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
<PAGE>
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.
<PAGE>
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.<PAGE>
<TABLE>
SHENANDOAH TELECOMMUNICATIONS COMPANY
AND SUBSIDIARY COMPANIES
PART I, FINANCIAL INFORMATION
ITEM I, FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION> Three months ended Nine months ended
September 30 September 30
1995 1994 1995 1994
<S>
OPERATING REVENUES
Telephone Revenues <C> <C> <C> <C>
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. <PAGE>
</TABLE>
<TABLE> SHENANDOAH TELECOMMUNICATIONS COMPANY
AND SUBSIDIARY COMPANIES
PART I, FINANCIAL INFORMATION
ITEM I, FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION> Three months ended Nine months ended
September 30 September 30
1995 1994 1995 1994
<S>
OPERATING EXPENSES <C> <C> <C> <C>
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. <PAGE>
</TABLE>
<TABLE> SHENANDOAH TELECOMMUNICATIONS COMPANY
AND SUBSIDIARY COMPANIES
PART I, FINANCIAL INFORMATION
ITEM I, FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION> Three months ended Nine months ended
September 30 September 30
1995 1994 1995 1994
<S> <C> <C> <C> <C>
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.
<PAGE>
</TABLE>
<TABLE> SHENANDOAH TELECOMMUNICATIONS COMPANY
AND SUBSIDIARY COMPANIES
PART I, FINANCIAL INFORMATION
ITEM I, FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF CASH FLOW
(UNAUDITED)
<CAPTION> NINE MONTHS ENDED SEPTEMBER 30
1995 1994
<S> ---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES <C> <C>
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. <PAGE>
</TABLE>
<TABLE> SHENANDOAH TELECOMMUNICATIONS COMPANY
AND SUBSIDIARY COMPANIES
PART I, FINANCIAL INFORMATION
ITEM I, FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF CASH FLOW
(UNAUDITED)
<CAPTION> NINE MONTHS ENDED SEPTEMBER 30
1995 1994
---------- ----------
<S>
CASH FLOWS FROM INVESTING ACTIVITIES <C> <C>
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. <PAGE>
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.
<PAGE>
</TABLE>
<TABLE> 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:
<C> 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
<S> 1995 1994 1995 1994 1995-94 1994-93 1995-94 1994-93
OPERATING REVENUES
Telephone Revenues <C> <C> <C> <C> <C> <C> <C> <C>
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%
<PAGE>
</TABLE>
<TABLE> SHENANDOAH TELECOMMUNICATIONS COMPANY
AND SUBSIDIARY COMPANIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
<CAPTION> 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
<S> 1995 1994 1995 1994 1995-94 1994-93 1995-94 1994-93
OPERATING EXPENSES
Cost of Products and <C> <C> <C> <C> <C> <C> <C> <C>
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%
<PAGE>
</TABLE>
<TABLE> SHENANDOAH TELECOMMUNICATIONS COMPANY
AND SUBSIDIARY COMPANIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
<CAPTION> 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
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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%
====== ===== ===== ===== ===== ===== ===== ======
<PAGE>
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. <PAGE>
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. <PAGE>
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. <PAGE>
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. <PAGE>
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
<PAGE>
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
<PAGE>
</TABLE>
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