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): May 6, 2010
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Shenandoah Telecommunications Company
(Exact name of registrant as specified in its charter)
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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
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))
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1
Item 7.01 Regulation FD Disclosure.
The following information is furnished pursuant to Regulation FD: On May 6, 2010, Shenandoah Telecommunications Company held its first quarter 2010 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 furnished with this Current Report on Form 8-K.
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First Quarter 2010 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.
SHENANDOAH TELECOMMUNICATIONS COMPANY
(Registrant)
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May 6, 2010
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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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Exhibit 99.1
1Q 2010 Earnings Conference Call
May 6, 2010
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
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1Q ‘10 Highlights
q Net Income - 1Q 2010 net income of
$6.8 million
$6.8 million
q Operating results - Net income from
continuing operations of $6.6 million
up 7%, with wireless up 4%
continuing operations of $6.6 million
up 7%, with wireless up 4%
q Cable Loss - Net loss from the cable
segment of $1.3 million
segment of $1.3 million
Net Income
(in millions)
Net Income from Continuing Operations
(in millions)
(in millions)
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1Q ’10 Wireless Highlights
n Steady Wireless growth - customers
up 5% in the last year, net adds up
7% this quarter
up 5% in the last year, net adds up
7% this quarter
n Quarterly churn improves - Q1
‘10 churn of 1.91% compared to
1.99% for Q4 ‘09 and 2.15% for Q1
’09
‘10 churn of 1.91% compared to
1.99% for Q4 ‘09 and 2.15% for Q1
’09
n Wireless upgrades completed -
Capital Spending reduced as wireless
high speed data upgrade and coverage
improvement programs are completed
Capital Spending reduced as wireless
high speed data upgrade and coverage
improvement programs are completed
PCS Customers (000s)
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1Q ’10 Other Highlights
n Cable Triple Play - 68% of acquired
homes passed upgraded through
March 31
homes passed upgraded through
March 31
n North River commitments
delivered - DSL service available to
100% of North River customers, up
from 50% at year end
delivered - DSL service available to
100% of North River customers, up
from 50% at year end
n Substantial DSL growth - DSL subs
up 5% in Q1 2010
up 5% in Q1 2010
n Discontinued Operations -
Converged Services sale process
continues
Converged Services sale process
continues
DSL Customers (000s)
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Adele Skolits
CFO and VP of Finance
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EPS
Earnings Per Share
Earnings per Share from Continuing
Operations
Operations
n Solid Earnings- EPS from
continuing operations of $.28 in 1Q
’10, up 8%
continuing operations of $.28 in 1Q
’10, up 8%
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Profitability
OIBDA for the Quarter Ended ($ millions)
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OIBDA
Change between 1Q’09and 1Q’10
in thousands
Wireless
n Average customers and
service revenues up 5%
service revenues up 5%
n Operating costs
associated with PCS
network upgrades
associated with PCS
network upgrades
Wireline
n Service revenues up 3%
Cable
n Revenues up despite
having sold 7% of the
RGU’s
having sold 7% of the
RGU’s
n Increased costs
associated with network
upgrades and adding
1,172 net adds in Q1’10
vs. loss of 69 in Q1’09
associated with network
upgrades and adding
1,172 net adds in Q1’10
vs. loss of 69 in Q1’09
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Cash Flows
Cash Flows ($ millions)
n Operating cash flow - Lower due
to timing of payments vendor, tax
and Sprint payments
to timing of payments vendor, tax
and Sprint payments
n Capex - Expenditures flat with
Q1’09 and lower than previous
quarters as Wireless network
improvements slow
Q1’09 and lower than previous
quarters as Wireless network
improvements slow
n Cost of Capital will drop - The
balance sheet will enable us to use
leverage to acquire JetBB, shifting
the fundamental capital structure
and dropping capital costs
balance sheet will enable us to use
leverage to acquire JetBB, shifting
the fundamental capital structure
and dropping capital costs
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Earle MacKenzie
EVP and COO
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Key Operational Results - Wireless
PCS Customers (000s)
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Key Operational Results - Wireless
Gross Additions
Net Additions
n Decrease in churn from
2.15% in Q1 ‘09 and
1.99% in Q4 ‘09 to 1.91%
in Q1 ’10
2.15% in Q1 ‘09 and
1.99% in Q4 ‘09 to 1.91%
in Q1 ’10
n Improvements in retention
lead to a 7% increase in
net adds
lead to a 7% increase in
net adds
n Bad Debt write-offs and
credits are down 5%
Q1’10 over Q1’09
credits are down 5%
Q1’10 over Q1’09
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Key Operational Results - PCS
Gross Billed Revenue per User - Data & Voice 1
1 - Before Service credits, bad debt, Sprint Nextel fees. See reconciliation of Non-GAAP financial measures
on slide 24
on slide 24
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PCS Revenues
Gross Billed Revenues ($ millions)
$36.0
$37.1
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PCS Customers Top Picks Q1 2010
n Top Service Plans - 49% of
Gross Adds
Gross Adds
u Everything Data Family
1500
1500
u Everything Messaging
Family 1500
Family 1500
u Everything 450
n Top Devices - Shentel
Controlled Channels
Controlled Channels
u Sanyo 3810 12%
u Sanyo 2700 11%
u Blackberry Curve 9%
u Samsung Exclaim 9%
u LG Rumor 2 9%
u Mobile Data Cards 7%
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Meeting PCS Customer Needs
n Growth in sites and EVDO
coverage has slowed
coverage has slowed
n Expanded data offering
u Over 95% POP’s with
EVDO coverage
EVDO coverage
n Future investments success
based or maintenance related
based or maintenance related
Number of Cell Sites
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Key Operational Results - Wireline
n Modest access line loss
n 46% overall broadband
penetration
penetration
n 12% growth in DSL
customers since 3/31/09
customers since 3/31/09
Access lines (000s)
Internet Customers (000s)
1 DSL only available within LEC area
2 Dial-up offered inside and outside the LEC area
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Key Operational Results - Cable
n Upgrades continue to result in
substantial RGU growth
substantial RGU growth
n 68% of homes passed
upgraded in acquired markets
upgraded in acquired markets
n Voice service launched
Cable Segment Net RGU Growth
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Key Operational Results - Cable
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12/31/08
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3/31/09
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12/31/09
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3/31/10
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Video
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Homes Passed
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64,365
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64,365
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56,268
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56,268
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Penetration
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38.70%
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38.50%
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40.50%
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41.30%
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High-speed Internet
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Available Homes
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19,405
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19,405
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25,748
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27,522
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Penetration
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5.80%
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6.20%
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8.10%
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10.10%
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Voice
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Available Homes
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-
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6,355
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Penetration
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n/a
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n/a
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n/a
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0.60%
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Investing in the Future
n Wireless expansion slows to
success-based coverage &
capacity adds in 2010
success-based coverage &
capacity adds in 2010
n Complete program to increase
broadband speeds to 10 MB+
in LEC area
broadband speeds to 10 MB+
in LEC area
n Increased miles and capacity
of fiber
of fiber
n Complete upgrade of existing
cable systems to 2-way to
provide triple play of services
cable systems to 2-way to
provide triple play of services
n Initial JetBB upgrades
Capex Spending
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Q&A
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Appendix
26
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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1Q '09
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1Q '10
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Gross billed revenue
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Wireless segment total operating revenues
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$28,804
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$30,233
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Equipment revenue
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-1,270
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-1,218
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Other revenue
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-2,174
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-2,488
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Wireless service revenue
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25,360
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26,527
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Service credits
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3,764
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3,756
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Write-offs
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1,705
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1,422
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Management fee
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2,482
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2,592
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Service fee
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2,730
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2,851
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Gross billed revenue
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36,041
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37,148
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Average subscribers
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212,176
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223,591
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Billed revenue per subscriber
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$56.62
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$55.38
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