SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended September 30, 1997
Commission File Number 0-9881
SHENANDOAH TELECOMMUNICATIONS COMPANY
(Exact name of registrant as specified in its charter)
Virginia 54-1162806
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification
organization) Number)
P.O. Box 459, Edinburg, Virginia 22824
(Address of principal executive office and zip code)
Registrant's telephone number,
including area code: (540) 984-4141
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of the close of the period covered by
this report.
Class Outstanding at October 1, 1997
Common Stock, No Par Value 3,760,760 Shares
PAGE
SHENANDOAH TELECOMMUNICATIONS COMPANY
AND SUBSIDIARY COMPANIES
PART I, FINANCIAL INFORMATION
ITEM I, FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
ASSETS
(UNAUDITED)
September 30, 1997 December 31, 1996
CURRENT ASSETS
Cash & Cash Equivalents $5,927,313 $3,763,468
Certificates of Deposit 204,122 1,142,181
Investments Held to Maturity Securities 499,581 2,148,945
Accounts Receivable 5,541,459 4,208,742
Materials 4,047,523 2,888,709
Prepaid and Other Current Assets 216,056 324,683
TOTAL CURRENT ASSETS $16,436,054 $14,476,728
NON-CURRENT ASSETS
Investment in Available for Sale Securities $4,775,261 $2,738,431
Investment in Held-To-Maturity Securities 1,622,433 1,622,433
Other Investments 4,591,907 4,112,947
TOTAL NON-CURRENT ASSETS $10,989,601 $8,473,811
PROPERTY, PLANT AND EQUIPMENT
Plant in Service $69,949,016 $65,125,491
Plant Under Construction 4,524,912 5,626,710
Less Accumulated Depreciation 24,478,413 21,648,820
NET PROPERTY, PLANT AND EQUIPMENT $52,417,477 $49,193,381
OTHER ASSETS
Cost in Excess of net assets of Business
less Accumulated Amortization $ 5,250,959 $ 5,532,602
Deferred Charges and Other Assets 557,213 597,575
Radio Spectrum License net of
Accumulated Amortization 714,258 0
Deposit 0 1,100,000
$ 6,522,431 $ 7,230,177
TOTAL ASSETS $86,365,562 $79,374,097
See accompanying notes to consolidated financial statements.
SHENANDOAH TELECOMMUNICATIONS COMPANY
AND SUBSIDIARY COMPANIES
PART I, FINANCIAL INFORMATION
ITEM I, FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
(UNAUDITED)
September 30, 1997 December 31, 1996
CURRENT LIABILITIES
Current Maturities of Long-Term Debt $ 499,408 $ 529,405
Accounts Payable 1,852,155 2,097,115
Advance Billings and Payments 258,607 590,336
Customers' Deposits 97,055 89,591
Other Current Liabilities 1,477,961 1,117,795
Income Taxes Payable 839,763 0
Other Taxes Payable 338,870 128,144
TOTAL CURRENT LIABILITIES $ 5,363,139 $ 4,552,386
LONG TERM DEBT, LESS CURRENT MATURITIES 25,497,905 24,176,834
OTHER LIABILITIES AND DEFERRED CREDITS
Deferred Investment Tax Credits $235,181 $291,957
Deferred Income Taxes 5,231,745 4,908,170
Pension and Other 867,990 573,363
6,334,916 5,773,490
MINORITY INTERESTS $ 1,963,306 $ 1,743,465
STOCKHOLDERS' EQUITY
Common Stock, no par, 8,000,000 shares
authorized (3,760,760 shares issued and
outstanding) $4,740,677 $4,740,677
Retained Earnings 41,274,272 37,716,654
Unrealized Gain on available-for-sale securities 1 191,348 670,591
47,206,297 43,127,922
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $86,365,562 $79,374,097
See accompanying notes to consolidated financial statements.
PAGE
SHENANDOAH TELECOMMUNICATIONS COMPANY
AND SUBSIDIARY COMPANIES
PART I, FINANCIAL INFORMATION
ITEM I, FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three months ended Nine months ended
September 30 September 30
------------------------- ---------------------------
1997 1996 1997 1996
OPERATING REVENUES
Telephone Revenues
Local Service $928,153 $828,715 $2,670,093 $2,428,140
Access 1,912,794 1,783,876 5,401,305 5,254,004
Toll 7,446 8,800 20,920 17,567
Miscellaneous:
Directory 276,707 283,377 841,880 863,452
Facility Leases 492,197 462,707 1,478,567 1,347,879
Billing & Collection 115,337 108,116 328,758 331,125
Other Miscellaneous 36,953 24,330 93,280 76,558
Total Telephone Revenues 3,769,587 3,496,921 10,834,803 10,318,725
Cable Television Revenues 635,619 221,408 1,876,770 663,384
ShenTel Service Revenues 538,855 511,462 1,539,376 1,285,688
Leasing Revenues 3,539 4,673 10,935 14,445
Mobile Revenues 2,238,521 1,813,891 6,192,078 4,819,014
PCS Revenues 478,586 75,243 1,186,458 111,765
Long Distance Revenues 220,100 262,815 696,332 796,543
Network Revenues 153,733 133,806 461,200 381,491
Total Revenues and Sales 8,038,540 6,520,219 22,797,952 18,391,055
OPERATING EXPENSES
Cost of Products and Services Sold 486,282 471,648 1,353,657 994,632
Line Costs 97,966 95,316 291,112 320,757
Plant Specific 705,510 633,204 1,999,365 1,6596507
Plant Non-Specific:
Network & Other 1,102,724 901,708 3,102,389 2,365,225
Depreciation and Amortization 1,187,999 861,454 3,449,816 2,479,414
PAGE
SHENANDOAH TELECOMMUNICATIONS COMPANY
AND SUBSIDIARY COMPANIES
PART I, FINANCIAL INFORMATION
ITEM I, FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three months ended Nine months ended
September 30 September 30
------------------------- ---------------------------
1997 1996 1997 1996
OPERATING EXPENSES (Continued)
Customer Operations $1,126,625 $ 842,222 $ 3,157,588 $2,436,812
Corporate Operations 662,455 588,437 1,951,810 1,664,325
Other Operating Income & Expense 179,519 49,897 523,446 143,698
Taxes other than income 106,406 93,263 315,106 295,249
Total Operating Expenses 5,655,486 4,537,149 16,144,289 12,359,762
Operating income 2,383,054 1,983,070 6,653,663 6,031,293
Gain on Sale of Investment 0 0 0 228,250
Non-operating income less expenses 427,147 367,882 911,977 804,412
Interest expense 409,832 170,181 1,154,001 439,859
Income before taxes 2,400,369 2,180,771 6,411,639 6,624,096
Provision for income taxes 765,466 735,133 2,039,180 2,235,939
Net income before minority interest 1,634,903 1,445,638 4,372,459 4,388,157
Minority interest (307,234) (188,383) (814,841) (490,245)
Net Income $1,327,669 $1,257,255 $3,557,618 $3,897,912
EARNINGS PER SHARE
Weighted Average Common
Shares Outstanding 3,760,760 3,760,760 3,760,760 3,760,760
Net Earnings per Share $0.35 $0.33 $0.95 $1.04
See accompanying notes to consolidated financial statements.
SHENANDOAH TELECOMMUNICATIONS COMPANY
AND SUBSIDIARY COMPANIES
PART I, FINANCIAL INFORMATION
ITEM I, FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF CASH FLOW
(UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30
1997 1996
CASH FLOWS FROM OPERATING
ACTIVITIES
Net Income $3,557,618 $3,897,916
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and Amortization $3,449,816 $2,479,414
Deferred taxes (22,885) (79,661)
Gain on Sale of Assets (31,103) (276,487)
Gain on Sale of Equity Investment 0 (228,250)
(Income)/Losses on Equity Investments (504,914) 0
Minority Share of Income 219,841 235,245
Other (38,405) 162,481
Decrease (increase) in
Accounts receivable (1,332,717) (257,985)
Materials and Supplies (1,011,027) (649,709)
Increase (decrease) in
Accounts Payable (244,960) 180,415
Income taxes payable 866,367 443,401
Other Deferrals and Accruals 595,464 (48,435)
Net cash provided by
operating activities $5,503,094 $5,858,345
PAGE
SHENANDOAH TELECOMMUNICATIONS COMPANY
AND SUBSIDIARY COMPANIES
PART I, FINANCIAL INFORMATION
ITEM I, FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF CASH FLOW
(UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30
1997 1996
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Property & Equipment ($7,085,725) ($13,697,225)
FCC Deposit Refund 953,400 0
Purchase of Intangible Asset 0 (5,886,171)
Purchase of Certificates of Deposit 0 (1,134,527)
Maturities of Certificates of Deposit 938,060 1,234,574
Cash flows from Securities 25,954 171,902
Proceeds from Investments 2,186,646 3,399,434
Purchases of Investments (1,648,658) (3,057,549)
Other 0 40,385
Net cash used in investing activities ($4,630,323) ($18,929,177)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long term debt $1,704,400 $11,525,322
Principal payments on long term debt (413,326) (304,544)
Net cash provided by investing activities 1,294,074 11,220,778
NET INCREASE/(DECREASE) IN CASH $2,163,845 ($1,850,054)
CASH AND CASH EQUIVALENTS:
Beginning 3,763,468 6,106,447
Ending $ 5,927,313 $ 4,256,393
See accompanying notes to consolidated financial statements.
PAGE
SHENANDOAH TELECOMMUNICATIONS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. In the opinion of management, the accompanying consolidated
financial statements contain all adjustments (consisting of
only normal recurring accruals) necessary to present fairly
Shenandoah Telecommunications Company's financial position
as of September 30, 1997 and the results of operations and
cash flows for the three and nine month periods ended
September 30, 1997 and 1996.
While the Company believes that the disclosures presented
are adequate, to make the information not misleading, it is
suggested that these financial statements be read in
conjunction with the financial statements and notes included
in the Company's annual report in Form 10-K.
2. Earnings per share of common stock have been determined by
using the weighted average number of shares outstanding
during the period.
3. In April the Board approved a $2 million line of credit with
First Union Bank, and in July the Board approved a $5
million line of credit with CoBank. The First Union line of
credit matures in May 1998, with a variable rate of Libor +
1.25%. Interest due is payable monthly with any unpaid
principal balance due at maturity. The CoBank line of
credit matures in August 1998. There are three interest
rate options, a weekly variable rate quoted by CoBank, a
fixed rate quoted by CoBank for such periods as may be
agreeable to CoBank, or Libor + 1.25%. Interest due is
payable monthly with any unpaid principal balance due at
maturity. No draws have been made on these lines of credit
as of September 30, 1997.
4. Certain account balances on the consolidated balance sheet
at December 31, 1996 have been reclassified to be consistent
with the classifications adopted for 1997.
SHENANDOAH TELECOMMUNICATIONS COMPANY
AND SUBSIDIARY COMPANIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Summary
The following tables set forth, for the periods indicated, the percentages which
certain items reflected in the financial data bear to total operating revenues and
the percentage increase of such items as compared to the indicated prior period:
RELATIONSHIP TO PERIOD TO PERIOD
TOTAL OPERATING REVENUES INCREASE OR DECREASE
Three months Nine months Three months Nine months
ended June 30 ended June 30 ended June 30 ended June 30
1997 1996 1997 1996 1997-96 1996-95 1997-96 1996-95
OPERATING REVENUES
Telephone Revenues
Local Service 11.55% 12.66% 11.71% 13.20% 12.41% 6.19% 9.96% 5.86%
Access 23.80% 27.36% 23.69% 28.57% 7.23% 11.54% 2.80% 8.94%
Toll 0.09% 0.13% 0.09% 0.10% -15.39% 667.89% 19.09% 121.41%
Miscellaneous:
Directory 3.44% 4.35% 3.69% 4.69% -2.35% 3.79% -2.50% 3.07%
Facility Leases 6.12% 7.10% 6.49% 7.33% 6.37% 10.46% 9.70% 6.75%
Billing & Collection 1.43% 1.66% 1.44% 1.80% 6.68% -9.23% -0.71% 10.95%
Other Miscellaneous 0.46% 0.37% 0.41% 0.42% 51.88% -19.90% 21.84% -14.14%
Total Telephone Revenues 46.89% 53.63% 47.53% 56.11% 7.80% 8.62% 5.00% 7.35%
Cable Television Revenues 7.91% 3.40% 8.23% 3.61% 187.08% 2.13% 182.91% 2.32%
ShenTel Service Revenues 6.70% 7.84% 6.75% 6.99% 5.36% 63.56% 19.73% 29.01%
Leasing Revenues 0.04% 0.07% 0.05% 0.08% -24.27% -22.34% -24.30% -22.12%
Mobile Revenues 27.85% 27.82% 27.16% 26.20% 23.41% 37.05% 28.49% 33.31%
PCS Revenues 5.95% 1.15% 5.20% 0.61% 536.05% N/A 961.56% N/A
Long Distance Revenues 2.74% 4.03% 3.05% 4.33% -16.25% -8.56% -12.58% -6.29%
Network Revenues 1.91% 2.05% 2.02% 2.07% 14.89% 8.04% 20.89% 2.68%
----- ----- ----- ----- ----- ----- ----- -----
Total Revenues and Sales 100.00% 100.00% 100.00% 100.00% 23.29% 18.77% 23.96% 14.14%
SHENANDOAH TELECOMMUNICATIONS COMPANY
AND SUBSIDIARY COMPANIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RELATIONSHIP TO PERIOD TO PERIOD
TOTAL OPERATING REVENUES INCREASE OR DECREASE
Three months Nine months Three months Nine months
ended June 30 ended June 30 ended June 30 ended June 30
1997 1996 1997 1996 1997-96 1996-95 1997-96 1996-95
OPERATING EXPENSES
Cost of Products and
Services Sold 6.05% 7.23% 5.94% 5.41% 3.10% 225.69% 36.10% 110.69%
Line Costs 1.22% 1.46% 1.28% 1.74% 2.78% -32.70% -9.24% -21.56%
Plant Specific 8.78% 9.71% 8.77% 9.02% 11.42% 47.97% 20.47% 23.21%
Plant Non-Specific:
Network & Other 13.72% 13.83% 13.61% 12.86% 22.29% 83.19% 31.17% 73.01%
Depreciation and
Amortization 14.78% 13.21% 15.31% 13.48% 37.91% 18.30% 39.14% 17.02%
Customer Operations 14.02% 12.92% 13.85% 13.25% 33.77% 34.15% 29.58% 38.82%
Corporate Operations 8.24% 9.02% 8.56% 9.05% 12.58% 16.97% 17.27% 15.77%
Other Operating Income
& Expenses 2.23% 0.77% 2.30% 0.78% 259.78% 11.23% 264.27% 4.98%
Taxes other than income 1.32% 1.43% 1.38% 1.61% 14.09% 16.29% 6.73% 19.25%
----- ----- ---- ----- ----- ----- ----- ------
Total Operating Expenses 70.35% 69.59% 70.81% 67.21% 24.65% 42.20% 30.62% 33.03%
Operating income 29.65% 30.41% 29.19% 32.79% 20.17% -13.74% 10.32% -11.58%
Gain on Sale of Investment 0.00% 0.00% 0.00% 1.24% N/A 0.00% -100.00% -73.83%
Non-operating income
less expenses 5.31% 5.64% 4.00% 4.37% 16.11% 28.14% 13.37% 10.84%
Interest expense 5.10% 2.61% 5.06% 2.39% 140.82% -2.21% 162.36% -16.17%
----- ----- ----- ----- ------ ----- ------ -----
Income before taxes 29.86% 33.45% 28.12% 36.02% 10.07% -18.65% -3.21% -18.85%
PAGE
SHENANDOAH TELECOMMUNICATIONS COMPANY
AND SUBSIDIARY COMPANIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RELATIONSHIP TO PERIOD TO PERIOD
TOTAL OPERATING REVENUES INCREASE OR DECREASE
Three months Nine months Three months Nine months
ended June 30 ended June 30 ended June 30 ended June 30
1997 1996 1997 1996 1997-96 1996-95 1997-96 1996-95
Provision for income taxes 9.52% 11.27% 8.94% 12.16% 4.13% -19.28% -8.80% -20.69%
----- ----- ----- ----- ----- ----- ----- -----
Net income before minority
interest 20.34% 22.17% 19.18% 23.86% 13.09% -18.33% -0.36% -17.88%
Minority interest -3.82% -2.89% -3.57% -2.67% 63.09% 4.97% 66.21% 12.84%
Net Income 16.52% 19.28% 15.60% 21.19% 5.60% -20.96% -8.73% -20.60%
===== ===== ===== ===== ===== ===== ===== =====
PAGE
SHENANDOAH TELECOMMUNICATIONS COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Shenandoah Telecommunications Company is a diversified
telecommunications holding company providing both regulated and
unregulated telecommunications services through its eight
wholly-owned subsidiaries.
This industry is in a period of transition from a protected
monopoly to a competitive environment as evidenced by the recent
passage of the Telecommunications Act of 1996. As a result,
Shenandoah Telecommunications has made and plans to continue to
make significant investments in the new and emerging
technologies.
The most significant revenue contributors are the regulated
telephone local exchange company accounting for 46.9% of revenue
and the cellular dominated operations of the Mobile subsidiary,
accounting for 27.9% of revenue during the most recent quarter.
Other significant services provided are paging, personal
communications services (PCS), cable television, Internet access,
long distance, and fiber facilities and towers leased to other
telecommunications carriers. The Company also sells and leases
equipment, mainly related to services provided. The Company also
participates in emerging technologies by direct investment in
non-affiliated companies.
RESULTS OF OPERATIONS
The regulated telephone subsidiary's largest source of revenue
continues to be for access to the local exchange network by
interexchange carriers. The volume for approximately two-thirds
of these access revenues typically tracks with changes in minutes
of use. The minutes of use during the first nine months and the
third quarter of 1997 increased 4.4% and 6.4% respectively from
the total minutes of use in comparative periods in 1996.
However, a change in the mix of minutes of use between the
interstate and intrastate jurisdictions, in combination with
higher than normal demand in early 1996 due to unusual weather
conditions, limited the revenue increase to 2.8% year-to-date.
In the third quarter the increase in associated revenues was
7.2%.
Third quarter cable television revenues increased 187.1% over the
third quarter of 1996. The year-to-date increase was 182.9%.
The increase was due to the acquisition of the CATV assets owned
by FontierVision Operating Partnership located in our service
area on September 30, 1996.
PAGE
SHENANDOAH TELECOMMUNICATIONS COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS (Continued)
The increase in the ShenTel Service revenues category for the
third quarter of 1997 compared to 1996 was 5.36%. The
year-to-date increase is 19.73%. This is principally due to
increases in Internet Service revenues stemming from customer
growth. Third quarter 1997 revenues from our Internet Service
operations were up $120,408 or 97.6% compared to the third
quarter of 1996. The year-to-date increase in Internet revenues
is $327,292 or 105.8%.
The Mobile revenues are mainly comprised of revenues from
cellular services. Third quarter 1997 local cellular revenues
increased $394,507 or 22.6% compared to the same period in 1996.
The year-to-date increase is $1,247,511 or 26.9%. The increase
in cellular revenues was due to an increase in the local customer
base, as well as increased use by other providers' customers
roaming in our network. Total revenues from the Cellular
operation accounted for 26.6% of total Company revenues in the
third quarter and 25.9% year-to-date.
PCS revenues increased $478,586 or 536.1% in the third quarter
compared to the third quarter of 1996. The year-to-date increase
is $1,186,458 or 961.6%. The PCS network was turned up at the
beginning of 1995. Work continues on the expansion of this
network.
Total payroll costs (including capitalized costs) in the third
quarter of 1997 increased by $239,230 or 18.2% compared to the
same period in 1996. The third quarter increase is primarily due
to additions of personnel in the PCS subsidiary as its sales
force grows with the opening of new retail stores. The
year-to-date increase is $298,230 or 7.8%. The first quarter of
1997 payroll costs were less than the first quarter 1996 costs
due to high maintenance costs incurred in January of 1996 to
repair blizzard and flood damage not being repeated in 1997, as
well as, reduced sales commissions in the ShenTel subsidiary.
PAGE
SHENANDOAH TELECOMMUNICATIONS COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS (Continued)
Cost of Goods Sold increased 3.1% in the third quarter compared
to the same period in 1996. The year-to-date increase is 36.1%.
This is due primarily to an increase in the volume of PCS phones
sold, a direct result of network coverage expansion.
Plant Specific expenses consist mainly of maintenance to the
Company's plant in service. This expense category increased
11.4% in the third quarter compared to the third quarter of 1996.
The year-to-date increase is 20.5%. These increases are due
primarily to increased maintenance to the CATV assets acquired
from FrontierVision, and rents paid for new retail outlets and
PCS equipment sites.
The expense category Network and Other consists primarily of
network support, engineering, and leased facilities costs. These
costs increased 22.3% in the third quarter compared to the third
quarter of 1996. The year-to-date increase is 31.2%. These
increases are primarily due to increased incollect roaming costs
in the cellular operation, and increases in leased facilities and
switching costs in the PCS operation due to network expansion.
Depreciation and Amortization, our largest expense category, was
37.9% higher in the third quarter of 1997 compared to the same
period in 1996. The year-to-date increase is 39.1%. Due mainly
to the acquisition of the CATV assets of FrontierVision,
depreciation and amortization expense for the CATV operation has
increased $131,526 or 211.5% in the third quarter and $395,287 or
215.3% for the first nine months over the same periods in 1996.
Continuing plant acquisition for the PCS network added $81,569 in
the third quarter and $280,013 year-to-date compared to 1996.
The percentage increases are 117.1% and 171.8% respectively.
Customer operations increased 33.8% for the quarter and 29.6%
year-to-date compared to the same periods in 1996. These costs
are for the marketing and sales, billing, and customer service
functions. As with the network and other category, increases for
the Internet access, cellular, and PCS businesses are primarily
responsible for the increase.
Corporate Operations increased 12.6% in the third quarter and
17.3% year-to-date compared to the same periods in 1996. The
Corporate Operations category includes expenses for executive and
general management, accounting, external relations, human
resources, legal, purchasing, insurance, and other general and
administrative costs. PAGE
SHENANDOAH TELECOMMUNICATIONS COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS (Continued)
The Other Operating Expense category consists of royalty expense
paid to programming providers for the Cable Television
subsidiary. The increase in these expenses compared with 1996 is
due to the acquisition of the Shenandoah County CATV assets of
FrontierVision on September 30, 1996.
Interest expense has increased 140.8% in the third quarter
compared to the third quarter of 1996 and increased 162.4%
year-to-date compared to the first nine months of 1996. The
Company began drawing funds on the CoBank note (described below)
in the third quarter of 1996. Draws on this note at September
30, 1997 equaled $14,570,588.
LIQUIDITY AND CAPITAL RESOURCES
On August 2, 1996, the Company signed a note with CoBank to
borrow up to $25 million. The term of the loan is for up to 15
years, with multiple interest options. The Company began drawing
these funds in the third quarter of 1996. A portion of these
funds were used for the acquisition of the Shenandoah County CATV
assets of FrontierVision in September of 1996. The new debt is
also being used to finance the building of the new network for
the PCS operation. The Company budgeted approximately
$12,000,000 for PCS-related plant in 1997, and anticipates
additional cash flow requirements for inventory and initial
operating losses.
In April the Board approved a $2 million line of credit with
First Union Bank and in July the Board approved a $5 million line
of credit with CoBank. No draws have been made on these lines of
credit as of September 30, 1997.
The Company budgeted capital expenditures of approximately
$11,500,000 for our other subsidiaries for 1997. These capital
needs will be met through internally generated cash flows and the
existing Rural Telephone Bank (RTB) note. A draw of $573,000 was
made on the RTB note in July 1997. The loan agreement with the
RTB allows for additional borrowings of approximately $2,800,000.
Expenditures of these loan funds is limited to capital projects
for the regulated local exchange carrier. PAGE
SHENANDOAH TELECOMMUNICATIONS COMPANY
PART II
OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security Holders
None
ITEM 6. Exhibits and Reports on Form 8-K
A. Exhibit No. 27 - Financial Data Schedule
B. No reports on Form 8-K were filed for the period
covered by this report.
PAGE
SHENANDOAH TELECOMMUNICATIONS COMPANY
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)
November 10, 1997 CHRISTOPHER E. FRENCH
Christopher E. French
President
November 10, 1997 LAURENCE F. PAXTON
Laurence F. Paxton
Vice President - Finance
5
9-MOS
DEC-31-1997
SEP-30-1997
5,927,313
6,275,638
5,541,459
0
4,047,523
16,436,054
72,370,977
24,478,413
86,365,562
5,363,139
25,497,905
0
0
4,740,677
42,465,620
86,365,562
0
22,797,952
1,353,657
16,144,289
814,841
0
1,154,001
6,411,639
2,039,180
6,653,663
0
0
0
3,557,618
.95
.95
