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): May 5, 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 May 5, 2009, the Company issued a press release reporting results for the three months ended March 31, 2009. 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.

 

SHENANDOAH TELECOMMUNICATIONS COMPANY

REPORTS FIRST QUARTER 2009 RESULTS

 

EDINBURG, VA, (May 5, 2009) – Shenandoah Telecommunications Company (Shentel) (NASDAQ: SHEN) announced financial and operating results for the first quarter ended March 31, 2009.

 

First Quarter 2008 Highlights

Highlights for the quarter include:

 

 

President and CEO, Christopher E. French commented, “Our continuing operations delivered solid performance improvements in the first quarter of 2009, despite a difficult economic environment. Our excellent results include solid increases in revenues, operating income, and net income from continuing operations. Unfortunately, after reassessing the market conditions and our progress in selling our converged services operation, we concluded there was a significant decline in value of these assets. Accordingly, we recorded an after tax non-cash impairment charge of $10.7 million, resulting in a net loss for the quarter. Operationally, we continued to make outstanding progress with the integration of EVDO into our PCS network, improvements in PCS network coverage, and the upgrade of the cable networks we acquired in West Virginia and Alleghany County, Virginia."

Consolidated Results

For the quarter ended March 31, 2009, net income from continuing operations was $6.2 million compared to $5.5 million in first quarter 2008. The Company’s total revenues for first quarter 2009 were $40.1 million, compared to $33.6 million for the same quarter in 2008, an increase of 19%. First quarter operating expenses increased to $28.0 million in 2009 from $24.0 million in 2008. The increase in revenues is primarily a result of an increase in average PCS subscribers of 11%, increases in the average billing per PCS subscriber and the revenues of the newly acquired cable operations. The increase in operating expenses results from costs associated with the new cable operations, improving and expanding our PCS network and depreciation related to fiber optic network improvements. Operating income for the quarter was $12.1 million, an increase of $2.5 million from first quarter 2008.

 

 

In September, the Company announced its plans to explore options for the sale of its Converged Services segment. The results of this segment have since been considered a discontinued operation. In connection with the preparation of the first quarter financial statements, based upon changes in the marketplace for this type of asset and further developments in the auction process for the sale of Converged Services, the Company has determined that the fair value of Converged Services has declined from earlier estimates. Accordingly, the Company has recorded an impairment of $17.5 million before taxes and $10.7 million after taxes which were allocated to the long-lived assets of this operation, including goodwill, intangibles and fixed assets. As a result of this impairment, this segment generated a net loss of $10.4 million for the quarter, in comparison to a net loss of $667 thousand for the first quarter of 2008.

The Company has restructured its business segment reporting to reflect changes in the Company’s internal management of its businesses in response to changes in the economic environment and other factors. It now has three reportable segments, which the Company operates and manages as strategic business units organized by lines of business: Wireless, Wireline and Cable TV.

The Wireless segment provides digital wireless service as a Sprint PCS Affiliate of Sprint Nextel, owns cell site towers built on leased land, and leases space on these towers to both affiliates and non-affiliated service providers. The Wireline segment provides regulated and unregulated voice services, dial-up and DSL internet access, long distance access services, and leases fiber optic facilities. The Cable TV segment provides cable television services.

In this quarter and in all future financial reporting, prior period comparative information will be restated to conform to the current structure.

 

 

Wireless Segment Operating Results

The Company continued to experience growth in wireless as a Sprint PCS Affiliate of Sprint Nextel, although at a slower pace. Our wireless customer count was 213,054 at March 31, 2009, a 10% increase from March 31, 2008, while first quarter churn was 2.15%, compared to 1.98% in first quarter 2008.

Wireless segment operating income was $10.9 million in the 2009 first quarter, up $4.2 million or 64% from the corresponding 2008 period. Revenue increased $4.4 million, while operating expenses increased $168 thousand. The increase in revenue resulted from an 11% increase in average PCS customers and an increase in the average PCS rates billed per customer. The increase in operating expenses included an additional $1.6 million in costs to operate the PCS network related to adding cell sites and EVDO capabilities. The Company added eight additional cell sites and 26 EVDO sites during the quarter. The Company now has 237 EVDO sites covering 87% of covered POPs. The network costs increases were offset by a decrease of $1.7 million in the costs to upgrade handsets and process handset warranty and insurance claims.

Wireline Operating Results

Telephone line losses continued to be among the lowest in the industry. Telephone had 24,092 access lines at March 31, 2009, a decrease of 117 from December 31, 2008. Operating income of the wireline operations for first quarter 2009 was $3.3 million, a decrease of $0.8 million from the comparable 2008 period. Revenues are down by $0.3 million primarily as a result of facilities lease revenues which increased in the first quarter of 2008 due to a short term lease. Expenses increased by $0.6 million primarily as a result of additional depreciation expenses associated with enhancements to the network.

Cable TV Operating Results

 

 

The Company had 25,244 cable customers at March 31, 2009, up approximately 17,000 from March 31, 2008, related to the purchase of assets and subscribers in West Virginia and Alleghany County, Virginia on December 1, 2008. Operating losses in the cable segment increased by $0.8 million to a loss of $0.9 million for the first quarter of 2009 over the same quarter in 2008. The acquisition resulted in an increase of revenues in the cable segment of $2.5 million and an increase in expenses of $3.3 million

Other Information

The Company’s first quarter 2009 capital expenditures were $9.1 million, up from $7.8 million in first quarter 2008. The increase in capital expenditures primarily resulted from upgrades to the acquired cable networks and spending to expand our PCS network coverage and footprint. The Company expects capital spending to remain elevated for the next several quarters with the ongoing upgrades of the acquired cable assets. Cash and cash equivalents as of March 31, 2009 were $18.7 million, up from $5.2 million at December 31, 2008. The Company retired $1.1 million of debt during the first quarter while borrowing $2 million, and at March 31, 2009, the debt/equity ratio was 0.26; and debt as a percent of total assets was 17%.

Teleconference Information:

Tuesday, May 5, 2009 4:00 P. M. (ET)

Domestic Dial in number: 1-877-718-5095

International Dial in number: 1-719-325-4822

Pass Code: 7467348

Webcast: www.shentel.com

 

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)

 

Condensed Consolidated Balance Sheets			March 31, 2009			December 31, 2008
Cash and cash equivalents			$	18,653		$	5,240
Other current assets				40,370			67,181
Total investments				7,856			8,388
Property, plant and equipment				336,136			326,120
Less accumulated depreciation and amortization				157,542			150,499
Net property, plant and equipment				178,594			175,621
Other assets, net				9,312			9,551
Total assets			$	254,785		$	265,981
Current liabilities, exclusive of current    maturities of long-term debt of $5,509 and    $4,399, respectively			$	17,896		$	19,986
Long-term debt, including current maturities				42,274			41,359
Total other liabilities				30,590			37,028
Total shareholders’ equity				164,025			167,608
Total liabilities and shareholders’ equity			$	254,785		$	265,981

 

 

SHENANDOAH TELECOMMUNICATIONS COMPANY

SUMMARY FINANCIAL INFORMATION (unaudited)

(In thousands, except per share amounts)

 

Condensed Consolidated Statements of Income

 

			Three months ended March 31,
			2009			2008
Revenues			$	40,102		$	33,587
Cost of goods and services				12,631			10,615
Selling, general and administrative				7,543			7,073
Depreciation				7,783			6,302
Operating expenses				27,957			23,990
Operating income				12,145			9,597
Interest expense				(531	)		(334	)
Other income (expense)				(460	)		(244	)
Income from continuing operations before income taxes				11,154			9,019
Income tax expense				4,920			3,560
Net income from continuing operations				6,234			5,459
Loss from discontinued operations, net of taxes				(10,369	)		(667	)
Net income (loss)			$	(4,135	)	$	4,792
Basic and diluted income (loss) per share:
Net income from continuing operations			$	0.26		$	0.23
Loss from discontinued operations				(0.44	)		(0.03	)
Net income (loss)			$	(0.18	)	$	0.20

 

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