UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
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July 21, 2005
Date of Report
(Date of earliest event reported)
Shenandoah Telecommunications Company
(Exact name of registrant as specified in its charter)
Virginia 0-9881 54-1162807
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification Number)
500 Shentel Way
P.O. Box 459
Edinburg, VA 22824
(Address of principal executive office) (Zip code)
Registrant's telephone number, including area code: (540) 984-4141
1
2.02 Results of Operations and Financial Condition.
On July 21, the Company issued a press release reporting results for the quarter
ending June 30, 2005. A copy of the press release is included as Exhibit 99.1 to
this report.
Item 9.01 Financial Statements and Exhibits
(c) Exhibits
99.1 Press release dated July 21, 2005
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)
July 22, 2005 /S/ Earle A. MacKenzie
----------------------
Earle A. MacKenzie
Executive Vice President and
Chief Financial Officer
2
Exhibit 99.1
NEWS RELEASE
For further information, please contact Earle A. MacKenzie at 540-984-5192.
SHENANDOAH TELECOMMUNICATIONS COMPANY
REPORTS SECOND QUARTER 2005 FINANCIAL RESULTS
EDINBURG, VA, (July 21, 2005) - Shenandoah Telecommunications Company
(Shentel; NASDAQ: SHEN) announced unaudited financial results for the second
quarter and six months ended June 30, 2005. Net income for the quarter ended
June 30, 2005 was $2.5 million, compared to $2.9 million for the second quarter
2004. Total second quarter revenues grew by 18.8% from the same quarter last
year, including a 15.9% increase in wireless revenues. Net income for the six
months ended June 30, 2005 was $4.9 million, which represented a decrease of
$0.3 million from the 2004 six-month period.
Overall Highlights
For the quarter ended June 30, 2005, net income was $2.5 million or $0.33
per diluted share, compared to $2.9 million or $0.38 per diluted share in the
second quarter of 2004. The Company's total revenues for the second quarter of
2005 were $35.5 million, compared to $29.9 million in the second quarter of
2004, which represented an increase of $5.6 million or 18.8%. The Company's
revenue growth was driven primarily by a $3.2 million increase in its wireless
PCS operations and $2.1 million from NTC Communications (NTC), acquired on
November 30, 2004.
Operating income for the second quarter of 2005 and 2004 was $4.7 million
and $5.0 million, respectively. The second quarter of 2005 operating income
includes an operating loss from NTC of $1.0 million and Stock Appreciation
Rights (SARS) expense of $0.5 million.
July 21, 2005
News Release
Page 2 of 5
Operating income for the six months ended June 30, 2005 and 2004 was $9.3
million for both periods, with 2005 including an operating loss of $1.8 million
for NTC and $0.6 million of SARS expense. The SARS expense relates to the
Company's stock-based compensation plan and was driven by the large increase in
the Company's stock price during 2005.
"We are please with our overall results during the quarter," stated
Christopher E. French, President and CEO. "The startup loss from NTC was
expected as we continue our efforts to build upon its potential; and, results
from our other business lines exhibited good improvement over prior periods."
PCS Operations
The Company experienced continued growth in second quarter wireless
revenues as a PCS Affiliate of Sprint, increasing its PCS subsidiary revenue to
a total of $23.0 million, which represented an increase of $3.2 million over the
2004 second quarter. The PCS net income was $1.1 million in the second quarter
of 2005 compared to net income of $0.9 million in the second quarter of 2004.
PCS net income for the six months ended June 30, 2005 was $2.0 million, which
represented a $0.6 million increase over the 2004 six-month period. The
Company's Sprint retail wireless customer count for the second quarter increased
by 5,200, compared to 4,900 in the second quarter of 2004, to approximately
112,100 retail customers, an 18.6% increase from June 30, 2004. Wholesale users
increased by 1,200, compared to a 1,700 increase in the second quarter of 2004,
to approximately 32,700, an 81.1% increase from June 30, 2004. The Company's
second quarter retail customer turnover, or churn, was 1.9%, similar to the
second quarter of 2004.
July 21, 2005
News Release
Page 3 of 5
Telephone Operations
The local telephone operations net income for the second quarter of 2005
was $1.8 million, which represented a $0.1 million increase compared to the
second quarter of 2004. Telephone operations recorded a net gain of 75 access
lines during the second quarter of 2005 and 186 for the six months ended June
30, 2005 to end the second quarter at 24,877.
Additional Highlights
During the second quarter, the Company invested $7.0 million in Plant in
Service and reduced long-term debt $13.1 million, primarily paying down a
long-term revolving line of credit. Cash and cash equivalents were $9.1 million
as of the end of the second quarter. At June 30, 2005, the Company's debt/equity
ratio was 32.0% and debt as a percent of total assets was 18.9%.
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 National 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.
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Earle A. MacKenzie
Chief Financial Officer
July 21, 2005
News Release
Page 4 of 5
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 and other competitive
factors. For a discussion of these factors, see the Company's Annual Report on
Form 10-K as filed with the Securities and Exchange Commission on March 22,2005.
The Company expressly disclaims any obligation to update or review any
forward-looking statements contained in this release.
SHENANDOAH TELECOMMUNICATIONS COMPANY
SUMMARY FINANCIAL INFORMATION (unaudited)
(In thousands, except per share amounts)
Condensed Consolidated Balance Sheets June 30, December 31,
- ------------------------------------- 2005 2004
---- ----
Cash and cash equivalents $ 9,050 $ 14,172
Other current assets 14,596 20,345
Total securities and investments 7,275 7,250
Property, plant and equipment 242,130 230,323
Less accumulated depreciation (84,584) (74,071)
--------- ---------
Net property, plant and equipment 157,546 156,252
Other assets, net 12,821 13,228
--------- ---------
Total assets $ 201,288 $ 211,247
========= =========
Current liabilities, exclusive of current
maturities of $4,448 and $4,372, respectively $ 17,108 $ 17,474
Long and short-term debt 38,122 52,291
Total other liabilities 26,829 27,685
Total shareholders' equity 119,229 113,797
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Total liabilities and shareholders' equity $ 201,288 $ 211,247
========= =========
July 21, 2005
News Release
Page 5 of 5
SHENANDOAH TELECOMMUNICATIONS COMPANY
SUMMARY FINANCIAL INFORMATION
(unaudited)
(In thousands, except per share amounts)
Condensed Consolidated Statements of Income
Three months ended Six months ended
June 30, June 30,
2005 2004* 2005 2004*
---- ----- ---- -----
Operating Revenues-Wireless $ 23,833 $ 20,568 $ 46,412 $ 39,432
-Wireline 9,177 7,608 18,382 14,757
-Other 2,454 1,676 5,070 3,383
-------- -------- -------- --------
Total operating revenue 35,464 29,852 69,864 57,572
Cost of goods and services 5,674 3,886 11,152 7,610
Network operating costs 10,209 9,156 19,931 17,467
Depreciation 5,492 4,395 10,914 8,732
Selling, general and administrative 9,430 7,390 18,591 14,452
-------- -------- -------- --------
Total operating expenses 30,805 24,827 60,588 48,261
-------- -------- -------- --------
Operating income 4,659 5,025 9,276 9,311
Interest expense (770) (773) (1,624) (1,571)
Other income (expense) 120 337 144 543
Income tax provision (1,497) (1,709) (2,889) (3,090)
-------- -------- -------- --------
Net income $ 2,512 $ 2,880 $ 4,907 $ 5,193
======== ======== ======== ========
Net earnings per share, basic $ 0.33 $ 0.38 $ 0.64 $ 0.68
======== ======== ======== ========
Net earnings per share, diluted $ 0.33 $ 0.38 $ 0.64 $ 0.68
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* Certain amounts for 2004 have been reclassified to conform with the 2005
presentation.