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 June 30, 1995 Commission File Number 0-9881
SHENANDOAH TELECOMMUNICATIONS COMPANY
(Exact name of registrant as specified in its charter)
Virginia 54-1162807
(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 August 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
June 30, 1995 December 31, 1994
CURRENT ASSETS
Cash & Cash Equivalents $4,822,402 $6,270,849
Certificates of Deposit 1,761,317 930,911
Investments Held to Maturity 3,266,265 3,254,460
Accounts Receivable 2,391,088 2,880,428
Leases Receivable (Net) 81,140 81,140
Materials 1,776,483 1,511,006
Prepaid and Other
Current Assets 178,432 236,191
Total Current Assets $14,277,127 $15,164,985
NONCURRENT ASSETS
Other Securities and
Investments $4,244,672 $4,615,689
Securities Available for Sale 1,456,226 0
Investments Held to Maturity 2,598,656 499,687
Investment in Direct
Financing Leases 278,712 287,584
--------- ---------
Total Noncurrent Assets $8,578,266 $5,402,960
--------- ---------
PLANT, PROPERTY AND EQUIPMENT
Plant in Service $50,607,330 $49,102,832
Plant Under Construction 397,969 248,717
Less Accumulated Depreciation 17,887,210 17,455,344
---------- ---------
Net Plant, Property,
and Equipment $33,118,089 $31,896,205
---------- ----------
TOTAL ASSETS $55,973,482 $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
------------------------------------
June 30, 1995 December 31, 1994
CURRENT LIABILITIES
Current Maturities of
Long-Term Debt $423,329 $423,329
Accounts Payable 465,946 307,691
Advance Billing 350,752 526,105
Customer Deposits 113,200 137,793
Other Current Liabilities 816,340 910,968
Income Taxes Payable 164,474 26,618
Other Accrued Taxes 176,509 53,739
Total Current Liabilities $2,510,550 $2,386,243
LONG TERM DEBT, LESS
CURRENT MATURITIES $9,306,505 $9,517,880
---------- ----------
OTHER LIABILITIES AND
DEFERRED CREDITS
Deferred Investment
Tax Credits $405,508 $442,844
Deferred Income Taxes 3,703,278 3,535,014
Pension and Other 635,017 745,935
--------- ---------
Total Other Liabilities
and Deferred Credits $4,743,803 $4,723,793
--------- ---------
Minority interests $1,474,473 $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 33,194,790 29,876,064
Unrealized Gain on
Securities Held for Sale 2,684 0
---------- ----------
Total Stockholders' Equity $37,938,151 $34,616,741
---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $55,973,482 $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 Six months ended
June 30 June 30
1995 1994 1995 1994
<S> --------- --------- ---------- ----------
OPERATING REVENUES
Telephone Revenues <C> <C> <C> <C>
Local Service $764,253 $721,425 $1,516,093 $1,394,463
Access 1,607,465 1,552,464 3,223,450 3,275,549
Toll 3,314 (20,151) 6,788 (17,549)
Miscellaneous:
Directory 271,595 250,753 564,710 515,040
Facility Leases 425,262 377,461 843,765 603,293
Billing & Collection 73,275 108,787 179,344 222,159
Other Miscellaneous 31,280 51,551 58,791 107,306
--------- --------- --------- ---------
Total Telephone Revenues 3,176,444 3,042,290 6,392,941 6,100,261
Cable Television Revenues 216,922 174,581 431,564 343,320
ShenTel Service Revenues 266,443 470,060 683,881 751,705
Leasing Revenues 6,438 5,456 12,531 9,511
Mobile Revenues 1,239,610 1,050,287 2,291,475 1,956,114
Long Distance Revenues 273,981 274,572 562,589 567,825
Network Revenues 123,842 80,197 247,685 160,395
--------- --------- --------- ---------
Total Revenues and Sales 5,303,680 5,097,443 10,622,666 9,889,131
--------- --------- ---------- ---------
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 Six months ended
June 30 June 30
1995 1994 1995 1994
--------- --------- ---------- ----------
<S>
OPERATING EXPENSES
Cost of Products and <C> <C> <C> <C>
Services Sold $ 115,315 $ 242,496 $ 327,275 $ 334,141
Line Costs 115,745 125,872 247,009 257,455
Plant Specific 484,915 361,277 919,117 786,753
Plant Non-Specific:
Network & Other 484,608 395,315 895,158 829,038
Depreciation and
Amortization 707,211 672,069 1,390,681 1,326,771
Customer Operations 571,742 547,348 1,127,630 1,127,599
Corporate Operations 466,496 462,210 934,543 906,464
Other Operating Income
& Expense 46,565 37,824 92,016 73,285
Taxes other than income 81,835 89,484 167,179 164,553
--------- --------- --------- ---------
Total Operating Expenses 3,074,432 2,933,895 6,100,608 5,806,059
--------- --------- --------- ---------
Operating income 2,229,248 2,163,548 4,522,058 4,083,072
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 Six months ended
June 30 June 30
1995 1994 1995 1994
--------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Gain on Sale of Investment $ 0 $ 0 $ 872,125 $ 0
Non-operating income
less expenses 251,845 38,846 438,657 45,416
Interest expense 171,659 149,503 350,692 322,263
--------- -------- --------- ---------
Income before taxes 2,309,434 2,052,891 5,482,148 3,806,225
Provision for income taxes 779,998 700,826 1,908,442 1,305,840
--------- --------- --------- ---------
Net income before
minority interest 1,529,436 1,352,065 3,573,706 2,500,385
Minority interest (145,144) (102,920) (254,980) (161,195)
Net Income $1,384,292 $1,249,145 $3,318,726 $2,339,190
========= ========= ========= =========
EARNINGS PER SHARE
Weighted Average Common
Shares Outstanding 3,760,760 3,760,760 3,760,760 3,760,760
========= ========= ========= =========
Net Earnings per Share $0.37 $0.33 $0.88 $0.62
==== ==== ==== ====
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> SIX MONTHS ENDED JUNE 30
1995 1994
<S>
CASH FLOWS FROM OPERATING ACTIVITIES <C> <C>
Net Income $3,318,726 $2,339,190
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and Amortization 1,390,681 1,326,771
Deferred taxes 185,020 52,074
Gain on Sale of Equity investment (872,125) 0
Investment (Gains)/Losses (119,532) 86,248
Minority Share of Income 254,980 161,195
Payment to Pension Fund (176,186) 0
Other 122,652 135,175
Decrease (increase) in
Accounts receivable 100,047 (157,741)
Materials and Supplies (265,477) 145,664
Increase (decrease) in
Accounts Payable 123,812 (158,933)
Income taxes payable 137,856 (409,383)
Other current liabilities (171,804) (121,482)
----------- ---------
Net cash provided by operating activities 4,028,650 3,398,778
----------- ---------
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)
SIX MONTHS ENDED JUNE 30
1995 1994
<S>
CASH FLOWS FROM INVESTING ACTIVITIES <C> <C>
Purchase of Property and Equipment (2,612,565) (1,684,287)
Investment in Direct Financing Leases (36,184) (179,616)
Payments Received on Direct Financing Leases 45,056 39,224
Purchase of Investments Securities (4,880,371) (2,023,463)
Sale of Investments Securities 1,843,342 869,756
Proceeds from matured note receivable 375,000 0
---------- ----------
Net cash provided by investing activities (5,265,722) (2,978,386)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Notes Payable 0 0
Payment of notes payable (211,375) (1,064,018)
---------- ----------
Net cash provided by financing activities (211,375) (1,064,018)
---------- ----------
NET INCREASE / (DECREASE) IN CASH (1,448,447) (643,626)
---------- ----------
CASH AND CASH EQUIVALENTS:
Beginning 6,270,849 5,695,891
---------- ----------
Ending $4,822,402 $5,052,265
========== ==========
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
June 30, 1995 and the results of operations and cash flows for the six month
periods ended June 30, 1994 and 1993.
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 period ended June 30, 1995 are not
necessarily indicative of the results to be expected for the full year.
<PAGE>
SHENANDOAH TELECOMMUNICATIONS COMPANY
AND SUBSIDIARY COMPANIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Summary
The following tables set forth, for the periods indicated, the percentages which
certain items reflected in the financial data bear to total operating revenues and
the percentage increase of such items as compared to the indicated prior period:
RELATIONSHIP TO PERIOD TO PERIOD
TOTAL OPERATING REVENUES INCREASE OR DECREASE
Three months Six months Three months Six months
ended June 30 ended June 30 ended June 30 ended June 30
1995 1994 1995 1994 1995-94 1994-93 1995-94 1994-93
OPERATING REVENUES
Telephone Revenues
Local Service 14.4% 14.2% 14.3% 14.2% 5.9% 10.4% 8.7% 7.5%
Access 30.3% 30.5% 30.3% 33.1% 3.5% 0.4% -1.6% 7.7%
Toll 0.1% -0.4% 0.1% -0.2% -116.4% -452.1% -138.7% -1035.4%
Miscellaneous:
Directory 5.1% 4.9% 5.3% 5.2% 8.3% -4.1% 9.6% 3.5%
Facility Leases 8.0% 7.4% 7.9% 6.1% 12.7% 48.5% 39.9% 13.6%
Billing & Collection 1.4% 2.1% 1.7% 2.2% -32.6% -0.9% -19.3% 2.8%
Other Miscellaneous 0.6% 1.0% 0.6% 1.1% -39.3% 82.1% -45.2% 77.9%
Total Telephone Revenues 59.9% 59.7% 60.2% 61.7% 4.4% 6.4% 4.8% 8.0%
Cable Television Revenues 4.1% 3.4% 4.1% 3.5% 24.3% -3.9% 25.7% -2.7%
ShenTel Service Revenues 5.0% 9.2% 6.4% 7.6% -43.3% 52.1% -9.0% 44.5%
Leasing Revenues 0.1% 0.1% 0.1% 0.1% 18.0% -86.9% 31.8% -88.9%
Mobile Revenues 23.4% 20.6% 21.6% 19.8% 18.0% 29.0% 17.1% 39.6%
Long Distance Revenues 5.2% 5.4% 5.3% 5.7% -0.2% -14.1% -0.9% -12.0%
Network Revenues 2.3% 1.6% 2.3% 1.6% 54.4% -24.0% 54.4% -20.1%
----- ----- ----- ----- ----- ----- ----- -----
Total Revenues and Sales 100.0% 100.0% 100.0% 100.0% 4.0% 10.1% 7.4% 11.7%
<PAGE>
SHENANDOAH TELECOMMUNICATIONS COMPANY
AND SUBSIDIARY COMPANIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RELATIONSHIP TO PERIOD TO PERIOD
TOTAL OPERATING REVENUES INCREASE OR DECREASE
Three months Six months Three months Six months
ended June 30 ended June 30 ended June 30 ended June 30
1995 1994 1995 1994 1995-94 1994-93 1995-94 1994-93
OPERATING EXPENSES
Cost of Products and
Services Sold 2.2% 4.8% 3.1% 3.4% -52.4% -1.7% -2.1% 6.1%
Line Costs 2.2% 2.5% 2.3% 2.6% -8.0% -7.7% -4.1% -0.9%
Plant Specific 9.1% 7.1% 8.7% 8.0% 34.2% -14.2% 16.8% -6.0%
Plant Non-Specific:
Network & Other 9.1% 7.8% 8.4% 8.4% 22.6% -3.8% 8.0% 8.4%
Depreciation and
Amortization 13.3% 13.2% 13.1% 13.4% 5.2% 8.2% 4.8% 6.8%
Customer Operations 10.8% 10.7% 10.6% 11.4% 4.5% 4.8% 0.0% 6.9%
Corporate Operations 8.8% 9.1% 8.8% 9.2% 0.9% 3.9% 3.1% 0.0%
Other Operating Income
& Expense 0.9% 0.7% 0.9% 0.7% 23.1% 10.6% 25.6% 8.2%
Taxes other than income 1.5% 1.8% 1.6% 1.7% -8.5% 41.2% 1.6% 33.7%
----- ----- ---- ----- ----- ----- ----- -----
Total Operating Expenses 57.9% 57.7% 57.5% 58.8% 4.8% 1.1% 5.1% 4.2%
Operating income 42.0% 42.4% 42.6% 41.3% 3.0% 25.0% 10.8% 24.4%
Gain on Sale of Investment 0.0% 0.0% 8.2% 0.0% N/A N/A N/A N/A
Non-operating income
less expenses 4.7% 0.8% 4.1% 0.5% 548.3% 127.3% 865.9% 144.0%
Interest expense 3.2% 2.9% 3.3% 3.3% 14.8% -1.1% 8.8% 6.8%
----- ----- ----- ----- ----- ----- ----- -----
Income before taxes 43.5% 40.3% 51.6% 38.5% 12.5% 42.9% 44.0% 32.3%
<PAGE>
SHENANDOAH TELECOMMUNICATIONS COMPANY
AND SUBSIDIARY COMPANIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RELATIONSHIP TO PERIOD TO PERIOD
TOTAL OPERATING REVENUES INCREASE OR DECREASE
Three months Six months Three months Six months
ended June 30 ended June 30 ended June 30 ended June 30
1995 1994 1995 1994 1995-94 1994-93 1995-94 1994-93
Provision for income taxes 14.7% 13.7% 18.0% 13.2% 11.3% 40.5% 46.1% 29.7%
----- ----- ----- ----- ----- ----- ----- -----
Net income before minority
interest 28.8% 26.5% 33.6% 25.3% 13.1% 44.1% 42.9% 33.7%
Minority interest -2.7% -2.0% -2.4% -1.6% 41.0% 944.6% 58.2% 4333.3%
Net Income 26.1% 24.5% 31.2% 23.7% 10.8% 34.6% 41.9% 25.3%
===== ===== ===== ===== ===== ===== ===== =====
<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 seven wholly-
owned subsidiaries.
The regulated local exchange telephone company is the largest
subsidiary, accounting for over 60.0% of revenue and 77.6% 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.
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 six months of 1995 increased
4.8% compared to the same period in 1994. Minutes of use during
the second quarter were 7.0% higher than the second 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 17.6% in the six
months of 1995 compared to the same period in 1994. Cellular
revenues increased 18.3% over the second quarter of 1994. Year-to-
date and for the second quarter of 1995, net additions of customers
were approximately the same as net additions for the same period 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 second quarter and year-to-date is due primarily to a
decrease in equipment sales compared to 1994. These sales are
down $118,792 or 28.6% compared to the first six 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 beginning of a new service
in 1995 providing local Internet access to regional
communities. This new service provided $33,398 of revenue
during the first six months of 1995.
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
6.8% from June 30, 1994. The increase in the second quarter of
1995 was 2.4% compared to a 3.4% increase in the second 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. Several
regulatory approvals must be secured 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 42.9% year-to-date
and 20.0% during the second quarter compared with the same
periods in 1994. The increase is due to new circuits being
added.
For the first half and the second quarter of 1995, operating
expenses increased 5.1% and 4.8% 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 plant specific category costs are for maintenance of the
company's plant in service. The increases in this category
were caused primarily by maintenance to cable in the CATV and
Telephone networks. The cable expenses increased $89,047 or
28.1% year-to-date and $15,211.37 or 8.8% compared to the
second quarter of 1994.
The increases in the network and other category are due
primarily to increases in facilities costs for our Cellular
operation and the new Internet local access operation. In the
second quarter of 1995 the Company added several leased
circuits to its Cellular network. These circuits will replace
several others that were already in place. This caused a
$25,481 or 10.6% increase in Cellular line costs for the second
quarter compared to the same period in 1994. The original
circuits will be taken out in the third quarter.
The Internet facilities costs year-to-date are $49,243 and were
$36,766 for the second quarter of 1995.
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 approximately $156,000.<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. Advances on this note may be taken until
February 1996. The Company expects to receive an additional
advance during the third quarter of 1995. As of December 31,
1994, the Company has received advances in the amount of
$3,386,000. 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). The service will be provided under a license
held by an unaffiliated company. This will require significant
investment in new plant and equipment over the next several
years. It is estimated that up to 50.0% of this amount may be
financed with loans from external services.
Due to the competition coming from new sources, management is
unable to predict the potential impact on the Company's cash
flow.
The Company has no material contractual commitments for capital
expenditures, however, the Company's Board of Directors has
approved a construction budget of approximately $14,000,000 in
1995. This budget includes the expenditures for PCS discussed
above. The remaining amounts are primarily for telephone
central office equipment and fiber optic cable facilities. The
Company expects to finance these expenditures through
internally generated cash flows as well as additional advances
from the RTB note.<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)
August 14, 1995 CHRISTOPHER E. FRENCH
Christopher E. French
President
August 14, 1995 LAURENCE F. PAXTON
Laurence F. Paxton
Vice President - Finance
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
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