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): March 4, 2009

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Shenandoah Telecommunications Company

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(Exact name of registrant as specified in its charter)

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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):

 

 

 

 

 

 

 

 

Item 2.02 Results of Operations and Financial Condition.

 

On March 4, 2009, the Company issued a press release reporting results for the three months and year ended December 31, 2008. A copy of the press release is included as Exhibit 99.1 to this report.

 

Item 9.01 Financial Statements and 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.

 

SHENANDOAH TELECOMMUNICATIONS COMPANY

 

 

Adele M. Skolits

Vice President - Finance and

(Duly Authorized Officer)

 

 

 

 

 

 

Exhibit 99.1

 

For further information, please contact Adele M. Skolits at 540-984-5161.

 

Teleconference Information:

Friday, March 6, 2009 10:00 A. M. (ET)

Domestic Dial in number: 1-877-852-6580

International Dial in number: 1-719-325-4752

Pass Code: 2530564

Audio webcast: www.shentel.com

 

SHENANDOAH TELECOMMUNICATIONS COMPANY

REPORTS HIGHER NET INCOME IN FOURTH QUARTER AND FULL YEAR 2008 FINANCIAL RESULTS

 

EDINBURG, VA, (March 4, 2009) – Shenandoah Telecommunications Company (Shentel, NASDAQ: SHEN) announced financial and operating results for the fourth quarter and year ended December 31, 2008.

Highlights

 

 

President and CEO, Christopher E. French commented, “2008 was a great year for our Company, both from a financial and an operational perspective. Despite the worsening economic environment we had excellent financial results with net income of $24.4 million. At the same time, we continued to invest in service improvements and expansion of our PCS network and grew our CATV business with the recent acquisition of over 17,000 cable subscribers.”

 

Consolidated Fourth Quarter Results

For the quarter ended December 31, 2008, net income from continuing operations was $5.4 million compared to $4.4 million in fourth quarter 2007. The Company’s total revenues for fourth quarter 2008 were $37.1 million, compared to $34.6 million for the same quarter in 2007, an increase of 7%. PCS Revenues grew by $1.9 million primarily as a result of a growth in our customer base. Also, our cable revenue grew by approximately $0.8 million following the acquisition of 17,000 cable customers in December. Fourth quarter operating expenses increased to $27.4 million in 2008 from $27.1 million in 2007. The increase in operating expenses (after adjusting for $2.7 million in one-time stock grant and pension settlement costs incurred in the fourth quarter of 2007) results primarily from costs associated with improving and expanding our PCS network and one month of operating expenses related to the Cable TV acquisition. Growth

 

 

in depreciation related to this expansion and network improvements in our Cable TV and Telephone businesses also contributed to the expense growth. Operating income for the quarter was $9.8 million, an increase of $2.3 million from fourth quarter 2007.

In September 2008, 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 net income of $0.2 million for the quarter, an improvement from the $0.8 million net loss for the same quarter in 2007. The change is principally due to reduced depreciation expense following the decision to dispose of the segment, and growth in the customer base.

Consolidated Full Year Results

For the year ended December 31, 2008, net income from continuing operations was $26.3 million compared to $22.2 million in 2007. The Company’s total revenues for 2008 were $144.4 million, compared to $130.4 million for 2007, an increase of 11%. Growth in the PCS customer base drove $12.8 million of the revenue increase. Additional revenue from the newly acquired cable operation accounted for an additional $0.8 million in revenue growth. Operating expenses increased to $98.8 million in 2008 from $93.7 million in 2007. The increase in operating expenses (after adjusting for $4.7 million in non-recurring stock grant, early retirement and pension settlement costs incurred in 2007) resulted primarily from:

The discontinued Converged Services operation generated net losses of $1.9 million for 2008, compared to the $3.4 million net loss for 2007. The change is principally due to reduced depreciation expense following the decision to dispose of the segment, and growth in the customer base.

 

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 December 31, 2008 of 211,462, a 13% increase from December 31, 2007. The Company’s fourth quarter churn was 1.9%, compared to 2.3% in fourth quarter 2007.

PCS operating income was $7.4 million in the 2008 fourth quarter, up $0.8 million or 12% from the fourth quarter of 2007. Fourth quarter 2008 revenue increased $1.9 million over fourth quarter 2007, while operating expenses increased $1.8 million (net of the $0.7 million of stock grant expenses in the 2007 period). The increase in revenue resulted from a 17% increase in average retail customers. The increase in operating expenses included:

 

 

Telephone Operating Results

Telephone had 24,209 access lines at December 31, 2008. This represents an increase of 16 for the fourth quarter and a decrease of 327 or 1% from the previous year-end. Operating income of the local telephone operations for fourth quarter 2008 was $2.6 million, an increase of $0.4 million from the comparable 2007 period. The 2007 period included $0.9 million in stock grant and pension settlement expenses. Depreciation expenses increased $0.5 million in the quarter ended December 31, 2008, over the comparable 2007 period, due to accelerated depreciation on certain fiber related assets that were scheduled for replacement in late 2008, and to new fiber and related equipment placed in service in the second half of 2008.

 

Other Information

Cash and cash equivalents as of December 31, 2008 were $5.2 million, down from $17.2 million at December 31, 2007. At December 31, 2008, the debt/equity ratio was 0.25 and debt as a percent of total assets was 15.5%. The Company’s fourth quarter 2008 capital expenditures were $19.7 million, up from $11.0 million in fourth quarter 2007, and for the twelve month period, were $65.5 million compared to $29.1 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, with spending to upgrade our recently acquired cable networks offsetting lower spending on our PCS network coverage and footprint. The Company repaid $1.1 million of debt principal during the fourth quarter and drew $23.7 million on its new debt facility during the quarter to fund capital expenditures and the cable system acquisition. As previously announced, the Company paid a cash dividend during the quarter 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.

 

 

SHENANDOAH TELECOMMUNICATIONS COMPANY

SUMMARY FINANCIAL INFORMATION (unaudited)

(In thousands)

 

 

 

 

SHENANDOAH TELECOMMUNICATIONS COMPANY

SUMMARY FINANCIAL INFORMATION (unaudited)

(In thousands, except per share amounts)

 

Condensed Consolidated Statements of Income

 

 

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