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): November 4,
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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__________________
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Virginia
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0-9881
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54-1162807
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(State
or other jurisdiction of incorporation)
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(Commission
File Number)
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(IRS
Employer Identification No.)
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500
Shentel Way
P.O.
Box 459
Edinburg,
VA
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22824
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code: (540) 984-4141
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Not
applicable
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(Former
name or former address, if changed since last
report.)
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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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o
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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o
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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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o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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1
Item
7.01 Regulation FD Disclosure.
The
following information is furnished pursuant to Regulation FD: On
November 4, 2009, Shenandoah Telecommunications Company held its third 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)
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Exhibits
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The
following exhibit is filed with this Current Report on Form 8-K.
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Third
Quarter 2009 Earnings Release Conference Call
Slides
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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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November
4, 2009
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/S/ Adele M. Skolits
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Adele
M. Skolits
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Vice
President - Finance and
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Chief
Financial Officer
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(Duly
Authorized Officer)
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2
3Q
2009 Earnings Conference Call
November
4, 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
3Q
‘09 Highlights
q Net
Income - 3Q ‘09 net income
of
$6.3 million
$6.3 million
q Operating
results - Net income
from
continuing operations of $6.3 million
continuing operations of $6.3 million
q Cable
Loss - Net loss from
the
acquired cable operations of $.8 million
acquired cable operations of $.8 million
Net
Income (in millions)
Net
Income from Continuing Operations
(in millions)
(in millions)
6
3Q
’09 & More Recent Highlights
n Cable
Triple Play -
40% of
acquired
homes passed upgraded through Nov.1
homes passed upgraded through Nov.1
n Investment
in wireless for
sustained growth - 16 additional cell
sites and 28 additional EVDO sites
sustained growth - 16 additional cell
sites and 28 additional EVDO sites
n Discontinued
Operations -
Converged Services sale in progress
Converged Services sale in progress
n Acquisition
of Rural Access Lines
- Closed November 1 on acquisition of
North River of 1,000 rural access lines
for $600k, upgrade to DSL for $1.0 m
is underway
- Closed November 1 on acquisition of
North River of 1,000 rural access lines
for $600k, upgrade to DSL for $1.0 m
is underway
Number
of Cell Sites
7
Adele
Skolits
CFO
and VP of Finance
8
EPS
Earnings
Per Share
Earnings
per Share from Continuing
Operations
Operations
n Solid
Earnings- EPS from
continuing operations and in total
of $.27 in 3Q ’09
continuing operations and in total
of $.27 in 3Q ’09
9
Segment
Results - Operating Income
Wireless
n Average customers
up 7% and service revenues up 4%
n Operating costs
associated with PCS network upgrades up $1.2 million in cost
of goods sold and $.9 million in depreciation
of goods sold and $.9 million in depreciation
Wireline
n Non-recurring
income - 3Q ‘08 included adjustment of $.6 in retroactive
access fees
access fees
Cable
n The acquired cable
operations will continue to impact earnings; it added $1.3
million to the net operating loss in 3Q ’09
million to the net operating loss in 3Q ’09
10
Profitability
OIBDA
for the Quarter Ended
($ millions)
n Maintaining
profitability while
investing in growth - OIBDA
margin of 47% for 3Q’09
investing in growth - OIBDA
margin of 47% for 3Q’09
11
Cash
Flows
Cash
Flows ($ millions)
n Increased
operating cash flow
- Cash generated by operations 3
times Q3’08
- Cash generated by operations 3
times Q3’08
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 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 increase in
churn
from 2.07% in Q2 ‘09 to
2.17% in Q3 ‘09, an
increase from 1.85% in
Q3 ‘08
from 2.07% in Q2 ‘09 to
2.17% in Q3 ‘09, an
increase from 1.85% in
Q3 ‘08
n Bad Debt write-offs
in
Q3‘09 of 5.3% of gross
revenues versus 5.5% in
Q3’08
Q3‘09 of 5.3% of gross
revenues versus 5.5% in
Q3’08
n Credits and
adjustments
down from 11.6% of gross
revenues in 3Q’08 to
11.0% in 3Q’09
down from 11.6% of gross
revenues in 3Q’08 to
11.0% in 3Q’09
15
Key
Operational Results - PCS
Gross
Billed Revenue per User - Data & Voice 1
n Data revenues
growth continues to grow
1 - Before Service
credits, bad debt, Sprint Nextel fees. See
reconciliation of Non-GAAP financial measures
on slide 24
on slide 24
16
PCS
Revenues
Gross
Billed Revenues ($ millions)
$35.0
$36.4
17
PCS
Customers Top Picks Q3 2009
n Top Service Plans -
49% 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 2
19%
u Sanyo 2700
12%
u Samsung Exclaim
8%
u Blackberry Curve
6%
u Sanyo Katana LX
6%
u Mobile Data Cards
6%
u Samsung Rant
5%
u Palm Pre
5%
18
Meeting
PCS Customer Needs
n On track to
complete 2009
construction plans
construction plans
n Expanded data
offering
u Over 94% POP’s
with
EVDO coverage
EVDO coverage
n PA coverage
improved
n Capacity
increased
Number
of Cell Sites
19
Key
Operational Results - Wireline
n Modest access line
loss
n 45%
broadband
penetration
penetration
n 2009 &
2010 Capex to
increase broadband
speeds to 10Mbps+
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
20
Key
Operational Results - Cable
n Integrating
acquisition of
17,000 new customers
17,000 new customers
n Converted acquired
cable
systems to our billing platform
systems to our billing platform
n Re-launch of 40% of
the cable
systems with 2 way video and
internet
systems with 2 way video and
internet
n Upgrade underway to
enable
us to offer triple play to 53%
of acquired homes passed by
year end 2009
us to offer triple play to 53%
of acquired homes passed by
year end 2009
Revenue
Generating Units(000’s)
21
Investing
in the Future
n Expanding wireless
coverage
& capacity with 64 new cell
sites and data with 125 EVDO
sites in 2009
& capacity with 64 new cell
sites and data with 125 EVDO
sites in 2009
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
22
Q&A
23
Appendix
24
Non-GAAP
Financial Measure - Billed Revenue per Subscriber
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Dollars
in thousands (except subscribers and revenue per
subscriber)
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3Q
‘08
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3Q
‘09
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Gross
billed revenue
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Wireless
segment total operating revenues
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$27,526
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$28,690
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Equipment
revenue
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(1,409)
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(1,046)
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Other
revenue
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(1,877)
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(2,357)
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Wireless
service revenue
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24,240
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25,287
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Service
credits
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4,000
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3,987
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Write-offs
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1,903
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1,916
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Management
fee
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2,336
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2,484
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Service
fee
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2,570
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2,732
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Gross billed
revenue
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35,049
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36,406
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Average
subscribers
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203,454
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217,659
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Billed
revenue per subscriber
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$57.42
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$55.75
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