UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 4, 2008
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Shenandoah Telecommunications Company
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(Exact name of registrant as specified in its charter)
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Virginia |
0-9881 |
54-1162807 |
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(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
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500 Shentel Way P.O. Box 459 Edinburg, VA |
22824 |
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(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (540) 984-4141
Not applicable
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(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2-(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 Results of Operations and Financial Condition.
On November 4, 2008, the Company issued a press release reporting results for the three months ended September 30, 2008. A copy of the press release is included as Exhibit 99.1 to this report.
Item 9.01 Financial Statements and Exhibits.
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(c) |
Exhibits |
SIGNATURE
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.
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SHENANDOAH TELECOMMUNICATIONS COMPANY |
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(Registrant) |
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November 5, 2008 |
/s/ Adele M. Skolits |
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Adele M. Skolits |
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Vice President - Finance and |
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Chief Financial Officer |
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(Duly Authorized Officer) |
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Exhibit 99.1
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NEWS RELEASE |
For further information, please contact Adele M. Skolits at 540-984-5161.
Teleconference Information:
Thursday, November 6, 2008 10:00 A. M. (ET)
Domestic Dial in number: 1-866-857-6150
International Dial in number: 1-719-325-4827
Pass Code: 1044608
Audio webcast: www.shentel.com
SHENANDOAH TELECOMMUNICATIONS COMPANY
REPORTS HIGHER NET INCOME IN THIRD QUARTER 2008
EDINBURG, VA, (November 4, 2008) – Shenandoah Telecommunications Company (Shentel, NASDAQ: SHEN) announced financial and operating results for the third quarter and nine months ended September 30, 2008.
Third Quarter 2008 Highlights
Highlights for the quarter include:
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PCS net subscriber additions of 5,380 bringing the total retail wireless customers to 205,777 at September 30, 2008, up 16% from September 30, 2007 |
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Net income from continuing operations of $7.4 million, up 23% from third quarter 2007 |
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Net income of $6.8 million, up $1.7 million or 33% from third quarter 2007 |
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Operating income of $12.6 million, up $2.9 million or 30% from the third quarter 2007 |
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Total revenues of $37.4 million, up $4.8 million or 15% from third quarter 2007 |
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PCS customer churn of 1.85%, in comparison to the 2.28% for the third quarter of 2007 |
November 4, 2008
News Release
Page 2 of 6
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EVDO high speed data services are now available to 68% of the population covered by our PCS network |
President and CEO, Christopher E. French commented, “Our Company delivered solid performance improvements in the third quarter despite the economic environment. We are pleased with the progress we made to expand our PCS network and offer further data and push to talk services.”
Consolidated Results
For the quarter ended September 30, 2008, net income from continuing operations was $7.4 million compared to $6.1 million in third quarter 2007. The Company’s total revenues for third quarter 2008 were $37.4 million, compared to $32.7 million for the same quarter in 2007, an increase of 15%. Third quarter operating expenses increased to $24.8 million in 2008 from $22.9 million in 2007. The increase in revenues is primarily a result of a larger base of PCS subscribers, while the increase in operating expenses results from costs associated with improving and expanding our PCS network. Operating income for the quarter was $12.6 million, an increase of $2.9 million from third quarter 2007.
In September, the company announced its plans to explore options for the sale of its Converged Services segment. The results of this segment are now considered a discontinued operation. This segment generated a net loss of $.6 million for the quarter, an improvement from the $1.0 million net loss for the same quarter in 2007.
PCS Operating Results
The Company continued to experience strong growth in wireless as a Sprint PCS Affiliate of Sprint Nextel, with wireless customer count at September 30, 2008 of 205,777, a
November 4, 2008
News Release
Page 3 of 6
16% increase from September 30, 2007. The Company’s third quarter churn was 1.85%, compared to 2.28% in third quarter 2007.
PCS operating income was $9.6 million in the 2008 third quarter, up $2.7 million or 40% from the corresponding 2007 period. Revenue increased $4.1 million, while operating expenses increased $1.4 million. The increase in revenue resulted from a 16% increase in average retail customers. The increase in operating expenses included an additional $0.9 million in costs to operate the PCS network related to adding cell sites and EVDO capabilities. The Company added 14 additional cell sites and 41 EVDO sites during the quarter. The Company now has 134 EVDO sites covering 68% of covered POPs.
Telephone Operating Results
Telephone line losses continued to be lower than most wireline carriers. Telephone had 24,193 access lines at September 30, 2008, a decrease of 343 from the previous year-end. Operating income of the local telephone operations for third quarter 2008 was $3.4 million, an increase of $0.1 million from the comparable 2007 period.
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Other Information |
The Company’s third quarter 2008 capital expenditures were $20.2 million, up from $9.3 million in third quarter 2007, and for the nine month period, were $38.9 million compared to $18.1 million in 2007. The increase in capital expenditures primarily resulted from spending to expand our PCS network coverage and footprint. The Company expects capital spending to remain elevated for the next several quarters. Cash and cash equivalents as of September 30, 2008 were $7.3 million, down from $17.2 million at December 31, 2007. The Company retired $1.1 million of debt during the third quarter, and at September 30, 2008, the debt/equity ratio was 0.11; and debt as a percent of total assets was 7.9%. As previously announced, on
November 4, 2008
News Release
Page 4 of 6
December 1, 2008, the Company will pay a cash dividend of 30 cents per share to shareholders of record as of November 12, 2008.
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 Global Select 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 in the Mid-Atlantic and Southeastern United States.
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, changes in regulation and other competitive factors.
November 4, 2008
News Release
Page 5 of 6
SHENANDOAH TELECOMMUNICATIONS COMPANY
SUMMARY FINANCIAL INFORMATION (unaudited)
(In thousands)
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Condensed Consolidated Balance Sheets |
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September 30, |
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December 31, |
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2008 |
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2007 |
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Cash and cash equivalents |
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$ |
7,318 |
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$ |
17,245 |
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Assets held for sale |
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27,178 |
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— |
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Other current assets |
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31,612 |
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23,891 |
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Investments |
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8,877 |
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9,936 |
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Property, plant and equipment |
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301,678 |
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300,622 |
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Less accumulated depreciation and amortization |
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145,267 |
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145,198 |
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Net property, plant and equipment |
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156,411 |
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155,424 |
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Other assets, net |
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5,518 |
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15,028 |
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Total assets |
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$ |
236,914 |
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$ |
221,524 |
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Current liabilities, exclusive of current |
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$ |
18,882 |
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$ |
19,808 |
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Long-term debt, including current maturities |
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18,735 |
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21,907 |
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Total other liabilities |
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28,606 |
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28,685 |
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Total shareholders’ equity |
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170,691 |
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151,124 |
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Total liabilities and shareholders’ equity |
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$ |
236,914 |
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$ |
221,524 |
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November 4, 2008
News Release
Page 6 of 6
SHENANDOAH TELECOMMUNICATIONS COMPANY
SUMMARY FINANCIAL INFORMATION (unaudited)
(In thousands, except per share amounts)
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Condensed Consolidated Statements of Income |
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Three months ended |
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Nine months ended |
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September 30, |
September 30, |
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2008 |
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2007 |
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2008 |
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2007 |
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Revenues |
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$ |
37,409 |
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$ |
32,655 |
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$ |
107,304 |
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$ |
95,755 |
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Cost of goods and services |
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10,662 |
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9,986 |
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31,244 |
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29,075 |
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Selling, general and administrative |
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7,724 |
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6,834 |
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21,052 |
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20,003 |
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Depreciation & amortization |
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6,424 |
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6,113 |
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19,127 |
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17,468 |
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Operating expenses |
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24,810 |
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22,933 |
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71,423 |
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66,546 |
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Operating income |
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12,599 |
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9,722 |
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35,881 |
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29,209 |
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Interest expense |
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(103 |
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(453 |
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(782 |
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(1,433 |
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Other income (expense), net |
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(234 |
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733 |
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(109 |
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1,800 |
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Income from continuing operations before income taxes |
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12,262 |
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10,002 |
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34,990 |
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29,576 |
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Income tax expense |
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4,818 |
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3,929 |
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14,013 |
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11,855 |
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Net income from continuing operations |
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$ |
7,444 |
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$ |
6,073 |
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$ |
20,977 |
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$ |
17,721 |
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Loss from discontinued operations, net of taxes |
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(636 |
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(966 |
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(2,128 |
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(2,596 |
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Net income |
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$ |
6,808 |
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$ |
5,107 |
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$ |
18,849 |
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$ |
15,125 |
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Net income per share, basic and diluted |
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$ |
0.29 |
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$ |
0.22 |
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$ |
0.80 |
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$ |
0.65 |
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#####