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