SOURCE: Warwick Valley Telephone Company

August 13, 2007 15:36 ET

WVT Communications Reports Second Quarter 2007 Results

WARWICK, NY--(Marketwire - August 13, 2007) - WVT Communications (NASDAQ: WWVY) announced today its financial results for the second quarter and six months ended June 30, 2007. There was solid improvement in net income for both periods. The Company increased its net income by 95% from $694,000 to $1,350,000 for the three-month period over the same period in 2006 and by 9% from $1,902,000 to $2,076,000 for the six-month period over the same period in 2006. Of the Company's net income for the six-month period in 2006, $611,000 derived from the sale of an investment. That income did not recur in 2007. If it is excluded from the net income for the first six months of 2006, the Company's net income for the comparable six-month period in 2007 increased by 40% over 2006.

Operating revenues decreased 7% from $6,341,000 to $5,878,000 for the three months ended June 30, 2007 compared to the same period in the prior year and decreased 5% from $12,416,000 to $11,769,000 for the six months ended June 30, 2007 compared to the same period in the prior year. The Company successfully introduced its Customer Winback Program and continued its "Triple Play" (bundle of wireline access, broadband internet and video services). The results of these two initiatives were not, however, enough to counteract revenue decreases from access lines.

While revenues continued to decline compared to last year, the Company introduced new services, advanced technology, competitive pricing plans and packaging that it believes should over time reduce or reverse that decline. We are significantly extending the footprint of our video services and will include High Definition TV and video on demand by the end of the third quarter. We have had success this quarter in the continuation of our "Triple Play" promotion of bundled wireline access, broadband internet, and video services as well as with the introduction of our Winback Program, which works to regain former customers. During the third quarter we will introduce our "Quadruple Play" offering to the consumer marketplace, which combines the Triple-Play with the re-introduction of WVT-branded wireless service. These efforts should help offset the effects of competition and technology substitution that have resulted in access line losses. In the third quarter we also will launch Voice over Internet Protocol ("VoIP") services together with high volume broadband transport for business customers and expand our CLEC operations in Poughkeepsie and Newburgh markets.

Further, as a result of aggressive cost controls, the Company's operating expenses decreased a significant 23% from $7,795,000 to $6,034,000 for the three months ended June 30, 2007 compared to the same period in the prior year and decreased 15% from $14,913,000 to $12,625,000 for the six months ended June 30, 2007 compared to the same period in the prior year. The decreases derived largely from prudent management of outside vendors and improvements in operating efficiencies.

The Company has a long history in successful deployments of new technology. We were one of the first 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. We have continued to invest in our operations to gain enhanced operating efficiencies and to enable the introduction of new services to our customers. Last year we installed one of the first VoIP switching platforms in the Hudson Valley. This year we will complete the installation of our enterprise resource planning system, which will support new services and provide operating efficiencies. During the second quarter, we upgraded several of our core servers with new technology, providing customers with enhanced features, and in the third quarter we plan to replace our core routers. We have a major capital program to extend video services and broadband internet to a greater number of our customers.

Commenting on the second quarter results, Duane Albro, the President and CEO, said, "The dramatic increase of net income by 95% is a significant milestone for WVT Communications and was principally due to the hard work of our employees in the execution of our business plan. The focus during the second quarter has been to dramatically reduce expenses in order to generate a positive operating margin, lower our cost structure to enhance our competitiveness and position our infrastructure and products for the increased marketing and sales planned for the remainder of the year. We are firmly committed to creating value for our shareholders by the successful planning and deployment of our initiatives, which we believe will maximize the value of our cash flows. We are continuing to reduce our debt and pay a stable dividend. We have increased our investment in O-P and will continue to evaluate other strategic investments as well. WVT Communications 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 NY 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     Six Months Ended
                                      June 30,              June 30,
                                --------------------  --------------------
                                   2007      2006        2007      2006
                                ---------  ---------  ---------  ---------

Operating revenues:
  Local network service         $     794  $     908  $   1,619  $   1,824
  Network access service            2,066      2,109      4,015      4,043
  Long distance services              825        890      1,735      1,746
  Directory advertising               331        328        669        668
  Online services                   1,440      1,577      2,915      3,206
  Other services and sales            422        529        816        929
                                ---------  ---------  ---------  ---------

  Total operating revenues          5,878      6,341     11,769     12,416
                                ---------  ---------  ---------  ---------

Operating expenses:
  Plant specific                      871      1,211      2,057      2,376
  Plant non-specific:
    Depreciation and
     amortization                   1,294      1,434      2,588      2,905
    Other                             746        890      1,447      1,760
  Customer operations                 895      1,088      1,947      2,113
  Corporate operations              1,587      2,609      3,137      4,489
  Cost of services and sales          294        230        685        590
  Property, revenue and payroll
   taxes                              347        333        764        680
                                ---------  ---------  ---------  ---------

  Total operating expenses          6,034      7,795     12,625     14,913
                                ---------  ---------  ---------  ---------

  Operating loss                     (156)    (1,454)      (856)    (2,497)

Other income (expense):
  Interest income (expense),
   net of capitalized interest        (92)        23       (126)         6
  Income from equity method
   investments                      2,265      2,487      4,135      4,768
  Gain on sale of investment            -          -          -        611
  Other income (expense), net          28         (6)        10        (12)
                                ---------  ---------  ---------  ---------

  Total other income (expense)      2,201      2,504      4,019      5,373
                                ---------  ---------  ---------  ---------

  Income before income taxes        2,045      1,050      3,163      2,876

Income taxes                          695        356      1,087        974
                                ---------  ---------  ---------  ---------

  Net income                        1,350        694      2,076      1,902

Preferred dividends                     7          7         13         13
                                ---------  ---------  ---------  ---------

  Income applicable to common
   stock                        $   1,343  $     687  $   2,063  $   1,889
                                =========  =========  =========  =========

  Basic and diluted earnings
   per share of outstanding
   common stock                 $    0.25  $    0.13  $    0.39  $    0.35
                                =========  =========  =========  =========

  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)

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

Current assets:
        Cash and cash equivalents               $     7,330   $     12,296
        Accounts receivable - net of allowance
         for uncollectibles - $134 and $107,
         in 2007 and 2006, respectively               3,442          4,121
        Other accounts receivable                       261            262
        Materials and supplies                        1,372            957
        Prepaid expenses                                765            695
        Deferred income taxes                           222            228
                                                -----------   ------------
Total current assets                                 13,392         18,559
                                                -----------   ------------

        Property, plant and equipment, net           36,411         37,087
        Unamortized debt issuance costs                  71             77
        Other deferred charges                          798            814
        Investments                                   8,450          3,733
        Other assets                                    170            179
                                                -----------   ------------

        Total assets                            $    59,292   $     60,449
                                                ===========   ============

Liabilities and Shareholders' Equity

Current liabilities:
        Accounts payable                        $     1,650   $      1,013
        Current maturities of long-term debt          1,519          1,519
        Advance billing and payments                    274            251
        Customer deposits                               119            128
        Accrued taxes                                   863          1,221
        Pension and post retirement benefit
         obligations                                  1,155          1,435
        Other accrued expenses                        1,531          2,199
                                                -----------   ------------
Total current liabilites                              7,111          7,766
                                                -----------   ------------

        Long-term debt, net of current
         maturities                                   6,454          7,214
        Deferred income taxes                         1,032          4,490
        Long term income taxes payable                3,659              -
        Other liabilities and deferred credits          624            624
        Pension and post retirement benefit
         obligations                                  7,766          7,583
                                                -----------   ------------

        Total liabilities                            26,646         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         (3,388)        (3,554)
        Retained earnings                            36,735         37,027
                                                -----------   ------------

        Total shareholders' equity                   32,646         32,772
                                                -----------   ------------

        Total liabilities and shareholders'
         equity                                 $    59,292   $     60,449
                                                ===========   ============


Contact Information

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