SOURCE: Warwick Valley Telephone Company

November 15, 2007 17:42 ET

WVT Communications Reports Third Quarter 2007 Results

WARWICK, NY--(Marketwire - November 15, 2007) - WVT Communications (NASDAQ: WWVY) (the "Company") announced today its financial results for the three month and nine month periods ended September 30, 2007. There was continued improvement in net income for both periods. The Company increased its net income for the three-month period by 24% from $1,259,000 in 2006 to $1,557,000 in 2007 and by 15% from $3,162,000 in 2006 to $3,633,000 in 2007 for the nine-month period. If the gain of $611,000 (pre-tax) derived from the sale of an investment in 2006 is excluded from the net income for the first nine months of 2006, the Company's net income for the comparable nine-month period in 2007 increased by 32% over 2006.

Operating revenues decreased 3% for the three-month period from $6,336,000 in 2006 to $6,137,000 in 2007 and by 5% for the nine-month period, from $18,752,000 in 2006 to $17,906,000 in 2007. While revenues have continued to decline compared to last year, the rate of decline has been somewhat lessened. The Company introduced its Customer Winback Program and enhanced its "Triple Play" (bundle of wireline access, broadband internet and video services) with the re-introduction of WVT-branded wireless service into an "Opt 4 Savings with Grand Slam" offering. The Company also extended the footprint of its video services and added High Definition TV during the third quarter. Management believes that these initiatives, along with other new services, competitive pricing plans and advance technology deployment should further reduce or reverse the revenue decline.

As a result of aggressive cost controls and improved operating efficiencies, operating expenses decreased a significant 7% for the three-month period from $6,727,000 in 2006 to $6,280,000 in 2007 and by 13% for the nine-month period, from $21,639,000 in 2006 to $18,905,000 in 2007.

The Company has a long history in successful deployments of new technology. WVT Communications was one of the first rural telephone companies to install digital switching, to offer internet access as an Internet Service Provider (ISP), and to offer video service as an alternative to cable TV companies. The Company has continued to invest in its operations to gain enhanced operating efficiencies and to enable the introduction of new services to our customers. This year the Company will complete the installation of its enterprise resource planning system, which will support new services and provide operating efficiencies. During the third quarter, the Company replaced its core routers with new technology. The Company has continued to deploy capital to extend video services and higher speed broadband internet to a greater number of our customers.

Commenting on the third quarter results, Duane Albro, the President and CEO, said, "The continued improvement in net income is a significant accomplishment for WVT Communications and was principally due to the diligence of our employees in the execution of our business plan. The focus during the third quarter was to continue our aggressive control of expenses in order to generate a positive operating margin; lower our cost structure to enhance our competitiveness; and to position our infrastructure and products for the increased marketing and sales planned for the remainder of this year and into 2008. We remain firmly committed to creating value for our shareholders by the successful planning and deployment of these initiatives. We also remain committed to expansion of our CLEC activities through either building or acquiring the capability. We believe that implementing our plans will maximize the value of our cash flows. WVT Communications continues to demonstrate that it is a great company with great customers and great employees... and a solid plan for growth."

About WVT Communications

WVT Communications is a leading voice, internet, video and wireless provider servicing consumers and businesses in the lower Hudson Valley of New York and New Jersey. Additional information about the Company is available at www.wvtc.com.

Forward-looking Statements

This press release includes statements that may constitute "forward-looking" statements. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1955. Forward-looking statements inherently involve risks and uncertainties that could cause or contribute to such differences that include, but are not limited to, competitive factors, the success of new products in the marketplace, dependence on third party vendors, and the ability to obtain financing. By making these forward-looking statements, WVT Communications undertakes no obligation to update these statements for revisions or changes after the date of this release.

                     WARWICK VALLEY TELEPHONE COMPANY
                    CONSOLIDATED STATEMENTS OF INCOME
                                (Unaudited)
           ($ in thousands, except share and per share amounts)

                                 Three Months Ended    Nine Months Ended
                                    September 30,        September 30,
                                --------------------  --------------------
                                  2007       2006       2007       2006
                                ---------  ---------  ---------  ---------

Operating revenues:
  Local network service         $     799  $     882  $   2,418  $   2,706
  Network access service            2,078      2,174      6,093      6,217
  Long distance services            1,007        887      2,742      2,633
  Directory advertising               328        340        997      1,008
  Online services                   1,419      1,527      4,334      4,733
  Other services and sales            506        526      1,322      1,455
                                ---------  ---------  ---------  ---------

  Total operating revenues          6,137      6,336     17,906     18,752
                                ---------  ---------  ---------  ---------

Operating expenses:
  Plant specific                    1,081      1,332      3,138      3,707
  Plant non-specific:
    Depreciation and
     amortization                   1,410      1,264      3,998      4,166
    Other                             752        805      2,199      2,567
  Customer operations               1,120        977      3,067      3,091
  Corporate operations              1,322      1,709      4,459      6,198
  Cost of services and sales          229        367        914        957
  Property, revenue and payroll
   taxes                              366        273      1,130        953
                                ---------  ---------  ---------  ---------

  Total operating expenses          6,280      6,727     18,905     21,639
                                ---------  ---------  ---------  ---------

  Operating loss                     (143)      (391)      (999)    (2,887)

Other income (expense):
  Interest income (expense),
   net of capitalized interest       (114)        15       (240)        21
  Income from equity method
   investments                      2,626      2,177      6,761      6,945
  Gain on sale of investment            -          -          -        611
  Other income (expense), net         (28)       (16)       (18)       (28)
                                ---------  ---------  ---------  ---------

  Total other income (expense)      2,484      2,176      6,503      7,549
                                ---------  ---------  ---------  ---------

  Income before income taxes        2,341      1,785      5,504      4,662

Income taxes                          784        526      1,871      1,500
                                ---------  ---------  ---------  ---------

  Net income                        1,557      1,259      3,633      3,162

Preferred dividends                     6          6         19         19
                                ---------  ---------  ---------  ---------

  Income applicable to common
   stock                        $   1,551  $   1,253  $   3,614  $   3,143
                                =========  =========  =========  =========

  Basic and diluted earnings
   per share of
  outstanding common stock      $    0.29  $    0.23  $    0.68  $    0.59
                                =========  =========  =========  =========
  Weighted average shares of
   common stock outstanding     5,351,780  5,351,780  5,351,780  5,351,780
                                =========  =========  =========  =========






                     WARWICK VALLEY TELEPHONE COMPANY
                        CONSOLIDATED BALANCE SHEETS
            ($ in thousands except share and per share amounts)

                                                 September 30, December 31,
                                                      2007         2006
                                                  -----------  -----------
                                                  (Unaudited)
Assets

Current assets:
    Cash and cash equivalents                     $     5,385  $    12,296
    Accounts receivable - net of allowance for
     uncollectibles - $150 and $107, in 2007 and
     2006, respectively                                 3,551        4,121
    Other accounts receivable                             244          262
    Materials and supplies                              1,689          957
    Prepaid expenses                                      695          695
    Deferred income taxes                                 187          228
                                                  -----------  -----------
Total current assets                                   11,751       18,559
                                                  -----------  -----------

    Property, plant and equipment, net                 36,231       37,087
    Unamortized debt issuance costs                        68           77
    Other deferred charges                                849          814
    Investments                                         8,644        3,733
    Other assets                                          170          179
                                                  -----------  -----------

    Total assets                                  $    57,713  $    60,449
                                                  ===========  ===========

Liabilities  and Shareholders' Equity

Current liabilities:
    Accounts payable                              $     1,081  $     1,013
    Current maturities of long-term debt                1,519        1,519
    Advance billing and payments                          251          251
    Customer deposits                                     108          128
    Accrued taxes                                         404        1,221
    Pension and post retirement benefit
     obligations                                        1,155        1,435
    Other accrued expenses                              2,062        2,199
                                                  -----------  -----------
Total current liabilites                                6,580        7,766
                                                  -----------  -----------

    Long-term debt, net of current maturities           6,075        7,214
    Deferred income taxes                               1,392        4,490
    Long term income taxes payable                      1,948            -
    Other liabilities and deferred credits                655          624
    Pension and post retirement benefit
     obligations                                        7,857        7,583
                                                  -----------  -----------

    Total liabilities                                  24,507       27,677
                                                  -----------  -----------

Shareholders' equity
    Preferred shares - $100 par value; authorized
     and issued shares of 5,000; $0.01 par value
     authorized and unissued shares of 10,000,000;        500          500
    Common stock - $0.01 par value; authorized
     shares of 10,000,000
     issued 5,985,463 shares                               60           60
    Treasury stock - at cost, 633,683 common
     shares                                            (4,748)      (4,748)
    Additional paid in capital                          3,487        3,487
    Accumulated other comprehensive loss               (3,305)      (3,554)
    Retained earnings                                  37,212       37,027
                                                  -----------  -----------

    Total shareholders' equity                         33,206       32,772
                                                  -----------  -----------

    Total liabilities and shareholders' equity    $    57,713  $    60,449
                                                  ===========  ===========

Contact Information

  • Contact:
    WVT Communications
    Kenneth H. Volz
    Executive Vice President & Chief Financial Officer
    845-986-8080