SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1996 Commission file number 0-8621
-------------------------------- -------------------------------
The Woodbury Telephone Company
------------------------------
(Exact name of registrant as specified in its charter)
Connecticut 06-0594990
- ------------------------------------------------------------------------------
(State or other jurisdiction of incorporation (IRS Employer Identification
or organization) Number)
299 Main Street South, Woodbury, Connecticut 06798
- -----------------------------------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code (203) 263-2121
--------------
Not Applicable
--------------
Former name, former address and former fiscal year, if changed since
last report.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes _x__ No ____
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at July 31, 1996
------- -----------------------------
Common Stock, par value $2.50 per share 769,107
<PAGE>
THE WOODBURY TELEPHONE COMPANY
FORM 10-Q
INDEX
PART I. FINANCIAL INFORMATION Page number
Item 1. Financial Statements (Unaudited)
Condensed Balance Sheets-
June 30, 1996 and December 31, 1995 3-4
Condensed Statements of Income-
Six months ended June 30, 1996 and 1995 5
Condensed Statements of Income-
Three Months Ended June 30, 1996 and 1995 6
Condensed Statements of Cash Flows
Six months ended June 30, 1996 and 1995 7
Notes to Condensed Financial Statements 8-9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10-11
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 6. Exhibits and Reports on Form 8-K 13
<PAGE>
THE WOODBURY TELEPHONE COMPANY
FORM 10-Q
FOR QUARTER ENDED JUNE 30, 1996
PART I
FINANCIAL INFORMATION
-2-
<PAGE>
<TABLE>
<CAPTION>
The Woodbury Telephone Company
Condensed Balance Sheets
ASSETS
June 30 December 31
1996 1995
(unaudited)
----------- ------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 2,194,404 $ 2,238,782
Accounts receivable, less allowance
for losses of $80,000 in 1996 and
$60,000 in 1995 1,713,656 1,589,030
Other receivables 1,333,617 1,254,484
Materials and supplies-at cost 559,252 421,306
Prepaid expenses 307,321 51,689
--------------- --------------
Total current assets 6,108,250 5,555,291
Telephone plant and other property:
In service 42,328,623 41,179,838
Accumulated depreciation (deduction) (21,739,653) (20,857,711)
---------------- ---------------
20,588,970 20,322,127
Other property 247,209 76,717
---------------- ---------------
20,836,179 20,398,844
Other assets:
1% Investment in Springwich Cellular
Limited Partnership 535,068 535,068
Deferred charges, less amortization 408,495 480,209
Regulatory asset 324,260 353,744
---------------- ----------------
1,267,823 1,369,021
$ 28,212,252 $ 27,323,156
================ ================
-3-
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
June 30 December 31
1996 1995
(Unaudited)
<S> <C> <C>
Current liabilities:
Accounts payable $ 1,562,015 $ 1,281,373
Advance billings and customers' deposits 291,700 286,640
Accrued interest 337,500 337,500
Income taxes 110,316 33,142
---------------- -----------------
Total current liabilities 2,301,531 1,938,655
Long-term debt 9,000,000 9,000,000
Deferred credits:
Income taxes 1,862,075 2,044,044
Investment tax credits 240,114 276,114
Regulatory liability 756,073 808,735
---------------- -----------------
2,858,262 3,128,893
Other long-term liabilities 500,876 453,872
Shareholders' equity:
Common Stock, par value $2.50 per share,
authorized 1,250,000 shares, issued and
outstanding 769,107 shares 1,922,768 1,922,768
Additional paid-in capital 1,475,394 1,475,394
Retained earnings 10,153,421 9,403,574
--------------- -----------------
13,551,583 12,801,736
--------------- -----------------
$ 28,212,252 $ 27,323,156
=============== =================
</TABLE>
See accompanying notes
-4-
<PAGE>
<TABLE>
<CAPTION>
The Woodbury Telephone Company
Condensed Statements of Income (Unaudited)
Six months ended June 30:
1996 1995
------------- ------------
<S> <C> <C>
Operating revenues:
Local service $ 1,624,067 $ 1,506,556
Network service 4,936,865 4,373,849
Other 471,455 465,882
Provision for uncollectibles
(deduction) (45,943) (37,146)
------------- -------------
6,986,444 6,309,141
Operating expenses:
Maintenance 1,339,540 1,396,580
Depreciation and amortization 1,423,044 1,377,441
General office 734,838 624,114
Commercial 677,298 687,597
Other 474,842 439,719
------------ ----------
4,649,562 4,525,451
------------ -------------
2,336,882 1,783,690
Other income:
Rental of telephone equipment
and other, net 184,407 191,947
Interest 66,281 62,172
------------ -------------
250,688 254,119
------------ -------------
2,587,570 2,037,809
Interest expense 417,177 411,928
------------ -------------
Income before income taxes 2,170,393 1,625,881
Income taxes 836,025 635,222
------------ -------------
Net income $1,334,368 $990,659
============ =============
Per share of common stock:
Net income $1.73 $1.29
====== ======
Dividends $0.76 $0.76
====== ======
Average number of shares of
Common stock outstanding 769,107 769,107
-5-
</TABLE>
See accompanying notes
<PAGE>
<TABLE>
<CAPTION>
The Woodbury Telephone Company
Condensed Statements of Income (Unaudited)
Three months ended June 30:
1996 1995
-------- --------
<S> <C> <C>
Operating revenues:
Local service $ 825,229 $ 762,547
Network service 2,433,011 2,201,997
Other 237,211 224,328
Provision for uncollectibles
(deduction) (20,635) (33,617)
----------- -----------
3,474,816 3,155,255
Operating expenses:
Maintenance 591,595 700,065
Depreciation and amortization 714,973 692,845
General office 417,560 312,477
Commercial 328,654 354,779
Other 243,804 219,153
----------- -----------
2,296,586 2,279,319
----------- ----------
1,178,230 875,936
Other income:
Rental of telephone equipment
and other, net 132,307 75,068
Interest 27,904 31,642
----------- ---------
160,211 106,710
----------- ----------
1,338,441 982,646
Interest expense 204,942 205,043
----------- ----------
Income before income taxes 1,133,499 777,603
Income taxes 439,354 310,559
----------- ----------
Net income $ 694,145 $ 467,044
============= ===========
Per share of common stock:
Net income $0.90 $0.61
===== =====
Dividends $0.38 $0.38
===== =====
Average number of shares of
Common Stock outstanding 769,107 769,107
See accompanying notes
-6-
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
The Woodbury Telephone Company
Condensed Statements of Cash Flows (Unaudited)
Six Months Ended June 30:
1996 1995
----------- ----------
<S> <C> <C>
Operating Activities
Net income $ 1,334,368 $ 990,659
Depreciation 1,416,867 1,305,724
Other (356,890) (691,786)
------------ -----------
Net Cash Provided By
Operating Activities 2,394,345 1,604,597
Investing Activities
Purchases of telephone plant
and other property (1,854,202) (1,078,242)
------------ -----------
Net Cash Used By Investing
Activities (1,854,202) (1,078,242)
Financing Activities
Dividends (584,521) (584,521)
------------- -----------
Net Cash Used By Financing
Activities (584,521) (584,521)
------------- -------------
Decrease In Cash And Cash
Equivalents ( 44,378) ( 58,166)
Cash and cash equivalents
At beginning of period 2,238,782 1,942,924
------------- ---------------
Cash And Cash Equivalents At
End Of Period $2,194,404 $1,884,758
============= ===============
See accompanying notes.
</TABLE>
-7-
<PAGE>
THE WOODBURY TELEPHONE COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1996
Note 1- Basis of Presentation
The accompanying unaudited condensed financial statements of The Woodbury
Telephone Company (the Company) have been prepared in accordance with
generally accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation have
been included. All adjustments were of a normal recurring nature.
Operating results for the six-month period ended June 30, 1996 are not
necessarily indicative of the results that may be expected for the year
ending December 31, 1996. For further information, refer to the financial
statements and footnotes thereto included in the Company's annual report on
Form 10-K for the year ended December 31, 1995.
The condensed balance sheet at December 31, 1995 has been derived from the
audited financial statements at that date.
-8-
<PAGE>
THE WOODBURY TELEPHONE COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED
JUNE 30, 1996
<TABLE>
<CAPTION>
Note 2-Income taxes
A reconciliation of the amount of income taxes based on the statutory federal
income tax rate to income taxes reflected in operations follows:
Six-month period ended
June 30,1996 June 30,1995
----------- ----------
<S> <C> <C>
Amount based on statutory federal
income tax rate $ 737,964 $ 552,800
State income taxes, less federal
tax effect 164,733 123,404
Investment tax credit amortization (36,000) (36,000)
Other (30,672) ( 4,982)
------------- ------------
Income Taxes $ 836,025 $ 635,222
============= ============
</TABLE>
-9-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Operating revenues increased by $677,303 (10.7%) and by $319,561 (10.1%) for
the six and three-month periods ended June 30, 1996 respectively over the
comparable 1995 periods. Local service revenues increased by $117,511 (7.8%)
for the six months ended June 30, 1996 and by $62,682 (8.2%) for the three
months ended June 30, 1996, compared to the respective 1995 periods. The
increase in each period resulted primarily from an increase of 4.9% in the
number of access lines served by the Company from June 30, 1995 to June 30,
1996, and from the introduction of CLASS services, such as Caller ID and
Selective Call-Forwarding, in May 1995. Network service revenues increased by
$563,016 (12.9%) and by $231,014 (10.5%) for the six and three-month periods
ended June 30, 1996 respectively over the comparable 1995 periods. Increased
customer use of the network to make calls beyond the local calling area
contributed to the increase in each period. In addition, for the six-month
period in 1996, the Company recognized network service revenues of
approximately $145,200 resulting from the re-classification of access provided
for certain calls terminating in the Company's service area from January 1995
through February 1996. This access was previously considered inter-LATA,
subject to pooling through the National Exchange Carrier Association (NECA).
Based on information provided by the originating carriers, the access was
determined to be intra-LATA, not subject to pooling, resulting in a higher
retention of access revenues by the Company. The Company recognized these
revenues in March 1996.
Operating expenses increased by $124,111 (2.7%) for the six-month period ended
June 30, 1996 over the comparable 1995 period. Maintenance expenses decreased
by $57,040 (4.1%). The Company changed its classification of certain data
processing costs from maintenance to general office expense. Expenses so
re-classified totaled approximately $82,000 through June 30, 1996. General
office expenses increased by $110,724 (17.7%) for the 1996 six-month period
compared to 1995. In addition to the reclassified data processing expense of
approzimately $82,000, legal expense increased by $31,568 (137.6%) for the
six months ended June 30, 1996 compared to the same period in 1995. This
increase reflects the Company's increased use of outside services to plan and
implement its response to the on-going changes in the telecommunications
industry environment.Operating expenses increased by $17,267 (0.8%) for the
three-month period ended June 30, 1996 over the comparable 1995 period. An
increase in depreciation and amortization expense of $22,128 (3.2%),
reflecting increased investment in telephone plant in service was mitigated
by a decline in all other operating expenses combined of $4,861 (0.3%).
-10-
<PAGE>
THE WOODBURY TELEPHONE COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS-CONTINUED
For the six-month period ended June 30, 1996 compared to 1995, other income
decreased by $3,431 (1.4%). For the three-month period ended June 30, 1996
compared to 1995, other income increased by $53,501 (50.1%) due largely to
the timing of certain maintenance contracts under which the Company maintains
customer-owned key telephone systems.
As of June 30, 1996, current assets exceeded current liabilities by $3,806,719,
an increase of $190,083 compared to December 31, 1995. Cash provided by
operating activities for the six months ended June 30, 1996 was $2,394,345, an
increase of $789,748 over the comparable period for 1995. Ther Company
anticipates that available cash, including that provided by current operating
activities, will be sufficient to cover expenditures and dividends declared
during the remainder of 1996.
-11-
<PAGE>
THE WOODBURY TELEPHONE COMPANY
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1996
PART II
OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
On April 3, 1996, the Company held its meeting of shareholders. At the annual
meeting, the shareholders voted on (i) the election of three class I directors
who will hold office until 1999 and until their successors are elected and
qualified, (ii) the ratification of Ernst & Young LLP as independent auditors
for the calendar year 1996, and (iii) action on two (2) shareholder
proposals:
SHAREHOLDER PROPOSAL #1
The shareholders request that the board retain the services of an
independent consultant who can suggest a plan so as to increase the amount of
shares held by the directors and officers of The Woodbury Telephone Company.
SHAREHOLDER PROPOSAL #2
To heighten interest in the shares of The Woodbury Telephone Company, the
shareholders request that the company retain the services of an independent
financial communications consultant so as to bring the company to the
attention of a wider audience of analysts, institutions and individual
investors.
The following sets forth the results of such voting:
TOTAL VOTES VOTES BROKER
VOTES FOR AGAINST NONVOTES
(i) Election of Class I
Directors:
(a) Harmon L. Andrews 644,549 634,542 10,007 0
(b) John A. Michaels 644,549 637,815 6,734 0
(c) Walter F. Torrance, Jr. 644,549 636,412 8,137 0
TOTAL VOTES VOTES
VOTES FOR AGAINST ABSTENTIONS
(ii) Independent Auditors 644,549 643,064 1,221 264
(iii) Shareholder Proposals
Proposal #1 629,335 81,984 533,328 14,023
Proposal #2 629,335 105,292 514,814 9,229
12
<PAGE>
THE WOODBURY TELEPHONE COMPANY
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1996
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
The Company did not file any reports on Form 8-K during the six months ended
June 30, 1996.
13
<PAGE>
SIGNATURES
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.
THE WOODBURY TELEPHONE COMPANY
DATE BY
DONALD E. PORTER
PRESIDENT AND TREASURER
DATE BY
WILLIAM R. PLATT
ASSISTANT TREASURER
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This schedule contains summary information
from the unaudited Woodbury Telephone Company
Condensed Statements of Income for the six months
ended June 30, 1996, and the Condensed Balance
Sheets as of June 30, 1996.
</LEGEND>
<MULTIPLIER> 1
<PERIOD TYPE> 3-mos
<FISCAL YEAR END> DEC-31-1996
<PERIOD END> JUN-30-1996
<BOOK VALUE> PER BOOK
<TOTAL NET UTILITY PLANT> 20,588,970
[OTHER-PROPERTY-AND-INVEST] 782,277
[TOTAL-CURRENT-ASSETS] 6,108,250
[TOTAL-DEFERRED-CHARGES] 408,495
[OTHER-ASSETS] 324,260
<TOTAL-ASSETS> 28,212,252
<COMMON> 1,922,768
[CAPITAL-SURPLUS-PAID-IN] 1,475,394
[RETAINED-EARNINGS] 10,153,421
[TOTAL-COMMON-STOCKHOLDERS-EQ] 13,551,583
0
0
[LONG-TERM-DEBT-NET] 9,000,000
[SHORT-TERM-NOTES] 0
[LONG-TERM-NOTES-PAYABLE] 0
[COMMERCIAL-PAPER-OBLIGATIONS] 0
<LONG-TERM-DEBT-CURRENT-PORT) 0
[PREFERRED-STOCK-CURRENT] 0
[CAPITAL-LEASE-OBLIGATIONS] 0
[LEASES-CURRENT] 0
[OTHER-ITEMS-CAPITAL-AND-LIAB] 5,660,669
[TOT-CAPITALIZATION-AND-LIAB] 28,212,252
[GROSS-OPERATING-REVENUE] 6,986,444
[INCOME-TAX-EXPENSE] 836,025
[OTHER-OPERATING-EXPENSES] 4,649,562
[TOTAL-OPERATING-EXPENSES] 5,485,587
[OPERATING-INCOME-LOSS] 1,500,857
[OTHER-INCOME-NET] 250,688
[INCOME-BEFORE-INTEREST-EXPEN] 1,751,545
[TOTAL-INTEREST-EXPENSE] 417,177
<NET-INCOME> 1,334,368
[PREFERRED-STOCK-DIVIDENDS] 0
[EARNINGS-AVAILABLE-FOR-COMM] 1,334,368
[COMMON-STOCK-DIVIDENDS] 584,521
[TOTAL-INTEREST-ON-BONDS] 405,000
[CASH-FLOW-OPERATIONS] 2,394,345
<EPS-PRIMARY> 1.73
<EPS-DILUTED> 1.73
</TABLE>
