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 ____March 31, 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 or (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:
613,463 common shares, no par value, outstanding at March 31, 1995.
PART I - FINANCIAL INFORMATION
Ite 1. Financial Statements
WARWICK VALLEY TELEPHONE COMPANY
BALANCE SHEET
<TABLE>
<CAPTION>
<S> <C> <C>
March 31, December 31,
1995 1994
(Unaudited) (Audited)
CURRENT ASSETS:
Cash $ 471,884 $ 422,037
Telecommunications accounts receivable, less accounts 2,136,299 1,682,568
receivable allowance 1995-$69,634; 1994-$65,155
Refundable income tax 0 42,034
Other accounts receivable 230,274 964,485
Materials and supplies 1,482,570 1,293,091
Prepaid expenses 531,468 285,819
TOTAL CURRENT ASSETS 4,852,495 4,690,034
NON-CURRENT ASSETS
Unamortized debt issuance expense 39,545 41,686
Other deferred charges 168,390 162,616
Investment in affiiliated company 5,043 0
Investment in non-affiliated company 788,564 779,806
TOTAL NON-CURRENT ASSETS 1,001,542 984,108
TELEPHONE PLANT, AT COST:
Land, buildings and equipment
In service 31,025,497 30,666,549
Under construction 751,295 839,392
31,776,792 31,505,941
Less: Accumulated depreciation 9,988,193 9,522,504
TOTAL PLANT 21,788,599 21,983,437
TOTAL ASSETS $ 27,642,636 $ 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>
March 31, December 31,
STOCKHOLDERS' EQUITY AND LIABILITIES 1995 1994
(Unaudited) (Audited)
CURRENT LIABILITIES:
Current maturities of long-term debt $ 120,000 $ 120,000
Accounts payable 1,647,514 1,766,777
Notes payable 700,000 900,000
Advance billing and payments 45,585 202,358
Customer deposits 286,415 257,226
Accrued taxes 134,924 31,426
Other accrued liabilities 351,028 523,866
TOTAL CURRENT LIABILITIES 3,285,466 3,801,653
LONG TERM DEBT:
Funded debt 7,342,500 7,370,000
TOTAL LONG TERM DEBT 7,342,500 7,370,000
OTHER LIABILITIES & DEFERRED CREDITS:
Unamortized operating investment tax credit - net 341,677 354,427
Unamortized non-operating investment tax credit - net 18,179 18,179
Net non-current deferred operating income tax 2,472,571 1,973,117
Other deferred credits 385,279 640,961
TOTAL OTHER LIABILITIES & DEFERRED CREDITS 3,217,706 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:639,263 shares at 3/31/95
and 639,263 shares at 12/31/94 2,089,642 2,089,642
Retained earnings 11,982,522 11,684,800
14,572,164 14,274,442
Less: Treasury stock 25,800 shares at cost for 1995
and 1994 775,200 775,200
TOTAL STOCKHOLDERS' EQUITY 13,796,964 13,499,242
TOTAL LIABILITIES $ 27,642,636 $ 27,657,579
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
-3-
WARWICK VALLEY TELEPHONE COMPANY
STATEMENT OF INCOME
(UNAUDITED)
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Three Months Ended
March 31,
1995 1994
Operating Revenues:
Local network service $ 801,960 $ 766,233
Network access and long distance network service 2,202,029 2,071,104
Miscellaneous 277,250 249,536
3,281,239 3,086,873
Less: Provisions for uncollectibles 7,200 7,200
Operating revenues
3,274,039 3,079,673
Operating Expenses:
Plant specific 562,189 474,279
Plant non-specific 657,237 613,800
Customer operating expense 668,447 652,385
Corporate operations 417,260 433,733
Operating expenses 2,305,133 2,174,197
Operating Taxes:
Federal income taxes 164,901 156,361
Other operating taxes 258,735 249,009
Operating taxes 423,636 405,370
Income from Operations 545,270 500,106
Non-Operating Income & Expenses, Net (Note 2) 127,459 91,156
Income before fixed charges 672,729 591,262
Interest & Related Items:
Interest on funded debt 149,183 167,027
Other Interest Deductions ( 9,550) 1,657
Amortization of debt issuance expense 2,141 2,141
Total interest & related items 141,774 170,825
Net income all sources 530,955 420,437
PREFERRED DIVIDENDS 6,250 6,250
INCOME APPLICABLE TO COMMON STOCK $ 524,705 $ 414,187
NET INCOME PER AVERAGE SHARE OF
OUTSTANDING COMMON STOCK $ 0.86 $ 0.68
CASH DIVIDENDS PAID PER SHARE $ 0.37 $ 0.37
AVERAGE SHARES OF COMMON STOCK OUTSTANDING 613,463 608,604
</TABLE>
The accompanying note to financial statements are an integral part of these
statements.
-4-
WARWICK VALLEY TELEPHONE COMPANY
STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 30, 1995 AND 1994
(Unaudited)
<TABLE>
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1995 1994
CASH FLOW FROM OPERATING ACTIVITIES:
Net Income $ 530,955 $ 811,925
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 503,674 715,736
Non-current deferred income taxes-dr. 0 (235,129)
Deferred income tax and investment tax credit 231,022 212,422
Interest charged to construction ( 14,914) ( 31,458)
CHANGE IN ASSETS AND LIABILITIES:
(Increase) Decrease in accounts receivable 280,480 155,789
(Increase) Decrease in materials and supplies (189,479) (306,931)
(Increase) Decrease in refundable income tax 42,034 23,716
(Increase) Decrease in prepaid expenses (245,649) (108,485)
(Increase) Decrease in deferred charges ( 5,774) 22,568
Increase (Decrease) in accounts payable (119,263) (256,553)
Increase (Decrease) in customers' deposits 29,189 ( 1,304)
Increase (Decrease) in accrued expenses ( 53,274) (311,141)
Increase (Decrease) in other liabilities (172,838) 122,639
Net Cash provided by operating activities 816,163 813,794
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (306,698) (872,418)
Interest charged to construction 14,914 31,458
Change in other investment ( 13,801) ( 95,311)
Net Cash used in investing activities (305,585) (936,271)
CASH FLOW FROM FINANCING ACTIVITIES:
Increase (Decrease) in Notes Payable (200,000) (125,000)
Reduction of long term debt ( 27,500) 26,215
Dividends (233,231) (436,698)
Sale of common stock 0 155,116
Net Cash used by financing activities (460,731) (380,367)
Increase (Decrease) in cash and cash equivalents 49,847 (502,844)
Cash and cash equivalents at beginning of year 422,037 753,385
Cash and cash equivalents at end of the period $ 471,884 $ 250,541
</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) present fairly the Company's
financial position as of March 31, 1995 and December 31, 1994, its income
for the three-month periods ended March 31, 1995 and 1994 and its cash
flow for the three-month periods ended March 31, 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 periods ended
March 31, 1995 and 1994 were as follows:
Three Months Ended
March 31,
1995 1994
Interest income $ 121 $ 5,019
Interest during construction 14,914 3,357
G/L disposition certain property 13,508 10,048
Special charges ( 709) ( 959)
Other non-operating income 16,900 70,000
Equity in earnings of affiliated company 82,725 3,691
$127,459 $91,156
- 6 -
WARWICK VALLEY TELEPHONE COMPANY
________________
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
RESULTS OF OPERATIONS - Three Months Ended March 31, 1995 - The Company's
net income from all sources increased $110,518 (or 26.3%) to $530,955 for
the three-month period ended March 31, 1995, as compared to the same period
in 1994. Operating revenues increased by $194,366 (or 6.3%) after provision
for uncollectibles, to $3,274,039 for the three-month period ended March 31,
1995 as compared to $3,079,673 for the corresponding period of 1994. The
increase in operating revenues was primarily the result of network access
revenues which increased $129,543 (or 10.1%), largely because of increased
interstate access rates effective July 1, 1994.
Operating expenses increased by $130,936 (or 6.0%) to $2,305,133 for the
three-month period ended March 31, 1995 as compared to the same period in
1994, mainly due to increased costs of salaries and benefits ($72,838) and
increased depreciation ($68,162). A number of other increases and decreases
occurred, the most significant being a reduction in supervision payroll of
$37,138, resulting from personnel changes which took place during the
quarter.
Non-operating income and expenses increased by $36,303 from $91,156 in
the three-month period ended March 31, 1994 to $127,459 in the same period
of 1995, largely as a result of the profit of $97,420 earned by Warwick
Valley Long Distance during the 1995 period, compared to $515 during the
1994 period. This was offset by a reduction in the Company's share of
Orange-Poughkeepsie Cellular Partnership income from $70,000 in the 1994
period to $16,900 in the 1995 period and a loss of $14,696 for Warwick
Valley Mobile during the 1995 period compared to a profit of $3,175 during
the 1994 period. Both of these adverse changes were the result of fraud
losses, a serious problem facing the industry. The Company expects such
losses to decrease as a result of security measures put into place near
year-end 1994 and also expects to be reimbursed for some of the losses
through its operating agreement with the cellular partnership.
LIQUIDITY AND CAPITAL RESOURCES - The Company's working capital decreased
from $2,128,887 at March 31, 1994 to $1,567,029 at March 31, 1995. This
difference is primarily due to a reduction in cash from the 1994 balance
which included part of the proceeds of the Series J Bond issue in December
1993.
The Company issued 5,553 shares of its common stock on April 1, 1995 to
employees participating in its retirement savings plans at a price of $34.94
per share, realizing $194,021.82. The sale price was discounted 15% from
the price at which the stock was valued by an independent appraisal firm
just prior to the transaction. Additional sales to employees are
anticipated in 1996 and subsequent years.
Pursuant to a NYSPSC order, the tax savings due to the general reduction
in income tax liability of the Company made possible by the Tax Reform Act
of 1986 attributable to New York State operations have been deferred. These
tax savings were applied during 1994, and will continue to be applied in
subsequent years, as an offset against the costs of funding retiree health
benefits. Reduced rates to reflect the tax savings were ordered in New
Jersey beginning July 1, 1987.
-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 $365,000 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 (NYNSINET), 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.
PART II - OTHER INFORMATION
Items 1 (Legal Proceedings), 2 (Changes in Securities), and 3 (Defaults Upon
Senior
Securities) are inapplicable.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS - At the
Company's 1995 Annual Meeting of Common Shareholders held on April 28, 1995,
Wisner H. Buckbee, Joseph E. DeLuca and Fred M. Knipp were elected as
directors for three-year terms and Corinna S. Lewis was elected as a
director for one year to fill the unexpired term of John W. Sanford, Jr.
The terms of Earl V. Barry, Howard Conklin, Jr., Philip S. Demarest, Victor
J. Marotta and Henry L. Nielsen, Jr. continued after the meeting.
Matters voted on at the meeting and the results of each vote are as
follows:
Broker
For Against Abstain Non-Votes
1. Set the number of directors at 27,552 2,036 6 95,292
nine until the next annual
meeting
Broker
For Against Withheld Non-Votes
2. Election of directors-
Wisner H. Buckbee 429,180 270 144 95,292
Joesph E. DeLuca 403,016 26,434 144 95,292
Fred M. Knipp 429,450 0 144 95,292
Corinna S. Lewis 423,652 5,798 144 95,292
Broker
For Against Abstain Non-Votes
3. Ratify the appointment of
Bush and Germain as the
independent public accountants
of the Company 429,558 0 36 95,292
-8-
WARWICK VALLEY TELEPHONE COMPANY
________________
Item 5. Other Information
At its reorganizational meeting on April 28, 1995, the Board of
Directors elected the following persons to the postions set forth opposite
their names:
Howard Conklin, Jr. - Chairman of the Board
Henry L. Nielsen, Jr. - Vice Chairman of the Board
Fred M. Knipp - President
Philip S. Demarest - Vice President, Secretary and
Treasurer
John P. Nye - Vice President
Herbert Gareiss, Jr. - Vice President, Assistant
Secretary and Assistant Treasurer
Item 6. Exhibits And Reports On Form 8-K
a) Exhibits - Not applicable
b) Reports on Form 8-K - Not applicable
-9-
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_May 12, 1995__ _________Herbert Gareiss, Jr.__________
Herbert Gareiss, Jr., Vice
President
(Duly Authorized Officer)
Date __May 12, 1995__ _________Philip S. Demarest____________
Philip S. Demarest, Vice-President
Secretary and Treasurer
(Principal Financial and Chief
Accounting Officer)
-10-
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<ARTICLE> UT
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<PERIOD-TYPE> 3-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1994 DEC-31-1993
<PERIOD-END> MAR-31-1995 DEC-31-1994
<BOOK-VALUE> PER-BOOK PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 21,788,599 21,983,437
<OTHER-PROPERTY-AND-INVEST> 793,607 779,806
<TOTAL-CURRENT-ASSETS> 4,852,495 4,690,034
<TOTAL-DEFERRED-CHARGES> 207,935 204,302
<OTHER-ASSETS> 0 0
<TOTAL-ASSETS> 27,642,636 27,657,579
<COMMON> 2,089,642 2,089,642
<CAPITAL-SURPLUS-PAID-IN> 0 0
<RETAINED-EARNINGS> 11,982,522 11,684,800
<TOTAL-COMMON-STOCKHOLDERS-EQ> 14,072,164 13,774,442
000,000 000,000
500,000 500,000
<LONG-TERM-DEBT-NET> 7,362,500 7,390,000
<SHORT-TERM-NOTES> 700,000 900,000
<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> 4,907,972 4,993,137
<TOT-CAPITALIZATION-AND-LIAB> 27,642,636 27,657,579
<GROSS-OPERATING-REVENUE> 3,274,039 12,252,804
<INCOME-TAX-EXPENSE> 164,901 312,507
<OTHER-OPERATING-EXPENSES> 0 0
<TOTAL-OPERATING-EXPENSES> 2,305,133 8,850,222
<OPERATING-INCOME-LOSS> 27,642,636 27,657,579
<OTHER-INCOME-NET> 127,459 326,392
<INCOME-BEFORE-INTEREST-EXPEN> 672,729 2,393,444
<TOTAL-INTEREST-EXPENSE> 141,774 643,994
<NET-INCOME> 530,995 1,749,450
6,250 25,000
<EARNINGS-AVAILABLE-FOR-COMM> 524,705 1,724,450
<COMMON-STOCK-DIVIDENDS> 226,981 1,028,280
<TOTAL-INTEREST-ON-BONDS> 149,183 619,064
<CASH-FLOW-OPERATIONS> 816,163 2,818,765
<EPS-PRIMARY> .86 2.82
<EPS-DILUTED> 0 0
