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): August 5, 2010
___________________
Shenandoah Telecommunications Company
(Exact name of registrant as specified in its charter)
__________________
|
Virginia
|
0-9881
|
54-1162807
|
|
(State or other jurisdiction of incorporation)
|
(Commission File Number)
|
(IRS Employer Identification No.)
|
|
500 Shentel Way
P.O. Box 459
Edinburg, VA
|
22824
|
|
(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):
|
o
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
|
o
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
|
o
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2-(b))
|
|
o
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
1
Item 7.01 Regulation FD Disclosure.
The following information is furnished pursuant to Regulation FD: On August 5, 2010, Shenandoah Telecommunications Company held its second 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.
|
(c)
|
Exhibits
|
The following exhibit is furnished with this Current Report on Form 8-K.
|
Second Quarter 2010 Earnings Release Conference Call 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
(Registrant)
|
August 5, 2010
|
/S/ Adele M. Skolits
|
|
|
Adele M. Skolits
|
||
|
Vice President - Finance and
|
||
|
Chief Financial Officer
|
||
|
(Duly Authorized Officer)
|
||
2
2Q 2010 Earnings Conference Call
August 5, 2010
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:
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.
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.
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 ‘10 Highlights
q Cable
u Acquisitions - Acquisition of Jet Broadband; closed on July 30th
u Sales Momentum - 2Q 2010 net RGU additions of 1,873; RGU growth of 7%
u Triple Play - High Speed data now available to 59% and voice to 40% of video homes
passed
passed
q Wireless
u Prepaid - purchased the right to a share of revenues from approximately 50,000
current Virgin Mobile customers and began offering Boost and Virgin Mobile service in
July
current Virgin Mobile customers and began offering Boost and Virgin Mobile service in
July
u 3G/4G - now selling 3G/4G data cards and handsets
q Other
u Pension - Final distribution of Defined Benefit Pension Plan assets
6
2Q ‘10 Highlights
q Net Income - Net income of $4.6 million
q Operating results - Net income from
continuing operations of $4.5 million
continuing operations of $4.5 million
q Cost of Pension Closing/Curtailment - $3.8
million before tax and $2.2 million after tax
million before tax and $2.2 million after tax
Net Income
(in millions)
Net Income from Continuing Operations (in
millions)
millions)
7
2Q ’10 Wireless Highlights
n Steady Wireless growth - customers up 5%
in the last year
in the last year
n Quarterly churn improves - Q2 ‘10
churn of 1.7% compared to 2.1% for Q2 ‘09 and
1.9% for Q1 ’10
churn of 1.7% compared to 2.1% for Q2 ‘09 and
1.9% for Q1 ’10
PCS Postpaid Customers (000s)
8
Adele Skolits
CFO and VP of Finance
9
EPS
Earnings per Share from Continuing Operations
n Solid Earnings- EPS of $.19 in 2Q ’10, the
pension impact was $.09
pension impact was $.09
10
Profitability
Adjusted OIBDA for the Quarter ($ millions)
11
Adjusted OIBDA by Segment
12
New Debt Facility
n Floating Rate Term Loan
Ø Facility size - $189.8 million
Ø Interest Rate - Floating at LIBOR + 3.5%, initially; no LIBOR floor
Ø Repayment - 5% per annum beginning 4Q’10, increasing to 10% per annum 4Q’11
Ø Covenants - Maintenance
n Revolver - $50 million, with $30 million available at closing, undrawn
n Fixed Rate Term Loan - $8.0 million at a rate of 7.37% repaid by August 2013
13
Earle MacKenzie
EVP and COO
14
Key Operational Results - Wireless
PCS Postpaid Customers (000s)
15
Key Operational Results - Wireless
Gross Additions
Net Additions
n Decrease in churn from 2.1% in
Q2 ’09 to 1.7% in Q2 ’10
Q2 ’09 to 1.7% in Q2 ’10
n Small decrease in net adds
16
Key Operational Results - PCS
Gross Billed Revenue per User - Data & Voice 1
1 - Before Service credits, bad debt, Sprint Nextel fees. See reconciliation of Non-GAAP financial measures on slide 24
17
PCS Revenues
Gross Billed Revenues ($ millions)
$36.0
$37.1
*-Please note the Net Service Fee percentage increased from 8.8% to 12% effective
6/1/10
6/1/10
18
PCS Customers Top Picks Q2 2010
n Top Service Plans - 55% of Gross Adds
u Everything Data Family 1500 -
40%
40%
u Everything Messaging Family 1500
- 8%
- 8%
u Everything 450 - 7%
n Top Devices - Shentel Controlled
Channels
Channels
u Blackberry 8530 - 16%
u Samsung Seek - 9%
u Sanyo 2700 - 8%
u LG Rumor 2 - 8%
u Samsung Moment - 6%
u Mobile Data Cards - 8%
19
Meeting PCS Customer Needs
n Reaching end of major expansion in
sites and EVDO
sites and EVDO
n Expanded data offering
u Over 95% POP’s with EVDO
coverage
coverage
n Future investments success based or
maintenance related
maintenance related
Number of Cell Sites
20
Key Operational Results - Wireline
n Modest access line loss
n Improved broadband
penetration to 49%
penetration to 49%
n 11% growth in DSL customers
since 6/30/09
since 6/30/09
Access lines (000s)
Internet Customers (000s)
21
Key Operational Results - Cable
n Upgrades continue to result in
substantial RGU growth
substantial RGU growth
n HSD now available to 82% of homes
passed in acquired markets
passed in acquired markets
n Voice service launched in Q1,
available to 69% of homes passed in
acquired markets
available to 69% of homes passed in
acquired markets
Cable Segment Net RGU Growth*
*- Net RGU Growth excludes 1,754 RGU’s sold in Q4’09”
22
Key Operational Results - Cable
|
|
12/31/08
|
6/30/09
|
|
12/31/09
|
6/30/10
|
|
Video
|
|
|
|
|
|
|
Homes Passed
|
64,365
|
64,365
|
|
56,268
|
56,395
|
|
Penetration
|
38.9%
|
38.5%
|
|
40.5%
|
41.2%
|
|
High-speed Internet
|
|
|
|
|
|
|
Available Homes
|
19,405
|
19,405
|
|
25,748
|
33,301
|
|
Penetration
|
5.80%
|
6.7%
|
|
8.10%
|
11.5%
|
|
Voice
|
|
|
|
|
|
|
Available Homes
|
-
|
-
|
|
-
|
27,914
|
|
Penetration
|
n/a
|
n/a
|
|
n/a
|
2.9%
|
Note: Video homes passed includes 16K homes located in Shenandoah County, VA, where internet and voice services are not
available from the cable company.
available from the cable company.
23
Investing in the Future
n Wireless expansion slows to success-
based coverage & capacity adds in
2010
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
n Complete upgrade of existing cable
systems to 2-way to provide triple
play of services
systems to 2-way to provide triple
play of services
n Initial JetBB upgrades
Capex Spending
24
Q&A
25
Appendix
26
Non-GAAP Financial Measure - Billed Revenue per Subscriber
|
Dollars in thousands (except subscribers and revenue per subscriber)
|
|
||
|
|
2Q '09
|
2Q '10
|
|
|
Gross billed revenue
|
|||
|
|
|
|
|
|
Wireless segment total operating revenues
|
$29,060
|
|
$30,031
|
|
Equipment revenue
|
(1,169)
|
|
(1,287)
|
|
Other revenue
|
(2,190)
|
|
(2,480)
|
|
Wireless service revenue
|
25,701
|
|
26,264
|
|
Service credits
|
3,310
|
|
3,714
|
|
Write-offs
|
1,564
|
|
1,381
|
|
Management fee
|
2,529
|
|
2,606
|
|
Service fee
|
2,782
|
|
3,213
|
|
Gross billed revenue
|
35,886
|
|
37,178
|
|
|
|
|
|
|
|
|
|
|
|
Average subscribers
|
214,208
|
|
226,259
|
|
|
|
|
|
|
Billed revenue per subscriber
|
$55.84
|
|
$54.77
|