SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-Q/A
(Amendment No.1)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2004
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF
1934
For the transition period from ______________________ to ______________________
Commission File Number: 0-9881
SHENANDOAH TELECOMMUNICATIONS COMPANY
(Exact name of registrant as specified in its charter)
Virginia 54-1162807
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
124 South Main Street, Edinburg, Virginia 22824
(Address of principal executive offices) (Zip Code)
(540) 984-4141
(Registrant's telephone number, including area code)
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. |X| YES |_| NO
Indicate by check mark whether the registration is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). |X| YES |_| NO
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at July 28, 2004
- -------------------------- ----------------------------
Common Stock, No Par Value 7,612,785 Shares
Explanatory Note
The undersigned registrant hereby files Amendment No. 1 to amend the following
items of its Form 10-Q for the quarter ended June 30, 2004:
1.) Item 4, "Controls and Procedures," and
2.) Item 6, "Exhibits and Reports on Form 8-K " to reissue the
certifications required by Sections 302 and 906 of the
Sarbanes-Oxley Act of 2002
PART I. FINANCIAL INFORMATION
ITEM 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of its President and Chief Executive
Officer, who is our principal executive officer, and its Executive Vice
President and Chief Financial Officer, who is our principal financial officer,
conducted an evaluation of our disclosure controls and procedures, as defined by
Rule 13a-15(e) under the Securities Exchange Act of 1934. Based on this
evaluation, the Company's principal executive officer and its principal
financial officer concluded that the Company's disclosure controls and
procedures were effective as of June 30, 2004.
During the second fiscal quarter of 2004, there were changes in the Company's
internal controls over financial reporting that have materially affected, or are
reasonably likely to materially affect, its internal control over financial
reporting as follows:
The Company dedicated significant resources during the second quarter of
2004 in preparing for the conversion of its new PCS point of sale system.
The conversion will involve a change from a stand-alone, Company-hosted
system, to a system hosted by Sprint that is integrated into the Sprint
PCS billing system. Through this integration, the Company has eliminated
several points of multiple data entry, thereby reducing the risk of error,
and enhancing internal control, while improving the sales process. The new
system was placed in service during mid-July 2004.
Under our agreements with Sprint, Sprint provides us with billing, collections,
customer care, certain network operations and other back office services for the
PCS operation. As a result, Sprint remits to the Company approximately 63% of
the Company's total revenues based on the results of the 2004 second quarter,
while approximately 44% of the expenses reflected in the Company's consolidated
financial statements relate to charges by or through Sprint for expenses such as
billing, collections and customer care, roaming expense, long-distance, and
travel. Due to this relationship, the Company necessarily relies on Sprint to
provide accurate, timely and sufficient data and information to properly record
our revenues, expenses and accounts receivable, which underlie a substantial
portion of our periodic financial statements and other financial disclosures.
Information provided by Sprint includes reports regarding the subscriber
accounts receivable in our markets. Sprint provides us monthly accounts
receivable, billing and cash receipts information on a market level, rather than
a subscriber level. We review these various reports to identify discrepancies or
errors. However, under our agreements with Sprint, we are entitled to only a
portion of the receipts, net of items such as taxes, government surcharges,
certain allocable write-
2
offs and the 8% of revenue retained by Sprint. Because of our reliance on Sprint
for financial information, we must depend on Sprint to design adequate internal
controls with respect to the processes established to provide this data and
information to the Company and Sprint's other PCS affiliate network partners. To
address this issue, Sprint engages its independent auditors to perform a
periodic evaluation of these controls and to provide a "Report on Controls
Placed in Operation and Tests of Operating Effectiveness for Affiliates" under
guidance provided in Statement of Auditing Standards No. 70 ("SAS 70 reports").
The report is provided to us annually and covers a twelve-month period from
October to September. The most recent report indicated there were no issues
which would adversely affect the information used to support the recording of
the revenues and expenses provided by Sprint related to our relationship with
them.
In connection with the requirements imposed under Section 404 of the
Sarbanes-Oxley Act of 2002, we have retained an outside consulting firm to
assist us in reviewing, documenting, and improving our internal control
processes and intend to engage a regional accounting firm to assist in the
testing of these controls.
As part of the preparation for meeting the requirements of Section 404 of the
Sarbanes-Oxley Act, the Company has spent time formalizing and further
documenting existing internal controls
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed with this Quarterly Report on Form
10-Q:
10.1 Addendum VI dated May 24, 2004 to Sprint PCS Management Agreement by
and among Sprint Spectrum L.P., WirelessCo, L.P., APC PCS, LLC,
PhillieCo, L.P., and Shenandoah Personal Communications Company.
31 Certifications pursuant to Rule 13a-14(a) under the Securities
Exchange Act of 1934.
32 Certifications pursuant to Rule 13a-14(b) under the Securities
Exchange Act of 1934 and 18 U.S.C. 1350.
(b) The following Current Reports on Form 8-K were furnished during the
period covered by this report:
Filing Date of Report Item Reported
--------------------- -------------
April 15, 2004 Item 9 (press release announcing first
quarter 2004 financial results)
May 26, 2004 Item 5 (press release announcing the
signing of a $20 Million Agreement
with Lucent Technologies for 3G
Network Equipment)
3
May 26, 2004 Item 5 (press release announcing the
signing of an amendment to the
management agreement with Sprint)
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)
February 22, 2005 /S/ Earle A. MacKenzie
------------------------------------
Earle A. MacKenzie
Executive Vice President and
Chief Financial Officer
(Duly Authorized Officer and
Principal Financial Officer)
4
Exhibit 31.1
CERTIFICATION
I, Christopher E. French, President and Chief Executive Officer of Shenandoah
Telecommunications Company, certify that:
1. I have reviewed this amended quarterly report on Form 10-Q/A of Shenandoah
Telecommunications Company;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the
period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally
accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such
evaluation; and
(d) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth
fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
function(s)):
(a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: February 22, 2005 /S/ CHRISTOPHER E. FRENCH
------------------------
Christopher E. French
President and
Chief Executive Officer
Exhibit 31.2
CERTIFICATION
I, Earle A. MacKenzie, Executive Vice President and Chief Financial Officer of
Shenandoah Telecommunications Company, certify that:
1. I have reviewed this amended quarterly report on Form 10-Q/A of Shenandoah
Telecommunications Company;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the
period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally
accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such
evaluation; and
(d) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth
fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
function(s)):
(a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: February 22, 2005 /S/ EARLE A. MACKENZIE
----------------------
Earle A. MacKenzie
Executive Vice President and
Chief Financial Officer
Exhibit 32
Written Statement of Chief Executive Officer and Chief Financial Officer
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Each of the undersigned, the President and Chief Executive Officer and the
Executive Vice President and Chief Financial Officer, of Shenandoah
Telecommunications Company (the "Company"), hereby certifies that, on the date
hereof:
(1) the quarterly report on Form 10-Q/A of the Company for the three
months ended June 30, 2004 filed on the date hereof with the Securities and
Exchange Commission (the "Report") fully complies with the requirements of
Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) information contained in the Report fairly presents, in all material
respects, the financial condition and result of operations of the Company.
/S/ CHRISTOPHER E. FRENCH
-------------------------
Christopher E. French
President and Chief Executive Officer
February 22, 2005
/S/ EARLE A. MACKENZIE
----------------------
Earle A. MacKenzie
Executive Vice President and
Chief Financial Officer
February 22, 2005
The foregoing certification is being furnished solely pursuant to Rule 13a-14(b)
under the Securities Exchange Act of 1934 (the "Exchange Act") and 18 U.S.C.
Section 1350 and is not being filed as part of the Report or as a separate
disclosure document. This certification shall not be deemed "filed" for purposes
of Section 18 of the Exchange Act or otherwise subject to liability under that
section. This certification shall not be deemed to be incorporated by reference
into any filing under the Securities Act of 1933 or the Exchange Act except to
the extent this Exhibit 32 is expressly and specifically incorporated by
reference in any such filing.