SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended __June 30, 1995 __
OR
_____ TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to________________
Commission file number 0-11174
__________________ WARWICK VALLEY TELEPHONE COMPANY_________________
(Exact name of registrant as specified in its charter)
__________________New York____________________________14-1160510__________
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
__47-49 Main Street, Warwick, New York___________________10990____________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code _____(914) 986-1101____
__________________________________________________________________________
Former name, former address and former fiscal year, if changed since last
report.
Indicate by check 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:
619,016 common shares, no par value, outstanding at June 30, 1995.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
WARWICK VALLEY TELEPHONE COMPANY
BALANCE SHEET
<TABLE>
<CAPTION>
<S> <C> <C>
June 30, December 31,
1995 1994
(Unaudited) (Audited)
CURRENT ASSETS:
Cash $ 533,993 $ 422,037
Telecommunications accounts receivable, less accounts 2,176,514 1,682,568
?f receivable allowance 1995-$68,170;? 1994-$65,155
Refundable income tax 0 42,034
Other accounts receivable 417,553 964,485
Materials and supplies 1,411,629 1,293,091
Prepaid expenses 554,175 285,819
TOTAL CURRENT ASSETS 5,093,864 4,690,034
NON-CURRENT ASSETS
Unamortized debt issuance expense 82,093 41,686
Other deferred charges 121,559 162,616
Investment in affiliated company 5,087 0
Investment in non-affiliated company 842,764 779,806
TOTAL NON-CURRENT ASSETS 1,051,503 984,108
TELEPHONE PLANT, AT COST:
Land, buildings and equipment
In service 31,152,622 30,666,549
Under construction 1,347,868 839,392
32,500,490 31,505,941
Less: Accumulated depreciation 10,404,736 9,522,504
TOTAL PLANT 22,095,754 21,983,437
TOTAL ASSETS $ 28,241,121 $ 27,657,579
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
-2-
Item 1. Financial Statements (Continued)
WARWICK VALLEY TELEPHONE COMPANY
BALANCE SHEET
<TABLE>
<CAPTION>
<S> <C> <C>
June 30, December 31,
STOCKHOLDERS' EQUITY AND LIABILITIES 1995 1994
(Unaudited) (Audited)
CURRENT LIABILITIES:
Current maturities of long-term debt $ 120,000 $ 120,000
Accounts payable 1,574,881 1,766,777
Notes payable 950,000 900,000
Advance billing and payments 246,216 202,358
Customer deposits 179,320 257,226
Accrued taxes 99,458 31,426
Other accrued liabilities 237,673 523,866
TOTAL CURRENT LIABILITIES 3,407,548 3,801,653
LONG TERM DEBT:
Funded debt 7,315,000 7,370,000
TOTAL LONG TERM DEBT 7,315,000 7,370,000
OTHER LIABILITIES & DEFERRED CREDITS:
Unamortized operating investment tax credit - net 328,927 354,427
Unamortized non-operating investment tax credit - net 18,179 18,179
Net non-current deferred operating income tax 2,534,730 1,973,117
Other deferred credits 362,804 640,961
TOTAL OTHER LIABILITIES & DEFERRED CREDITS 3,244,640 2,986,684
STOCKHOLDERS' EQUITY
Preferred stock - 5% cumulative, $100 par value;
7,500 shares authorized
5,000 shares issued and outstanding 500,000 500,000
Common stock, without par value;
720,000 shares authorized;
Issued and outstanding: 644,816 shares at 6/30/95
and 639,263 shares at 12/31/94 2,283,665 2,089,642
Retained earnings 12,265,468 11,684,800
15,049,133 14,274,442
Less: Treasury stock 25,800 shares at cost for 1995
and 1994 775,200 775,200
TOTAL STOCKHOLDERS' EQUITY 14,273,933 13,499,242
TOTAL LIABILITIES $ 28,241,121 $ 27,657,579
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
-3-
Item 1. Financial Statements (Continued)
WARWICK VALLEY TELEPHONE COMPANY
STATEMENTS OF INCOME
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
Operating revenues:
Local network service $ 763,504 $ 700,213 $1,565,464 $1,466,446
Network access and long distance
network service 2,223,147 1,968,553 4,425,176 4,039,657
Miscellaneous 227,022 225,033 504,272 474,569
3,213,673 2,893,799 6,494,912 5,980,672
Less: Provisions for uncollectibles 7,200 7,200 14,400 14,400
Operating revenues 3,206,473 2,886,599 6,480,512 5,966,272
Operating expenses:
Plant specific 415,911 506,059 978,100 980,338
Plant non-specific 658,262 607,324 1,315,499 1,221,124
Customer operations 703,048 654,353 1,371,495 1,306,738
Corporate operations 439,849 505,017 857,109 938,750
Operating expenses 2,217,070 2,272,753 4,522,203 4,446,950
Operating taxes:
Federal income taxes 158,346 50,644 323,247 207,005
Operating other taxes 261,074 235,279 519,809 484,288
Operating taxes 419,420 285,923 843,056 691,293
Income from operations 569,983 327,923 1,115,253 828,029
Non-operating income & expenses -
net (Note 2) 118,278 171,485 245,737 262,641
Income before fixed charges 688,261 499,408 1,360,990 1,090,670
Interest & related items:
Interest on funded debt 148,898 150,758 298,081 317,785
Other interest deductions (844) (709) 1,297 948
Amortization of debt issuance expense 21,977 2,140 12,427 4,281
Total interest & related items 170,031 152,189 311,805 323,014
Net income all sources 518,230 347,219 1,049,185 767,656
PREFERRED DIVIDENDS 6,250 6,250 12,500 12,500
INCOME APPLICABLE TO COMMON STOCK $ 511,980 $ 340,969 $1,036,685 $ 755,156
NET INCOME PER AVERAGE SHARE
OF OUTSTANDING COMMON STOCK 0.83 0.56 1.69 1.24
CASH DIVIDENDS PAID PER SHARE 0.37 0.37 0.74 0.74
AVERAGE SHARES OF COMMON STOCK
OUTSTANDING 616,240 611,034 614,851 609,819
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
- 4 -
WARWICK VALLEY TELEPHONE COMPANY
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(Unaudited)
<TABLE>
<CAPTION>
<C> <C> <C>
1995 1994
CASH FLOW FROM OPERATING ACTIVITIES:
Net Income $ 1,049,185 $ 767,656
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,023,334 873,847
Non-current deferred income taxes-dr. 0 0
Deferred income tax and investment tax credit 257,956 158,626
Interest charged to construction (24,841) (49,326)
CHANGE IN ASSETS AND LIABILITIES:
(Increase) Decrease in accounts receivable 52,986 130,040
(Increase) Decrease in materials and supplies (118,538) (264,589)
(Increase) Decrease in refundable income tax 42,034 0
(Increase) Decrease in prepaid expenses (268,356) (201,887)
(Increase) Decrease in deferred charges 41,057 (19,290)
Increase (Decrease) in accounts payable (191,896) 887,222
Increase (Decrease) in customers' deposits (77,906) (3,679)
Increase (Decrease) in accrued expenses 111,891 (255,297)
Increase (Decrease) in other liabilities (286,193) (7,598)
Net Cash provided by operating activities 1,610,713 2,015,725
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (1,123,224) (2,692,139)
Interest charged to construction 24,841 49,326
Change in unamortized debt issuance expense (52,835) 0
Change in other investment (68,045) 42,580
Net Cash used in investing activities (1,219,263) (2,600,233)
CASH FLOW FROM FINANCING ACTIVITIES:
Increase (Decrease) in Notes Payable 50,000 0
Reduction of long term debt (55,000) (55,000)
Dividends (468,517) (464,665)
Sale of common stock 194,023 167,295
Net Cash used by financing activities (279,494) (352,370)
Increase (Decrease) in cash and cash equivalents 111,956 (936,878)
Cash and cash equivalents at beginning of year 422,037 1,529,483
Cash and cash equivalents at end of the period $ 533,993 $ 592,605
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
-5-
Item 1. Financial Statements (Continued)
WARWICK VALLEY TELEPHONE COMPANY
NOTES TO FINANCIAL STATEMENTS
1. In the opinion of the management of the Warwick Valley Telephone Company,
the accompanying financial statements contain all adjustments (consisting
only of normal recurring adjustments) necessary to present fairly the
Company's financial position as of June 30, 1995 and December 31, 1994, its
income for the three-month and six-month periods ended June 30, 1995 and
1994 and its cash flow for the six-month periods ended June 30, 1995 and
1994.
These financial statements should be read in conjunction with the
financial statements and the notes included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1994.
The results of operations for any interim period are not necessarily
indicative of the results of operations for a full year.
2. Non-operating income and expenses for the three-month and six-month
periods ended June 30, 1995 and 1994 were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
Interest income $135 $11,527 $256 $16,546
Interest during construction 9,927 45,969 24,841 49,326
G/L disposition certain property (2,598) 5,427 10,910 15,475
Special charges (21,579) (20,650) (22,288) (21,609)
Other non-operating income 54,200 99,000 71,100 169,000
Equity in earnings of affiliated company 78,193 30,212 160,918 33,903
$118,278 $171,485 $245,737 $262,641
</TABLE>
- 6 -
WARWICK VALLEY TELEPHONE COMPANY
________________
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
RESULTS OF OPERATIONS - Six Months Ended June 30, 1995 - The Company's
net income from all sources increased $281,529 (or 36.7%) to $1,049,185
for the six-month period ended June 30, 1995, as compared to the same
period in 1994. Operating revenues increased by $514,240 (or 8.6%)
after provision for uncollectibles, to $6,480,512 for the six-month
period ended June 30, 1995 as compared to $5,966,272 for the
corresponding period of 1994. The increase in operating revenues was
caused mainly by increases in network access and toll revenues, which
increased $385,519 in the aggregate during the period, as compared to
the same six months of 1994.
Operating expenses increased by $75,253 (or 1.7%) to $4,522,203 for
the six-month period ended June 30, 1995 as compared to the same period
in 1994. Increased costs of salaries and benefits (approximately
$108,000) and depreciation ($141,000) were offset by reductions in
areas such as materials for repairs ($31,000), computer costs
($46,000), tariff filing costs ($36,000) and directory costs ($18,000).
Non-operating income and expenses decreased by $16,904 from
$262,641 in the six-month period ended June 30, 1994 to $245,737 in the
same period of 1995. A decrease of $117,123 in cellular income from
the Company's subsidiary and the Company's share of the Orange-Poughkeepsie
Cellular Partnership occurred primarily as a result of roamer fraud losses.
At the same time, Warwick Valley Long Distance, the Company's toll subsidiary,
had improved earnings of $146,238, compared to the 1994 period, when the
business was in its start-up phase. Reduced interest during construction
($24,485) and interest income ($16,290) also contributed to the change.
See Liquidity and Capital Resources below.
RESULTS OF OPERATIONS - Three Months Ended June 30, 1995 - The
Company's net income from all sources increased $171,011 (or 49.3%) to
$518,230 for the three-month period ended June 30, 1995, as compared to
$347,219 for the same period in 1994. Operating revenues increased by
$319,874 (or 11.1%) after provision for uncollectibles, to $3,206,473
for the three-month period ended June 30, 1995 as compared to
$2,886,599 for the corresponding period of 1994. The increase in
operating revenues was caused mainly by increases in access and toll
revenues over the 1994 period.
Operating expenses decreased by $55,683 (or 2.5%) to $2,217,070 for
the three-month period ended June 30, 1995 as compared to the same
period in 1994. Increased costs of salaries, benefits and depreciation
were offset as noted in Results of Operations - Six Months Ended June
30, 1995.
Non-operating income and expenses decreased by $53,207 from
$171,485 in the three-month period ended June 30, 1994 to $118,278 in
the same period of 1995, largely as a result of the factors listed
above under Results of Operations - Six Months Ended June 30, 1995.
See Liquidity and Capital Resources below.
LIQUIDITY AND CAPITAL RESOURCES - The Company's working capital
increased to $1,686,316 at June 30, 1995 from $1,440,094 at June 30,
1994, largely as a result of a higher level of receivables and a larger
inventory of materials and supplies at June 30, 1995.
-7-
WARWICK VALLEY TELEPHONE COMPANY
________________
The Company holds a 7.5% limited partnership interest in the
cellular mobile telephone partnership which is licensed to operate as
the wire-line licensee in both Orange and Dutchess Counties, New York.
Since the inception of the partnership, the Company has made capital
contributions of $249,750. No further capital contributions are
currently scheduled. A wholly-owned subsidiary of the Company, Warwick
Valley Mobile Telephone Company (WVMT), resells cellular telephone
service to the Company's subscribers as well as to others. WVMT also
sells and installs cellular telephone sets. The Company has invested
approximately $355,000 in WVMT since its operations began on April 1,
1989.
A second wholly-owned subsidiary, Warwick Valley Long Distance
Company, Inc. (WVLD), began business in December 1993 in New Jersey and
in May 1994 in New York. WVLD resells toll service to customers of
Warwick Valley Telephone. WVLD achieved positive retained earnings
prior to the end of 1994.
An additional wholly-owned subsidiary, Warwick Valley Networks,
Inc. (WVN), was established during 1994. WVN is a partner in the New
York State Independent Network (NYSINET), which was created by the
independent telephone companies of New York to build and operate its
own data connections network. NYSINET will make it unnecessary for its
member companies to rely on outside companies for these services and
may also offer services to companies who are not members, creating a
potential source of additional revenue. The NYSINET network is
expected to be in operation before the end of 1995.
Potential major changes in legislation and degree of
regulation/competition are pending in Congress and the Federal and
State regulatory agencies which have jurisdiction over the Company.
Although final decisions are probably months away, it would appear that
local and regional toll competition will be allowed, starting in 1996.
Until the rules governing such competition have been established, it is
difficult to estimate the effect on the Company in the different
markets in which it will compete. The most predictable markets
currently are the regional toll areas in both New York and New Jersey.
Such competition in each state is expected to have the effect of
reducing Warwick's revenues to an extent which cannot yet be
determined. The Company has urged in the ongoing proceeding that it be
allowed to realign its local, toll and access rates in New Jersey to
prevent a significant shortfall. However, a decision will not be
reached in that proceeding for several months. The New York rules on
regional toll competition are to be implemented in 1996, but only a
small revenue loss is anticipated.
PART II - OTHER INFORMATION
Items 1 (Legal Proceedings), 2 (Changes in Securities), 3 (Defaults
Upon Senior Securities) and 4 (Submission of Matters to a Vote of Securities
Holders) are inapplicable.
Item 5. Other Information
On March 10, 1995, the Company reached agreement with Local 503 of
the International Brotherhood of Electrical Workers on a three-year
contract, effective May 1, 1995, regarding wages and working conditions.
Local 503 represents non-management plant employees. The Warwick Valley
Telephone Company Employees Association (WVTEA) represents non-management
employees in the office and operator departments. The Company's contract
with WVTEA expires on November 1, 1995.
Effective June 30, 1995, John P. Nye, Vice President, retired from
the Company. No successor has been named.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits - Not applicable
b) Reports on Form 8-K - Not applicable
-8-
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.
Warwick Valley Telephone Company
Registrant
Date________________ ________________________________________
Herbert Gareiss, Jr., Vice President
(Duly Authorized Officer)
Date _______________ ________________________________________
Philip S. Demarest, Vice-President
Secretary and Treasurer
(Principal Financial and Chief
Accounting Officer)
-9-
<TABLE> <S> <C>
<ARTICLE> UT
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1994 DEC-31-1993
<PERIOD-END> JUN-30-1995 DEC-31-1994
<BOOK-VALUE> PER-BOOK PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 22,095,754 21,983,437
<OTHER-PROPERTY-AND-INVEST> 842,764 779,806
<TOTAL-CURRENT-ASSETS> 5,093,864 4,690,034
<TOTAL-DEFERRED-CHARGES> 203,652 204,302
<OTHER-ASSETS> 0 0
<TOTAL-ASSETS> 28,241,121 27,657,579
<COMMON> 2,283,665 2,089,642
<CAPITAL-SURPLUS-PAID-IN> 0 0
<RETAINED-EARNINGS> 12,265,468 11,684,800
<TOTAL-COMMON-STOCKHOLDERS-EQ> 14,549,133 13,774,442
0 0
500,000 500,000
<LONG-TERM-DEBT-NET> 7,195,000 7,250,000
<SHORT-TERM-NOTES> 950,000 900,000
<LONG-TERM-NOTES-PAYABLE> 0 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0 0
<LONG-TERM-DEBT-CURRENT-PORT> 120,000 120,000
0 0
<CAPITAL-LEASE-OBLIGATIONS> 0 0
<LEASES-CURRENT> 0 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 4,806,988 4,993,137
<TOT-CAPITALIZATION-AND-LIAB> 28,241,121 27,657,579
<GROSS-OPERATING-REVENUE> 6,480,512 12,252,804
<INCOME-TAX-EXPENSE> 323,247 312,507
<OTHER-OPERATING-EXPENSES> 0 0
<TOTAL-OPERATING-EXPENSES> 4,522,203 8,850,222
<OPERATING-INCOME-LOSS> 1,115,253 3,090,075
<OTHER-INCOME-NET> 245,737 326,392
<INCOME-BEFORE-INTEREST-EXPEN> 1,360,990 2,393,444
<TOTAL-INTEREST-EXPENSE> 311,805 643,994
<NET-INCOME> 1,049,185 1,749,450
12,500 25,000
<EARNINGS-AVAILABLE-FOR-COMM> 1,036,685 1,724,450
<COMMON-STOCK-DIVIDENDS> 456,017 1,028,820
<TOTAL-INTEREST-ON-BONDS> 298,081 619,064
<CASH-FLOW-OPERATIONS> 1,610,713 2,818,765
<EPS-PRIMARY> .74 2.82
<EPS-DILUTED> 0 0
<FN>
<F1>
</FN>
</TABLE>
