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 11, 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 11, 2009, Shenandoah Telecommunications Company presented at an investor conference hosted by Raymond James in Orlando, Florida. The presentation included materials related to the Company’s fourth quarter and year end 2008 results of operations. The materials attached hereto as Exhibit 99.1 were utilized during the presentation. 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.
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99.1 |
Raymond James Investor Conference Presentation Slides |
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 11, 2009 |
/S/ Adele M. Skolits |
Adele M. Skolits
Vice President - Finance and
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Chief Financial Officer |
(Duly Authorized Officer)
Raymond James Investor Conference
March 11, 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 Annual Report on Form 10-K for the fiscal year ended December 31, 2008. Copies
of this
Form 10-K, as well as subsequent filings, 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
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 effectors
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 business and for budget
plannin
g purposes.
Agenda
Introduction and Shentel Overview – Earle MacKenzie - COO
Overview of PCS
Overview of Wireline
Financials – Adele Skolits – CFO
Shenandoah Telecommunications Company
Major subsidiaries: PCS, Telephone, Mobile and Cable
Shentel Management Company: Allocation subsidiary for all
employees and shared expenses
Allocation Subsidiary
Wireline Entities
Wireless Entities
Shenandoah
Telecommunications
Company
Shentel Cable
Company
Shentel Service
Company
Shenandoah Mobile
Company
Shenandoah Cable
Television Company
Shentel Management
Company
Shentel
Communications
Company
Shenandoah
Telephone Company
Shenandoah
Personal
Communications
Company
Shentel Converged
Services
Shenandoah Network
Company
Shenandoah Long
Distance Company
Growth Strategy – Capitalize on Core Competencies
Wireless
Increase penetration in existing PCS footprint
Look for new wireless opportunities in surrounding
geographic areas
Telephone
Attractive markets at reasonable prices
Cable
Focus on smaller less competitive markets
Build clusters to gain operating efficiencies
Upgrade networks to offer “Triple Play”
Business Overview
Public company with 4,400+ shareholders
70% individual/30% institutional
Profitable
Strong growth
Healthy balance sheet
Continuity of ownership & management
Focused business plan
New opportunity in fiber/coax wireline triple play
2008 OIBDA by Segment
Business Overview
Total OIBDA = $72 million
2008 Revenues by Segment
Total External Revenues = $144 million
PCS Overview
One of 3 remaining Sprint Nextel
affiliates
2.3 million licensed POPs
1.9 million covered POPs
211k total subscribers
10.5% penetration
411 CDMA base stations
211 EVDO enabled cell sites
86% EVDO covered POPs
$41,000 Estimated Average
household income
Key Operational Metrics – PCS
Retail Subscribers (000s)
Number of Cell Sites
Churn (%)
Penetration (%)
- Total POPs as of 2008: 2.3 million
- Covered POPs as of 2008: 1.9 million
20% CAGR
- EVDO coverage as of 2008: 86% of covered POP
- EVDO coverage as of 2009E: 92% of covered POP
52
Attractive Service Revenue Growth - PCS
Gross Billed PCS Revenue ($ millions)1
1 Before credits and fees
21% CAGR
PCS Revenues
Billed Revenues ($ millions)
Up 19%
Bad Debt
Management Fee
Service Credits
Service Fee
Net Revenue
PCS Revenue per Subscriber
Gross Billed Revenues per Subscriber1
1 Before credits and fees
2 Data ARPU was $15.90 in Q4 - 2008
2
Voice
Data
PCS Distribution
PCS Gross Adds Breakdown (%)
Current Distribution
17 company stores
17 branded stores
44 exclusive agents (Shentel)
61 Regional/National (Sprint)
Mobile Business
Revenue ($ millions)
OIBDA ($ millions)
Overview
118 towers
183 non-affiliate leases
$5.3
$6.2
$6.7
11% CAGR
Non-affiliate
Affiliate
Capital Expenditures - Wireless
Capital Expenditures by Category ($ million)
Other
Capacity
Coverage
EVDO
Mobile
# Cell Sites
332
346
411
489
% Covered POPs
77%
79%
85%
89%
# EVDO Sites
0
52
211
318
% POPs Covered
N/A
27%
86%
92%
Wireline Customers
24.2k LEC access lines
5.2k dial-up Internet
subscribers
10k DSL subscribers
25.4k cable TV subscribers
10.8k long distance
subscribers
One FTTH community in
service
Network
Route miles: 756
Fiber miles: 46,733
Wireline Overview
Wireline OIBDA 2008
Total Wireline OIBDA = $19 million
Wireline Revenue 2008
Total Wireline Revenues = $40 million
Telephone
Access lines (000s)
Revenue ($ millions)1
OIBDA ($ millions with % margin)
-0.7% CAGR
1 Includes internal revenues
2 Excludes stock-based compensation and one-time ERO and pension closing expenses of $2.7 million
2
Local Subs
Access
Other
Shentel Services
Customers (000s)
Revenues ($ millions)
DSL
Dial-up
1
2
1
2
1 DSL only available within LEC area
2 Dial-up offered inside and outside the LEC area
Cable TV
Overview
Subscribers (000s)
Complimentary (with LEC business)
Offensive positioning (Outside ILEC)
60,000 homes passed
One-way now, two way in 2009/2010
YE09 – HD, DVR, VOD, Internet, Voice
Revenue ($ millions)
OIBDA ($ millions)
1 Includes Rapid Communications acquisition – December 2008
1
1
1
Digital
Basic
Agenda
Introduction and Shentel Overview
Overview of PCS
Overview of Wireline
Financials – Adele Skolits - CFO
Consolidated Financial Results
Net Income from Continuing Operations
27% CAGR
In millions
Revenues
1 2006 Net income includes $6.4 million of gain related to the liquidation of the Rural Telephone Bank (RTB)
1
PCS
Other
PCS
Other
Key Financial Results – Consolidated
Operating Income
Operating Income Before Depreciation &
Amortization (OIBDA)
In millions
PCS
Other
PCS
Other
Key Financial Results – Consolidated
Earnings Per Share
- Continuing Operations
Earnings Per Share
- Net Income
1
1
1 EPS and Fully Diluted EPS include $0.27 per share as a result of the one time gain related to the liquidation of the Rural Telephone Bank
Cash Flows
Cash Flows ($ 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
Increase in Cash Balance
$3.8
($12.0)
($15.8)
Consolidated P&L1
Note:
1 In March 2007, the company entered into a new Affiliate Agreement with Sprint Nextel which modified the way PCS revenues and expenses were previously accounted for. Therefore, beginning in 2007, financial metrics, particularly revenue and revenue related metrics, are not comparable to results prior to 2007
2 2006 Net income includes $6.4 million of gain related to the liquidation of the Rural Telephone Bank (RTB)
3 Includes stock-based compensation of $2.1 million and one-time ERO and pension closing expenses of $2.7 million, before taxes and $1.3 and $1.6 million after taxes, respectively
4 Does not include network expense
($ millions) 20062 20073 2008
Revenue1
$158.9
$130.4
$144.4
% growth1
-17.9%
10.7%
Gross profit4
$94.5
$89.7
$100.7
% margin1
59.5%
68.8%
69.7%
Operating Income
$25.7
$36.7
$45.6
% margin1
16.2%
28.1%
31.6%
OIBDA
$48.1
$60.1
$72.1
% margin1
30.3%
46.1%
49.9%
Net Income from Continuing Operations
$20.7
$22.2
$26.3
% margin1
13.0%
17.0%
18.2%
Earnings per share
$0.77
$0.80
$1.04
PCS Financial Performance
Note: In March 2007, the company entered into a new Affiliate Agreement with Sprint Nextel which modified the way PCS revenues and
expenses were previously accounted for. Therefore,
financial metrics beginning in 2007 are not comparable to results prior to 2007
1 Includes stock-based compensation of $0.7 million and one-time ERO and pension closing expenses of $0.1 million
($ millions) 2006 20071 2008
Revenue
$115.5
$87.3
$100.2
% growth
-24.4%
14.7%
Operating Income
$15.7
$28.8
$33.5
% margin
13.6%
33.0%
33.4%
Per subscriber
$116
$168
$168
OIBDA
$30.0
$43.9
$49.8
% margin
26.0%
50.3%
49.7%
Per subscriber
$221
$257
$249
Capital Expenditures
$5.7
$13.7
$43.8
Mobile Financial Performance1
($ millions) 2006 2007 2008
1 Includes internal revenue
Revenue
$5.3
$6.2
$6.7
% growth
17.4%
11.4%
Operating Income
$2.1
$2.6
$2.8
% margin
39.8%
42.4%
46.9%
OIBDA
$3.0
$3.5
$3.7
% margin
56.6%
58.1%
61.2%
Capital Expenditures
$2.1
$0.4
$1.3
Telephone Financial Performance1
1 Includes internal revenue
2 Excludes stock-based compensation and one-time ERO and pension closing expenses of $2.7 million
($ millions) 2006 20072 2008
Revenue
$30.5
$30.5
$30.7
% growth
0.2%
0.4%
Operating Income
$14.4
$11.3
$12.5
% margin
47.1%
37.0%
40.9%
OIBDA
$19.1
$16.5
$19.1
% margin
62.7%
54.1%
62.4%
Capital Expenditures
$3.4
$6.2
$8.2
Cable Financial Performance
1 Excludes stock-based compensation one-time ERO and pension closing expenses of $0.6 million
($ millions) 2006 20071 20082
Revenue
$5.0
$5.1
$6.1
% growth
1.2%
6.0%
Operating Income
($0.6)
($1.8)
($0.9)
% margin
NM
NM
NM
OIBDA
$0.6
($0.8)
$0.3
% margin
11.1%
-15.1%
5.4%
Capital Expenditures
$0.3
$0.2
$0.4
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
Non-GAAP Financial Measure – 2008 OIBDA
Dollars in thousands
PCS
Telephone
Mobile
Cable
Other
Consolidated
Operating Income
$33,474
$12,530
$2,839
($916)
($2,281)
$45,646
Depreciation and amortization
16,330
6,594
884
1,250
1,376
26,434
OIBDA
$49,804
$19,124
$3,723
$334
($905)
$72,080
Non-GAAP Financial Measure – 2007 OIBDA
Dollars in thousands
PCS
Telephone
Mobile
Cable
Other
Consolidated
Operating Income
$28,824
$11,307
$2,611
($1,812)
($,4,243)
$36,687
Depreciation and amortization
15,107
5,217
923
1,050
1,156
23,453
OIBDA
$43,931
$16,524
$3,534
($762)
($3,087)
$60,140
Non-GAAP Financial Measure – 2006 OIBDA
Dollars in thousands
PCS
Telephone
Mobile
Cable
Other
Consolidated
Operating Income
$15,660
$14,356
$2,091
($548)
($5,830)
$25,729
Depreciation and amortization
14,326
4,755
878
1,104
1,303
22,366
OIBDA
$29,986
$19,111
$2,969
$556
($4,527)
$48,095
Non-GAAP Financial Measure – 2005 OIBDA
Dollars in thousands
PCS
Other
Consolidated
Operating Income
$9,730
$9,827
$19,577
Depreciation and amortization
12,692
7,210
19,902
OIBDA
$22,422
$17,037
$39,459
Non-GAAP Financial Measure – 2004 OIBDA
Dollars in thousands
PCS
Other
Consolidated
Operating Income
$6,188
$11,989
$18,177
Depreciation and amortization
11,915
6,872
18,787
OIBDA
$18,103
$18,861
$36,964
Raymond James Investor Conference
March 11, 2009