SHENANDOAH TELECOMMUNICATIONS CO/VA/ 10-K

ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures 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 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, 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. ITEM 9B. OTHER INFORMATION None. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. 43 Table of Contents PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE See “Executive Officers of the Registrant” in Part 1, Item 1 of this report for information about our executive officers, which is incorporated by reference in this Item 10. Other information required by this Item 10 is incorporated by reference to the Company's definitive proxy statement for its 2023 Annual Meeting of Shareholders, referred to as the “2023 proxy statement,” which we will file with the SEC on or before 120 days after our 2022 fiscal year end, and which appears in the 2023 proxy statement under the captions “Election of Directors” and “Section 16(a) Beneficial Ownership Reporting Compliance.” We have adopted a code of ethics applicable to our chief executive officer and all senior financial officers, who include our principal financial officer, principal accounting officer, and persons performing similar functions. The code of ethics, which is part of our Code of Business Conduct and Ethics, is available on our website at www.shentel.com . To the extent required by SEC rules, we intend to disclose any amendments to our code of conduct and ethics, and any waiver of a provision of the code with respect to the Company’s directors, principal executive officer, principal financial officer, principal accounting officer, or persons performing similar functions, on our website referred to above within four business days following such amendment or waiver, or within any other period that may be required under SEC rules from time to time. ITEM 11. EXECUTIVE COMPENSATION Information required by this Item 11 is incorporated herein by reference to the 2023 proxy statement, including the information in the 2023 proxy statement appearing under the captions “Election of Directors-Director Compensation” and “Executive Compensation.” ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS Information required by Item 12 is incorporated herein by reference to the 2023 proxy statement appearing under the caption “Security Ownership.” 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. Outstanding awards and the number of shares available for future issuance as of December 31, 2022 were as follows: Number of securities to be issued upon exercise of outstanding options and RSUs Weighted average exercise price of outstanding options Number of securities remaining available for future issuance 2014 Equity Incentive Plan 857,511 $ — 2,099,886 ITEM 13. CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE Information required by Item 13 is incorporated herein by reference to the 2023 proxy statement, including the information in the 2023 proxy statement appearing under the caption “Executive Compensation-Certain Relationships and Related Transactions.” ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES Information required by Item 14 is incorporated herein by reference to the 2023 proxy statement, including the information in the 2023 proxy statement appearing under the caption “Shareholder Ratification of Independent Registered Public Accounting Firm.” 44 Table of Contents PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES The following is a list of documents filed as a part of this report: (1) Financial Statements (2) Financial Statement Schedule (3) Exhibits 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. ITEM 16. FORM 10-K SUMMARY None. 45 Table of Contents SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES Index to the Consolidated 2022 Financial Statements Page Reports of Independent Registered Public Accounting Firm as of and for the Year Ended December 31, 2022 F- 2 Report of Independent Registered Public Accounting Firm as of and for the Years Ended December 31, 202 1 and 2020 F- 5 Consolidated Financial Statements Consolidated Balance Shee ts as of December 31, 2022 and 2021 F- 6 Consolidated Statements of Comprehensive (Loss) Income for the years ended December 31, 2022, 2021 and 2020 F- 7 Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2022, 2021 and 2020 F- 8 Consolidated Statements of Cash Flows for the years ended December 31, 2022, 2021 and 2020 F- 9 Notes to Consolidated Financial Statements F- 10 Financial Statement Schedule Valuation and Qualifying Accounts F- 29 F-1 Table of Contents Report of Independent Registered Public Accounting Firm 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 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 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 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. F-2 Table of Contents 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; and, • 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. Ft. Lauderdale, Florida February 22, 2023 F-3 Table of Contents Report of Independent Registered Public Accounting Firm 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 The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. 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 U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. 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 effective internal control over financial reporting was maintained in all material respects. 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. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. 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; 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. 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. /s/ RSM US LLP Ft. Lauderdale, Florida February 22, 2023 F-4 Table of Contents 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. 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. /s/ KPMG LLP We served as the Company’s auditor from 2001 to 2022. McLean, Virginia February 28, 2022 F-5 Table of Contents SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, 2022 and 2021 (in thousands) 2022 2021 ASSETS Current assets: Cash and cash equivalents $ 44,061 $ 84,344 Accounts receivable, net of allowance for doubtful accounts of $ 776 and $ 352 , respectively 20,615 22,005 Income taxes receivable 29,755 30,188 Prepaid expenses and other 11,509 29,830 Current assets held for sale 22,622 — Total current assets 128,562 166,367 Investments 12,971 13,661 Property, plant and equipment, net 687,553 554,162 Goodwill and intangible assets, net 81,515 89,831 Operating lease right-of-use assets 53,859 56,414 Deferred charges and other assets 13,259 10,298 Total assets $ 977,719 $ 890,733 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Current maturities of long-term debt, net of unamortized loan fees $ 648 $ — Accounts payable 49,173 28,542 Advanced billings and customer deposits 12,425 11,128 Accrued compensation 9,616 9,653 Current operating lease liabilities 2,829 3,318 Accrued liabilities and other 17,906 14,649 Current liabilities held for sale 3,824 — Total current liabilities 96,421 67,290 Long-term debt, less current maturities, net of unamortized loan fees 74,306 — Other long-term liabilities: Deferred income taxes 84,600 86,014 Asset retirement obligations 9,932 9,615 Benefit plan obligations 3,758 8,216 Non-current operating lease liabilities 50,477 51,692 Other liabilities 20,218 25,631 Total other long-term liabilities 168,985 181,168 Commitments and contingencies (Note 13) Shareholders’ equity: Common stock, no par value, authorized 96,000 ; 50,110 and 49,965 issued and outstanding at December 31, 2022 and 2021, respectively — — Additional paid in capital 57,453 49,351 Retained earnings 580,554 592,924 Total shareholders’ equity 638,007 642,275 Total liabilities and shareholders’ equity $ 977,719 $ 890,733 See accompanying notes to consolidated financial statements. F-6 Table of Contents SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME Years Ended December 31, 2022, 2021 and 2020 (in thousands, except per share amounts) 2022 2021 2020 Service revenue and other $ 267,371 $ 245,239 $ 220,775 Operating expenses: Cost of services exclusive of depreciation and amortization 107,546 102,299 89,657 Selling, general and administrative 92,392 82,451 85,016 Restructuring expense 1,251 1,727 — Impairment expense 5,241 5,986 — Depreciation and amortization 68,899 55,206 48,703 Total operating expenses 275,329 247,669 223,376 Operating loss ( 7,958 ) ( 2,430 ) ( 2,601 ) 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: Income from discontinued operations, net of tax — 94,667 124,097 Gain on the sale of discontinued operations, net of tax — 896,235 — Total income from discontinued operations, net of tax — 990,902 124,097 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 (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 (loss) income per share $ ( 0.17 ) $ 19.92 $ 2.51 Weighted average shares outstanding, basic 50,155 50,026 49,901 Weighted average shares outstanding, diluted 50,155 50,149 50,024 Cash dividends declared per share $ 0.08 $ 18.82 $ 0.34 See accompanying notes to consolidated financial statements. F-7 Table of Contents SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY Years Ended December 31, 2022, 2021 and 2020 (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 Net income — — 125,673 — 125,673 Net loss on interest rate swaps, net of tax — — — ( 5,014 ) ( 5,014 ) Dividends declared — — ( 16,950 ) — ( 16,950 ) Dividends reinvested in common stock — ( 2 ) — — ( 2 ) Stock-based compensation 156 6,833 — — 6,833 Stock options exercised — 36 — — 36 Common stock issued 1 31 — — 31 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 — — — — Balance, December 31, 2020 49,868 47,317 534,440 ( 4,706 ) 577,051 Net income — — 998,831 — 998,831 Net gain on interest rate swaps, net of tax — — — 4,706 4,706 Dividends declared — — ( 940,347 ) — ( 940,347 ) Stock-based compensation 133 3,661 — — 3,661 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 loss — — ( 8,379 ) — ( 8,379 ) Dividends declared — — ( 3,991 ) — ( 3,991 ) Stock-based compensation 194 9,178 — — 9,178 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 See accompanying notes to consolidated financial statements. F-8 Table of Contents SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended December 31, 2022, 2021 and 2020 (in thousands) 2022 2021 2020 Cash flows from operating activities: Net (loss) income $ ( 8,379 ) $ 998,831 $ 125,673 Income from discontinued operations, net of tax — 990,902 124,097 (Loss) income from continuing operations ( 8,379 ) 7,929 1,576 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 68,175 54,389 47,964 Amortization 724 817 739 Accretion of asset retirement obligations 531 421 333 Bad debt expense 1,972 1,028 1,220 Stock-based compensation expense, net of amount capitalized 8,528 3,408 5,907 Deferred income taxes ( 1,414 ) 22,263 14,906 Restructuring expense 1,251 1,727 — Impairment expense 5,241 5,986 — Other, net ( 824 ) 481 ( 1,311 ) Changes in assets and liabilities: Accounts receivable ( 583 ) 163 ( 7,318 ) Current income taxes 434 ( 25,149 ) ( 15,896 ) Operating lease right-of-use assets 6,322 4,779 3,980 Other assets ( 451 ) ( 7,005 ) ( 2,505 ) Accounts payable 19 2,976 ( 663 ) Lease liabilities ( 5,471 ) ( 4,333 ) ( 3,067 ) Other deferrals and accruals ( 1,180 ) ( 6,427 ) 7,494 Net cash provided by operating activities - continuing operations 74,895 63,453 53,359 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: Capital expenditures ( 189,609 ) ( 160,101 ) ( 120,450 ) Cash disbursed for acquisitions — — ( 1,890 ) 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 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 ) Taxes paid for equity award issuances ( 1,076 ) ( 1,627 ) ( 2,217 ) Payments for financing arrangements and other ( 932 ) ( 1,193 ) ( 769 ) 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 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 Cash and cash equivalents, beginning of period 84,344 195,397 101,651 Cash and cash equivalents, end of period $ 44,061 $ 84,344 $ 195,397 See accompanying notes to consolidated financial statements. F-9 Table of Contents SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1. Nature of Operations 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. 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 integrated networks are connected by a fiber network. All of these operations are contained within our Broadband reporting segment. 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. Note 2. Summary of Significant Accounting Policies Principles of consolidation: The accompanying consolidated financial statements include the accounts of Shenandoah Telecommunications Company and all of its wholly owned subsidiaries. All intercompany accounts and transactions for continuing operations have been eliminated in consolidation. Use of estimates: 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. F-10 Table of Contents 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: Cash equivalents include all investments with an original maturity of three months or less. The Company places its temporary cash investments with high credit quality financial institutions. 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. Investments: 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 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. Maintenance expense is recognized as incurred when repairs are performed that do not extend the life of property, plant and equipment. Expenses for major renewals and improvements, which significantly extend the useful lives of existing property and equipment, are capitalized and depreciated. Depreciation is calculated on the straight-line method over the estimated useful lives of the assets. Labor costs associated with customer installation activities at existing service locations are expensed as incurred under industry specific guidance. Leasehold improvements are amortized over the lesser of their useful lives or respective lease terms. Land is not depreciated. Refer to Note 5, Property, Plant and Equipment , for additional information. Indefinite-lived intangible assets: Goodwill represents the excess of acquisition costs over the fair value of tangible net assets and identifiable intangible assets of the businesses acquired. Cable franchise rights provide us with the non-exclusive right to provide video services in a specified area. Spectrum licenses are issued by the Federal Communications Commission (“FCC”) and provide us with either an exclusive or priority access right to utilize designated radio frequency spectrum within specific geographic service areas to provide wireless communication services. 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, F-11 Table of Contents 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. 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. 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 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 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: The Benefit Plan Obligations caption includes the following: ($ in thousands) December 31, 2022 December 31, 2021 Pension plan $ — $ 2,393 Postretirement medical benefits plan 1,869 3,506 Supplemental executive retirement plan 1,889 2,317 Total $ 3,758 $ 8,216 The pension plan is a frozen defined benefit plan. Benefits under the plan vested after five years of plan service and were based on years of service and an average of the five highest consecutive years of compensation subject to certain reductions if the employee elects to receive the benefit prior to age 65 . This plan was amended on December 31, 2012, to freeze future benefit plan accruals for participants. As of December 31, 2022 and 2021, the fair value of our pension plan assets were $ 21.3 million and $ 31.1 million, respectively. These investments are held in mutual funds, and are valued based on the net asset value per share. Our Pension Plan's projected benefit obligation was $ 24.7 million and $ 33.5 million, at December 31, 2022 and 2021, respectively. 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. 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. F-12 Table of Contents The SERP is a benefit plan that provides deferred compensation to certain employees. The Company holds 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 upon retirement. 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 in the Company's consolidated statement of comprehensive (loss) income. Leases: 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. Segments: 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. F-13 Table of Contents New Accounting Standards 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. We adopted ASU 2021-10 in 2022 and have included the new disclosure requirements in Note 12, Government Grants . Note 3. Revenue from Contracts with Customers 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 Beginning Balance $ 8,147 $ 7,358 Commission payments 3,355 3,229 Contract asset amortization ( 2,856 ) ( 2,440 ) Ending Balance $ 8,646 $ 8,147 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. F-14 Table of Contents Note 4. Investments Investments consist of the following: (in thousands) December 31, 2022 December 31, 2021 SERP investments at fair value $ 1,889 $ 2,317 Cost method investments 10,749 11,004 Equity method investments 333 340 Total investments $ 12,971 $ 13,661 SERP investments at fair value: 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 $ 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. Equity method investments: 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 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. We recognized cost of service of $ 0.1 million, $ 1.2 million, and $ 2.7 million for the use of ValleyNet’s network during 2022, 2021, and 2020, respectively. F-15 Table of Contents Note 5. Property, Plant and Equipment Property, plant and equipment consist of the following: (in thousands) Estimated Useful Lives December 31, 2022 December 31, 2021 Land $ 3,722 $ 3,771 Land improvements 10 years 3,483 3,478 Buildings and structures 10 - 45 years 93,461 96,323 Cable and fiber 15 - 30 years 593,771 453,405 Equipment and software 4 - 8 years 317,347 391,293 Plant in service 1,011,784 948,270 Plant under construction 144,534 79,963 Total property, plant and equipment 1,156,318 1,028,233 Less: 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. 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. F-16 Table of Contents Note 6. Goodwill and Intangible Assets The Company’s goodwill and intangible assets consist of the following: December 31, 2022 December 31, 2021 (in thousands) Gross Carrying Amount Accumulated Amortization and Other Net Gross Carrying Amount Accumulated Amortization and Other Net Goodwill - Broadband $ 3,244 $ — $ 3,244 $ 3,244 $ — $ 3,244 Indefinite-lived intangibles: Cable franchise rights $ 64,334 $ — $ 64,334 $ 64,334 $ — $ 64,334 FCC spectrum licenses 12,122 — 12,122 13,839 — 13,839 Railroad crossing rights 141 — 141 141 — 141 Total indefinite-lived intangibles 76,597 — 76,597 78,314 — 78,314 Finite-lived intangibles: FCC spectrum licenses — — — 6,811 ( 672 ) 6,139 Subscriber relationships 28,425 ( 26,910 ) 1,515 28,425 ( 26,451 ) 1,974 Other intangibles 488 ( 329 ) 159 463 ( 303 ) 160 Total finite-lived intangibles 28,913 ( 27,239 ) 1,674 35,699 ( 27,426 ) 8,273 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 respect to the licenses subject to final approval and issuance by the 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. 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 Subscriber relationships 3 - 10 years Other intangibles 15 - 20 years F-17 Table of Contents The following table summarizes expected amortization of intangible assets at December 31, 2022: (in thousands) Amortization of Intangible Assets 2023 $ 489 2024 489 2025 483 2026 103 2027 65 Thereafter 45 Total $ 1,674 Note 7. Other Assets and Accrued Liabilities Prepaid expenses and other, classified as current assets, included the following: (in thousands) December 31, 2022 December 31, 2021 Deposit for FCC spectrum licenses $ — $ 16,118 Prepaid maintenance expenses 7,444 8,391 Broadband contract acquisition costs 2,809 2,502 SERP investments — 801 Other 1,256 2,018 Prepaid expenses and other $ 11,509 $ 29,830 Deferred charges and other assets, classified as long-term assets, included the following: (in thousands) December 31, 2022 December 31, 2021 Broadband contract acquisition costs $ 5,837 $ 5,645 Prepaid expenses and other 7,422 4,653 Deferred charges and other assets $ 13,259 $ 10,298 Accrued liabilities and other, classified as current liabilities, included the following: (in thousands) December 31, 2022 December 31, 2021 Accrued programming costs 3,306 $ 3,084 Pension plan 3,341 — Restructuring accrual 146 1,761 Other current liabilities 11,113 9,804 Accrued liabilities and other $ 17,906 $ 14,649 F-18 Table of Contents Other liabilities, classified as long-term liabilities, included the following: (in thousands) December 31, 2022 December 31, 2021 Noncurrent portion of deferred revenue $ 18,679 $ 19,749 Noncurrent portion of financing leases 1,500 1,614 FCC spectrum license obligations — 3,807 Other 39 461 Other liabilities $ 20,218 $ 25,631 Restructuring activities 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. 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: Years Ended December 31, (in thousands) 2022 2021 2020 Balance at beginning of year $ 9,824 $ 5,113 $ 6,152 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 Note 8. Leases 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 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 $ 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. F-19 Table of Contents The following table summarizes the expected maturity of lease liabilities at December 31, 2022: (in thousands) Operating Leases Finance Leases Total 2023 $ 4,987 $ 176 $ 5,163 2024 5,102 178 5,280 2025 4,897 180 5,077 2026 4,405 153 4,558 2027 3,634 155 3,789 2028 and thereafter 64,443 1,359 65,802 Total lease payments 87,468 2,201 89,669 Less: interest ( 34,162 ) ( 604 ) ( 34,766 ) Present value of lease liabilities $ 53,306 $ 1,597 $ 54,903 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. Below is a summary of our contractual minimum rental receipts expected under the lease agreements in place at December 31, 2022: (in thousands) Operating Leases 2023 $ 15,100 2024 13,710 2025 12,791 2026 9,754 2027 8,258 2028 and thereafter 21,572 Total $ 81,185 Note 9. Debt 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, 2021 Term loan A-1 $ 37,500 $ — Term loan A-2 37,500 — Total debt 75,000 — Less: 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 F-20 Table of Contents 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 2023 $ 656 2024 1,781 2025 2,250 2026 34,125 2027 375 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. The transition from LIBOR could result in us paying higher or lower interest rates on our current LIBOR-indexed term loans. Our Credit Agreement includes provisions that provide for the identification of a LIBOR replacement rate. Due to the uncertainty regarding the transition from LIBOR-indexed financial instruments and the manner in which an alternative reference rate will apply, we cannot yet reasonably estimate the expected financial impact of the LIBOR transition. 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. F-21 Table of Contents Note 10. Income Taxes The Company files a consolidated U.S. federal income tax return and various state income tax returns. The provision for the federal and state income taxes attributable to income (loss) consists of the following components: Years Ended December 31, (in thousands) 2022 2021 2020 Current expense (benefit) Federal taxes $ 673 $ ( 21,392 ) $ ( 13,748 ) State taxes ( 186 ) ( 2,565 ) ( 2,148 ) Total current provision 487 ( 23,957 ) ( 15,896 ) Deferred (benefit) expense Federal taxes ( 1,119 ) 25,518 13,325 State taxes ( 295 ) ( 3,255 ) 1,581 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 ) % A reconciliation of income tax expense (benefit) determined by applying the federal and state tax rates to income before income taxes is as follows: Years Ended December 31, (in thousands) 2022 2021 2020 Expected tax (benefit) expense at federal statutory $ ( 1,954 ) $ 1,310 $ 24 State income taxes, net of federal tax effect ( 410 ) 438 54 Revaluation of deferred tax liabilities — ( 5,206 ) — Stranded tax effects reclassified from other comprehensive income — 1,620 — 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. F-22 Table of Contents 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: (in thousands) December 31, 2022 December 31, 2021 Deferred tax assets: Leases $ 14,809 $ 15,483 Asset retirement obligations 2,972 2,581 Net operating loss carry-forwards 28,398 5,878 Pension liabilities 978 2,148 Accruals and stock-based compensation 3,087 2,572 Other 5,767 6,300 Total gross deferred tax assets 56,011 34,962 Less valuation allowance ( 619 ) — Net deferred tax assets 55,392 34,962 Deferred tax liabilities: Property, plant and equipment 109,852 92,449 Leases 14,541 15,410 Intangible assets 12,867 10,710 Prepaid assets and other 2,732 2,407 Total gross deferred tax liabilities 139,992 120,976 Net deferred tax liabilities $ 84,600 $ 86,014 The Company has a deferred tax asset of $ 28.4 million related to federal and various state net operating losses. 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. The Company is not currently subject to state or federal income tax audits as of December 31, 2022. The Company's returns are generally open to examination from 2019 forward and the net operating losses acquired from nTelos are open to examination from 2003 forward. Note 11. Stock Compensation, Earnings per Share, and Dividends The Company's 2014 Stock Incentive Plan (the “Plan”) allows for the grant of equity based incentive compensation to all employees. The Plan authorizes grants of up to an additional 4,200,000 shares over a ten-year period beginning in 2014. Under the Plan, grants may take the form of stock awards, awards of options to acquire stock, stock appreciation rights and other forms of equity based compensation; both options to acquire stock and stock awards were granted. 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 F-23 Table of Contents 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: Years Ended December 31, (in thousands) 2022 2021 2020 Stock compensation expense $ 9,142 $ 3,552 $ 6,227 Capitalized stock compensation 614 144 320 Stock compensation expense, net $ 8,528 $ 3,408 $ 5,907 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. The following table indicates the computation of basic and diluted earnings per share: Years Ended December 31, (in thousands, except per share amounts) 2022 2021 2020 Calculation of net income per share: (Loss) income from continuing operations $ ( 8,379 ) $ 7,929 $ 1,576 Income from discontinued operations, net of tax $ — $ 990,902 $ 124,097 Net (loss) income $ ( 8,379 ) $ 998,831 $ 125,673 Basic weighted average shares outstanding 50,155 50,026 49,901 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 (loss) income per share $ ( 0.17 ) $ 19.97 $ 2.52 Effect of stock-based compensation awards outstanding: Basic weighted average shares outstanding 50,155 50,026 49,901 Effect from dilutive shares and options outstanding — 123 123 Diluted weighted average shares outstanding 50,155 50,149 50,024 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 (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. Note 12. 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 F-24 Table of Contents 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 RDOF 887 Connect MD 10,200 MBPS 1,349 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. Note 13. Commitments and Contingencies We are committed to make payments to satisfy our lease liabilities. 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. 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: (in thousands) Purchase Commitments 2023 $ 4,684 2024 3,267 2025 1,993 2026 1,044 2027 609 2028 and thereafter 109 Total $ 11,706 The Company is subject to claims and legal actions that may arise in the ordinary course of business. The Company does not believe that any of these pending claims or legal actions are either probable or reasonably possible of a material loss. Note 14. Segment Reporting 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 (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. Intercompany revenue is primarily derived from services provided to the discontinued operation, for periods prior to the divestiture. F-25 Table of Contents Year ended December 31, 2022: (in thousands) Broadband Tower Corporate & Eliminations Consolidated External revenue Residential & SMB $ 193,974 $ — $ — $ 193,974 Commercial Fiber 38,821 — — 38,821 RLEC & Other 16,035 — — 16,035 Tower lease — 18,541 — 18,541 Service revenue and other 248,830 18,541 — 267,371 Intercompany revenue and other 185 378 ( 563 ) — Total revenue 249,015 18,919 ( 563 ) 267,371 Operating expenses Cost of services 102,267 5,712 ( 433 ) 107,546 Selling, general and administrative 56,776 1,279 34,337 92,392 Restructuring expense 849 — 402 1,251 Impairment expense 5,241 — — 5,241 Depreciation and amortization 63,175 2,416 3,308 68,899 Total operating expenses 228,308 9,407 37,614 275,329 Operating income (loss) $ 20,707 $ 9,512 $ ( 38,177 ) $ ( 7,958 ) Capital expenditures $ 188,729 $ 620 $ 260 $ 189,609 Year ended December 31, 2021: (in thousands) Broadband Tower Corporate & Eliminations Consolidated External revenue Residential & SMB $ 177,530 $ — $ — $ 177,530 Commercial Fiber 30,842 — — 30,842 RLEC & Other 15,249 — — 15,249 Tower lease — 12,393 — 12,393 Service revenue and other 223,621 12,393 — 236,014 Revenue for service provided to the discontinued Wireless operations 4,459 5,311 ( 545 ) 9,225 Total revenue 228,080 17,704 ( 545 ) 245,239 Operating expenses Cost of services 97,283 5,438 ( 422 ) 102,299 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 Total operating expenses 199,248 8,688 39,733 247,669 Operating income (loss) $ 28,832 $ 9,016 $ ( 40,278 ) $ ( 2,430 ) Capital expenditures $ 156,131 $ 977 $ 2,993 $ 160,101 F-26 Table of Contents Year ended December 31, 2020: (in thousands) Broadband Tower Corporate & Eliminations Consolidated External revenue Residential & SMB $ 154,956 $ — $ — $ 154,956 Commercial Fiber 24,431 — — 24,431 RLEC & Other 15,971 — — 15,971 Tower lease — 7,402 — 7,402 Service revenue and other 195,358 7,402 — 202,760 Revenue for service provided to the discontinued Wireless operations 8,989 9,653 ( 627 ) 18,015 Total revenue 204,347 17,055 ( 627 ) 220,775 Operating expenses Cost of services 84,893 4,896 ( 132 ) 89,657 Selling, general and administrative 39,472 1,430 44,114 85,016 Depreciation and amortization 41,076 1,906 5,721 48,703 Total operating expenses 165,441 8,232 49,703 223,376 Operating income (loss) $ 38,906 $ 8,823 $ ( 50,330 ) $ ( 2,601 ) Capital expenditures $ 117,246 $ 2,001 $ 1,203 $ 120,450 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, (in thousands) 2022 2021 2020 Total consolidated operating loss $ ( 7,958 ) $ ( 2,430 ) $ ( 2,601 ) 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. F-27 Table of Contents Note 15. 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) Revenue: 2021 2020 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 There was no material income from discontinued operations for the year ended December 31, 2022. F-28 Table of Contents Schedule II Valuation and Qualifying Accounts Changes in the Company’s allowance for doubtful accounts for accounts receivable for the years ended December 31, 2022, 2021 and 2020 are summarized below: (in thousands) Balance at Beginning of Year Recoveries added to allowance Bad debt expense Write-offs Balance at End of Year Year Ended December 31, 2022 Allowance for doubtful accounts $ 352 $ 414 $ 1,972 $ ( 1,962 ) $ 776 Year Ended December 31, 2021 Allowance for doubtful accounts $ 614 $ 530 $ 1,028 $ ( 1,820 ) $ 352 Year Ended December 31, 2020 Allowance for doubtful accounts $ 533 $ 758 $ 1,220 $ ( 1,897 ) $ 614 F-29 Table of Contents Exhibits Index Exhibit Number Exhibit Description 2.1 Asset Purchase Agreement, dated May 28, 2021, between Shenandoah Telecommunications Company and T-Mobile USA, Inc. (incorporated by reference from Exhibit 2.1 to the Company's Current Report on Form 8-K filed on June 1, 2021). 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 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. 4.2 Shenandoah Telecommunications Company Dividend Reinvestment Plan filed as Exhibit 4.4 to the Company’s Registration Statement on Form S-3D (No. 333-74297). 10.1 Credit Agreement, dated July 1, 2021, by and among Shenandoah Telecommunications Company, certain of its subsidiaries as guarantors, CoBank ACB, as administrative agent, and the other lenders party thereto (incorporated by reference from Exhibit 10.1 to the Company's Current Report on Form 8-K filed on July 1, 2021). 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. 10.3 2014 Equity Incentive Plan filed as Appendix A to the Company’s Definitive Proxy Statement filed on March 13, 2014 (No. 333-196990). 10.4 Form of Stock Option Awards for Executives under the 2014 Equity Incentive Plan. *10.5 Form of Restricted Stock 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. *31.1 Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. *31.2 Certification of Principal Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. *31.3 Certification of Principal Accounting Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. F-30 Table of Contents **32 Certifications pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. § 1350. (101) Formatted in XBRL (Extensible Business Reporting Language) 101.INS XBRL Instance Document - the instance document does not appear in the interactive data filing because its XBRL tags are embedded within the Inline XBRL document 101.SCH XBRL Taxonomy Extension Schema Document 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF XBRL Taxonomy Extension Definition Linkbase Document 101.LAB XBRL Taxonomy Extension Label Linkbase Document 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) * Filed herewith ** This certification is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (Exchange Act), or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended (Securities Act), or the Exchange Act. Table of Contents SIGNATURES Pursuant to the requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SHENANDOAH TELECOMMUNICATIONS COMPANY February 22, 2023 /S/ CHRISTOPHER E. FRENCH Christopher E. French, President & Chief Executive Officer (Principal Executive Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. /s/CHRISTOPHER E. FRENCH President & Chief Executive Officer, February 22, 2023 Director (Principal Executive Officer) Christopher E. French /s/JAMES J. VOLK Senior Vice President – Chief Financial Officer February 22, 2023 (Principal Financial Officer) James J. Volk /s/DENNIS A. ROMPS Vice President - Chief Accounting Officer February 22, 2023 (Principal Accounting Officer) Dennis A. Romps /s/THOMAS A. BECKETT Director February 22, 2023 Thomas A. Beckett /s/TRACY FITZSIMMONS Director February 22, 2023 Tracy Fitzsimmons /s/JOHN W. FLORA Director February 22, 2023 John W. Flora /s/ RICHARD L. KOONTZ, JR. Director February 22, 2023 Richard L. Koontz, Jr. /s/KENNETH L. QUAGLIO Director February 22, 2023 Kenneth L. Quaglio /s/LEIGH ANN SCHULTZ Director February 22, 2023 Leigh Ann Schultz /s/VICTOR C. BARNES Director February 22, 2023 Victor C. Barnes F-32