SOURCE: Warwick Valley Telephone Company

May 15, 2008 17:33 ET

Warwick Valley Telephone Company Reports Financial Results for First Quarter Ended March 31, 2008

WARWICK, NY--(Marketwire - May 15, 2008) - Warwick Valley Telephone Company ("WVT Communications") ("the Company") (NASDAQ: WWVY) announced today its financial results for the three months ended March 31, 2008. The Company increased its net income by 4.7% to $760,000 from $726,000 for the three-month period over the same period in 2007. The increase was attributable primarily to our increased investments in Orange County-Poughkeepsie Limited Partnership ("OP") and continued expense containment partially offset by higher costs associated with the ramp-up of our sales force focusing on the small and medium sized business market, as well as one time separation costs for management employees.

Operating revenues decreased 4.2% from $5,891,000 to $5,644,000 for the three months ended March 31, 2008 compared to the same period in the prior period. The decrease is primarily due to a decrease in online service and local network service revenues resulting from the migration of customers from dial-up service to other high speed Internet providers partially offset by an increase in other services and sales resulting from the increased sales of customer business telephone systems.

As a result of continued cost controls, operating expenses decreased 1.8% from $6,591,000 to $6,474,000 for the three months ended March 31, 2008. These decreases derived largely from the continued oversight of outside vendors and through operating efficiencies partially offset by increases in depreciation, higher content costs, trunk line costs, severance payments made to management employees as well as the ramp-up of our direct sales force.

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. 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 first quarter results, Duane Albro, the President and CEO, said, "We recognize the benefit we gain from our interest in the OP wireless partnership and we know that our primary telephone business must be self-sufficient. We have the infrastructure in place and we are aggressively ramping up our sales activities to drive our top-line revenue. We will also continue our aggressive control of expenses in order to improve our operating margin and enhance our competitiveness. We remain firmly committed to creating value for our shareholders by the successful implementation of the above initiatives. We also remain committed to expansion of our Competitive Local Exchange Carrier activities through either building or acquiring the capability. WVT Communications continues to demonstrate that it is a great company with great customers and great employees...with 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 forward-looking statements as defined be the Private Securities Litigation Reform Act of 1995. These include statements concerning expectations, estimates, and projections about the industry, management beliefs and assumptions of Warwick Valley Telephone Company. ("Warwick," "we," "us," or "our"). Words such as "anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates," and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that difficult to forecast. Therefore, our actual results may materially differ from those expressed or forecasted in any such forward-looking statements. When considering these risks, uncertainties and assumptions, you should keep in mind the cautionary statements elsewhere in this report and in any document incorporated herein by reference. New risks and uncertainties arise from time to time and we can not predict those events or how they may affect us. For a more detailed discussion of the risks and uncertainties that may affect Warwick's operating and financial results and its ability to achieve its financial objectives, interested parties should review the "Risk Factors" sections in the Warwick's reports filed with the Securities and Exchange Commission, including the Annual Report on Form 10-K for the fiscal year ended December 31, 2007. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

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



                                                       Three Months Ended
                                                            March 31
                                                      --------------------
                                                        2008       2007
                                                      ---------  ---------

Operating revenues:
  Local network service                               $     749  $     825
  Network access service                                  1,913      1,949
  Long distance services                                    822        910
  Directory advertising                                     325        338
  Online services                                         1,340      1,475
  Other services and sales                                  495        394
                                                      ---------  ---------

  Total operating revenues                                5,644      5,891
                                                      ---------  ---------

Operating expenses:
  Plant specific                                          1,314      1,186
  Plant non-specific:
    Depreciation and amortization                         1,359      1,294
    Other                                                   763        701
  Customer operations                                     1,130      1,052
  Corporate operations                                    1,298      1,550
  Cost of services and sales                                261        391
  Property, revenue and payroll taxes                       349        417
                                                      ---------  ---------

  Total operating expenses                                6,474      6,591
                                                      ---------  ---------

  Operating loss                                           (830)      (700)

Other income (expense):
  Interest income (expense), net of capitalized
   interest                                                 (87)       (34)
  Income from equity method investments                   2,147      1,870
  Other income (expense), net                               (49)       (18)
                                                      ---------  ---------

  Total other income (expense)                            2,011      1,818
                                                      ---------  ---------

  Income before income taxes                              1,181      1,118

Income taxes                                                421        392
                                                      ---------  ---------

  Net income                                                760        726

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

  Income applicable to common stock                   $     754  $     720
                                                      =========  =========

  Basic and diluted earnings per share of
  outstanding common stock                            $    0.14  $    0.13
                                                      =========  =========
  Weighted average shares of common stock
  outstanding                                         5,351,780  5,351,780
                                                      =========  =========




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

                                                  March 31,   December 31,
                                                    2008          2007
                                                ------------  ------------
                                                (Unaudited)
Assets

Current assets:
   Cash and cash equivalents                    $      5,295  $      5,849
   Accounts receivable - net of allowance for
    uncollectibles - $209 and $214, in 2008 and
    2007, respectively                                 2,844         3,067
   Other accounts receivable                              73           152
   Materials and supplies                              1,615         1,591
   Prepaid expenses                                      942           769
   Prepaid expenses                                      253             -
   Deferred income taxes                                 108           119
                                                ------------  ------------
Total current assets                                  11,130        11,547
                                                ------------  ------------

   Property, plant and equipment, net                 35,380        35,791
   Unamortized debt issuance costs                        61            65
   Other deferred charges                                749           762
   Investments                                         8,233         8,276
   Other assets                                          210           210
                                                ------------  ------------

   Total assets                                 $     55,763  $     56,651
                                                ============  ============

Liabilities  and Shareholders' Equity

Current liabilities:
   Accounts payable                             $      1,103  $        940
   Current maturities of long-term debt                1,519         1,519
   Advance billing and payments                          208           234
   Customer deposits                                     105           116
   Accrued taxes                                         126            80
   Pension and post retirement benefit
    obligations                                          929           929
   Other accrued expenses                              1,344         1,830
                                                ------------  ------------
Total current liabilites                               5,334         5,648
                                                ------------  ------------

   Long-term debt, net of current maturities           5,315         5,695
   Deferred income taxes                               3,334         3,334
   Long term income taxes payable                        660           640
   Other liabilities and deferred credits                622           591
   Pension and post retirement benefit
    obligations                                        4,374         4,324
                                                ------------  ------------

   Total liabilities                                  19,639        20,232
                                                ------------  ------------

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                                  60            60
    issued 5,985,463 shares
   Treasury stock - at cost, 633,683 common
    shares                                            (4,748)       (4,748)
   Additional paid in capital                          3,487         3,487
   Accumulated other comprehensive loss                 (853)         (875)
   Retained earnings                                  37,678        37,995
                                                ------------  ------------

   Total shareholders' equity                         36,124        36,419
                                                ------------  ------------

   Total liabilities and shareholders' equity   $     55,763  $     56,651
                                                ============  ============

Contact Information

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