UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 6, 2009
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Shenandoah Telecommunications Company
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(Exact name of registrant as specified in its charter)
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Virginia |
0-9881 |
54-1162807 |
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(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
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500 Shentel Way P.O. Box 459 Edinburg, VA |
22824 |
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(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (540) 984-4141
Not applicable
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(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2-(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 8.01 Other Events.
On March 6, 2009, Shenandoah Telecommunications Company held its fourth quarter and year end 2008 earnings conference call. The materials attached hereto as Exhibit 99.1 were utilized during the conference call. These materials are also available on the Company’s website.
These materials may contain forward-looking statements about Shenandoah Telecommunications regarding, among other things, our business strategy, our prospects and our financial position. These statements can be identified by the use of forward-looking terminology such as “believes,” “estimates,” “expects,” “intends,” “may,” “will,” “should,” “could,” or “anticipates” or the negative or other variation of these or similar words, or by discussions of strategy or risks and uncertainties. Shenandoah Telecommunications undertakes no obligation to revise or update such statements to reflect current events or circumstances after the date hereof, or to reflect the occurrence of unanticipated events.
Item 9.01 Financial Statements and Exhibits.
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(c) |
Exhibits |
The following exhibits are filed with this Current Report on Form 8-K.
SIGNATURE
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
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(Registrant) |
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March 6, 2009 |
/S/ Adele M. Skolits |
Adele M. Skolits
Vice President - Finance and
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Chief Financial Officer |
(Duly Authorized Officer)
4Q 2008 Earnings Conference Call
March 6, 2009
Exhibit 99.1
Safe Harbor Statement
This presentation includes “forward-looking statements” within the meaning of Section 27A of the
Securities Act and Section 21E of the Securities
Exchange Act of 1934, as amended, regarding,
among other things, our business strategy, our prospects and our financial position. These
statements can be identified by the use of forward-looking terminology such as “believes,”
“estimates,”
“expects,” “intends,” “may,” “will,” “should,” “could,” or “anticipates” or the negative or
other variation of these similar words, or by discussions of strategy or risks and uncertainties. These
statements are based on current expectations of future events. If underlying assumptions prove
inaccurate or unknown risks or uncertainties materialize, actual results could vary materially from the
Company’s expectations and projections. Important
factors that could cause actual results to differ
materially from such forward-looking statements include, without limitation, risks related to the
following:
Increasing competition in the communications industry; and
A complex and uncertain regulatory environment.
A further list and description of these risks, uncertainties and other factors can be found in the
Company’s SEC filings which are available online at www.sec.gov, www.shentel.com or on request
from
the Company. The Company does not undertake to update any forward-looking statements as
a result of new information or future events or developments
1
Use of Non-GAAP Financial Measures
Included in this presentation are certain non-GAAP financial measures that are not determined in
accordance with US generally accepted accounting principles. These financial performance measures
are not indicative of cash provided or used by operating activities and exclude the effects of certain
operating, capital and financing costs and may differ from comparable information provided by other
companies, and they should not be considered
in isolation, as an alternative to, or more meaningful
than measures of financial performance determined in accordance with US generally accepted
accounting principles. These financial performance measures are commonly used in the industry
and
are presented because Shentel believes they provide relevant and useful information to investors.
Shentel utilizes these financial performance measures to assess its ability to meet future capital
expenditure and working capital requirements,
to incur indebtedness if necessary, return investment
to shareholders and to fund continued growth. Shentel also uses these financial performance
measures to evaluate the performance of its businesses and for budget planning purposes.
2
Chris French
CEO and President
3
2008 Highlights
Record operating results - Net income
from continuing operations of $26.3 million
Returning value to shareholders -
Dividend of $.30/share up 11%
Fully funded business plan - $52 million
debt facility
Positioning the consolidated
enterprise to maximize shareholder
returns - Acquisition of 17,000 cable
customers (44,000 homes
passed); sale of
Converged Services
Strong balance sheet - Capital Structure
provides capacity to be opportunistic; Debt
to equity ratio of .25
$10.1
$10.9
$20.7
$22.2
$26.3
2004
2005
2006
2007
2008
Net Income from Continuing Operations
(in millions)
$4.4
$5.4
4Q 2007
4Q 2008
4
2008 Highlights
Wireless growth drives results -
5,685 net subscriber additions for
4Q’08 to 211,462 at year end;
average subs up 17%
for 2008;
churn down to 1.9% in 4Q’08
Investment in wireless for
sustained growth - Expansion of
EVDO
to 86% of the PCS footprint,
19% growth in cell sites
Providing a quality local
customer experience -
PCS churn
down to 1.9% in 4Q’08 from 2.3% in
4Q’07
154
187
211
2006
2007
2008
PCS Subscribers (000s)
Number of Cell Sites
52
211
332
346
411
2006
2007
2008
EVDO
Total
5
Economic Environment
Today’s economic environment presents
challenges and opportunities…
Capital Spending Rationale
Careful review of capital projects to prioritize based on payback
Being Opportunistic
Our balance sheet enables us to take advantage of opportunities
which fit our business model
Broadband Stimulus
We are monitoring the evolving rules for public support of rural
broadband development
6
Adele Skolits
CFO and VP of Finance
7
$0.44
$0.47
$0.89
$0.94
$1.12
$0.44
$0.46
$0.77
$0.80
$1.04
2004
2005
2006*
2007
2008
EPS Continuing Operations
EPS
EPS
Earnings Per Share – Year over Year
$0.19
$0.23
4Q 2007
4Q 2008
Earnings per Share from Continuing
Operations
– Quarter over Quarter
Delivering value for
Shareholders– EPS growth of
21% in 4Q’08 over 4Q’07; year
over year growth
of 19%
*-Includes gain on sale of Rural Telephone Bank stock of $.27 in EPS from Continuing
Operations and EPS
8
Profitability
Cash Flows ($ millions)
Maintaining profitability while investing in growth –
Adjusted OIBDA up 5% for 4Q’08 over 4Q’07
12/31/08
12/31/07
12/31/08
12/31/07
Operating Income
$9.8
$7.5
$45.6
$36.7
Special items before taxes
Early retirement Offering
2.0
Pension Settlement
0.7
0.7
Cost of share award
2.1
2.1
Depreciation and Amortization
7.3
6.0
26.4
23.5
Adjusted OIBDA
$17.1
$16.3
$72.0
$65.0
Quarter Ended
Year Ended
9
Cash Flows
Cash Flows ($ millions)
2007
2008
Change
Net Cash from Operations
$43.7
$50.1
$6.4
Capital Expenditures
($29.1)
($65.5)
($36.4)
Cable TV Acquisition
($10.9)
($10.9)
Borrowings
$23.7
$23.7
Debt Repayments
($4.1)
($4.2)
($0.1)
Dividends
($5.8)
($6.5)
($0.7)
Other
($0.9)
$1.3
$2.2
Free Cash Flow
$3.8
($12.0)
($15.8)
Record operating cash flow –
15% growth in cash generated by
operations
New debt facility supports
sustained growth – Increased
capital expenditures supports cable
acquisition and PCS development
Manageable debt service – New
debt facility has equal amortization
over six years beginning next year
Positioned to deliver for
shareholders – Debt capacity and
cash flow generation will enable
the company to be opportunistic
or
return value to shareholders
10
Earle MacKenzie
COO and EVP
11
Key Operational Results – PCS
103
123
154
187
211
2004
2005
2006
2007
2008
Retail Subscribers (000s)
12
Key Operational Results – PCS
21,870
17,329
4Q 2007
4Q 2008
9,214
5,685
4Q’07
4Q’08
Gross Additions
Net Additions
75,829
68,693
2007
2008
33,800
24,159
2007
2008
13
Key Operational Results – PCS
Gross Billed Revenue per User – Data &
Voice
Billed revenue per subscriber
continues to grow – Data revenues
growth is sustaining this growth
$12.58
$13.63
$43.03
$42.35
$55.61
$55.98
2007
2008
Data
Voice
Total
14
PCS Revenues
Billed Service Revenues ($ millions)
$80.1
$92.1
$11.1
$15.0
$6.9
$8.1
$16.1
$19.0
2007
2008
Management & Service
Fees
Bad Debt
Service Credits
Net Revenue
$114.1
$134.2
15
PCS Customers Top Picks – Q4’08
Service Plans
Everything Messaging
Family 1500
Everything Data
Family 1500
Simply Everything
Handsets
Sanyo Katana
Samsung Rant
LG Lotus
Samsung Instinct
16
Meeting PCS Customer Needs
Expanded data
offering
Over 90% POP’s will
have EVDO coverage
PA coverage
improved
Capacity increased
Number of Cell Sites
52
211
318
332
346
411
489
2006
2007
2008
2009 Est.
EVDO
Total
17
Key Operational Results - Telco
Modest access line
loss
41% data penetration
Increased broadband
speeds
24
.
8
24.5
24
.
2
2006
2007
2008
Access lines (000s)
-.7% CAGR
Internet Customers (000s)
6.6
8.1
10.0
9.9
7.5
5.2
2006
2007
2008
DSL customers
Dial
-
up customers
18
Key Operational Results - Cable
Acquisition of 17,000
new customers
Expect to offer triple
play to 85% of
acquired homes
passed by year end
2009
Number of Customers (000’s)
17.1
8.6
8.7
8.4
8.3
25.4
2004
2005
2006
2007
2008
Shen. Co.
Acquired
Total
19
Q&A
20
Appendix
21
Non-GAAP Financial Measure – Billed Revenue per Subscriber
Dollars in thousands (except subscribers and revenue per subscriber)
2008
2007
Gross billed revenue
Wireless segment total operating revenues
$ 100,151
$ 87,307
Equipment revenue
(5,214)
(5,015)
Other revenue
(2,788)
(2,238)
Wireless service revenue
92,149
80,054
Service credits
15,018
11,082
Write-offs
8,064
6,863
Management fee
9,034
7,717
Service fee
9,938
8,493
Gross billed revenue
134,203
114,209
Average subscribers
199,794
171,161
Billed revenue per subscriber
$ 55.98
$ 55.61
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