form10q.htm
UNITED
STATES OF AMERICA
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D. C. 20549
FORM
10-Q
(Mark
One)
x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
|
For
the quarterly period ended September 30,
2009
|
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
|
For
the transition period from__________ to
__________
|
Commission
File No.: 000-09881
SHENANDOAH
TELECOMMUNICATIONS COMPANY
(Exact
name of registrant as specified in its charter)
VIRGINIA
|
54-1162807
|
(State
or other jurisdiction of
incorporation
or organization)
|
(I.R.S.
Employer Identification No.)
|
500
Shentel Way, 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. Yes x No ¨
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes o No
o
Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of “large accelerated
filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of
the Exchange Act.
Large accelerated filer
¨
|
Accelerated filer x
|
Non-accelerated filer
¨
|
Smaller reporting company
¨
|
Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).
Yes ¨ No x
The
number of shares of the registrant’s common stock outstanding on October 23,
2009 was 23,640,510.
INDEX
|
|
Page |
|
|
Numbers |
|
|
|
|
PART
I.
|
FINANCIAL
INFORMATION
|
|
|
|
|
|
|
Item
1.
|
Financial
Statements
|
|
|
|
|
|
|
|
|
|
3-4
|
|
|
|
|
|
|
|
5
|
|
|
|
|
|
|
|
6
|
|
|
|
|
|
|
|
7-8
|
|
|
|
|
|
|
|
9-14
|
|
|
|
|
Item
2.
|
|
|
15-27
|
|
|
|
|
Item
3.
|
|
|
27
|
|
|
|
|
Item
4.
|
|
|
28
|
|
|
|
|
PART
II.
|
OTHER
INFORMATION
|
|
|
|
|
|
|
Item
1A.
|
|
|
29
|
|
|
|
|
Item
2.
|
|
|
29
|
|
|
|
|
Item
6.
|
|
|
29
|
|
|
|
|
|
|
|
30
|
|
|
|
|
|
|
|
31
|
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
(in
thousands)
ASSETS
|
|
September 30,
2009
|
|
|
December 31,
2008
|
|
|
|
|
|
|
|
|
Current
Assets
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$ |
14,918 |
|
|
$ |
5,240 |
|
Accounts
receivable, net
|
|
|
15,621 |
|
|
|
16,131 |
|
Vendor
credits receivable
|
|
|
178 |
|
|
|
5,232 |
|
Income
taxes receivable
|
|
|
- |
|
|
|
7,366 |
|
Materials
and supplies
|
|
|
4,706 |
|
|
|
6,376 |
|
Prepaid
expenses and other
|
|
|
2,663 |
|
|
|
2,283 |
|
Assets
held for sale
|
|
|
10,870 |
|
|
|
28,310 |
|
Deferred
income taxes
|
|
|
1,848 |
|
|
|
1,483 |
|
Total
current assets
|
|
|
50,804 |
|
|
|
72,421 |
|
|
|
|
|
|
|
|
|
|
Investments,
including $1,880 and $1,440 carried at fair value
|
|
|
8,666 |
|
|
|
8,388 |
|
|
|
|
|
|
|
|
|
|
Property,
Plant and Equipment
|
|
|
|
|
|
|
|
|
Plant
in service
|
|
|
344,678 |
|
|
|
323,096 |
|
Plant
under construction
|
|
|
22,647 |
|
|
|
5,076 |
|
|
|
|
367,325 |
|
|
|
328,172 |
|
Less
accumulated amortization and depreciation
|
|
|
172,447 |
|
|
|
151,695 |
|
Net
property, plant and equipment
|
|
|
194,878 |
|
|
|
176,477 |
|
|
|
|
|
|
|
|
|
|
Other
Assets
|
|
|
|
|
|
|
|
|
Intangible
assets, net
|
|
|
2,711 |
|
|
|
3,163 |
|
Cost
in excess of net assets of businesses acquired
|
|
|
4,547 |
|
|
|
4,547 |
|
Deferred
charges and other assets, net
|
|
|
1,391 |
|
|
|
1,841 |
|
Net
other assets
|
|
|
8,649 |
|
|
|
9,551 |
|
Total
assets
|
|
$ |
262,997 |
|
|
$ |
266,837 |
|
See
accompanying notes to unaudited condensed consolidated financial
statements.
(Continued)
SHENANDOAH
TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
(in
thousands)
LIABILITIES
AND SHAREHOLDERS’ EQUITY
|
|
September 30,
2009
|
|
|
December 31,
2008
|
|
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
|
Current
maturities of long-term debt
|
|
$ |
6,357 |
|
|
$ |
4,399 |
|
Accounts
payable
|
|
|
4,698 |
|
|
|
5,607 |
|
Advanced
billings and customer deposits
|
|
|
6,343 |
|
|
|
5,151 |
|
Accrued
compensation
|
|
|
1,414 |
|
|
|
2,584 |
|
Liabilities
held for sale
|
|
|
1,092 |
|
|
|
1,013 |
|
Income
taxes payable
|
|
|
6,209 |
|
|
|
- |
|
Accrued
liabilities and other
|
|
|
3,450 |
|
|
|
5,631 |
|
Total
current liabilities
|
|
|
29,563 |
|
|
|
24,385 |
|
|
|
|
|
|
|
|
|
|
Long-term
debt, less current maturities
|
|
|
22,718 |
|
|
|
36,960 |
|
|
|
|
|
|
|
|
|
|
Other
Long-Term Liabilities
|
|
|
|
|
|
|
|
|
Deferred
income taxes
|
|
|
22,435 |
|
|
|
29,505 |
|
Deferred
lease payable
|
|
|
3,259 |
|
|
|
3,142 |
|
Other
liabilities
|
|
|
8,881 |
|
|
|
6,533 |
|
Total
other liabilities
|
|
|
34,575 |
|
|
|
39,180 |
|
|
|
|
|
|
|
|
|
|
Commitments
and Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’
Equity
|
|
|
|
|
|
|
|
|
Common
stock
|
|
|
17,094 |
|
|
|
16,139 |
|
Retained
earnings
|
|
|
161,540 |
|
|
|
152,706 |
|
Accumulated
other comprehensive loss, net of tax
|
|
|
(2,493 |
) |
|
|
(2,533 |
) |
Total
shareholders’ equity
|
|
|
176,141 |
|
|
|
166,312 |
|
|
|
|
|
|
|
|
|
|
Total
liabilities and shareholders’ equity
|
|
$ |
262,997 |
|
|
$ |
266,837 |
|
See
accompanying notes to unaudited condensed consolidated financial
statements.
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in
thousands, except per share amounts)
|
|
Three
Months Ended
September 30,
|
|
|
Nine
Months Ended
September 30,
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
revenues
|
|
$ |
40,115 |
|
|
$ |
37,408 |
|
|
$ |
120,356 |
|
|
$ |
107,304 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of goods and services, exclusive of depreciation
and amortization shown separately below
|
|
|
13,703 |
|
|
|
10,712 |
|
|
|
39,452 |
|
|
|
31,394 |
|
Selling,
general and administrative, exclusive of depreciation and amortization
shown separately below
|
|
|
7,692 |
|
|
|
7,724 |
|
|
|
22,569 |
|
|
|
21,052 |
|
Depreciation
and amortization
|
|
|
8,151 |
|
|
|
6,484 |
|
|
|
24,116 |
|
|
|
19,304 |
|
Total
operating expenses
|
|
|
29,546 |
|
|
|
24,920 |
|
|
|
86,137 |
|
|
|
71,750 |
|
Operating
income
|
|
|
10,569 |
|
|
|
12,488 |
|
|
|
34,219 |
|
|
|
35,554 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
(193 |
) |
|
|
(103 |
) |
|
|
(1,128 |
) |
|
|
(783 |
) |
Gain
(loss) on investments, net
|
|
|
201 |
|
|
|
(386 |
) |
|
|
(203 |
) |
|
|
(746 |
) |
Non-operating
income, net
|
|
|
95 |
|
|
|
153 |
|
|
|
449 |
|
|
|
638 |
|
Income
from continuing operations before income taxes
|
|
|
10,672 |
|
|
|
12,152 |
|
|
|
33,337 |
|
|
|
34,663 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
tax expense
|
|
|
4,326 |
|
|
|
4,774 |
|
|
|
14,019 |
|
|
|
13,881 |
|
Net
income from continuing operations
|
|
|
6,346 |
|
|
|
7,378 |
|
|
|
19,318 |
|
|
|
20,782 |
|
Loss
from discontinued operations, net of tax benefits of $24,
$429, $6,415 and $1,357, respectively
|
|
|
(39 |
) |
|
|
(636 |
) |
|
|
(10,484 |
) |
|
|
(2,128 |
) |
Net
income
|
|
$ |
6,307 |
|
|
$ |
6,742 |
|
|
$ |
8,834 |
|
|
$ |
18,654 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted income (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income from continuing operations
|
|
$ |
0.27 |
|
|
$ |
0.31 |
|
|
$ |
0.81 |
|
|
$ |
0.88 |
|
Loss
from discontinued operations
|
|
|
- |
|
|
|
(0.03 |
) |
|
|
(0.44 |
) |
|
|
(0.09 |
) |
Net
income
|
|
$ |
0.27 |
|
|
$ |
0.28 |
|
|
$ |
0.37 |
|
|
$ |
0.79 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average shares outstanding, basic
|
|
|
23,640 |
|
|
|
23,541 |
|
|
|
23,633 |
|
|
|
23,532 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average shares, diluted
|
|
|
23,706 |
|
|
|
23,610 |
|
|
|
23,696 |
|
|
|
23,591 |
|
See
accompanying notes to unaudited condensed consolidated financial
statements.
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
AND
COMPREHENSIVE INCOME
(in
thousands, except per share amounts)
|
|
Shares
|
|
|
Common
Stock
|
|
|
Retained
Earnings
|
|
|
Accumulated
Other
Comprehensive
Income
(Loss)
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2007, as previously reported
|
|
|
23,509 |
|
|
$ |
14,691 |
|
|
$ |
136,667 |
|
|
$ |
(1,739 |
) |
|
$ |
149,619 |
|
Prior
period adjustment (see note 3)
|
|
|
- |
|
|
|
- |
|
|
|
(1,036 |
) |
|
|
- |
|
|
|
(1,036 |
) |
Balance,
December 31, 2007, as adjusted
|
|
|
23,509 |
|
|
$ |
14,691 |
|
|
$ |
135,631 |
|
|
$ |
(1,739 |
) |
|
$ |
148,583 |
|
Comprehensive
income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
|
- |
|
|
|
- |
|
|
|
24,145 |
|
|
|
- |
|
|
|
24,145 |
|
Reclassification
adjustment for unrealized loss from pension plans included in net income,
net of tax
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
137 |
|
|
|
137 |
|
Net
unrealized loss from pension plans, net of tax
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(931 |
) |
|
|
(931 |
) |
Total
comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,351 |
|
Dividends
declared ($0.30 per share)
|
|
|
- |
|
|
|
- |
|
|
|
(7,070 |
) |
|
|
- |
|
|
|
(7,070 |
) |
Dividends
reinvested in common stock
|
|
|
24 |
|
|
|
550 |
|
|
|
- |
|
|
|
- |
|
|
|
550 |
|
Stock-based
compensation
|
|
|
- |
|
|
|
161 |
|
|
|
- |
|
|
|
- |
|
|
|
161 |
|
Conversion
of liability classified awards to equity classified awards
|
|
|
- |
|
|
|
65 |
|
|
|
- |
|
|
|
- |
|
|
|
65 |
|
Common
stock issued through exercise of incentive
stock options
|
|
|
72 |
|
|
|
597 |
|
|
|
- |
|
|
|
- |
|
|
|
597 |
|
Net
excess tax benefit from stock options exercised
|
|
|
- |
|
|
|
75 |
|
|
|
- |
|
|
|
- |
|
|
|
75 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2008
|
|
|
23,605 |
|
|
$ |
16,139 |
|
|
$ |
152,706 |
|
|
$ |
(2,533 |
) |
|
$ |
166,312 |
|
Comprehensive
income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
|
- |
|
|
|
- |
|
|
|
8,834 |
|
|
|
- |
|
|
|
8,834 |
|
Reclassification
adjustment for unrealized loss from pension plans included in
net income, net of tax
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
40 |
|
|
|
40 |
|
Total
comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,874 |
|
Stock-based
compensation
|
|
|
- |
|
|
|
497 |
|
|
|
- |
|
|
|
- |
|
|
|
497 |
|
Conversion
of liability classified awards to equity classified awards
|
|
|
- |
|
|
|
85 |
|
|
|
- |
|
|
|
- |
|
|
|
85 |
|
Common
stock issued through exercise of incentive
stock options
|
|
|
35 |
|
|
|
310 |
|
|
|
- |
|
|
|
- |
|
|
|
310 |
|
Net
excess tax benefit from stock options exercised
|
|
|
- |
|
|
|
63 |
|
|
|
- |
|
|
|
- |
|
|
|
63 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
September 30, 2009
|
|
|
23,640 |
|
|
$ |
17,094 |
|
|
$ |
161,540 |
|
|
$ |
(2,493 |
) |
|
$ |
176,141 |
|
See
accompanying notes to unaudited condensed consolidated financial
statements.
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in
thousands)
|
|
Nine
Months Ended
September 30,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
Cash
Flows From Operating Activities
|
|
|
|
|
|
|
Net
income
|
|
$ |
8,834 |
|
|
$ |
18,654 |
|
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
Impairment
on assets held for sale
|
|
|
17,545 |
|
|
|
- |
|
Depreciation
|
|
|
23,666 |
|
|
|
22,318 |
|
Amortization
|
|
|
450 |
|
|
|
454 |
|
Stock
based compensation expense
|
|
|
475 |
|
|
|
84 |
|
Excess
tax benefits on stock option exercises
|
|
|
(63 |
) |
|
|
(54 |
) |
Deferred
income taxes
|
|
|
(7,463 |
) |
|
|
1,265 |
|
Loss
on disposal of assets
|
|
|
734 |
|
|
|
256 |
|
Realized
losses on investments carried at fair value
|
|
|
188 |
|
|
|
94 |
|
Unrealized
(gains) losses on investments carried at fair value
|
|
|
(515 |
) |
|
|
398 |
|
Net
(gain) loss from patronage and equity investments
|
|
|
395 |
|
|
|
275 |
|
Other
|
|
|
2,300 |
|
|
|
(3,735 |
) |
Changes
in assets and liabilities:
|
|
|
|
|
|
|
|
|
(Increase)
decrease in:
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
685 |
|
|
|
(3,810 |
) |
Materials
and supplies
|
|
|
1,694 |
|
|
|
(386 |
) |
Increase
(decrease) in:
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
|
(915 |
) |
|
|
1,589 |
|
Deferred
lease payable
|
|
|
114 |
|
|
|
210 |
|
Other
prepaids, deferrals and accruals
|
|
|
11,384 |
|
|
|
(6,400 |
) |
|
|
|
|
|
|
|
|
|
Net
cash provided by operating activities
|
|
$ |
59,508 |
|
|
$ |
31,212 |
|
|
|
|
|
|
|
|
|
|
Cash
Flows From Investing Activities
|
|
|
|
|
|
|
|
|
Purchase
and construction of plant and equipment
|
|
$ |
(37,648 |
) |
|
$ |
(38,900 |
) |
Proceeds
from sale of equipment
|
|
|
75 |
|
|
|
210 |
|
Purchase
of investment securities
|
|
|
(360 |
) |
|
|
(342 |
) |
Proceeds
from investment activities
|
|
|
14 |
|
|
|
633 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash used in investing activities
|
|
$ |
(37,919 |
) |
|
$ |
(38,399 |
) |
(Continued)
SHENANDOAH
TELECOMMUNICATIONS COMPANY AND SUBSIDIARIES
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in
thousands)
|
|
Nine
Months Ended
September 30,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
Cash
Flows From Financing Activities
|
|
|
|
|
|
|
Principal
payments on long-term debt
|
|
$ |
(14,284 |
) |
|
$ |
(3,172 |
) |
Amounts
borrowed under debt agreements
|
|
|
2,000 |
|
|
|
- |
|
Excess
tax benefits on stock option exercises
|
|
|
63 |
|
|
|
54 |
|
Proceeds
from exercise of incentive stock options
|
|
|
310 |
|
|
|
378 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash used in financing activities
|
|
$ |
(11,911 |
) |
|
$ |
(2,740 |
) |
|
|
|
|
|
|
|
|
|
Net
increase (decrease) in cash and cash equivalents
|
|
$ |
9,678 |
|
|
$ |
(9,927 |
) |
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents:
|
|
|
|
|
|
|
|
|
Beginning
|
|
|
5,240 |
|
|
|
17,245 |
|
Ending
|
|
$ |
14,918 |
|
|
$ |
7,318 |
|
|
|
|
|
|
|
|
|
|
Supplemental
Disclosures of Cash Flow Information
|
|
|
|
|
|
|
|
|
Cash
payments for:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$ |
1,437 |
|
|
$ |
1,181 |
|
|
|
|
|
|
|
|
|
|
Income
taxes
|
|
$ |
1,596 |
|
|
$ |
7,853 |
|
During
the nine months ended September 30, 2009, the Company utilized $5,054 of vendor
credits receivable to reduce cash paid for acquisitions of property, plant and
equipment.
See
accompanying notes to unaudited condensed consolidated financial
statements.
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. The
interim condensed consolidated financial statements of Shenandoah
Telecommunications Company and Subsidiaries (collectively, the “Company”) are
unaudited. In the opinion of management, all adjustments necessary
for a fair presentation of the interim results have been reflected
therein. All such adjustments were of a normal and recurring
nature. These statements should be read in conjunction with the
consolidated financial statements and related notes in the Company’s Annual
Report on Form 10-K for the year ended December 31, 2008. The balance
sheet information at December 31, 2008 was derived from the audited December 31,
2008 consolidated balance sheet.
2. Operating
revenues and income from operations for any interim period are not necessarily
indicative of results that may be expected for the entire year.
3. During
the second quarter of 2009, the Company determined that it had understated its
asset retirement obligations relating to co-located cell sites beginning with
the year ended December 31, 2003. As a result, the Company has
corrected its consolidated balance sheet as of December 31, 2008 and its
consolidated income statements for the three months and nine months ended
September 30, 2008, included in this report.
The
cumulative effect of this correction, net of tax effects, is a reduction of
retained earnings of $1,036,000 as of the beginning of fiscal year 2008 and a
decrease to net income from continuing operations and net income of $66,000 and
$195,000 for the three and nine months ended September 30, 2008,
respectively.
The
corrections do not affect historical net cash flows from operating, investing or
financing activities.
Following
is a summary of the effects of these changes on the Company’s consolidated
balance sheet as of December 31, 2008, as well as the effects of these changes
on the Company’s consolidated statements of income for the three months and nine
months ended September 30, 2008; and the effects of these changes on the
consolidated statement of shareholders’ equity and comprehensive income for the
year ended December 31, 2008:
Consolidated
Statements of Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
Previously Reported
|
|
|
Adjustments
|
|
|
As
Adjusted
|
|
|
|
(in
thousands)
|
|
Three
months ended September 30, 2008
|
|
|
|
|
|
|
|
|
|
Cost
of goods and services
|
|
$ |
10,662 |
|
|
$ |
50 |
|
|
$ |
10,712 |
|
Depreciation
and amortization
|
|
|
6,424 |
|
|
|
60 |
|
|
|
6,484 |
|
Total
operating expenses
|
|
|
24,810 |
|
|
|
110 |
|
|
|
24,920 |
|
Operating
income
|
|
|
12,598 |
|
|
|
(110 |
) |
|
|
12,488 |
|
Income
from continuing operations before income taxes
|
|
|
12,262 |
|
|
|
(110 |
) |
|
|
12,152 |
|
Income
tax expense
|
|
|
4,818 |
|
|
|
(44 |
) |
|
|
4,774 |
|
Net
income from continuing operations
|
|
|
7,444 |
|
|
|
(66 |
) |
|
|
7,378 |
|
Net
income
|
|
|
6,808 |
|
|
|
(66 |
) |
|
|
6,742 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine
months ended September 30, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of goods and services
|
|
$ |
31,244 |
|
|
$ |
150 |
|
|
$ |
31,394 |
|
Depreciation
and amortization
|
|
|
19,127 |
|
|
|
177 |
|
|
|
19,304 |
|
Total
operating expenses
|
|
|
71,423 |
|
|
|
327 |
|
|
|
71,750 |
|
Operating
income
|
|
|
35,881 |
|
|
|
(327 |
) |
|
|
35,554 |
|
Income
from continuing operations before income taxes
|
|
|
34,990 |
|
|
|
(327 |
) |
|
|
34,663 |
|
Income
tax expense
|
|
|
14,013 |
|
|
|
(132 |
) |
|
|
13,881 |
|
Net
income from continuing operations
|
|
|
20,977 |
|
|
|
(195 |
) |
|
|
20,782 |
|
Net
income
|
|
|
18,849 |
|
|
|
(195 |
) |
|
|
18,654 |
|
Consolidated
Balance Sheet
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
Previously Reported
|
|
|
Adjustments
|
|
|
As
Adjusted
|
|
|
|
(in
thousands)
|
|
December
31, 2008
|
|
|
|
|
|
|
|
|
|
Plant
in service
|
|
$ |
321,044 |
|
|
$ |
2,052 |
|
|
$ |
323,096 |
|
Accumulated
amortization and depreciation
|
|
|
150,499 |
|
|
|
1,196 |
|
|
|
151,695 |
|
Net
property, plant and equipment
|
|
|
175,621 |
|
|
|
856 |
|
|
|
176,477 |
|
Total
assets
|
|
|
265,981 |
|
|
|
856 |
|
|
|
266,837 |
|
Deferred
income taxes
|
|
|
30,401 |
|
|
|
(896 |
) |
|
|
29,505 |
|
Other
liabilities
|
|
|
3,485 |
|
|
|
3,048 |
|
|
|
6,533 |
|
Total
other liabilities
|
|
|
37,028 |
|
|
|
2,152 |
|
|
|
39,180 |
|
Retained
earnings
|
|
|
154,002 |
|
|
|
(1,296 |
) |
|
|
152,706 |
|
Total
shareholders’ equity
|
|
|
167,608 |
|
|
|
(1,296 |
) |
|
|
166,312 |
|
Total
liabilities and shareholders’ equity
|
|
|
265,981 |
|
|
|
856 |
|
|
|
266,837 |
|
Consolidated
Statement of Shareholders’ Equity and Comprehensive Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
Previously Reported
|
|
|
Adjustments
|
|
|
As
Adjusted
|
|
|
|
(in
thousands) |
|
As
of December 31, 2007
|
|
|
|
|
|
|
|
|
|
Retained
earnings
|
|
$ |
136,667 |
|
|
$ |
(1,036 |
) |
|
$ |
135,631 |
|
Total
stockholders’ equity
|
|
|
149,619 |
|
|
|
(1,036 |
) |
|
|
148,583 |
|
4. In
September 2008, the Company announced its intention to sell its Converged
Services operation, and the related assets and liabilities were reclassified as
held for sale in the consolidated balance sheet and the historical operating
results were reclassified as discontinued operations. Depreciation
and amortization on long-lived assets was also discontinued.
The
Company began an auction process with respect to the sale of the Converged
Services assets in the fourth quarter of 2008. The Company
determined, both at September 30, 2008 and December 31, 2008, based on its
analysis of similar transactions, comparable values for other companies in the
industry, and the broad range of values indicated by potential buyers during the
early stages of the auction process, that no write-down of the carrying value of
the net assets held for sale was required.
Subsequently,
in connection with the preparation of the Company’s first quarter 2009 financial
statements, based upon changes in the marketplace for this type of asset and
further developments in the auction process, the Company determined that the
fair value of Converged Services had declined from earlier
estimates. Accordingly, the Company recorded an impairment loss of
$17.5 million ($10.7 million, net of taxes) to reduce the carrying value of
these assets to their estimated fair value less cost to sell as of March 31,
2009. At September 30, 2009, negotiations to complete the sale
continue, and there has been no change in the estimated fair value of the
assets.
Assets
and liabilities held for sale consisted of the following:
|
|
September 30,
2009
|
|
|
December 31,
2008
|
|
Assets
held for sale:
|
|
|
|
|
|
|
Property,
plant and equipment, net
|
|
$ |
7,506 |
|
|
$ |
15,414 |
|
Goodwill
|
|
|
- |
|
|
|
6,539 |
|
Intangible
assets, net
|
|
|
915 |
|
|
|
1,931 |
|
Deferred
charges
|
|
|
1,628 |
|
|
|
3,384 |
|
Other
assets
|
|
|
821 |
|
|
|
1,042 |
|
|
|
$ |
10,870 |
|
|
$ |
28,310 |
|
Liabilities:
|
|
|
|
|
|
|
|
|
Other
liabilities
|
|
$ |
1,092 |
|
|
$ |
1,013 |
|
Discontinued
operations included the following amounts of operating revenue and income (loss)
before income taxes:
|
|
Three
Months Ended
September 30,
|
|
|
Nine
Months Ended
September 30,
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
Operating
revenues
|
|
$ |
3,123 |
|
|
$ |
3,387 |
|
|
$ |
10,033 |
|
|
$ |
9,005 |
|
Loss
before income taxes
|
|
$ |
(63 |
) |
|
$ |
(1,065 |
) |
|
$ |
(16,899 |
) |
|
$ |
(3,485 |
) |
5. Basic
net income (loss) per share was computed on the weighted average number of
shares outstanding. Diluted net income (loss) per share was computed
under the treasury stock method, assuming the conversion as of the beginning of
the period for all dilutive stock options. During 2007, the Company
issued approximately 68,000 performance share units that are “contingently
issuable shares” under the treasury stock method. Based upon the
Company’s stock price during the thirty day periods prior to September 30, 2009
and 2008, these shares did not meet the threshold to be considered dilutive
shares, and were excluded from the respective diluted net income per share
computations. At September 30, 2009, approximately 56,000 performance share
units were outstanding, while at September 30, 2008, approximately 59,000
performance share units were outstanding. During February 2009, the Company
issued options to purchase approximately 169,000 shares at an exercise price of
$25.26 per share, and during both 2007 and 2008, the Company issued options to
purchase 30,000 shares at exercise prices of $20.50 and $22.76,
respectively. Based upon the average daily closing price of the
Company’s common stock as reported on the NASDAQ Stock Market, these options
were anti-dilutive and were excluded from the dilutive net income (loss) per
share calculation for the three months and nine months ended September 30,
2009. There were no adjustments to net income.
6. Investments
include $1.9 million and $1.4 million of investments carried at fair value as of
September 30, 2009 and December 31, 2008, respectively, consisting of equity,
bond and money market mutual funds. These investments were acquired
under a rabbi trust arrangement related to a non-qualified supplemental
retirement plan maintained by the Company. During the three months
ended September 30, 2009, the Company contributed $28 thousand to the trust,
recognized no net losses on dispositions of investments, recognized $8 thousand
in dividend and interest income from investments, and recognized net unrealized
gains of $209 thousand on these investments. During the nine months
ended September 30, 2009, the Company contributed $92 thousand to the trust,
recognized net losses on dispositions of investments of $188 thousand,
recognized $27 thousand in dividend and interest income from investments, and
recognized net unrealized gains of $509 thousand on these
investments. Fair values for these investments held under the rabbi
trust were determined by Level 1 quoted market prices for the underlying mutual
funds.
7. Financial
instruments on the consolidated balance sheets that approximate fair value
include: cash and cash equivalents, receivables, investments carried
at fair value, payables, accrued liabilities, and long-term debt. Due
to the relatively short time frame to maturity of the Company’s fixed rate debt,
fair value approximates its carrying value.
8. Operating
segments are defined as components of an enterprise about which separate
financial information is available that is evaluated regularly by the chief
operating decision makers. During 2009, the Company restructured its
business segments to reflect changes in the Company’s corporate direction and
strategy in response to changes in the economic environment and other
factors. The Company has three reportable segments, which the Company
operates and manages as strategic business units organized by lines of business:
(1) Wireless, (2) Wireline, and (3) Cable TV. The Other column
primarily includes Shenandoah Telecommunications Company, the parent holding
company as well as certain general and administrative costs historically charged
to Converged Services that cannot be allocated to discontinued
operations. Prior period comparative information has been restated to
conform to the current structure.
The
Wireless segment provides digital wireless service to a portion of a four-state
area covering the region from Harrisburg, York and Altoona, Pennsylvania, to
Harrisonburg, Virginia, as a Sprint PCS Affiliate of Sprint
Nextel. This segment also owns cell site towers built on leased land,
and leases space on these towers to both affiliates and non-affiliated service
providers.
The
Wireline segment provides regulated and unregulated voice services, dial-up and
DSL internet access, and long distance access services throughout Shenandoah
County, Virginia, and leases fiber optic facilities throughout the northern
Shenandoah Valley of Virginia, northern Virginia and adjacent areas along the
Interstate 81 corridor, including portions of West Virginia and
Maryland.
The Cable
TV segment provides cable television services in Shenandoah County, Virginia,
and beginning December 1, 2008, in various franchise areas in West Virginia and
Alleghany County, Virginia.
Selected
financial data for each segment is as follows:
Three
months ended September 30, 2009
(In
thousands)
|
|
Wireless
|
|
|
Wireline
|
|
|
Cable
TV
|
|
|
Other
|
|
|
Eliminations
|
|
|
Consolidated
Totals
|
|
External
revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
revenues
|
|
$ |
25,287 |
|
|
$ |
3,340 |
|
|
$ |
3,526 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
32,153 |
|
Access
charges
|
|
|
- |
|
|
|
2,078 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,078 |
|
Facilities
and tower lease
|
|
|
1,135 |
|
|
|
1,860 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,995 |
|
Equipment
|
|
|
1,046 |
|
|
|
24 |
|
|
|
41 |
|
|
|
- |
|
|
|
- |
|
|
|
1,111 |
|
Other
|
|
|
543 |
|
|
|
945 |
|
|
|
290 |
|
|
|
- |
|
|
|
- |
|
|
|
1,778 |
|
Total
external revenues
|
|
|
28,011 |
|
|
|
8,247 |
|
|
|
3,857 |
|
|
|
- |
|
|
|
- |
|
|
|
40,115 |
|
Internal
revenues
|
|
|
679 |
|
|
|
3,440 |
|
|
|
8 |
|
|
|
- |
|
|
|
(4,127 |
) |
|
|
- |
|
Total
operating revenues
|
|
|
28,690 |
|
|
|
11,687 |
|
|
|
3,865 |
|
|
|
- |
|
|
|
(4,127 |
) |
|
|
40,115 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs
of goods and services, exclusive of depreciation and amortization shown
separately below
|
|
|
9,594 |
|
|
|
4,346 |
|
|
|
3,285 |
|
|
|
84 |
|
|
|
(3,606 |
) |
|
|
13,703 |
|
Selling,
general and administrative, exclusive of depreciation and amortization
shown separately below
|
|
|
4,123 |
|
|
|
1,934 |
|
|
|
1,309 |
|
|
|
847 |
|
|
|
(521 |
) |
|
|
7,692 |
|
Depreciation
and amortization
|
|
|
5,178 |
|
|
|
1,999 |
|
|
|
895 |
|
|
|
79 |
|
|
|
- |
|
|
|
8,151 |
|
Total
operating expenses
|
|
|
18,895 |
|
|
|
8,279 |
|
|
|
5,489 |
|
|
|
1,010 |
|
|
|
(4,127 |
) |
|
|
29,546 |
|
Operating
income (loss)
|
|
|
9,795 |
|
|
|
3,408 |
|
|
|
(1,624 |
) |
|
|
(1,010 |
) |
|
|
- |
|
|
|
10,569 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-operating
income (expense)
|
|
|
111 |
|
|
|
100 |
|
|
|
35 |
|
|
|
450 |
|
|
|
(400 |
) |
|
|
296 |
|
Interest
expense
|
|
|
(64 |
) |
|
|
(68 |
) |
|
|
(74 |
) |
|
|
(387 |
) |
|
|
400 |
|
|
|
(193 |
) |
Income
(loss) from continuing operations before income taxes
|
|
|
9,842 |
|
|
|
3,440 |
|
|
|
(1,663 |
) |
|
|
(947 |
) |
|
|
- |
|
|
|
10,672 |
|
Income
taxes
|
|
|
(4,030 |
) |
|
|
(1,286 |
) |
|
|
630 |
|
|
|
360 |
|
|
|
- |
|
|
|
(4,326 |
) |
Net
income (loss) from continuing operations
|
|
$ |
5,812 |
|
|
$ |
2,154 |
|
|
$ |
(1,033 |
) |
|
$ |
(587 |
) |
|
$ |
- |
|
|
$ |
6,346 |
|
Three
months ended September 30, 2008
(In
thousands)
|
|
Wireless
|
|
|
Wireline
|
|
|
Cable
TV
|
|
|
Other
|
|
|
Eliminations
|
|
|
Consolidated
Totals
|
|
External
revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
revenues
|
|
$ |
24,240 |
|
|
$ |
3,249 |
|
|
$ |
1,187 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
28,676 |
|
Access
charges
|
|
|
- |
|
|
|
2,968 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,968 |
|
Facilities
and tower lease
|
|
|
1,017 |
|
|
|
1,576 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,593 |
|
Equipment
|
|
|
1,409 |
|
|
|
433 |
|
|
|
19 |
|
|
|
- |
|
|
|
- |
|
|
|
1,861 |
|
Other
|
|
|
254 |
|
|
|
943 |
|
|
|
113 |
|
|
|
- |
|
|
|
- |
|
|
|
1,310 |
|
Total
external revenues
|
|
|
26,920 |
|
|
|
9,169 |
|
|
|
1,319 |
|
|
|
- |
|
|
|
- |
|
|
|
37,408 |
|
Internal
revenues
|
|
|
606 |
|
|
|
2,789 |
|
|
|
8 |
|
|
|
- |
|
|
|
(3,403 |
) |
|
|
- |
|
Total
operating revenues
|
|
|
27,526 |
|
|
|
11,958 |
|
|
|
1,327 |
|
|
|
- |
|
|
|
(3,403 |
) |
|
|
37,408 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs
of goods and services, exclusive of depreciation and amortization shown
separately below
|
|
|
8,583 |
|
|
|
4,082 |
|
|
|
902 |
|
|
|
98 |
|
|
|
(2,953 |
) |
|
|
10,712 |
|
Selling,
general and administrative, exclusive of depreciation and amortization
shown separately below
|
|
|
4,557 |
|
|
|
1,883 |
|
|
|
383 |
|
|
|
1,351 |
|
|
|
(450 |
) |
|
|
7,724 |
|
Depreciation
and amortization
|
|
|
4,259 |
|
|
|
1,887 |
|
|
|
265 |
|
|
|
73 |
|
|
|
- |
|
|
|
6,484 |
|
Total
operating expenses
|
|
|
17,399 |
|
|
|
7,852 |
|
|
|
1,550 |
|
|
|
1,522 |
|
|
|
(3,403 |
) |
|
|
24,920 |
|
Operating
income (loss)
|
|
|
10,127 |
|
|
|
4,106 |
|
|
|
(223 |
) |
|
|
(1,522 |
) |
|
|
- |
|
|
|
12,488 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-operating
income (expense)
|
|
|
129 |
|
|
|
29 |
|
|
|
(15 |
) |
|
|
375 |
|
|
|
(751 |
) |
|
|
(233 |
) |
Interest
expense
|
|
|
(85 |
) |
|
|
(114 |
) |
|
|
(67 |
) |
|
|
(588 |
) |
|
|
751 |
|
|
|
(103 |
) |
Income
(loss) from continuing operations before income
taxes
|
|
|
10,171 |
|
|
|
4,021 |
|
|
|
(305 |
) |
|
|
(1,735 |
) |
|
|
- |
|
|
|
12,152 |
|
Income
taxes
|
|
|
(4,230 |
) |
|
|
(1,516 |
) |
|
|
115 |
|
|
|
857 |
|
|
|
- |
|
|
|
(4,774 |
) |
Net
income (loss) from continuing operations
|
|
$ |
5,941 |
|
|
$ |
2,505 |
|
|
$ |
(190 |
) |
|
$ |
(878 |
) |
|
$ |
- |
|
|
$ |
7,378 |
|
Nine
months ended September 30, 2009
(In
thousands)
|
|
Wireless
|
|
|
Wireline
|
|
|
Cable
TV
|
|
|
Other
|
|
|
Eliminations
|
|
|
Consolidated
Totals
|
|
External
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
revenues
|
|
$ |
76,348 |
|
|
$ |
9,928 |
|
|
$ |
10,682 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
96,958 |
|
Access
charges
|
|
|
- |
|
|
|
6,695 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
6,695 |
|
Facilities
and tower lease
|
|
|
3,322 |
|
|
|
4,630 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
7,952 |
|
Equipment
|
|
|
3,485 |
|
|
|
111 |
|
|
|
76 |
|
|
|
- |
|
|
|
- |
|
|
|
3,672 |
|
Other
|
|
|
1,451 |
|
|
|
2,880 |
|
|
|
748 |
|
|
|
- |
|
|
|
- |
|
|
|
5,079 |
|
Total
external revenues
|
|
|
84,606 |
|
|
|
24,244 |
|
|
|
11,506 |
|
|
|
- |
|
|
|
- |
|
|
|
120,356 |
|
Internal
Revenues
|
|
|
1,948 |
|
|
|
9,568 |
|
|
|
24 |
|
|
|
- |
|
|
|
(11,540 |
) |
|
|
- |
|
Total
operating revenues
|
|
|
86,554 |
|
|
|
33,812 |
|
|
|
11,530 |
|
|
|
- |
|
|
|
(11,540 |
) |
|
|
120,356 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs
of goods and services, exclusive of depreciation and amortization shown
separately below
|
|
|
27,534 |
|
|
|
12,563 |
|
|
|
9,211 |
|
|
|
235 |
|
|
|
(10,091 |
) |
|
|
39,452 |
|
Selling,
general and administrative, exclusive of depreciation and amortization
shown separately below
|
|
|
12,237 |
|
|
|
5,374 |
|
|
|
3,766 |
|
|
|
2,641 |
|
|
|
(1,449 |
) |
|
|
22,569 |
|
Depreciation
and amortization
|
|
|
15,021 |
|
|
|
6,334 |
|
|
|
2,513 |
|
|
|
248 |
|
|
|
- |
|
|
|
24,116 |
|
Total
operating expenses
|
|
|
54,792 |
|
|
|
24,271 |
|
|
|
15,490 |
|
|
|
3,124 |
|
|
|
(11,540 |
) |
|
|
86,137 |
|
Operating
income (loss)
|
|
|
31,762 |
|
|
|
9,541 |
|
|
|
(3,960 |
) |
|
|
(3,124 |
) |
|
|
- |
|
|
|
34,219 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-operating
income (expense)
|
|
|
179 |
|
|
|
202 |
|
|
|
55 |
|
|
|
834 |
|
|
|
(1,024 |
) |
|
|
246 |
|
Interest
expense
|
|
|
(231 |
) |
|
|
(192 |
) |
|
|
(166 |
) |
|
|
(1,563 |
) |
|
|
1,024 |
|
|
|
(1,128 |
) |
Income
(loss) from continuing operations before income taxes
|
|
|
31,710 |
|
|
|
9,551 |
|
|
|
(4,071 |
) |
|
|
(3,853 |
) |
|
|
- |
|
|
|
33,337 |
|
Income
taxes
|
|
|
(13,095 |
) |
|
|
(3,596 |
) |
|
|
1,547 |
|
|
|
1,125 |
|
|
|
- |
|
|
|
(14,019 |
) |
Net
income (loss) from continuing operations
|
|
$ |
18,615 |
|
|
$ |
5,955 |
|
|
$ |
(2,524 |
) |
|
$ |
(2,728 |
) |
|
$ |
- |
|
|
$ |
19,318 |
|
Nine
months ended September 30, 2008
(In
thousands)
|
|
Wireless
|
|
|
Wireline
|
|
|
Cable
TV
|
|
|
Other
|
|
|
Eliminations
|
|
|
Consolidated
Totals
|
|
External
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
revenues
|
|
$ |
67,802 |
|
|
$ |
9,789 |
|
|
$ |
3,591 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
81,182 |
|
Access
charges
|
|
|
- |
|
|
|
7,780 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
7,780 |
|
Facilities
and tower lease
|
|
|
3,010 |
|
|
|
4,882 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
7,892 |
|
Equipment
|
|
|
4,221 |
|
|
|
574 |
|
|
|
50 |
|
|
|
- |
|
|
|
- |
|
|
|
4,845 |
|
Other
|
|
|
2,437 |
|
|
|
2,853 |
|
|
|
315 |
|
|
|
- |
|
|
|
- |
|
|
|
5,605 |
|
Total
external revenues
|
|
|
77,470 |
|
|
|
25,878 |
|
|
|
3,956 |
|
|
|
- |
|
|
|
- |
|
|
|
107,304 |
|
Internal
Revenues
|
|
|
1,804 |
|
|
|
8,623 |
|
|
|
24 |
|
|
|
- |
|
|
|
(10,451 |
) |
|
|
- |
|
Total
operating revenues
|
|
|
79,274 |
|
|
|
34,501 |
|
|
|
3,980 |
|
|
|
- |
|
|
|
(10,451 |
) |
|
|
107,304 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs
of goods and services, exclusive of depreciation and amortization shown
separately below
|
|
|
25,731 |
|
|
|
11,723 |
|
|
|
2,745 |
|
|
|
307 |
|
|
|
(9,112 |
) |
|
|
31,394 |
|
Selling,
general and administrative, exclusive of depreciation and amortization
shown separately below
|
|
|
12,826 |
|
|
|
5,568 |
|
|
|
1,031 |
|
|
|
2,966 |
|
|
|
(1,339 |
) |
|
|
21,052 |
|
Depreciation
and amortization
|
|
|
12,802 |
|
|
|
5,498 |
|
|
|
784 |
|
|
|
220 |
|
|
|
- |
|
|
|
19,304 |
|
Total
operating expenses
|
|
|
51,359 |
|
|
|
22,789 |
|
|
|
4,560 |
|
|
|
3,493 |
|
|
|
(10,451 |
) |
|
|
71,750 |
|
Operating
income (loss)
|
|
|
27,915 |
|
|
|
11,712 |
|
|
|
(580 |
) |
|
|
(3,493 |
) |
|
|
- |
|
|
|
35,554 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-operating
income (expense)
|
|
|
375 |
|
|
|
95 |
|
|
|
(18 |
) |
|
|
1,352 |
|
|
|
(1,912 |
) |
|
|
(108 |
) |
Interest
expense
|
|
|
(286 |
) |
|
|
(340 |
) |
|
|
(198 |
) |
|
|
(1,871 |
) |
|
|
1,912 |
|
|
|
(783 |
) |
Income
(loss) from continuing operations before income
taxes
|
|
|
28,004 |
|
|
|
11,467 |
|
|
|
(796 |
) |
|
|
(4,012 |
) |
|
|
- |
|
|
|
34,663 |
|
Income
taxes
|
|
|
(11,599 |
) |
|
|
(4,357 |
) |
|
|
302 |
|
|
|
1,773 |
|
|
|
- |
|
|
|
(13,881 |
) |
Net
income (loss) from continuing operations
|
|
$ |
16,405 |
|
|
$ |
7,110 |
|
|
$ |
(494 |
) |
|
$ |
(2,239 |
) |
|
$ |
- |
|
|
$ |
20,782 |
|
The
Company’s assets by segment are as follows:
(In
thousands)
|
|
September 30,
2009
|
|
|
December 31,
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wireless
|
|
$ |
132,283 |
|
|
$ |
121,453 |
|
Wireline
|
|
|
76,267 |
|
|
|
67,884 |
|
Cable
TV
|
|
|
17,705 |
|
|
|
19,065 |
|
Other
(includes assets held for sale)
|
|
|
183,952 |
|
|
|
196,932 |
|
Combined
totals
|
|
|
410,207 |
|
|
|
405,334 |
|
Inter-segment
eliminations
|
|
|
(147,210 |
) |
|
|
(138,497 |
) |
Consolidated
totals
|
|
$ |
262,997 |
|
|
$ |
266,837 |
|
9. The
Company files U.S. federal income tax returns and various state and local income
tax returns. With few exceptions, years prior to 2005 are no longer
subject to examination. No state or federal income tax audits were in
process as of September 30, 2009.
10. On
October 20, 2009, the Company’s Board of
Directors declared a cash dividend of $0.32 per share, payable December 1, 2009
to shareholders of record as of November 10, 2009.
On
November 2, 2009, the Company closed on the purchase of customers and assets of
the North River Telephone Cooperative, serving the Mt. Solon, Virginia, area;
the purchase price was approximately $0.6 million. The Company has
not completed its assessment of the fair values of the assets
acquired. With this acquisition, the Company added approximately
1,000 telephone access lines. The Company has committed to spend $1.8
million through 2010 to upgrade and integrate North River’s network and provide
high-speed broadband services to its customers.
The
Company has evaluated subsequent events for potential recognition and/or
disclosure through November 5, 2009, the date the consolidated financial
statements included in this Quarterly Report on Form 10-Q were
issued.
|
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
This
management’s discussion and analysis includes “forward-looking statements”
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. When used in this report, the
words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan” and
similar expressions as they relate to Shenandoah Telecommunications Company or
its management are intended to identify these forward-looking
statements. All statements regarding Shenandoah Telecommunications
Company’s expected future financial position and operating results, business
strategy, financing plans, forecasted trends relating to the markets in which
Shenandoah Telecommunications Company operates and similar matters are
forward-looking statements. We cannot assure you that the Company’s
expectations expressed or implied in these forward-looking statements will turn
out to be correct. The Company’s actual results could be materially
different from its expectations because of various factors, including those
discussed below and under the caption “Risk Factors” in the Company’s Annual
Report on Form 10-K for its fiscal year ended December 31, 2008. The
following management’s discussion and analysis should be read in conjunction
with the Company’s Annual Report on Form 10-K for its fiscal year ended December
31, 2008, including the financial statements and related notes included
therein.
General
Overview. Shenandoah
Telecommunications Company is a diversified telecommunications company providing
both regulated and unregulated telecommunications services through its wholly
owned subsidiaries. These subsidiaries provide local exchange
telephone services and wireless personal communications services (as a Sprint
PCS Affiliate of Sprint Nextel), as well as cable television, video, Internet
and data services, long distance, sale of telecommunications equipment, fiber
optics facilities, paging and leased tower facilities. The Company has the
following three reporting segments, which it operates and manages as strategic
business units organized by lines of business:
|
*
|
Wireless,
which provides wireless personal communications services, or PCS, as a
Sprint PCS Affiliate of Sprint Nextel, through Shenandoah Personal
Communications Company, and tower facilities for personal communications
services, leased to both affiliated and non-affiliated entities through
Shenandoah Mobile Company;
|
|
*
|
Wireline,
which involves the provision of regulated and non-regulated telephone
services, Internet access, and leased fiber optic facilities, primarily
through Shenandoah Telephone Company, ShenTel Service Company, and
Shenandoah Network Company, respectively, and long-distance and CLEC
services through Shenandoah Long Distance Company, ShenTel Communications
Company and Shentel Converged Services of West Virginia, Inc.;
and
|
|
*
|
Cable
TV, which involves the provision of cable television services, through
Shenandoah Cable Television Company in Shenandoah County, Virginia, and
since December 1, 2008, in Alleghany County, Virginia and various locales
throughout West Virginia, through Shentel Cable
Company.
|
The Other
category includes the provision of investments and management services to its
subsidiaries, through Shenandoah Telecommunications Company.
In
September 2008, the Company announced its intention to sell its Converged
Services operation, and the related assets and liabilities were reclassified as
held for sale in the consolidated balance sheet and the historical operating
results were reclassified as discontinued operations. Depreciation
and amortization on long-lived assets was discontinued.
The
Company began an auction process with respect to the sale of the Converged
Services assets in the fourth quarter of 2008. The Company
determined, both at September 30, 2008 and December 31, 2008, based on its
analysis of similar transactions, comparable values for other companies in the
industry, and the broad range of values indicated by potential buyers during the
early stages of the auction process, that no write-down of the carrying value of
the net assets held for sale was required.
Subsequently,
in connection with the preparation of the Company’s first quarter 2009 financial
statements, based upon changes in the marketplace for this type of asset and
further developments in the auction process, the Company determined that the
fair value of Converged Services had declined from earlier
estimates. Accordingly, the Company recorded an impairment loss of
$17.5 million ($10.7 million, net of taxes) to reduce the carrying value of
these assets to their estimated fair value less cost to sell as of March 31,
2009. At September 30, 2009, negotiations to complete the
sale continue, and there has been no change in the estimated fair value of the
assets.
Additional
Information About the Company’s Business
The
following table shows selected operating statistics of the Company for the three
months ending on, or as of, the dates shown:
|
|
Sept. 30,
2009
|
|
|
Dec. 31,
2008
|
|
|
Sept. 30,
2008
|
|
|
Dec. 31,
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail
PCS Subscribers
|
|
|
219,353 |
|
|
|
211,462 |
|
|
|
205,777 |
|
|
|
187,303 |
|
PCS
Market POPS (000) (1)
|
|
|
2,324 |
|
|
|
2,310 |
|
|
|
2,308 |
|
|
|
2,297 |
|
PCS
Covered POPS (000) (1)
|
|
|
1,988 |
|
|
|
1,931 |
|
|
|
1,898 |
|
|
|
1,814 |
|
PCS
Average Monthly Retail Churn % (2)
|
|
|
2.17 |
% |
|
|
1.87 |
% |
|
|
1.85 |
% |
|
|
2.32 |
% |
CDMA
Base Stations (sites)
|
|
|
448 |
|
|
|
411 |
|
|
|
378 |
|
|
|
346 |
|
EVDO-enabled
sites
|
|
|
306 |
|
|
|
211 |
|
|
|
134 |
|
|
|
52 |
|
EVDO
Covered POPS (000) (1)
|
|
|
1,874 |
|
|
|
1,663 |
|
|
|
1,292 |
|
|
|
624 |
|
Towers
(100 foot and over)
|
|
|
113 |
|
|
|
103 |
|
|
|
103 |
|
|
|
101 |
|
Towers
(under 100 foot)
|
|
|
19 |
|
|
|
15 |
|
|
|
15 |
|
|
|
14 |
|
Telephone
Access Lines
|
|
|
23,547 |
|
|
|
24,042 |
|
|
|
24,193 |
|
|
|
24,536 |
|
Total
Switched Access Minutes (000)
|
|
|
81,986 |
|
|
|
90,460 |
|
|
|
93,813 |
|
|
|
92,331 |
|
Originating
Switched Access Minutes (000)
|
|
|
22,770 |
|
|
|
25,425 |
|
|
|
26,203 |
|
|
|
26,128 |
|
Long
Distance Subscribers
|
|
|
10,821 |
|
|
|
10,842 |
|
|
|
10,884 |
|
|
|
10,689 |
|
Long
Distance Calls (000) (3)
|
|
|
7,136 |
|
|
|
7,981 |
|
|
|
8,086 |
|
|
|
7,944 |
|
Total
Fiber Miles – Wireline
|
|
|
49,175 |
|
|
|
46,733 |
|
|
|
39,528 |
|
|
|
35,872 |
|
Fiber
Route Miles – Wireline
|
|
|
784 |
|
|
|
756 |
|
|
|
680 |
|
|
|
647 |
|
DSL
Subscribers
|
|
|
10,549 |
|
|
|
9,918 |
|
|
|
9,754 |
|
|
|
8,136 |
|
Dial-up
Internet Subscribers
|
|
|
3,787 |
|
|
|
4,866 |
|
|
|
5,347 |
|
|
|
7,547 |
|
Cable
Television Subscribers (4)
|
|
|
24,117 |
|
|
|
24,933 |
|
|
|
8,142 |
|
|
|
8,303 |
|
Employees
(full time equivalents)
|
|
|
454 |
|
|
|
445 |
|
|
|
401 |
|
|
|
411 |
|
|
1)
|
POPS
refers to the estimated population of a given geographic area and is based
on information purchased from third party sources. Market POPS
are those within a market area which the Company is authorized to serve
under its Sprint PCS affiliate agreements, and Covered POPS are those
covered by the network’s service
area.
|
|
2)
|
PCS
Average Monthly Retail Churn is the average of the three monthly
subscriber turnover, or churn, calculations for the
period.
|
|
3)
|
Originated
by customers of the Company’s Telephone
subsidiary.
|
|
4)
|
The
increase at December 31, 2008 is primarily a result of the acquisition of
cable customers from Rapid Communications, LLC, on December 1,
2008.
|
Results
of Operations
Three
Months Ended September 30, 2009 Compared with the Three Months Ended September
30, 2008
Consolidated
Results
The
Company’s consolidated results from continuing operations for the third quarter
of 2009 and 2008 are summarized as follows:
(in
thousands)
|
|
Three
Months Ended
September 30,
|
|
|
Change
|
|
|
|
2009
|
|
|
2008
|
|
|
$ |
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
revenues
|
|
$ |
40,115 |
|
|
$ |
37,408 |
|
|
$ |
2,707 |
|
|
|
7.2 |
|
Operating
expenses
|
|
|
29,546 |
|
|
|
24,920 |
|
|
|
4,626 |
|
|
|
18.6 |
|
Operating
income
|
|
|
10,569 |
|
|
|
12,488 |
|
|
|
(1,919 |
) |
|
|
(15.4 |
) |
Other
income (expense)
|
|
|
103 |
|
|
|
(336 |
) |
|
|
439 |
|
|
|
130.7 |
|
Income
tax expense
|
|
|
4,326 |
|
|
|
4,774 |
|
|
|
(448 |
) |
|
|
(9.4 |
) |
Net
income from continuing operations
|
|
$ |
6,346 |
|
|
$ |
7,378 |
|
|
$ |
(1,032 |
) |
|
|
(14.0 |
) |
Operating
revenues
For the
three months ended September 30, 2009, operating revenue increased $2.7 million,
or 7.2%, primarily due to increased service revenue in the Wireless segment and
the additional revenue from the Shentel Cable acquisition in late 2008. For the
quarter ended September 30, 2009, Wireless operating revenues increased $1.2
million, or 4.2%, while Cable TV segment operating revenues increased $2.5
million. All other Company revenues decreased by $1.0 million,
compared to the three months ended September 30, 2008.
Operating
expenses
For the
quarter ended September 30, 2009, operating expenses increased $4.6 million, or
18.6%, compared to the 2008 period. The incremental costs of the
Shentel Cable operations accounted for $3.9 million of the year over year
increase. Capital improvements to the Company’s fiber optic network
and to provide expanded wireless coverage and additional services, specifically
EVDO high speed wireless internet data access availability, added $1.0 million
of depreciation to operating expenses, while other costs in the Wireless segment
increased $0.5 million. The Company expensed approximately $0.5
million of one-time professional fees during the third quarter of
2008.
Income
tax expense
The
Company’s effective tax rate on income from continuing operations increased from
39.3% in the third quarter of 2008 to 40.5% in the third quarter of 2009 due to
changes in the allocation of taxable income to higher tax states.
Net
income from continuing operations
For the
three months ended September 30, 2009, net income from continuing operations
decreased $1.0 million, as operating expenses increased faster than operating
revenues, as described above.
Wireless
The
Company’s Wireless segment provides digital wireless service to a portion of a
four-state area covering the region from Harrisburg, York and Altoona,
Pennsylvania, to Harrisonburg, Virginia, through Shenandoah PCS Company (“PCS”),
a Sprint PCS Affiliate of Sprint Nextel. This segment also leases
land on which it builds Company-owned cell towers, which it leases to affiliated
and non-affiliated wireless service providers, throughout the same four-state
area described above, through Shenandoah Mobile Company (“Mobile”).
PCS
receives revenues from Sprint Nextel for subscribers that obtain service in
PCS’s network coverage area. PCS relies on Sprint Nextel to provide
timely, accurate and complete information to record the appropriate revenue for
each financial period. Revenues received from Sprint Nextel are
recorded net of fees totaling 16.8% of net billed revenue, as defined, retained
by Sprint Nextel.
PCS had
448 PCS base stations in service at September 30, 2009, compared to 378 base
stations in service at September 30, 2008. As of September 30, 2009,
PCS had 306 EVDO-enabled sites, up from 134 EVDO-enabled sites operating as of
September 30, 2008, covering 94% of our currently covered
population. Approximately 25 additional base stations and 30
additional EVDO-enabled sites are expected to be added by year end
2009.
The
Company’s average PCS retail customer turnover, or churn rate, was 2.17% in the
third quarter of 2009, compared to 1.85% in the third quarter of
2008. As of September 30, 2009, the Company had 219,353 retail PCS
subscribers compared to 205,777 subscribers at September 30,
2008. The PCS operation added 3,286 net retail subscribers in the
third quarter of 2009 compared to 5,380 net retail subscribers added in the
third quarter of 2008.
Mobile
owned 130 towers at September 30, 2009, up from 116 at September 30,
2008. Mobile expects to complete 10 or more new towers during the
remainder of 2009. At September 30, 2009, Mobile had 192 leases for
non-affiliate cell sites, and 127 affiliate leases, compared to 176
non-affiliate and 112 affiliate leases as of September 30, 2008.
(in
thousands)
|
|
Three
Months Ended
September 30,
|
|
|
Change
|
|
|
|
2009
|
|
|
2008
|
|
|
$
|
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
operating revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
Wireless
service revenue
|
|
$ |
25,287 |
|
|
$ |
24,240 |
|
|
$ |
1,047 |
|
|
|
4.3 |
|
Tower
lease revenue
|
|
|
1,813 |
|
|
|
1,623 |
|
|
|
190 |
|
|
|
11.7 |
|
Equipment
revenue
|
|
|
1,046 |
|
|
|
1,409 |
|
|
|
(363 |
) |
|
|
(25.8 |
) |
Other
revenue
|
|
|
544 |
|
|
|
254 |
|
|
|
290 |
|
|
|
114.2 |
|
Total
segment operating revenues
|
|
|
28,690 |
|
|
|
27,526 |
|
|
|
1,164 |
|
|
|
4.2 |
|
Segment
operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of goods and services, exclusive of depreciation and amortization shown
separately below
|
|
|
9,594 |
|
|
|
8,583 |
|
|
|
1,011 |
|
|
|
11.8 |
|
Selling,
general and administrative, exclusive of depreciation and amortization
shown separately below
|
|
|
4,123 |
|
|
|
4,557 |
|
|
|
(434 |
) |
|
|
(9.5 |
) |
Depreciation
and amortization
|
|
|
5,178 |
|
|
|
4,259 |
|
|
|
919 |
|
|
|
21.6 |
|
Total
segment operating expenses
|
|
|
18,895 |
|
|
|
17,399 |
|
|
|
1,496 |
|
|
|
8.6 |
|
Segment
operating income
|
|
$ |
9,795 |
|
|
$ |
10,127 |
|
|
$ |
(332 |
) |
|
|
(3.3 |
) |
Operating
revenues
Wireless
service revenue increased $1.0 million, or 4.3%, for the three months ended
September 30, 2009, compared to the comparable 2008 period. Average
subscribers increased 7.0% in the current quarter compared to the 2008 third
quarter. Total credits against gross billed revenue and bad debt
write-offs were essentially unchanged from the third quarter of
2008.
The
increase in tower lease revenue resulted from additional cell site
leases.
The
decrease in equipment revenue consists of $0.2 million in lower handset revenue
due to fewer handsets sold, and $0.2 million less commission revenue due to
fewer sales of phones that operate on the iDEN network, for which the Company is
paid a commission for each phone sold.
Other
revenue in 2008 reflected a reduction of $0.2 million to prior accruals for
Universal Service Fund fees from Sprint Nextel.
Cost
of goods and services
Cost of
goods and services increased $1.0 million, or 11.8%, in 2009 from the third
quarter of 2008. Costs of the expanded network coverage and
roll-out of EVDO coverage resulted in a $1.2 million increase in network costs
including rent for additional tower and co-location sites, power and backhaul
line costs.
Network
costs are expected to increase in future periods as additional EVDO sites are
brought on-line, and as new towers and base stations are added to expand our
network coverage and capacity.
Selling,
general and administrative
Selling,
general and administrative expenses decreased $0.4 million in 2009 from the
third quarter of 2008 due approximately equally to a decrease in commissions and
operating taxes.
Depreciation
and amortization
Depreciation
and amortization increased $0.9 million in 2009 over 2008, due to capital
projects for EVDO capability and new cell sites placed in service beginning in
2008 and into early 2009. Depreciation is expected to continue to
increase as additional sites are brought on-line.
Wireline
The
Wireline segment is comprised of several subsidiaries providing
telecommunications services. Through these subsidiaries, this segment
provides regulated and unregulated voice services, dial-up and DSL internet
access, and long distance access services throughout Shenandoah County,
Virginia, and leases fiber optic facilities throughout the northern Shenandoah
Valley of Virginia, northern Virginia and adjacent areas along the Interstate 81
corridor, including portions of West Virginia and Maryland.
(in
thousands)
|
|
Three
Months Ended
September 30,
|
|
|
Change
|
|
|
|
2009
|
|
|
2008
|
|
|
$
|
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
operating revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
revenue
|
|
$ |
3,594 |
|
|
$ |
3,403 |
|
|
$ |
191 |
|
|
|
5.6 |
|
Access
revenue
|
|
|
2,766 |
|
|
|
3,581 |
|
|
|
(815 |
) |
|
|
(22.8 |
) |
Facilities
lease revenue
|
|
|
3,991 |
|
|
|
3,222 |
|
|
|
769 |
|
|
|
23.9 |
|
Equipment
revenue
|
|
|
24 |
|
|
|
433 |
|
|
|
(409 |
) |
|
|
(94.5 |
) |
Other
revenue
|
|
|
1,312 |
|
|
|
1,319 |
|
|
|
(7 |
) |
|
|
(0.5 |
) |
Total
segment operating revenues
|
|
|
11,687 |
|
|
|
11,958 |
|
|
|
(271 |
) |
|
|
(2.3 |
) |
Segment
operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of goods and services, exclusive of depreciation and amortization shown
separately below
|
|
|
4,346 |
|
|
|
4,082 |
|
|
|
264 |
|
|
|
6.5 |
|
Selling,
general and administrative, exclusive of depreciation and amortization
shown separately below
|
|
|
1,934 |
|
|
|
1,883 |
|
|
|
51 |
|
|
|
2.7 |
|
Depreciation
and amortization
|
|
|
1,999 |
|
|
|
1,887 |
|
|
|
112 |
|
|
|
5.9 |
|
Total
segment operating expenses
|
|
|
8,279 |
|
|
|
7,852 |
|
|
|
427 |
|
|
|
5.4 |
|
Segment
operating income
|
|
$ |
3,408 |
|
|
$ |
4,106 |
|
|
$ |
(698 |
) |
|
|
(17.0 |
) |
Operating
revenues
Operating
revenues decreased $0.3 million overall in the third quarter of 2009 from the
third quarter of 2008, principally due to a one-time sale of equipment recorded
in the 2008 period. Access revenue declined due to declining minutes
of use, while facilities lease revenue increased due to new and revised
contracts with third parties.
Cost
of goods and services
Cost of
goods and services increased $0.3 million, due primarily to increased line costs
associated with facilities lease revenues.
Cable
Television
The Cable
TV segment provides analog, digital and high-definition television signals under
franchise agreements within Shenandoah County, Virginia, and since December 1,
2008, in various locales in West Virginia and in Alleghany County,
Virginia. As of September 30, 2009, it served 24,117 customers, up
from 8,142 subscribers served as of September 30, 2008. Essentially
all of the increase resulted from the acquisition of cable assets and customers
from Rapid Communications, LLC, completed December 1, 2008. Since the
acquisition, the Company has been working to upgrade a number of the acquired
systems, and completed upgrades in the Alleghany County, Virginia, market during
the second quarter of 2009, and during the third quarter, in the Franklin and
Petersburg, West Virginia markets. The Company introduced expanded
service offerings in the Alleghany County market late in the second quarter of
2009, and expects additional expansion as markets in West Virginia are upgraded
through 2010. The Company expects to spend approximately $23 million
on these upgrades through 2010; spending through September 30, 2009 totaled
approximately $10 million.
(in
thousands)
|
|
Three
Months Ended
September 30,
|
|
|
Change
|
|
|
|
2009
|
|
|
2008
|
|
|
$
|
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
operating revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
revenue
|
|
$ |
3,526 |
|
|
$ |
1,187 |
|
|
$ |
2,339 |
|
|
|
197.1 |
|
Equipment
and other revenue
|
|
|
339 |
|
|
|
140 |
|
|
|
199 |
|
|
|
142.1 |
|
Total
segment operating revenues
|
|
|
3,865 |
|
|
|
1,327 |
|
|
|
2,538 |
|
|
|
191.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of goods and services, exclusive of depreciation and amortization shown
separately below
|
|
|
3,285 |
|
|
|
902 |
|
|
|
2,383 |
|
|
|
264.2 |
|
Selling,
general and administrative, exclusive of depreciation and amortization
shown separately below
|
|
|
1,309 |
|
|
|
383 |
|
|
|
926 |
|
|
|
241.8 |
|
Depreciation
and amortization
|
|
|
895 |
|
|
|
265 |
|
|
|
630 |
|
|
|
237.7 |
|
Total
segment operating expenses
|
|
|
5,489 |
|
|
|
1,550 |
|
|
|
3,939 |
|
|
|
254.1 |
|
Segment
operating loss
|
|
$ |
(1,624 |
) |
|
$ |
(223 |
) |
|
$ |
(1,401 |
) |
|
|
n/m |
|
Operating
revenues and expenses
The newly
acquired cable operations generated $1.3 million of the change in segment
operating loss shown above as the Company rebuilds the networks in order to
launch new services
Nine
Months Ended September 30, 2009 Compared with the Nine Months Ended September
30, 2008
Consolidated
Results
The
Company’s consolidated results from continuing operations for the nine months
ended September 30, 2009 and 2008, respectively, are summarized as
follows:
(in
thousands)
|
|
Nine
Months Ended
September 30,
|
|
|
Change
|
|
|
|
2009
|
|
|
2008
|
|
|
$
|
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
revenues
|
|
$ |
120,356 |
|
|
$ |
107,304 |
|
|
$ |
13,052 |
|
|
|
12.2 |
|
Operating
expenses
|
|
|
86,137 |
|
|
|
71,750 |
|
|
|
14,387 |
|
|
|
20.1 |
|
Operating
income
|
|
|
34,219 |
|
|
|
35,554 |
|
|
|
(1,335 |
) |
|
|
(3.8 |
) |
Other
income (expense)
|
|
|
(882 |
) |
|
|
(891 |
) |
|
|
9 |
|
|
|
1.0 |
|
Income
tax expense
|
|
|
14,019 |
|
|
|
13,881 |
|
|
|
138 |
|
|
|
1.0 |
|
Net
income from continuing operations
|
|
$ |
19,318 |
|
|
$ |
20,782 |
|
|
$ |
(1,464 |
) |
|
|
(7.0 |
) |
Operating
revenues
For the
nine months ended September 30, 2009, operating revenue increased $13.1 million,
or 12.2%, primarily due to increased service revenue in the Wireless segment and
the additional revenue from the Shentel Cable acquisition in late 2008. For the
2009 period, Wireless operating revenues increased $7.3 million, or 9.2%, while
the incremental Shentel Cable revenues in the Cable TV segment totaled $6.9
million for 2009. All other Company revenues decreased by $1.1
million, compared to the nine months ended September 30, 2008.
Operating
expenses
For the
nine months ended September 30, 2009, operating expenses increased $14.4
million, or 20.1%, compared to the 2008 period. The incremental costs
of the Shentel Cable operations accounted for $9.4 million of the year over year
increase. Additional depreciation expense of $3.3 million on
improvements to the Company’s fiber optic network and to support expanded
wireless coverage and additional services, specifically EVDO high speed wireless
internet data access availability, and the associated additional $1.7 million of
operating costs for rent and power, accounted for the remainder of the increase
in operating expenses.
Income
tax expense
The
Company’s effective tax rate on income from continuing operations increased from
40.0% in the first nine months of 2008 to 42.1% in the first nine months of 2009
primarily due to revisions to certain tax estimates recorded in the first
quarter of 2009, and the allocation of taxable income to higher tax
states.
Net
income from continuing operations
For the
nine months ended September 30, 2009, net income from continuing operations
decreased $1.5 million, due primarily to operating losses in the Cable TV
segment subsequent to the Shentel Cable acquisition in December 2008, and lower
operating income in the Wireline segment, partially offset by increased
operating income in the Wireless segment.
Wireless
(in
thousands)
|
|
Nine
Months Ended
September 30,
|
|
|
Change
|
|
|
|
2009
|
|
|
2008
|
|
|
$
|
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
operating revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
Wireless
service revenue
|
|
$ |
76,348 |
|
|
$ |
67,802 |
|
|
$ |
8,546 |
|
|
|
12.6 |
|
Tower
lease revenue
|
|
|
5,268 |
|
|
|
4,812 |
|
|
|
456 |
|
|
|
9.5 |
|
Equipment
revenue
|
|
|
3,485 |
|
|
|
4,221 |
|
|
|
(736 |
) |
|
|
(17.4 |
) |
Other
revenue
|
|
|
1,453 |
|
|
|
2,439 |
|
|
|
(986 |
) |
|
|
(40.4 |
) |
Total
segment operating revenues
|
|
|
86,554 |
|
|
|
79,274 |
|
|
|
7,280 |
|
|
|
9.2 |
|
Segment
operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of goods and services, exclusive of depreciation and amortization shown
separately below
|
|
|
27,534 |
|
|
|
25,731 |
|
|
|
1,803 |
|
|
|
7.0 |
|
Selling,
general and administrative, exclusive of depreciation and amortization
shown separately below
|
|
|
12,237 |
|
|
|
12,826 |
|
|
|
(589 |
) |
|
|
(4.6 |
) |
Depreciation
and amortization
|
|
|
15,021 |
|
|
|
12,802 |
|
|
|
2,219 |
|
|
|
17.3 |
|
Total
segment operating expenses
|
|
|
54,792 |
|
|
|
51,359 |
|
|
|
3,433 |
|
|
|
6.7 |
|
Segment
operating income
|
|
$ |
31,762 |
|
|
$ |
27,915 |
|
|
$ |
3,847 |
|
|
|
13.8 |
|
Operating
revenues
Wireless
service revenue increased $8.5 million, or 12.6%, for the nine months ended
September 30, 2009, compared to the comparable 2008 period. Average
subscribers increased 8.9% in the first half of 2009 compared to the 2008 first
half, while subscribers upgrading to higher revenue plans also added to revenue
growth during the first half of the year. Total credits against gross
billed revenue decreased 1.1% to $11.1 million, while bad debt write-offs
declined 15.7% to $5.2 million, compared to the first nine months of
2008.
The
increase in tower lease revenue resulted primarily from additional cell site
leases to non-affiliates.
The
decrease in equipment revenue consists of $0.3 million in lower handset revenue
due to fewer handsets sold, and $0.4 million less commission revenue due to
fewer sales of phones that operate on the iDEN network, for which the Company is
paid a commission for each phone sold.
The
decrease in other revenue reflects a one-time pass through of approximately $0.9
million of Universal Service Fund fees from Sprint Nextel in the second quarter
of 2008, combined with subsequent declines in recurring Universal Service Fund
fees.
Cost
of goods and services
Cost of
goods and services increased $1.8 million in the 2009 period compared to
2008. Costs of the expanded network coverage and roll-out of
EVDO coverage resulted in a $3.1 million increase in network costs and a $0.4
million increase in maintenance costs. Network costs include rent for
additional tower and co-location sites, and power and backhaul line
costs. Customer retention costs (including the costs of handsets used
for upgrades and warranty and insurance replacements) decreased $1.9 million
from 2008, principally due to changes in warranty programs since June of
2008.
Network
costs are expected to continue to increase in future periods as additional EVDO
sites are brought on-line, and as new towers and base stations are added to
expand our network coverage and capacity. The rate of increase
should begin to moderate in 2010 as future expansion efforts will primarily be
success-based in order to address capacity requirements.
Depreciation
and amortization
Depreciation
and amortization increased approximately $2.2 million in 2009 over 2008, due to
capital projects for EVDO capability and new cell sites placed in service since
2007. Depreciation is expected to continue to increase as additional
sites are brought on-line, though the rate of increase should begin to slow in
2010.
Wireline
(in
thousands)
|
|
Nine
Months Ended
September 30,
|
|
|
Change
|
|
|
|
2009
|
|
|
2008
|
|
|
$
|
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
operating revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
revenue
|
|
$ |
10,566 |
|
|
$ |
10,258 |
|
|
$ |
308 |
|
|
|
3.0 |
|
Access
revenue
|
|
|
8,576 |
|
|
|
9,512 |
|
|
|
(936 |
) |
|
|
(9.8 |
) |
Facilities
lease revenue
|
|
|
10,583 |
|
|
|
10,182 |
|
|
|
401 |
|
|
|
3.9 |
|
Equipment
revenue
|
|
|
111 |
|
|
|
574 |
|
|
|
(463 |
) |
|
|
(80.7 |
) |
Other
revenue
|
|
|
3,976 |
|
|
|
3,975 |
|
|
|
1 |
|
|
|
0.0 |
|
Total
segment operating revenues
|
|
|
33,812 |
|
|
|
34,501 |
|
|
|
(689 |
) |
|
|
(2.0 |
) |
Segment
operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of goods and services, exclusive of depreciation and amortization shown
separately below
|
|
|
12,563 |
|
|
|
11,723 |
|
|
|
840 |
|
|
|
7.2 |
|
Selling,
general and administrative, exclusive of depreciation and amortization
shown separately below
|
|
|
5,374 |
|
|
|
5,568 |
|
|
|
(194 |
) |
|
|
(3.5 |
) |
Depreciation
and amortization
|
|
|
6,334 |
|
|
|
5,498 |
|
|
|
836 |
|
|
|
15.2 |
|
Total
segment operating expenses
|
|
|
24,271 |
|
|
|
22,789 |
|
|
|
1,482 |
|
|
|
6.5 |
|
Segment
operating income
|
|
$ |
9,541 |
|
|
$ |
11,712 |
|
|
$ |
(2,171 |
) |
|
|
(18.5 |
) |
Operating
revenues
Access
revenue decreased $0.9 million, or 9.8%, for the nine months ended September 30,
2009, from the 2008 nine-month period, due to declining minutes of
use. Minutes of use have declined approximately 10% in 2009 from 2008
levels. For 2008, equipment revenue included one large non-recurring
sale of equipment.
Cost
of goods and services
Cost of
goods and services increased $0.8 million, due to increased line costs in
support of higher facilities lease revenue ($0.3 million); equipment disposals
and inventory write-offs of obsolete inventory ($0.2 million); and costs
associated with the equipment sale described above ($0.4 million).
Depreciation
and amortization
Depreciation
and amortization expense increased $0.8 million, due to capital projects placed
in service in 2008 relating to fiber related upgrades and redundancy projects,
and improvements to our DSL plant to increase customer connection
speeds.
Cable
Television
(in
thousands)
|
|
Nine
Months Ended
September 30,
|
|
|
Change
|
|
|
|
2009
|
|
|
2008
|
|
|
$
|
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
operating revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
revenue
|
|
$ |
10,682 |
|
|
$ |
3,591 |
|
|
$ |
7,091 |
|
|
|
197.5 |
|
Equipment
and other revenue
|
|
|
848 |
|
|
|
389 |
|
|
|
459 |
|
|
|
118.0 |
|
Total
segment operating revenues
|
|
|
11,530 |
|
|
|
3,980 |
|
|
|
7,550 |
|
|
|
189.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of goods and services, exclusive of depreciation and amortization shown
separately below
|
|
|
9,211 |
|
|
|
2,745 |
|
|
|
6,466 |
|
|
|
235.6 |
|
Selling,
general and administrative, exclusive of depreciation and amortization
shown separately below
|
|
|
3,766 |
|
|
|
1,031 |
|
|
|
2,735 |
|
|
|
265.3 |
|
Depreciation
and amortization
|
|
|
2,513 |
|
|
|
784 |
|
|
|
1,729 |
|
|
|
220.5 |
|
Total
segment operating expenses
|
|
|
15,490 |
|
|
|
4,560 |
|
|
|
10,930 |
|
|
|
239.7 |
|
Segment
operating loss
|
|
$ |
(3,960 |
) |
|
$ |
(580 |
) |
|
$ |
(3,380 |
) |
|
|
n/m |
|
Operating
revenues and expenses
The
increases in operating revenues and expenses shown above primarily reflect the
impact of the acquisition from Rapid Communications, LLC, in December
2008. The newly
acquired cable operations generated $3.0 million of the operating loss for the
nine months ended September 30, 2009, while the Company rebuilds the acquired
networks in order to launch new services. However,
operating results in the legacy Shenandoah County Cable TV unit have also
declined $0.4 million, due approximately equally to declining revenue, increases
in programming costs, and increased expenditures for system
maintenance.
Liquidity
and Capital Resources
The
Company has four principal sources of funds available to meet the financing
needs of its operations, capital projects, debt service, investments and
potential dividends. These sources include cash flows from
operations, existing balances of cash and cash equivalents, the liquidation of
investments and borrowings. Management routinely considers the
alternatives available to determine what mix of sources are best suited for the
long-term benefit of the Company.
Sources and Uses of Cash. The
Company generated $59.5 million of net cash from operations in the first nine
months of 2009, compared to $31.2 million in the first nine months of
2008. Net income (adjusted for the non-cash impairment charge on
assets held for sale, net of tax effects) and the utilization of the year end
2008 tax receivable to offset 2009 estimated tax payments, generated most of the
increase. The income tax receivable at December 31, 2008, resulted
from tax savings from bonus depreciation on capital spending for equipment
placed in service during late 2008.
Indebtedness. As of September 30, 2009,
the Company’s indebtedness totaled $29.1 million, with an annualized overall
weighted average interest rate of approximately 5.13%. The balance
included $14.7 million at a variable rate of 2.85% that resets weekly, with the
balance at a variety of fixed rates ranging from 6.67% to 8.05%. As
of September 30, 2009, the Company was in compliance with the covenants in its
credit agreements.
The
Company has the ability to borrow approximately $9.2 million as of September 30,
2009, under a revolving reducing credit facility established in
2004. No balances are currently outstanding on this
facility.
The
Company entered into a $52 million delayed draw term loan in October, 2008, to
fund capital expenditures, the Rapid Communications acquisition, and other
corporate purposes. The Company borrowed $2 million under this
facility during the first quarter of 2009 and repaid $11 million during the
second quarter. The Company has $37.3 million available on this
facility as of September 30, 2009, and it may make draws against this facility
through December 31, 2009. Repayments under this facility begin on
March 31, 2010, in 24 equal quarterly installments based upon the outstanding
balance as of December 31, 2009.
The
Company has no off-balance sheet arrangements (other than operating leases) and
has not entered into any transactions involving unconsolidated, limited purpose
entities or commodity contracts.
Capital Commitments. Capital
expenditures budgeted for 2009, as adjusted, total approximately $62 million, a
decrease of approximately $11 million from initial estimates and down $2 million
from the most recent projection. Half of the decrease reflects delays
in spending into 2010. Expected spending for the remainder of the
year includes approximately $10 million in our Wireless segment
for PCS base stations and towers to expand our network coverage and
capacity (principally in Pennsylvania), new EVDO sites to provide EVDO service
over more of our network, and additional switch capacity to handle the
additional growth. The Wireline segment expects to spend approximately $6
million for telephone network operations and fiber projects and to add capacity
and redundancy to our fiber networks in Virginia, Maryland and West Virginia,
and the Cable segment expects to spend approximately $8 million, principally in
the new markets acquired from Rapid Communications. Capital spending
for 2010 is currently expected to be substantially lower than that budgeted for
2009, and will be more evenly spread amongst our three major
segments. Capital spending may shift amongst these priorities as
opportunities arise, and the Company is prepared to reduce spending in areas if
market conditions change.
For the
2009 nine month period, the Company spent $37.6 million on capital projects,
compared to $38.9 million in the comparable 2008 period. Spending
related to Wireless projects accounted for $15.7 million in the first nine
months of 2009, while Wireline projects accounted for $6.4 million, Cable TV for
$11.1 million, and other projects $4.4 million. The Company expects
the pace of spending to begin slowing in coming quarters, initially in the
Wireless segment and then in the Cable TV segment.
The
Company believes that cash on hand, cash flow from operations and borrowings
expected to be available under the Company’s existing credit facilities will
provide sufficient cash to enable the Company to fund its planned capital
expenditures, make scheduled principal and interest payments, meet its other
cash requirements and maintain compliance with the terms of its financing
agreements for at least the next 12 months. Thereafter, capital expenditures
will likely continue to be required to provide increased capacity to meet the
Company’s expected growth in demand for its products and services. The actual
amount and timing of the Company’s future capital requirements may differ
materially from the Company’s estimate depending on the demand for its products
and new market developments and opportunities. The Company currently
expects that it will fund its future capital expenditures primarily with cash on
hand and from operations, although there are events outside the control of the
Company that could have an adverse impact on cash flows from
operations.
These
events include, but are not limited to: changes in overall economic
conditions, regulatory requirements, changes in technologies, availability of
labor resources and capital, changes in the Company’s relationship with Sprint
Nextel, and other conditions. The Wireless segment’s operations are
dependent upon Sprint Nextel’s ability to execute certain functions such as
billing, customer care, and collections; the subsidiary’s ability to develop and
implement successful marketing programs and new products and services; and the
subsidiary’s ability to effectively and economically manage other operating
activities under the Company's agreements with Sprint
Nextel. The Company's ability to attract and maintain a
sufficient customer base is also critical to its ability to maintain a positive
cash flow from operations. The foregoing events individually or
collectively could affect the Company’s results.
Recently
Issued Accounting Standards
There
were no recently issued accounting standards, not adopted by the Company as of
September 30, 2009, that are expected to have a material impact on the Company’s
results of operations or financial condition.
|
QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET
RISK
|
The
Company’s market risks relate primarily to changes in interest rates on
instruments held for other than trading purposes. The Company’s
interest rate risk generally involves three components. The first
component is outstanding debt with variable rates. As of September
30, 2009, the Company had $14.7 million of variable rate debt outstanding,
bearing interest at a rate of 2.85% as determined by CoBank on a weekly basis.
An increase in market interest rates of 1.00% would add approximately $147
thousand to annual interest expense; if and when fully drawn, a 1.00% increase
in market interest rates would add $520 thousand to annual interest
expense. The remaining approximately $14.4 million of the Company’s
outstanding debt has fixed rates through maturity. Due to the
relatively short time frame to maturity of this fixed rate debt, market value
approximates carrying value of the fixed rate debt.
The
second component of interest rate risk consists of temporary excess cash, which
can be invested in various short-term investment vehicles such as overnight
repurchase agreements and Treasury bills with a maturity of less than 90
days. The cash is currently invested in an institutional cash
management fund that has limited interest rate risk. Management
continues to evaluate the most beneficial use of these funds.
The third
component of interest rate risk is marked increases in interest rates that may
adversely affect the rate at which the Company may borrow funds for growth in
the future. Management does not believe that this risk is currently
significant because the Company’s existing sources of liquidity are adequate to
provide cash for operations, payment of debt and near-term capital
projects.
Management
does not view market risk as having a significant impact on the Company's
results of operations, although future results could be adversely affected if
interest rates were to increase significantly for an extended period and the
Company were to require additional external financing. The Company’s
investments in publicly traded stock and bond mutual funds under the rabbi
trust, which are subject to market risks and could experience significant swings
in market values, are offset by corresponding changes in the liabilities owed to
participants in the Executive Supplemental Retirement Plan. General
economic conditions affected by regulatory changes, competition or other
external influences may pose a higher risk to the Company’s overall
results.
As of
September 30, 2009, the Company has $6.8 million invested in privately held
companies directly or through investments with portfolio
managers. Most of the companies are in an early stage of development
and significant increases in interest rates could have an adverse impact on
their results, ability to raise capital and viability. The Company’s
market risk is limited to the funds previously invested and an additional $0.2
million committed under contracts the Company has signed with portfolio
managers.
Evaluation
of Disclosure Controls and Procedures
Management,
with the participation of our President and Chief Executive Officer, who is the
principal executive officer, and the Vice President - Finance and Chief
Financial Officer, who is the 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. The Company's
principal executive officer and its principal financial officer concluded that
the Company's disclosure controls and procedures were effective as of September
30, 2009.
Changes
in Internal Control Over Financial Reporting
During
the third quarter of 2009, there were no changes in the Company's internal
control over financial reporting that have materially affected, or are
reasonably likely to materially affect, its internal control over financial
reporting.
Other
Matters Relating to Internal Control Over Financial Reporting
Under the
Company’s agreements with Sprint Nextel, Sprint Nextel provides the Company with
billing, collections, customer care, certain network operations and other back
office services for the PCS operation. As a result, Sprint Nextel remits to the
Company approximately 63% of the Company’s total operating
revenues. Due to this relationship, the Company necessarily relies on
Sprint Nextel to provide accurate, timely and sufficient data and information to
properly record the Company’s revenues, and accounts receivable, which underlie
a substantial portion of the Company’s periodic financial statements and other
financial disclosures.
Information
provided by Sprint Nextel includes reports regarding the subscriber accounts
receivable in the Company’s markets. Sprint Nextel provides the
Company with monthly accounts receivable, billing and cash receipts information
on a market level, rather than a subscriber level. The Company
reviews these various reports to identify discrepancies or
errors. Under the Company’s agreements with Sprint Nextel, the
Company is entitled to only a portion of the receipts, net of items such as
taxes, government surcharges, certain allocable write-offs and the 16.8% of
revenue retained by Sprint Nextel. Because of the Company’s reliance
on Sprint Nextel for financial information, the Company must depend on Sprint
Nextel to design adequate internal controls with respect to the processes
established to provide this data and information to the Company and Sprint
Nextel’s other Sprint PCS affiliate network partners. To address this
issue, Sprint Nextel engages an independent registered public accounting firm 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 the Company on an
annual basis and covers a nine-month period. The most recent report covers the
period from January 1, 2008 to September 30, 2008. The most recent
report indicated there were no material issues which would adversely affect the
information used to support the recording of the revenues provided by Sprint
Nextel related to the Company’s relationship with them.
PART II.
|
OTHER
INFORMATION
|
As
previously discussed, our actual results could differ materially from our
forward looking statements. There have been no material changes in the risk
factors from those described in Part 1, Item 1A of the
Company’s Annual Report on Form 10-K for the fiscal year ended December 31,
2008.
|
Unregistered Sales of Equity
Securities and Use of
Proceeds
|
The
Company maintains a dividend reinvestment plan (the “DRIP”) for the benefit of
its shareholders. When shareholders remove shares from the DRIP, the
Company issues a certificate for whole shares, pays out cash for any fractional
shares, and cancels the fractional shares purchased. The following
table provides information about the Company’s repurchases of fractional shares
during the three months ended September 30, 2009:
|
|
Number
of Shares
Purchased
|
|
|
Average
Price Paid per Share
|
|
July
1 to July 31
|
|
|
- |
|
|
$ |
20.08 |
|
August
1 to August 31
|
|
|
- |
|
|
|
- |
|
September
1 to September 30
|
|
|
- |
|
|
$ |
17.37 |
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1 |
|
|
$ |
18.66 |
|
(a) The
following exhibits are filed with this Quarterly Report on Form
10-Q:
31.1
|
Certification
of President and Chief Executive Officer pursuant to Rule 13a-14(a) under
the Securities Exchange Act of
1934.
|
31.2
|
Certification
of Vice President - Finance and Chief Financial Officer 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.
|
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)
|
|
|
|
|
|
|
|
/s/Adele M. Skolits
|
|
Adele
M. Skolits
|
|
Vice
President - Finance and Chief Financial Officer
|
|
Date:
November 5, 2009
|
|
Exhibit No.
|
Exhibit
|
|
|
|
|
|
Certification
of President and Chief Executive Officer pursuant to Rule 13a-14(a) under
the Securities Exchange Act of 1934.
|
|
|
|
|
|
Certification
of Vice President - Finance and Chief Financial Officer pursuant to Rule
13a-14(a) under the Securities Exchange Act of 1934.
|
|
|
|
|
|
Certifications
pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and
18 U.S.C. 1350.
|