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Item 9A. Controls and Procedures

2023-02-22 compared with 2022-02-28 · 415 added, 458 removed, 570 unchanged (60% of the section changed)

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Our Chief Executive Officer, Chief Financial Officer, and Principal Accounting Officer (the certifying officers) have conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of December 31, 2022.

Our certifying officers concluded that, as a result of the material weaknesses in internal control over financial reporting described below, our disclosure controls and procedures were not effective as of December 31, 2021.

Per Rules 13a-15(e) and 15d-15(e), the term disclosure controls and procedures means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act (15 U.S.C.

78a et seq.) is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the issuer’s management, including its Chief Executive Officer and Chief Financial Officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

In light of the material weaknesses described below, management performed additional analysis and other procedures to ensure that our consolidated financial statements were prepared in accordance with U.S.

generally accepted accounting principles (GAAP).

Accordingly, management believes that the consolidated financial statements included in this Annual Report on Form 10-K fairly present, in all material respects, our financial position, results of operations, and cash flows as of and for the periods presented, in accordance with U.S.

Our certifying officers concluded that our disclosure controls and procedures were effective as of December 31, 2022.

Changes in Internal Control over Financial Reporting

As disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020, the Company is pursuing a multi-year, phased approach to remediate its material weaknesses.

There have been no changes in the Company’s internal control over financial reporting that occurred during the quarter ended December 31, 2021 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Management’s Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act).

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

In order to evaluate the effectiveness of internal control over financial reporting, under the direction of our certifying officers, we conducted an assessment using the criteria established in Internal Control - Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this assessment, our certifying officers concluded that the Company’s internal control over financial reporting was not effective as of December 31, 2021 due to a material weakness in our control environment.

Unusually high employee turnover and multiple priorities, including the need to recalibrate control activities for our smaller continuing operations, upgrade our lease accounting and enterprise resource planning (ERP) systems, and continue our remediation efforts placed strain on our resources.

As a result, the Company did not have effective information and communication processes and did not have effective control activities related to i) the design and operation of process-level controls over the accounting for purchases (current liabilities and operating expenses), property, plant, and equipment and related depreciation expense, and leases, and ii) reaching and documenting appropriate historical accounting conclusions related to capitalization of fulfillment costs, fees associated with leases, and cable replacement.

As a result of the deficiencies described above, there were immaterial misstatements, some of which were corrected during 2021, and an immaterial error restatement of the 2020 and 2019 consolidated financial statements.

The deficiencies described above created a reasonable possibility that a material misstatement to the consolidated financial statements would not be prevented or detected on a timely basis and therefore we concluded that the deficiencies represent material weaknesses in the Company’s internal control over financial reporting and our internal control over financial reporting was not effective as of December 31, 2021.

Our independent registered public accounting firm, KPMG LLP, who audited the consolidated financial statements included in this Annual Report on Form 10-K, issued an adverse opinion on the effectiveness of the Company’s internal control over financial reporting.

KPMG LLP’s report appears on page F-3 of this Annual Report on Form 10-K.

Management’s Remediation Plan

The Company is committed to completing its remediation efforts during 2022.

Our 2021 accomplishments and 2022 plans are summarized below.

• We designed and began to configure new ERP and lease accounting systems that are scheduled to be implemented during 2022 along with newly designed controls and processes over purchasing (current liabilities and operating expenses), property, plant, and equipment and related depreciation expense, and leases.

• We will continue to re-evaluate previously adopted accounting policies to ensure they remain appropriate in light of our smaller continuing operations, and

• We will hire, retain and train individuals with the appropriate skills and experience related to technical accounting, internal control over financial reporting, and the design and implementation of information technology solutions to ensure we meet our remediation goals.

We will report regularly to the Audit Committee on the progress and results of the remediation plan, including the identification, status, and resolution of internal control deficiencies

As disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021, the Company pursued a multi-year, phased approach to remediate its material weaknesses.

During the quarter ended December 31, 2022, the Company completed implementation of management's remediation plan.

Our 2022 accomplishments are summarized below.

• We formed a Company wide, cross functional task force of employees, charged with implementing the remediation plan with regular reports on progress provided to the Principal Executive Officer and Principal Financial Officer.

• We completed an implementation of a new enterprise resource planning (“ERP”) system and a lease accounting system.

In the process of deploying these new systems, we designed and implemented new, or otherwise enhanced existing, internal control activities to complement operational and administrative process changes required to support the functionality of our new ERP and lease accounting systems.

• We completed a reevaluation of our accounting policies including those established in conjunction with management’s remediation plan as reported in Item 9A of our 2021 Form 10-K.

As a result of this effort, we did not identify any new significant financial reporting risks that required implementation or enhancement of new or existing policies or key internal control activities.

• Employee incentives and professional development opportunities were thoughtfully designed and drove employee engagement, retention, and focus on our remediation plan.

Employee turnover did not have a significant impact on our remediation efforts.

Internal Control over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting.

The Company’s internal control system was designed to provide reasonable assurance as to the integrity and reliability of the published financial statements.

The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2022.

In making this assessment, the Company’s management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework (2013 framework).

Based on its assessment, the Company’s management believes that, as of December 31, 2022, the Company’s internal control over financial reporting is effective based on those criteria.

RSM US LLP, an independent registered public accounting firm, which audited the Company’s consolidated financial statements included in this Annual Report, has issued an attestation report on the Company’s internal control over financial reporting containing the disclosure required by this Item.

OTHER INFORMATION

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

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Information required by Item 12 is incorporated herein by reference to the 2023 proxy statement appearing under the caption “Security Ownership.”

The Company awards stock options to its employees meeting certain eligibility requirements under its shareholder-approved Company Stock Incentive Plan, referred to as the 2014 Equity Incentive Plan.

The Company grants stock awards to its employees meeting certain eligibility requirements under its shareholder-approved Company Stock Incentive Plan, referred to as the 2014 Equity Incentive Plan.

The 2014 Equity Incentive Plan authorizes grants of up to an additional 4.2 million shares over a ten-year period beginning in 2014.

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(2) Financial Statement Schedule

The exhibits required to be filed by Item 601 of Regulation S-K are listed in the Exhibit Index directly following Item 16.

Form 10-K Summary, within this Annual Report on Form 10-K.

The exhibits required to be filed by Item 601 of Regulation S-K are listed in the Exhibit Index directly following the Financial Statements beginning on page F-1, within this Annual Report on Form 10-K.

FORM 10-K SUMMARY

SHENANDOAH TELECOMMUNICATIONS COMPANY

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Index to the Consolidated 2022 Financial Statements

Reports of Independent Registered Public Accounting Firm

Reports of Independent Registered Public Accounting Firm as of and for the Year Ended December 31, 2022

Report of Independent Registered Public Accounting Firm as of and for the Years Ended December 31, 202 1 and 2020

Consolidated Financial Statements

Consolidated Balance Shee ts as of December 31, 2022 and 2021

Consolidated Statements of Comprehensive Income for the years ended December 31, 2021, 2020 and 2019 F- 7

Consolidated Statements of Comprehensive (Loss) Income for the years ended December 31, 2022, 2021 and 2020

Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2022, 2021 and 2020

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Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors

Shenandoah Telecommunications Company:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Shenandoah Telecommunications Company and subsidiaries (the Company) as of December 31, 2021 and 2020, the related consolidated statements of comprehensive income, shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2021, and the related notes and financial statement schedule II - Valuation and Qualifying Accounts (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2021, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 28, 2022 expressed an adverse opinion on the effectiveness of the Company’s internal control over financial reporting.

To the Shareholders and the Board of Directors Shenandoah Telecommunications Company

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Shenandoah Telecommunications Company and its subsidiaries (the Company) as of December 31, 2022, the related consolidated statements of comprehensive (loss) income, shareholders’ equity, and cash flows, for the year then ended, and the related notes to the consolidated financial statements and Schedule II – Valuation and Qualifying Accounts (collectively, the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for the year ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013, and our report dated February 22, 2023 expressed an unqualified opinion on the effectiveness of the Company's internal control over financial reporting.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's financial statements based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Determination of costs capitalized into property, plant, and equipment

As discussed in Notes 2 and 6 to the consolidated financial statements, the property, plant, and equipment, net balance as of December 31, 2021 was $554.2 million.

The determination to capitalize, rather than expense, costs increases operating income and net income.

We identified the determination of costs capitalized into property, plant, and equipment as a critical audit matter.

The nature of evidence provided, such as third-party invoices, can lack specificity of the item acquired or activity performed and required complex judgment to determine that the costs qualified for capitalization.

The following are the primary procedures we performed to address this critical audit matter.

For a sample of costs capitalized, we inspected the related invoice(s).

For those invoices lacking specificity, we inspected additional support, such as project documentation or contracts.

In certain instances, we also involved a professional with specialized skills and knowledge in the telecommunications industry, who assisted in evaluating the nature of the project and related costs.

The combination of these procedures was used to independently assess the Company’s determination that such costs qualified for capitalization.

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

Determining the Fair Value of Cable Franchise Rights

As described in Notes 2 and 6 to the financial statements, the Company’s indefinite-lived cable franchise rights are $64.3 million as of December 31, 2022.

The Company evaluates the recoverability of its cable franchise rights annually on October 1, or more frequently whenever events or substantive changes in circumstances indicate that it is more likely than not that the cable franchise rights’ carrying value exceeds its estimated fair value.

The Company performed a quantitative analysis which involved estimating the fair value of the cable franchise rights.

Management used a Greenfield Model, which is a valuation method under the income approach.

Under this approach, fair value is based on estimated after-tax discounted future cash flows, assuming an initial hypothetical start-up operation maturing into an average performing operation with similar rights.

The valuation technique used by management included theoretical assumptions of the costs that would be incurred to start-up operations when the only owned asset is the cable franchise right and the associated revenues, operating margins and capital expenditures expected to be incurred in the start-up years, which are inherently judgmental.

We identified the cable franchise rights impairment assessment as a critical audit matter because of the significant estimates and assumptions management used in the impairment analysis.

Auditing management’s judgments used in the impairment assessment regarding forecasts of future revenue, operating margins, capital expenditures, and the discount rate to be applied involved a high degree of auditor judgment and increased audit effort, including the use of our valuation specialist.

Our audit procedures related to the Company’s cable franchise rights impairment assessment included the following, among others:

• Obtaining an understanding of the relevant controls related to the Company’s cable franchise rights impairment analysis, and tested such controls for design and operating effectiveness, including controls over management’s review of the significant assumptions described above.

• Testing management’s process for developing the forecasts by (i) understanding management’s process for developing the forecasted revenue growth rates, forecasted margins, and forecasted capital expenditures during the start-up and growth phases, (ii) testing the completeness, accuracy, and relevance of the underlying data used in the forecast, and (iii) comparing these assumptions to historical results and to forecasted information included in external industry reports;

• Utilizing our valuation professionals to assist in (i) assessing the appropriateness of the valuation model method, and (ii) evaluating the reasonableness of the Company’s discount rate.

/s/ RSM US LLP

We have served as the Company's auditor since 2022.

McLean, Virginia

Lauderdale, Florida

February 22, 2023

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors

Shenandoah Telecommunications Company:

Opinion on Internal Control Over Financial Reporting

We have audited Shenandoah Telecommunications Company and subsidiaries' (the Company) internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, because of the effect of the material weaknesses, described below, on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2021 and 2020, the related consolidated statements of comprehensive income, shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2021, and the related notes and financial statement schedule II - Valuation and Qualifying Accounts (collectively, the consolidated financial statements), and our report dated February 28, 2022 expressed an unqualified opinion on those consolidated financial statements.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The following material weaknesses have been identified and included in management’s assessment:

The Company did not have an effective control environment due to insufficient resources.

As a result, the Company was unable to maintain effective information and communication processes and did not have effective control activities related to:

i) the design and operation of process-level controls over the accounting for purchases (current liabilities and operating expenses), property, plant, and equipment and related depreciation expense, and leases, and ii) reaching and documenting appropriate historical accounting conclusions related to the capitalization of contract fulfillment costs, upfront fees associated with lease arrangements, and cable repairs and maintenance.

The material weaknesses were considered in determining the nature, timing, and extent of audit tests applied in our audit of the 2021 consolidated financial statements, and this report does not affect our report on those consolidated financial statements.

To the Shareholders and the Board of Directors Shenandoah Telecommunications Company

Opinion on the Internal Control Over Financial Reporting

We have audited Shenandoah Telecommunications Company’s (the Company) internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

In our opinion, Shenandoah Telecommunications Company (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on the COSO criteria.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December 31, 2022, the related consolidated statements of comprehensive (loss) income, shareholders’ equity, and cash flows for the year ended December 31, 2022, and the related notes to the consolidated financial statements and Schedule II – Valuation and Qualifying Accounts, and our report dated February 22, 2023 expressed an unqualified opinion thereon.

Basis for Opinion

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Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

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Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

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A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit

preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ RSM US LLP

Lauderdale, Florida

February 22, 2023

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors

Shenandoah Telecommunications Company:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheet of Shenandoah Telecommunications Company and subsidiaries (the Company) as of December 31, 2021, the related consolidated statements of comprehensive (loss) income, shareholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2021, and the related notes and financial statement schedule II – Valuation and Qualifying Accounts (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2021, in conformity with U.S.

generally accepted accounting principles.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

We served as the Company’s auditor from 2001 to 2022.

McLean, Virginia

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Accrued compensation 9,616 9,653

Income taxes payable — 6,951

Current operating lease liabilities 2,829 3,318

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Total current liabilities 96,421 67,290

Long-term debt, less current maturities, net of unamortized loan fees 74,306 —

Other long-term liabilities:

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Retained earnings 580,554 592,924

Accumulated other comprehensive loss, net of taxes — ( 4,706 )

Total shareholders’ equity 638,007 642,275

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SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

Years Ended December 31, 2022, 2021 and 2020

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Operating expenses:

Cost of services 102,299 89,657 83,572

Cost of services exclusive of depreciation and amortization 107,546 102,299 89,657

Selling, general and administrative 92,392 82,451 85,016

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Operating loss ( 7,958 ) ( 2,430 ) ( 2,601 )

Other income, net 8,665 3,187 3,280

Income before income taxes 6,235 586 1,938

Income tax (benefit) expense ( 1,694 ) ( 990 ) 6

Income from continuing operations 7,929 1,576 1,932

Other (expense) income:

Other (expense) income, net ( 1,348 ) 8,665 3,187

(Loss) income from continuing operations before income taxes ( 9,306 ) 6,235 586

Income tax benefit ( 927 ) ( 1,694 ) ( 990 )

(Loss) income from continuing operations ( 8,379 ) 7,929 1,576

Discontinued operations:

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Total income from discontinued operations, net of tax — 990,902 124,097

Net income 998,831 125,673 55,500

Other comprehensive income:

Net gains (losses) on interest rate swaps, net of tax 4,706 ( 5,014 ) ( 7,972 )

Comprehensive income $ 1,003,537 $ 120,659 $ 47,528

Net income per share, basic and diluted:

Basic - Income from continuing operations $ 0.16 $ 0.03 $ 0.04

Net (loss) income ( 8,379 ) 998,831 125,673

Other comprehensive income (loss):

Unrealized income (loss) on interest rate hedge, net of tax — 4,706 ( 5,014 )

Comprehensive (loss) income $ ( 8,379 ) $ 1,003,537 $ 120,659

Net (loss) income per share, basic and diluted:

Basic - (Loss) income from continuing operations $ ( 0.17 ) $ 0.16 $ 0.03

Basic - Income from discontinued operations, net of tax $ — $ 19.81 $ 2.49

Basic net income per share $ 19.97 $ 2.52 $ 1.11

Diluted - Income from continuing operations $ 0.16 $ 0.03 $ 0.04

Basic net (loss) income per share $ ( 0.17 ) $ 19.97 $ 2.52

Diluted - (Loss) income from continuing operations $ ( 0.17 ) $ 0.16 $ 0.03

Diluted - Income from discontinued operations, net of tax $ — $ 19.76 $ 2.48

Diluted net income per share $ 19.92 $ 2.51 $ 1.11

Diluted net (loss) income per share $ ( 0.17 ) $ 19.92 $ 2.51

Weighted average shares outstanding, basic 50,155 50,026 49,901

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Years Ended December 31, 2022, 2021 and 2020

(in thousands, except per share amounts)

(in thousands)

Shares of Common Stock (no par value) Additional Paid in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total

Balance, December 31, 2019 49,671 42,110 425,717 308 468,135

Immaterial correction of accumulated error (Note 1) ( 3,838 ) ( 3,838 )

Balance, December 31, 2018 (adjusted) 49,630 47,456 384,658 8,280 440,394

Net income — — 125,673 — 125,673

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Dividends reinvested in common stock — ( 2 ) — — ( 2 )

Share repurchases ( 200 ) ( 7,231 ) — — ( 7,231 )

Stock-based compensation 156 6,833 — — 6,833

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Common stock issued 1 31 — — 31

Shares retired for settlement of employee taxes upon issuance of vested equity awards ( 62 ) ( 2,911 ) — — ( 2,911 )

Annual dividend reinvestment 12 526 — — 526

Shares surrendered for settlement of employee taxes upon issuance of vested equity awards ( 48 ) ( 2,217 ) — — ( 2,217 )

Common stock issued to acquire non-controlling interest in nTelos 76 — — — —

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Net income — — 998,831 — 998,831

Net loss on interest rate swaps, net of tax — — — ( 5,014 ) ( 5,014 )

Net gain on interest rate swaps, net of tax — — — 4,706 4,706

Dividends declared — — ( 940,347 ) — ( 940,347 )

Dividends reinvested in common stock — ( 2 ) — — ( 2 )

Stock-based compensation 133 3,661 — — 3,661

Stock options exercised — 36 — — 36

Common stock issued 1 31 — — 31

Annual dividend reinvestment 12 526 — — 526

Shares retired for settlement of employee taxes upon issuance of vested equity awards ( 48 ) ( 2,217 ) — — ( 2,217 )

Common stock issued to acquire non-controlling interest in nTelos 76 — — — —

Shares surrendered for settlement of employee taxes upon issuance of vested equity awards ( 36 ) ( 1,627 ) — — ( 1,627 )

Balance, December 31, 2021 49,965 49,351 592,924 — 642,275

Net income — — 998,831 — 998,831

Net gain on interest rate swaps, net of tax — — — 4,706 4,706

Net loss — — ( 8,379 ) — ( 8,379 )

Dividends declared — — ( 3,991 ) — ( 3,991 )

Stock-based compensation 194 9,178 — — 9,178

Shares retired for settlement of employee taxes upon issuance of vested equity awards ( 36 ) ( 1,627 ) — — ( 1,627 )

Shares surrendered for settlement of employee taxes upon issuance of vested equity awards ( 49 ) ( 1,076 ) — — ( 1,076 )

Balance, December 31, 2022 50,110 $ 57,453 $ 580,554 $ — $ 638,007

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Cash flows from operating activities:

Net income $ 998,831 $ 125,673 $ 55,500

Net (loss) income $ ( 8,379 ) $ 998,831 $ 125,673

Income from discontinued operations, net of tax — 990,902 124,097

Income from continuing operations 7,929 1,576 1,932

(Loss) income from continuing operations ( 8,379 ) 7,929 1,576

Adjustments to reconcile net income to net cash provided by operating activities:

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Impairment expense 5,241 5,986 —

Gain from patronage and investments and other 481 ( 1,311 ) ( 4,769 )

Other, net ( 824 ) 481 ( 1,311 )

Changes in assets and liabilities:

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Net cash provided by operating activities - continuing operations 74,895 63,453 53,359

Net cash (used) provided by operating activities - discontinued operations ( 314,387 ) 249,508 216,816

Net cash (used) provided by operating activities ( 250,934 ) 302,867 259,145

Net cash (used in) provided by operating activities - discontinued operations — ( 314,387 ) 249,508

Net cash provided by (used in) operating activities 74,895 ( 250,934 ) 302,867

Cash flows from investing activities:

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Cash disbursed for acquisitions — — ( 1,890 )

Cash disbursed for deposit on FCC spectrum leases — ( 16,118 ) ( 16,742 )

Refund received (cash disbursed) for deposit on FCC spectrum leases 3,996 — ( 16,118 )

Proceeds from sale of assets and other 1,434 366 370

Net cash used in investing activities - continuing operations ( 184,179 ) ( 159,735 ) ( 138,088 )

Net cash provided (used) in investing activities - discontinued operations 1,944,089 ( 17,500 ) ( 71,656 )

Net cash provided (used) in investing activities 1,784,354 ( 155,588 ) ( 165,334 )

Net cash provided by (used in) investing activities - discontinued operations — 1,944,089 ( 17,500 )

Net cash (used in) provided by investing activities ( 184,179 ) 1,784,354 ( 155,588 )

Cash flows from financing activities:

Proceeds from term loan borrowings 75,000 — —

Payments for debt issuance costs — ( 841 ) —

Dividends paid, net of dividends reinvested ( 3,991 ) ( 940,256 ) ( 16,424 )

Share repurchases — — ( 7,231 )

Taxes paid for equity award issuances ( 1,076 ) ( 1,627 ) ( 2,217 )

Payments for financing arrangements and other ( 932 ) ( 1,193 ) ( 769 )

Net cash used in financing activities - continuing operations ( 943,917 ) ( 19,410 ) ( 24,048 )

Net cash provided by (used in) financing activities - continuing operations 69,001 ( 943,917 ) ( 19,410 )

Net cash used in financing activities - discontinued operations — ( 700,556 ) ( 34,123 )

Net cash used in financing activities ( 1,644,473 ) ( 53,533 ) ( 77,246 )

Net cash provided by (used in) financing activities 69,001 ( 1,644,473 ) ( 53,533 )

Net (decrease) increase in cash and cash equivalents ( 40,283 ) ( 111,053 ) 93,746

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Nature of Operations

Shenandoah Telecommunications Company and its subsidiaries (collectively, the “Company”) provide broadband data, video and voice services to residential and commercial customers in portions of Virginia, West Virginia, Maryland, Pennsylvania and Kentucky, via fiber optic, hybrid fiber coaxial cable, and fixed wireless networks.

Shenandoah Telecommunications Company and its subsidiaries (collectively, “Shentel”, “we”, “our”, “us”, or the “Company”) provide broadband data, video and voice services to residential and commercial customers in portions of Virginia, West Virginia, Maryland, Pennsylvania and Kentucky, via fiber optic and hybrid fiber coaxial cable networks.

We also lease dark fiber and provide Ethernet and Wavelength fiber optic services to enterprise and wholesale customers throughout the entirety of our service area.

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Our Tower segment owns 222 cell towers and leases colocation space on those towers to wireless communications providers, refer to Note 14, Segment Reporting , for additional information.

Revision of Prior Period Financial Statements

Immaterial correction of accumulated error

During 2021, the Company determined that an error existed in our previously issued financial statements related to the capitalization of labor costs associated with customer installation activities at existing service locations for the Broadband segment.

These activities were incorrectly recognized as capitalized contract fulfillment costs since the adoption of Accounting Standards Codification 606, Revenue from contracts with customers, (“ASC 606”) on January 1, 2018.

The costs should have been expensed according to application of historical accounting policy in place prior to the adoption of ASC 606, and pursuant to industry specific guidance ASC 922 Entertainment – Cable Television.

The error was evaluated under the U.S.

Securities and Exchange Commission's ("SEC's") authoritative guidance on materiality and the quantification of the effect of prior period misstatements on the Company’s financial statements.

Although the Company has determined such error to be immaterial to its prior annual and interim financial statements, the cumulative effect of the error would be material if corrected in the current year.

Therefore, the Company revised its historical financial statements to properly reflect the historical accounting policy elected pursuant to ASC 922.

The cumulative impact of such error, relative to earnings, for the period prior to 2019 was insignificant.

As of and for the Year Ended

December 31, 2020

($ in thousands) Pre-Adjustment Error Correction Post-Adjustment

Consolidated Balance Sheet:

Prepaid expenses and other $ 9,631 $ ( 2,109 ) $ 7,522

Deferred charges and other assets 11,650 ( 5,202 ) 6,448

Deferred income taxes 150,652 ( 1,968 ) 148,684

Retained earnings 539,783 ( 5,343 ) 534,440

Consolidated Statement of Comprehensive Income:

Cost of services 88,203 1,454 89,657

Income before income taxes 2,040 ( 1,454 ) 586

Income tax (benefit) expense ( 586 ) ( 404 ) ( 990 )

Income from continuing operations 2,626 ( 1,050 ) 1,576

Net income 126,723 ( 1,050 ) 125,673

Comprehensive income 121,709 ( 1,050 ) 120,659

Net income per share, basic and diluted:

Basic - Income from continuing operations $ 0.05 $ ( 0.02 ) $ 0.03

Basic - Net income per share $ 2.54 $ ( 0.02 ) $ 2.52

Diluted - Income from continuing operations $ 0.05 $ ( 0.02 ) $ 0.03

Diluted - Net income per share $ 2.53 $ ( 0.02 ) $ 2.51

As of and for the Year Ended

December 31, 2019

($ in thousands) Pre-Adjustment Error Correction Post-Adjustment

Consolidated Balance Sheet:

Prepaid expenses and other $ 11,178 $ ( 2,510 ) $ 8,668

Deferred charges and other assets 9,267 ( 3,349 ) 5,918

Deferred income taxes 137,567 ( 1,565 ) 136,002

Retained earnings, beginning of year 388,496 ( 3,838 ) 384,658

Retained earnings, end of year 430,010 ( 4,294 ) 425,716

Consolidated Statement of Comprehensive Income:

Cost of services 82,949 623 83,572

Income before income taxes 2,561 ( 623 ) 1,938

Income tax (benefit) expense 173 ( 167 ) 6

Income from continuing operations 2,388 ( 456 ) 1,932

Net income 55,956 ( 456 ) 55,500

Comprehensive income 47,984 ( 456 ) 47,528

Net income per share, basic and diluted:

Basic - Income from continuing operations $ 0.05 $ ( 0.01 ) $ 0.04

Basic - Net income per share $ 1.12 $ ( 0.01 ) $ 1.11

Diluted - Income from continuing operations $ 0.05 $ ( 0.01 ) $ 0.04

Diluted - Net income per share $ 1.12 $ ( 0.01 ) $ 1.11

Summary of Significant Accounting Policies

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Use of estimates:

The preparation of financial statements in conformity with accounting principles generally accepted in the United States, or the U.S., requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States, requires us to make estimates and assumptions that affect reported amounts of assets, liabilities, revenues and expenses and related disclosures.

Due to the inherent uncertainty involved in making estimates, actual results to be reported in future periods could differ from our estimates.

Revenue recognition:

The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from contracts with customers, (“ASC 606”).

Our Broadband segment provides broadband data, video and voice services to residential, small and midsize businesses (“SMB”) and commercial customers in portions of Virginia, West Virginia, Maryland, Pennsylvania and Kentucky, via fiber optic and hybrid fiber coaxial cable networks.

The Broadband segment also provides voice and DSL telephone services to customers in Virginia’s Shenandoah County and portions of adjacent counties as an RLEC.

These contracts are generally cancellable at the customer’s discretion without penalty at any time.

Transaction price is measured as the amount billed, which is generally determined by list prices for goods and services less discounts offered.

We allocate the total transaction price in these transactions based upon the standalone selling price of each distinct good or service.

We generally recognize these revenues 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.

A significant portion of the Company’s revenues are derived from customers who may cancel their subscriptions at any time without penalty.

As such, the amount of deferred revenue related to unsatisfied performance obligations is not necessarily indicative of the future revenue to be recognized from the Company’s existing customers.

Installation fees charged upfront without transfer of commensurate goods or services to the customer are allocated to services and are recognized ratably over the longer of the contract term or the period in which the unrecognized fee remains material to the contract, which we estimate to be one year .

Additionally, the Company incurs commission expenses related to in-house and third-party vendors which are capitalized and amortized over the expected customer benefit period.

Our Broadband segment also provides Ethernet and Wavelength fiber optic services to commercial fiber customers under capacity agreements, and the related revenue is recognized over time.

In some cases, non-refundable upfront fees are charged for connecting commercial fiber customers to our fiber network.

Those amounts are recognized ratably over the initial contract term.

The Broadband segment also leases dedicated fiber optic strands to customers as part of “dark fiber” agreements, which are accounted for as leases under ASC 842, Leases (“ASC 842”).

Our Tower segment leases space on owned cell towers to our Broadband segment, and to other wireless carriers.

Revenue from these leases is accounted for under ASC 842.

Advertising Costs:

The Company expenses advertising costs and marketing production costs as incurred and includes such costs within selling, general and administrative expenses in the consolidated statements of operations.

Advertising expense for the years ended December 31, 2022, 2021 and 2020 was $ 6.8 million, $ 4.4 million and $ 2.7 million, respectively.

Fair value measurements:

The Company measures certain assets and liabilities at fair value.

Fair value is defined as the exchange price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

The Company uses the fair value hierarchy to evaluate inputs used in determining the fair value of its assets and liabilities.

The three levels of inputs used to measure fair value are (i) observable inputs, such as quoted prices in active markets (level 1);

(ii) inputs other than quoted prices in active markets that are observable either directly or indirectly (level 2);

and (iii) unobservable inputs that require the Company to use present value and other valuation techniques in the determination of fair value (level 3).

The Company remeasures long-lived assets such as property, plant and equipment, intangible assets and goodwill at fair value when they are deemed to be impaired.

The fair value of these assets is determined with valuation techniques using the best information available and may include quoted market prices, market comparables or discounted cash flow models.

The carrying amounts reported in the Company’s consolidated financial statements for cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate fair value because of the short-term nature of these financial instruments.

The carrying amount of the Company's debt balance from term loans, which have a floating interest rate, approximate fair value.

Cash and cash equivalents:

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Generally, such investments are in excess of FDIC or SIPC insurance limits.

Allowance for doubtful accounts:

Accounts receivable have been reduced by an allowance for amounts that may be uncollectible in the future.

This estimated allowance is based primarily on the aging category, historical collection experience and management’s evaluation of the financial condition of the customer.

The Company writes off accounts receivable balances deemed uncollectible against the allowance for credit losses generally when the account is turned over for collection to an outside collection agency.

The Company investments measured at fair value primarily consist of Supplemental executive retirement plan (“SERP”) investments in a rabbi trust as a source of funding for future payments under the plan.

The SERP’s investments were designated as trading securities and will be liquidated and paid out to the participants six months after retirement.

The benefit obligation to participants is always equal to the value of the SERP assets under ASC 710, Compensation .

The Company's investments measured at cost primarily consist of CoBank’s Class A common stock derived from the CoBank patronage program.

The investment is recognized as the Company’s initial investment in CoBank plus subsequent patronage distributions received from CoBank.

Property, plant and equipment:

Property, plant and equipment is stated at cost less accumulated depreciation.

Property, plant and equipment is stated at cost less accumulated depreciation and amortization.

The Company capitalizes all costs associated with the purchase, deployment and installation of property, plant and equipment, including interest costs and internal labor costs on major capital projects during the period of their construction.

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Labor costs associated with customer installation activities at existing service locations are expensed as incurred under industry specific guidance.

Leasehold improvements are depreciated over the lesser of their useful lives or respective lease terms.

Leasehold improvements are amortized over the lesser of their useful lives or respective lease terms.

Land is not depreciated.

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While some cable franchises and spectrum licenses are issued for a fixed time (generally ten years and up to fifteen years , respectively), renewals have been granted routinely and at nominal costs.

The Company believes it will be able to meet all requirements necessary to secure renewal of its cable franchise

rights and spectrum licenses.

Moreover, the Company has determined that there are currently no legal, regulatory, contractual, competitive, economic or other factors that limit the useful lives of our cable franchises or spectrum licenses and as a result, we account for cable franchise rights and spectrum licenses as indefinite-lived intangible assets.

The Company believes it will be able to meet all requirements necessary to secure renewal of its cable franchise rights and spectrum licenses.

Moreover, the Company has determined that there are currently no legal, regulatory, contractual,

competitive, economic or other factors that limit the useful lives of our cable franchises or spectrum licenses and as a result, we account for cable franchise rights and spectrum licenses as indefinite-lived intangible assets.

Indefinite-lived intangible assets are not amortized, but rather, are subject to impairment testing annually, in the fourth quarter, or whenever events or changes in circumstances indicate that the carrying amount may not be fully recoverable.

These assets are evaluated for impairment based on the identification of reporting units.

Our reporting units align with our reporting segments.

We evaluated our reporting units for impairment during the fourth quarter of 2021, 2020 and 2019, respectively, on the basis of qualitative factors.

Goodwill is evaluated for impairment based on the identification of reporting units.

Our reporting units align with our reportable segments.

We evaluated our reporting units for impairment on October 1, 2022 on the basis of qualitative factors.

Our consideration of qualitative factors included but was not limited to macroeconomic conditions, industry and market conditions, company specific events, changes in circumstances, after tax cash flows and market capitalization trends.

We concluded that there were no indicators that a reporting unit impairment was more likely than not during the years ended December 31, 2021, 2020, or 2019.

We concluded that there were no indicators that a reporting unit impairment was more likely than not.

We evaluated our cable franchise rights for impairment on October 1, 2022 utilizing a quantitative assessment.

Our quantitative assessment compared an estimated fair value of the cable franchise rights to their book value.

To estimate fair value we used a greenfield model, a method under the income approach, which reflected the expected discounted cash flows of a notional start-up business with no assets other than the cable franchise rights being valued.

The primary assumptions utilized in the analysis include assumptions regarding revenue growth, the amount and timing of capital expenditures, EBITDA margins and the discount rate utilized.

We concluded that no impairment existed.

Long-lived assets:

Finite-lived intangible assets, property, plant, and equipment, and other long-lived assets are amortized or depreciated over their estimated useful lives, as summarized in the respective notes below.

Finite-lived intangible assets, property, plant, and equipment, and other long-lived assets held for use are amortized or depreciated over their estimated useful lives, as summarized in the respective notes below.

These assets are evaluated for impairment based on the identification of asset groups.

Our asset groups align with our reportable segments.

We evaluated our asset groups for impairment during the fourth quarter of 2021.

We concluded that there were no indicators that an asset group impairment was more likely than not during the years ended December 31, 2021, 2020, or 2019.

Advertising Costs:

Advertising expense for the years ended December 31, 2021, 2020 and 2019 was $ 4.4 million, $ 2.7 million and $ 3.5 million, respectively.

We evaluated our asset groups for impairment during the fourth quarter of 2022 and concluded that there were no indicators that an asset group impairment was more likely than not, with the exception of those described in Note 5, Property, Plant and Equipment.

Asset retirement obligations:

Certain of the Company’s lease agreements contain provisions requiring the Company to restore facilities or remove property in the event that the lease agreement is not renewed.

The Company records an estimate for the cost to comply with these provisions based on what a willing third party would charge for the retirement activity on the date of recognizing the asset retirement obligation.

Upon retirement of the related asset and performance of the asset retirement activities, the Company derecognizes the asset retirement obligation and records a gain or loss to reflect the difference between the Company's estimate and the actual cost to retire the asset.

Benefit plan obligations:

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Postretirement medical benefits plan 1,869 3,506

Supplemental executive retirement plan ("SERP") 2,317 2,687

Supplemental executive retirement plan 1,889 2,317

Total $ 3,758 $ 8,216

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The Pension Plan liability was discounted at 4.90 % and 2.74 % at December 31, 2022 and 2021, respectively.

On October 13, 2021, the Company adopted a resolution to terminate its pension plan effective December 31, 2021.

Following adoption of the resolution, on October 28, 2021, the Company provided notice of intent to terminate the pension plan to participants.

The Company expects to complete the termination of the plan, and settle all obligations thereunder, in 2022.

On October 13, 2021, the Company adopted a resolution to terminate its pension plan.

The expected termination will result in a payout of all existing obligations either through lump sum payments or through the purchase of annuity contracts at the option of the pension plan's participants.

The Company expects the pension plan termination to be completed by December 31, 2023.

Consequently, the net benefit plan obligation for the pension plan, with a balance of approximately $ 3.4 million, is presented in accrued liabilities and other in the Company's consolidated balance sheet at December 31, 2022.

The postretirement medical benefits plan is a frozen, unfunded, defined benefit plan.

The postretirement plan liability was discounted at 5.00 % and 2.70 % at December 31, 2022 and 2021, respectively.

Following our adoption of ASU 2017-17, Compensation—Retirement Benefits (Topic 715):

Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, on January 1, 2018, all components of benefit plan expense are presented in Other income, net and our policy is to immediately recognize actuarial gains and losses into earnings.

The SERP is a benefit plan that provides deferred compensation to certain employees.

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The benefit obligation to participants is always equal to the value of the SERP assets under ASC 710 Compensation.

Changes to the investments’ fair value are presented in Other income, net, while the reciprocal changes in the liability representative of compensatory expense, are presented in selling, general and administrative expense.

The Company leases various telecommunications 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 right-of-use 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.

Income taxes:

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements.

Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.

The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

In assessing the ability to realize deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The ultimate realization of deferred tax assets is dependent upon generating future taxable income during the periods in which those temporary differences become deductible.

The Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income, taxable income in prior carryback years if available and tax planning strategies in making this assessment.

Based upon the level of historical taxable income, projections for future taxable income over the periods for which the deferred tax assets are deductible, and the option to elect out of bonus depreciation on in-serviced fixed assets, the Company believes it more likely than not that the net deferred tax assets will be realized.

The Company recognizes a tax benefit from an uncertain tax position when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits.

The Company records a liability for the difference between the benefit recognized and measured for financial statement purposes and the tax position taken or expected to be taken on the tax return.

Changes in the estimate are recorded in the period in which such determination is made.

Stock-based compensation:

The cost of employee services received in exchange for share-based awards classified as equity is measured using the estimated fair value of the award on the date of the grant, and the related expense is recorded using the straight-line method consistent with the recipient's respective service period.

The fair value for the Company's restricted stock units (“RSUs”) are determined using the Company's stock price and the fair value for the Company's Relative Total Shareholder Return (“RTSR”) awards are determined using a Monte Carlo simulation.

The Company records forfeitures for its RSUs and RTSRs as they occur.

Certain of the Company's share-based awards contain retirement clauses which state that awards will continue to vest without the requirement of continuous employment after a participant achieves certain service- and age-based requirements (“Retirement Eligibility”).

The Company accelerates expense associated with eligible awards for employees who have achieved Retirement Eligibility on the later of the grant date or the date in which Retirement Eligibility is achieved.

The Company’s chief operating decision maker (“CODM”) regularly reviews the Company’s results to assess performance and allocates resources at the level of the Company's two operating segments, Broadband and Tower.

Given the differences in the characteristics of the Company's operating segments, management has determined that the operating segments cannot be combined into one reportable segment.

As such, the Company has two reportable segments, Broadband and Tower.

New Accounting Standards

In March 2020, the FASB issued ASU 2020-04 “ Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting.

” This accounting update provides optional accounting relief to entities with contracts, hedge accounting relationships or other transactions that reference London Interbank Offering Rate (LIBOR) or other interest rate benchmarks for which the referenced rate is expected to be discontinued or replaced.

This optional relief generally allows for contract modifications solely related to the replacement of the reference rate to be accounted for as a continuation of the existing contract instead of as an extinguishment of the contract, and therefore would not require reassessment of a previous accounting determination.

The Company's Credit Agreement has LIBOR as a reference rate.

We plan to apply the accounting relief as any relevant contract modifications are made to our Credit Agreement during the course of the reference rate reform transition period.

The optional relief can be applied beginning January 1, 2020, and ending December 31, 2022.

We adopted ASU No.

2018-02- Income Statement - Reporting Comprehensive Income, ("ASC 220"), as of January 1, 2019.

We elected not to reclassify stranded income tax effects from accumulated other comprehensive income (OCI) to retained earnings.

We utilize the portfolio approach as our policy to release the income tax effects from accumulated OCI as the entire portfolio is liquidated, sold, or extinguished.

In November 2021, the FASB issued ASU 2021-10, “ Government Assistance (Topic 832), Disclosures by Business Entities About Government Assistance, ” which requires entities to provide disclosures on material government assistance transactions for annual reporting periods.

In November 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2021-10, “ Government Assistance (Topic 832), Disclosures by Business Entities About Government Assistance, ” (“ASU 2021-10”) which requires entities to provide disclosures on material government assistance transactions for annual reporting periods.

The disclosures include information about the nature of the assistance, the related accounting policies used to account for government assistance, the effect of government assistance on the entity’s financial statements and any significant terms and conditions of the agreements, including commitments and contingencies.

The new standard is effective for the Corporation on January 1, 2022 and only impacts annual financial statement disclosures.

The adoption is not expected to have a material effect on our consolidated financial statements.

Discontinued Operations

On August 26, 2020, Sprint Corporation ("Sprint"), an indirect subsidiary of T-Mobile US, Inc., ("T-Mobile"), on behalf of and as the direct or indirect owner of Sprint PCS, delivered notice to the Company exercising its option to purchase the assets and operations of our Wireless operations for 90 % of the “Entire Business Value” (as defined under our affiliate agreement and determined pursuant to the appraisal process set forth therein).

Shortly thereafter, the Company committed to a plan to sell the discontinued Wireless operations.

On July 1, 2021, pursuant to the previously announced Asset Purchase Agreement (the “Purchase Agreement”), dated May 28, 2021, between Shentel and T-Mobile, Shentel completed the sale to T-Mobile of its Wireless assets and operations for cash consideration of approximately $ 1.94 billion, inclusive of the approximately $ 60 million settlement of the waived management fees by Sprint, and net of certain transaction expenses (the “Transaction”).

The assets and liabilities that transferred in the sale (the "disposal group") were presented as held for sale within our historical consolidated balance sheets, and discontinued operations within our historical consolidated statements of comprehensive income.

The transaction was structured as an asset sale for income tax purposes.

As a result, no current or deferred tax assets or liabilities were included within the disposal group.

While the Company’s long-term debt did not transfer in the sale, its provisions required full repayment of all outstanding amounts, concurrent with the consummation of the sale.

Accordingly, all debt balances and related interest rate swap liabilities were therefore presented outside of the disposal group as a current liability as of December 31, 2020, and.

the related interest expense and debt extinguishment costs were presented within discontinued operations under the relevant authoritative guidance.

The carrying amounts of the major classes of assets and liabilities, classified as held for sale in the consolidated balance sheets, were as follows:

(in thousands) December 31,

Inventory $ 5,746

Prepaid expenses and other 47,003

Property, plant and equipment, net 299,647

Intangible assets, net 176,459

Goodwill 146,383

Operating lease right-of-use assets 421,586

Deferred charges and other assets 36,470

Current assets held for sale $ 1,133,294

Current operating lease liabilities $ 409,887

Accrued liabilities and other 8,770

Asset retirement obligations 33,545

Current liabilities held for sale $ 452,202

Income from discontinued operations, net of tax in the consolidated statements of comprehensive income consist of the following for the years ended December 31, 2021, 2020 and 2019:

(in thousands)

2021 2020 2019

Service revenue and other $ 201,076 $ 401,035 $ 375,730

Equipment revenue 12,253 41,338 67,659

Total revenue 213,329 442,373 443,389

Operating expenses:

Cost of services 38,144 116,394 128,482

Cost of goods sold 11,964 40,642 65,148

Selling, general and administrative 17,514 34,011 39,128

Severance expense 465 — —

Depreciation and amortization — 62,930 111,467

Total operating expenses 68,087 253,977 344,225

Operating income 145,242 188,396 99,164

Other (expense) income:

Debt extinguishment ( 11,032 ) — —

Interest expense and other, net ( 9,178 ) ( 20,455 ) ( 29,286 )

Gain on sale of disposition of Wireless assets and operations 1,227,531 — —

Income before income taxes 1,352,563 167,941 69,878

Income tax expense 361,661 43,844 16,310

Income from discontinued operations, net of tax $ 990,902 $ 124,097 $ 53,568

Consummation of the sale triggered the recognition of approximately $ 21.2 million of incremental selling costs during 2021, for contingent deal advisory fees and severance expenses, which are netted against the gain on sale of disposition of Wireless assets and operations.

In addition, also triggered by the disposition event, we recognized an $ 11.0 million loss on debt extinguishment and incurred interest expense of approximately $ 2.6 million on the termination of our interest rate swaps in connection with the Wireless sale.

The Company generated $ 10.2 million in revenue from T-Mobile throughout the remainder of 2021 after the consummation of the sale.

We adopted ASU 2021-10 in 2022 and have included the new disclosure requirements in Note 12, Government Grants .

Revenue from Contracts with Customers

Our Broadband segment provides broadband data, video and voice services to residential and commercial customers in portions of Virginia, West Virginia, Maryland, Pennsylvania and Kentucky, via fiber optic, hybrid fiber coaxial cable, and fixed wireless networks.

The Broadband segment also provides voice and DSL telephone services to customers in Virginia’s Shenandoah County and portions of adjacent counties as a Rural Local Exchange Carrier (“RLEC”).

These contracts are generally cancellable at the customer’s discretion without penalty at any time.

We allocate the total transaction price in these transactions based upon the standalone selling price of each distinct good or service.

Additionally, the Company incurs commission costs related to in-house and third-party vendors which are capitalized and amortized over the expected weighted average customer life which is approximately six years .

Below is a summary of the Broadband segment's capitalized contract acquisition costs:

Our Broadband segment provides broadband data, video and voice services to residential, SMB and commercial customers in portions of Virginia, West Virginia, Maryland, Pennsylvania and Kentucky, via fiber optic and hybrid fiber coaxial cable networks.

The Broadband segment also provides voice and DSL telephone services to customers in Virginia’s Shenandoah County and portions of adjacent counties as an RLEC.

Contract Assets

The Company’s contract assets primarily include commissions incurred to acquire contracts with customers.

The Company incurs commission expenses related to in-house and third-party vendors which are capitalized and amortized over the expected customer benefit period which is approximately six years .

Amortization of capitalized commission expenses is recorded in selling, general and administrative expenses in the Company's consolidated statements of comprehensive (loss) income.

The following tables present the activity of current and non-current contract assets:

(in thousands) 2022 2021

1 unchanged sentence

Commission payments 3,355 3,229

Contract amortization ( 2,440 ) ( 2,188 )

Contract asset amortization ( 2,856 ) ( 2,440 )

Ending Balance $ 8,646 $ 8,147

Our Broadband segment also provides Ethernet and Wavelength fiber optic services to commercial fiber customers under capacity agreements, and the related revenue is recognized over time.

In some cases, non-refundable upfront fees are charged for connecting commercial fiber customers to our fiber network.

Those amounts are recognized ratably over the longer of the contract term or the period in which the unrecognized fee remains material to the respective contract.

A related contract liability of $ 3.5 million at December 31, 2021, is expected to be recognized into revenue at the rate of approximately $ 0.2 million per year.

The Broadband segment also leases dedicated fiber optic strands to customers as part of “dark fiber” agreements, which are accounted for as leases under ASC 842.

Our Tower segment leases space on owned cell towers to our Broadband segment, and to other wireless carriers.

Revenue from these leases is accounted for under ASC 842.

Refer to Note 15, Segment Reporting , for a summary of these revenue streams.

No customers accounted for more than 10% of revenue for the years ended December 31, 2021, 2020 and 2019 and no customer made up more than 10% of accounts receivable at December 31, 2021 and December 31, 2020.

Contract Liabilities

The Company’s contract liabilities include services that are billed in advance and recorded as deferred revenue, as well as installation fees that are changed upfront without transfer of commensurate goods or services to the customer.

The Company’s current contract liabilities are included in advanced billings and customer deposits in its consolidated balance sheets and the Company’s non-current contract liabilities are included in other liabilities in its consolidated balance sheets.

The current contract liabilities at December 31, 2021 were recognized within revenues in the Company’s consolidated statement of comprehensive (loss) income during 2022.

Shentel anticipates the current contract liability balance of $ 9.5 million as of December 31, 2022 to be recognized within revenues in the next twelve months and the non-current contract liability balance of $ 1.9 million to be recognized within revenues after twelve months.

No customers accounted for more than 10% of revenue for the years ended December 31, 2022, 2021, and 2020 and no customer made up more than 10% of accounts receivable at December 31, 2022 and 2021.

Refer to Note 14, Segment Reporting , for a summary of the Company's revenue streams.

Investments consist of the following:

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SERP investments at fair value:

The Company holds the SERP investments in a rabbi trust as a source of funding for future payments under the plan.

The SERP’s investments were designated as trading securities and will be liquidated and paid out to the participants six months after retirement.

The benefit obligation to participants is always equal to the value of the SERP assets under ASC 710, Compensation .

The fair value of the SERP investments are based on unadjusted quoted prices in active markets and are classified as Level 1 of the fair value hierarchy.

Changes to the investments' fair value are presented in Other income (expense), while the reciprocal changes in the liability are presented in selling, general and administrative expense.

At December 31, 2021, $ 0.8 million of SERP investments were presented as prepaid expenses and other (current assets).

Those investments were liquidated in July 2022 to pay the current portion of our SERP obligation.

Cost method investments :

Our investment in CoBank’s Class A common stock, derived from the CoBank patronage program, represented substantially all of our cost method investments with a balance of $ 10.0 million and $ 10.3 million at December 31, 2022 and 2021, respectively.

We recognized approximately $ 2.0 million, $ 4.2 million and $ 4.2 million of patronage income in Other income (expense) in 2021, 2020 and 2019, respectively.

We recognized approximately $ 70.7 thousand, $ 2.0 million and $ 4.2 million of patronage income in other income (expense) in 2022, 2021 and 2020, respectively.

Historically, approximately 75 % of the patronage distributions were collected in cash and 25 % in equity.

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At December 31, 2022, the Company had a 20.0 % ownership interest in Valley Network Partnership (“ValleyNet”).

The Company and ValleyNet purchase capacity on one another’s fiber network.

The Company and ValleyNet purchase capacity on one another’s fiber network through related party transactions.

We recognized revenue of $ 0.7 million, $ 0.7 million, and $ 0.9 million from providing service to ValleyNet during 2022, 2021, and 2020, respectively.

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Property, Plant and Equipment

Property, plant and equipment consisted of the following:

Property, plant and equipment consist of the following:

(in thousands) Estimated Useful Lives December 31,

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Total property, plant and equipment 1,156,318 1,028,233

accumulated amortization and depreciation 474,071 428,400

accumulated depreciation and amortization ( 468,765 ) ( 474,071 )

Property, plant and equipment, net $ 687,553 $ 554,162

Property, plant and equipment, net increased due primarily to capital expenditures in the Broadband segment driven by our Glo Fiber market expansion.

In Q4 2021, the Company ceased expansion of its Beam network, resulting in abandonment of related property, plant and equipment.

Consequently, the Company recorded $ 6.0 million of impairment charges related to abandonment of Beam property, plant and equipment after estimating the salvage value based on quoted prices for the assets.

The Company's accounts payable as of December 31, 2022 included amounts associated with capital expenditures of approximately $ 43.8 million.

Cash flows for accounts payable and capital expenditures exclude this activity.

Depreciation and amortization expense was $ 68.2 million, $ 54.4 million, and $ 48.0 million for the years ended December 31, 2022, 2021, and 2020, respectively.

In 2022, the Company improved internal controls over property, plant, and equipment.

The enhanced controls identified fully depreciated assets no longer held by the Company.

Accordingly, the Company made adjustments to reduce the cost of buildings and structures, cable and fiber, and equipment and software by $ 0.3 million, $ 0.1 million, and $ 62.9 million, respectively, with an offset to accumulated depreciation at December 31, 2022.

In the fourth quarter of 2021, due to the availability of grants awarded under various governmental initiatives in support of rural fiber to the home (“FTTH”) broadband network expansion projects, we decided to cease further expansion of our Beam branded fixed wireless edge-out strategy, which is offered under our Broadband segment.

During the second quarter of 2022, the Company permanently ceased operating 20 of our 55 Beam fixed wireless sites.

Consequently, Shentel recorded an impairment charge of $ 4.1 million.

On August 23, 2022, the Company entered into a definitive asset purchase agreement (the “Spectrum Purchase Agreement”) with a wireless carrier pursuant to which the Company agreed to sell certain FCC spectrum licenses and leases utilized in the Company's Beam branded fixed wireless service for total consideration of approximately $ 21.5 million, composed of $ 17.7 million cash and approximately $ 3.8 million of liabilities to be assumed by the wireless carrier (the “Spectrum Transaction”).

The Spectrum Transaction is expected to close in the first half of 2023, subject to the receipt of regulatory approvals and other customary closing conditions.

As a result of the Spectrum Transaction, the Company ceased its remaining Beam operations in the fourth quarter of 2022 and accelerated depreciation for remaining Beam network assets.

Shentel recorded $ 7.4 million in accelerated depreciation for the year ended December 31, 2022.

Goodwill and Intangible Assets

The Company's intangible assets consisted of the following:

The Company’s goodwill and intangible assets consist of the following:

December 31, 2022 December 31, 2021

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Total goodwill and intangible assets $ 108,754 $ ( 27,239 ) $ 81,515 $ 117,257 $ ( 27,426 ) $ 89,831

Amortization expense was $ 0.7 million, $ 0.8 million and $ 0.7 million for the years ended December 31, 2022, 2021 and 2020, respectively.

During the third quarter of 2020, the Company was awarded certain indefinite-lived Citizens Broadband Radio Service (“CBRS”) spectrum licenses to be used within the Broadband segment.

The Company paid an aggregate deposit of $ 16.1 million with the licenses subject to final approval and issuance by the Federal Communications Commission (“FCC”).

The licenses will provide us priority access rights over general access users other than incumbents, in that specific band, in accordance with the FCC’s three-tier CBRS band spectrum sharing framework to utilize designated radio frequency spectrum within specific geographic service areas to provide wireless communication services.

The FCC has delayed the issuance of the licenses because the allowable spectrum ownership levels for certain of our investors would be exceeded should the licenses be issued.

The Company is currently in discussions with the FCC and is considering to forego the issuance of certain licenses included in this transaction covering 15 markets with a cost basis of approximately $ 4.5 million in exchange for a refund and expects resolution in early 2022.

The entire deposit of $ 16.1 million is classified within prepaid expenses and other in the Company's consolidated balance sheet as of December 31, 2021.

For the years ended December 31, 2021, 2020 and 2019, amortization expense was approximately $ 0.8 million, $ 0.7 million and $ 0.5 million, respectively.

The Company paid an aggregate deposit of $ 16.1 million with respect to the licenses subject to final approval and issuance by the FCC.

The FCC approved the Company’s final application for the licenses in the third quarter of 2022, resulting in the issuance of the licenses with a deposit value of $ 12.1 million.

The Company recorded these licenses as indefinite-lived intangible assets.

These licenses are not subject to the Spectrum Transaction described above.

The remaining $ 4.0 million of the deposit was returned to the Company in the form of a cash refund in the fourth quarter of 2022.

As described in Note 5, Property, Plant and Equipment , the Company entered into the Spectrum Purchase Agreement to sell FCC spectrum licenses associated with Beam.

As a result of the expected sale, the Company concluded that the FCC spectrum licenses met the held-for-sale criteria;

accordingly, $ 13.8 million of indefinite-lived licenses and $ 5.9 million of finite-lived licenses are presented as held for sale, along with the corresponding $ 3.8 million of operating lease liabilities related to the finite-lived licenses.

The Company evaluated the events described here and in Note 5, Property, Plant and Equipment and determined that these events do not represent a strategic shift in the Company’s business.

Our finite-lived intangible assets are amortized over the following estimated useful lives:

Estimated Useful Life

FCC spectrum licenses 18 - 30 years

Subscriber relationships 3 - 10 years

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Accrued liabilities and other, classified as current liabilities, included the following:

(in thousands) December 31, 2021 December 31, 2020

Interest rate swaps $ — $ 4,048

(in thousands) December 31,

2022 December 31,

Accrued programming costs 3,306 $ 3,084

Sales and property taxes payable 1,065 1,072

Pension plan 3,341 —

Restructuring accrual 146 1,761

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2022 December 31,

Noncurrent portion of deferred lease revenue $ 19,749 $ 18,687

FCC spectrum license obligations 3,807 3,845

Noncurrent portion of deferred revenue $ 18,679 $ 19,749

Noncurrent portion of financing leases 1,500 1,614

Other 461 881

FCC spectrum license obligations — 3,807

Other liabilities $ 20,218 $ 25,631

Restructuring activities

During 2021, in connection with the disposition of our Wireless segment, we implemented a restructuring plan whereby certain employees were notified of their pending dismissal under the workforce reduction program.

The following table identifies severance activity that has occurred as a result of the plan:

(in thousands) Year Ended

December 31, 2021

Beginning Balance January 1, 2021 $ —

Expense (1) 3,862

Payments (2) ( 2,101 )

Ending Balance - December 31, 2021 $ 1,761

_______________________________________________________

(1) For the year ended December 31, 2021, approximately $ 2.2 million of expense was recognized within discontinued operations and $ 1.7 million in continuing operations.

(2) For the year ended December 31, 2021, approximately $ 1.4 million of payments were attributable to discontinued operations and $ 0.7 million in continued operations.

During 2021, as a result of the sale of our Wireless assets and operations, we implemented a restructuring plan whereby certain employees were notified of their pending dismissal under the workforce reduction program.

We made $ 1.7 million and $ 2.1 million in severance payments for the years ended December 31, 2022 and 2021, respectively.

For the year ended December 31, 2021, we recognized expenses of $ 1.7 million and $ 2.2 million, presented in continuing and discontinued operations, respectively.

Asset Retirement Obligations:

Our asset retirement obligations (“ARO”) arise from certain of our leases and generally require us to remove our towers from ground leases.

The Company's estimates related to ARO were revised during 2021 resulting in recognition of an additional obligation of $ 4.3 million.

Current ARO liabilities are recorded in accrued liabilities and other in the Company’s consolidated balance sheets.

Below is a summary of our current and non-current asset retirement obligations:

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Balance at beginning of year $ 9,824 $ 5,113 $ 6,152

Additional liabilities accrued 4,334 262 593

Changes to prior estimates ( 44 ) ( 1,633 ) ( 3,659 )

Payments — — —

Additional asset retirement obligations recorded and changes to prior estimates 1,198 4,290 ( 1,371 )

Liabilities settled ( 185 ) — —

Accretion expense 531 421 332

Balance at end of year $ 11,368 $ 9,824 $ 5,113

We adopted ASC 842 on January 1, 2019 using the modified retrospective method.

We applied the package of practical expedients and, as a result, did not reassess prior conclusions regarding lease identification, lease classification and initial direct costs under the new standard.

In those circumstances where the Company is the lessee, we elected to account for non-lease components associated with our leases (e.g., maintenance costs) and lease components as a single lease component for substantially all of our asset classes.

We lease various telecommunications 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 Company uses the observable unsecured borrowing rate and risk-adjusts that rate to approximate a collateralized rate.

At December 31, 2022, our operating leases had a weighted average remaining lease term of twenty years and a weighted average discount rate of 4.5 %.

Our finance leases had a weighted average remaining lease term of fourteen years and a weighted average discount rate of 5.2 %.

During 2021, we recognized $ 7.1 million of operating lease expense and $ 0.6 million of interest and depreciation expense on finance leases.

Our finance leases had a weighted average remaining lease term of thirteen years and a weighted average discount rate of 5.2 %.

We recognized $ 7.6 million, $ 7.1 million and $ 6.6 million of operating lease expense for the years ended December 31, 2022, 2021 and 2020, respectively.

We recognized $ 0.6 million of interest and depreciation expense on finance leases for each of the years ended December 31, 2022, 2021 and 2020.

Operating lease expense is presented in cost of service or selling, general and administrative expense based on the use of the relevant facility.

Variable lease payments and short-term lease expense were both immaterial.

We remitted $ 5.6 million of operating lease payments during 2021.

We also obtained $ 11.1 million and $ 6.8 million of leased assets in exchange for new operating lease liabilities recognized during 2021 and 2020, respectively.

We remitted $ 6.1 million, $ 5.6 million, and $ 4.4 million of operating lease payments during the years ended December 31, 2022, 2021 and 2020, respectively.

We also obtained $ 2.5 million, $ 11.1 million and $ 6.8 million of leased assets in exchange for new operating lease liabilities, including new and modified agreements, recognized during the years ended December 31, 2022, 2021 and 2020, respectively.

The following table summarizes the expected maturity of lease liabilities at December 31, 2022:

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Present value of lease liabilities $ 53,306 $ 1,597 $ 54,903

We recognized $ 11.1 million of operating lease revenue during 2021 related to the cell site colocation space and dedicated fiber optic strands that we lease to our customers, which is included in service and other revenue in the consolidated statements of comprehensive income.

We recognized $ 18.4 million, $ 11.1 million, and $ 9.1 million of operating lease revenue for the years ended December 31, 2022, 2021 and 2020, respectively, related to the cell site colocation space and dedicated fiber optic strands that we lease to our customers, which is included in service revenue and other in the consolidated statements of comprehensive (loss) income.

Substantially all of our lease revenue relates to fixed lease payments.

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Total $ 81,185

Our cash payments for interest were $ 10.4 million and $ 18.6 million during 2021 and 2020, respectively.

As discussed in Note 3, Discontinued Operations , upon consummation of the Transaction, the Company used approximately $ 681 million of the proceeds received from the sale to fully repay all outstanding principal amounts under, and terminate the Credit Agreement existing as of June 30, 2021 ("Prior Credit Agreement").

On July 1, 2021, the Company entered into a Credit Agreement (the “Credit Agreement”) with various financial institutions thereto (the “Lenders”) and CoBank, ACB, as administrative agent for the Lenders (in such capacity, the “Administrative Agent”).

The Credit Agreement provides for three credit facilities (collectively, the “Facilities”), in an aggregate amount equal to $ 400 million:

(i) a $ 100 million five-year revolving credit facility (the “Revolver”), (ii) a $ 150 million five-year delay draw

amortizing term loan (the “Term Loan A-1”) and (iii) a $ 150 million seven-year delay draw amortizing term loan (the “Term Loan A-2” and, together with the Term Loan A-1, the “Term Loans”).

The Credit Agreement includes a provision under which the Company may request that additional term loans be made to it in an amount not to exceed the sum of (1) the greater of (a) $ 75 million and (b) 100% of Consolidated EBIDTA (as defined in the Credit Agreement), calculated on a pro forma basis in accordance with the Credit Agreement, plus (2) an additional unlimited amount subject to a maximum Total Net Leverage Ratio (as defined in the Credit Agreement) of 4.00 :1.00, calculated on a pro forma basis in accordance with the Credit Agreement, subject to the receipt of commitments from one or more lenders for any such additional term loans and other customary conditions.

The Company may use the proceeds from the Revolver and the Term Loans to finance capital expenditures, provide working capital, and for other general corporate purposes of the Company and its subsidiaries, including the payment of fees and expenses in connection with the foregoing.

The Term Loans, when drawn upon, are to be repaid in quarterly principal installments commencing on September 30, 2023, with the unpaid balance of the Term Loans due at maturity, as set forth in the Credit Agreement.

Interest payments on outstanding loans are required monthly, beginning in the period of the initial and any subsequent draws.

Rates for borrowing under the Credit Agreement are based, at the Company’s election, upon whether the borrowing is a LIBOR loan or a base rate loan.

LIBOR loans will bear interest at an adjusted LIBOR rate (which shall be no less than 0.00 %) plus an applicable margin ranging from 1.50 % to 2.75 % for the Term Loan A-1 and the Revolver and from 1.50 % to 3.00 % for the Term Loan A-2, depending on the Company’s Total Net Leverage Ratio.

Base rate loans will bear interest at a base rate plus an applicable margin ranging from 0.50 % to 1.75 % for the Term Loan A-1 and the Revolver and from 0.50 % to 2.00 % for the Term Loan A-2, depending on the Company’s Total Net Leverage Ratio.

In addition, under the terms of the Credit Agreement, the Company agrees to pay the Lenders a fee on undrawn portions of the Term Loans and Revolver from time to time.

This fee rate is dependent on the Company’s Total Net Leverage Ratio and ranges from a rate per annum equal to 0.200 % to 0.375 %.

The Credit Agreement contains representations and warranties, and affirmative and negative financial covenants usual and customary for similar secured credit facilities, each of which are applicable to the Company and its subsidiaries, including covenants governing the ability of the Company and its subsidiaries, subject to negotiated exceptions, to incur additional indebtedness and additional liens on their assets, engage in mergers or acquisitions or dispose of assets, pay dividends or make other distributions, enter into transactions with affiliated persons, make investments or change the nature of the Company’s and its subsidiaries’ businesses.

The Company is also subject to certain financial covenants to be measured on a trailing twelve month basis on the last day of each calendar quarter.

These covenants include:

• maintaining a Total Net Leverage Ratio (as defined in the Credit Agreement) not greater than 4.25 to 1.00 (subject to customary increased leverage periods following certain qualifying acquisitions);

• maintaining a Debt Service Coverage Ratio (as defined in the Credit Agreement) not less than 2.00 to 1.00.

Indebtedness outstanding under any of the Facilities may be accelerated upon the occurrence of an Event of Default (as defined in the Credit Agreement).

As of December 31, 2021, the Company had not drawn on the Term Loans or the Revolver and was in compliance with the financial covenants in its credit agreements.

The International Exchange (ICE) Benchmark Administration (the “IBA”) ceased the publication of one-week and two-month LIBOR on December 31, 2021 and expects to phase-out the remaining tenors (overnight, one-month, three-month, six-month and 12-month) on June 30, 2023.

Our term loans and revolver identify LIBOR as a reference rate for tenors ceasing on June 30, 2023 and mature after 2023.

Our Credit Agreement, dated July 1, 2021 (the “Credit Agreement”) contains (i) a $ 100 million, five-year undrawn revolving credit facility (the “Revolver”), (ii) a $ 150 million five-year delayed draw amortizing term loan (“Term Loan A-1”) and (iii) a $ 150 million seven-year delayed draw amortizing term loan (“Term Loan A-2” and collectively with Term Loan A-1, the “Term Loans”).

The following loans were outstanding under the Credit Agreement:

(in thousands) December 31,

2022 December 31,

Term loan A-1 $ 37,500 $ —

Term loan A-2 37,500 —

Total debt 75,000 —

unamortized loan fees ( 46 ) —

Total debt, net of unamortized loan fees $ 74,954 $ —

Both Term Loan A-1 and Term Loan A-2 bear interest at one-month LIBOR plus a margin of 1.50 %.

The margin of 1.50 % is variable and determined by the Company’s net leverage ratio.

Interest is paid monthly.

The interest rate was 4.39 % at December 31, 2022.

Our cash payments for interest were $ 0.6 million, $ 10.4 million and $ 18.6 million for the years ended December 31, 2022, 2021 and 2020, respectively.

Interest paid in 2021 and 2020 was incurred and paid under a prior credit agreement which was repaid in connection with the sale of the Wireless business in 2021.

Refer to Note 15, Discontinued Operations , for details concerning the sale of the Wireless business.

Shentel is charged commitment fees on unutilized portions

of its Revolver and Term Loans.

The Company recorded $ 0.7 million related to these fees for the year ended December 31, 2022, which is included in other (expense) income, net in the consolidated statements of comprehensive (loss) income.

The Credit Agreement contains a borrowing deadline of June 30, 2023, after which the Company will not be able to borrow against the undrawn portion of the Term Loans.

The Company expects to borrow the remaining $ 225.0 million available under the Term Loans by the borrowing deadline.

The Credit Agreement includes various covenants, including total net leverage ratio and debt service coverage ratio financial covenants.

The Credit Agreement is fully secured by a pledge and unconditional guarantee from the Company and all of its subsidiaries, except Shenandoah Telephone Company.

This provides the lenders a security interest in substantially all of the assets of the Company.

Shentel’s Term Loans require quarterly payments based on a percentage of the outstanding balance.

Based on the outstanding balance as of December 31, 2022, Term Loan A-1 requires quarterly principal repayments of $ 0.2 million from September 30, 2023 through June 30, 2024;

then increasing to $ 0.5 million quarterly from September 30, 2024 through March 31, 2026, with the remaining balance due June 30, 2026.

Based on the outstanding balance as of December 31, 2022, Term Loan A-2 requires quarterly principal repayments of $ 0.1 million through March 31, 2028, with the remaining balance due June 30, 2028.

These scheduled payments are also summarized below:

(in thousands) Amount

2028 and thereafter 35,813

Total $ 75,000

Shentel has not made any borrowings under its Revolver as of December 31, 2022.

In the event borrowings are made in the future, the entire outstanding principal amount borrowed is due June 30, 2026.

The International Exchange (ICE) Benchmark Administration ceased the publication of one-week and two-month LIBOR on December 31, 2021 and the remaining tenors (overnight, one-month, three-month, six-month and 12-month) will cease to be published on June 30, 2023.

Our term loans and revolver identify LIBOR as a reference rate for tenors ceasing on June 30, 2023 and maturing after 2023.

Alternative reference rates that replace LIBOR may not yield the same or similar economic results over the terms of the financial instruments.

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Any changes to the reference rate will be agreed through an amendment to the Credit Agreement and are expected to reference the Secured Overnight Financing Rate, though the timing of such amendment and applicability to any future amounts owed under the Credit Agreement are not certain at this time.

Derivatives and Hedging

As discussed in Note 3, Discontinued Operations , upon consummation of the Transaction, the Company used approximately $ 2.6 million of the proceeds received from the sale to fully satisfy its obligations under, and terminate, the interest rate swaps.

Amounts reclassified from accumulated other comprehensive income (loss) are presented as part of income from discontinued operations.

The table below summarizes changes in accumulated other comprehensive income (loss) by component, including the reclassification from accumulated other comprehensive income (loss) into earnings following the swap termination:

(in thousands) (Losses) Gains on

Hedges Income Tax

Benefit Accumulated

Comprehensive

(Loss) Income, net of taxes

Balance as of December 31, 2020 $ ( 4,048 ) $ ( 658 ) $ ( 4,706 )

Other comprehensive income (loss) before reclassifications 1,447 ( 361 ) 1,086

Amounts reclassified from accumulated other comprehensive income (loss) to interest expense 2,601 1,019 3,620

Net current period other comprehensive (loss) income 4,048 658 4,706

Balance as of December 31, 2021 $ — $ — $ —

The Company files a consolidated U.S.

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(in thousands) 2022 2021 2020

Current (benefit) expense

Current expense (benefit)

Federal taxes $ 673 $ ( 21,392 ) $ ( 13,748 )

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Total current provision 487 ( 23,957 ) ( 15,896 )

Deferred expense (benefit)

Deferred (benefit) expense

Federal taxes ( 1,119 ) 25,518 13,325

State taxes ( 295 ) ( 3,255 ) 1,581

Total deferred provision 22,263 14,906 16,681

Income tax (benefit) expense $ ( 1,694 ) $ ( 990 ) $ 6

Total deferred (benefit) expense ( 1,414 ) 22,263 14,906

Income tax benefit $ ( 927 ) $ ( 1,694 ) $ ( 990 )

Effective tax rate 10.0 % ( 27.2 ) % ( 168.9 ) %

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(in thousands) 2022 2021 2020

Expected tax expense at federal statutory $ 1,310 $ 24 $ 371

Expected tax (benefit) expense at federal statutory $ ( 1,954 ) $ 1,310 $ 24

State income taxes, net of federal tax effect ( 410 ) 438 54

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Stranded tax effects reclassified from other comprehensive income — 1,620 —

Excess tax benefit from share based compensation and other expense, net 144 ( 1,068 ) ( 380 )

Income tax (benefit) expense $ ( 1,694 ) $ ( 990 ) $ 6

The effective tax rate in 2021 decreased from 2020, primarily as a result of recognition of non-cash deferred tax benefits triggered by the disposition of Wireless assets and operations, (see Note 3 – Discontinued Operations ), which drove a reduction in the Company’s future estimated tax rate, as apportionable income and expenses for higher tax rate jurisdictions was reduced, resulting in a revaluation of deferred tax liabilities during the year ended December 31, 2021.

The Company's net cash payments for income taxes were $ 459.1 million in the year ended December 31, 2021, which included $ 434.3 million of payments related to the taxable gain from the sale of the Wireless business.

The Company's cash payments for income taxes were $ 11.2 million in the year ended December 31, 2020.

Excess tax expense (benefit) from share based compensation and other expense, net 818 144 ( 1,068 )

Valuation allowance 619 — —

Income tax benefit $ ( 927 ) $ ( 1,694 ) $ ( 990 )

The change in effective tax rate between 2022 and 2021 was primarily a result of decreased income tax benefit due to a one-time benefit realized in 2021 as a result of the 2021 disposition of Wireless assets and operations (see Note 15, Discontinued Operations ).

The Company's cash payments for income taxes were $ 0.1 million and $ 11.2 million for the years ended December 31, 2022 and 2021, respectively.

The Company's cash refunds for income taxes were $ 9.5 million for the year ended December 31, 2020.

Deferred tax assets and liabilities are measured using enacted tax rates that are expected to apply in the year of reversal or settlement and arise from temporary differences between the US GAAP and tax bases of the following assets and liabilities:

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Net deferred tax liabilities $ 84,600 $ 86,014

In assessing the ability to realize deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The ultimate realization of deferred tax assets is dependent upon generating future taxable income during the periods in which those temporary differences become deductible.

Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, taxable income in prior carryback years if available and tax planning strategies in making this assessment.

The Company has a deferred tax asset of $ 28.4 million related to federal and various state net operating losses.

As of December 31, 2021, the Company had approximately $ 27.8 million of federal net operating losses expiring through 2027.

The Company also had approximately $ 0.3 million of state net operating losses expiring through 2036.

As of December 31, 2022, the Company had approximately $ 125.6 million of federal net operating losses, including approximately $ 97.8 million of federal net operating losses generated after 2017.

Federal net operating losses generated prior to 2018 expire through 2027.

The Company also had approximately $ 40.0 million of state net operating losses, which can be carried forward indefinitely.

The Company's income tax benefit for the year ended December 31, 2022 included tax expense of $ 0.6 million for a valuation allowance on deferred tax assets related to federal net operating losses expected to expire unutilized.

The Company had no valuation allowances on deferred tax assets as of December 31, 2021.

As of December 31, 2022 and 2021, the Company had no unrecognized tax benefits.

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both options to acquire stock and stock awards were granted.

The Company granted approximately 200 thousand restricted stock units (RSUs) to employees and directors during 2021 at an average market price of $ 28.99 .

The Company also granted, approximately 59 thousand performance-based Relative Total Shareholder Return (“RTSR”) awards to employees at an average value of $ 34.05 during 2020.

On July 2, 2021, the Company’s Board of Directors declared a special dividend of $ 18.75 per share on the issued and outstanding shares of the Company’s common stock (the “Special Dividend”).

On August 4, 2021, in accordance with the Plan, the Company's Board of Directors adopted a resolution to modify the outstanding equity awards to offset the grantees’ loss in intrinsic value caused by the disposition of wireless and the decline in the Company's share price following the Special Dividend.

Approximately 81 thousand awards were issued, split between RSUs and RTSRs, as a result of this modification.

No other terms or conditions of the outstanding equity awards were modified, no incremental expense was required to be recognized, and there was no significant impact to dilutive securities.

The Company's RSUs generally have service requirements only or performance and service requirements with vesting periods ranging from one year for directors to four years for employees.

RTSR awards generally vest over an approximate three year period.

The performance factor applied to the RTSR awards is based upon the Company's stock performance compared to a group of peer companies.

As of December 31, 2022, the only forms of stock awards outstanding are RSUs and RTSRs.

The Company granted approximately 518,000 RSUs at a weighted average grant price of $ 21.56 to employees and directors during the year ended December 31, 2022.

Approximately 153,000 RSUs with a weighted average grant price of $ 27.50 vested and 53,000 RSUs with a weighted average grant price of $ 25.89 were forfeited during the year ended December 31, 2022.

The total fair value of RSUs vested was $ 3.3 million during the year ended December 31, 2022.

Approximately 649,000 RSUs with a weighted average grant price of $ 23.39 remained outstanding as of December 31, 2022.

The Company granted approximately 100,000 RTSRs at a weighted average grant price of $ 23.83 to employees during the year ended December 31, 2022.

Approximately 46,000 RTSRs with a weighted average grant price of $ 33.83 vested and 6,000 RTSRs with a weighted average grant price of $ 36.28 were forfeited during the year ended December 31, 2022.

The total fair

value of RSUs vested was $ 1.2 million during the year ended December 31, 2022.

Approximately 202,000 RTSRs with a weighted average grant price of $ 29.46 remained outstanding as of December 31, 2022.

As described above, the amount of RTSRs issued are adjusted on the vesting date.

The amounts above exclude the adjustment and issuance of RTSRs based on actual performance, which totaled approximately 9,000 awards for the year ended December 31, 2022.

The Company's RSUs generally have service conditions only or performance and service conditions with vesting periods ranging from one year for directors to five years for employees.

RTSR awards vest approximately three years from the grant date.

The performance condition applied to the RTSR awards is based upon the Company's stock performance compared to a group of peer companies.

The actual number of shares to be issued can range from 0 % to 150 % of the awards granted.

Stock-based compensation expense was as follows:

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Stock compensation expense, net $ 8,528 $ 3,408 $ 5,907

As of December 31, 2021, there was $ 5.9 million of total unrecognized compensation cost related to non-vested incentive awards that are expected to be recognized over weighted average period of 1.8 years.

As of December 31, 2022, there was $ 9.2 million of total unrecognized compensation cost related to non-vested incentive awards which is expected to be recognized over weighted average period of 2.4 years.

We utilize the treasury stock method to calculate the impact on diluted earnings per share that potentially dilutive stock-based compensation awards have.

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Calculation of net income per share:

Income from continuing operations $ 7,929 $ 1,576 $ 1,932

(Loss) income from continuing operations $ ( 8,379 ) $ 7,929 $ 1,576

Income from discontinued operations, net of tax $ — $ 990,902 $ 124,097

Net income $ 998,831 $ 125,673 $ 55,500

Net (loss) income $ ( 8,379 ) $ 998,831 $ 125,673

Basic weighted average shares outstanding 50,155 50,026 49,901

Basic net income per share - continuing operations $ 0.16 $ 0.03 $ 0.04

Basic net (loss) income per share - continuing operations $ ( 0.17 ) $ 0.16 $ 0.03

Basic net income per share - discontinued operations $ — $ 19.81 $ 2.49

Basic net income per share $ 19.97 $ 2.52 $ 1.11

Basic net (loss) income per share $ ( 0.17 ) $ 19.97 $ 2.52

Effect of stock-based compensation awards outstanding:

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Diluted weighted average shares outstanding 50,155 50,149 50,024

Diluted net income per share - continuing operations $ 0.16 $ 0.03 $ 0.04

Diluted net (loss) income per share - continuing operations $ ( 0.17 ) $ 0.16 $ 0.03

Diluted net income per share - discontinued operations $ — $ 19.76 $ 2.48

Diluted net income per share $ 19.92 $ 2.51 $ 1.11

There were approximately 259 thousand anti-dilutive awards outstanding during 2021 and fewer than 110 thousand anti-dilutive awards outstanding during 2020 and 2019.

The Special Dividend was paid on August 2, 2021.

The total payout to Shentel shareholders, including amounts reinvested in the Company’s stock via the Company’s Dividend Reinvestment Plan, was approximately $ 937 million.

In addition to the Special Dividend, on October 27, 2021, the Company Board of Directors declared the annual dividend of $ 0.07 per share on the

issued and outstanding shares of the Company's common stock (the "Annual Dividend").

The Annual Dividend was paid on December 1, 2021.

The total payout to Shentel shareholders, including amounts reinvested in the Company’s stock via the Company’s Dividend Reinvestment Plan, was approximately $ 3 million.

Diluted net (loss) income per share $ ( 0.17 ) $ 19.92 $ 2.51

There were approximately 365,000 , 259,000 , and 30,000 anti-dilutive awards outstanding for the years ended December 31, 2022, 2021 and 2020, respectively.

The Company paid a special dividend of $ 18.75 per share on August 2, 2021 (the “Special Dividend”).

The total amount paid pursuant to the Special Dividend to Shentel shareholders, including amounts reinvested in the Company’s stock via the Company’s Dividend Reinvestment Plan, was approximately $ 937 million.

Government Grants

In 2021, Shentel commenced negotiations with various governmental entities to receive awards under broadband infrastructure grant programs to strategically expand the Company's broadband network in order to provide broadband services to unserved residences in the partnering counties in Virginia, Maryland and West Virginia.

Throughout 2021 and 2022, in partnership with

counties in the respective states, Shentel has been awarded grants under the Virginia Telecommunication Initiative (“VATI”) and the Rural Digital Opportunity Fund (“RDOF”) in Virginia, the Connect Maryland Network Infrastructure Grant Program (“Connect MD”) in Maryland, and the Major Broadband Projects Strategies (“MBPS”) in West Virginia.

The following table summarizes the awards under each program:

(in thousands) Awards

VATI $ 58,918

Connect MD 10,200

Total $ 71,354

To receive such grant distributions, we entered into agreements with each partnering county in Virginia and Maryland and expect to complete similar agreement in West Virginia.

These agreements outline certain build-out milestones.

The network is required to meet certain performance conditions to ensure that minimum download and upload speeds are able to be provided to the underserved residences.

The Company recognizes grant receivables at the time it becomes probable that the Company will be eligible to receive the grant, which is estimated to correspond with the date when specified build-out milestones are achieved.

The grant is treated as a reduction to the corresponding property, plant and equipment asset balance and is recognized through a reduction in depreciation expense over the life of the corresponding asset.

Reimbursable amounts are dependent upon the actual construction costs.

The Company has not recognized any amounts under these programs as of December 31, 2022 and 2021.

Commitments and Contingencies

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The scheduled payments under those obligations are summarized in Note 8, Leases .

We also have outstanding unconditional purchase commitments to procure marketing services and IT software licenses through 2026 and commitments for licenses to access Educational Broadband Service (“EBS”) spectrum channels through 2039.

For the years ended December 31, 2021, 2020 and 2019 we paid $ 3.4 million, $ 1.4 million and $ 0.5 million, respectively, for the marketing services and IT software license purchase commitments.

For each of the years ended December 31, 2021, 2020 and 2019, we paid approximately $ 0.1 million for access to certain EBS spectrum channels.

We also have outstanding unconditional purchase commitments to procure marketing services and IT software licenses through 2026.

For the years ended December 31, 2022, 2021 and 2020 we paid $ 5.2 million, $ 3.4 million and $ 1.4 million, respectively, for the programming, marketing and IT software license purchase commitments.

The Company is obligated to make the following future minimum payments under the non-cancelable terms of these commitments as of December 31, 2022:

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The divestiture of our Wireless operations on July 1, 2021 represented a strategic shift in the Company’s business which therefore qualified the segment as a discontinued operation.

As a result, for all periods presented, the operating results and cash flows related to the Wireless segment were reflected as a discontinued operation in our Consolidated Statements of Comprehensive Income and the Consolidated Statements of Cash Flows.

As a result, for all periods presented, the operating results and cash flows related to the Wireless segment were reflected as a discontinued operation in our consolidated statements of comprehensive (loss) income and the consolidated statements of cash flows.

The tables below reflect the results of operations of the Company's reportable segments in continuing operations, consistent with internal reporting used by the Company.

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Service revenue and other 248,830 18,541 — 267,371

Revenue for service provided to the discontinued Wireless operations 4,459 5,311 ( 545 ) 9,225

Intercompany revenue and other 185 378 ( 563 ) —

Total revenue 249,015 18,919 ( 563 ) 267,371

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Selling, general and administrative 47,840 1,197 33,414 82,451

Restructuring expense 202 — 1,525 1,727

Impairment expense 5,986 — — 5,986

Depreciation and amortization 47,937 2,053 5,216 55,206

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Capital expenditures $ 117,246 $ 2,001 $ 1,203 $ 120,450

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

A reconciliation of the total of the reportable segments’ operating (loss) income to consolidated (loss) income from continuing operations before income taxes is as follows:

Years Ended December 31,

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Total consolidated operating loss $ ( 7,958 ) $ ( 2,430 ) $ ( 2,601 )

Other income, net 8,665 3,187 3,280

Income from continuing operations before income taxes $ 6,235 $ 586 $ 1,938

Other (expense) income, net ( 1,348 ) 8,665 3,187

(Loss) income from continuing operations before income taxes $ ( 9,306 ) $ 6,235 $ 586

The Company’s CODM does not currently review total assets by segment since the assets are centrally managed and some of the assets are shared by the segments, accordingly total assets by segment are not applicable.

Quarterly Results (unaudited)

The following table reflects selected quarterly results for the Company.

Amounts were adjusted from their previous presentation as a result of the error correction discussed in Note 1.

Three Months Ended

(in thousands, except per share data) March 31, 2021 June 30, 2021 September 30, 2021 December 31, 2021

Revenue $ 59,691 $ 60,700 $ 62,244 $ 62,604

Operating income (loss) 2,230 2,390 851 ( 7,901 )

Income (loss) from continuing operations 2,945 1,626 6,495 ( 3,137 )

Income (loss) from discontinued operations, net of tax 48,472 51,566 ( 406 ) ( 4,965 )

Gain on the sale of discontinued operations, net of tax — — 886,732 9,503

Net income 51,417 53,192 892,821 1,401

Basic - Income (loss) from continuing operations $ 0.06 $ 0.03 $ 0.13 $ ( 0.06 )

Basic - Income from discontinued operations, net of tax $ 0.97 $ 1.04 $ 17.73 $ 0.09

Basic net income per share $ 1.03 $ 1.07 $ 17.86 $ 0.03

Diluted - Income (loss) from continuing operations $ 0.06 $ 0.03 $ 0.13 $ ( 0.06 )

Diluted - Income from discontinued operations, net of tax $ 0.97 $ 1.03 $ 17.68 $ 0.09

Diluted net income per share $ 1.03 $ 1.06 $ 17.81 $ 0.03

Three Months Ended

(in thousands except per share data) March 31, 2020 June 30, 2020 September 30, 2020 December 31, 2020

Revenue $ 53,134 $ 54,336 $ 55,173 $ 58,132

Operating income (loss) ( 1,648 ) ( 2,361 ) ( 121 ) 1,529

Income (loss) from continuing operations ( 55 ) ( 893 ) 985 1,539

Discontinued Operations

On July 1, 2021, pursuant to the Asset Purchase Agreement (the “Purchase Agreement”), dated May 28, 2021, between Shentel and T-Mobile, Shentel completed the sale to T-Mobile of its Wireless assets and operations for cash consideration of approximately $ 1.94 billion, inclusive of the approximately $ 60 million settlement of the waived management fees by Sprint, and net of certain transaction expenses (the “Transaction”).

The assets and liabilities that transferred in the Transaction (the “disposal group”) were presented as held for sale within our historical consolidated balance sheets, and discontinued operations within our historical consolidated statements of comprehensive (loss) income.

Income from discontinued operations, net of tax in the consolidated statements of comprehensive income consist of the following for the years ended December 31, 2021 and 2020:

(in thousands)

Service revenue and other $ 201,076 $ 401,035

Equipment revenue 12,253 41,338

Total revenue 213,329 442,373

Operating expenses:

Cost of services 38,144 116,394

Cost of goods sold 11,964 40,642

Selling, general and administrative 17,514 34,011

Severance expense 465 —

Depreciation and amortization — 62,930

Total operating expenses 68,087 253,977

Operating income 145,242 188,396

Other (expense) income:

Debt extinguishment ( 11,032 ) —

Interest expense and other, net ( 9,178 ) ( 20,455 )

Gain on sale of disposition of Wireless assets and operations 1,227,531 —

Income before income taxes 1,352,563 167,941

Income tax expense 361,661 43,844

Income from discontinued operations, net of tax $ 990,902 $ 124,097

Net income 13,074 28,891 34,494 49,214

Basic - Income (loss) from continuing operations $ — $ ( 0.02 ) $ 0.02 $ 0.03

Basic - Income from discontinued operations, net of tax $ 0.26 $ 0.60 $ 0.67 $ 0.96

Basic net income per share $ 0.26 $ 0.58 $ 0.69 $ 0.99

Diluted - Income (loss) from continuing operations $ — $ ( 0.02 ) $ 0.02 $ 0.03

Diluted - Income from discontinued operations, net of tax $ 0.26 $ 0.60 $ 0.67 $ 0.95

Diluted net income per share $ 0.26 $ 0.58 $ 0.69 $ 0.98

There was no material income from discontinued operations for the year ended December 31, 2022.

Valuation and Qualifying Accounts

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Allowance for doubtful accounts $ 533 $ 758 $ 1,220 $ ( 1,897 ) $ 614

FORM 10-K SUMMARY

Exhibits Index

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3.1 Amended and Restated Articles of Incorporation of Shenandoah Telecommunications Company, effective August 31, 2019, filed as exhibit 3.2 to the Company's Quarterly Report on Form 10-Q dated September 30, 2019.

3.2 Amended and Restated Bylaws of Shenandoah Telecommunications Company, effective February 22, 2022 , filed as exhibit 3.

1 to the Company's Current Report on Form 8-K filed o n February 2 8 , 2 022 .

3.2 Amended and Restated Bylaws of Shenandoah Telecommunications Company, effective October 25, 2022 , filed as exhibit 3.1 to the Company's Current Report on Form 8-K filed on October 27 , 2022.

4.1 Description of the Company's Common Stock Registered Under Section 12 of the Exchange Act of 1934.

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10.2 Supplemental Executive Retirement Plan as amended and restated, filed as Exhibit 10.14 to the Company’s Current Report on Form 8-K dated March 23, 2007.

10.4 Addendum VI dated May 24, 2004 to Sprint PCS Management Agreement by and among Sprint Spectrum L.P., Wireless Co, L.P., APC PCS, LLC, Phillie Co, L.P., and Shenandoah Personal Communications Company filed as Exhibit 10.15 to the Company’s Report on Form 10-Q for the quarterly period ended June 30, 2004.

10.5 2005 Stock Incentive Plan filed as Exhibit 10.1 to the Company’s Registration Statement on Form S-8 (No.

10.6 Addendum VII dated March 13, 2007 to Sprint PCS Management Agreement by and among Sprint Spectrum L.P., Wireless Co., L.P., APC PCS, LLC, Phillie Co, L.P., and Shenandoah Personal Communications Company, filed as Exhibit 10.31 to the Company’s Report on Form 10-K for the year ended December 31, 2006.

10.7 Addendum VIII to the Sprint Management Agreement dated November 19, 2007, filed as Exhibit 10.36 to the Company’s Current Report on Form 8-K dated November 20, 2007.

10.8 Addendum IX to the Sprint Management Agreement dated as of April 14, 2009, and filed as Exhibit 10.42 to the Company’s Annual Report on Form 10-K dated March 8, 2010.

10.9 Addendum X dated March 15, 2010 to Sprint PCS Management Agreement by and among Sprint Spectrum L.P., Wireless Co, L.P., APC PCS, LLC, Phillie Co, L.P., Sprint Communications Company L.P.

and Shenandoah Personal Communications Company, filed as Exhibit 10.44 to the Company’s Current Report on Form 10-Q, dated May 7, 2010.

10.10 Addendum XI dated July 7, 2010 to Sprint PCS Management Agreement by and among Sprint Spectrum L.P., Wireless Co, L.P., APC PCS, LLC, Phillie Co, L.P., Sprint Communications Company L.P.

and Shenandoah Personal Communications Company, filed as Exhibit 10.45 to the Company’s Current Report on Form 8-K dated July 8, 2010.

10.3 2014 Equity Incentive Plan filed as Appendix A to the Company’s Definitive Proxy Statement filed on March 13, 2014 (No.

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*10.5 Form of Restricted Stock Unit Award for Executives under the 2014 Equity Incentive Plan.

10.14 Form of Performance Share Unit Award for Executives under the 2014 Equity Incentive Plan.

*10.6 Form of RTSR Performance Share Unit Award for Executives under the 2014 Equity Incentive Plan.

10.7 Form of Severance Agreement, filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on February 11, 2020.

10.8 Form of Strategic Retention Performance Share Unit Award, filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on September 23, 2022.

*21 List of Subsidiaries.

*23.1 Consent of RSM US L L P, Independent Registered Public Accounting Firm.

*23.2 Consent of KPMG LLP, Independent Registered Public Accounting Firm.

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February 22, 2023

February 28, 2022

/s/KENNETH L.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures