UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
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OCTOBER 19, 2004
Date of Report
(Date of earliest event reported)
Shenandoah Telecommunications Company
(Exact name of registrant as specified in its charter)
Virginia 0-9881 54-1162807
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification Number)
500 Shentel Way
P.O. Box 459
Edinburg, VA 22824
(Address of principal executive office) (Zip code)
Registrant's telephone number, including area code: (540) 984-4141
Item 2.02 Results of Operations and Financial Condition.
The following news release is being filed pursuant to Item 2.02 of Form 8-K
NEWS RELEASE
For further information, please contact Earle A. MacKenzie at 540-984-5192.
SHENANDOAH TELECOMMUNICATIONS COMPANY INCREASES CASH DIVIDEND AND REPORTS
THIRD QUARTER 2004 FINANCIAL RESULTS
EDINBURG, VA, (October 19, 2004) - The Board of Directors of Shenandoah
Telecommunications Company (Shentel; NASDAQ: SHEN) declared a cash dividend of
$0.43 per share. The dividend will be payable December 1, 2004, to shareholders
of record on November 12, 2004. The dividend is an increase of $0.04 per share
or 10.3 % over the 2003 dividend. Total payout to shareholders will be
approximately $3.3 million.
Shenandoah Telecommunications Company also announced unaudited financial
results for the third quarter ended September 30, 2004. Income from continuing
operations for the quarter was $3.1 million, compared to $2.7 million for the
third quarter 2003. Total third quarter revenues grew by 13.4% from the same
quarter last year, including a 21.9% increase in wireless revenues. Income from
continuing operations for the nine months ended September 30, 2004 was $8.3
million, which represented an increase of $2.6 million from the 2003 nine-month
period.
As previously announced, the Company sold its interest in the Virginia 10
RSA Limited Partnership cellular operation on February 28, 2003, and classified
its prior cellular operation and gain from the sale as discontinued operations.
Net income including discontinued operations for the nine months ended September
30, 2004 was $8.3 million, compared to $28.2 million in the first nine months of
2003.
October 19, 2004
News Release
Page 3 of 8
Overall Highlights
For the quarter ended September 30, 2004, income from continuing
operations was $3.1 million or $0.41 per diluted share, compared to $2.7 million
or $0.35 per diluted share in the third quarter of 2003. The Company's total
revenues for the third quarter of 2004 were $31.3 million, compared to $27.6
million in the third quarter of 2003, which represented an increase of $3.7
million or 13.4%. The Company's revenue growth was driven by an increase in its
PCS business.
Operating income for the third quarter of 2004 and 2003 was $6.5 million
and $4.9 million, respectively. The increase is due to the continued improvement
in the Company's PCS operations.
President and CEO, Christopher E. French commented, "We are pleased with
the continuation of our profitable growth, and our fourth consecutive quarter of
profitable results from our PCS operations. This continued growth has enabled us
to again increase our cash dividend to shareholders, further rewarding them for
their patience as investors."
Wireless Operations
The Company experienced strong growth in third quarter wireless revenues
as a PCS Affiliate of Sprint, increasing its PCS subsidiary revenue to a total
of $21.2 million, which represented an increase of $3.9 million over the 2003
third quarter. The PCS net income was $1.3 million in the third quarter of 2004
compared to a net income of $9,000 in the third quarter of 2003. PCS net income
for the nine months ended September 30, 2004 was $2.7 million, which represented
a $4.2 million increase over the 2003 nine-month period. The Company's Sprint
retail wireless customer count increased by 3,600, similar to the increase in
the third
October 19, 2004
News Release
Page 4 of 8
quarter of 2003, to approximately 98,100 customers. Wholesale users increased by
1,600, compared to a 2,800 increase in the third quarter of 2003, to
approximately 19,600. Wholesale users are added through Sprint's relationship
with its wholesale customers. The Company's third quarter retail customer
turnover, or churn, was 2.2%, compared to 2.4% in the third quarter of 2003.
Wireline Operations
The local telephone operations net income for the 2004 third quarter was
$1.8 million, which represented a $0.2 million decrease compared to the 2003
third quarter. Telephone operations recorded a net loss of 49 access lines
during the 2004 third quarter to end the quarter at 24,818.
External Investments
In the quarter ended September 30, 2004, the Company recorded a $0.3
million loss on investments compared to a nominal loss in the third quarter of
2003. At the end of the quarter, the Company's external investments totaled $7.9
million.
Consolidated Results
The Company recorded expenses of approximately $0.2 million in the third
quarter of 2004 related to the ongoing implementation efforts related to new SEC
and NASDAQ requirements as a result of the Sarbanes-Oxley Act. Interest expense
decreased $0.1 million from the same quarter last year due to a reduction in
debt outstanding. The Company invested $16.2 million in plant in service and
retired $1.1 million of scheduled debt during the third quarter of 2004. The
Company had cash and cash equivalents of $31.5 million as of the end of the
third quarter. At September 30, 2004, the Company's debt/equity ratio was 35.0%
and debt as a percent of total assets was 19.9%.
October 19, 2004
News Release
Page 5 of 8
Other Items
On August 27, 2004, the Company announced it signed a letter of intent to
purchase the 83.8 percent of NTC Communications L.L.C. that it did not currently
own. It is anticipated the transaction will close prior to year end.
About Shenandoah Telecommunications
Shenandoah Telecommunications Company is a holding company that provides a
comprehensive portfolio of telecommunications products and services through its
operating subsidiaries. The Company is traded on the NASDAQ National Market
under the symbol "SHEN." The Company's operating subsidiaries provide local and
long distance telephone, internet and data services, cable television, wireless
voice and data services, alarm monitoring, and telecommunications equipment,
along with many other associated solutions, to the four-state region from
Harrisonburg, Virginia to Harrisburg and Altoona, Pennsylvania.
This release contains forward-looking statements that are subject to various
risks and uncertainties. The Company's actual results could differ materially
from those anticipated in these forward-looking statements as a result of
unforeseen factors. A discussion of factors that may cause actual results to
differ from management's projections, forecasts, estimates and expectations is
available in the Company filings with the SEC. Those factors may include changes
in general economic conditions, increases in costs and other competitive
factors. For a discussion of these factors, see the Company's Annual Report on
Form 10-K as filed with the Securities and Exchange Commission on March 9, 2004.
The Company expressly disclaims any obligation to update or review any
forward-looking statements contained in this release.
October 19, 2004
News Release
Page 6 of 8
SHENANDOAH TELECOMMUNICATIONS COMPANY
SUMMARY FINANCIAL INFORMATION (unaudited)
(In thousands, except per share amounts)
Condensed Balance Sheets September 30, December 31,
2004 2003
---- ----
Cash and cash equivalents $ 31,523 $ 28,696
Other current assets 15,794 12,267
Total securities and investments 7,845 7,467
Property, plant and equipment 226,395 199,692
Less accumulated depreciation (84,220) (72,006)
--------- ---------
Net property, plant and equipment 142,175 127,686
Other assets, net 4,175 9,248
--------- ---------
Total assets $ 201,512 $ 185,364
========= =========
Current liabilities, exclusive of current
maturities of $4,313 and $4,230, respectively $ 22,805 $ 11,566
Long and short-term debt 40,185 43,346
Total other liabilities 23,692 24,244
Total stockholders' equity 114,830 106,208
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Total liabilities and stockholders' equity $ 201,512 $ 185,364
========= =========
October 19, 2004
News Release
Page 7 of 8
SHENANDOAH TELECOMMUNICATIONS COMPANY
SUMMARY FINANCIAL INFORMATION
(unaudited)
Condensed Statements of Income Three months ended Nine months ended
(In thousands, except per share amounts) September 30, September 30,
2004 2003 2004 2003
---- ---- ---- ----
Operating Revenues-Wireless $ 21,959 $ 18,009 $ 61,591 $ 50,411
-Wireline 7,680 7,774 22,437 21,722
-Other 1,631 1,799 5,014 5,240
-------- -------- -------- --------
Total operating revenue 31,270 27,582 89,042 77,373
Cost of goods and services 2,091 2,998 8,115 7,987
Network operating costs 9,182 8,535 26,623 25,067
Depreciation 4,715 4,180 13,447 12,328
Selling, general and administrative 8,812 7,011 25,076 20,463
-------- -------- -------- --------
Total operating expenses 24,800 22,724 73,261 65,845
-------- -------- -------- --------
Operating income 6,470 4,858 15,781 11,528
Interest expense (756) (839) (2,327) (2,686)
Other income (expense) (759) 231 (216) 135
Income tax provision (1,844) (1,533) (4,934) (3,285)
-------- -------- -------- --------
Income from continuing operations 3,111 2,717 8,304 5,692
Discontinued operations, net of income taxes -- (23) -- 22,605
Cumulative effect of a change in
accounting, net of income taxes -- -- -- (76)
-------- -------- -------- --------
Net income $ 3,111 $ 2,694 $ 8,304 $ 28,221
======== ======== ======== ========
Net earnings per share, basic
Continuing operations $ 0.41 $ 0.36 $ 1.09 $ 0.75
Discontinued operations, net of
income taxes -- -- -- 2.98
Cumulative effect of a change in
accounting, net of taxes -- -- -- (0.01)
-------- -------- -------- --------
Total $ 0.41 $ 0.36 $ 1.09 $ 3.72
======== ======== ======== ========
Net earnings per share, diluted
Continuing operations $ 0.41 $ 0.35 $ 1.09 $ 0.75
Discontinued operations, net of
income taxes -- -- -- 2.97
Cumulative effect of a change in
accounting, net of taxes -- -- -- (0.01)
-------- -------- -------- --------
Total $ 0.41 $ 0.35 $ 1.09 $ 3.71
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October 19, 2004
News Release
Page 8 of 8
SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARY COMPANIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SHENANDOAH TELECOMMUNICATIONS COMPANY
(Registrant)
OCTOBER 21, 2004 /S/ EARLE A. MACKENZIE
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Earle A. MacKenzie
Chief Financial Officer