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 3,
2009
Shenandoah
Telecommunications Company
(Exact
name of registrant as specified in its charter)
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Virginia
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0-9881
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54-1162807
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(State
or other jurisdiction of incorporation)
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(Commission
File Number)
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(IRS
Employer Identification No.)
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500
Shentel Way
P.O.
Box 459
Edinburg,
VA
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22824
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code: (540) 984-4141
Not
applicable
(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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o
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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o
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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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o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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1
Item
2.02 Results of Operations and Financial Condition.
On
November 3, 2009, the Company issued a press release reporting results for the
three months ended September 30, 2009. 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)
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Exhibits
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Press
release dated November 3, 2009
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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
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(Registrant)
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November
3, 2009
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/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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2
Exhibit
99.1
NEWS
RELEASE
For
further information, please contact Adele M. Skolits at
540-984-5161.
SHENANDOAH
TELECOMMUNICATIONS COMPANY
REPORTS
THIRD QUARTER 2009 FINANCIAL RESULTS
EDINBURG,
VA, (November 3, 2009) – Shenandoah Telecommunications Company (Shentel)
(NASDAQ: SHEN) announces financial and operating results for the third quarter
and nine months ended September 30, 2009.
Third
Quarter 2009 Highlights
Highlights
for the quarter include:
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·
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Revenue
of $40.1 million, an increase of 7% from third quarter
2008
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·
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Net
income of $6.3 million, which includes a net loss of $0.8 million from
newly acquired cable operations undergoing
upgrades
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·
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PCS
net subscriber additions of 3,286
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·
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Total
PCS subscribers of 219,353, up 7% from September 30,
2008
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·
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EVDO
high speed data services are now available to 94% of the population
covered by our PCS network
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·
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Added
seven cell towers, 16 CDMA base stations, and 28 EVDO-enabled
sites
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·
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Completed
upgrades in the recently acquired cable territories to 27% of the homes
passed, and 100% of the homes passed in Shenandoah County cable
territory
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President
and CEO, Christopher E. French commented, “Despite a difficult economic
environment, our company experienced solid operating results in the quarter,
while continuing to invest in upgrading and improving all of our networks,
especially PCS and the newly acquired cable operations. Development
of and growth in these operations is an important part of our plans for
long-term growth in earnings. During the quarter we continued to make
improvements in our PCS network, further improving coverage and extending high
speed data service to 94 percent of our covered population. We are
fortunate that our financial strength has allowed us to continue to invest in
growth at a time when many companies are retrenching, and we believe these
investments position us well for when economic conditions
improve.”
November
3, 2009
News
Release
Page 2 of
7
Consolidated
Third Quarter Results
For the
quarter ended September 30, 2009, net income from continuing operations was $6.3
million compared to $7.4 million in third quarter 2008. The third
quarter of 2009 included an after-tax loss of $0.8 million from the cable
operations acquired in December 2008, which are undergoing
upgrades. The Company’s total revenues for third quarter 2009 were
$40.1 million, compared to $37.4 million for the same quarter in 2008, an
increase of 7%. Third quarter operating expenses increased to $29.5
million in 2009 from $24.9 million in 2008. The increase in revenues
is primarily a result of higher revenues in our PCS unit and the revenues of the
newly acquired cable operations. The increase in PCS revenues is a
result of an increase in average PCS subscribers of 7%. The increase
in operating expenses results from costs associated with the new cable
operations, improvements and expansion of our PCS and fiber optic networks, and
associated depreciation.
November
3, 2009
News
Release
Page 3 of
7
Consolidated
Nine Months Results
For the
nine months ended September 30, 2009, net income from continuing operations was
$19.3 million compared to $20.8 million in the comparable 2008
period. Year-to-date, results for 2009 include a $1.9 million
after-tax loss from the cable operations acquired in December of
2008. The Company’s total revenues for the 2009 nine months were
$120.4 million, compared to $107.3 million for the same period in 2008, an
increase of 12%. Operating expenses increased to $86.1 million in the
first nine months of 2009 from $71.8 million in the prior period. The
increase in revenues is primarily a result of an increase in average PCS
subscribers of 9% and the revenues of the newly acquired cable
operations. Operating expenses increased due to costs associated with
the new cable operations, improvements and expansion of our PCS and fiber optic
networks, and associated depreciation.
Cable
TV Update
The
Company acquired cable assets and subscribers in West Virginia and Alleghany
County, Virginia on December 1, 2008. In the third quarter of 2009,
the acquisition added revenues of $2.6 million and expenses of $3.9 million, for
an operating loss of $1.3 million. The acquired cable operations
accounted for 68% of the decrease in consolidated operating income in third
quarter 2009 compared to third quarter 2008. Following the upgrade of
the network acquired in Alleghany County, Virginia, during the second quarter,
the Company completed upgrades to the networks acquired in Franklin and
Petersburg, West Virginia, during the third quarter of 2009. Through
September 30, the Company had upgraded networks passing 27% of homes passed in
our acquired service areas, and an additional 13% of homes passed have been
upgraded since the end of the quarter. The Company expects to have
53% of homes passed upgraded by the end of the year. In addition, the
Company has upgraded its cable network in Shenandoah County, Virginia, upgrading
100% of homes passed as of September 30, 2009. In total, the Company
expects to have upgraded, as of December 31, 2009, approximately 65% of homes
passed in our cable markets.
November
3, 2009
News
Release
Page 4 of
7
Other
Information
The
Company’s third quarter 2009 capital expenditures were $12.1 million, down from
$20.2 million in third quarter 2008. 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 increase in the fourth quarter as the PCS network improvements are
finished and cable network upgrade work increases. Spending should
then begin to decline over the next several quarters as enhancements to the PCS
network focus on success-based spending to address capacity issues, followed by
reduced spending as planned cable network upgrades are completed.
Cash and
cash equivalents as of September 30, 2009 were $14.9 million, up from $5.2
million at December 31, 2008. The Company made scheduled repayments
against debt facilities of $1.1 million during the third quarter. At
September 30, 2009, the debt/equity ratio was 0.17; and debt as a percent of
total assets was 11%. The amount available to the Company through its
delayed draw term loan facility was $37.3 million as of September 30,
2009. Draws against this facility can be made through December 31,
2009. The Company continues to progress towards completing the sale
of its Converged Services operations.
November
3, 2009
News
Release
Page 5 of
7
The
Company’s Board of Directors declared a cash dividend of $0.32 per share,
payable December 1, 2009 to shareholders of record on November 10,
2009. This represents an increase of $0.02 per share, or 7%, over the
2008 dividend.
About
Shenandoah Telecommunications
Shenandoah
Telecommunications Company is a holding company that provides a broad range of
telecommunications services through its operating subsidiaries. The Company is
traded on the NASDAQ Global Select Market under the symbol
“SHEN.” The Company’s operating subsidiaries provide local and long
distance telephone, Internet and data services, cable television, wireless voice
and data services, alarm monitoring, and telecommunications equipment, along
with many other associated solutions in the Mid-Atlantic United
States.
Teleconference
Information:
Wednesday,
November 4, 2009 9:00 A. M. (ET)
Domestic
Dial in number: 1-800-441-0022
International
Dial in number: 1-719-325-2106
Audio
webcast: www.shentel.com
This
release contains forward-looking statements that are subject to various risks
and uncertainties. The Company’s actual results could differ
materially from those anticipated in these forward-looking statements as a
result of unforeseen factors. A discussion of factors that may cause
actual results to differ from management’s projections, forecasts, estimates and
expectations is available in the Company filings with the SEC. Those
factors may include changes in general economic conditions, increases in costs,
changes in regulation and other competitive factors.
November
3, 2009
News
Release
Page 6 of
7
SHENANDOAH
TELECOMMUNICATIONS COMPANY
SUMMARY
FINANCIAL INFORMATION (unaudited)
(In
thousands)
Condensed Consolidated
Balance Sheets
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September 30,
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December 31,
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|||||||
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2009
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2008
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Cash
and cash equivalents
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$ | 14,918 | $ | 5,240 | ||||
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Other
current assets
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35,886 | 67,181 | ||||||
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Investments
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8,666 | 8,388 | ||||||
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Property,
plant and equipment
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367,325 | 328,172 | ||||||
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Less
accumulated depreciation and amortization
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172,447 | 151,695 | ||||||
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Net
property, plant and equipment
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194,878 | 176,477 | ||||||
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Other
assets, net
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8,649 | 9,551 | ||||||
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Total
assets
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$ | 262,997 | $ | 266,837 | ||||
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Current
liabilities, exclusive of current maturities of long-term debt of $6,357
and $4,399, respectively
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$ | 23,206 | $ | 19,986 | ||||
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Long-term
debt, including current maturities
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29,075 | 41,359 | ||||||
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Total
other liabilities
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34,575 | 39,180 | ||||||
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Total
shareholders' equity
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176,141 | 166,312 | ||||||
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Total
liabilities and shareholders' equity
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$ | 262,997 | $ | 266,837 | ||||
November
3, 2009
News
Release
Page 7 of
7
SHENANDOAH
TELECOMMUNICATIONS COMPANY
SUMMARY
FINANCIAL INFORMATION (unaudited)
(In
thousands, except per share amounts)
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,
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September 30,
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2009
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2008
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2009
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2008
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Revenues
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$ | 40,115 | $ | 37,408 | $ | 120,356 | $ | 107,304 | ||||||||
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Cost
of goods and services
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13,703 | 10,712 | 39,452 | 31,394 | ||||||||||||
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Selling,
general and administrative
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7,692 | 7,724 | 22,569 | 21,052 | ||||||||||||
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Depreciation
& amortization
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8,151 | 6,484 | 24,116 | 19,304 | ||||||||||||
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Operating
expenses
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29,546 | 24,920 | 86,137 | 71,750 | ||||||||||||
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Operating
income
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10,569 | 12,488 | 34,219 | 35,554 | ||||||||||||
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Interest
expense
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(193 | ) | (103 | ) | (1,128 | ) | (783 | ) | ||||||||
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Other
income (expense), net
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296 | (233 | ) | 246 | (108 | ) | ||||||||||
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Income
from continuing operations before income taxes
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10,672 | 12,152 | 33,337 | 34,663 | ||||||||||||
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Income
tax expense
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4,326 | 4,774 | 14,019 | 13,881 | ||||||||||||
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Net
income from continuing operations
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$ | 6,346 | $ | 7,378 | $ | 19,318 | $ | 20,782 | ||||||||
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Loss
from discontinued operations, net of taxes
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(39 | ) | (636 | ) | (10,484 | ) | (2,128 | ) | ||||||||
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Net
income
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$ | 6,307 | $ | 6,742 | $ | 8,834 | $ | 18,654 | ||||||||
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Basic
and diluted income (loss) per share:
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Net
income from continuing operations
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$ | 0.27 | $ | 0.31 | $ | 0.81 | $ | 0.88 | ||||||||
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Loss
from discontinued operations
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- | (0.03 | ) | (0.44 | ) | (0.09 | ) | |||||||||
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Net
income
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$ | 0.27 | $ | 0.28 | $ | 0.37 | $ | 0.79 | ||||||||
#####