SHEN Shenandoah Telecommunications Company

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UNITED STATES OF AMERICA

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

(Mark One)

☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the quarterly period ended March 31, 2021
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the transition period from__________ to __________

Commission File No.: 000-09881

SHENANDOAH TELECOMMUNICATIONS COMPANY

(Exact name of registrant as specified in its charter)

Virginia						54-1162807
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

500 Shentel Way, Edinburg, Virginia    22824

(Address of principal executive offices)  (Zip Code)

(540) 984-4141 

(Registrant's telephone number, including area code) 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒   No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes ☒   No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐  No  ☒

SHENANDOAH TELECOMMUNICATIONS COMPANY

INDEX

Page Numbers

PART I.

FINANCIAL INFORMATION

Item 1.

Financial Statements

Unaudited Condensed Consolidated Balance Sheets

3

Unaudited Condensed Consolidated Statements of Comprehensive Income

4

Unaudited Condensed Consolidated Statements of Shareholders’ Equity

5

Unaudited Condensed Consolidated Statements of Cash Flows

6

Notes to Unaudited Condensed Consolidated Financial Statements

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

17

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

23

Item 4.

Controls and Procedures

23

PART II.

OTHER INFORMATION

Item 1A.

Risk Factors

24

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

24

Item 6.

Exhibits

25

Signatures

26

SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)			March 31, 2021						December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents			$	229,182					$	195,397
Accounts receivable, net of allowance for doubtful accounts of $490 and $614, respectively			66,618						70,393
Prepaid expenses and other			12,943						9,631
Current assets held for sale			1,117,528						1,133,294
Total current assets			1,426,271						1,408,715
Investments			13,376						13,769
Property, plant and equipment, net			468,383						440,427
Goodwill and Intangible assets, net			106,543						106,759
Operating lease right-of-use assets			52,738						50,387
Deferred charges and other assets			14,998						11,650
Total assets			$	2,082,309					$	2,031,707
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current maturities of long-term debt, net of unamortized loan fees			$	680,531					$	688,463
Accounts payable			19,866						19,599
Advanced billings and customer deposits			9,407						8,594
Accrued compensation			11,235						16,413
Income taxes payable			21,622						6,951
Current operating lease liabilities			2,062						1,970
Accrued liabilities and other			14,505						13,869
Current liabilities held for sale			443,089						452,202
Total current liabilities			1,202,317						1,208,061
Other long-term liabilities:
Deferred income taxes			155,623						150,652
Asset retirement obligations			5,130						4,955
Benefit plan obligations			12,785						14,645
Non-current operating lease liabilities			48,047						46,095
Other liabilities			24,453						24,905
Total other long-term liabilities			246,038						241,252
Commitments and contingencies (Note 13)
Shareholders’ equity:
Common stock, no par value, authorized 96,000; 49,943 and 49,868 issued and outstanding at March 31, 2021 and December 31, 2020, respectively			—						—
Additional paid in capital			46,583						47,317
Retained earnings			591,304						539,783
Accumulated other comprehensive loss, net of taxes			(3,933)						(4,706)
Total shareholders’ equity			633,954						582,394
Total liabilities and shareholders’ equity			$	2,082,309					$	2,031,707

See accompanying notes to unaudited condensed consolidated financial statements.

SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands, except per share amounts)			Three Months Ended March 31,
			2021						2020
Service revenue and other			$	59,691					$	53,134
Operating expenses:
Cost of services			23,283						20,317
Selling, general and administrative			20,153						22,096
Restructuring expense			618						—
Depreciation and amortization			13,266						12,085
Total operating expenses			57,320						54,498
Operating income (loss)			2,371						(1,364)
Other income:
Other income, net			1,600						749
Income (loss) before income taxes			3,971						(615)
Income tax expense (benefit)			922						(765)
Income from continuing operations			3,049						150
Income from discontinued operations, net of tax			48,472						13,130
Net income			51,521						13,280
Other comprehensive income:
Unrealized income (loss) on interest rate hedge, net of tax			773						(6,106)
Comprehensive income			$	52,294					$	7,174
Net income per share, basic and diluted:
Basic - Income from continuing operations			$	0.06					$	—
Basic - Income from discontinued operations, net of tax			$	0.97					$	0.27
Basic net income per share			$	1.03					$	0.27
Diluted - Income from continuing operations			$	0.06					$	—
Diluted - Income from discontinued operations, net of tax			$	0.97					$	0.27
Diluted net income per share			$	1.03					$	0.27
Weighted average shares outstanding, basic			49,947						49,888
Weighted average shares outstanding, diluted			50,081						50,036

See accompanying notes to unaudited condensed consolidated financial statements.

SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(in thousands)
						Shares of Common Stock (no par value)						Additional Paid in Capital						Retained Earnings						Accumulated Other Comprehensive (Loss) Income						Total
Balance, December 31, 2020						49,868						$	47,317					$	539,783					$	(4,706)					$	582,394
Net income						—						—						51,521						—						51,521
Other comprehensive gain (loss), net of tax						—						—						—						773						773
Stock based compensation						109						746						—						—						746
Stock options exercised						—						—						—						—						—
Common stock issued						—						8						—						—						8
Shares retired for settlement of employee taxes upon issuance of vested equity awards						(33)						(1,486)						—						—						(1,486)
Common stock issued to acquire non-controlling interest in nTelos						—						—						—						—						—
Balance, March 31, 2021						49,943						$	46,583					$	591,304					$	(3,933)					$	633,954
						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					$	430,010					$	308					$	472,428
Net income						—						—						13,280						—						13,280
Other comprehensive loss, net of tax						—						—						—						(6,106)						(6,106)
Stock-based compensation						137						2,985						—						—						2,985
Common stock issued						—						8						—						—						8
Shares retired for settlement of employee taxes upon issuance of vested equity awards						(42)						(1,945)						—						—						(1,945)
Common stock issued to acquire non-controlling interest in nTelos						76						—						—						—						—
Balance, March 31, 2020						49,842						$	43,158					$	443,290					$	(5,798)					$	480,650

See accompanying notes to unaudited condensed consolidated financial statements.

SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)			Three Months Ended March 31,
			2021						2020
Cash flows from operating activities:
Net income			$	51,521					$	13,280
Income from discontinued operations, net of tax			48,472						13,130
Income from continuing operations			3,049						150
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation			13,043						11,931
Amortization			223						154
Accretion of asset retirement obligations			93						81
Bad debt expense			137						205
Stock based compensation expense, net of amount capitalized			642						2,739
Deferred income taxes			5,256						(385)
Gain from patronage and investments			(432)						(338)
Changes in assets and liabilities:
Accounts receivable			1,861						2,998
Current income taxes			(4,334)						(388)
Operating lease right-of-use assets			669						666
Other assets			(5,824)						(1,732)
Accounts payable			(281)						1,262
Lease liabilities			(929)						(416)
Other deferrals and accruals			(4,037)						(3,673)
Net cash provided by operating activities - continuing operations			9,136						13,254
Net cash provided by operating activities - discontinued operations			75,530						47,854
Net cash provided by operating activities			84,666						61,108
Cash flows from investing activities:
Capital expenditures			(39,482)						(23,362)
Proceeds from sale of assets and other			14						263
Net cash used in investing activities - continuing operations			(39,468)						(23,099)
Net cash used in investing activities - discontinued operations			(882)						(8,926)
Net cash used in investing activities			(40,350)						(32,025)
Cash flows from financing activities:
Taxes paid for equity award issuances			(1,486)						(1,945)
Payments for financing arrangements and other			(496)						(27)
Net cash used in financing activities - continuing operations			(1,982)						(1,972)
Net cash used in financing activities - discontinued operations			(8,549)						(8,530)
Net cash used in financing activities			(10,531)						(10,502)
Net increase in cash and cash equivalents			33,785						18,581
Cash and cash equivalents, beginning of period			195,397						101,651
Cash and cash equivalents, end of period			$	229,182					$	120,232

See accompanying notes to unaudited condensed consolidated financial statements.

SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1.  Basis of Presentation and Other Information

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X for interim financial information. All normal recurring adjustments considered necessary for a fair presentation have been included. Certain disclosures normally included in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) have been omitted. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2020.

The preparation of the unaudited interim consolidated financial statements requires management of the Company to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingencies at the date of the unaudited interim condensed consolidated financial statements. These estimates are inherently subject to judgment and actual results could differ.

Adoption of New Accounting Principles

There have been no material developments related to recently issued accounting standards, including the expected dates of adoption and estimated effects on the Company's unaudited condensed consolidated financial statements and note disclosures, from those disclosed in the Company's 2020 Annual Report on Form 10-K, that would be expected to impact the Company.

Note 2. Discontinued Operations

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

The final and binding appraisal process that determined the transaction price was completed on February 1, 2021. Expected sale proceeds are $1.95 billion based upon the appraisal process and other agreements between the parties.

The closing of the sale is now expected to occur in the third quarter of 2021, subject to execution of the definitive asset purchase agreement, securing required regulatory approvals and customary closing conditions. The Company and T-Mobile submitted required regulatory filings to the Department of Justice (DOJ), the Federal Communications Commission (FCC), and the Public Service Commission of West Virginia (PSCWV), in March 2021. The premerger notification waiting period under the Hart-Scott Rodino Antitrust Improvements Act of 1976, as amended, expired on April 26, 2021, without the DOJ’s Antitrust Division or the Federal Trade Commission taking any action in connection with the proposed transaction thus allowing the parties to consummate the transaction upon receipt of pending regulatory approvals from the FCC and the PSCWV.

The assets and liabilities that are expected to transfer in the sale are presented as held for sale within our unaudited condensed consolidated balance sheets, and discontinued operations within our unaudited condensed consolidated statements of comprehensive income. This disposal group excludes the accounts receivable and certain current liabilities generated by our Wireless operations because they are expected to be settled separately from the sale. Such accounts receivable totaled $49.4 million and $51.7 million at March 31, 2021 and December 31, 2020, respectively, and such current liabilities totaled $4.9 million and $6.1 million at March 31, 2021 and December 31, 2020, respectively. Our identification of assets and liabilities held for sale could change based on the terms of the final asset purchase agreement.

The transaction is structured as an asset sale for income tax purposes. As a result, no current or deferred tax assets or liabilities are included within the disposal group. While our long-term debt does not transfer in the sale, its provisions require us to repay all of the debt upon consummation of the sale. Our debt is therefore presented outside of the disposal group as a current liability at December 31, 2020. Our related interest rate swap liabilities are also presented outside of the disposal group as a current liability at December 31, 2020, because management intends to settle them at consummation. Because repayment of the debt is

contractually triggered by the sale, the related interest expense is presented within discontinued operations under the relevant authoritative guidance.

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

Income from discontinued operations, net of tax in the consolidated statements of comprehensive income consist of the following:

Under the relevant authoritative guidance, consummation of the sale will trigger or accelerate the recognition of certain expense related to contingent deal advisory fees, severance costs, recognition of our interest rate swap losses in net income, and loss on debt extinguishment. Our estimate of the related range of reasonably possible expense extends from $0 if the sale is not consummated to $36 million.

Note 3. Revenue from Contracts with Customers

Our Broadband segment provides broadband data, video and voice services to residential and commercial customers in portions of Virginia, West Virginia, Maryland, Pennsylvania and Kentucky, via fiber optic, hybrid fiber coaxial cable, and fixed wireless networks. The Broadband segment also provides voice and DSL telephone services to customers in Virginia’s Shenandoah County and portions of adjacent counties as a Rural Local Exchange Carrier (“RLEC”).

These contracts are generally cancellable at the customer’s discretion without penalty at any time. We allocate the total transaction price in these transactions based upon the standalone selling price of each distinct good or service. 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. 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 about one year. Additionally, the Company incurs commission and installation costs related to in-house and third-party vendors which are capitalized and amortized over the expected weighted average customer life which is approximately five years.

Our Broadband segment also provides Ethernet and Wavelength fiber optic services to commercial fiber customers under capacity agreements, and the related revenue is recognized over time. In some cases, non-refundable upfront fees are charged for connecting commercial fiber customers to our fiber network. Those amounts are recognized ratably over the longer of the contract term or the period in which the unrecognized fee remains material to the respective contract. A related contract liability of $2.8 million was recognized at March 31, 2021, which we expect to recognize into revenue at the rate of approximately $0.8 million per year.

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

Our Tower segment leases space on owned cell towers to our Wireless and Broadband segments, and to other wireless carriers. Revenue from these leases is accounted for under ASC 842.

Refer to Note 14, Segment Reporting, for a summary of these revenue streams.

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

SERP Investments at Fair Value: The Supplemental Executive Retirement Plan (“SERP”) is a benefit plan that provides deferred compensation to certain employees. The Company holds the related 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 (expense), while the reciprocal changes in the liability are presented in selling, general and administrative expense. At March 31, 2021, an additional $0.8 million of SERP investments were presented as prepaid expenses and other (current assets) as we intend to liquidate certain investments to pay the current portion of our SERP obligation.

Cost Method Investments: Our investment in CoBank’s Class A common stock represented substantially all of our cost method investments with a balance of $10.0 million and $9.8 million at March 31, 2021 and December 31, 2020, respectively. We recognized approximately $1.0 million of patronage income in Other income (expense) in both the three months ended March 31, 2021 and 2020. Historically, approximately 75% of the patronage distributions were collected in cash and 25% in equity.

Equity Method Investments: At March 31, 2021, 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. We recognized revenue of $0.2 million from providing service to ValleyNet during both of the three months ended March 31, 2021 and 2020, respectively. We recognized Cost of service of $0.5 million and $0.8 million for the use of ValleyNet’s network during the three months ended March 31, 2021 and 2020, respectively.

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

We acquired Canaan Cable ("Canaan") on December 31, 2020. The $2.1 million acquisition price was allocated as follows: $1.1 million of property, plant and equipment; $0.4 million to subscriber relationships; and $0.6 million of goodwill. We remitted $1.89 million of the acquisition price at closing.

During the third quarter of 2020, the Company completed the purchase of certain indefinite-lived CBRS spectrum licenses for an aggregate cost of $16.1 million, within our Broadband segment. Spectrum licenses in the CBRS band are issued by the Federal Communications Commission (“FCC”) and provide us priority access rights over general access users other than incumbents, in that specific band, in accordance with the FCC’s three-tier CBRS band spectrum sharing framework to utilize designated radio frequency spectrum within specific geographic service areas to provide wireless communication services.

For the three months ended March 31, 2021 and 2020, amortization expense was approximately $0.2 million and $0.2 million, respectively.

Deferred charges and other assets, classified as long-term assets, included the following:

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

Other liabilities, classified as long-term liabilities, included the following:

During the three months ended March 31, 2021, we implemented a restructuring plan whereby certain employees will leave the Company during the second quarter of 2021. We recognized a restructuring accrual for severance benefits payable to those employees totaling $0.8 million. Of that amount, $0.6 million was presented within income from continuing operations, and $0.2 million was presented within income from discontinued operations.

Note 8. Leases

We lease various telecommunications sites, warehouses, retail stores, and office facilities for use in our business. These agreements include fixed rental payments as well as variable rental payments, such as those based on relevant inflation indices. The accounting lease term includes optional renewal periods that we are reasonably certain to exercise based on our assessment of relevant contractual and economic factors. The related lease payments are discounted at lease commencement using the Company's incremental borrowing rate in order to measure the lease liability and ROU asset.

The 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. At March 31, 2021, our operating leases had a weighted average remaining lease term of 22 years and a weighted average discount rate of 4.5%. Our finance leases had a weighted average remaining lease term of 14 years and a weighted average discount rate of 5.2%.

During each of the three months ended March 31, 2021 and 2020, we recognized $1.4 million of operating lease expense. We recognized $0.2 million and $0.1 million of interest and depreciation expense on finance leases during the three months ended March 31, 2021 and 2020, respectively. 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 $1.5 million and $1.0 million of operating lease payments during the three months ended March 31, 2021 and 2020, respectively. We also obtained $2.7 million and $0.3 million of leased assets in exchange for new operating lease liabilities recognized during the three months ended March 31, 2021 and 2020, respectively.

The following table summarizes the expected maturity of lease liabilities at March 31, 2021:

(in thousands)						Operating Leases						Finance Leases						Total
2021						$	3,639					$	107					$	3,746
2022						4,695						175						4,870
2023						4,251						177						4,428
2024						3,894						179						4,073
2025						3,672						181						3,853
2026 and thereafter						65,240						1,551						66,791
Total lease payments						85,391						2,370						87,761
Less: Interest						35,282						695						35,977
Present value of lease liabilities						$	50,109					$	1,675					$	51,784

We recognized $2.4 million and $2.1 million of operating lease revenue during the three months ended March 31, 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 and other revenue in the consolidated statements of comprehensive income. Substantially all of our lease revenue relates to fixed lease payments.

Below is a summary of our minimum rental receipts under the lease agreements in place at March 31, 2021:

Term Loan A-1 bears interest at one-month LIBOR plus a margin of 1.50%, while Term Loan A-2 bears interest at one-month LIBOR plus a margin of 1.75%. LIBOR resets monthly. Our cash payments for interest were $3.9 million and $5.8 million during the three months ended March 31, 2021 and 2020, respectively.

As shown below, as of March 31, 2021, the Company was in compliance with the financial covenants in its credit agreements.

Rate quotations provided by a group of banks that sustain LIBOR will no longer be required after 2021. As a result, it is uncertain whether LIBOR will continue to be quoted after 2021. Our term loans and interest rate swaps identify LIBOR as a reference rate and mature after 2021. 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, affect the fair value of the derivative instruments we hold, or affect our ability to effectively use interest rate swaps to manage interest rate risk. 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, including when it will happen, and the manner in which an alternative reference rate will apply, we cannot yet reasonably estimate the expected financial impact of the LIBOR transition.

As discussed in Note 2, Discontinued Operations, the terms of our long term debt agreements require us to repay all of our debt upon consummation of the sale of our Wireless operations, which is expected to occur during the third quarter of 2021. Management also intends to settle the related interest rate swaps upon consummation. Both are therefore presented outside of the disposal group as a current liability at March 31, 2021.

Note 10.  Derivatives and Hedging

The Company's interest rate swaps are pay-fixed (1.16%), receive-variable (one month LIBOR) that hedged approximately 40% of outstanding debt with outstanding notional amounts totaling $275.3 million and $328.7 million as of March 31, 2021 and 2020, respectively.

The fair value of these instruments was estimated using an income approach and observable market inputs. The hedge was determined to be highly effective and therefore all of the change in its fair value was recognized through other comprehensive income.

The table below summarizes changes in accumulated other comprehensive income (loss) by component:

Note 11.  Income Taxes

The Company files U.S. federal income tax returns and various state income tax returns. The Company is not subject to any state or federal income tax audits as of March 31, 2021. The Company's returns are generally open to examination from 2017 forward and the net operating losses acquired in the acquisition of nTelos are open to examination from 2002 forward.

The effective tax rates for the three months ended March 31, 2021 and 2020, differ from the statutory U.S. federal income tax rate of 21% primarily due to the state income taxes, excess tax benefits and other discrete items.

The Company's cash refunds for income taxes were $0.8 million in the three months ended March 31, 2021. The Company had no significant cash payments or refunds for income taxes during the three months ended March 31, 2020.

There were fewer than 100 thousand anti-dilutive awards outstanding during three months ended March 31, 2021 and 2020.

Note 13.  Commitments and Contingencies

We are committed to make payments to satisfy our lease liabilities and long-term debt. The scheduled payments under those obligations are summarized in the respective notes. We are also committed to make annual payments of approximately $108.0 thousand on our FCC spectrum license obligation through 2039.

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 expected divestiture of our Wireless operations represents a strategic shift in the Company’s business and qualifies as a discontinued operation. As a result, the operating results and cash flows related to the Wireless segment have been reflected as discontinued operations in our Unaudited Condensed Consolidated Statements of Comprehensive Income and the Unaudited Condensed 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.

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

The Company’s chief operating decision maker (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 provided.