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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APRIL 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 File Number) (I.R.S. Employer
incorporation or organization) 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 FIRST QUARTER 2004 FINANCIAL RESULTS
EDINBURG, VA, (April 15, 2004) - Shenandoah Telecommunications Company
(Shentel; NASDAQ: SHEN) announced unaudited financial results for the first
quarter ended March 31, 2004. Income from continuing operations for the quarter
was $2.3 million, compared to $1.9 million for the same period in 2003. Total
first quarter revenues grew by 11.5% from the same quarter last year, including
a 21.2% increase in wireless revenues.
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 as discontinued operations. Net income including
discontinued operations for the three months ended March 31, 2004 was $2.3
million compared to $24.5 million in the first quarter of 2003.
Overall Highlights
For the quarter ended March 31, 2004, income from continuing operations
was $2.3 million or $0.30 per diluted share, compared to $1.9 million or $0.26
per diluted share in the first quarter of 2003. The Company's total revenues for
the first quarter 2004 were $27.8 million, compared to $24.9 million in the
first quarter of 2003, an increase of $2.9 million or 11.5%. The Company's
revenue growth was driven by an increase in its PCS business. Operating income
for the first quarter of 2004 and 2003 was $4.3 million and $4.1 million,
respectively. The 2003 first quarter results included $0.4 million of favorable
adjustments to prior period estimates, in addition to bad debt recoveries of
$0.4 million. Additionally, a reduction in revenue of $0.3
million was recorded in the first quarter of 2004 against telephone access
revenue related to revenue recorded in prior periods disputed by interexchange
carriers.
President and CEO, Christopher E. French, commented, "We are pleased with
our overall financial results, and achieving our second consecutive quarter of
profitability in our PCS subsidiary. We have made great strides in continuing to
grow our business and in replacing the financial contribution that our cellular
operations contributed prior to its sale in the first quarter of last year. That
sale has allowed us to focus all of our wireless efforts on PCS, and earning a
reasonable return on our wireless investment."
Wireless Operations
The Company experienced strong growth in first quarter wireless revenues
as a PCS Affiliate of Sprint, increasing its PCS subsidiary revenue by $3.2
million compared to the first quarter of 2003, to a total of $18.2 million. The
PCS net income was $0.5 million in the first quarter of 2004 compared to a net
loss of $0.7 million in the first quarter of 2003. The Company's Sprint retail
wireless customer count increased by 4,500, compared to 4,900 in the first
quarter of 2003, to approximately 90,000 customers. Wholesale users increased by
3,500, compared to a 1,600 increase in the first quarter of 2003, to
approximately 16,000. Wholesale users are added through Sprint's relationship
with its wholesale customers. The Company's first quarter churn was 2.2%, down
from 2.6% in the first quarter of 2003.
Wireline Operations
The local telephone operations net income for the first quarter was $1.6
million, a $0.6 million decrease compared to the same quarter last year. The
decrease in net income was the result of the Company recording a reduction in
revenue of $0.3 million against access revenue in the first quarter related to a
dispute by interexchange carriers, the recovery of $0.4 million in the first
quarter of 2003 of previously written off bad debt and an increase in 2004
operating
expenses. Telephone operations recorded a net gain of 24 access lines in the
period to end the quarter at 24,901.
External Investments
In the quarter ended March 31, 2004, the Company recorded an $18 thousand
loss on investments compared to a loss of $0.3 million in the first quarter of
2003. At the end of the quarter, the Company's external investments totaled $7.5
million.
Consolidated Results
The Company recorded expenses of approximately $0.3 million in the first
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 $0.2 million from the same quarter last year due to a reduction in
debt outstanding. The Company invested $1.6 million in Plant in Service and
retired $1.0 million of scheduled debt during the first quarter of 2004. The
Company had cash and cash equivalents of $33.1 million as of the end of the
quarter. The Company's debt/equity ratio was 38.9% at March 31, 2004; and debt
as a percent of total assets was 22.6%.
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.
SHENANDOAH TELECOMMUNICATIONS COMPANY
SUMMARY FINANCIAL INFORMATION (unaudited)
(In thousands, except per share amounts)
Condensed Balance Sheets March 31, December 31,
2004 2003
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Cash and cash equivalents $ 33,138 $ 28,696
Other current assets 11,984 12,267
Total securities and investments 7,464 7,467
Property, plant and equipment 200,853 199,692
Less accumulated depreciation (75,974) (72,006)
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Net property, plant and equipment 124,879 127,686
Other assets, net 9,293 9,248
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Total assets $ 186,758 $ 185,364
========= =========
Current liabilities, exclusive of current
maturities of $4,257 and $4,230, respectively $ 11,289 $ 11,566
Long and short-term debt 42,301 43,346
Total other liabilities 24,496 24,244
Total stockholders' equity 108,672 106,208
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Total liabilities and stockholders' equity $ 186,758 $ 185,364
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SHENANDOAH
TELECOMMUNICATIONS COMPANY
SUMMARY FINANCIAL INFORMATION
(unaudited)
Condensed Statements of Income
(In thousands, except per share amounts) Three months ended
March 31,
2004 2003
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Operating Revenues-Wireless $ 18,953 $ 15,634
-Wireline 7,149 7,639
-Other 1,707 1,674
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Total operating revenue 27,809 24,947
Cost of goods and services 2,960 2,289
Network operating costs 8,341 8,046
Depreciation 4,337 4,021
Selling, general and administrative 7,887 6,441
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Total operating expenses 23,525 20,797
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Operating income 4,284 4,150
Interest expense (797) (954)
Other income (expense) 206 (124)
Income tax provision (1,380) (1,141)
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Income from continuing operations 2,313 1,931
Discontinued operations, net of income taxes -- 22,628
Cumulative effect of a change in accounting,
net of income taxes -- (76)
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Net income $ 2,313 $ 24,483
======== ========
Net earnings per share, basic
Continuing operations $ 0.30 $ 0.26
Discontinued operations, net of
income taxes -- 2.99
Cumulative effect of a change in
accounting, net of taxes -- (0.01)
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Total $ 0.30 $ 3.24
======== ========
Net earnings per share, diluted
Continuing operations $ 0.30 $ 0.26
Discontinued operations, net of
income taxes -- 2.98
Cumulative effect of a change in
accounting, net of taxes -- (0.01)
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Total $ 0.30 $ 3.23
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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)
April 16, 2004 /S/ EARLE A. MACKENZIE
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Earle A. MacKenzie
Chief Financial Officer