-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Qaq1o9eJVuLNBgVhx/cnMO2+CQ/LDbiLxp8nqSdY2h/Oai2SsYMUrKzfRPjanoDV Sli2S8tu8tTtX++4O6PDtg== 0000104777-95-000023.txt : 19951119 0000104777-95-000023.hdr.sgml : 19951119 ACCESSION NUMBER: 0000104777-95-000023 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951114 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: WARWICK VALLEY TELEPHONE CO CENTRAL INDEX KEY: 0000104777 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 141160510 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-11174 FILM NUMBER: 95591404 BUSINESS ADDRESS: STREET 1: 47 49 MAIN ST CITY: WARWICK STATE: NY ZIP: 10990 BUSINESS PHONE: 9149861101 MAIL ADDRESS: STREET 1: 47 49 MAIN ST STREET 2: PO BOX 592 CITY: WARWICK STATE: NY ZIP: 10990 10-Q 1 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 __September 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 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 September 30, 1995. PART I - FINANCIAL INFORMATION Item 1. Financial Statements WARWICK VALLEY TELEPHONE COMPANY BALANCE SHEET
September 30, December 31, 1995 1994 (Unaudited) (Audited) CURRENT ASSETS: Cash $ 455,177 $ 422,037 Telecommunications accounts receivable, less accounts 2,431,279 1,682,568 receivable allowance 1995-$68,013; 1994-$65,155 Refundable income tax 0 42,034 Other accounts receivable 489,808 964,485 Materials and supplies 1,435,541 1,293,091 Prepaid expenses 434,798 285,819 TOTAL CURRENT ASSETS 5,246,603 4,690,034 NON-CURRENT ASSETS Unamortized debt issuance expense 78,631 41,686 Other deferred charges 130,394 162,616 Investment in affiliated company 5,086 0 Investment in non-affiliated company 920,914 779,806 TOTAL NON-CURRENT ASSETS 1,135,025 984,108 TELEPHONE PLANT, AT COST: Land, buildings and equipment In service 31,608,158 30,666,549 Under construction 1,394,607 839,392 33,002,765 31,505,941 Less: Accumulated depreciation 10,806,875 9,522,504 TOTAL PLANT 22,195,890 21,983,437 TOTAL ASSETS $ 28,577,518 $ 27,657,579
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
September 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 1,755,799 1,766,777 Notes payable 550,000 900,000 Advance billing and payments 186,037 202,358 Customer deposits 186,696 257,226 Accrued taxes 195,824 31,426 Other accrued liabilities 665,610 523,866 TOTAL CURRENT LIABILITIES 3,659,966 3,801,653 LONG TERM DEBT: Funded debt 7,277,500 7,370,000 TOTAL LONG TERM DEBT 7,277,500 7,370,000 OTHER LIABILITIES & DEFERRED CREDITS: Unamortized operating investment tax credit - net 316,177 354,427 Unamortized non-operating investment tax credit - net 18,179 18,179 Net non-current deferred operating income tax 2,296,272 1,973,117 Other deferred credits 340,439 640,961 TOTAL OTHER LIABILITIES & DEFERRED CREDITS 2,971,067 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 9/30/95 and 639,263 shares at 12/31/94 2,283,665 2,089,642 Retained earnings 12,660,520 11,684,800 15,444,185 14,274,442 Less: Treasury stock 25,800 shares at cost 775,200 775,200 TOTAL STOCKHOLDERS' EQUITY 14,668,985 13,499,242 TOTAL LIABILITIES $ 28,577,518 $ 27,657,579
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 NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994 (Unaudited)
Three Months Ended Nine Months Ended September 30, September 30, 1995 1994 1995 1994 Operating revenues: Local network service $ 816,580 $ 709,895 $2,382,044 $2,176,341 Network access and long distance network service 2,391,255 2,217,896 6,816,431 6,257,553 Miscellaneous 280,127 270,751 784,399 745,320 3,487,962 3,198,542 9,982,874 9,179,214 Less: Provisions for uncollectibles 7,200 7,200 21,600 21,600 Operating revenues 3,480,762 3,191,342 9,961,274 9,157,614 Operating expenses: Plant specific 560,428 442,156 1,538,528 1,422,494 Plant non-specific 644,160 632,809 1,959,659 1,853,933 Customer operations 698,141 696,776 2,069,636 2,003,514 Corporate operations 442,276 366,793 1,299,385 1,305,543 Operating expenses 2,345,005 2,138,534 6,867,208 6,585,484 Operating taxes: Federal income taxes 225,665 189,726 548,912 396,731 Operating other taxes 272,572 269,069 792,381 753,357 Operating taxes 498,237 458,795 1,341,293 1,150,088 Income from operations 637,520 594,013 1,752,773 1,422,042 Non-operating income & expenses - net (Note 2) 176,526 111,460 422,263 374,103 Income before fixed charges 814,046 705,473 2,175,036 1,796,145 Interest & related items: Interest on funded debt 148,218 150,941 446,299 468,726 Other interest deductions 13,458 1,189 14,755 2,136 Amortization of debt issuance expense 3,461 2,140 15,888 6,422 Total interest & related items 165,137 154,270 476,942 477,284 Net income all sources 648,909 551,203 1,698,094 1,318,861 PREFERRED DIVIDENDS 6,250 6,250 18,750 18,750 INCOME APPLICABLE TO COMMON STOCK $ 642,659 $ 544,953 $1,679,344 $1,300,111 NET INCOME PER AVERAGE SHARE OF OUTSTANDING COMMON STOCK 1.04 0.89 2.73 2.13 CASH DIVIDENDS PAID PER SHARE 0.37 0.37 1.11 1.11 AVERAGE SHARES OF COMMON STOCK OUTSTANDING 619,016 613,463 616,240 611,034
The accompanying notes to financial statements are an integral part of these statements. - 4 - WARWICK VALLEY TELEPHONE COMPANY STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994 (Unaudited)
1995 1994 CASH FLOW FROM OPERATING ACTIVITIES: Net Income $ 1,698,094 $ 1,318,861 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,533,758 1,321,603 Non-current deferred income taxes-dr. 0 0 Deferred income tax and investment tax credit (15,617) 273,646 Interest charged to construction (29,897) (109,481) CHANGE IN ASSETS AND LIABILITIES: (Increase) Decrease in accounts receivable (274,034) (78,493) (Increase) Decrease in materials and supplies (142,450) (330,931) (Increase) Decrease in refundable income tax 42,034 0 (Increase) Decrease in prepaid expenses (148,979) (108,792) (Increase) Decrease in deferred charges 32,222 (24,028) Increase (Decrease) in accounts payable (10,978) 160,462 Increase (Decrease) in customers' deposits (70,530) (4,056) Increase (Decrease) in accrued expenses 148,078 (208,365) Increase (Decrease) in other liabilities 141,744 125,021 Net Cash provided by operating activities 2,903,445 2,335,447 CASH FLOW FROM INVESTING ACTIVITIES: Purchase of property, plant and equipment (1,730,323) (3,549,757) Interest charged to construction 29,897 109,481 Change in unamortized debt issuance expense (52,834) 0 Change in other investment (146,194) (44,213) Net Cash used in investing activities (1,899,454) (3,484,489) CASH FLOW FROM FINANCING ACTIVITIES: Increase (Decrease) in Notes Payable (350,000) 750,000 Reduction of long term debt (92,500) (92,500) Dividends (722,374) (697,896) Sale of common stock 194,023 167,295 Net Cash used by financing activities (970,851) 126,899 Increase (Decrease) in cash and cash equivalents 33,140 (1,022,143) Cash and cash equivalents at beginning of year 422,037 1,529,483 Cash and cash equivalents at end of the period $ 455,177 $ 507,340
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 September 30, 1995 and December 31, 1994, its income for the three-month and nine-month periods ended September 30, 1995 and 1994 and its cash flow for the nine-month periods ended September 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 nine-month periods ended September 30, 1995 and 1994 were as follows:
Three Months Ended Nine Months Ended September 30, September 30, 1995 1994 1995 1994 Interest income $129 $428 $385 $16,974 Interest during construction 5,056 60,155 29,897 109,481 G/L disposition certain property 4,938 6,326 15,848 21,803 Special charges (2,524) (9,403) (24,812) (31,012) Other non-operating income 78,150 86,100 149,250 255,100 Equity in earnings of affiliated company 90,777 (32,146) 251,695 1,757 $176,526 $111,460 $422,263 $374,103
- 6 - WARWICK VALLEY TELEPHONE COMPANY ________________ Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS - Nine Months Ended September 30, 1995 - The Company's net income from all sources increased $379,233 (or 28.8%) to $1,698,094 for the nine-month period ended September 30, 1995, as compared to the same period in 1994. Operating revenues increased by $803,660 (or 8.8%) after provision for uncollectibles, to $9,961,274 for the nine-month period ended September 30, 1995 as compared to $9,157,614 for the corresponding period of 1994. The increase in operating revenues was caused mainly by increases in network access and toll revenues, which increased $558,878 in the aggregate during the period, as compared to the same nine months of 1994. Operating expenses increased by $281,724 (or 4.3%) to $6,867,208 for the nine-month period ended September 30, 1995 as compared to the same period in 1994. Increased costs of salaries and benefits (approximately $169,000) and depreciation ($203,000) were offset by reductions in areas such as materials for repairs ($20,000), tariff filing costs ($42,000) and directory costs ($20,000). Non-operating income and expenses increased by $48,160 from $374,103 in the nine-month period ended September 30, 1994 to $422,263 in the same period of 1995. A decrease of $108,197 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 an increase in earnings of $252,285, to $248,674 for the 1995 period from a loss of $3,611 during 1994 when the business was in its start-up phase. Reductions in interest during construction of $79,584 and in interest income of $16,589 offset part ot the increase. See Liquidity and Capital Resources below. RESULTS OF OPERATIONS - Three Months Ended September 30, 1995 - The Company's net income from all sources increased $97,706 (or 17.7%) to $648,909 for the three-month period ended September 30, 1995, as compared to $551,203 for the same period in 1994. Operating revenues increased by $289,420 (or 9.1%) after provision for uncollectibles, to $3,480,762 for the three-month period ended September 30, 1995 as compared to $3,191,342 for the corresponding period of 1994. The increase in operating revenues was caused mainly by increases in access, toll and local revenues over the 1994 period. Operating expenses increased by $206,471 (or 9.7%) to $2,345,005 for the three-month period ended September 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 - Nine Months Ended September 30, 1995. Non-operating income and expenses increased by $65,066 from $111,460 in the three-month period ended September 30, 1994 to $176,526 in the same period of 1995, largely as a result of the factors listed above under Results of Operations - Nine Months Ended September 30, 1995. See Liquidity and Capital Resources below. LIQUIDITY AND CAPITAL RESOURCES - The Company's working capital increased to $1,586,637 at September 30, 1995 from $1,334,195 at September 30, 1994, largely as a result of a higher level of receivables and a lower level of notes payable, offset by a higher level of other accrued liabilities at September 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 $347,000 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. Another wholly-owned subsidiary, Hometown Online, Inc. (Online) was created during 1995. Online is the corporate entity through which WVTC provides connectivity to the Internet as well as local and regional information services to personal computer users. Service is offered within WVTC's service area as well as in nearby areas in New York, New Jersey and Pennsylvania. Online first began offering services in July, 1995. WVTC has invested approximately $200,000 in Online since its inception. Potential major changes in legislation and regulation that affect the structure of future regulation and 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 markets most likely to be affected first are the regional toll areas in both New York and New Jersey. The competition in those regional toll areas is expected to have the effect of reducing Warwick's revenues. The extent of such reduction cannot yet be determined but is expected to be small in New York where carrier access is the main revenue source. The New York regional toll rules are expected to be implemented in 1996. The Company has urged in the ongoing New Jersey proceeding that it be allowed to realign its local, toll and access rates to prevent a shortfall which could result from the loss of a significant portion of the regional toll market. Currently the Company's market share is estimated to be in excess of 90%. A decision will not be reached in that proceeding for several months. 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 October 25, 1995, the Company reached agreement with The Warwick Valley Telephone Company Employees' Association (WVTEA) on a three-year contract, effective November 6, 1995, regarding wages and working conditions. WVTEA represents non-management clerical and operator employees. Local 503 of the International Brotherhood of Electrical Workers represents non-management employees in the plant department. The Company's contract with Local 503 expires on May 1, 1998. -8- Item 6. Exhibits and Reports on Form 8-K a) Exhibits - Not applicable b) Reports on Form 8-K - Not applicable 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- EX-27 2
UT 9-MOS 12-MOS DEC-31-1994 DEC-31-1993 SEP-30-1995 DEC-31-1994 PER-BOOK PER-BOOK 22,195,890 21,983,437 920,914 779,806 5,246,603 4,690,034 209,025 204,302 0 0 28,577,518 27,657,579 2,283,665 2,089,642 0 0 12,660,520 11,684,800 14,944,185 13,774,442 0 0 500,000 500,000 7,157,500 7,250,000 550,000 900,000 0 0 0 0 120,000 120,000 0 0 0 0 0 0 5,185,833 4,993,137 28,577,518 27,657,579 9,961,274 12,252,804 548,912 312,507 0 0 6,867,208 8,850,222 1,752,773 2,067,052 422,263 326,392 2,175,036 2,393,444 476,942 643,994 1,698,094 1,749,450 18,750 25,000 1,679,344 1,724,450 703,624 1,028,820 446,299 619,064 2,903,445 2,818,765 2.73 2.82 0 0
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