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): July 29, 2009
___________________
Shenandoah Telecommunications Company
(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
(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 7.01 Regulation FD Disclosure.
The following information is furnished pursuant to Regulation FD: On July 29, 2009, Shenandoah Telecommunications Company held its second quarter 2009 earnings release 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 exhibit is 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.
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SHENANDOAH TELECOMMUNICATIONS COMPANY |
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(Registrant) |
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July 29, 2009 |
Adele M. Skolits |
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Adele M. Skolits
Vice President - Finance and
Chief Financial Officer
(Duly Authorized Officer) |
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2Q 2009 Earnings Conference Call
July 29, 2009
Exhibit 99.1
2
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:
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:
qIncreasing competition in the communications industry; and
qA 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.
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.
3
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.
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.
4
Chris French
CEO and President
5
2Q ‘09 Highlights
q Net Income - 2Q ‘09 net income of
$6.7 million
$6.7 million
q Discontinued Operations -
Converged Services sale in progress
Converged Services sale in progress
q Operating results - Net
income from
continuing operations of $6.8 million
continuing operations of $6.8 million
Net Income (in millions)
Net Income from Continuing Operations
(in millions)
(in millions)
6
2Q ‘09 Highlights
n Cable Triple Play - Covington,
VA
upgrade of cable plant complete,
upgrade of significant remaining
markets in progress, billing systems
transitioned
upgrade of cable plant complete,
upgrade of significant remaining
markets in progress, billing systems
transitioned
n Investment in wireless for
sustained growth - 41 additional
EVDO sites and 13 additional cell sites
sustained growth - 41 additional
EVDO sites and 13 additional cell sites
n Acquisition of Rural Access Lines
- North River Co-op membership
approved sale of approximately
1,000 rural access lines for $600k,
upgrading to DSL for $1.0 m
- North River Co-op membership
approved sale of approximately
1,000 rural access lines for $600k,
upgrading to DSL for $1.0 m
Number of Cell Sites
7
Adele Skolits
CFO and VP of Finance
8
EPS
Earnings Per Share
Earnings per Share from Continuing
Operations
Operations
- Quarter over Quarter
n EPS - EPS of $.29 for
2Q ’09
n Delivering value for
Shareholders - - EPS from
continuing operations $.29 in 2Q
‘09
Shareholders - - EPS from
continuing operations $.29 in 2Q
‘09
9
Segment Results - Operating Income
Wireless
n Average customers up 9% and Gross billings
up 14%
n Operating costs associated with PCS network
upgrades of $.5 million
n Non-recurring income - 2Q ‘08 included
receipt of $1.1 in USF funds from Sprint for prior
periods
periods
Wireline
n Increased network and depreciation associated
with network enhancements of $.5 million
Cable
n The acquired cable operations will continue
to impact earnings; it added $1.1 million to the
net operating loss in 2Q ’09
net operating loss in 2Q ’09
10
Profitability
OIBDA for the Quarter Ended ($ millions)
Maintaining profitability while investing in growth
11
Cash Flows
Cash Flows ($ millions)
n Strong operating cash flow -
92% growth in cash generated by
operations
92% growth in cash generated by
operations
n Capex Well Supported-
Increased capital expenditures
supported more than adequately by
operating cash flow and debt
facility
Increased capital expenditures
supported more than adequately by
operating cash flow and debt
facility
n Future Cash Flows - New
debt
facility has equal amortization over
six years beginning in 2010, when
CAPEX spending is expected to
drop
facility has equal amortization over
six years beginning in 2010, when
CAPEX spending is expected to
drop
n Positioned to deliver for
shareholders - Ability to be
opportunistic or return value to
shareholders
shareholders - Ability to be
opportunistic or return value to
shareholders
12
Earle MacKenzie
EVP and COO
13
Key Operational Results - PCS
Retail Subscribers (000s)
14
Key Operational Results - PCS
Gross Additions
Net Additions
n Modest decrease in churn
from 2.15% in Q1 ‘09 to
2.07% in Q2 ‘09, but an
increase from 1.74% in
Q2 ‘08
from 2.15% in Q1 ‘09 to
2.07% in Q2 ‘09, but an
increase from 1.74% in
Q2 ‘08
n Lower bad debt in Q2 ‘09
compared to Q2 ’08 (from
$1.8m to $1.6m)
compared to Q2 ’08 (from
$1.8m to $1.6m)
15
Key Operational Results - PCS
Gross Billed Revenue per User - Data &
Voice 1
Voice 1
n Gross Billed revenue per
subscriber continues to
grow - - Data revenues
growth continues
subscriber continues to
grow - - Data revenues
growth continues
1 - Before Service credits, bad debt, Sprint Nextel fees. See reconciliation of Non-GAAP financial measures on slide 23.
Prior to January 1, 2009 and consistent with Sprint’s methodology, 30% of service plans which included voice and data
revenue were allocated to data ARPU. Subsequently, Sprint specifically identified in its affiliate reporting the amount
related to data and voice revenues.
Prior to January 1, 2009 and consistent with Sprint’s methodology, 30% of service plans which included voice and data
revenue were allocated to data ARPU. Subsequently, Sprint specifically identified in its affiliate reporting the amount
related to data and voice revenues.
16
PCS Revenues
Gross Billed Revenues ($ millions)
$32.6
$35.9
17
PCS Customers Top Picks Q2 2009
n Top Service Plans - 48% of
Gross Adds
Gross Adds
u Everything Messaging
Family 1500
Family 1500
u Everything Data Family
1500
1500
u Simply Everything
n Top Devices - Shentel
Controlled Channels
Controlled Channels
u LG Rumor 15%
u Samsung Rant 10%
u Mobile Data Cards 9%
u Samsung HighNote 9%
u LG Lotus 8%
n 62% of Equipment Sales -
Shentel Controlled Channels
Shentel Controlled Channels
18
Key Operational Results - Telco
n Modest access line
loss
loss
n 43% data penetration
n 2009 & 2010 Capex
to increase
broadband speeds to
10Mbps
to increase
broadband speeds to
10Mbps
Access lines (000s)
Internet Customers (000s)
1 DSL only available within LEC area
2 Dial-up offered inside and outside the LEC area
19
Key Operational Results - Cable
n Integrating acquisition of
17,000 new customers
17,000 new customers
n Converting acquired systems
to our billing platform
to our billing platform
n Upgrade underway to enable
us to offer triple play to 85%
of acquired homes passed by
year end 2009
us to offer triple play to 85%
of acquired homes passed by
year end 2009
n Re-launch of the first acquired
market in late Q2
market in late Q2
Number of Customers (000’s)
20
Investing in the Future
n Expanding wireless coverage
& capacity with 21 new cell
sites and data with 67 EVDO
sites
& capacity with 21 new cell
sites and data with 67 EVDO
sites
n Increasing broadband speeds
to 10 MB in LEC area
to 10 MB in LEC area
n Increased miles and capacity
of fiber
of fiber
n Upgrade of cable systems to 2
-way to provide triple play of
services
-way to provide triple play of
services
Capex Spending
21
Q&A
22
Appendix
23
Non-GAAP Financial Measure - Billed Revenue per Subscriber