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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Otelco - Income Deposit Securities (MM) | NASDAQ:OTT | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0 | - |
Delaware
|
52-2126395
|
|
(State or Other Jurisdiction of
|
(I.R.S. Employer
|
|
Incorporation or Organization)
|
Identification No.)
|
|
505 Third Avenue East, Oneonta, Alabama
|
35121
|
|
(Address of Principal Executive Offices)
|
(Zip Code)
|
Title of Each Class
|
Name of Each Exchange on Which Registered
|
|
Income Deposit Securities, each representing shares of
Common Stock and Senior Subordinated
Notes due 2019
|
The NASDAQ Stock Market LLC
|
Large accelerated filer o | Accelerated filer x | |
Non-accelerated filer o | Smaller reporting company o | |
(Do not check if a smaller reporting company) |
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90
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Item 15. | Exhibits and Financial Statement Schedules |
90
|
Voice and data access lines, or access line equivalents
|
99,395 | |||
Wholesale network connections
|
162,117 | |||
Cable television customers
|
4,155 | |||
Additional internet customers
|
4,506 |
Source of Revenue
|
||||
Local services
|
45.6 | % | ||
Network access
|
30.4 | |||
Cable television
|
3.2 | |||
Internet
|
15.1 | |||
Transport services
|
5.7 | |||
Total
|
100.0 | % |
|
●
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customers could seek alternative sources of services from our competitors;
|
|
●
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employees could be distracted from performance of their duties or more easily attracted to other career opportunities; and
|
|
●
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vendors, suppliers, agents and other business partners could terminate their relationship with us or require financial assurances or enhanced performance.
|
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●
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incur additional indebtedness and issue preferred stock and certain redeemable capital stock;
|
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●
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make certain types of restricted payments, including investments and acquisitions;
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●
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pay dividends on our common stock;
|
|
●
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sell certain assets;
|
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●
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enter into specified transactions with affiliates;
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●
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create a number of liens;
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●
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consolidate, merge or transfer all or substantially all of our assets; and
|
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●
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change the nature of our business.
|
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●
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our territories could have significant weather events which physically damage access lines and network infrastructure;
|
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●
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our rural geography creates the risk of security breaches, break-ins and sabotage;
|
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●
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power surges and outages, computer viruses or hacking and software or hardware defects that are beyond our control; and
|
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●
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unusual spikes in demand or capacity limitations in our or our suppliers’ networks.
|
Item 1B. | Unresolved Staff Comments |
Item 2. | Properties |
Land
|
$ | 1,156,843 | ||
Buildings and improvements
|
12,296,102 | |||
Telephone equipment
|
223,465,617 | |||
Cable television equipment
|
11,266,855 | |||
Furniture and equipment
|
2,989,944 | |||
Vehicles
|
6,185,199 | |||
Computer software and equipment
|
15,892,452 | |||
Internet equipment
|
3,870,817 | |||
Total property and equipment
|
277,123,829 | |||
Accumulated depreciation
|
(218,880,926 | ) | ||
Net property and equipment
|
$ | 58,242,903 |
Item 3. | Legal Proceedings |
Item 4. | Mine Safety Disclosures |
Item X. | Executive Officers of the Registrant |
Name
|
Age
|
Position
|
||
Michael D. Weaver
|
60
|
President, Chief Executive Officer and Director
|
||
Curtis L. Garner, Jr.
|
65
|
Chief Financial Officer
|
||
Dennis Andrews
|
56
|
Senior Vice President and General Manager – Alabama & Missouri
|
||
Jerry C. Boles
|
60
|
Senior Vice President and Controller
|
||
E. Todd Wessing
|
47
|
Vice President and General Manager – Missouri
|
||
Robert J. Souza
|
59
|
Senior Vice President and General Manager – New England
|
||
Edwin D. Tisdale
|
53
|
Senior Vice President – New England Support Services
|
Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
High ($US)
|
Low ($US)
|
|||||||
2012
|
||||||||
Fourth Quarter
|
$ | 2.79 | $ | 1.29 | ||||
Third Quarter
|
$ | 7.48 | $ | 1.56 | ||||
Second Quarter
|
$ | 13.25 | $ | 5.11 | ||||
First Quarter
|
$ | 15.00 | $ | 11.88 | ||||
2011
|
||||||||
Fourth Quarter
|
$ | 16.72 | $ | 13.50 | ||||
Third Quarter
|
$ | 18.47 | $ | 14.40 | ||||
Second Quarter
|
$ | 19.65 | $ | 17.27 | ||||
First Quarter
|
$ | 20.30 | $ | 18.18 |
|
●
|
we may only pay dividends in any given fiscal quarter that are less than 100% of our excess cash for the period from and including the first fiscal quarter beginning after the date of the indenture to the end of our most recently ended fiscal quarter for which internal financial statements are available at the time of such payment. “Excess Cash” means with respect to any period, Adjusted EBITDA, as defined in the indenture, minus the sum of (i) cash interest expense, (ii) capital expenditures and (iii) cash income tax expense, in each case, for such period;
|
|
●
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we may not pay dividends if our interest coverage ratio, which is defined as Adjusted EBITDA divided by consolidated interest expense, is below 1.4 times;
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●
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we may not pay any dividends if not permitted under any of our senior indebtedness;
|
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●
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we may not pay any dividends while interest on the senior subordinated notes is being deferred or, after the end of any interest deferral, so long as any deferred interest has not been paid in full; and
|
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●
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we may not pay any dividends if a default or event of default under the indenture governing the senior subordinated notes has occurred and is continuing.
|
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●
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a “fixed charge coverage ratio” (defined as our Consolidated EBITDA, as defined in the credit facility, for any period of four consecutive fiscal quarters divided by the sum of certain capital expenditures, cash income taxes, the aggregate amount of cash interest expense and scheduled principal payments for such period) of not less than 1.14 times; and
|
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●
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a “senior leverage ratio” (defined as senior secured debt as of the last day of any period divided by our Consolidated EBITDA, as defined in the credit facility, for any period of four consecutive fiscal quarters) of not more than 3.85 times.
|
12/07 | 12/08 | 12/09 | 12/10 | 12/11 | 12/12 | |||||||||||||||||||
Otelco Inc.
|
$ | 100.00 | $ | 62.02 | $ | 141.06 | $ | 189.62 | $ | 159.14 | $ | 16.39 | ||||||||||||
Russell 2000
|
$ | 100.00 | $ | 66.21 | $ | 84.20 | $ | 106.82 | $ | 102.36 | $ | 119.09 | ||||||||||||
S&P Telecommunication Services
|
$ | 100.00 | $ | 69.51 | $ | 75.72 | $ | 90.08 | $ | 95.72 | $ | 113.24 |
Item 6. | Selected Financial Data |
At and For The Year Ended December 31,
|
||||||||||||||||||||
2008
(1)
|
2009
|
2010
|
2011
(1)
|
2012
|
||||||||||||||||
(In Thousands Except Per Share Amounts)
|
||||||||||||||||||||
Income Statement Data
|
||||||||||||||||||||
Revenues:
|
||||||||||||||||||||
Local services
|
$ | 30,014 | $ | 48,441 | $ | 49,014 | $ | 47,463 | $ | 44,880 | ||||||||||
Network access
|
27,281 | 33,297 | 32,982 | 32,128 | 29,934 | |||||||||||||||
Cable television
|
2,389 | 2,489 | 2,799 | 2,981 | 3,153 | |||||||||||||||
Internet
|
12,449 | 14,027 | 14,015 | 13,946 | 14,802 | |||||||||||||||
Transport services
|
4,982 | 5,501 | 5,590 | 5,326 | 5,635 | |||||||||||||||
Total
|
$ | 77,115 | $ | 103,755 | $ | 104,400 | $ | 101,844 | $ | 98,404 | ||||||||||
Income (loss) from operations
|
$ | 21,087 | $ | 21,927 | $ | 26,369 | $ | 24,630 | $ | (129,394 | ) | |||||||||
Income (loss) before income tax
|
$ | 243 | $ | (4,484 | ) | $ | 1,301 | $ | 2,447 | $ | (151,767 | ) | ||||||||
Net income (loss) available to common stockholders
|
$ | 214 | $ | (3,118 | ) | $ | 691 | $ | 2,197 | $ | (126,900 | ) | ||||||||
Net income (loss) per common share
|
||||||||||||||||||||
Basic
|
$ | 0.02 | $ | (0.25 | ) | $ | 0.05 | $ | 0.17 | $ | (9.60 | ) | ||||||||
Diluted
|
$ | (0.03 | ) | $ | (0.25 | ) | $ | 0.05 | $ | 0.17 | $ | (9.60 | ) | |||||||
Dividends declared per share
|
$ | 0.71 | $ | 0.71 | $ | 0.71 | $ | 0.71 | $ | 0.18 | ||||||||||
Balance Sheet Data
|
||||||||||||||||||||
Cash and cash equivalents
|
$ | 13,542 | $ | 17,731 | $ | 18,226 | $ | 12,394 | $ | 32,516 | ||||||||||
Property and equipment, net
|
75,407 | 69,029 | 63,887 | 65,882 | 58,243 | |||||||||||||||
Total assets
|
355,541 | 337,528 | 322,136 | 317,724 | 172,325 | |||||||||||||||
Long-term notes payable (including current portion)
|
278,800 | 273,717 | 271,596 | 271,106 | 270,990 |
Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
|
●
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the $162 million of outstanding principal term loan obligations under the Company’s senior credit facility will be reduced to a maximum of $142 million (or such higher amount that is agreed to in writing by the agent under the Company’s senior credit facility and the holders of more than 50% in number and 66 2/3% in amount of the outstanding principal term loan obligations under the Company’s senior credit facility) through a cash payment;
|
|
●
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the maturity of the outstanding principal term loan obligations under the Company’s senior credit facility will be extended to April 30, 2016;
|
|
●
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the Company’s senior credit facility will be amended to, among other things:
|
|
o
|
require amortized payments at a straight-line rate of 5.0% per annum commencing the first quarter after the effectiveness of the Plan, payable quarterly in arrears;
|
|
o
|
require quarterly excess cash flow principal payments equal to 75% of the Company’s excess cash as defined in the Plan Support Agreement; and
|
|
o
|
modify the interest rate to a marginal rate of 3.5% plus the greater of LIBOR or 3.0%
|
|
●
|
the holders of the outstanding principal term loan obligations under the Company’s senior credit facility will receive their pro rata share of the Company’s new Class B common stock, which new Class B common stock will represent 7.5% of the total economic and voting interests in the Company immediately following the effectiveness of the Plan, subject to dilution of up to 10% on account of the issuance of equity interests in the Company pursuant to a management equity plan which is expected to be adopted by the Company following its emergence from bankruptcy;
|
|
●
|
certain revolving loan commitments under the Company’s senior credit facility will be reinstated, with availability of up to $5 million;
|
|
●
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the Company’s outstanding senior subordinated notes, including the outstanding senior subordinated notes constituting part of the Company’s IDSs, will be cancelled and the holders of outstanding senior subordinated notes, including senior subordinated notes held through IDSs, will receive their pro rata share of the Company’s new Class A common stock, which new Class A common stock will represent 92.5% of the total economic and voting interests in the Company immediately following the effectiveness of the Plan, subject to dilution of up to 10% on account of the issuance of equity interests in the Company pursuant to the management equity plan referred to above; and
|
|
●
|
the outstanding shares of the Company’s existing common stock, all of which currently constitute part of the IDSs, will be cancelled.
|
|
●
|
Local services
. We receive revenues from providing local exchange telecommunications services in our eleven rural territories, from the wholesale network services in New England, and on a competitive basis throughout Maine and New Hampshire. These revenues include monthly subscription charges for basic service, calling beyond the local territory on a fixed price and on a per minute basis, local private line services and enhanced calling features, such as voicemail, caller identification, call waiting and call forwarding. We also provide billing and collections services for other carriers under contract and receive revenues from directory advertising. A growing portion of our rural subscribers take bundled service plans which include multiple services, including unlimited domestic calling, for a flat monthly fee.
|
|
●
|
Network access
. We receive revenues from charges established to compensate us for the origination, transport and termination of calls of long distance, wireless and other interexchange carriers. These include subscriber line charges imposed on end users and switched and special access charges paid by carriers. Switched access charges for long distance services within Alabama, Massachusetts, Maine, Missouri, New Hampshire, Vermont and West Virginia are based on rates approved by the APSC, MDTC, MPUC, MPSC, NHPUC, VPSB and WVPSC, respectively, where appropriate. Switched and special access charges for interstate and international services are based on rates approved by the FCC.
|
|
●
|
Cable television
. We offer basic, digital, high-definition, digital video recording, VOD and pay per view cable television services to a portion of our telephone service territory in Alabama, including IPTV. We are a reseller of satellite services for DirecTV.
|
|
●
|
Internet
. We receive revenues from monthly recurring charges for digital high-speed data lines, legacy dial-up internet access and ancillary services such as web hosting and computer virus protection.
|
|
●
|
Transport Services
. We receive monthly recurring revenues for the rental of fiber to transport data and other telecommunications services in Maine and New Hampshire.
|
September
|
December
|
Quarterly
% Change
September 30-
|
Annual
|
|||||||||||||||||||||
December 31,
|
30, | 31, |
December 31,
|
% Change
|
||||||||||||||||||||
2011
(2)
|
2012
|
2011 | 2012 | 2012 | 2011-2012 | |||||||||||||||||||
Otelco access line equivalents
(1)
|
102,378 | 99,395 | 100,195 | 99,395 | (0.8 | )% | (2.9 | )% | ||||||||||||||||
RLEC and other services:
|
||||||||||||||||||||||||
Voice access lines
|
46,202 | 43,021 | 43,816 | 43,021 | (1.8 | )% | (6.9 | )% | ||||||||||||||||
Data access lines
|
22,904 | 22,742 | 22,977 | 22,742 | (1.0 | )% | (0.7 | )% | ||||||||||||||||
Access line equivalents
(1)
|
69,106 | 65,763 | 66,793 | 65,763 | (1.5 | )% | (4.8 | )% | ||||||||||||||||
Cable television customers
|
4,201 | 4,155 | 4,181 | 4,155 | (0.6 | )% | (1.1 | )% | ||||||||||||||||
Satellite television customers
|
226 | 233 | 232 | 233 | 0.4 | % | 3.1 | % | ||||||||||||||||
Additional internet customers
|
5,414 | 4,506 | 4,690 | 4,506 | (3.9 | )% | (16.8 | )% | ||||||||||||||||
RLEC dial-up
|
301 | 198 | 211 | 198 | (6.2 | )% | (34.2 | )% | ||||||||||||||||
Other dial-up
|
2,797 | 1,895 | 2,083 | 1,895 | (9.0 | )% | (32.2 | )% | ||||||||||||||||
Other data lines
|
2,316 | 2,413 | 2,396 | 2,413 | 0.7 | % | 4.2 | % | ||||||||||||||||
CLEC:
|
||||||||||||||||||||||||
Voice access lines
|
30,189 | 30,470 | 30,341 | 30,470 | 0.4 | % | 0.9 | % | ||||||||||||||||
Data access lines
|
3,083 | 3,162 | 3,061 | 3,162 | 3.3 | % | 2.6 | % | ||||||||||||||||
Access line equivalents
(1)
|
33,272 | 33,632 | 33,402 | 33,632 | 0.7 | % | 1.1 | % | ||||||||||||||||
Wholesale network connections
(3)
|
157,144 | 162,117 | 162,700 | 162,117 | (0.4 | )% | 3.2 | % | ||||||||||||||||
For the Years Ended
December 31,
|
Annual Change
2011-2012
|
|||||||||||||||||||
2010
|
2011
(2)
|
2012
|
Amount
|
Percent
|
||||||||||||||||
Total revenues (in millions):
|
$ | 104.4 | $ | 101.8 | $ | 98.4 | $ | (3.40 | ) | (3.3 | )% | |||||||||
RLEC
|
$ | 58.1 | $ | 57.4 | $ | 55.7 | $ | (1.70 | ) | (3.0 | )% | |||||||||
CLEC
|
$ | 46.3 | $ | 44.4 | $ | 42.7 | $ | (1.70 | ) | (3.8 | )% |
(1)
We define access line equivalents as voice access lines and data access lines (including cable modems, digital subscriber lines, and dedicated data access trunks).
(2)
We acquired Shoreham on October 14, 2011. At December 31, 2011, Shoreham had 3,309 voice access lines and 1,672 data access lines, or 4,981 access line equivalents, and 55 dial-up internet customers which are included in the Key Operating Statistics.
|
|||||
(3)
TW is the source for approximately 98% of wholesale network connections reflected in the Key Operating Statistics. The TW contract was not renewed when it expired on December 31, 2012. Substantially all of the TW connections were ported to the TW network during the first quarter of 2013.
|
Year Ended December 31,
|
||||||||||||
2010
|
2011
|
2012
|
||||||||||
Revenues
|
||||||||||||
Local services
|
46.9 | % | 46.6 | % | 45.6 | % | ||||||
Network access
|
31.6 | 31.6 | 30.4 | |||||||||
Cable television
|
2.7 | 2.9 | 3.2 | |||||||||
Internet
|
13.4 | 13.7 | 15.1 | |||||||||
Transport services
|
5.4 | 5.2 | 5.7 | |||||||||
Total revenues
|
100.0 | % | 100.0 | % | 100.0 | % | ||||||
Operating expenses
|
||||||||||||
Cost of services
|
39.5 | % | 43.2 | % | 42.9 | % | ||||||
Selling, general and administrative expenses
|
12.5 | 12.7 | 14.2 | |||||||||
Depreciation and amortization
|
22.7 | 19.9 | 19.6 | |||||||||
Long-lived assets impairment – PP&E
|
- | - | 2.9 | |||||||||
Long-lived assets impairment – intangibles
|
- | - | 5.8 | |||||||||
Goodwill impairment
|
- | - | 146.0 | |||||||||
Total operating expenses
|
74.7 | 75.8 | 231.4 | |||||||||
Income (loss) from operations
|
25.3 | 24.2 | (131.4 | ) | ||||||||
Other income (expense)
|
||||||||||||
Interest expense
|
(23.7 | ) | (24.3 | ) | (23.3 | ) | ||||||
Change in fair value of derivatives
|
(0.8 | ) | 2.2 | 0.2 | ||||||||
Other income
|
0.5 | 0.3 | 0.3 | |||||||||
Total other expenses
|
(24.0 | ) | (21.8 | ) | (22.8 | ) | ||||||
Income (loss) before income taxes
|
1.3 | 2.4 | (154.2 | ) | ||||||||
Income tax (expense) benefit
|
(0.6 | ) | (0.2 | ) | 25.3 | |||||||
Net income (loss) available to common stockholders
|
0.7 | % | 2.2 | % | (128.9 | )% |
Year Ended December 31,
|
Change
|
|||||||||||||||
2011
|
2012
|
Amount
|
Percent
|
|||||||||||||
(Dollars in Thousands)
|
||||||||||||||||
Local services
|
$ | 47,463 | $ | 44,881 | $ | (2,582 | ) | (5.4 | )% | |||||||
Network access
|
32,128 | 29,934 | (2,194 | ) | (6.8 | ) | ||||||||||
Cable television
|
2,981 | 3,153 | 172 | 5.8 | ||||||||||||
Internet
|
13,946 | 14,801 | 855 | 6.1 | ||||||||||||
Transport services
|
5,326 | 5,635 | 309 | 5.8 | ||||||||||||
Total revenues
|
$ | 101,844 | $ | 98,404 | $ | (3,440 | ) | (3.4 | ) |
Year Ended December 31,
|
Change
|
|||||||||||||||
2011
|
2012
|
Amount
|
Percent
|
|||||||||||||
(Dollars in Thousands)
|
||||||||||||||||
Cost of services
|
$ | 43,996 | $ | 42,232 | (1,764 | ) | (4.0 | )% | ||||||||
Selling, general and administrative expenses
|
12,985 | 14,013 | 1,028 | 7.9 | ||||||||||||
Depreciation and amortization
|
20,232 | 19,277 | (955 | ) | (4.7 | ) | ||||||||||
Long-lived assets impairment – PP&E
|
- | 2,874 | 2,874 |
NM
|
||||||||||||
Long-lived assets impairment – intangibles
|
- | 5,748 | 5,748 |
NM
|
||||||||||||
Goodwill impairment
|
- | 143,654 | 143,654 |
NM
|
||||||||||||
Total
|
$ | 77,213 | $ | 227,798 | $ | 150,585 |
NM
|
Year Ended December 31,
|
Change
|
|||||||||||||||
2011
|
2012
|
Amount
|
Percent
|
|||||||||||||
(Dollars in Thousands)
|
||||||||||||||||
Interest expense
|
$ | (24,776 | ) | $ | (22,932 | ) | $ | (1,844 | ) | (7.4 | )% | |||||
Change in fair value of derivatives
|
2,230 | 241 | (1,989 | ) |
NM
|
|||||||||||
Other income
|
363 | 316 | (47 | ) | (12.9 | ) | ||||||||||
Income tax benefit (expense)
|
(250 | ) | 24,868 | 25,118 |
NM
|
Year Ended December 31,
|
Change
|
|||||||||||||||
2010
|
2011
|
Amount
|
Percent
|
|||||||||||||
(Dollars in Thousands)
|
||||||||||||||||
Local services
|
$ | 49,014 | $ | 47,463 | $ | (1,551 | ) | (3.2 | )% | |||||||
Network access
|
32,982 | 32,128 | (854 | ) | (2.6 | ) | ||||||||||
Cable television
|
2,799 | 2,981 | 182 | 6.5 | ||||||||||||
Internet
|
14,015 | 13,946 | (69 | ) | (0.5 | ) | ||||||||||
Transport services
|
5,590 | 5,326 | (264 | ) | (4.7 | ) | ||||||||||
Total
|
$ | 104,400 | $ | 101,844 | $ | (2,556 | ) | (2.4 | ) |
Year Ended December 31,
|
Change
|
|||||||||||||||
2010
|
2011
|
Amount
|
Percent
|
|||||||||||||
(Dollars in Thousands)
|
||||||||||||||||
Cost of services
|
$ | 41,286 | $ | 43,996 | $ | 2,710 | 6.6 | % | ||||||||
Selling, general and administrative expenses
|
13,075 | 12,985 | (90 | ) | (0.7 | ) | ||||||||||
Depreciation and amortization
|
23,670 | 20,232 | (3,438 | ) | (14.5 | ) | ||||||||||
Total
|
$ | 78,031 | $ | 77,213 | $ | (818 | ) | (1.0 | ) |
Year Ended December 31,
|
Change
|
|||||||||||||||
2010
|
2011
|
Amount
|
Percent
|
|||||||||||||
(Dollars in Thousands)
|
||||||||||||||||
Interest expense
|
$ | (24,747 | ) | $ | (24,776 | ) | $ | 29 | 0.1 | % | ||||||
Change in fair value of derivatives
|
(878 | ) | 2,230 | 3,108 |
NM
|
|||||||||||
Other income
|
557 | 363 | (194 | ) | (34.8 | ) | ||||||||||
Income tax expense
|
(610 | ) | (250 | ) | 360 |
NM
|
Year Ended December 31,
|
||||||||||||
2010
|
2011
|
2012
|
||||||||||
(Dollars in Thousands)
|
||||||||||||
Cash generation
|
||||||||||||
Revenues
|
$ | 104,400 | $ | 101,844 | $ | 98,404 | ||||||
Other income
|
557 | 363 | 317 | |||||||||
Cash received from operations
|
104,957 | 102,207 | 98,721 | |||||||||
Cost of services
|
41,286 | 43,996 | 42,232 | |||||||||
Selling, general and administrative expenses
|
13,075 | 12,985 | 14,013 | |||||||||
Cash consumed by operations
|
54,361 | 56,981 | 56,245 | |||||||||
Cash generated from operations
|
$ | 50,596 | $ | 45,226 | $ | 42,476 | ||||||
Cash utilization
|
||||||||||||
Capital investment in operations
|
$ | 10,225 | $ | 10,548 | $ | 6,357 | ||||||
Senior debt interest and fees
|
9,791 | 9,577 | 7,639 | |||||||||
Interest on senior subordinated notes
|
13,763 | 13,996 | 6,998 | |||||||||
Dividends
|
9,225 | 9,321 | 2,330 | |||||||||
Cash utilized by the Company
|
$ | 43,004 | $ | 43,442 | $ | 23,324 | ||||||
Percentage of cash utilized of cash generated
|
85.0 | % | 96.1 | % | 54.9 | % |
Year Ended December 31,
|
||||||||
2011
|
2012
|
|||||||
(Dollars in Thousands)
|
||||||||
Net income (loss)
|
$ | 2,197 | $ | (126,900 | ) | |||
Add: Depreciation
|
11,891 | 10,496 | ||||||
Interest expense - net of premium
|
23,408 | 21,564 | ||||||
Interest expense - amortize loan cost
|
1,368 | 1,368 | ||||||
Income tax expense (benefit)
|
250 | (24,868 | ) | |||||
Change in fair value of derivatives
|
(2,230 | ) | (241 | ) | ||||
Loan fees
|
76 | 76 | ||||||
Amortization - intangibles
|
8,342 | 8,781 | ||||||
Goodwill impairment
|
- | 143,653 | ||||||
Impairment of long-lived assets
|
- | 8,622 | ||||||
Restructuring expense
|
- | 2,036 | ||||||
IXC tariff dispute settlement
|
- | 593 | ||||||
Adjusted EBITDA
|
$ | 45,302 | $ | 45,180 |
Total
|
Less Than 1
Year |
1-3 Years
|
3-5 Years
|
More Than
5 Years |
||||||||||||||||
Second amended and restated credit facility
(1)
|
||||||||||||||||||||
Term
|
$ | 162,000,000 | $ | 162,000,000 | $ | – | $ | – | $ | – | ||||||||||
Revolver
(2)
|
– | – | – | – | – | |||||||||||||||
Senior subordinated notes
(1)
|
107,660,530 | 107,660,530 | – | – | – | |||||||||||||||
Expected interest expense
(1)(3)
|
9,054,505 | 9,054,505 | – | – | – | |||||||||||||||
Total contractual cash obligations
|
$ | 278,715,035 | $ | 278,715,035 | $ | – | $ | – | $ | – |
(1)
The filing of the Reorganization Cases constituted an event of default and triggered the automatic and immediate acceleration of debt outstanding under the terms of our senior credit facility and the indenture governing our senior subordinated notes. In addition, the filing of the Reorganization Cases terminated the revolving loan commitments under our senior credit facility. We believe that any efforts to enforce our payment obligations under our senior credit facility and the indenture governing our senior subordinated notes are currently stayed under the Bankruptcy Code as a result of the filing of the Reorganization Cases in the Bankruptcy Court.
Upon the effectiveness of the Plan, assuming that it is consummated in accordance with its terms, among other things, the indenture governing our senior subordinated notes will be terminated, our senior subordinated notes will be cancelled, the outstanding principal term loan obligations under our senior credit facility will be reduced to a maximum of $142 million (or such higher amount that is agreed to in writing by the agent under our senior credit facility and the holders of more than 50% in number and 66 2/3% in amount of the outstanding principal term loan obligations under our senior credit facility) through a cash payment, the maturity of the outstanding principal term loan obligations under our senior credit facility will be extended to April 30, 2016 and certain revolving loan commitments under our senior credit facility will be reinstated, with availability of up to $5 million. There can be no assurance as to the timing for approval of the Plan or that the Plan will be confirmed.
|
Item 7A. | Quantitative and Qualitative Disclosures about Market Risk |
As of December 31,
|
||||||||
2011
|
2012
|
|||||||
Assets
|
||||||||
Current assets
|
||||||||
Cash and cash equivalents
|
$ | 12,393,792 | $ | 32,516,283 | ||||
Accounts receivable:
|
||||||||
Due from subscribers, net of allowance for doubtful accounts of $260,568 and $239,274, respectively
|
4,355,632 | 4,205,944 | ||||||
Unbilled receivables
|
2,183,465 | 2,003,634 | ||||||
Other
|
5,449,074 | 5,336,162 | ||||||
Materials and supplies
|
1,780,820 | 1,845,246 | ||||||
Prepaid expenses
|
1,328,475 | 1,981,631 | ||||||
Deferred income taxes
|
726,310 | 1,843,160 | ||||||
Total current assets
|
28,217,568 | 49,732,060 | ||||||
Property and equipment, net
|
65,881,975 | 58,242,903 | ||||||
Goodwill
|
188,954,840 | 44,956,840 | ||||||
Intangible assets, net
|
20,545,691 | 6,670,392 | ||||||
Investments
|
1,943,805 | 1,919,327 | ||||||
Deferred financing costs, net
|
4,485,324 | 4,037,311 | ||||||
Deferred income taxes
|
7,454,443 | 6,275,997 | ||||||
Other assets
|
240,667 | 490,131 | ||||||
Total assets
|
$ | 317,724,313 | $ | 172,324,961 | ||||
Liabilities and Stockholders’ Deficit
|
||||||||
Current liabilities
|
||||||||
Accounts payable
|
$ | 1,490,717 | $ | 2,007,405 | ||||
Accrued expenses
|
6,034,104 | 14,900,378 | ||||||
Advance billings and payments
|
1,590,689 | 1,560,190 | ||||||
Deferred income taxes
|
353,285 | 430,896 | ||||||
Customer deposits
|
143,657 | 90,837 | ||||||
Current maturity of long-term debt
|
– | 270,990,023 | ||||||
Total current liabilities
|
9,612,452 | 289,979,729 | ||||||
Deferred income taxes
|
48,112,384 | 22,670,168 | ||||||
Interest rate swaps
|
241,438 | – | ||||||
Advance billings and payments
|
615,584 | 788,638 | ||||||
Other liabilities
|
403,823 | 484,019 | ||||||
Long-term notes payable, less current maturities
|
271,106,387 | – | ||||||
Total liabilities
|
330,092,068 | 313,922,554 | ||||||
Stockholders’ deficit
|
||||||||
Class A Common Stock, $.01 par value-authorized 20,000,000 shares; issued and outstanding 13,221,404 shares
|
132,214 | 132,214 | ||||||
Retained deficit
|
(12,499,969 | ) | (141,729,807 | ) | ||||
Total stockholders’ deficit
|
(12,367,755 | ) | (141,597,593 | ) | ||||
Total liabilities and stockholders’ deficit
|
$ | 317,724,313 | $ | 172,324,961 |
Years Ended December 31,
|
||||||||||||
2010
|
2011
|
2012
|
||||||||||
Revenues
|
$ | 104,400,219 | $ | 101,843,567 | $ | 98,404,232 | ||||||
Operating expenses
|
||||||||||||
Cost of services
|
41,286,418 | 43,995,953 | 42,231,706 | |||||||||
Selling, general and administrative expenses
|
13,074,794 | 12,984,686 | 14,013,154 | |||||||||
Depreciation and amortization
|
23,670,243 | 20,232,833 | 19,277,214 | |||||||||
Long-lived assets impairment – property, plant and equipment
|
– | – | 2,874,000 | |||||||||
Long-lived assets impairment – intangibles
|
– | – | 5,748,000 | |||||||||
Goodwill impairment
|
– | – | 143,653,744 | |||||||||
Total operating expenses
|
78,031,455 | 77,213,472 | 227,797,818 | |||||||||
Income (loss) from operations
|
26,368,764 | 24,630,095 | (129,393,586 | ) | ||||||||
Other income (expense)
|
||||||||||||
Interest expense
|
(24,746,542 | ) | (24,776,123 | ) | (22,932,180 | ) | ||||||
Change in fair value of derivatives
|
(878,518 | ) | 2,229,893 | 241,438 | ||||||||
Other income
|
556,820 | 363,482 | 316,922 | |||||||||
Total other expenses
|
(25,068,240 | ) | (22,182,748 | ) | (22,373,820 | ) | ||||||
Income (loss) before income tax
|
1,300,524 | 2,447,347 | (151,767,406 | ) | ||||||||
Income tax (expense) benefit
|
(609,809 | ) | (249,929 | ) | 24,867,841 | |||||||
Net income (loss)
|
$ | 690,715 | $ | 2,197,418 | $ | (126,899,565 | ) | |||||
Weighted average common shares outstanding:
|
||||||||||||
Basic
|
12,985,629 | 13,221,404 | 13,221,404 | |||||||||
Diluted
|
13,221,404 | 13,221,404 | 13,221,404 | |||||||||
Basic net income (loss) per common share
|
$ | 0.05 | $ | 0.17 | $ | (9.60 | ) | |||||
Diluted net income (loss) per common share
|
$ | 0.05 | $ | 0.17 | $ | (9.60 | ) | |||||
Dividends declared per common share
|
$ | 0.71 | $ | 0.71 | $ | 0.18 |
Class A
|
Class B
|
Additional Paid-
|
Total
|
|||||||||||||||||||||||||
Common Stock
|
Common Stock
|
In
|
Retained
|
Stockholders’
|
||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Deficit
|
Equity (Deficit)
|
||||||||||||||||||||||
Balance, December 31, 2009
|
12,676,733 | $ | 126,767 | 544,671 | $ | 5,447 | $ | 10,340,862 | $ | (6,988,734 | ) | $ | 3,484,342 | |||||||||||||||
Net income
|
690,715 | 690,715 | ||||||||||||||||||||||||||
Class B conversion to Class A
|
544,671 | 5,447 | (544,671 | ) | (5,447 | ) | 0 | |||||||||||||||||||||
Direct cost of Class B conversion
|
(194,053 | ) | (194,053 | ) | ||||||||||||||||||||||||
Dividends declared
|
(9,225,091 | ) | (9,225,091 | ) | ||||||||||||||||||||||||
Balance, December 31, 2010
|
13,221,404 | $ | 132,214 | – | $ | – | $ | 921,718 | $ | (6,298,019 | ) | $ | (5,244,087 | ) | ||||||||||||||
Net income
|
2,197,418 | 2,197,418 | ||||||||||||||||||||||||||
Dividends declared
|
(921,718 | ) | (8,399,368 | ) | (9,321,086 | ) | ||||||||||||||||||||||
Balance, December 31, 2011
|
13,221,404 | $ | 132,214 | – | $ | – | $ | – | $ | (12,499,969 | ) | $ | (12,367,755 | ) | ||||||||||||||
Net loss
|
(126,899,565 | ) | (126,899,565 | ) | ||||||||||||||||||||||||
Dividends declared and paid
|
(2,330,273 | ) | (2,330,273 | ) | ||||||||||||||||||||||||
Balance, December 31, 2012
|
13,221,404 | $ | 132,214 | – | $ | – | $ | – | $ | (141,729,807 | ) | $ | (141,597,593 | ) |
Years Ended December 31,
|
||||||||||||
2010
|
2011
|
2012
|
||||||||||
Cash flows from operating activities:
|
||||||||||||
Net income (loss)
|
$ | 690,715 | $ | 2,197,418 | $ | (126,899,565 | ) | |||||
Adjustments to reconcile net income (loss) to cash flows from operating activities:
|
||||||||||||
Depreciation
|
13,837,560 | 11,891,474 | 10,495,725 | |||||||||
Amortization
|
9,832,683 | 8,341,359 | 8,781,489 | |||||||||
Long-lived assets impairment – property, plant and equipment
|
– | – | 2,874,000 | |||||||||
Long-lived assets impairment – intangibles
|
– | – | 5,748,000 | |||||||||
Goodwill impairment
|
– | – | 143,653,744 | |||||||||
Amortization of debt premium
|
(92,307 | ) | (103,640 | ) | (116,364 | ) | ||||||
Amortization of loan costs
|
1,361,351 | 1,368,095 | 1,368,097 | |||||||||
Change in fair value of derivatives
|
878,518 | (2,229,893 | ) | (241,438 | ) | |||||||
Provision (benefit) for deferred income taxes
|
428,098 | 226,962 | (24,924,190 | ) | ||||||||
Provision for uncollectible revenue
|
141,474 | 914,555 | 619,813 | |||||||||
Changes in operating assets and liabilities, net of operating assets and liabilities acquired:
|
||||||||||||
Accounts receivable
|
427,432 | (1,590,110 | ) | (177,380 | ) | |||||||
Material and supplies
|
152,655 | 173,350 | (64,426 | ) | ||||||||
Prepaid expenses and other assets
|
(69,464 | ) | (117,356 | ) | (904,643 | ) | ||||||
Income tax receivable
|
389,486 | – | – | |||||||||
Accounts payable and accrued liabilities
|
(1,657,758 | ) | (1,423,589 | ) | 9,153,687 | |||||||
Advance billings and payments
|
(111,673 | ) | (116,732 | ) | 142,555 | |||||||
Other liabilities
|
202,751 | (1,756 | ) | 222,083 | ||||||||
Net cash from operating activities
|
26,411,521 | 19,530,137 | 29,731,187 | |||||||||
Cash flows from investing activities:
|
||||||||||||
Acquisition and construction of property and equipment
|
(10,225,229 | ) | (10,547,705 | ) | (6,357,307 | ) | ||||||
Purchase of investment
|
(1,708 | ) | (2,220 | ) | (1,033 | ) | ||||||
Proceeds from repayment of investment
|
1,067 | – | – | |||||||||
Payments for the purchase of Shoreham Telephone, net of cash acquired
|
– | (5,010,284 | ) | – | ||||||||
Deferred charges/acquisition
|
(1,845 | ) | – | – | ||||||||
Net cash used in investing activities
|
(10,227,715 | ) | (15,560,209 | ) | (6,358,340 | ) | ||||||
Cash flows used in financing activities:
|
||||||||||||
Cash dividends paid
|
(9,225,091 | ) | (9,321,086 | ) | (2,330,273 | ) | ||||||
Direct cost of exchange of Class B shares for Class A shares
|
(194,053 | ) | – | – | ||||||||
Loan origination costs
|
(155,160 | ) | (95,596 | ) | (920,083 | ) | ||||||
Repayment of long-term notes payable
|
(6,114,172 | ) | (385,828 | ) | – | |||||||
Net cash used in financing activities
|
(15,688,476 | ) | (9,802,510 | ) | (3,250,356 | ) | ||||||
Net increase (decrease) in cash and cash equivalents
|
495,330 | (5,832,582 | ) | 20,122,491 | ||||||||
Cash and cash equivalents, beginning of period
|
17,731,044 | 18,226,374 | 12,393,792 | |||||||||
Cash and cash equivalents, end of period
|
$ | 18,226,374 | $ | 12,393,792 | $ | 32,516,283 | ||||||
Supplemental disclosures of cash flow information:
|
||||||||||||
Interest paid
|
$ | 23,484,474 | $ | 24,130,675 | $ | 14,895,749 | ||||||
Income taxes paid (received)
|
$ | (265,275 | ) | $ | 90,517 | $ | 76,749 |
|
●
|
the $162 million of outstanding principal term loan obligations under the Company’s senior credit facility will be reduced to a maximum of $142 million (or such higher amount that is agreed to in writing by the agent under the Company’s senior credit facility and the holders of more than 50% in number and 66 2/3% in amount of the outstanding principal term loan obligations under the Company’s senior credit facility) through a cash payment;
|
|
●
|
the maturity of the outstanding principal term loan obligations under the Company’s senior credit facility will be extended to April 30, 2016;
|
|
●
|
the holders of the outstanding principal term loan obligations under the Company’s senior credit facility will receive their pro rata share of the Company’s new Class B common stock, which new Class B common stock will represent 7.5% of the total economic and voting interests in the Company immediately following the effectiveness of the Plan, subject to dilution of up to 10% on account of the issuance of equity interests in the Company pursuant to a management equity plan which is expected to be adopted by the Company following its emergence from bankruptcy (the “Management Equity Plan”);
|
|
●
|
certain revolving loan commitments under the Company’s senior credit facility will be reinstated, with availability of up to $5 million;
|
|
●
|
the Company’s outstanding senior subordinated notes, including the outstanding senior subordinated notes constituting part of the Company’s Income Deposit Securities (“IDSs”), will be cancelled and the holders of outstanding senior subordinated notes, including senior subordinated notes held through IDSs, will receive their pro rata share of the Company’s new Class A common stock, which new Class A common stock will represent 92.5% of the total economic and voting interests in the Company immediately following the effectiveness of the Plan, subject to dilution of up to 10% on account of the issuance of equity interests in the Company pursuant to the Management Equity Plan; and
|
|
●
|
the outstanding shares of the Company’s existing Class A common stock (“common stock”), all of which currently constitute part of the IDSs, will be cancelled.
|
Alabama
Reporting Unit |
Missouri
Reporting Unit |
New England
Reporting Unit |
Total
|
|||||||||||||
Balance as of December 31, 2011
|
||||||||||||||||
Intangible assets
|
$ | 128,441 | $ | 356,384 | $ | 20,060,866 | $ | 20,545,691 | ||||||||
Accumulated impairment losses
|
- | - | - | - | ||||||||||||
128,441 | 356,384 | 20,060,866 | 20,545,691 | |||||||||||||
Amortization
|
(48,068 | ) | (120,000 | ) | (7,959,231 | ) | (8,127,299 | ) | ||||||||
Impairment losses
|
- | - | (5,748,000 | ) | (5,748,000 | ) | ||||||||||
Balance as of December, 31 2012
|
||||||||||||||||
Intangible assets
|
80,373 | 236,384 | 12,101,635 | 12,418,392 | ||||||||||||
Accumulated impairment losses
|
- | - | (5,748,000 | ) | (5,748,000 | ) | ||||||||||
Intangible asset adjusted cost basis
|
$ | 80,373 | $ | 236,384 | $ | 6,353,635 | $ | 6,670,392 |
October 14, 2011
|
||||
Cash
|
$ | 237,850 | ||
Other current assets
|
552,331 | |||
Property and equipment
|
4,529,760 | |||
Intangible assets
|
1,729,600 | |||
Goodwill
|
420,505 | |||
Current liabilities
|
(332,710 | ) | ||
Deferred income tax liabilities
|
(1,889,202 | ) | ||
Purchase price
|
$ | 5,248,134 |
Unaudited
2010
|
Unaudited
2011
|
|||||||
Revenue
|
$ | 106,812,024 | $ | 103,707,313 | ||||
Income from operations
|
$ | 26,422,934 | $ | 24,705,377 | ||||
Net income
|
$ | 722,165 | $ | 1,935,327 | ||||
Net income per common share
|
$ | 0.05 | $ | 0.15 |
December 31, 2011
|
||||||||||||||||
Carrying
Value
|
Accumulated
Amortization |
Accumulated
Impairments |
Net
Value
|
|||||||||||||
Customer relationships
|
$ | 29,429,882 | $ | (15,483,937 | ) | $ | - | $ | 13,945,945 | |||||||
Contract relationships
|
19,600,000 | (13,066,667 | ) | - | 6,533,333 | |||||||||||
Non-competition
|
95,103 | (44,080 | ) | - | 51,023 | |||||||||||
Trade name
|
16,200 | (810 | ) | - | 15,390 | |||||||||||
Total
|
$ | 49,141,185 | $ | (28,595,494 | ) | $ | - | $ | 20,545,691 |
December 31, 2012
|
||||||||||||||||
Carrying
Value
|
Accumulated
Amortization |
Accumulated
Impairments |
Net
Value
|
|||||||||||||
Customer relationships
|
$ | 29,429,882 | $ | (18,065,687 | ) | $ | (5,728,889 | ) | $ | 5,635,306 | ||||||
Contract relationships
|
19,600,000 | (18,579,167 | ) | - | 1,020,833 | |||||||||||
Non-competition
|
95,103 | (74,672 | ) | (12,452 | ) | 7,979 | ||||||||||
Trade name
|
16,200 | (3,267 | ) | (6,659 | ) | 6,274 | ||||||||||
Total
|
$ | 49,141,185 | $ | (36,722,793 | ) | $ | (5,748,000 | ) | $ | 6,670,392 |
Estimated
|
December 31,
|
||||||||||
Life
|
2011
|
2012
|
|||||||||
Land
|
$ | 1,156,843 | $ | 1,156,843 | |||||||
Building and improvements
|
20-40 | 12,246,942 | 12,296,102 | ||||||||
Telephone equipment
|
6-20 | 227,825,838 | 223,465,617 | ||||||||
Cable television equipment
|
7 | 10,918,212 | 11,266,855 | ||||||||
Furniture and equipment
|
8-14 | 2,967,337 | 2,989,944 | ||||||||
Vehicles
|
7-9 | 6,089,630 | 6,185,199 | ||||||||
Computer software equipment
|
5-7 | 15,590,697 | 15,892,452 | ||||||||
Internet equipment
|
5 | 3,923,314 | 3,870,817 | ||||||||
Total property, plant and equipment
|
280,718,813 | 277,123,829 | |||||||||
Accumulated depreciation and amortization
|
(214,836,838 | ) | (218,880,926 | ) | |||||||
Net property, plant and equipment
|
$ | 65,881,975 | $ | 58,242,903 |
December 31,
|
||||||||
2011
|
2012
|
|||||||
Wholesale contracts receivable
|
$ | 1,880,608 | $ | 1,677,891 | ||||
Carrier access bills receivable
|
1,561,174 | 1,669,118 | ||||||
NECA receivable
|
682,016 | 930,115 | ||||||
Receivables from Alabama Service Fund
|
423,356 | 245,328 | ||||||
Connect America Fund receivable
|
– | 232,241 | ||||||
Other miscellaneous
|
901,920 | 581,469 | ||||||
$ | 5,449,074 | $ | 5,336,162 |
December 31,
|
||||||||
2011
|
2012
|
|||||||
Investment in CoBank stock, at cost
|
$ | 1,474,920 | $ | 1,474,920 | ||||
Rental property
|
397,644 | 372,134 | ||||||
Other miscellaneous
|
71,241 | 72,273 | ||||||
$ | 1,943,805 | $ | 1,919,327 |
2013
|
$ | 589,340 | ||
2014
|
257,029 | |||
2015
|
117,786 | |||
2016
|
96,393 | |||
2017
|
82,661 | |||
Thereafter
|
308,284 | |||
Total
|
$ | 1,451,493 |
December 31,
|
||||||||
2011
|
2012
|
|||||||
Term credit facility, General Electric Capital Corporation; variable interest rate of 4.46% at December 31, 2012. There are no scheduled principal payments. Interest payments are due on the last day of each LIBOR period or at one month intervals, whichever date comes first. The unpaid balance was scheduled to be due October 31, 2013. The credit facility is secured by the total assets of the subsidiary guarantors.
|
$ | 162,000,000 | $ | 162,000,000 | ||||
13% Senior subordinated notes due 2019; interest payments are due quarterly. On June 8, 2010, IDSs that included $4,085,033 in senior subordinated debt were issued in the conversion of Class B shares. Premium amortization for the years ended December 31, 2011 and 2012 was $103,640 and $116,364, respectively.
|
100,606,387 | 100,490,023 | ||||||
13% Senior subordinated notes, held separately, due 2019; interest payments are due quarterly.
|
8,500,000 | 8,500,000 | ||||||
Total notes payable
|
271,106,387 | 270,990,023 | ||||||
Less: current portion
|
– | (270,990,023 | ) | |||||
Long-term notes payable
|
$ | 271,106,387 | $ | – |
2013
(1)
|
$ | 269,660,531 | ||
2014
|
– | |||
2015
|
– | |||
2016
|
– | |||
2017
|
– | |||
Thereafter
|
– | |||
Total principal
|
269,660,531 | |||
Unamortized premium
(2)
|
1,329,492 | |||
Total
|
$ | 270,990,023 |
(1)
|
The filing of the Reorganization Cases constituted an event of default and triggered the automatic and immediate acceleration of debt outstanding under the terms of the Company’s senior credit facility and the indenture governing the Company’s senior subordinated notes. The repayment classification for the notes payable for 2013 reflects such acceleration.
|
(2)
|
The unamortized premium is associated with the 3,000,000 IDSs issued July 5, 2007.
|
For the Years Ended December 31,
|
||||||||||||
2010
|
2011
|
2012
|
||||||||||
Federal income taxes
|
||||||||||||
Current
|
$ | (3,015 | ) | $ | (2,033 | ) | $ | 53,969 | ||||
Deferred
|
278,383 | (75,765 | ) | (20,261,348 | ) | |||||||
Total federal tax expense (benefit)
|
275,368 | (77,798 | ) | (20,207,379 | ) | |||||||
State income taxes
|
||||||||||||
Current
|
184,726 | 25,000 | 2,380 | |||||||||
Deferred
|
149,715 | 302,727 | (4,662,842 | ) | ||||||||
Total state tax expense (benefit)
|
334,441 | 327,727 | (4,660,462 | ) | ||||||||
Total income tax expense (benefit)
|
$ | 609,809 | $ | 249,929 | $ | (24,867,841 | ) |
December 31,
|
||||||||
2011
(1)
|
2012
|
|||||||
Deferred tax liabilities:
|
||||||||
Amortization
|
$ | (28,374,977 | ) | $ | (10,129,938 | ) | ||
Depreciation
|
(13,924,912 | ) | (11,685,694 | ) | ||||
Amortized intangibles
|
(5,796,972 | ) | (839,560 | ) | ||||
Prepaid expense
|
(353,285 | ) | (430,896 | ) | ||||
Other
|
(15,523 | ) | (14,976 | ) | ||||
Total deferred tax liabilities
|
$ | (48,465,669 | ) | $ | (23,101,064 | ) | ||
Deferred tax assets:
|
||||||||
Federal net operating loss carryforwards
|
$ | 6,058,180 | $ | 4,426,198 | ||||
Alternative minimum credits carryforwards
|
504,130 | 555,690 | ||||||
State net operating loss carryforwards
|
438,786 | 769,262 | ||||||
Restructuring expense
|
– | 632,170 | ||||||
Deferred compensation
|
297,468 | 322,644 | ||||||
Advance payments
|
256,218 | 327,718 | ||||||
Bad debt
|
298,683 | 704,147 | ||||||
Other
|
327,288 | 381,328 | ||||||
Total deferred tax assets
|
$ | 8,180,753 | $ | 8,119,157 |
(1)
|
The 2011 balances include net deferred tax liabilities in the amount of $2,233,458 related to the STC stock acquisition that occurred on October 14, 2011. In 2012 the acquired net deferred tax liability was adjusted to $1,889,202. See note 4, Acquisitions, above.
|
For the Years Ended December 31,
|
||||||||||||
2010
|
2011
|
2012
|
||||||||||
Federal income tax at statutory rate
|
35 | % | 35 | % | 35 | % | ||||||
Federal income tax provision (benefit) at statutory rate
|
$ | 455,183 | $ | 856,571 | $ | (53,126,353 | ) | |||||
State income tax provision (benefit), net of federal income tax effects
|
217,387 | 213,022 | (3,029,300 | ) | ||||||||
Goodwill impairment
|
– | – | 31,418,821 | |||||||||
Change in fair value of derivatives
|
307,482 | (781,466 | ) | (84,503 | ) | |||||||
Other
|
(370,243 | ) | (38,198 | ) | (46,506 | ) | ||||||
Provision (benefit) for income taxes
|
$ | 609,809 | $ | 249,929 | $ | (24,867,841 | ) | |||||
Effective income tax rate
|
46.9 | % | 10.2 | % | 16.4 | % |
For the Years Ended December 31,
|
||||||||||||
2010
|
2011
|
2012
|
||||||||||
Weighted average of common shares-basic
|
12,985,629 | 13,221,404 | 13,221,404 | |||||||||
Effect of dilutive securities
|
235,775 | – | – | |||||||||
Weighted average common shares and potential common shares-diluted
|
13,221,404 | 13,221,404 | 13,221,404 | |||||||||
Net income (loss)
|
$ | 690,715 | $ | 2,197,418 | $ | (126,899,565 | ) | |||||
Net income (loss) per basic and diluted common share
|
$ | 0.05 | $ | 0.17 | $ | (9.60 | ) |
First
Quarter
|
Second
Quarter
|
Third
Quarter
|
Fourth
Quarter
|
|||||||||||||
Fiscal 2011:
|
||||||||||||||||
Revenue
|
$ | 25,392,000 | $ | 25,501,062 | $ | 25,302,747 | $ | 25,647,758 | ||||||||
Operating income
|
5,320,713 | 7,326,611 | 6,124,154 | 5,858,617 | ||||||||||||
Net income
|
4,654 | 1,283,277 | 885,462 | 24,025 | ||||||||||||
Net income per common share
|
$ | – | $ | 0.10 | $ | 0.07 | $ | – | ||||||||
Fiscal 2012:
|
||||||||||||||||
Revenue
|
$ | 25,374,241 | $ | 24,713,773 | $ | 24,427,896 | $ | 23,888,322 | ||||||||
Operating income (loss)
|
6,616,738 | (148,061,028 | ) | 6,487,374 | 5,563,331 | |||||||||||
Net income (loss)
|
818,238 | (128,010,613 | ) | 316,306 | (23,496 | ) | ||||||||||
Net income (loss) per common share
|
$ | 0.06 | $ | (9.68 | ) | $ | 0.02 | $ | – |
|
●
|
Level 1 consists of observable market data in an active market for identical assets or liabilities.
|
|
●
|
Level 2 consists of observable market data, other than that included in Level 1, that is either directly or indirectly observable.
|
|
●
|
Level 3 consists of unobservable market data. The input may reflect the assumptions of the Company, not a market participant, if there is little available market data and the Company’s own assumptions are considered by management to be the best available information.
|
December 31, 2011
|
||||||||||||||||
Fair Value
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
Liabilities
|
||||||||||||||||
Interest rate swaps
|
$ | 241,438 | $ | – | $ | 241,438 | $ | – | ||||||||
Total liabilities
|
$ | 241,438 | $ | – | $ | 241,438 | $ | – |
December 31, 2012
|
||||||||
Carrying Value
|
Fair Value
|
|||||||
Notes payable
|
$ | 269,660,531 | $ | 171,841,824 |
Parent
|
Guarantor
Subsidiaries |
Non-
Guarantor Subsidiaries |
Eliminations
|
Consolidated
|
||||||||||||||||
Revenues
|
$ | 3,493,053 | $ | 101,600,140 | $ | 10,855,909 | $ | (11,548,883 | ) | $ | 104,400,219 | |||||||||
Operating expenses
|
(3,493,053 | ) | (77,083,003 | ) | (9,004,282 | ) | 11,548,883 | (78,031,455 | ) | |||||||||||
Income from operations
|
– | 24,517,137 | 1,851,627 | – | 26,368,764 | |||||||||||||||
Other income (expense)
|
(24,856,925 | ) | (311,219 | ) | 99,904 | – | (25,068,240 | ) | ||||||||||||
Earnings from subsidiaries
|
26,157,449 | – | – | (26,157,449 | ) | – | ||||||||||||||
Income before income tax
|
1,300,524 | 24,205,918 | 1,951,531 | (26,157,449 | ) | 1,300,524 | ||||||||||||||
Income tax expense
|
(609,809 | ) | (7,944,116 | ) | (761,943 | ) | 8,706,059 | (609,809 | ) | |||||||||||
Net income to common stockholders
|
$ | 690,715 | $ | 16,261,802 | $ | 1,189,588 | $ | (17,451,390 | ) | $ | 690,715 |
Parent
|
Guarantor
Subsidiaries |
Non-
Guarantor Subsidiaries |
Eliminations
|
Consolidated
|
||||||||||||||||
Revenues
|
$ | 3,289,457 | $ | 99,770,739 | $ | 4,234,814 | $ | (5,451,443 | ) | $ | 101,843,567 | |||||||||
Operating expenses
|
(3,289,457 | ) | (75,146,885 | ) | (4,228,573 | ) | 5,451,443 | (77,213,472 | ) | |||||||||||
Income from operations
|
– | 24,623,854 | 6,241 | – | 24,630,095 | |||||||||||||||
Other income (expense)
|
(21,825,630 | ) | (356,881 | ) | (237 | ) | – | (22,182,748 | ) | |||||||||||
Earnings from subsidiaries
|
24,272,977 | – | – | (24,272,977 | ) | – | ||||||||||||||
Income before income tax
|
2,447,347 | 24,266,973 | 6,004 | (24,272,977 | ) | 2,447,347 | ||||||||||||||
Income tax expense
|
(249,929 | ) | (7,666,626 | ) | (2,395 | ) | 7,669,021 | (249,929 | ) | |||||||||||
Net income to common stockholders
|
$ | 2,197,418 | $ | 16,600,347 | $ | 3,609 | $ | (16,603,956 | ) | $ | 2,197,418 |
Parent
|
Guarantor
Subsidiaries |
Non-
Guarantor Subsidiaries |
Eliminations
|
Consolidated
|
||||||||||||||||
Revenues
|
$ | 3,317,930 | $ | 91,099,939 | $ | 3,986,363 | $ | – | $ | 98,404,232 | ||||||||||
Operating expenses
|
(5,350,563 | ) | (148,572,542 | ) | (73,874,713 | ) | – | (227,797,818 | ) | |||||||||||
Loss from operations
|
(2,032,633 | ) | (57,472,603 | ) | (69,888,350 | ) | – | (129,393,586 | ) | |||||||||||
Other income (expense)
|
(22,336,942 | ) | (36,827 | ) | (51 | ) | – | (22,373,820 | ) | |||||||||||
Earnings from subsidiaries
|
(127,397,831 | ) | – | – | 127,397,831 | – | ||||||||||||||
Loss before income tax
|
(151,767,406 | ) | (57,509,430 | ) | (69,888,401 | ) | 127,397,831 | (151,767,406 | ) | |||||||||||
Income tax benefit (expense)
|
24,867,841 | (27,878,483 | ) | 27,878,483 | – | 24,867,841 | ||||||||||||||
Net loss to common stockholders
|
$ | (126,899,565 | ) | $ | (85,387,913 | ) | $ | (42,009,918 | ) | $ | 127,397,831 | $ | (126,899,565 | ) |
Parent
|
Guarantor
Subsidiaries |
Non-
Guarantor Subsidiaries |
Eliminations
|
Consolidated
|
||||||||||||||||
Cash flows from operating activities:
|
||||||||||||||||||||
Net income
|
$ | 690,715 | $ | 16,261,802 | $ | 1,189,588 | $ | (17,451,390 | ) | $ | 690,715 | |||||||||
Adjustment to reconcile net income to cash flows from operating activities
|
5,075,290 | 18,105,293 | 3,206,795 | – | 26,387,378 | |||||||||||||||
Changes in operating assets and liabilities, net of operating assets and liabilities acquired
|
27,592,163 | (25,289,272 | ) | (2,969,463 | ) | – | (666,572 | ) | ||||||||||||
Net cash provided by operating activities
|
33,358,168 | 9,077,823 | 1,426,920 | (17,451,390 | ) | 26,411,521 | ||||||||||||||
Cash flows used in investing activities
|
(218,301 | ) | (8,630,120 | ) | (1,379,294 | ) | – | (10,227,715 | ) | |||||||||||
Cash flows used in financing activities
|
(33,139,867 | ) | 1 | – | 17,451,390 | (15,688,476 | ) | |||||||||||||
Net increase in cash and cash equivalents
|
– | 447,704 | 47,626 | – | 495,330 | |||||||||||||||
Cash and cash equivalents, beginning of period
|
– | 17,617,266 | 113,778 | – | 17,731,044 | |||||||||||||||
Cash and cash equivalents, end of period
|
$ | – | $ | 18,064,970 | $ | 161,404 | $ | – | $ | 18,226,374 |
Parent
|
Guarantor
Subsidiaries |
Non-
Guarantor Subsidiaries |
Eliminations
|
Consolidated
|
||||||||||||||||
Cash flows from operating activities:
|
||||||||||||||||||||
Net income
|
$ | 2,197,418 | $ | 33,204,304 | $ | 3,608 | $ | (33,207,912 | ) | $ | 2,197,418 | |||||||||
Adjustment to reconcile net income to cash flows from operating activities
|
(275,513 | ) | 19,762,543 | 921,882 | – | 20,408,912 | ||||||||||||||
Changes in operating assets and liabilities, net of operating assets and liabilities acquired
|
24,266,264 | (27,119,787 | ) | (222,670 | ) | – | (3,076,193 | ) | ||||||||||||
Net cash provided by operating activities
|
26,188,169 | 25,847,060 | 702,820 | (33,207,912 | ) | 19,530,137 | ||||||||||||||
Cash flows provided by (used in) investing activities
|
218,301 | (15,075,741 | ) | (702,769 | ) | – | (15,560,209 | ) | ||||||||||||
Cash flows used in financing activities
|
(26,406,470 | ) | (16,603,952 | ) | – | 33,207,912 | (9,802,510 | ) | ||||||||||||
Net increase (decrease) in cash and cash equivalents
|
– | (5,832,633 | ) | 51 | – | (5,832,582 | ) | |||||||||||||
Cash and cash equivalents, beginning of period
|
– | 18,226,074 | 300 | – | 18,226,374 | |||||||||||||||
Cash and cash equivalents, end of period
|
$ | – | $ | 12,393,441 | $ | 351 | $ | – | $ | 12,393,792 |
Parent
|
Guarantor
Subsidiaries |
Non-
Guarantor Subsidiaries |
Eliminations
|
Consolidated
|
||||||||||||||||
Cash flows from operating activities:
|
||||||||||||||||||||
Net loss
|
$ | (126,899,565 | ) | $ | (180,220,349 | ) | $ | (42,009,913 | ) | $ | 222,230,262 | $ | (126,899,565 | ) | ||||||
Adjustment to reconcile net loss to cash flows from operating activities
|
1,010,294 | 76,126,680 | 71,052,777 | – | 148,189,751 | |||||||||||||||
Changes in operating assets and liabilities, net of operating assets and liabilities acquired
|
71,618,424 | (34,473,960 | ) | (28,703,463 | ) | – | 8,441,001 | |||||||||||||
Net cash provided by (used in) operating activities
|
(54,270,847 | ) | (138,567,629 | ) | 339,401 | 222,230,262 | 29,731,187 | |||||||||||||
Cash flows used in investing activities
|
– | (6,018,939 | ) | (339,401 | ) | – | (6,358,340 | ) | ||||||||||||
Cash flows provided by (used in) financing activities
|
54,270,847 | 164,709,059 | – | (222,230,262 | ) | (3,250,356 | ) | |||||||||||||
Net increase in cash and cash equivalents
|
– | 20,122,491 | – | – | 20,122,491 | |||||||||||||||
Cash and cash equivalents, beginning of period
|
– | 12,393,442 | 350 | – | 12,393,792 | |||||||||||||||
Cash and cash equivalents, end of period
|
$ | – | $ | 32,515,933 | $ | 350 | $ | – | $ | 32,516,283 |
●
|
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;
|
●
|
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
|
●
|
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 consolidated financial statements.
|
Name
|
Age
|
Position
|
|||
Michael D. Weaver
|
60 |
Chairman, President, Chief Executive Officer and Director
|
|||
William Bak
|
72 |
Director
|
|||
Robert E. Guth
|
49 |
Director
|
|||
Howard J. Haug
|
62 |
Director
|
|||
Stephen P. McCall
|
42 |
Director
|
|||
Andrew Meyers
|
44 |
Director
|
|||
William F. Reddersen
|
65 |
Director
|
Name and Principal Position
|
Year
|
Salary
($)
|
Non-Equity
Incentive Plan
Compensation
(2)
($)
|
All Other
Compensation
(3)
($)
|
Total
($)
|
|||||||||||||
Michael D. Weaver
(1)
|
2012
|
401,744 | 60,621 | 16,982 | 479,347 | |||||||||||||
Chairman, President
and Chief Executive Officer
|
2011
|
383,152 | — | 16,165 | 399,317 | |||||||||||||
2010
|
345,175 | 258,791 | 17,330 | 621,296 | ||||||||||||||
Curtis L. Garner, Jr.
|
2012
|
236,063 | 27,691 | 16,248 | 280,002 | |||||||||||||
Chief Financial Officer and Secretary
|
2011
|
230,359 | — | 16,355 | 246,714 | |||||||||||||
2010
|
205,953 | 113,615 | 16,625 | 336,193 | ||||||||||||||
Robert J. Souza
|
2012
|
206,003 | 98,892 | (4) | 19,747 | 324,642 | ||||||||||||
Senior Vice President and General
Manager – New England
|
2011
|
199,992 | — | 21,799 | 221,791 | |||||||||||||
2010
|
171,928 | 68,534 | 14,285 | 254,747 | ||||||||||||||
Dennis K. Andrews
|
2012
|
210,916 | 16,392 | 13,979 | 241,287 | |||||||||||||
Senior Vice President and
General Manager – Alabama & Missouri
|
2011
|
215,761 | — | 17,305 | 233,066 | |||||||||||||
2010
|
188,865 | 73,259 | 14,605 | 276,729 | ||||||||||||||
Edwin D. Tisdale
|
2012
|
174,052 | 13,527 | 12,129 | 199,708 | |||||||||||||
Senior Vice President – New England Support Services
|
2011
|
151,683 | — | 10,664 | 162,347 | |||||||||||||
|
2010
|
136,913 | 45,203 | 10,258 | 192,374 | |||||||||||||
(1)
Mr. Weaver does not receive any compensation for his services as a director.
(2)
Reflects cash bonuses earned for performance in 2010 and 2012, and paid in 2011 and 2013, respectively, after board of directors approval, plus long-term incentive compensation for 2010 paid in 2013. No cash bonuses for performance were earned in 2011.
(3)
Reflects the value of our matching contribution to our 401(k) plan, a one-time $350 payment to each employee’s health savings account and the value of the individual’s personal use of a Company-provided vehicle.
(4)
Reflects one time award associated with five year “stay bonus” required under the TW contact.
|
Estimated Future Payouts Under
Non-Equity Incentive Plan Awards
|
||||||||||||||
Name
|
Grant Date
|
Threshold ($)
|
Target ($)
|
Maximum ($)
|
||||||||||
Michael D. Weaver
|
3/7/2012
(1)
|
0 | 289,500 | 309,765 | ||||||||||
3/7/2012
(2)
|
0 | 130,862 | (3) | |||||||||||
Curtis L. Garner, Jr.
|
3/7/2012
(1)
|
0 | 132,240 | 141,497 | ||||||||||
3/7/2012
(2)
|
0 | 58,161 | (3) | |||||||||||
Robert J. Souza
|
3/7/2012
(1)
|
0 | 78,280 | 83,760 | ||||||||||
3/7/2012
(2)
|
0 | 32,715 | (3) | |||||||||||
Dennis K. Andrews
|
3/7/2012
(1)
|
0 | 78,280 | 83,760 | ||||||||||
3/7/2012
(2)
|
0 | 32,715 | (3) | |||||||||||
Edwin D. Tisdale
|
3/7/2012
(1)
|
0 | 64,600 | 69,122 | ||||||||||
3/7/2012
(2)
|
0 | 25,445 | (3) | |||||||||||
(1)
Annual performance bonus grant associated with employment agreement. Performance bonus award targets for 2012 were reduced in June 2012 in connection with the Company’s potential restructuring plans.
(2)
Annual long-term incentive plan grant. No annual long-term incentive plan awards were earned in 2012.
(3)
There are no maximums under the long-term incentive plan.
|
Type of Termination of Employment
(1)
|
||||||||||||||
Name (Position)
|
Type of
Termination
Payment
|
Involuntary
Termination
Without
Cause
(2)
|
Death or
Disability
|
Termination
Upon a
Change
of Control
|
||||||||||
Michael D. Weaver
|
Annual Bonus
|
$ | 60,621 | $ | 60,621 | $ | 60,621 | |||||||
(Chairman, President and Chief
Executive Officer)
|
Cash Severance
|
772,000 | 772,000 | 772,000 | ||||||||||
|
$ | 832,621 | $ | 832,621 | $ | 832,621 | ||||||||
Curtis L. Garner, Jr.
|
Annual Bonus
|
$ | 27,691 | $ | 27,691 | $ | 27,691 | |||||||
(Chief Financial Officer and Secretary)
|
Cash Severance
|
232,000 | 232,000 | 232,000 | ||||||||||
$ | 259,691 | $ | 259,691 | $ | 259,691 | |||||||||
Robert J. Souza
|
Annual Bonus
|
$ | 16,392 | $ | — | $ | 16,392 | |||||||
(Senior Vice President and General
Manager – New England)
|
Cash Severance
|
103,000 | — | 103,000 | ||||||||||
|
$ | 119,392 | $ | — | $ | 119,392 | ||||||||
Dennis K. Andrews
|
Annual Bonus
|
$ | 16,392 | $ | — | $ | 16,392 | |||||||
(Senior Vice President & General
Manger Alabama & Missouri)
|
Cash Severance
|
103,000 | — | 103,000 | ||||||||||
|
$ | 119,392 | $ | — | $ | 119,392 | ||||||||
Edwin D. Tisdale
|
Annual Bonus
|
$ | 13,527 | $ | — | $ | 13,527 | |||||||
(Senior Vice President – New England
Support Services)
|
Cash Severance
|
85,000 | — | 85,000 | ||||||||||
|
$ | 98,527 | $ | — | $ | 98,527 | ||||||||
(1)
All data in the table reflects estimates of the value of payments and benefits assuming the named executive officer was terminated on December 31, 2012. There are no stock based components to the compensation plans and no defined benefit plans for the Company. Disability benefit plan payments available to all employees are not included.
(2)
The amounts listed in this column will not be payable if the named executive officer voluntarily resigns or is terminated for cause.
|
Name
|
Fees Earned or
Paid in Cash
($)
|
Total
($)
|
||||||
William Bak
|
72,500 | 72,500 | ||||||
Robert E. Guth
|
67,000 | 67,000 | ||||||
Howard J. Haug
|
80,000 | 80,000 | ||||||
Stephen P. McCall
|
72,000 | 72,000 | ||||||
Andrew Meyers
|
72,000 | 72,000 | ||||||
William F. Reddersen
|
73,500 | 73,500 |
|
●
|
each person who is known by us to beneficially own more than 5% of our shares;
|
|
●
|
each member of our board of directors;
|
|
●
|
each of our named executive officers; and
|
|
●
|
all members of our board of directors and our executive officers as a group.
|
(1)
|
Based on a Schedule 13D filed on March 13, 2013 with the SEC by Ira Sochet as of March 13, 2013. Ira Sochet’s address is P.O. Box 398537, Miami Beach, Florida 33239.
|
(2)
|
Based on an amendment to Schedule 13G filed on January 22, 2013 with the SEC by Signature Global Advisors, a business unit of CI Investments Inc., as of December 31, 2012. Signature Global Advisors’ address is CI Investments, 2 Queen Street East, Twentieth Floor, Toronto, Ontario M5C 3G7, Canada.
|
(3)
|
Includes 50 shares held by Mr. Haug’s wife.
|
(4)
|
Includes 1,439 shares held by Uniform Gifts to Minors Act accounts for the benefit of Mr. Garner’s grandchildren. Mr. Garner is the custodian of such accounts. Mr. Garner disclaims beneficial ownership of these shares. In addition, also includes 11,729 shares which Mr. Garner owns jointly with his spouse.
|
2011
|
2012
|
|||||||
Audit Fees
|
$ | 334,378 | $ | 377,761 | ||||
Audit-Related Fees
|
- | - | ||||||
Tax Fees
|
- | - | ||||||
All Other Fees
|
- | - | ||||||
Total Fees
|
$ | 334,378 | $ | 377,761 |
Page
|
|
Reports of Independent Registered Public Accounting Firm
|
43 |
Consolidated Balance Sheets
|
45 |
Consolidated Statements of Operations
|
46 |
Consolidated Statements of Stockholders’ Equity (Deficit)
|
47 |
Consolidated Statements of Cash Flows
|
48 |
Notes to Consolidated Financial Statements | 49 |
Exhibit
No.
|
Description
|
|
3.1
|
Certificate of Incorporation of Otelco Inc. (filed as Exhibit 3.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004 and incorporated herein by reference)
|
|
3.2
|
Third Amended and Restated By-laws of Otelco Inc. (filed as Exhibit 3.2 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004 and incorporated herein by reference)
|
|
4.1
|
Indenture, dated as of December 21, 2004, among Otelco Inc., each subsidiary listed on the signature pages thereto and Wells Fargo Bank, National Association, as trustee, relating to the 13% Senior Subordinated Notes due 2019 (filed as Exhibit 4.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004 and incorporated herein by reference)
|
|
4.2
|
Supplemental Indenture, dated as of July 3, 2006, by and among Mid-Maine Communications, Inc., Mid-Maine TelPlus, the Existing Guarantors listed on the signature pages thereto, and Wells Fargo Bank, NA, as trustee (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on July 5, 2006 and incorporated herein by reference)
|
|
4.3
|
Second Supplemental Indenture, dated as of July 5, 2007, by and among Otelco Inc., certain of its subsidiaries and Wells Fargo Bank, National Association, as trustee (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on July 5, 2007 and incorporated herein by reference)
|
|
4.4
|
Third Supplemental Indenture, dated as of October 31, 2008, by and among War Holdings, Inc., Pine Tree Holdings, Inc., The Pine Tree Telegraph and Telephone Company, CRC Communications of Maine, Inc., Saco River Telegraph and Telephone Company, Communications Design Acquisition Corporation, Granby Holdings, Inc., The Granby Telegraph and Telephone Co. of Mass., Inc., the Existing Guarantors listed on the signature pages thereto, Otelco Inc. and Wells Fargo Bank, National Association, as trustee (filed as Exhibit 4.4 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008 and incorporated herein by reference)
|
Exhibit
No.
|
Description
|
|
4.5
|
Fourth Supplemental Indenture, dated as of June 8, 2010, among Otelco Inc., certain of its subsidiaries and Wells Fargo Bank, National Association, as trustee (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on June 8, 2010 and incorporated herein by reference)
|
|
4.6
|
Fifth Supplemental Indenture, dated as of October 1, 2011, among Otelco Inc., Mid-Missouri Telephone Company, the Existing Guarantors listed on the signature pages thereto and Wells Fargo Bank, National Association, as trustee (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on October 3, 2011 and incorporated herein by reference)
|
|
4.7
|
Sixth Supplemental Indenture, dated as of October 14, 2011, among Otelco Inc., Shoreham Telephone LLC, the Existing Guarantors listed on the signature pages thereto and Wells Fargo Bank, National Association, as trustee (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on October 14, 2011 and incorporated herein by reference)
|
|
4.8
|
Form of 13% Senior Subordinated Note due 2019 (included in Exhibit 4.1)
|
|
4.9
|
Form of stock certificate for common stock (filed as Exhibit 4.4 to Amendment No. 4 to Registration Statement on Form S-1 (file no. 333-115341) and incorporated herein by reference)
|
|
4.10
|
Form of global Income Deposit Security (filed as Exhibit 4.5 to Amendment No. 4 to Registration Statement on Form S-1 (file no. 333-115341) and incorporated herein by reference)
|
|
10.1
|
Amended and Restated Employment Agreement, dated as of March 11, 2009, between Otelco Inc. and Michael D. Weaver (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on March 12, 2009 and incorporated herein by reference)*
|
|
10.2
|
Amended and Restated Employment Agreement, dated as of March 11, 2009, between Otelco Inc. and Curtis L. Garner, Jr. (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on March 11, 2009 and incorporated herein by reference)*
|
|
10.3
|
Employment Agreement, dated as of August 24, 2006, between Otelco Inc. and Dennis Andrews (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 29, 2006 and incorporated herein by reference)*
|
|
10.4
|
Employment Agreement, dated as of November 15, 2006, between Otelco Inc. and Jerry C. Boles (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on November 15, 2006 and incorporated herein by reference)*
|
|
10.5
|
Second Amended and Restated Credit Agreement, dated as of October 20, 2008 (the “Credit Agreement”), by and among Otelco Inc. and the other credit party signatories thereto and General Electric Capital Corporation, as a lender and as an agent for the lenders, and the other lenders from time to time party thereto (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 21, 2008 and incorporated herein by reference)
|
|
10.6
|
Amendment, dated as of December 17, 2008, to the Employment Agreement, dated as of August 24, 2006, between Otelco Inc. and Dennis Andrews (filed as Exhibit 10.10 to the Company’s Annual Report on Form 10-K filed on March 11, 2009 and incorporated herein by reference)*
|
Exhibit
No.
|
Description
|
|
10.7
|
Amendment, dated as of December 17, 2008, to the Employment Agreement, dated as of November 15, 2006, between Otelco Inc. and Jerry C. Boles (filed as Exhibit 10.11 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008 and incorporated herein by reference)*
|
|
10.8
|
Amended and Restated Employment Agreement, dated as of April 27, 2009, between Otelco Inc. and Robert Souza (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 28, 2009 and incorporated herein by reference)*
|
|
10.9
|
Executive Long Term Incentive Plan approved May 12, 2009, effective January 1, 2009 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on May 14, 2009 and incorporated herein by reference)*
|
|
10.10
|
Amendment, dated as of March 5, 2010, to the Amended and Restated Employment Agreement, dated as of March 11, 2009, between Otelco Inc. and Michael D. Weaver (filed as Exhibit 10.13 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2009 and incorporated herein by reference)*
|
|
10.11
|
Amendment, dated as of March 5, 2010, to the Amended and Restated Employment Agreement, dated as of March 11, 2009, between Otelco Inc. and Curtis L. Garner, Jr. (filed as Exhibit 10.14 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2009 and incorporated herein by reference)*
|
|
10.12
|
Second Amendment, dated as of March 4, 2011, to the Employment Agreement, dated as of August 24, 2006, between Otelco Inc. and Dennis Andrews, as previously amended on December 17, 2008 (filed as Exhibit 10.14 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 and incorporated herein by reference)*
|
|
10.13
|
Second Amendment, dated as of March 4, 2011, to the Employment Agreement, dated as of November 15, 2006, between Otelco Inc. and Jerry C. Boles, as previously amended on December 17, 2008 (filed as Exhibit 10.15 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 and incorporated herein by reference)*
|
|
10.14
|
Amendment, dated as of March 4, 2011, to the Amended and Restated Employment Agreement, dated as of April 27, 2009, between Otelco Inc. and Robert Souza (filed as Exhibit 10.16 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 and incorporated herein by reference)*
|
|
10.15
|
Amended and Restated Employment Agreement, dated as of April 10, 2009, between Otelco Inc. and Edwin D. Tisdale (filed as Exhibit 10.18 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 and incorporated herein by reference)*
|
|
10.16
|
Amendment, dated as of March 4, 2011, to the Amended and Restated Employment Agreement, dated as of April 10, 2009, between Otelco Inc. and Edwin D. Tisdale (filed as Exhibit 10.19 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 and incorporated herein by reference)*
|
|
10.17
|
Employment Agreement, dated as of March 4, 2013, between Otelco Inc. and E. Todd Wessing*
|
|
10.18
|
Restructuring Support Agreement, dated as of January 31, 2013, by and among Otelco Inc., each of Otelco Inc.’s direct and indirect subsidiaries and certain lenders under the Credit Agreement (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on February 1, 2013 and incorporated herein by reference)
|
|
12.1
|
Computation of Ratio of Earnings to Fixed Charges
|
Exhibit
No.
|
Description
|
|
21.1
|
List of subsidiaries of Otelco Inc.
|
|
23.1
|
Consent of BDO USA, LLP, Independent Registered Public Accounting Firm
|
|
31.1
|
Certificate pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 of the Chief Executive Officer
|
|
31.2
|
Certificate pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 of the Chief Financial Officer
|
|
32.1
|
Certificate pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of the Chief Executive Officer
|
|
32.2
|
Certificate pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of the Chief Financial Officer
|
|
101
|
The following information from the Company’s annual report on Form 10-K for the year ended December 31, 2012 formatted in Extensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations; (iii) Consolidated Statements of Stockholders’ Equity (Deficit); (iv) Consolidated Statements of Cash Flows; and (v) Notes to Consolidated Financial Statements
|
|
OTELCO INC.
|
|||
By:
|
/s/ Michael D. Weaver
|
||
Michael D. Weaver
|
|||
President and Chief Executive Officer
|
Signature
|
Title
|
Date
|
||
/s/ Michael D. Weaver
|
President, Chief Executive Officer and Director
|
April 2, 2013
|
||
Michael D. Weaver
|
(Principal Executive Officer)
|
|||
/s/ Curtis L. Garner, Jr.
|
Chief Financial Officer
|
April 2, 2013
|
||
Curtis L. Garner, Jr.
|
(Principal Financial and Accounting Officer)
|
|||
/s/ William Bak
|
Director
|
April 2, 2013
|
||
William Bak
|
||||
/s/ Robert E. Guth
|
Director
|
April 2, 2013
|
||
Robert E. Guth
|
||||
/s/ Howard J. Haug
|
Director
|
April 2, 2013
|
||
Howard J. Haug
|
||||
/s/ Stephen P. McCall
|
Director
|
April 2, 2013
|
||
Stephen P. McCall
|
||||
/s/ Andrew Meyers
|
Director
|
April 2, 2013
|
||
Andrew Meyers
|
||||
/s/ William F. Reddersen
|
Director
|
April 2, 2013
|
||
William F. Reddersen
|
1 Year Otelco - Income Deposit Securities (MM) Chart |
1 Month Otelco - Income Deposit Securities (MM) Chart |
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