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): July 25, 2007

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Shenandoah Telecommunications Company

(Exact name of registrant as specified in its charter)

__________________

 

 

 

 

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):

 

 

 

 

 

 

1

 

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Item 2.02 Results of Operations and Financial Condition.

 

On July 25, 2007, the Company issued a press release reporting results for the three months and six months ended June 30, 2007. 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

(Registrant)

 

Earle A. MacKenzie

Executive Vice President and

Chief Financial Officer

(Duly Authorized Officer)

 

 

2

 

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For further information, please contact Earle A. MacKenzie at 540-984-5192.

 

SHENANDOAH TELECOMMUNICATIONS COMPANY

REPORTS SECOND QUARTER 2007 FINANCIAL RESULTS

 

EDINBURG, VA, (July 25, 2007) – Shenandoah Telecommunications Company (Shentel, NASDAQ: SHEN) announced financial results for the second quarter of 2007. Net income for the second quarter increased to $5.9 million, a 113.7% increase from $2.8 million for the same period in 2006. Year-to-date net income was $10.0 million, a 104.8% increase from $4.9 million for the same period in 2006, excluding the one-time, net of tax gain of $6.4 million the Telephone Company recorded in 2006 related to the liquidation of the Rural Telephone Bank. Fully diluted earnings per share for the second quarter of 2007 were $0.25 and year-to-date $0.43, compared to $0.12 and $0.49 for the same periods last year, respectively. Earnings per share for all periods reflect the previously announced three-for-one stock split with a record date of August 2, 2007.

 

Second Quarter Highlights

 

For the quarter ended June 30, 2007, net income was $5.9 million, compared to $2.8 million in the second quarter of 2006. The Company’s total revenues for the second quarter of 2007 were $35.1 million, compared to $41.4 million for the same quarter in 2006. The decrease in the Company’s revenue is a result of the change in presentation of PCS revenues and expenses to conform to the new terms of the Management Agreement signed with Sprint Nextel in March 2007 retroactive to January 1, 2007. Operating income for the quarter was $9.7 million, an increase of $5.0 million from the second quarter of 2006. The increase was a result of the outstanding performance of the Company’s PCS operations.

 

PCS Operations

 

The Company continued to experience strong growth in wireless as a Sprint PCS Affiliate of Sprint Nextel, with second quarter net income of $4.8 million, a $2.6 million increase over the second quarter of 2006. Year-to-date net income was $9.1 million, compared to $3.5 million in 2006. PCS

 

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revenue decreased by $6.0 million, to a total of $21.8 million, compared to the same period last year due to the change in presentation effective January 2007. PCS operating income was $8.0 million in the second quarter of 2007, compared to $4.1 million in the second quarter of 2006. Year-to-date operating income was $15.3 million, an increase of $8.7 million or 130.5% over 2006.

 

The Company’s Sprint PCS retail wireless customer count at June 30, 2007 was 172,983. During the second quarter, net retail customers increased by 7,835, a 35.7% increase in net additions compared to the second quarter of 2006. Year-to-date, net retail customers have increased by 19,480, a 68.2% increase in net additions compared to the first six months of 2006. The Company’s second quarter churn was 1.7% compared to 1.9% in the second quarter of 2006.

 

Telephone Operations

 

Second quarter net income for the local telephone operations was $2.4 million, an increase of $0.3 million or 9.1% from the same quarter last year. The operating income of the local telephone operations for the second quarter of 2007 was $3.7 million, an increase of $0.3 million from 2006. Telephone had 24,738 access lines at June 30, 2007, a decrease of 92 from December 31, 2006.

 

Converged Services

 

Revenue for the second quarter of 2007 was $2.5 million, a decrease of $0.1 million from the same quarter last year. The operating loss was $2.2 million for the second quarter of 2007, an improvement of 11.0% from the same period in 2006. At June 30, 2007, Converged Services had 19,204 Internet users, 8,735 video users and 4,169 voice users compared to 18,719, 7,374 and 8,797 users respectively, at June 30, 2006. The Company plans to bring eight new MDU complexes, with a total of 1,350 apartments, into service in the third quarter. The second quarter results for both years reflect the effects of fewer college customers during the summer months.

 

Other Operations

 

The Company ended the second quarter with 16,123 Dial-up and Broadband Internet customers, of which 7,222 access the service through Digital Subscriber Lines (DSL). This represents

 

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a 34.4% increase in DSL customers, but an overall decrease of 762 Internet customers from June 30, 2006. Over 29% of the Company’s access lines currently use the Company’s DSL service. Dial-up customers, primarily outside of the Company’s DSL footprint, continue to migrate to other high-speed alternatives.

 

Other Information

 

The Company’s 2007 second quarter capital expenditures and commitments were $5.4 million and it had cash and cash equivalents at June 30, 2007 of $23.3 million. At June 30, 2007, the debt/equity ratio was 0.16; and debt as a percent of total assets was 11.1%. As previously announced, the Company will have a three- for-one stock split with a record date of August 2, 2007.

 

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.

 

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.

 

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SHENANDOAH TELECOMMUNICATIONS COMPANY
SUMMARY FINANCIAL INFORMATION (unaudited)
(In thousands, except per share amounts)

Condensed Consolidated Balance Sheets

		June 30, 2007					December 31, 2006
Cash and cash equivalents			$	23,256					$	13,440
Other current assets				19,871						17,423
Total securities and investments				9,666						7,075
Property, plant and equipment				281,401						274,061
Less accumulated depreciation				131,470						118,417
Net property, plant and equipment				149,931						155,644
Other assets, net				13,938						14,138
Total assets			$	216,662					$	207,720
Current liabilities, exclusive of current
maturities of long-term debt $4,177 and
$4,109, respectively			$	17,503					$	17,171
Long-term debt, including current maturities				23,978						26,016
Total other liabilities				29,049						29,344
Total shareholders’ equity				146,132						135,189
Total liabilities and shareholders’ equity			$	216,662					$	207,720

 

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SHENANDOAH TELECOMMUNICATIONS COMPANY
SUMMARY FINANCIAL INFORMATION
(unaudited)
(In thousands, except per share amounts)

Condensed Consolidated Statements of Income

			Three months ended June 30,						Six months ended June 30,
			2007			2006			2007			2006
Revenues			$	35,101		$	41,426		$	68,149		$	81,266
Cost of goods and services				11,068			17,563			22,470			34,447
Depreciation and amortization				7,225			7,114			14,313			13,653
Selling, general and administrative				7,070			11,977			14,544			24,204
Operating income				9,738			4,772			16,822			8,922
Interest expense				472			610			979			1,258
Other income				(751	)		(520	)		(1,067	)		(11,160	)
Income tax provision				4,070			1,899			6,892			7,421
Net income before change in accounting				5,947			2,783			10,018			11,403
Cumulative effect of a change in accounting,
net of income taxes				—			—			—			(77	)
Net income			$	5,947		$	2,783		$	10,018		$	11,326
Basic net income (loss) per share:
Net income before cumulative effect of a
change in accounting, net of taxes			$	0.25		$	0.12		$	0.43		$	0.49
Cumulative effect of a change in accounting,
net of income taxes				—			—			—			—
Net income per share, basic			$	0.25		$	0.12		$	0.43		$	0.49
Diluted net income (loss) per share:
Net income before cumulative effect of
change in accounting, net of taxes			$	0.25		$	0.12		$	0.43		$	0.49
Cumulative effect of a change in accounting,
net of income taxes				—			—			—			—
Net Income per share, diluted			$	0.25		$	0.12		$	0.43		$	0.49

 

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