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 March 31, 1997 Commission file number 0-8621
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The Woodbury Telephone Company
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(Exact name of registrant as specified in its charter)
Connecticut 06-0594990
- -----------------------------------------------------------------------
(State or other jurisdiction of (IRS Employer Identification
incorporation 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 April 30, 1997
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Common Stock, par value $2.50 per share 769,107
<PAGE>
THE WOODBURY TELEPHONE COMPANY
FORM 10-Q
INDEX
Page No.
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Balance Sheets-
March 31, 1997 and December 31, 1996 3-4
Condensed Statements of Income-
Three months ended March 31, 1997 and 1996 5
Condensed Statements of Cash Flows
Three months ended March 31, 1997 and 1996 6
Notes to Condensed Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8- 9
PART II. Exhibits and Reports of Form 8-K 10
<PAGE>
THE WOODBURY TELEPHONE COMPANY
FORM 10-Q
FOR QUARTER ENDED MARCH 31, 1997
PART I
FINANCIAL INFORMATION
<PAGE>
<TABLE>
<CAPTION>
The Woodbury Telephone Company
Condensed Balance Sheets
ASSETS
March 31 December 31
1997 1996
(unaudited)
----------- ------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 1,963,760 $ 2,102,768
Accounts receivable, less allowance
for losses of $80,000 in 1997 and 1996 1,777,545 1,875,990
Other receivables 1,506,608 1,515,580
Materials and supplies-at cost 693,510 664,629
Prepaid expenses 488,454 53,191
Recoverable income taxes 198,665
--------------- --------------
Total current assets 6,429,877 6,410,823
Telephone plant and other property:
In service 43,880,059 43,432,833
Plant under construction 913,549 789,058
Less accumulated depreciation (23,565,477) (22,992,930)
---------------- ---------------
21,228,131 21,228,961
Other property 243,757 222,414
---------------- --------------
21,471,888 21,451,375
Other assets:
1% Investment in Springwich Cellular
Limited Partnership 535,068 535,068
Deferred charges, less amortization 316,530 336,780
Regulatory asset 294,776 294,776
---------------- ---------------
1,146,374 1,166,624
$ 29,048,139 $ 29,028,822
================ ================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
March 31 December 31
1997 1996
<S> <C> <C>
Current liabilities:
Accounts payable $ 1,749,068 $ 1,944,593
Advance billings and customers' deposits 300,083 297,825
Accrued interest 135,000 337,500
Income taxes 8,894
---------------- -----------------
Total current liabilities 2,193,045 2,579,918
Long-term debt 9,000,000 9,000,000
Deferred credits:
Income taxes 1,710,146 1,710,146
Investment tax credits 186,114 204,114
Regulatory liability 703,411 703,411
---------------- ----------------
2,599,671 2,617,671
Other long-term liabilities 583,640 557,286
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 11,273,621 10,875,785
--------------- -----------------
14,671,783 14,273,947
--------------- -----------------
$ 29,048,139 $ 29,028,822
=============== ================
</TABLE>
See accompanying notes
<PAGE>
<TABLE>
<CAPTION>
The Woodbury Telephone Company
Condensed Statements of Income (Unaudited)
Three months ended March 31:
1997 1996
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<S> <C> <C>
Operating revenues:
Local service $ 905,077 $ 798,838
Network service 2,653,188 2,503,854
Other 254,537 234,244
Provision for uncollectibles
(deduction) 4,532 (25,308)
------------- -------------
3,817,334 3,511,628
Operating expenses:
Maintenance 648,265 747,945
Depreciation and amortization 741,724 708,071
General office 544,658 317,278
Commercial 342,839 348,644
Other 209,326 231,038
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2,486,812 2,352,976
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1,330,522 1,158,652
Other income:
Rental of telephone equipment
and other, net 21,799 52,100
Interest 33,149 38,377
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54,948 90,477
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1,385,470 1,249,129
Interest expense 205,814 212,235
------------ -------------
Income before income taxes 1,179,656 1,036,894
Income taxes 489,559 396,671
------------ -------------
Net income $ 690,097 $ 640,223
============ =============
Per share of common stock:
Net income $0.90 $0.83
====== ======
Dividends $0.38 $0.38
====== ======
Average number of shares of
Common stock outstanding 769,107 769,107
See accompanying notes
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
The Woodbury Telephone Company
Condensed Statements of Cash Flows (Unaudited)
Three Months Ended March 31:
1997 1996
----------- ----------
<S> <C> <C>
Operating Activities
Net income $ 690,097 $ 640,223
Depreciation 738,635 672,213
Other (516,331) (584,828)
------------ -----------
Net Cash Provided By
Operating Activities 912,401 727,608
Investing Activities
Purchases of telephone plant
and other property (759,148) (631,445)
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Net Cash Used By Investing
Activities (759,148) (631,445)
Financing Activities
Dividends (292,261) (292,261)
------------- -----------
Net Cash Used By Financing
Activities (292,261) (292,261)
------------- -----------
Decrease In Cash And Cash
Equivalents (139,008) (196,098)
Cash and cash equivalents
At beginning of period 2,102,768 2,238,782
------------ -------------
Cash And Cash Equivalents At
End Of Period $1,963,760 $2,042,684
============ ==============
See accompanying notes.
</TABLE>
THE WOODBURY TELEPHONE COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 1997
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 three-month period ended March 31, 1997 are
not necessarily indicative of the results that may be expected for the
year ending December 31, 1997. 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, 1996.
The condensed balance sheet at December 31, 1996 has been derived from
the audited financial statements at that date.
<PAGE>
THE WOODBURY TELEPHONE COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED
MARCH 31, 1997
<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:
Three-month period ended March 31:
1997 1996
----------- ----------
<S> <C> <C>
Amount based on statutory federal
income tax rate $ 401,083 $ 352,544
State income taxes, less federal
tax effect 89,536 78,700
Investment tax credit amortization (18,000) (18,000)
Other 16,940 (16,573)
------------- ------------
Income Taxes $ 489,559 $ 396,671
============= ============
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
At the Special Meeting of Shareholders of The Woodbury Telephone
Company ("Company") held on April 2,1997, shareholders voted to approve
the Amended and Restated Agreement and Plan of Merger with Southern New
England Telecommunications Corporation ("SNET").
A total of 665,376 shares, representing 86.5% of all the outstanding
shares of Woodbury Telephone Company Common Stock, were represented
at the meeting, with 659,989 shares voted in favor of the merger, 4,133
shares voted against the merger and 1,254 shares abstaining. The total
shares voted in favor of the merger represented 85.8% of all the
outstanding shares of Woodbury Telephone Company Common Stock. In
addition, 77.6% of the outstanding shares of Woodbury Telephone Company
Common Stock not held by SNET and its affiliates and associates were
voted in favor of the merger. The Company and SNET are continuing to
address other conditions to closing, and expect the transaction to be
consummated in the third quarter of 1997.
Operating revenues increased by $305,706 (8.7%) for the three-month
period ended March 31, 1997 over the comparable 1996 period. Local
service revenues increased by $106,239 (13.3%) for the three months
ended March 31,1997 compared to the comparable 1996 period.The increase
resulted primarily from an increase of 7.2% in the number of access
lines served by the Company from April 1, 1996 to March 31, 1997, as
well as an increase in the percentage of business lines, which generate
more revenue than residential lines. Network service revenues increased
by $149,334 (6.0%)for the three-month period ended March 31, 1997 over
the comparable 1996 period. Increased customer use of the network to
make calls beyond the local calling area contributed to the increase.
For the three-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 Carriers 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.
Operating expenses increased by $133,836 (5.7%) for the three months
ended March 31, 1997 compared to 1996. Maintenance expenses decreased
by $99,680 (13.3%) for the three months ended March 31,1997 compared
to the comparable 1996 period. The decrease was attributable to a
reduction in payroll-related benefits of approximately $35,000
chargeable to maintenance accounts, a reduction of $16,665 in labor
charged to testing expense, due mainly to the less severe weather in
the first three months of 1997 compared to 1996, and a reduction of
approximately $8,500 in expenses for snow removal through March 31,
1997 compared to the same period in 1996. In addition, software
purchases for general purpose computer applications were
approximately $13,000 less in the three-month period ended March 31,
1997 compared to 1996. General office expenses increased by $227,380
(71.7%) for the three months ended March 31 in 1997 compared to 1996.
This increase reflects the Company's legal and other costs incurred
in connection with the proposed transaction with SNET.
For the three-month period ended March 31, 1997 compared to 1996, other
income decreased by $35,529 (39.3%). The decline was due mainly to
losses of approximately $33,450 associated with Internet services,
which the Company began offering July 1, 1996.
As of March 31, 1997 current assets exceeded current liabilities by
$4,236,829 an increase of $405,924 compared to December 31, 1996. Cash
provided by operating activities for the three months ended March 31,
1997 was $912,401,an increase of $184,793 over the comparable period
for 1996. The Company anticipates that available cash, including that
provided by current operating activities, will be sufficient to cover
capital expenditures and dividends declared during the remainder of
1997.
<PAGE>
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
Exhibits - None
The Company did not file any reports on Form 8-K during the
three months ended March 31, 1997.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
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> UT
<LEGEND>
This schedule contains summary information extracted from
the unaudited Woodbury Telephone Company Condensed
Statements of Income for the three months ended March 31,
1997, and the Condensed Balance Sheets as of March 31, 1997.
</LEGEND>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MARCH-31-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 21,228,131
<OTHER-PROPERTY-AND-INVEST> 778,825
<TOTAL-CURRENT-ASSETS> 6,429,877
<TOTAL-DEFERRED-CHARGES> 316,530
<OTHER-ASSETS> 294,776
<TOTAL-ASSETS> 29,048,139
<COMMON> 1,922,768
<CAPITAL-SURPLUS-PAID-IN> 1,475,394
<RETAINED-EARNINGS> 11,273,621
<TOTAL-COMMON-STOCKHOLDERS-EQ> 14,671,783
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
0
<CAPITAL LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 5,376,356
<TOT-CAPITALIZATION-AND-LIAB> 29,048,139
<GROSS-OPERATING-REVENUE> 3,817,334
<INCOME-TAX-EXPENSE> 489,559
<OTHER-OPERATING-EXPENSES> 2,486,812
<TOTAL-OPERATING-EXPENSES> 2,976,371
<OPERATING-INCOME-LOSS> 840,963
<OTHER-INCOME-NET> 54,948
<INCOME-BEFORE-INTEREST-EXPEN> 895,911
<TOTAL-INTEREST-EXPENSE> 205,814
<NET-INCOME> 690,097
0
</TABLE>
