Shenandoah Telecommunications Company Reports Fourth Quarter and
Full Year 2004 Financial Results EDINBURG, Va., Feb. 23
/PRNewswire-FirstCall/ -- Shenandoah Telecommunications Company
announced financial results for the fourth quarter of 2004 and year
end results as of December 31, 2004. Income from continuing
operations for the fourth quarter decreased to $1.9 million from
$4.1 million in the same period in 2003 primarily due to favorable
adjustments totaling $2.5 million to management's PCS estimates in
2003 and an increase in 2004 depreciation expense of $0.5 million
resulting from a change in estimated lives of certain assets.
Income from continuing operations for the year ended December 31,
2004 was $10.2 million compared to $9.8 million for 2003. Total
fourth quarter revenues were $32.3 million, a growth of 14.4% from
the same quarter the previous year, including a 14.5% increase in
wireless revenues and $0.5 million wireline revenue contribution
from one month of operations of NTC Communications, purchased
December 1, 2004. Total 2004 revenues grew by 14.5%, including a
19.5% increase in wireless revenues, to a total of $121.0 million.
As previously announced, the Company sold its interest in the
Virginia 10 RSA Limited Partnership cellular operation on February
28, 2003, and classified its prior cellular operation as
discontinued, as is further discussed below. Net income including
discontinued operations for the twelve months ended December 31,
2004 was $10.2 million compared to $32.1 million in 2003. Fourth
Quarter Highlights For the quarter ended December 31, 2004, income
from continuing operations was $1.9 million, compared to $4.1
million in fourth quarter 2003. The Company's total revenues for
the fourth quarter 2004 were $32.3 million, compared to $28.2
million in the same quarter 2003, an increase of $4.1 million or
14.4%. The Company's revenue growth was driven by increases in its
PCS business and the inclusion of the December results of NTC
Communications. Operating income for the quarter was $3.8 million,
a decrease of $3.3 million from fourth quarter 2003. The decrease
in operating income is primarily due to favorable adjustments to
management's PCS estimates recorded in the fourth quarter of 2003
totaling $2.5 million. These adjustments reflected the settlement
of disputes with Sprint and included recording additional PCS
revenues and reductions in expenses related to previous periods of
operations. Additionally, operating expenses in 2004 increased due
to a change in estimated lives of certain assets increasing
depreciation expense by $0.5 million, costs related to compliance
of Sarbanes-Oxley of $0.3 million and operating losses for NTC of
$0.2 million. Annual Highlights For the year ended December 31,
2004, income from continuing operations was $10.2 million or $1.34
per diluted share, compared to $9.8 million or $1.28 per diluted
share in 2003. The Company's total revenues for 2004 were $121.0
million, compared to $105.6 million in 2003, an increase of $15.4
million or 14.5%. The Company's revenue growth was primarily driven
by its PCS business. Operating income for 2004 was $19.6 million,
an increase of $1.0 million or 5.4% from 2003. The increase is
primarily a result of continued growth in PCS operations offset by
the adjustments recorded in the fourth quarter 2003. President and
CEO, Christopher E. French commented, "We are very pleased with our
financial results for 2004. We were able to continue delivering
profitable growth despite incurring significant costs related to
new Sarbanes- Oxley requirements. The closing of the acquisition of
NTC Communications will also provide us with a new source of growth
as we further expand our services throughout the southeast United
States." PCS Operations The Company continued to experience strong
growth in wireless revenues as a PCS Affiliate of Sprint,
increasing its PCS subsidiary revenue by $2.7 million to a total of
$21.2 million for fourth quarter 2004 and increasing by $13.4
million to a total of $80.2 million for 2004, compared to the same
periods last year. The Company's Sprint retail wireless subscriber
count increased during the fourth quarter by 4,560, to
approximately 102,600 subscribers. Although not included in the
Company's subscriber count, wholesale-prepaid subscribers increased
by 7,734 in the fourth quarter. The Company ended 2004 with 27,300
wholesale subscribers. The Company's fourth quarter churn was 2.22%
and 2.15% for all of 2004, comparable to the same periods last
year. The PCS net income was $0.2 million in fourth quarter 2004
compared to a net income of $1.8 million in fourth quarter 2003. As
stated previously, the 2003 fourth quarter included adjustments of
prior period estimates. The PCS net income of $2.9 million for the
year ended December 31, 2004, is a $2.6 million improvement over
the same period in 2003. Prior period and settlement adjustments
with Sprint totaled $1.1 million in 2003. Telephone Operations The
local telephone operations net income for 2004 was $6.9 million, a
decrease of $0.2 million from 2003. The Company had 24,691 access
lines at December 31, 2004, a decrease of 186 from the previous
year-end. Other Operations The Company ended the year with
approximately 17,700 Internet customers of which 2,646 access the
service through Digital Subscriber Lines (DSL). This represents a
104% increase in DSL customers, but a decrease of 1,000 overall
Internet customers as of December 31, 2004. Dial-up customers,
primarily outside of the Company's DSL footprint continue to
migrate to high-speed alternatives. DSL service is available to
more than 97.0% of the subscribers of the Company's local telephone
serving area. As previously reported, on December 1, 2004, the
Company purchased the 83.9% of NTC Communications that it did not
previously own. During December 2004, NTC generated an operating
loss of $0.1 million after taxes, which has been included in the
consolidated results. Results from 2004 included $1.1 million of
revenue from the Company's contract with the Virginia Department of
Transportation for the 511Virginia travel information service. As
previously reported, this contract terminated on February 13, 2005.
External Investments In the quarter ended December 31, 2004, the
Company recorded a loss of $0.1 million on external investments
compared to a loss of $0.2 million in 2003. A loss of $0.2 million
was recorded for the year 2004, compared to a loss of $0.4 million
for the year 2003. At the end of the quarter, the Company's
external investments totaled $7.3 million. Discontinued Operations
and Consolidated Results As previously disclosed, the Company
completed the sale of its general partner interest in the Virginia
10 RSA Limited Partnership at the close of business on February 28,
2003. That transaction resulted in a $21.3 million after-tax gain,
and the Company received $33.7 million in cash and $5.0 million in
escrow, subject to certain post-closing adjustments. The Company
has classified its prior cellular operation as discontinued
operations. Net income for discontinued operations in 2003 was
$22.4 million or $2.94 per diluted share. Incorporating these
results with those of continuing operations as described above in
Annual Highlights, 2003 consolidated net income was $32.1 million
or $4.22 per share on a diluted basis. The Company's 2004 capital
expenditures were $33.8 million and it had cash and cash
equivalents of $14.2 million as of year-end. The Company's
debt/equity ratio at December 31, 2004 was 0.46; and debt as a
percent of total assets was 25.0%. About Shenandoah
Telecommunications Shenandoah Telecommunications Company is a
holding company that provides a broad range of telecommunications
services through its operating subsidiaries. The Company is traded
on the NASDAQ National Market under the symbol "SHEN." The
Company's operating subsidiaries provide local and long distance
telephone, Internet and data services, cable television, wireless
voice and data services, alarm monitoring, and telecommunications
equipment, along with many other associated solutions in the
Mid-Atlantic and Southeastern United States. This release contains
forward-looking statements that are subject to various risks and
uncertainties. The Company's actual results could differ materially
from those anticipated in these forward-looking statements as a
result of unforeseen factors. A discussion of factors that may
cause actual results to differ from management's projections,
forecasts, estimates and expectations is available in the Company
filings with the SEC. Those factors may include changes in general
economic conditions, increases in costs and other competitive
factors. SHENANDOAH TELECOMMUNICATIONS COMPANY SUMMARY FINANCIAL
INFORMATION (unaudited) (In thousands, except per share amounts)
Condensed Balance Sheets December 31, December 31, 2004 2003 Cash
and cash equivalents $14,172 $28,696 Other current assets 20,345
12,267 Total securities and investments 7,250 7,467 Property, plant
and equipment 230,323 199,692 Less accumulated depreciation
(74,071) (72,006) Net property, plant and equipment 156,252 127,686
Other assets, net 13,228 9,248 Total assets $211,247 $185,364
Current liabilities, exclusive of current maturities of $ 4,372 and
$4,230, respectively $17,474 $11,566 Long and short-term debt
52,830 43,346 Total other liabilities 27,146 24,244 Total
shareholders' equity 113,797 106,208 Total liabilities and
shareholders' equity $211,247 $185,364 SHENANDOAH
TELECOMMUNICATIONS COMPANY SUMMARY FINANCIAL INFORMATION
(unaudited) Condensed Statements of Income (In thousands, except
per share Three months Twelve months amounts) ended ended December
31, December 31, 2004 2003 2004 2003 Operating Revenues -- Wireless
$22,015 $19,217 $83,238 $69,629 -- Wireline 8,247 7,300 30,684
29,022 -- Other 2,038 1,726 7,052 6,966 Total operating revenue
32,300 28,243 120,974 105,617 Cost of goods and services 4,926
4,853 15,793 13,386 Network operating costs 9,572 7,927 36,220
31,666 Depreciation and amortization 5,573 4,303 19,020 16,631
Selling, general and administrative 8,385 4,061 30,316 25,306 Total
operating expenses 28,456 21,144 101,349 86,989 Operating income
3,844 7,099 19,625 18,628 Interest expense (802) (825) (3,129)
(3,510) Other income (expense) 41 (227) (175) (53) Income tax
provision (1,144) (1,978) (6,078) (5,304) Income from continuing
operations 1,939 4,069 10,243 9,761 Discontinued operations, net of
income taxes - (216) - 22,389 Cumulative effect of a change in
accounting, net of income taxes - - - (76) Net income $1,939 $3,853
$10,243 $32,074 Net earnings per share, basic Continuing operations
$0.25 $0.54 $1.35 $1.29 Discontinued operations, net of income
taxes - (0.03) - 2.95 Cumulative effect of a change in accounting,
net of taxes - - - (0.01) Total $0.25 $0.51 $1.35 $4.23 Net
earnings per share, diluted Continuing operations $0.25 $0.53 $1.34
$1.28 Discontinued operations, net of income taxes - (0.03) - 2.94
Cumulative effect of a change in accounting, net of taxes - - -
(0.01) Total $0.25 $0.50 $1.34 $4.22 DATASOURCE: Shenandoah
Telecommunications Company CONTACT: Earle A. MacKenzie of
Shenandoah Telecommunications Company, +1-540-984-5192 Web site:
http://www.shentel.com/
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