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Exhibit Index on Page 15
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended JANUARY 1, 1999 TO DECEMBER 31, 1999
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER. 0-11174
WARWICK VALLEY TELEPHONE COMPANY 401K PLAN
(Full title of the Plan)
WARWICK VALLEY TELEPHONE COMPANY
47 MAIN STREET
PO BOX 592
WARWICK, NEW YORK 10990
(Address of principal executive office)
(Name of Issuer and address of principal executive office)
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WARWICK VALLEY TELEPHONE COMPANY 401K PLAN
INDEX
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 3
Statement of Net Assets Available for Benefits as of December 31, 1999
and 1998. 4
Statement of Changes in Net Assets Available for Benefits for the periods
of December 31, 1999, December 31, 1998 and March 31, 1998. 5
Notes to Financial Statements 6-11
2
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HOLDING PAGE FOR "REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS"
3
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WARWICK VALLEY TELEPHONE COMPANY 401K PLAN
Statement of Net Assets Available for Benefits
December 31, 1999 and 1998
1999 1998
---- ----
Investments, at fair value:
Mutual Funds $ 2,963,314 $ 2,260,328
Warwick Valley Telephone
Company Stock 4,897,118 3,431,130
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7,860,432 5,691,458
------------- -------------
Cash 562,537 436,072
Participant Loan Receivables 84,206 32,560
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TOTAL ASSETS 8,507,175 6,160,090
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NET ASSETS AVAILABLE FOR BENEFITS $ 8,507,175 $ 6,160,090
============= =============
The accompanying notes are an integral part of these financial statements.
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<TABLE>
WARWICK VALLEY TELEPHONE COMPANY 401K PLAN
Statement of Changes in Net Assets Available for Benefits
Periods Ended December 31, 1999, December 31, 1998 and March 31, 1998
<CAPTION>
(12 Months) (9 Months) (12 Months)
12/31/99 12/31/98 3/31/98
---------- ---------- ----------
<S> <C> <C> <C>
ADDITIONS
Additions to net assets attributed to:
Interest/market appreciation $2,832,366 $1,046,699 $ 909,988
Dividends on company stock 158,707 135,993 96,141
---------- ---------- ----------
2,991,073 1,182,692 1,006,129
Contributions: elective and rollover 863,409 532,134 586,934
---------- ---------- ----------
TOTAL ADDITIONS 3,854,482 1,714,826 1,593,063
---------- ---------- ----------
DEDUCTIONS
Deductions from net assets attributed to:
Distributions to participants 1,507,397 16,500 23,155
---------- ---------- ----------
TOTAL DEDUCTIONS 1,507,397 16,500 23,155
---------- ---------- ----------
NET INCREASE 2,347,085 1,698,326 1,569,908
NET ASSETS AVAILABLE FOR BENEFITS
Beginning of year 6,160,090 4,461,764 2,891,856
---------- ---------- ----------
END OF YEAR $8,507,175 $6,160,090 $4,461,764
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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WARWICK VALLEY TELEPHONE COMPANY 401K PLAN
NOTES TO FINANCIAL STATEMENTS
(1) PLAN DESCRIPTION:
Effective January 1, 1999, the Company consolidated its three
separate 401(K) plans (Management, IBEW and WVTEA) into one plan
called the Warwick Valley Telephone Company 401(K) Plan. The plan
year from January 1 through December 31 and the Company's stock is
valued using current market prices from the NASDAQ (The Company's
stock started trading on the NASDAQ in April, 1998). The Charles
Schwab Trust Company is trustee of the plan and they will administer
the investment activity of the plan. Prior year amounts in these
financial statements have been restated to reflect the consolidation
of three separate plans into one plan.
The following description of the Warwick Valley Telephone Company
401K Plan (the "Plan") is provided for general information purposes
only. Participants should refer to the summary plan description and
the plan agreement for a more complete description of the plan's
provisions.
GENERAL-
The Plan covers all eligible employees of the Warwick Valley
Telephone Company (the "Company") as allowed under section 401(k) of
the Internal Revenue Code and is subject to the provisions of the
Employee Retirement Income Security Act of 1974 ("ERISA"). The
Trustee controls and manages the operations of the Plan. As of
December 31, 1999 there were 104 employees contributing to the Plan
from a total of 110 eligible to contribute. As of December 31, 1999
there were 119 total participants (including inactive participants
as defined by the Plan).
CONTRIBUTIONS-
PARTICIPANTS-
Eligible employees may participate in the Plan by contributing
to the Deferred Feature (before-tax) of the Plan. The
participant may contribute no more than 15% of base
compensation to the Deferred Feature.
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PLAN SPONSOR-
The Plan Sponsor contributes to the Plan 100% of each
Participant's contributions, subject to certain limitations.
The Management Participants matching contributions may not
exceed 7% of their annual compensation. Warwick Valley
Telephone Employee Association ("WVTEA") Participants matching
contributions may not exceed 7% of their annual compensation
through November 2, 1999 and 8% of their annual compensation
from November 2, 1999 through December 31, 1999. International
Brotherhood of Electrical Workers ("IBEW") Participants
matching contributions may not exceed 4.5% of their annual
compensation through May 2, 1999 and 6% of their annual
compensation from May 2, 1999 through December 31, 1999.
PARTICIPANT ROLLOVERS-
The Plan permits eligible participants, as defined in the
Plan, to rollover cash or other property acceptable to the
Plan Administrator from another qualified plan in addition to
making qualified voluntary participant contributions.
VESTING-
Participant accounts are fully vested and nonforfeitable at
all times.
LOANS-
The Plan permits participants to borrow up to 50% of their
account balance up to a maximum of $50,000 and an interest
rate of 1% plus prime and at other terms established in the
plan agreement.
PAYMENT OF BENEFITS -
On termination of service due to disability or retirement, a
participant may elect to receive either a lump-sum amount
equal to the value of the participant's vested interest in his
or her account, or equal periodic payments. For termination of
service due to death, a participant's beneficiary may receive
the value of the vested interest in the participant's account
as a lump-sum distribution.
PAYMENT OF WARWICK VALLEY TELEPHONE COMPANY STOCK UPON
TERMINATION -
If a participant has any portion of their account invested in
Warwick Valley Telephone Company Stock, he or she may take the
stock as an "in-kind" distribution or take the stock as cash.
"In-kind" distribution means the participant will receive a
stock certificate for the whole shares in his or her account.
Fractional shares will be paid in cash. If the participant
wishes to take the stock portion of their account as a cash
distribution, the Company will buy the stock at the bid price
on the day the withdrawal is processed.
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WITHDRAWALS-
Participants may make withdrawals under the hardship
provisions of the Plan while still employed by the Company.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF ACCOUNTING-
The accompanying financial statements of the Plan have been prepared
on the accrual method of accounting.
USE OF ESTIMATES-
The preparation of financial statements in conformity with generally
accepted accounting principles requires the plan administrator to
make estimates and assumptions that affect certain reported amounts
and disclosures. Accordingly, actual results may differ from those
estimates. Prior year amounts have been restated to conform to the
current year's financial statement presentation, including the
merging of the three plans into one.
PLAN EXPENSES-
Expenses related to the administration of the Plan have been paid by
Warwick Valley Telephone Company (the Plan "Sponsor"). These costs
represent professional services in the amount of approximately
$50,500 and for the twelve month period ending December 31, 1999,
$33,712 for the nine month period ending December 31, 1998, and
$54,500 for the twelve months ended March 31, 1998.
INVESTMENTS-
The investments included in the statement of net assets available
for benefits are stated at fair value. Shares of registered
investment companies and the Company's common stock are valued at
quoted market prices which represent the net asset value of shares
held by the Plan at year-end.
Effective January 1, 1999 the Company's common stock is valued using
quoted market prices from the NASDAQ, which it started trading on in
April, 1998. Prior to January 1, 1999 under the terms of the three
predecessor plans, the Company's common stock was valued using an
annual independent appraisal. The value was changed on April 1 of
each year for an appraisal done as under the appraisal method, of
the preceding December 31, and this valuation would remain the same
until the next April 1st. Consequently the fair value as of December
31, 1998 was based on the appraisal done December 31, 1997. Due to
this change in the method of valuation, as of January 1, 1999 the
fair value of the Company's common stock increased by approximately
$1,340,000.
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DISTRIBUTIONS TO PARTICIPANTS-
Distributions are recorded when paid.
(3) INVESTMENTS:
Through December 31, 1999, participants could invest their funds in
eleven available investment vehicles as described below:
SCHWAB INSTITUTIONAL ADVANTAGE MONEY MARKET FUND- A fund that
purchases short-term bonds from a diversified selection of
government entities and businesses including utilities,
energy, financial, durables, staples, services, retail, health
and technology.
WILLIAM BLAIR INCOME FUND - A fund that seeks current income
consistent with preservation of capital. The fund ordinarily
invests at least 90% of assets in domestic or foreign U.S.
dollar denominated high-quality debt securities, U.S.
government obligations and collateralized obligations. Up to
10% of assets may be invested in unrated securities.
FREEMONT BOND FUND - This fund seeks total return consistent
with preservation of capital. The fund ordinarily invests at
least 65% of assets in debt securities, such as U.S. and
foreign government obligations, domestic and foreign corporate
debt and mortgage and asset-backed securities.
FIDELITY PURITAN FUND - This fund seeks income consistent with
preservation of capital. The fund invests in a diversified
array of high-yielding securities such as common stocks,
preferred stocks and bonds. The fund may purchase foreign
securities, zero-coupon bonds and indexed securities.
VANGUARD WELLINGTON FUND - This fund seeks conservation and
reasonable income. The fund normally invests 60% to 70% of
assets in common stocks and convertible securities. It
typically invests the balance of assets in investment-grade
corporate debt and U.S. government obligations. The fund may
invest up to 10% of assets in foreign securities.
FIDELITY GROWTH AND INCOME FUND - This fund seeks long-term
growth, current income and growth of income, consistent with
reasonable investment risk. The fund invests primarily in
dividend-paying common stocks with growth potential.
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FIDELITY MAGELLAN FUND - This fund seeks capital appreciation.
The fund invests primarily in common stocks and convertible
securities, with up to 20% of assets invested in debt
securities of all types and qualities. It features domestic
corporations operating primarily in the U.S., domestic
corporations that have significant activities and interests
outside the U.S., and foreign companies.
VANGUARD U.S. GROWTH FUND - This fund seeks long-term growth
of capital. The fund invests primarily in common stocks and
convertible securities issued by established U.S. companies.
In selecting investments, the advisor emphasizes companies
that it believes to have exceptional growth records, strong
market positions, reasonable financial strength and relatively
low sensitivity to changing economic conditions.
WEITZ VALUE FUND - This fund seeks capital appreciation,
current income is secondary. The fund invests primarily in
equity securities. The advisor seeks securities trading at
prices lower than their intrinsic values. The fund may invest
in foreign securities and securities that are not readily
marketable. It may also write covered call options.
GAM INTERNATIONAL A FUND - This fund seeks long-term capital
appreciation. The fund normally invests at least 65% of assets
in securities issued in at least three foreign countries. It
invests primarily in equities, but may also purchase debt
securities.
WARWICK VALLEY TELEPHONE COMPANY COMMON STOCK FUND - This fund
invests entirely in common stock of Warwick Valley Telephone
Company.
The fair value of investments that exceed 5% of net assets available for
benefits are as follows:
12/31/99 12/31/98
Warwick Valley Telephone Company
Common Stock $ 4,897,118 $ 3,431,130
Fidelity Magellan Fund 1,176,254 1,150,587
Fidelity Growth and Income Fund 917,377 692,845
Fidelity Puritan Fund 289,285 271,188
Fidelity Ginnie Mae Fund - 145,708
William Blair Income Fund 35,585 -
Freemont Bond Fund 112,481 -
Vanguard Wellington Fund 76,532 -
Vanguard U.S. Growth Fund 196,180 -
Weitz Value Fund 150,029 -
GAM International A Fund 9,591 -
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TOTAL INVESTMENTS $ 7,860,432 $ 5,691,458
=========== ===========
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(4) FEDERAL INCOME TAX STATUS:
The Company received determination letters from the Internal Revenue
Service, dated December 2, 1996 and May 19, 1997, respectively,
stating that the Plan, as amended, is qualified under Sections 401
and 501 of the Internal Revenue Code. Participants in a qualified
plan are not subject to income taxes on Company contributions or
dividend income allocated to their accounts until a distribution is
made from the Plan.
(5) PLAN TERMINATION:
The terms of the Plan do not contemplate any specific termination
date. However, the Plan may be terminated at any time by the Board
of Directors. Upon a complete discontinuance of contributions,
partial termination, or termination of this Plan, each participant,
former participant, and beneficiary will continue to have a
nonforfeitable interest in their Plan account.
(6) RELATED PARTY TRANSACTIONS:
Certain expenses of administration and servicing of the Plan,
including equipment, supplies, and payroll expenses of
administrative and clerical personnel and fees of the Trustee, are
provided by the Company without charge to the Plan.
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CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation, by
reference, of our report included in this Annual Report on Form 11-K into the
Warwick Valley Telephone Company Registration Statement No. 333-64799 on Form
S-8.
BUSH & GERMAIN, P.C.
SYRACUSE, NEW YORK
JUNE 28, 2000
12
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BUSH & GERMAIN, P.C.
SYRACUSE, NEW YORK
JUNE 28, 2000
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
Warwick Valley Telephone Company, The Plan Administrator, has duly caused this
annual report to be signed on its behalf by the undersigned thereunto duly
authorized.
WARWICK VALLEY TELEPHONE COMPANY SAVINGS PLAN
By /s/ Colleen Shannon
-------------------
By Colleen Shannon, Assistant Secretary of
Warwick Valley Telephone Company, Plan
Administrator
Date June 28, 2000
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EXHIBIT INDEX
SEQUENTIALLY
EXHIBIT NUMBER EXHIBIT NUMBERED PAGE
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23 Independent Auditors 12
Consent
