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 12, 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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Item 8.01 Other Events.
On May 12, 2010, Shenandoah Telecommunications Company presented at the Jefferies 6th Annual Global Internet, Media & Telecom Conference in New York, New York. The presentation included materials related to the Company’s results of operations through March 31, 2010. 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)
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Exhibits
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The following exhibits are furnished with this Current Report on Form 8-K.
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Jefferies 6th Annual Global Internet, Media & Telecom Conference Presentation 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
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(Registrant)
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May 12, 2010
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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
May 12, 2010
Jefferies
Global Internet, Media, & Telecom Conference
Exhibit 99.1
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:
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:
nIncreasing competition in the communications industry; and
nA 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, 2009. 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.
Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009. 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.
2
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 planning
purposes.
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 planning
purposes.
3
Agenda
Introduction and Shentel Overview - Earle MacKenzie - EVP/COO
Overview of Wireless
Overview of Cable
Overview of Wireline
Financials - Adele Skolits - CFO
4
Shenandoah Telecommunications Company
n Reporting Segments: Wireless, Wireline and Cable
n Shentel Management Company: Allocation subsidiary for all
employees and shared expenses
employees and shared expenses
Allocation Subsidiary
Wireline Entities
Wireless Entities
Shenandoah
Telecommunications
Company
Telecommunications
Company
Shentel Cable
Company
Company
Shentel Service
Company
Company
Shenandoah Mobile
Company
Company
Shenandoah Cable
Television Company
Television Company
Shentel Management
Company
Company
Shentel
Communications
Company
Communications
Company
Shenandoah
Telephone Company
Telephone Company
Shenandoah
Personal
Communications
Company
Personal
Communications
Company
Shenandoah
Network Company
Network Company
Shenandoah Long
Distance Company
Distance Company
Cable Entities
5
Growth Strategy - Capitalize on Core Competencies
n Cable
u Focus on smaller less competitive markets
u Build clusters to gain operating efficiencies
u Upgrade networks to offer “Triple Play”
n Wireless
u Increase penetration in existing PCS footprint
u Look for new wireless opportunities in surrounding
geographic areas
geographic areas
n Wireline
u Attractive markets at reasonable prices
6
Segment Overview
Twelve Months Ending March 31, 2010
Twelve Months Ending March 31, 2010
Total External Revenues = $162.0 million
Operating Income Before Depreciation
& Amortization (OIBDA) by Segment
Revenue by Segment
7
Agenda
Introduction and Shentel Overview
Overview of Wireless
Overview of Cable
Overview of Wireline
Financials
8
PCS Overview
n Only remaining public Sprint
Nextel affiliate
Nextel affiliate
n 2.4 million licensed POPs
n 2.1 million covered POPs
n 225k total subscribers
u 11% penetration of covered
POPs
POPs
n 481 CDMA base stations
n 340 EVDO enabled cell sites
u 96% EVDO covered POPs
n $41,000 Estimated Average
household income
household income
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Profile of the Sprint Nextel Relationship
• Current contract through 2019 with two 10 year extensions
• Upon expiration of contract - Shentel compensated based on
enterprise value
enterprise value
• Settlement simplification in place through contract unless
amended by both parties
amended by both parties
Ø8% of Revenue - Spectrum, Brand, National Platform
- Fixed for life of contract
Ø8.8% of revenue - all other settlement items (billing,
customer care, long distance, travel)
customer care, long distance, travel)
-Can change annually with maximum of 12%
• Launched 4G in York & Harrisburg, PA, May 2010
ØWholesale Clearwire Service
• Plan to be able to offer all CDMA prepaid offerings by end of
Q2 2010
Q2 2010
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Key Operational Metrics - PCS
Periods Ending
Periods Ending
Retail Subscribers (000s)
Number of Cell Sites
Churn (%)
EVDO Sites
Non-EVDO Sites
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Attractive Service Revenue Growth - PCS
12 Months Ending
12 Months Ending
Gross Billed PCS Revenue ($ millions)1
1 Before credits and fees
11 % CAGR
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PCS Revenues
12 Months Ending
12 Months Ending
Billed Revenue ($ millions)
Up 5%
Bad Debt
Management Fee
Service Credits
Service Fee
Net Revenue
13
PCS Revenue per Subscriber
Period Ending
Period Ending
Gross Billed Revenue per Subscriber1
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Wireless Segment
12 Months Ending
12 Months Ending
Reported Revenue ($ millions)
OIBDA ($ millions)
15% CAGR
15
Capital Expenditures - Wireless
12 Months Ending
12 Months Ending
Capital Expenditures by Category ($ millions)
# Cell Sites 346 411 476 503
% Covered POPs 79% 85% 87% 88%
# EVDO Sites 52 211 334 365
% POPs Covered 27% 86% 94% 95%
Other
Capacity
Coverage
EVDO
Towers
16
Agenda
Introduction and Shentel Overview
Overview of Wireless
Overview of Cable
Overview of Wireline
Financials
17
Cable TV Overview
n Complimentary (with LEC business)
u 16k Homes Passed
u 8k Video Subscribers
n Offensive positioning (Outside ILEC)
u 40k Homes Passed
u 15k Video and 3k Internet Subscribers
u Voice service initiated 3/31/10
n All upgraded by 9/30/10
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Digital
Internet
Basic
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Cable TV
12 Months Ending
12 Months Ending
Revenue ($ millions)
OIBDA ($ millions)
Includes Rapid Communications acquisition December 1, 2008
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Deal Highlights - JetBroadband Acquisition
n Structured as an asset
purchase
purchase
n Purchase Price = $148
n 115 thousand homes
passed and serves 67
thousand RGUs
passed and serves 67
thousand RGUs
u 43 thousand video
customers
customers
u 22 thousand data
customers
customers
u 2 thousand voice
customers
customers
n Network
u 3,200 miles
u 900 miles of fiber
u 84% two way
n Competition
u No fiber to the home
u CenturyLink, Verizon
and Frontier
and Frontier
u Satellite providers
21
JBB Acquisition - Rationale
n Diversification
n Scale
n Below Market Penetration
n Geographic Fit
n Synergies
n Leveraging Core Competencies
n Coaxial Network
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Percent of Homes Passed with Services
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JBB Network
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Key Operational Metrics - With Acquisition
Pro Forma for Periods Ending March 31, 2010
Pro Forma for Periods Ending March 31, 2010
Cable Homes Passed (in 000’s)
RGUs (in 000’s)
Revenues (in millions)
OIBDA (in millions)
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Capital Expenditures by Segment ($ millions)
26
JBB Execution
n Success with Rapid Acquisition
n Network Interconnection
n Proven Technologies
n Similar Demographics
n Proximity
n Low Regulatory Risk
n Strategic Owner Appeal
27
Agenda
Introduction and Shentel Overview
Overview of PCS
Overview of Cable
Overview of Wireline
Financials
28
Wireline Customers
March 31, 2010
March 31, 2010
n 24.2k LEC access lines
n Acquisition of North River
Telephone closed November
2nd
Telephone closed November
2nd
u 0.9k access lines
n 11.5k DSL subscribers
u 46% Penetration of Access
Lines
Lines
n 3.0k dial-up Internet
subscribers
subscribers
n 10.9k long distance
subscribers
subscribers
n One FTTH community in
service outside of LEC area
service outside of LEC area
n Fiber Network
u Route miles: 1,570
29
Agenda
Introduction and Shentel Overview
Overview of PCS
Overview of Cable
Overview of Wireline
Financials - Adele Skolits - CFO
30
Net Income from Continuing Operations
($ millions)
Revenue ($ millions)
1 Shentel Converged Services has been reclassed as discontinued operations. All results have been restated.
Wireless
Wireline
Cable
31
Operating Income ($ millions)
Operating Income Before Depreciation
& Amortization ($ millions)
Key Financial Results - Continuing Operations1
12 Months Ending
1 Shentel Converged Services has been reclassed as discontinued operations. All results have been restated.
32
Key Financial Results - Consolidated
12 Months Ending
12 Months Ending
Earnings Per Share
- Continuing Operations1
Earnings Per Share
- Net Income
1 Shentel Converged Services has been reclassed as discontinued operations. All results have been restated.
2 Includes $10.7 million write down of Converged Service Business Unit ($0.45 per share) in Q1 2009
33
Jet BB Deal - Financial Highlights
n Operating Income before
Interest and Depreciation
Interest and Depreciation
u $16.2 before Corporate
office costs
office costs
u $14.6 after Corporate
office costs
office costs
n Financing
u Syndicated debt deal
u $198m Term Loan
u $50m Undrawn
Revolver
Revolver
u Oversubscribed at
more than 150% of
needs
more than 150% of
needs
34
Level of Debt - Acquisition Impact
Pro Forma for Periods Ending March 31, 2010
Pro Forma for Periods Ending March 31, 2010
Debt (in millions)
Debt to EBITDA Ratio
35
Q&A
36
Appendix
37
Non-GAAP Financial Measure - Billed Revenue per Subscriber
Period Ending
Period Ending
38
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Dollars in thousands
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Wireless
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Wireline
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Cable
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Other
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Consolidated
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Operating Income
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$40,459
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$12,711
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($7,172)
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($3,683)
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$42,315
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Depreciation and amortization
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20,660
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8,090
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4,045
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308
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33,103
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OIBDA
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$61,119
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$20,801
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($3,127)
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($3,375)
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$75,418
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Non-GAAP Financial Measure - OIBDA
12 Months Ended 3/31/2010
12 Months Ended 3/31/2010
39
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Dollars in thousands
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Wireless
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Wireline
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Cable
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Other
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Consolidated
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Operating Income
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$40,082
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$13,926
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($1,684)
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($4,589)
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$47,735
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Depreciation and amortization
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18,039
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8,071
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1,738
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315
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28,163
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OIBDA
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$58,121
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$21,997
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$54
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($4,274)
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$75,898
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Non-GAAP Financial Measure - OIBDA
12 Months Ended 3/31/2009
12 Months Ended 3/31/2009
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Dollars in thousands
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Wireless
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Wireline
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Cable
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Other
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Consolidated
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Operating Income
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$29,739
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$14,199
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($1,336)
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($5,082)
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$37,520
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Depreciation and amortization
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16,629
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6,468
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1,035
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263
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24,395
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OIBDA
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$46,368
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$20,667
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($301)
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($4,819)
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$61,915
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Non-GAAP Financial Measure - OIBDA
12 Months Ended 3/31/2008
12 Months Ended 3/31/2008
May 12, 2010
Jefferies
Global Internet, Media, & Telecom Conference