[LOGO] SHENTEL
SHENANDOAH
TELECOMMUNICATIONS
COMPANY
PROSPECTUS
DIVIDEND
REINVESTMENT
PLAN
PROSPECTUS SUPPLEMENT Filing made pursuant to Rule 424(b)(3)
(To Prospectus dated March 11, 1999) Registration Statement No. 333-74297
SHENANDOAH TELECOMMUNICATIONS COMPANY
500 Shentel Way
Post Office Box 459
Edinburg, Virginia 22824
(540) 984-4141
DIVIDEND REINVESTMENT PLAN
This Prospectus describes Shenandoah Telecommunications Company's Dividend
Reinvestment Plan (the "Plan"), which was adopted by the Board of Directors of
the Company on February 8, 1999 and amended by the Board on July 18, 2005. The
Plan provides shareholders of the Company with a simple and convenient method of
investing cash dividends in additional shares of Common Stock at a cost that may
represent a savings over that available in normal market purchases.
The price of the Company's Common Stock purchased under the Plan will be
calculated as described in Question 9 on page 3 of this Prospectus.
We have registered a total of 300,000 shares for sale under the Plan.
You should keep this Prospectus for future reference.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON
THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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The date of this prospectus supplement is September 9, 2005
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Page
TABLE OF CONTENTS
DESCRIPTION OF THE COMPANY'S DIVIDEND REINVESTMENT PLAN.......................2
Purpose ...............................................................2
Advantages..............................................................2
Administration..........................................................2
Participation...........................................................2
Purchases...............................................................3
Costs...................................................................4
Reports to Participants.................................................4
Certificates for Shares.................................................4
Stock Dividends; Stock Splits...........................................4
Withdrawal from Plan....................................................4
Amendment and Termination of Plan.......................................5
Federal Income Tax Consequences.........................................6
Inquiries Concerning the Plan...........................................5
Interpretation of the Plan..............................................6
Responsibility of the Company and the Plan Agent........................6
USE OF PROCEEDS...............................................................6
DESCRIPTION OF THE COMPANY'S CAPITAL STOCK....................................6
INDEMNIFICATION...............................................................6
WHERE YOU CAN FIND MORE INFORMATION...........................................7
FORWARD-LOOKING STATEMENTS....................................................8
LEGAL MATTERS.................................................................8
EXPERTS.......................................................................8
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN CONNECTION
WITH THE OFFER CONTAINED IN THIS PROSPECTUS. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFERING IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE THROUGH ITS USE SHALL
IMPLY THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF.
DESCRIPTION OF THE COMPANY'S
DIVIDEND REINVESTMENT PLAN
The following is a question and answer statement explaining the provisions
of the Plan. A copy of the Plan may be obtained from the Company's executive
offices at: Shenandoah Telecommunications Company, 500 Shentel Way, Post Office
Box 459, Edinburg, Virginia 22824, Attention: Dividend Reinvestment Plan, or by
calling the Company at (540) 984-4141. In the event of any conflict between the
answers to these questions and the Plan, the more detailed provisions of the
Plan will control. Shareholders who do not wish to participate in the Plan will
continue to receive cash dividends, as declared, in the usual manner.
Purpose
1. What is the purpose of the Plan?
The purpose of the Plan is to provide the shareholders of the Company with
a simple and convenient method of investing cash dividends in additional shares
of the common stock, without par value, of the Company (the "Common Stock") at a
cost that may, because of the Company's payment of brokerage fees associated
with the purchases of Common Stock under the Plan, represent a savings over that
available in normal market purchases.
Advantages
2. What are the advantages of the Plan?
The Plan is advantageous to the shareholders by permitting them to acquire
additional shares of the Common Stock automatically at no brokerage commission
costs.
Administration
3. Who administers the Plan?
The Plan is administered by the Company (the "Plan Agent"). Purchases
of the Common Stock pursuant to the Plan may be delegated to an independent
purchasing agent (the "Purchasing Agent"). The Purchasing Agent will be an
unaffiliated entity designated from time to time by the Board of Directors of
the Company, the Company's Chief Executive Officer or the Company's Chief
Financial Officer.
Participation
4. Who is eligible to participate in the Plan?
All holders of record of the Common Stock are eligible to participate in
the Plan. A beneficial owner of Common Stock whose shares are registered in a
name other than his own must become a shareholder of record with respect to any
such shares that the shareholder desires to participate in the Plan by
transferring such shares into his own name in order to participate in the Plan.
5. How does an eligible shareholder enroll in the Plan?
Any eligible shareholder may enroll in the Plan by completing and signing
the Participant Card accompanying this Prospectus and returning it to the Plan
Agent. Additional Participant Cards may be obtained at any time by written or
oral request to the Plan Agent.
6. When may an eligible shareholder enroll in the Plan?
An eligible shareholder may enroll in the Plan at any time. If the
shareholder's Participant Card requesting reinvestment of dividends is received
by the Plan Agent on or before the record date established for a particular
dividend (the "Record Date"), reinvestment will commence with that dividend. If
a Participant Card is received from a shareholder after the Record Date
established for a particular dividend, the reinvestment of dividends will begin
with the dividend following the next Record Date, if the shareholder is still a
holder of record at such time.
A shareholder may, at any time or from time to time, change his
participation level and thereby increase or decrease his number of participating
shares in the Plan by completing and signing a new Participant Card and
returning it to the Plan Agent. If a new Participant Card requesting a change in
participation level is received by the Plan Agent on or before the Record Date
established for a particular dividend, the change will be reflected with that
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dividend. If a new Participant Card is received by the Plan Agent after the
Record Date established for a particular dividend, the change in participation
level will begin with the dividend following the next Record Date, if the
shareholder is still a holder of record at such time.
7. Must a shareholder enroll all shares held of record by him?
No, a shareholder may enroll in the Plan some or all shares of Common
Stock owned of record by that shareholder. A shareholder must enroll and
maintain at least one whole share of Common Stock to participate in the Plan
Purchases
8. What is the source of the Common Stock purchased under the Plan?
The source of shares of Common Stock to be purchased under the Plan for
dividend reinvestment will be either shares of Common Stock purchased on the
open market, authorized but unissued shares of the Company, or a combination
thereof, as determined by the Board of Directors of the Company. It is the
intent of the Company's Board of Directors that open market purchases will be
the primary source of shares to be purchased under the plan.
9. How will the price of shares purchased under the Plan be determined?
The price of shares purchased in the open market will be the weighted
average price of all the shares purchased for the Plan for a particular dividend
(excluding brokerage commissions). The price of shares purchased from the
Company will be the Fair Market Value (as defined below) of such shares
determined as of the date the particular dividend is actually paid by the
Company. Fair Market Value means the value of the Company's common stock
determined by the Company as follows:
o Exchange Traded. In the event that the Company's common stock
is listed on a national securities exchange, the fair market
value per share will be the average of the high and low sale
prices of the Company's common stock as reported on such
exchange for each of the ten trading days immediately
preceding the determination date.
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o NASDAQ Listed. In the event that the Company's common stock is
not listed on a national securities exchange, but is then
quoted on The NASDAQ Stock Market (whether the National or
SmallCap Market), the fair market value per share will be the
average of the high and low sale prices of the Company's
common stock as reported on The NASDAQ Stock Market for each
of the ten trading days immediately preceding the
determination date.
o OTC Traded. In the event that the Company's common stock is
not listed on a national securities exchange and is not quoted
on The NASDAQ Stock Market, the fair market value per share
will be the average of the high and low bid and asked
quotations of the Company's common stock for each of the ten
trading days immediately preceding the determination date as
reported by two brokerage firms to be selected by the Company
which are then making a market in the Company's common stock,
except that if no closing bid or asked quotation is available
on one or more of such trading days, fair market value will be
determined by reference to the ten trading days preceding the
determination date on which closing bid and asked quotations
are available.
o Other. In the event that the Company's common stock is not
listed on a national securities exchange, is not quoted on The
NASDAQ Stock Market and no closing bid and asked quotations
are available, or that the fair market value per share cannot
otherwise be determined as contemplated above, then fair
market value per share will be determined in good faith by the
Company.
10. How many shares will be purchased by the Purchasing Agent for the
Participants in the Plan?
The number of shares to be purchased for participants in the Plan (a
"Participant") by the Purchasing Agent will depend on the amount of the
Participant's dividend and the price of the shares. Each Participant shall
receive a statement indicating the number of shares purchased with a particular
dividend.
11. When will shares be purchased?
Shares of Common Stock may be purchased at any time but generally not
later than 30 days after the date that a dividend is actually paid by the
Company (the "Investment Date"). Interest will not be paid on funds held pending
investment. Temporary suspension of purchases may occur at any time when, in the
judgment of the Plan Agent, the purchase of shares would violate any
governmental, judicial, securities exchange or National Association of
Securities Dealers, Inc. order. Dividend and voting rights will commence upon
settlement of the purchase. For the purposes of making purchases, the Purchasing
Agent will commingle each Participant's funds with those of all other
Participants.
Costs
12. What are the costs to a Participant in the Plan?
All costs of administration of the Plan will be borne by the Company;
however, the Company reserves the right to establish service charges in
connection with the Plan. Participants in the Plan will be notified prior to any
such charges becoming due.
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Reports to Participants
13. What kind of reports will be sent to Participants in the Plan?
As soon as practicable after completion of each investment on behalf of a
Participant, the Plan Agent will mail to such Participant a statement showing
(i) the amount of the dividend applied toward such investment (ii) the taxes
withheld, if any, (iii) the net amount invested, (iv) the number of shares
purchased, (v) the average cost per share, (vi) the cost basis of the shares
purchased, (vii) the date of purchase, and (viii) the amount of any brokerage
fees paid by the Company on behalf of a Participant. Each Participant, with the
exception of Participants that are corporations, tax-exempt organizations and
other tax-exempt payees, will receive annually an Internal Revenue Service Form
1099, or any successor form, reporting dividend income received.
Certificates for Shares
14. Will certificates be issued for shares purchased?
Certificates for whole shares will only be issued to Participants as soon
as practicable following a written request. Certificates for fractional shares
will not be issued under any circumstances. Instead, each Participant's account
maintained by the Plan Agent will be credited with the number of fractional
shares allocated to such Participant as a result of the Participant's
investment.
Stock Dividends; Stock Splits
15. What happens if the Company declares a stock dividend or a stock split?
Statements representing any stock dividends or split shares distributed by
the Company will be mailed to each Participant. Dividends on such shares shall
automatically be enrolled in the Plan, unless the Participant notifies the Plan
Agent to the contrary.
Withdrawal from Plan
16. How and when may a Participant withdraw from the Plan?
A Participant may terminate his account at any time prior to a Record Date
by giving written notice of termination to the Plan Agent. The effective date of
any such termination will be the fifth trading day following receipt by the Plan
Agent of such notice, provided that the effective date of termination in the
case of any termination notice received by the Plan Agent after a Record Date
will be the fifth trading day after the completion of the investment in Plan
Shares in respect of the Investment Date following such Record Date. Within a
reasonable time after the effective date of termination, the Plan Agent will
deliver to the Participant (i) a certificate representing any previously
unissued Plan Shares held under the Plan, if any, and (ii) a check for any
uninvested dividends and the cash payable in lieu of fractional shares, if any
then held in the Participant's account maintained by the Plan Agent. The amount
of cash payable in lieu of any fractional shares will be calculated based on the
Fair Market Value of the Common Stock determined as of the effective date of
termination.
17. If you are an employee of the Company and a Participant in the Plan, what
happens if you terminate your employment?
Termination of employment does not automatically terminate participation
in the Plan. Dividends on shares held in the Plan for an employee who leaves the
Company will continue to be reinvested until the former employee terminates
participation in the Plan.
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Amendment and Termination of Plan
18. May the Plan be amended or terminated?
Yes. The Company may amend, supplement, suspend, modify or terminate the
Plan at any time without the approval of the Participants. Thirty (30) days'
notice of any suspension or material amendment shall be sent to all
Participants, who shall in all events have the right to withdraw from the Plan.
The Plan Agent shall have the right at any time upon written notice to a
Participant to suspend or terminate such Participant's participation in the Plan
if it determines in its sole discretion that suspension or termination is
appropriate because shares of Common Stock may not lawfully be offered or sold
in the state in which the Participant resides or that the Participant is using
the Plan for purposes inconsistent with the intended purpose of the Plan, or for
any other reasons. In the event that a Participant's right to participate in the
Plan is terminated, the Participant shall be treated as though a notice to
withdraw from the Plan had been received on the effective date of such
termination.
Federal Income Tax Consequences
19. What are the federal income tax consequences of participating in the Plan?
The following discussion summarizes the principal federal income tax
consequences, under current law, of participation in the Plan. It does not
address all potentially relevant federal income tax matters, including
consequences peculiar to persons subject to special provisions of federal income
tax law. The discussion is based on various rulings of the Internal Revenue
Service regarding several types of dividend reinvestment plans. No ruling,
however, has been issued or requested regarding the Plan. The following
discussion is for your general information only, and you are urged to consult
your own tax advisor to determine the particular tax consequences that may
result from your participation in the Plan and from the disposition of any
shares of Common Stock purchased pursuant to the Plan.
Dividends that are reinvested to acquire shares of Common Stock will be
taxable to you as if you received the dividends. You also will be treated as
receiving an additional dividend equal to the amount of your share of any
brokerage commissions paid by the Company when dividends are reinvested. For
example, if $100 of your dividends are reinvested to purchase shares of Common
Stock in the open market under the Plan, and if the amount of the related
brokerage commission is $1, the total amount of the dividend you will be treated
as receiving for federal income tax purposes will be $101. (The $1 figure in the
preceding example is for purposes of illustration only; it is not a
representation or estimate of the amount or percentage of brokerage commissions
that may be paid under the Plan.)
The initial tax basis of shares of Common Stock you acquire with
reinvested dividends will equal the amount of the dividend you are treated as
having received. Consequently, your initial basis in a share acquired with
reinvested dividends will be the share's purchase price plus the amount of any
brokerage commission allocable to the share. The holding period for shares of
Common Stock acquired with reinvested dividends will begin the day after the
date the shares are purchased for you, which may be later than the dividend
payment date.
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Inquiries Concerning the Plan
20. Who should be contacted with questions concerning the Plan?
All inquiries concerning the Plan should be directed to:
Shenandoah Telecommunications Company
500 Shentel Way
Post Office Box 459
Edinburg, Virginia 22824
Attention: Dividend Reinvestment Plan
Interpretation of the Plan
21. Who will interpret the provisions of the Plan?
Any question of interpretation arising under the Plan will be determined
by the Board of Directors of the Company pursuant to applicable federal and
state law and the rules and regulations of all regulatory authorities, and such
determination shall be final and binding on all Participants.
Responsibility of the Company and the Plan Agent
22. What are the responsibilities of the Company and the Plan Agent, if any,
with respect to the Plan?
Neither the Company, the Plan Agent nor its nominees shall have any
responsibility beyond the exercise of ordinary care for any action taken or
omitted pursuant to the Plan, nor shall they have any duties, responsibilities
or liabilities except such as are expressly set forth in the Plan.
Neither the Company nor the Plan Agent shall be liable for any act done in
good faith, or for any good faith omission to act, including, without
limitation, any claim or liability (i) with respect to the prices at which
shares are purchased or the times when purchases are made or (ii) for any
fluctuation in the market value of the Common Stock. Participants must realize
that neither the Company nor the Plan Agent can provide any assurance of a
profit or protection against loss on any shares purchased under the Plan.
USE OF PROCEEDS
The Company has no basis for estimating precisely either the number of
shares of Common Stock that may be sold under the Plan or the prices at which
such shares may be sold. The Company intends to use the proceeds of newly issued
shares sold pursuant to the Plan, if any, for general corporate purposes.
DESCRIPTION OF THE COMPANY'S CAPITAL STOCK
The following information with respect to the capital stock of the Company
is subject to the detailed provisions of the Company's Articles of Incorporation
and bylaws, as currently in effect. These statements do not purport to be
complete, or to give full effect to the provisions of statutory or common law,
and are subject to, and are qualified in their entirety by reference to, the
terms of the Company's Articles of Incorporation and bylaws.
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The securities offered hereby are shares of Common Stock, no par value per
share. As of August 29, 2005, there were 16,000,000 shares authorized, of which
7,668,279 shares were issued and outstanding.
Holders of Common Stock have the sole and full power to vote for the
election of directors and all other purposes without limitation, except as
otherwise provided by Virginia law. Holders of Common Stock are entitled to one
vote per share of Common Stock held. The holders of Common Stock do not have
cumulative voting rights nor do they have preemptive rights to subscribe for
unissued shares of stock of the Company. Holders of Common Stock are entitled to
receive dividends if, when and as declared from time to time by the Board of
Directors from funds available therefor and to the net assets remaining upon
liquidation of the Company.
INDEMNIFICATION
Directors and officers of the Company are entitled to indemnification
against liabilities, fines, penalties and claims imposed upon or asserted
against them in any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative and whether formal or
informal. This indemnification covers all costs and expenses reasonably incurred
by an officer or director in connection with any such proceeding, except for
matters as to which a director or officer is liable because he engaged in
willful misconduct or a knowing violation of criminal law. In addition, the
Virginia Stock Corporation Act and the Company's Articles of Incorporation,
under certain circumstances, eliminates the liability of directors and officers
for monetary damages in a shareholder or derivative proceeding.
As permitted by the Virginia Stock Corporation Act, the Company has
purchased a directors' and officers' liability insurance policy that will,
subject to certain limitations, indemnify the Company and its officers and
directors for damages they become legally obligated to pay as a result of any
negligent act, error or omission committed by directors or officers while acting
in their capacities as such.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling the
registrant pursuant to the foregoing provisions, the registrant has been
informed that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act and is
therefore unenforceable.
WHERE YOU CAN FIND MORE INFORMATION
This Prospectus is part of a Registration Statement the Company has filed
with the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933 with respect to the shares of Common Stock being offered
by this Prospectus (the "Registration Statement"). The Registration Statement,
including the attached exhibits and schedules, contains additional relevant
information about the Company and the Common Stock. The Commission's rules and
regulations allow us to omit certain information included in the Registration
Statement from this Prospectus. The Registration Statement may be inspected by
anyone without charge at the Commission's principal office at 100 F Street,
N.E., Washington, D.C. 20549.
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In addition, the Company files reports, proxy statements and other
information with the Commission under the Securities Exchange Act of 1934. You
may read and copy this information at the following Commission locations:
Public Reference Room Northeast Regional Office Midwest Regional Office
100 F Street, N.E. 3 World Financial Center 175 W. Jackson Boulevard
Washington, D.C. 20549 Room 4300 Suite 900
New York, New York 10281 Chicago, Illinois 60604
You may also obtain copies of this information by mail from the
Commission's Public Reference Room, 100 F Street, N.E., Washington, D.C. 20549,
at prescribed rates. You may obtain information on the operation of the Public
Reference Room by calling the Commission at 1-800-732-0330.
The Commission also maintains an Internet world wide web site that
contains reports, proxy statements and other information about issuers, like the
Company, who file electronically with the Commission. That site's address is
http://www.sec.gov.
The Commission allows the Company to "incorporate by reference"
information into this Prospectus. This means that the Company can disclose
important information to you by referring you to another document filed
separately with the Commission. The information incorporated by reference is
considered to be a part of this Prospectus, except for any information that is
superseded by information that is included directly in this document.
This Prospectus specifically incorporates by reference:
o the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2004;
o the Company's Quarterly Report[s] on Form 10-Q for the fiscal
quarters ended March 31, 2005 [and June 30, 2005];
o the Company's Current Reports on Form 8-K, dated January 21, 2005,
April 20, 2005 and May 4, 2005; and
o the description of our common stock contained in our Registration
Statement on Form 8-B filed with the SEC on August 11, 1981,
including any amendment or reports filed for the purpose of updating
such description.
We also incorporate by reference any additional documents that we may file
with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange
Act of 1934 (other than those "furnished" pursuant to Item 2.02 or Item 7.01 of
Form 8-K or other information "furnished" to the SEC) from the date of this
Prospectus until the termination of the offering of the securities. These
documents may include annual, quarterly and current reports, as well as proxy
statements. Any material that we later file with the SEC will automatically
update and replace the information previously filed with the SEC.
You can obtain any of the documents incorporated by reference in this
document from the Company or from the Commission through the Commission's web
site at the address described above. Documents incorporated by reference are
available from the Company without charge, excluding any exhibits to those
documents, unless the
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exhibit is specifically incorporated by reference as an exhibit in this
Prospectus. You can obtain documents incorporated by reference in this
Prospectus by requesting them in writing or by telephone from the Company at the
following address:
Shenandoah Telecommunications Company
Post Office Box 459
Edinburg, Virginia 22824
Attention: Vice President - Finance
(540) 984-4141
Additional information regarding the Company may be obtained through the
Company's Internet worldwide web site. That site's address is
http://www.shentel.com.
FORWARD-LOOKING STATEMENTS
This Prospectus may contain 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. Such forward-looking statements are identified by words
such as "believes," "anticipates," "expects" and words and phrases of similar
import. Such forward-looking statements relate to future events, the future
performance of the Company and involve known and unknown risks, uncertainties
and other factors that may cause the actual results, performance or achievements
to be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Prospective investors
should specifically consider the various factors discussed from time to time in
reports filed by the Company with the Securities and Exchange Commission that
could cause actual results to differ.
LEGAL MATTERS
The legality of the shares of Common Stock offered hereby has been passed
upon for the Company by Hunton & Williams, Richmond, Virginia.
EXPERTS
The consolidated financial statements of the Company and management's
annual report on internal control over financial reporting incorporated in this
Prospectus and Registration Statement by reference to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 2004 have been
audited by KPMG LLP, independent registered public accounting firm, as indicated
in their reports with respect thereto, and are incorporated herein by reference
in reliance upon the authority of said firm as experts in accounting and
auditing in giving said reports.
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SHENANDOAH TELECOMMUNICATIONS COMPANY
500 Shentel Way
PO Box 459
Edinburg, VA 22824
We must serve well to prosper -
We must prosper to serve well