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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JULY 15, 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)
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 9.
The information contained in this report on Form 8-K is being furnished pursuant
to Item 12 under Item 9 as directed by the Securities and Exchange Commission in
Release No. 34-47583 and shall not be deemed to be "filed" for purposes of
Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the
liabilities of that Section.
NEWS RELEASE
For further information, please contact Earle A. MacKenzie at 540-984-5192.
SHENANDOAH TELECOMMUNICATIONS COMPANY
REPORTS SECOND QUARTER 2004 FINANCIAL RESULTS
EDINBURG, VA, (July 15, 2004) - Shenandoah Telecommunications Company
(Shentel; NASDAQ: SHEN) announced unaudited financial results for the second
quarter ended June 30, 2004. Income from continuing operations for the quarter
was $2.9 million, compared to $1.0 million for the 2003 second quarter. Total
second quarter revenues grew by 20.6% from the same quarter last year, including
a 23.3% increase in wireless revenues. Income from continuing operations for the
six months ended June 30, 2004 was $5.2 million, which represented an increase
of $2.2 million from the 2003 six-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 six months ended June 30,
2004 was $5.2 million, compared to $25.5 million in the first six months of
2003.
Overall Highlights
For the quarter ended June 30, 2004, income from continuing operations was
$2.9 million or $0.38 per diluted share, compared to $1.0 million or $0.14 per
diluted share in the second quarter of 2003. The Company's total revenues for
the second quarter of 2004 were $30.0
million, compared to $24.8 million in the second quarter of 2003, which
represented an increase of $5.2 million or 20.6%. The Company's revenue growth
was driven by an increase in its PCS business.
Operating income for the second quarter of 2004 and 2003 was $5.0 million
and $2.4 million, respectively. The 2003 second quarter results included a $1.5
million reduction in access revenue in the Wireline Operations for charges
disputed by long-distance carriers. Operating expenses continued to increase,
primarily in SG&A, due to ongoing staff additions required by current and
expected growth and the increasing complexity of the Company's operations and
reporting requirements.
Wireless Operations
The Company experienced strong growth in second quarter wireless revenues
as a PCS Affiliate of Sprint, increasing its PCS subsidiary revenue to a total
of $20.7 million, which represented an increase of $3.9 million over the 2003
second quarter. The PCS net income was $0.9 million in the second quarter of
2004 compared to a net loss of $0.8 million in the second quarter of 2003. PCS
net income for the six months ended June 30, 2004 was $1.4 million, which
represented a $2.9 million increase over the 2003 six-month period. The
Company's Sprint retail wireless customer count increased by 4,900, similar to
the increase in the second quarter of 2003, to approximately 94,500 customers.
Wholesale users increased by 2,000, compared to a 1,400 increase in the second
quarter of 2003, to approximately 18,000. Wholesale users are added through
Sprint's relationship with its wholesale customers. The Company's second quarter
customer turnover, or churn, was 1.9%, down from 2.1% in the second quarter of
2003.
Wireline Operations
The local telephone operations net income for the 2004 second quarter was
$1.7 million, which represented a $0.6 million increase compared to the 2003
second quarter. The increase in net income was primarily attributable to a
reduction in access revenue of $1.5 million related to a dispute by
interexchange carriers, which the Company recorded in the 2003 second quarter.
Telephone operations recorded a net loss of 34 access lines during the 2004
second quarter to end the quarter at 24,867.
External Investments
In the quarter ended June 30, 2004, the Company recorded a $146,000 gain
on investments compared to a nominal gain in the second quarter of 2003. At the
end of the quarter, the Company's external investments totaled $7.7 million.
Consolidated Results
The Company recorded expenses of approximately $0.2 million in the second
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 $7.0 million in plant in service and
retired $1.1 million of scheduled debt during the second quarter of 2004. The
Company had cash and cash equivalents of $34.9 million as of the end of the
second quarter. At June 30, 2004, the Company's debt/equity ratio was 36.9% and
debt as a percent of total assets was 21.3%.
About Shenandoah Telecommunications
Shenandoah Telecommunications Company is a holding company that provides a
broad range of telecommunications 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 telephone, cable television, Internet access,
interexchange facilities, and PCS services, along with many other associated
services, 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.
SHENANDOAH TELECOMMUNICATIONS COMPANY
SUMMARY FINANCIAL INFORMATION (unaudited)
(In thousands, except per share amounts)
Condensed Balance Sheets June 30, December 31,
2004 2003
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Cash and cash equivalents $ 34,931 $ 28,696
Other current assets 19,472 12,267
Total securities and investments 7,900 7,467
Property, plant and equipment 207,647 199,692
Less accumulated depreciation (80,251) (72,006)
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Net property, plant and equipment 127,396 127,686
Other assets, net 4,389 9,248
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Total assets $ 194,088 $ 185,364
========= =========
Current liabilities, exclusive of current
maturities of $4,285 and $4,230, respectively $ 15,435 $ 11,566
Long and short-term debt 41,246 43,346
Total other liabilities 25,725 24,244
Total stockholders' equity 111,682 106,208
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Total liabilities and stockholders' equity $ 194,088 $ 185,364
========= =========
SHENANDOAH TELECOMMUNICATIONS COMPANY
SUMMARY FINANCIAL INFORMATION
(unaudited)
Condensed Statements of Income
(In thousands, except per share amounts) Three months ended Six months ended
June 30, June 30,
2004 2003 2004 2003
-------- -------- -------- --------
Operating Revenues-Wireless $ 20,679 $ 16,769 $ 39,632 $ 32,403
-Wireline 7,608 6,309 14,757 13,948
-Other 1,676 1,766 3,383 3,440
-------- -------- -------- --------
Total operating revenue 29,963 24,844 57,772 49,791
Cost of goods and services 3,037 2,661 6,024 4,989
Network operating costs 9,127 8,647 17,441 16,532
Depreciation 4,395 4,127 8,732 8,148
Selling, general and administrative 8,379 7,011 16,264 13,452
-------- -------- -------- --------
Total operating expenses 24,938 22,446 48,461 43,121
-------- -------- -------- --------
Operating income 5,025 2,398 9,311 6,670
Interest expense (773) (893) (1,571) (1,847)
Other income (expense) 337 150 543 (96)
Income tax provision (1,709) (611) (3,090) (1,752)
-------- -------- -------- --------
Income from continuing operations 2,880 1,044 5,193 2,975
Discontinued operations, net of income taxes -- -- -- 22,628
Cumulative effect of a change in
accounting, net of income taxes -- -- -- (76)
-------- -------- -------- --------
Net income $ 2,880 $ 1,044 $ 5,193 $ 25,527
======== ======== ======== ========
Net earnings per share, basic
Continuing operations $ 0.38 $ 0.14 $ 0.68 $ 0.39
Discontinued operations, net of
income taxes -- -- -- 2.98
Cumulative effect of a change in
accounting, net of taxes -- -- -- (0.01)
-------- -------- -------- --------
Total $ 0.38 $ 0.14 $ 0.68 $ 3.37
======== ======== ======== ========
Net earnings per share, diluted
Continuing operations $ 0.38 $ 0.14 $ 0.68 $ 0.39
Discontinued operations, net of
income taxes -- -- -- 2.97
Cumulative effect of a change in
accounting, net of taxes -- -- -- (0.01)
-------- -------- -------- --------
Total $ 0.38 $ 0.14 $ 0.68 $ 3.36
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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)
July 16, 2004 /S/ CHRISTOPHER E. FRENCH
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Christopher E. French
President