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 the quarter ended September 30, 1997 Commission File No. 0-16751
CFW COMMUNICATIONS COMPANY
(Exact name of registrant as specified in its charter)
VIRGINIA 54-1443350
(State or other jurisdiction of (I R S employer
incorporation or organization) identification no.)
P. O. Box 1990, Waynesboro, Virginia 22980
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code 540-946-3500
None
(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
(APPLICABLE ONLY TO CORPORATE ISSUERS)
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class COMMON STOCK, NO PAR VALUE Outstanding 11/13/97 12,982,748
<PAGE>
CFW COMMUNICATIONS COMPANY
I N D E X
Page
Number
PART I. FINANCIAL INFORMATION
Condensed Consolidated Balance Sheets,
September 30,1997 and December 31, 1996 3-4
Condensed Consolidated Statements of
Income, Three and Nine Months Ended
September 30, 1997 and 1996 5
Condensed Consolidated Statements of
Cash Flows, Nine Months Ended
September 30,1997 and 1996 6
Notes to Condensed Consolidated
Financial Statements 7
Management's Discussion and Analysis
of Financial Condition and Results of
Operations 8-12
PART II. OTHER INFORMATION 13
SIGNATURES 14-15
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CFW COMMUNICATIONS COMPANY
Condensed Consolidated Balance Sheets
ASSETS
<TABLE>
<CAPTION>
September 30, 1997 December 31,
(unaudited) 1996
<S> <C>
CURRENT ASSETS
Cash and cash equivalents $ 975,392 $ 3,003,607
Accounts receivable, including
interest receivable 12,921,331 9,441,979
Note receivable - 126,062
Materials and supplies 1,848,108 2,019,836
Prepaid expenses 343,604 345,277
Income taxes receivable 113,297 617,067
------------- ------------
16,201,732 15,553,828
------------- ------------
SECURITIES AND INVESTMENTS 18,017,242 20,597,270
------------- ------------
PROPERTY AND EQUIPMENT
In service 134,261,334 124,388,071
Under construction 1,983,463 2,807,983
------------- ------------
136,244,797 127,196,054
Less: accumulated depreciation 41,661,989 37,162,040
------------- ------------
94,582,808 90,034,014
------------- ------------
OTHER ASSETS
Cost in excess of net assets
of business acquired, less
accumulated amortization 13,281,529 12,660,497
Deferred charges 2,202,636 2,198,923
Deposit for PCS licenses - 1,355,347
Radio spectrum licenses 3,898,418 -
------------- ------------
19,382,583 16,214,767
------------- ------------
TOTAL ASSETS $148,184,365 $142,399,879
============= ============
</TABLE>
3
<PAGE>
CFW COMMUNICATIONS COMPANY
Condensed Consolidated Balance Sheets
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
September 30, 1997 December 31,
(unaudited) 1996
<S> <C>
CURRENT LIABILITIES
Accounts payable $ 2,994,280 $ 3,346,045
Customers' deposits 486,710 469,566
Advance billings 2,121,522 1,876,808
Accrued payroll 970,919 1,007,883
Accrued interest 404,251 726,000
Note Payable 1,090,141 -
Other accrued liabilities 3,202,963 2,987,816
Deferred revenue 1,620,905 1,181,481
------------- ------------
12,891,691 11,595,599
------------- ------------
LONG-TERM DEBT 25,556,160 24,000,000
------------- ------------
LONG-TERM LIABILITIES
Deferred income taxes 9,243,702 10,702,885
Retirement benefits other than
pensions 8,253,859 7,724,107
Other 1,455,933 1,478,467
------------- ------------
18,953,494 19,905,459
------------- ------------
MINORITY INTERESTS 1,395,302 896,895
------------- ------------
SHAREHOLDERS' EQUITY
Preferred stock, no par - -
Common stock, no par 43,379,265 43,378,440
Retained earnings 47,430,878 40,163,310
Unrealized gain (loss) on securities
available for sale (1,422,425) 2,460,176
------------- ------------
89,387,718 86,001,926
------------- ------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $148,184,365 $142,399,879
============= ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
CFW COMMUNICATIONS COMPANY
Condensed Consolidated Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30, September 30, September 30,
1997 1996 1997 1996
<S> <C>
OPERATING REVENUES
Wireline communications $ 8,580,522 $ 7,875,830 $25,314,414 $23,832,448
Wireless communications 3,230,325 2,517,597 8,864,393 6,779,029
Directory assistance 2,857,631 1,620,104 7,317,606 4,894,917
Other communications services 488,101 523,497 1,629,132 1,396,906
------------- ------------- ------------ -----------
15,156,579 12,537,028 43,125,545 36,903,300
------------- ------------- ------------ -----------
OPERATING EXPENSES
Maintenance and support 2,453,825 2,581,365 7,020,330 7,580,579
Depreciation & Amortization 2,255,507 2,007,707 6,673,076 5,721,869
Customer operations 3,739,863 2,722,200 10,191,962 8,230,484
Corporate operations 1,575,394 1,178,274 5,014,633 3,567,112
------------- ------------- ------------- ------------
10,024,589 8,489,546 28,900,001 25,100,044
------------- ------------- ------------- ------------
OPERATING INCOME 5,131,990 4,047,482 14,225,544 11,803,256
OTHER INCOME (EXPENSE)
Other expenses, principally
interest (368,629) (336,133) (950,850) (1,084,008)
Interest and dividend income 96,218 106,496 225,488 409,384
Equity Income (loss)- Wireless
Investees (39,017) 111,444 8,272 498,622
Gain on sale of investment - - 5,077,379 -
------------- ------------- ------------- ------------
4,820,562 3,929,289 18,585,833 11,627,254
INCOME TAXES 1,752,521 1,451,581 6,954,880 4,327,150
------------- ------------- ------------- ------------
3,068,041 2,477,708 11,630,953 7,300,104
MINORITY INTERESTS (174,390) (185,786) (351,978) (370,049)
------------- ------------- ------------- -------------
NET INCOME $ 2,893,651 $ 2,291,922 $11,278,975 $ 6,930,055
============= ============= ============= ============
Net income per share:
Income before minority
interests $ 0.235 $ 0.189 $ 0.891 $ 0.559
Minority interests (0.013) (0.014) (0.027) (0.028)
------------- ------------- ------------- -------------
Net income $ 0.222 $ 0.175 $ 0.864 $ 0.531
============= ============= ============= ============
Average shares outstanding 13,052,932 13,071,149 13,054,758 13,052,528
============= ============= ============= ============
Cash dividends per share $ 0.103 $ 0.098 $ 0.309 $ 0.294
============= ============= ============= ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
CFW COMMUNICATIONS COMPANY
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30, September 30,
1997 1996
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $11,278,975 $ 6,930,055
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 6,286,805 5,175,405
Amortization 483,168 546,464
Deferred taxes 1,012,720 524,171
Retirement benefits other than pensions 529,752 434,612
Other 411,340 (418,391)
Distributions received from investments 99,704 155,141
Equity from wireless investees (8,272) (440,552)
Minority interests, net of distributions 203,308 224,295
Gain on sale of investment (5,077,378) -
Changes in assets and liabilities from operations:
(Increase) decrease in accounts
receivable (3,479,352) (26,913)
(Increase) decrease in materials and
supplies 171,728 (43,212)
(Increase) decrease in other current assets 270,997 (1,481,833)
Decrease in accounts payable (351,765) (1,405,192)
Increase (decrease) in other accrued
liabilities (493,104) 855,938
Increase in other current liabilities 1,351,999 951,127
------------- ------------
Net cash provided by operating activities 12,690,625 11,981,115
------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (10,835,599) (10,485,686)
Purchase of radio spectrum licenses (4,459,818) -
Cash flows from securities and investments (853,759) (3,156,270)
Purchase of minority interest (1,103,481) -
Proceeds from Sale of Investment 6,594,399 -
------------- ------------
Net cash used in investing activities (10,658,258) (13,641,956)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds (payments) on borrowings (50,000) 4,000,136
Cash dividends (4,011,407) (3,815,191)
Stock redeemed 825 (175,313)
------------- -------------
Net cash used in financing activities (4,060,582) 9,632
------------- ------------
Decrease in cash and cash equivalents (2,028,215) (1,651,209)
Cash and cash equivalents:
Beginning 3,003,607 5,264,986
------------- ------------
Ending $ 975,392 $ 3,613,777
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
6
<PAGE>
CFW COMMUNICATIONS COMPANY
Notes To Condensed Consolidated Financial Statements
(1) In the opinion of the Company, the accompanying condensed consolidated
financial statements which are unaudited, except for the condensed
consolidated balance sheet dated December 31, 1996, contain all
adjustments (consisting of only normal recurring accruals) necessary to
present fairly the financial position as of September 30, 1997 and
December 31, 1996 and the results of operations for the three and nine
months ended September 30, 1997 and 1996 and cash flows for the nine
months ended September 30, 1997 and 1996.
Certain amounts on the 1996 financial statements have been reclassified,
with no effect on net income, to conform with classifications adopted in
1997.
(2) The results of operations for the three and nine months ended September
30, 1997 and 1996 are not necessarily indicative of the results to be
expected for the full year.
(3) The Company has currently outstanding 420,670 options to acquire shares
of common stock, of which 213,782 are currently exercisable.
The earnings per common share were computed on the weighted average
number of shares outstanding. The common stock equivalents resulting
from the options mentioned in the preceding paragraph have been included
in the computation as outstanding shares.
The Company will adopt FAS 128, Earnings Per Share (EPS), for periods
ending after December 15, 1997. This standard replaces the presentation
of primary EPS with a presentation of basic EPS. The required change in
the computation of EPS is not expected to have a significant impact on
the Company's EPS.
(4) In April 1997, the Company sold its 30% limited interest in the Roanoke
MSA Cellular Partnership to GTE Wireless (GTE) for approximately $6.6
million and recognized a gain on the sale of approximately $5.1 million.
In addition, in April 1997, the Company purchased from GTE an 8.4%
limited interest in the Virginia RSA6 Cellular Partnership for
approximately $1.1 million. At September 30, 1997, the Company has an
84% ownership interest in the Virginia RSA6 Cellular Partnership.
(5) In April 1997, the Company and R&B Communications, Inc. (R&B) purchased
from GTE part of its Personal Communications Services (PCS) radio
spectrum license including most of West Virginia and parts of eastern
Kentucky, southwestern Virginia and eastern Ohio. The acquisition price
for the license was approximately $8.5 million of which the Company's
share was approximately $4.25 million.
In August 1997, the Company and R&B formed the West Virginia PCS
Alliance, L.C. (WV PCS Alliance) and contributed the aforementioned
license along with PCS radio spectrum licenses for the Basic Trading
Areas (BTAs) of Clarksburg-Elkins, WV; Fairmont, WV; Morgantown, WV; and
Cumberland, MD. to the WV PCS Alliance. In August 1997, the Company also
invested $1.0 million of cash in the WV PCS Alliance. In addition, in
August 1997, AEP Communications, LLC (AEPC), a subsidiary of Appalachian
Electric Power (AEP) invested approximately $6 million in the WVA PCS
Alliance and the VA PCS Alliance. As a result of the cash investments
and contribution of licenses by the Company, coupled with the dilution
of the Company's interest from AEP's investment in the partnership, the
Company holds a 45% common ownership interest in the WV PCS Alliance as
of the third quarter end.
The contributed licenses enable the WV PCS Alliance to build-out and
operate a PCS system to provide PCS services to a 2.0 million populated
area. The Company is managing this build-out. The WV PCS Alliance
expects to commence operations during the first half of 1998. The
Company will account for its investment in the WVA PCS Alliance under
the equity method of accounting and expects to provide guarantees for a
portion of the debt obligations to be incurred by the WV PCS Alliance.
7
<PAGE>
CFW COMMUNICATIONS COMPANY
Item 2. Management's Discussion And Analysis
Of Financial Conditions And Results Of Operations
Three and Nine Months Ended September 30, 1997 and 1996
OVERVIEW
CFW Communications Company ("CFW" or the "Company") is a diversified
communications company providing a broad range of products and services to
business and residential customers in Virginia. These communications products
and services include local telephone, cellular and paging, wireless and wireline
cable television, directory assistance, competitive access, local Internet
access, and alarm monitoring and installation.
The Company's strategy is to be a regional full-service provider of
communications products and services to customers within an expanding service
area. The Company has implemented this strategy through acquisitions,
investments in spectrum licenses and internal growth through capital investment.
In addition, the Company has leveraged its existing switching platform and fiber
optic network by introducing new services such as long distance directory
assistance, cable television, local Internet access, and various enhanced
services such as Call Waiting and Caller Identification. These activities have
contributed to considerable growth in the Company's operating revenues. In
conjunction with this strategy, the Company opened its first integrated retail
store in late September 1997, offering digital wireless phones and service,
wireless cable, internet, and long distance.
As a result of the Company's increasing focus on and growth in wireless
communications and other competitive communications related businesses, a larger
percentage of the Company's operating revenues and operating cash flows are
being generated by businesses other than the mature telephone operations.
Operating cash flow is defined as operating income before depreciation and
amortization. Management believes operating cash flow is a meaningful indicator
of the Company's performance. Operating cash flow is commonly used in the
wireless communications industry and by financial analysts and others who follow
the industry to measure operating performance.
Management expects continued proportionate growth in revenue, operating cash
flows and operating income from its current consolidated operations. However,
lower operating margins due to start-up costs of newer businesses are expected.
The Company's recognition of its proportionate share of losses associated with
the start-up of Virginia PCS Alliance, L.C. (VA Alliance), WV PCS Alliance, and
other PCS joint ventures is expected to offset net income growth from
consolidated operations and reduce net income as a percent of revenue. These
losses are expected to continue to grow until build-out is completed and a
sufficient customer base is established. The VA Alliance became operational in
late September 1997 and is being marketed under the Intelos brand name.
The Company wishes to caution readers that these forward-looking statements and
any other forward-looking statements made by the Company are based on a number
of assumptions including, but not limited to, continuation of economic growth
and demand for wireless and wireline communications services; continuation of
current level of services for certain material customers; reform initiatives
being considered by the FCC
8
<PAGE>
CFW COMMUNICATIONS COMPANY
Item 2. Management's Discussion And Analysis
Of Financial Conditions And Results Of Operations
(Continued)
being relatively revenue neutral; significant competition in the Company's
telephone service area not emerging in 1997 and 1998; and achievement of
build-out, operational, and marketing plans relating to deployment of PCS
services. Any significant deviations from these assumptions could cause actual
results to differ materially from those in the above and other forward-looking
statements.
RESULTS OF OPERATIONS
The Company had net income of $2.9 million, or $0.22 per share, for the third
quarter 1997. This represents a 26% increase over net income of $2.3 million, or
$.175 per share for the third quarter 1996. For the nine months ended September
30, 1997 net income was $11.3 million or $0.86 per share including a $5.1
million ($3.1 million after tax or $0.24 per share) gain on the sale of its
investment in the Roanoke Cellular partnership. Exclusive of this gain, net
income for the nine months ended September 30, 1997 increased $1.2 million, or
$0.09 per share, up from $6.9 million or $0.53 per share for the prior year's
comparable period. Operating revenues were $15.2 million for the third quarter
1997 and $43.1 million for the nine months ended September 30, 1997, a 21%
increase over third quarter 1996 revenues of $12.5 million and a 17% increase
over the $36.9 million for the nine months ended September 30, 1996. Operating
cash flows for the third quarter 1997 were $7.4 million, a 22% increase over
third quarter 1996 operating cash flows of $6.1 million. Operating cash flows
for the nine months ended September 30, 1997 were $20.9 million, a 19% increase
over the $17.5 million for the prior year's comparable period.
These results reflect strong contributions from CFW's managed cellular
operations, positive cash flow contributions from wireless cable, directory
assistance and growth in telephone access lines, minutes of use and calling
features.
OPERATING REVENUES
Total operating revenues increased $2.6 million or 21% for the three months
ended September 30, 1997 and $6.2 million or 17% for the nine months then ended
as compared to the same periods in 1996. These increases are primarily
attributable to the net addition of over 10,000 combined cellular, paging and
wireless cable customers from a year ago and doubling of the Company's directory
assistance contract through the expansion of our contract with AT&T to include
directory assistance in the states of N.J, Delaware and Pennsylvania. In
addition, over 4% growth in access lines, 5% growth in access and toll minutes,
double digit growth in calling features and an 83% increase in internet
customers have also contributed to the revenue increases.
WIRELINE COMMUNICATIONS
Revenues from the Company's wireline operations, which include telephone
revenues, fiber optic network usage and wireline cable revenues, increased $0.7
million or 9% and $1.5 million or 6% for the three and nine months ended
September 30, 1997. Telephone revenues, which include local service, access and
toll services, directory advertising and calling feature revenues were $7.2
million and $21.2 million for the three and nine months ended September 30,
1997, an increase of $0.5 million or 8% and $1.1 million or 5%, respectively,
over the comparable periods in 1996. These revenue increases were due in part to
a 4% growth in toll and access minutes of use in third quarter 1997 compared to
third quarter 1996 and a 5% growth for the comparable nine month period ending
9
<PAGE>
CFW COMMUNICATIONS COMPANY
Item 2. Management's Discussion And Analysis
Of Financial Conditions And Results Of Operations
(Continued)
September 30, 1997. Internet revenues increased $0.1 million or 89% and $0.2
million or 65% for the three and nine months ended September 30, 1997. These
increases reflect an 83% increase in the customer base over the first nine
months of 1996.
WIRELESS COMMUNICATIONS
Revenues from the Company's wireless communications, which include cellular,
paging, wireless cable, and other miscellaneous revenues, increased $0.7 million
or 28% and $2.1 million or 31% for the three and nine months ended September 30,
1997. Cellular revenues, including access, air time roaming charges, paging and
voicemail increased by $0.5 million or 26% for the three month period and $1.5
million or 29% for the comparable nine month period. Contributing to this growth
was a 41% growth in the RSA6 cellular customer base and a 31% growth in the
paging customer base over the first nine months of 1996. Wireless cable revenue
increased $0.2 million or 36% and $0.6 million or 35% for the three and nine
months ended September 30, 1997, primarily due to customer growth of 26% over
the comparable nine months of 1996. The cable customer growth reflects continued
penetration in all of the markets it serves (Charlottesville, Shenandoah Valley
and Richmond).
DIRECTORY ASSISTANCE
During the first half of 1997, the Company commenced directory assistance
services to AT&T customers seeking telephone numbers in New Jersey and Delaware.
During August through October 1997, the Company expanded this service to
encompass Pennsylvania. Primarily due to these factors, directory assistance
produced an additional $1.2 million or 76% and $2.4 million or 49% of revenues
for the three and nine month periods ending September 30, 1997 as compared to
the same periods for 1996. Although directory assistance has not reached it's
full run rate in new traffic territories, year over year call volume is up 6.8
million or 41%. These new territiories are expected to generate, on an
annualized basis, over 130% growth in calling volume.
OPERATING EXPENSES
Operating expenses increased $1.5 million or 18% for the three month period
ended September 30, 1997 and $3.8 million or 15% for the nine months then ended
as compared to the same periods in 1996. Of this increase, $1.2 million and $2.3
million for the three and nine months ended September 30, 1997, respectively,
was due to the operating expenses, excluding depreciation and amortization, of
the Company's directory assistance service, which expanded to include New
Jersey, Delaware and parts of Pennsylvania during the first nine months of 1997.
As a percentage of total operating revenues, total operating expenses declined
slightly to 66% and 67% for the three and nine months ended September 30, 1997
versus 68% for both comparable periods in 1996.
MAINTENANCE AND SUPPORT EXPENSE
Maintenance and support expense, which includes property and equipment
maintenance, general engineering and general administration of plant operations,
decreased $0.1 million or 5% and decreased $0.6 million or 7% for the three and
nine months ended September 30, 1997, respectively.
10
<PAGE>
CFW COMMUNICATIONS COMPANY
Item 2. Management's Discussion And Analysis
Of Financial Conditions And Results Of Operations
(Continued)
The reductions are primarily the result of access and other network pricing
decreases coupled with better utilization of the Company's facilities and
equipment infrastructure.
DEPRECIATION AND AMORTIZATION EXPENSE
Depreciation and amortization expense increased $0.2 million or 12% and $1.0
million or 17% for the three and nine months September 30, 1997 versus the
comparable periods in 1996 as a result of capital additions primarily in
network, cellular, wireless cable, and information services businesses relating
to continued business expansion. Capital expenditures related to wireless cable
customer growth accounted for $0.1 million and $0.5 million of this depreciation
and amortization increase. Expansion of the fiber optic network for competitive
access contributed $0.1 million and $0.2 million for the three and nine months
September 30, 1997 versus the comparable periods in 1996.
CUSTOMER OPERATIONS EXPENSE
Customer operations expense, which includes marketing, product management,
product advertising, sales, publication of a regional telephone directory,
customer services, directory assistance services and local directory services
increased $1.0 million or 37% and $2.0 million or 24% for the three and nine
month period ended September 30, 1997. Approximately 90% of these increases
relate to the directory assistance business and reflect continued training and
additional staff related to the expansion of states handled for the new
directory assistance markets served. Additionally, the Company has invested
resources in customer service related functions in order to support the
Company's revenue growth businesses.
CORPORATE OPERATIONS EXPENSE
Corporate operations expense, which includes taxes other than income, executive,
planning, accounting, external relations, legal, purchasing, information
management, human resources and other general and administrative expenses
increased $0.4 million or 34% and $1.4 million or 41% for the three and nine
month period ended September 30, 1997. This increase relates primarily to
internal infrastructure growth necessary to support the growth in several of the
businesses and increased benefits costs.
EQUITY INCOME FROM WIRELESS INVESTEES
Equity income from wireless investees, which includes equity earnings from the
Company's interest in the RSA5 cellular partnership and the PCS Alliance
partnerships decreased $0.2 million or 135% and $0.5 million or 99% for the
three and nine months ended September 30, 1997 as compared to the same periods
in 1996. This decrease is primarily due to the sale of the Company's 30% limited
interest in the Roanoke MSA cellular partnership to GTE in April 1997 (see Note
4 to the Financial Statements). Additionally, the Company reported $0.1 million
of PCS losses associated with the start-up of PCS operations by the Virginia PCS
Alliance in late September 1997.
INCOME TAXES
Income taxes increased $0.3 million and $2.6 million for the three and nine
months ended September 30, 1997 as compared to the same periods in 1996. This
increase is due to an increase in taxable income from operations and $1.9
million of taxes from the gain on sale of the Roanoke MSA cellular partnership.
The effective rate remained unchanged at 38% for the nine month period ended
September 30, 1997 and 1996.
11
<PAGE>
CFW COMMUNICATIONS COMPANY
Item 2. Management's Discussion And Analysis
Of Financial Conditions And Results Of Operations
(Continued)
LIQUIDITY AND CAPITAL RESOURCES
In the nine months ended September 30, 1997, net cash provided by operating
activities was $12.7 million. Principal changes in operating assets and
liabilities included a $3.5 million increase in accounts receivable which
represented the short term advances to the PCS Alliances, the addition of two
states for the directory assistance contract, and the receivable for directory
advertising. Other current liabilities increased $1.4 million primarily due to
the $1.1 million funding for operating expenses. This is offset by the decrease
in accounts payable and other accrued liabilities of $0.4 million and $0.5
million, respectively.
The Company's investing activities for the nine months ended September 30, 1997
included $10.8 million for the purchase of property and equipment, including
$1.7 million towards a new office and switch facility to be used by our wireless
operations, $1.8 million for billing, accounting and human resources software,
and additions attributable to customer expansion and infrastructure build out
throughout all operating divisions. The Company also purchased $4.5 million of
PCS and WCS radio spectrum licenses with approximately $4.2 million of PCS radio
sprecturm licenses being contributed to the WVA PCS Alliance (see note 5).
Additionally, the Company contributed $0.9 million to the WVA PCS Alliance.
Finally, the Company purchased $1.1 million of minority interest in the VA RSA6
partnership and realized $6.6 million from the sale of the Roanoke MSA cellular
partnership.
Net cash used for financing activities for the nine months ended September 30,
1997 aggregated $4.1 million which primarily represents payment of dividends on
outstanding capital stock.
The Company has entered into guaranty agreements whereby the Company is
committed to provide guarantees of up to $36.2 million of the VA PCS Alliance's
debt and redeemable preferred obligations, with such guarantee becoming
effective as obligations are incurred by the Alliance. At September 30, 1997,
the Company has guaranteed $13.2 million of the Alliance's obligations.
See Note 4 to the Financial Statements for discussions relative to the PCS
Alliances cash flow activity.
12
<PAGE>
CFW COMMUNICATIONS COMPANY
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable
Item 2. Changes In Securities
Not applicable
Item 3. Defaults Upon Senior Securities
Not applicable
Item 4. Submission Of Matters To A Vote Of Security Holders
None
Item 5. Other Information
Not applicable
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits
(27) Financial Data Schedule
(B) Reports on Form 8-K - None
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.
CFW COMMUNICATIONS COMPANY
November 11, 1997 s/J. S. Quarforth
------------------------------------
J. S. Quarforth, President
and Chief Executive Officer
November 11, 1997 s/C. S. Smith
------------------------------------
C. S. Smith, VP-Administration,
Treasurer and Secretary
November 11, 1997 s/M. B. Moneymaker
------------------------------------
M. B. Moneymaker
Vice President - Finance
14
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
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