of these costs is included in cost of services, and selling, general and administrative expenses. Amortized and capitalized costs for Cable and Wireline contracts are as follows:
Three Months Ended March 31, | ||||||||
(in thousands) | 2019 | 2018 | ||||||
Prepaid expenses and other | $ | $ | ||||||
Deferred charges and other assets | ||||||||
Total capitalized contract costs | $ | $ | ||||||
Amortization of contract costs | $ | $ | ||||||
Note 4. Acquisitions
Big Sandy
On February 28, 2019, the Company completed its preliminary valuation for the acquisition of the assets of Big Sandy Broadband, Inc. ("Big Sandy") for $10 million and recorded $4.6 million of property, plant and equipment; $2.8 million of subscriber relationships; and $2.6 million of goodwill which is reported in the Cable segment and was accounted for as a business combination under ASC 805, Business Combinations. The estimated useful lives of the acquired property, plant and equipment were approximately 2.5 years to 11 years and the estimated useful lives for subscriber relationships were 11 years at the time of the acquisition. Big Sandy was a provider of cable television, telephone and high speed internet services. The Company's investment will allow the Cable segment to expand its footprint into the adjacent markets of eastern Kentucky. Our preliminary allocation of the acquisition price is based on our preliminary estimate of fair value for each of the acquired assets and liabilities. These
11
Note 5. Customer Concentration
Significant Contractual Relationship
In 1999, the Company executed a Management Agreement (the “Agreement”) with Sprint whereby the Company committed to construct and operate a PCS network using CDMA air interface technology. The Agreement has been amended numerous times. Under the amended Agreement, the Company is the exclusive PCS Affiliate of Sprint providing wireless mobility communications network products and services on the 800 MHz, 1900 MHz and 2.5 GHz spectrum ranges in its territory across a multi-state area covering large portions of central and western Virginia, south-central Pennsylvania, West Virginia, and portions of Maryland, North Carolina, Kentucky, and Ohio. Effective February 1, 2018, the Company amended its Agreement with Sprint to expand its wireless service area to include certain areas in Kentucky, Pennsylvania, Virginia and West Virginia.
Note 6. Earnings (Loss) Per Share ("EPS")
Basic EPS was computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted EPS was computed under the treasury stock method by dividing net income (loss) by the sum of the weighted average number of shares of common stock outstanding and potentially dilutive securities outstanding during the period under the treasury stock method. Potentially dilutive securities include stock options and restricted stock units and shares that the Company is contractually obligated to issue in the future.
Three Months Ended March 31, | ||||||||
(in thousands, except per share amounts) | 2019 | 2018 | ||||||
Calculation of net income (loss) per share: | ||||||||
Net income (loss) | $ | $ | ||||||
Basic weighted average shares outstanding | ||||||||
Basic net income (loss) per share | $ | $ | ||||||
Effect of stock options outstanding: | ||||||||
Basic weighted average shares outstanding | ||||||||
Effect from dilutive shares and options outstanding | ||||||||
Diluted weighted average shares outstanding | ||||||||
Diluted net income (loss) per share | $ | $ | ||||||
The computation of diluted EPS does not include certain unvested awards, on a weighted average basis, because their inclusion would have an anti-dilutive effect on EPS. The awards excluded because of their anti-dilutive effect were as follows:
Three Months Ended March 31, | ||||||
(in thousands) | 2019 | 2018 | ||||
Awards excluded from the computation of diluted net income (loss) per share because their inclusion would have been anti-dilutive | ||||||
12
Note 7. Investments
(in thousands) | March 31, 2019 | December 31, 2018 | |||||
Domestic equity funds | $ | $ | |||||
International equity funds | |||||||
Total investments carried at fair value | |||||||
CoBank | |||||||
Equity in other telecommunications partners | |||||||
Total investments carried at cost | |||||||
Other | |||||||
Total equity method investments | |||||||
Total investments | $ | $ | |||||
Note 8. Property, Plant and Equipment
(in thousands) | Estimated Useful Lives | March 31, 2019 | December 31, 2018 | |||||||
Land | $ | $ | ||||||||
Buildings and structures | 10 - 40 years | |||||||||
Cable and wire | 4 - 40 years | |||||||||
Equipment and software | 2 - 17 years | |||||||||
Plant in service | ||||||||||
Plant under construction | ||||||||||
Total property, plant and equipment | ||||||||||
Less accumulated amortization and depreciation | ||||||||||
Property, plant and equipment, net | $ | $ | ||||||||
Note 9. Goodwill and Other Intangible Assets
(in thousands) | March 31, 2019 | December 31, 2018 | |||||
Wireless | $ | $ | |||||
Cable | |||||||
Wireline | |||||||
Total Goodwill | $ | $ | |||||
13
March 31, 2019 | December 31, 2018 | ||||||||||||||||||||||
(in thousands) | Gross Carrying Amount | Accumulated Amortization and Other | Net | Gross Carrying Amount | Accumulated Amortization and Other | Net | |||||||||||||||||
Non-amortizing intangibles: | |||||||||||||||||||||||
Cable franchise rights | $ | $ | — | $ | $ | $ | — | $ | |||||||||||||||
Railroad crossing rights | — | — | |||||||||||||||||||||
Total non-amortizing intangibles | — | — | |||||||||||||||||||||
Finite-lived intangibles: | |||||||||||||||||||||||
Affiliate contract expansion - Wireless | ( | ) | ( | ) | |||||||||||||||||||
Favorable leases - Wireless | ( | ) | |||||||||||||||||||||
Acquired subscribers - Cable | ( | ) | ( | ) | |||||||||||||||||||
Other intangibles | ( | ) | ( | ) | |||||||||||||||||||
Total finite-lived intangibles | ( | ) | ( | ) | |||||||||||||||||||
Total intangible assets | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | |||||||||||||
Note 10. Derivatives and Hedging
(in thousands) | March 31, 2019 | December 31, 2018 | ||||||
Balance sheet location of derivative financial instruments: | ||||||||
Prepaid expenses and other | $ | $ | ||||||
Deferred charges and other assets, net | ||||||||
Total derivatives designated as hedging instruments | $ | $ | ||||||
Three Months Ended March 31, 2019 | |||||||||||
(in thousands) | Gains (Losses) on Cash Flow Hedges | Income Tax (Expense) Benefit | Accumulated Other Comprehensive Income (Loss), net of taxes | ||||||||
Balance as of December 31, 2018 | $ | $ | ( | ) | $ | ||||||
Net change in unrealized gain (loss) | ( | ) | ( | ) | |||||||
Amounts reclassified from accumulated other comprehensive income to interest expense | ( | ) | ( | ) | |||||||
Net current period other comprehensive income (loss) | ( | ) | ( | ) | |||||||
Balance as of March 31, 2019 | $ | $ | ( | ) | $ | ||||||
14
Note 11. Other Assets and Accrued Liabilities
(in thousands) | March 31, 2019 | December 31, 2018 | ||||||
Prepaid rent | $ | $ | ||||||
Prepaid maintenance expenses | ||||||||
Interest rate swaps | ||||||||
Contract asset | ||||||||
Other | ||||||||
Prepaid expenses and other | $ | $ | ||||||