-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Fpvj4bWiNHZBeaMTb6vgFGcPbhtzSQhfsFY+LoN98rCHGJRwPNf9gmJJcaXKPdxG 4vhh5oBB5fwa2s7y+JSpyw== 0000354963-95-000018.txt : 19951119 0000354963-95-000018.hdr.sgml : 19951119 ACCESSION NUMBER: 0000354963-95-000018 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951114 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SHENANDOAH TELECOMMUNICATIONS CO/VA/ CENTRAL INDEX KEY: 0000354963 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 541162807 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-09881 FILM NUMBER: 95591417 BUSINESS ADDRESS: STREET 1: PO BOX 459 STREET 2: 124 SOUTH MAIN ST CITY: EDINBURG STATE: VA ZIP: 22824 BUSINESS PHONE: 7039845247 MAIL ADDRESS: STREET 1: P O BOX 459 CITY: EDINBURG STATE: VA ZIP: 22824 10-Q 1 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, 1995 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 November 1, 1995 Common Stock, No Par Value 3,760,760 Shares SHENANDOAH TELECOMMUNICATIONS COMPANY AND SUBSIDIARY COMPANIES PART I, FINANCIAL INFORMATION ITEM I, FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEETS ASSETS September 30, 1995 December 31, 1994 CURRENT ASSETS Cash & Cash Equivalents $4,894,979 $6,270,849 Certificates of Deposit 1,574,312 930,911 Investments Held to Maturity 6,862,796 3,254,460 Accounts Receivable 2,915,996 2,880,428 Leases Receivable (Net) 81,140 81,140 Materials 1,669,137 1,511,006 Prepaid and Other Current Assets 129,855 236,191 Total Current Assets $18,128,215 $15,164,985 NONCURRENT ASSETS Other Securities and Investments 2,931,241 4,615,689 Securities Available for Sale 2,537,598 0 Investments Held to Maturity 1,499,659 499,687 Investment in Direct Financing Leases 259,674 287,584 Total Noncurrent Assets 7,228,172 5,402,960 PLANT, PROPERTY AND EQUIPMENT Plant in Service 50,525,408 49,102,832 Plant Under Construction 2,001,831 248,717 Less Accumulated Depreciation 18,410,056 17,455,344 Net Plant, Property, and Equipment 34,117,183 31,896,205 TOTAL ASSETS $59,473,570 $52,464,150 ========== ========== 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 September 30, 1995 December 31, 1994 CURRENT LIABILITIES Current Maturities of Long-Term Debt $423,329 $423,329 Accounts Payable 578,239 307,691 Advance Billing 229,513 526,105 Customer Deposits 111,027 137,793 Other Current Liabilities 863,651 910,968 Income Taxes Payable 0 26,618 Other Accrued Taxes 241,551 53,739 Total Current Liabilities 2,447,310 2,386,243 LONG TERM DEBT, LESS CURRENT MATURITIES 10,199,674 9,517,880 OTHER LIABILITIES AND DEFERRED CREDITS Deferred Investment Tax Credits 386,583 442,844 Deferred Income Taxes 3,697,693 3,535,014 Pension and Other 655,027 745,935 Total Other Liabilities and Deferred Credits 4,739,303 4,723,793 Minority interests 1,653,936 1,219,493 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 34,785,475 29,876,064 Unrealized Gain on Securities Available for Sale, Net of Taxes 907,195 0 Total Stockholders' Equity 40,433,347 34,616,741 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $59,473,570 $52,464,150 See accompanying notes to consolidated financial statements. 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 1995 1994 1995 1994 OPERATING REVENUES Telephone Revenues Local Service $777,591 $730,827 $2,293,684 $2,125,290 Access 1,599,319 1,595,298 4,822,769 4,870,847 Toll 1,146 (14,219) 7,934 (31,768) Miscellaneous: Directory 273,033 249,358 837,743 764,398 Facility Leases 418,896 312,653 1,262,661 915,946 Billing & Collection 119,105 120,504 298,449 342,663 Other Miscellaneous 30,374 14,776 89,165 122,082 --------- --------- --------- --------- Total Telephone Revenues 3,219,464 3,009,197 9,612,405 9,109,458 Cable Television Revenues 216,789 190,442 648,353 533,762 ShenTel Service Revenues 312,698 432,134 996,579 1,183,839 Leasing Revenues 6,017 5,074 18,548 14,585 Mobile Revenues 1,323,502 1,124,254 3,614,977 3,080,368 Long Distance Revenues 287,433 295,906 850,022 863,731 Network Revenues 123,843 80,197 371,528 240,592 --------- --------- --------- --------- Total Revenues and Sales 5,489,746 5,137,204 16,112,412 15,026,335 --------- --------- ---------- ---------- See accompanying notes to consolidated financial statements.
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 1995 1994 1995 1994 OPERATING EXPENSES Cost of Products and Services Sold 144,813 201,034 472,088 535,175 Line Costs 141,625 137,986 408,916 395,441 Plant Specific 427,922 431,834 1,347,039 1,218,587 Plant Non-Specific: Network & Other 492,220 407,515 1,367,096 1,236,553 Depreciation and Amortization 728,177 710,501 2,118,858 2,037,272 Customer Operations 627,798 611,345 1,755,428 1,738,944 Corporate Operations 503,054 524,438 1,437,597 1,430,902 Other Operating Income & Expense 44,860 39,858 136,876 113,143 Taxes other than income 80,199 82,332 247,378 246,885 --------- --------- --------- --------- Total Operating Expenses 3,190,668 3,146,843 9,291,276 8,952,902 --------- --------- --------- --------- Operating income 2,299,078 1,990,361 6,821,136 6,073,433 Gain on Sale of Investment 268,722 0 1,140,847 0 Non-operating income less expenses 287,103 73,483 725,760 118,899 Interest expense 174,027 171,257 524,719 493,520 --------- --------- --------- --------- See accompanying notes to consolidated financial statements.
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 1995 1994 1995 1994 Income before taxes 2,680,876 1,892,587 8,163,024 5,698,812 Provision for income taxes 910,728 561,700 2,819,170 1,867,540 --------- --------- --------- --------- Net income before minority interest 1,770,148 1,330,887 5,343,854 3,831,272 Minority interest (179,463) (110,597) (434,443) (271,792) Net Income $1,590,685 $1,220,290 $4,909,411 $3,559,480 ========= ========= ========= ========= EARNINGS PER SHARE Weighted Average Common Shares Outstanding 3,760,760 3,760,760 3,760,760 3,760,760 ========= ========= ========= ========= Net Earnings per Share $0.42 $0.32 $1.31 $0.95 ===== ===== ===== ===== 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 1995 1994 ---------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES Net Income $4,909,411 $3,559,480 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and Amortization 2,118,858 2,037,272 Deferred taxes 185,020 89,961 Gain on Sale of Equity investment (1,140,848) 0 Investment (Gains)/Losses (214,357) 112,271 Minority Share of Income 434,443 271,792 Payment to Pension Fund (176,186) 0 Other 259,966 313,950 Decrease (increase) in Accounts receivable (474,907) (16,829) Materials and Supplies (158,131) (77,329) Increase (decrease) in Accounts Payable 236,105 (138,931) Income taxes payable (30,499) (525,937) Other current liabilities (178,983) (246,564) ------------ ------------ Net cash provided by operating activities 5,769,892 5,379,136 ------------ ------------ 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 1995 1994 ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES Purchase of Property and Equipment (4,384,329) (2,559,029) Investment in Direct Financing Leases (36,729) (187,550) Payments Received on Direct Financing Leases 64,639 51,955 Purchase of Investments Securities (10,150,172) (2,123,590) Sale of Investments Securities 6,304,035 1,457,862 Issue note receivable 0 (250,000) Proceeds from matured note receivable 375,000 0 ------------ ------------ Net cash provided by investing activities (7,827,556) (3,610,352) ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from Notes Payable 998,000 0 Payment of notes payable (316,206) (1,157,973) ------------ ------------ Net cash provided by financing activities 681,794 (1,157,973) ------------ ------------ NET INCREASE / (DECREASE) IN CASH (1,375,870) 610,811 ------------ ------------ CASH AND CASH EQUIVALENTS: Beginning 6,270,849 5,695,891 ------------ ------------ Ending $4,894,979 $6,306,702 ============ ============ See accompanying notes to consolidated financial statements. 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, 1995 and the results of operations and cash flows for the nine month periods ended September 30, 1995 and 1994. While the Company believes that the disclosures presented are adequate, to make the information not misleading, it is suggested that these condensed 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. The results of operations for the three-month and nine-month periods ended September 30, 1995 are not necessarily indicative of the results to be expected for the full year.
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 Sept 30 ended Sept 30 ended Sept 30 ended Sept 30 1995 1994 1995 1994 1995-94 1994-93 1995-94 1994-93 OPERATING REVENUES Telephone Revenues Local Service 14.2% 14.1% 14.3% 14.1% 6.4% 8.9% 7.9% 8.0% Access 29.1% 31.1% 29.9% 32.4% 0.3% -5.0% -1.0% 3.1% Toll 0.0% -0.3% 0.0% -0.2% 108.1% -687.3% 125.0% -839.3% Miscellaneous: Directory 5.0% 4.9% 5.2% 5.1% 9.5% 3.4% 9.6% 3.5% Facility Leases 7.6% 6.1% 7.8% 6.1% 34.0% 36.1% 37.9% 20.4% Billing & Collection 2.2% 2.3% 1.9% 2.3% -1.2% 5.7% -12.9% 3.8% Other Miscellaneous 0.6% 0.3% 0.6% 0.8% 105.6% -46.0% -27.0% 39.2% Total Telephone Revenues 58.7% 58.5% 59.7% 60.6% 7.0% 1.4% 5.5% 5.8% Cable Television Revenues 3.9% 3.7% 4.0% 3.6% 13.8% 13.5% 21.5% 2.5% ShenTel Service Revenues 5.7% 8.4% 6.2% 7.9% -27.6% 79.0% -15.8% 55.4% Leasing Revenues 0.1% 0.1% 0.1% 0.1% 18.6% -87.3% 27.2% -88.4% Mobile Revenues 24.1% 21.9% 22.4% 20.5% 17.7% 25.1% 17.4% 33.9% Long Distance Revenues 5.2% 5.8% 5.3% 5.7% -2.9% -10.6% -1.6% -11.5% Network Revenues 2.3% 1.6% 2.3% 1.6% 54.4% -14.7% 54.4% -18.4% ----- ----- ----- ----- ----- ----- ----- ----- Total Revenues and Sales 100.0% 100.0% 100.0% 100.0% 6.9% 8.4% 7.2% 10.6%
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 Sept 30 ended Sept 30 ended Sept 30 ended Sept 30 1995 1994 1995 1994 1995-94 1994-93 1995-94 1994-93 OPERATING EXPENSES Cost of Products and Services Sold 2.6% 3.9% 2.9% 3.6% -28.0% 79.0% -11.8% 25.2% Line Costs 2.6% 2.7% 2.5% 2.6% 2.6% 6.0% 3.4% 1.4% Plant Specific 7.8% 8.4% 8.4% 8.1% -0.9% -11.1% 10.5% -7.8% Plant Non-Specific: Network & Other 9.0% 7.9% 8.5% 8.2% 20.8% -7.1% 10.6% 2.8% Depreciation and Amortization 13.3% 13.8% 13.2% 13.6% 2.5% 11.2% 4.0% 8.3% Customer Operations 11.4% 11.9% 10.9% 11.6% 2.7% 11.0% 0.9% 8.3% Corporate Operations 9.2% 10.2% 8.9% 9.5% -4.1% 12.3% 0.5% 4.2% Other Operating Income & Expense 0.8% 0.8% 0.8% 0.8% 12.5% 16.9% 21.0% 11.1% Taxes other than income 1.5% 1.6% 1.5% 1.6% -2.6% 42.2% 0.2% 36.4% ----- ----- ----- ----- ------ ----- ----- ----- Total Operating Expenses 58.2% 61.2% 57.6% 59.6% 1.4% 7.9% 3.8% 5.5% Operating income 41.9% 38.7% 42.3% 40.4% 15.5% 9.1% 12.3% 18.9%
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 Sept 30 ended Sept 30 ended Sept 30 ended Sept 30 1995 1994 1995 1994 1995-94 1994-93 1995-94 1994-93 Gain on Sale of Investment 4.9% 0.0% 7.1% 0.0% N/A N/A N/A N/A Non-operating income less expenses 5.2% 1.4% 4.5% 0.8% 290.7% -103.1% 510.4% 277.2% Interest expense 3.2% 3.3% 3.3% 3.3% 1.6% 12.9% 6.3% 8.8% ----- ----- ----- ----- ----- ----- ----- ----- Income before taxes 48.8% 36.8% 50.7% 37.9% 41.7% 10.8% 43.2% 24.3% Provision for income taxes 16.6% 10.9% 17.5% 12.4% -62.1% -4.3% 51.0% 17.2% ----- ----- ----- ----- ------ ------ ----- ----- Net income before minority interest 32.2% 25.9% 33.2% 25.5% 33.0% 18.7% 39.5% 28.1% Minority interest -3.3% -2.2% -2.7% -1.8% 62.3% 108.0% 59.8% 378.5% Net Income 29.0% 23.8% 30.5% 23.7% 30.4% 14.2% 37.9% 21.3% ====== ===== ===== ===== ===== ===== ===== ====== SHENANDOAH TELECOMMUNICATIONS 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. The regulated local exchange telephone company is the largest subsidiary, accounting for over 59.0% of revenue and 76.0% of net income year-to-date in 1995 (excluding the gain on the sale of equity security). This industry is in a period of transition from a regulated monopoly to a competitive environment with changing technology. As a result, Shenandoah Telecommunications has made and plans to continue to make significant investments in new and emerging technologies. The Company is currently constructing a wireless network to provide Personal Communications Services to regional communities. Other significant services provided are cellular, cable television, long distance, and facilities leased to interexchange carriers on a Company owned fiber optic cable network. 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 Company's largest source of revenue continues to be for access to the Company's local exchange network by interexchange carriers. The volume for these access revenues is measured in minutes of use. The minutes of use during the first nine months of 1995 increased 5.7% compared to the same period in 1994. Minutes of use during the third quarter were 7.3% higher than the third quarter of 1994. Changes in NECA settlement procedures, effective July 1, 1994, offset the increases in minutes of use. The decrease in billing and collection revenues is primarily attributed to a $33,192 refund in June 1995 to an interexchange carrier for correcting an error to message counts. Management expects these revenues to decline further when one of the interexchange carriers discontinues using our local exchange company for a portion of the billing process. This change is tentatively scheduled to occur in the last quarter of 1995. The increase in Mobile Company revenues was due to growth in our cellular operation. Cellular revenues increased 17.5% in the nine months of 1995 compared to the same period in 1994. Cellular revenues increased 17.4% over the third quarter of 1994. Year-to-date and for the third quarter of 1995, net additions ofcustomers were approximately the same as net additions for the sameperiod in 1994. SHENANDOAH TELECOMMUNICATIONS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS (Continued) The decrease in the ShenTel Service revenues category for both the third quarter and year-to-date is due primarily to a decrease in equipment sales compared to 1994. These sales are down $145,323 or 26.2% compared to the first nine months of 1994. Another factor was the completion of a consulting contract that provided $12,929 in the first half of 1994. The contract expired in the fourth quarter of 1994. These two items were partially offset by the rapid growth of a new service started in late 1994 providing local Internet access to regional communities. On September 1, 1994, the cable television company restructured its rates by increasing its rates for basic and premium service and decreasing or eliminating its charges for other services such as rental of converters. As a result of the rate changes and subscriber growth, total revenue for cable television services for the final four months of 1994 increased 17.3% over the previous four months' total, and 26.0% over the final four months of 1993. The number of Cable subscribers has increased 6.9% from June 30, 1994. The increase in the third quarter of 1995 was .1% compared to a 1.1% increase in the third quarter of 1994. The Company estimates that our cable rates are within the limits prescribed by the FCC for cable systems of our size. None of the local governments within the Company's cable television serving area have indicated that they will exercise any authority they may have to regulate rates. The Company has recently applied for a franchise to extend the cable television network into an area already served by another cable provider and compete directly with the incumbent provider. Work is progressing to obtain the necessary regulatory approvals from local and federal governments before construction can begin on the competitive network. The Company also leases capacity on fiber optic facilities in Virginia, West Virginia, and Maryland to interexchange carriers. The revenue for this activity appears as facilities leases and as network revenues on the income statement. This service experienced a revenue increase of 41.3% year-to-date and 38.2% during the third quarter compared with the same periods in 1994. The increase is due to new circuits being added. For the first nine months and the third quarter of 1995, operating expenses increased 3.8% and 1.4% respectively compared to the same periods in 1994. SHENANDOAH TELECOMMUNICATIONS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS (Continued) The first operating expense category is cost of goods sold. This category reflects decreases in both the quarter-to-quarter as well as year-to-date comparisons due to the previously discussed decline in ShenTel Service equipment sales. The increases in the network and other category are due primarily to increases in facilities and network administration costs for the Internet local access operation, and engineering and network support costs for our subsidiary that will provide Personal Communications service. The Internet costs have increased this category approximately 6.5% year-to-date and for the third quarter compared to the same periods in 1994. The costs for the ] subsidiary have increased this category 1.5% year-to-date and 4.5% for the third quarter compared to the same periods in 1994. The non-operating income less expenses category consists mainly of the income or loss from investments made by the Company. The Company, along with other telecommunications providers, founded an organization that built a fiber optic network in the Richmond, Virginia metropolitan area. The fiber network provided competitive access to businesses in the area. As a result of a strategic change, it was agreed to sell this business to Metropolitan Fiber Systems. The Company recognized a gain on the sale in January of 1995. The amount of the gain was $872,125. In addition the Company recognized losses of $103,461 and $52,270 respectively during the first six months and second quarter of 1994 as our portion of the operations of this organization. During the third quarter of 1995 the Company sold a portion of the MFS stock it received in exchange for this fiber network. The transaction resulted in a pre-tax gain of $268,722. SHENANDOAH TELECOMMUNICATIONS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES The Company continues to generate a strong cash flow from operations that adequately meets the Company's need for cash. Other available sources of liquidity are two unsecured lines of credit with local banks totaling $4.5 million. No advances have been made from these lines of credit in 1995. The Company has a loan agreement with the Rural Telephone Bank (RTB) in the amount of $9,240,000. The Company received an additional advance during the third quarter of 1995 in the amount of $998,000. As of October 31, 1995, the Company has received advances in the amount of $4,384,000. Expenditure of these loan funds is limited to approved capital projects for the regulated local exchange carrier. The Company has reached an agreement to construct and manage part of a network that will provide Personal Communications Services (PCS). A separate wholly-owned subsidiary has been formed to operate this business. The service will be provided under a license held by an unaffiliated company. Construction has begun on the new network that will support this service. Construction of the new network will require significant investment in new plant and equipment over the next several years. Due to the competition coming from new sources, management is unable to predict the potential impact of the new operation on the Company's cash flow. The Company has contractual commitments to meet certain network build out requirements in connection with the construction of the new network discussed above. The Company's Board of Directors has approved a construction budget of approximately $14,000,000 for 1995, including $6,000,000 for the network. The remaining amounts are primarily for telephone central office equipment and fiber optic cable facilities. The Company expects to finance the 1995 expenditures through internally generated cash flows as well as additional advances from the RTB note. For subsequent years, management expects that the Company will require additional financing from external sources to finance the completion of the network. SHENANDOAH TELECOMMUNICATIONS COMPANY PART II OTHER INFORMATION ITEM 4. Submission of Matters to a Vote of Security Holders No matters were submitted to a vote of security holders. ITEM 6. Exhibits and Reports on Form 8-K NONE 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 13, 1995 CHRISTOPHER E. FRENCH Christopher E. French President November 13, 1995 LAURENCE F. PAXTON Laurence F. Paxton Vice President - Finance
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5 3-MOS 9-MOS DEC-31-1995 DEC-31-1995 SEP-30-1995 SEP-30-1995 4894979 4894979 5468839 5468839 2915996 2915996 0 0 1669137 1669137 18128215 18128215 50525408 50525408 18410056 18410056 59473570 59473570 2447310 2447310 10199674 10199674 4740677 4740677 0 0 0 0 35692670 35692670 59473570 59473570 113221 511626 5489746 16112412 144813 472088 3190668 9291276 179463 434443 8872 13564 174027 524719 2501413 7728581 910728 2819170 1590685 4909411 0 0 0 0 0 0 1590685 4909411 .42 1.31 .42 1.31
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