SC 13D/A 1 wwvy13da12.txt 12 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ---------------- SCHEDULE 13D/A (Rule 13d-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a) Under the Securities Exchange Act of 1934 (AMENDMENT No. 12) WARWICK VALLEY TELEPHONE COMPANY ----------------------------------------------------------- (Name of Issuer) COMMON STOCK, PAR VALUE $0.01 PER SHARE ----------------------------------------------------------- (Title of Class of Securities) 936750108 ----------------------------------------------------------- (CUSIP Number) SANTA MONICA PARTNERS, L.P. 1865 Palmer Avenue Larchmont, NY 10538 914-833-0875 ----------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) September 30, 2005 ----------------------------------------------------------- (Date of Event that Requires Filing of This Statement) CUSIP No. 936750108 13D/A Page 1 of 10 Pages CUSIP No. 936750108 13D/A Page 2 of 10 Pages ___________________________________________________________ 1 NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) SANTA MONICA PARTNERS, L.P. 13-3100474 _______________________________________________________ 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [X] ___________________________________________________________ 3 SEC USE ONLY ___________________________________________________________ 4 SOURCE OF FUNDS WC ___________________________________________________________ 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [_] ___________________________________________________________ 6 CITIZENSHIP OR PLACE OF ORGANIZATION NEW YORK ___________________________________________________________ 7 SOLE VOTING POWER NUMBER OF 112,684 SHARES -------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 0 EACH REPORTING -------------------------------------- PERSON WITH 9 SOLE DISPOSITIVE POWER 112,684 -------------------------------------- 10 SHARED DISPOSITIVE POWER 0 _____________________________________________________________ 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 112,684 ______________________________________________________________ 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [X] ___________________________________________________________ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 2.1% ___________________________________________________________ 14 TYPE OF REPORTING PERSON PN Filing by Santa Monica Partners, L.P. of this statement shall not be construed as an admission that such entity is, for purposes of Section 13(d) of the Securities Exchange Act of 1934, the beneficial owner of any other securities covered by this statement. CUSIP No. 936750108 13D/A Page 3 of 10 Pages ___________________________________________________________ 1 NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) SANTA MONICA PARTNERS OPPORTUNITY FUND, L.P. 56-2393841 _______________________________________________________ 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [X] ___________________________________________________________ 3 SEC USE ONLY ___________________________________________________________ 4 SOURCE OF FUNDS WC ___________________________________________________________ 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [_] ___________________________________________________________ 6 CITIZENSHIP OR PLACE OF ORGANIZATION NEW YORK ___________________________________________________________ 7 SOLE VOTING POWER NUMBER OF 5000 SHARES -------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 0 EACH REPORTING -------------------------------------- PERSON WITH 9 SOLE DISPOSITIVE POWER 5000 -------------------------------------- 10 SHARED DISPOSITIVE POWER 0 _____________________________________________________________ 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 5000 ______________________________________________________________ 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [X] ___________________________________________________________ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.1% ___________________________________________________________ 14 TYPE OF REPORTING PERSON PN Filing by Santa Monica Partners Opportunity Fund, L.P. of this statement shall not be construed as an admission that such entity is, for purposes of Section 13(d) of the Securities Exchange Act of 1934, the beneficial owner of any other securities covered by this statement. CUSIP No. 936750108 13D/A Page 4 of 10 Pages ___________________________________________________________ 1 NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) SANTA MONICA PARTNERS II, L.P. 48-1289758 _______________________________________________________ 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [X] ___________________________________________________________ 3 SEC USE ONLY ___________________________________________________________ 4 SOURCE OF FUNDS WC ___________________________________________________________ 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [_] ___________________________________________________________ 6 CITIZENSHIP OR PLACE OF ORGANIZATION NEW YORK ___________________________________________________________ 7 SOLE VOTING POWER NUMBER OF 2000 SHARES -------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 0 EACH REPORTING -------------------------------------- PERSON WITH 9 SOLE DISPOSITIVE POWER 2000 -------------------------------------- 10 SHARED DISPOSITIVE POWER 0 _____________________________________________________________ 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2000 ______________________________________________________________ 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [X] ___________________________________________________________ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.0% ___________________________________________________________ 14 TYPE OF REPORTING PERSON PN __________________________________________________________ Filing by Santa Monica Partners II, L.P. of this statement shall not be construed as an admission that such entity is, for purposes of Section 13(d) of the Securities Exchange Act of 1934, the beneficial owner of any other securities covered by this statement. CUSIP No. 936750108 13D/A Page 5 of 10 Pages 1 NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) SMP ASSET MANAGEMENT LLC ___________________________________________________________ 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [X] ___________________________________________________________ 3 SEC USE ONLY ___________________________________________________________ 4 SOURCE OF FUNDS WC (of Santa Monica Partners, L.P.) ______________________________________________________ 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [_] ___________________________________________________________ 6 CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE ___________________________________________________________ 7 SOLE VOTING POWER NUMBER OF 112,684 SHARES -------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 0 EACH REPORTING -------------------------------------- PERSON WITH 9 SOLE DISPOSITIVE POWER 112,684 -------------------------------------- 10 SHARED DISPOSITIVE POWER 0 -------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 112,684 ______________________________________________________________ 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [X] _________________________________________________________ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 2.1% ___________________________________________________________ 14 TYPE OF REPORTING PERSON OO (LLC) ___________________________________________________________ Filing by SMP Asset Management, LLC of this statement shall not be construed as an admission that such entity is, for purposes of Section 13(d) of the Securities Exchange Act of 1934, the beneficial owner of any other securities covered by this statement. CUSIP No. 936750108 13D/A Page 6 of 10 Pages 1 NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) SANTA MONICA PARTNERS ASSET MANAGEMENT LLC ___________________________________________________________ 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [X] ___________________________________________________________ 3 SEC USE ONLY ___________________________________________________________ 4 SOURCE OF FUNDS WC (of Santa Monica Partners Opportunity Fund, L.P. and Santa Monica Partners II, L.P.) ______________________________________________________ 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [_] ___________________________________________________________ 6 CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE ___________________________________________________________ 7 SOLE VOTING POWER NUMBER OF 7000 SHARES -------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 0 EACH REPORTING -------------------------------------- PERSON WITH 9 SOLE DISPOSITIVE POWER 7000 -------------------------------------- 10 SHARED DISPOSITIVE POWER 0 -------------------------------------- 12 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 7000 ______________________________________________________________ 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [X] _________________________________________________________ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.0% ___________________________________________________________ 14 TYPE OF REPORTING PERSON OO (LLC) ___________________________________________________________ Filing by Santa Monica Partners Asset Management, LLC of this statement shall not be construed as an admission that such entity is, for purposes of Section 13(d) of the Securities Exchange Act of 1934, the beneficial owner of any other securities covered by this statement. CUSIP No. 936750108 13D/A Page 7 of 10 Pages 1 NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) LAWRENCE J. GOLDSTEIN ___________________________________________________________ 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [X] ___________________________________________________________ 3 SEC USE ONLY ___________________________________________________________ 4 SOURCE OF FUNDS WC (of Santa Monica Partners, L.P. and certain client accounts) ___________________________________________________________ 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [_] ___________________________________________________________ 6 CITIZENSHIP OR PLACE OF ORGANIZATION USA ___________________________________________________________ 7 SOLE VOTING POWER NUMBER OF 119,684 SHARES -------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 0 EACH REPORTING -------------------------------------- PERSON WITH 9 SOLE DISPOSITIVE POWER 130,000 -------------------------------------- 10 SHARED DISPOSITIVE POWER 0 ____________________________________________________________ 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 130,000 ______________________________________________________________ 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [X] ___________________________________________________________ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 2.4% ___________________________________________________________ 14 TYPE OF REPORTING PERSON IN __________________________________________________________ Filing by Lawrence J. Goldstein of this statement shall not be construed as an admission that such person is, for purposes of Section 13(d) of the Securities Exchange Act of 1934, the beneficial owner of any securities covered by this statement. CUSIP No. 936750108 13D/A Page 8 of 10 Pages WARWICK VALLEY TELEPHONE COMPANY SCHEDULE 13D/A (AMENDMENT No. 12) Item 1. Security and Issuer. No Change Item 2. Identity and Background. a) This Statement is being filed by Santa Monica Partners, L.P., a New York limited partnership ("Santa Monica Partners"), Santa Monica Partners Opportunity Fund, L.P. a Delaware limited partnership ("SMPOF"), Santa Monica Partners II, a Delaware limited partnership ("SMPII"), SMP Asset Management LLC, a Delaware limited liability company that acts as the general partner of Santa Monica Partners ("SMP Asset Management"), Santa Monica Partners Asset Management, LLC, a Delaware limited liability company that acts as the general partner of SMPOF and SMPII ("SMPAM"), and Lawrence J. Goldstein, the president and sole owner of SMP Asset Management and SMPAM. (b)-(c) The principal business of Santa Monica Partners, SMPOF and SMPII is to invest in securities with the objective of preserving principal, building net worth, and achieving long-term capital growth for its investors. The principal business of SMP Asset Management and SMPAM is to provide investment advice to and to manage the business and affairs of Santa Monica Partners, SMPOF and SMPII respectively. Mr. Goldstein's principal occupation is providing investment advice to and supervising the business and affairs of SMP Asset Management, SMPAM, and indirectly, Santa Monica Partners, SMPOF and SMPII. The principal business address of Santa Monica Partners, SMPOF, SMPII, SMP Asset Management, SMPAM, and Mr. Goldstein (collectively, the "Reporting Persons") is 1865 Palmer Avenue, Larchmont, New York 10538. (d) During the last five years, none of the Reporting Persons has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). (e) During the last five years, none of the Reporting Persons has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction or is subject to any judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or a finding of any violation with respect to such laws. (f) Mr. Goldstein is a citizen of the United States of America. Item 3. Source and Amount of Funds or Other Consideration. The source of all funds for purchases of the Shares by Santa Monica Partners, SMPOF and SMPII was the working capital of Santa Monica Partners, SMPOF and SMPII respectively. The source of all funds for purchases by SMP Asset Management, SMPAM and Mr. Goldstein, as President and sole owner of SMP Asset Management and SMPAM, was the working capital of Santa Monica Partners, SMPOF and SMPII respectively. The source of CUSIP No. 936750108 13D/A Page 9 of 10 Pages all funds for purchases by Mr. Goldstein on behalf of certain client accounts was the working capital of such accounts. Such working capital may, at any given time, include margin loans made by brokerage firms in the ordinary course of business. Item 4. Purpose of Transaction. On September 30, 2005 Santa Monica Partners, L.P. transmitted a letter to shareholders of Warwick Valley Telephone the "Issuer. Such letter of September 30, 2005 is annexed hereto as Exhibit 1 and is incorporated by reference. Item 5. Interest in Securities of the Issuer. (a)-(b) As of September 30, 2005: (i) the Reporting Persons owned beneficially, directly or indirectly, an aggregate of 130,000 Shares, or 2.4% of the Shares outstanding; (ii) Santa Monica Partners had sole voting and sole dispositive power over 112,684 Shares; SMPOF had sole voting and sole dispositive power over 5,000 Shares; SMPII had sole voting and sole dispositive power over 2,000 Shares; Lawrence J. Goldstein had sole voting and sole dispositive power over 119,684 Shares and sole dispositive power over 130,500 Shares. (c) The following is a list of transactions in the Shares made in open market purchases during the past 60 days: Amount Price per Date Bought Share Purchaser 9/9/05 6,108 $23.00 Santa Monica Partners (d) No Change (e) No Change Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer. No Change Item 7. Material to be filed as Exhibits. Exhibit 1: September 30, 2005 letter from Santa Monica Partners, LP to shareholders of the Issuer. Exhibit 2: Agreement of Joint Filing by and among Santa Monica Partners, L.P., Santa Monica Opportunity Fund, L.P. and Santa Monica Partners II, L.P., dated September 30, 2005 CUSIP No. 936750108 13D/A Page 10 of 10 Pages SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. SANTA MONICA PARTNERS, L.P. By: SMP ASSET MANAGEMENT LLC By: /s/LAWRENCE J.GOLDSTEIN ---------------------------------------- Lawrence J. Goldstein, President SANTA MONICA PARTNERS OPPORTUNITY FUND, L.P. SANTA MONICA PARTNERS II, L.P. By: SANTA MONICA PARTNERS ASSET MANAGEMENT LLC By: /s/LAWRENCE J.GOLDSTEIN ---------------------------------------- Lawrence J. Goldstein, President SMP ASSET MANAGEMENT, LLC By: /s/LAWRENCE J. GOLDSTEIN ---------------------------------------- Lawrence J. Goldstein, President SANTA MONICA PARTNERS ASSET MANAGEMENT, LLC By: /s/LAWRENCE J. GOLDSTEIN ---------------------------------------- Lawrence J. Goldstein, President /s/LAWRENCE J. GOLDSTEIN -------------------------------------- Lawrence J. Goldstein Exhibit 1: SANTA MONICA PARTNERS, L.P. 1865 PALMER AVENUE LARCHMONT, NY 10538 WWW.SMPLP.COM Tel: 914.833.0875 Fax: 914.833.1068 ljgoldstein@bloomberg.net September 30, 2005 Members of The Board of Directors Fred M. Knipp Wisner H. Buckbee, Chairman Robert J. Devalentino, Herbert Gareiss Jr., President & CEO Henry L. Nielsen Jr., Philip S Demarest, William E. Morrow, Dr. Joseph E. Deluca, and Ms. Corinna S. Lewis Warwick Valley Telephone Company 47 Main Street Warwick, NY 10990 Re: Shareholders Being Taken as Patsies Not Partners Time To Sell The Warwick Valley Telephone Company Lady and Gentlemen: The situation in which shareholders of Warwick Valley Telephone Company find themselves in is disgusting. Entrenched management is nothing new, but unfortunately it is not getting any rarer, despite the lessons of the last four years. While shareholders have suffered billions in losses, the senior executives who fathered these disasters walked away with extraordinary wealth. To their shame, these business leaders view shareholders as patsies, not partners. So it is with Warwick's management. Just look at the Warwick facts. For example, look at the Company's statement of management compensation policy, as filed by Warwick with the Securities and Exchange Commission and distributed to shareholders. According to Warwick's most recent proxy statement (that's the April 2004 proxy statement because Warwick's management has not managed to file the 2005 proxy): "The Company's executive compensation program with has two components: Base Salary [and] Annual Bonus. These components are designed to provide incentives and motivate key executives whose efforts and job performance will enhance the strategic well being of the Company and maximize value to its shareholders. The program is also structured to attract and retain the highest caliber executives. The executive compensation program compensates the individual executive officers based on the Company's consolidated performance and the individual's contribution." Did it work and did the Company ever really mean it in the first place? We think it helps to carefully consider this statement of purpose made by the Board of Directors of the Company and compare it to subsequent events. Did the Board's plan "maximize value to its shareholders?" There is no evidence that it did. To the contrary, shareholder value has been destroyed by any reasonable reckoning. Warwick's common stock has lost $59.7 million in market value since November 2003. Moreover, revenues have been flat and operating income has declined every year since 2000, including year-to-date 2005. Did the Board's plan help the Company attract and retain the highest caliber executives? There is no evidence that it did. To the contrary, Mr. M. Lynn Pike, the Company's former CEO, was terminated in July 2004 and replaced by someone who had already been serving the Company for over twenty years, Mr. Herb Gareiss. Indeed, Mr. Gareiss had been previously passed over by the Company's Board when Mr. Pike was engaged to be the CEO some four and half years earlier. In fact, not only was Mr. Gareiss passed over as Presidential material in 2000, but it is interesting to recall the words of Mr. Fred Knipp, the retiring President, who said the following in a press release at that time, "Lynn was chosen after a national search. His extensive experience (of 30 years) in telecommunications makes him the ideal choice to continue WVT's ongoing commitment to quality, service progressive technology and a good return for shareholders." On September 23, 2004, Mr. Philip A. Grybas announced that he was resigning his position as the Chief Financial Officer. He was replaced later by an outsider who has not, as of this writing, been able to file a 2004 annual report or quarterly reports for the first or second quarters of 2005. On July 13, 2005 the Company's Board fired the Vice President of Operations and Technology, Larry Drake and said the Company does not intend to replace Mr. Drake. Mr. Drake was regarded as a key member of the management team (after all, the Company needed to have a special plan to attract and retain him), and yet his job is apparently not important enough to fill upon his departure. Moreover, the Company and Mr. Drake held weeks-long discussions regarding the terms of Mr. Drake's departure. These resulted in Warwick giving him the store, or at least some of his office equipment. The Company's announcement said only "Mr. Drake will receive a separation benefit of $98,863.97 and a supplemental separation benefit of $153,962.29 and be permitted to retain certain office equipment and related benefits". We guess no perquisite is too small to negotiate! On September 14, 2005, Brenda A. Schadt, the Vice President of Customer Service and Directory of Warwick Valley Telephone Company retired and the Company said, "it does not intend to name another Vice President to fill her position." Once again, it is not entirely clear just why it is so important to attract and retain executives if, when they quit or retire, their positions are apparently not considered sufficiently vital as to merit replacement. Perhaps the Board needs instead to consider better incentives for themselves. The eight Board members own a total of just 3.51% of the outstanding shares. By point of reference, we own 2.4%, or 70% of what the entire Warwick Board of Directors own of this Company. We would own a lot more if we controlled the Board, or if the current members didn't. The Board has entrenched itself with staggered terms. The Company's shareholders are entitled to elect only three directors per year. Shareholders unhappy with the Board must nevertheless suffer their tenure for three years to replace all nine members. Members of the Board are paid a reasonable sum by today's standards and yet even this small sum seems too great given the Board's failure to seriously and properly evaluate the two most important decisions they'll likely ever be called upon to consider as directors of the Company: (i) the future of the Company's principal asset, the Company's interests in the Orange County- Poughkeepsie Limited Partnership ("OCP") and (ii) the future of the Company's most-incompetently managed asset, the Company's plain old telephone business. These failures of the Board are directly related to the Company's failure to maximize shareholder value. The Company's failure to "attract and retain the highest caliber executives," report financial results for 2004, report financial results for the first or second quarters of 2005, file a proxy statement or hold an annual meeting by October are just the insults. The shareholder value destroyed is the injury. The Board has failed to comply with Sarbanes-Oxley requirements, despite having spent at least $1.5 million extra so far in attempting to figure out how to comply and notwithstanding management's statement in May 2005 that: "we strongly believe that the Company will be in a position to file these reports well in advance of that date (July 29, 2005)..." and that "[a]s soon as practical after these filings are made, the Company will announce the date of the annual meeting and mail its proxy." Management went on to sanctimoniously add "it is extremely important that you vote your proxy." We couldn't agree more. To the best of our knowledge, this year will be the first time in 100 years that the Company failed to timely issue a proxy statement and hold an annual meeting. I guess Warwick management had more important things to do. Such as going to the trouble and expense, both wasted we're sure, to seek approval from the SEC to exclude our non-binding MAXIMIZE VALUE RESOLUTION from the upcoming proxy statement for the next annual meeting or to try and figure out how not to understand and not to seriously understand and consider our proposal to enhance shareholder value by distributing to shareholders the Company's interests in the OCP. The reason the Company has not been able to comply with Sarbanes- Oxley is because it never made the capital investment necessary to employ modern billing, accounting, inventory and CABs systems. These decisions were the Board's decisions and now the lack of interoperability of these systems hampers the Company's ability to satisfy its obligations as a public company - obligations which have become so costly that they are likely to mean the difference between the Company reporting an operating loss instead of a profit. The Company likely faces some significant capital expenditures in the years ahead. For all of these reasons and more, it is time for the Board to honor its claim that you have a commitment to increasing shareholder value and do something about it. Our take on Warwick today is that the capital expenditures necessary to remain competitive in the telecommunications business cannot be supported by a company Warwick's size and that competition is unlikely to be kind to small, rural incumbent local exchange carriers ("ILECs"). We believe that 7 - 7.5 x EBITDA is a good valuation right now for ILECs and that the Company is unlikely to improve EBITDA over the next two years, regardless the policies it pursues. The performance of the only business the Company actually manages has been dismal. The Company's operating income has been declining and the valuation of that business has been declining with it. A sale of the plain old telephone business to a more capable operator with better economies of scale would be in the best interest of the owners of the other 96.5% of the Company's shares. We have already spoke to investment bankers who would be happy to take the assignment and believe that there are strategic buyers interested in purchasing the Company for a significant premium. We have heard from several companies that indicated their interest directly to us. The Board should of course be open to this and if contacted should share this information with shareholders We would like to remind each and every one of the Board members that their fiduciary duty is to shareholders, not the Company's management. Accordingly, should the Board fail to act or communicate directly with us; should the Board continue to sit on its hands, paralyzed into inaction, we will consider taking steps to replace the members as soon as practicable through the democratic process - three at a time, if necessary. Sincerely, Lawrence J. Goldstein Exhibit 2: Agreement of Joint Filing Pursuant to Rule 13d-1(k) promulgated under the Securities Exchange Act of 1934, as amended, each of the undersigned persons hereby agrees to file with the Securities and Exchange Commission the Statement on Schedule 13D (the "Statement") to which this Agreement is attached as an exhibit, as well as any further amendments filed by them with respect to the shares of common stock of Warwick Valley Telephone Company, $.01 per value per share, and agree that the Statement is filed on behalf of each of them. IN WITNESS WHEREOF, the undersigned have executed this Agreement. Dated: September 30, 2005 SANTA MONICA PARTNERS, L.P. By: SMP ASSET MANAGEMENT LLC By: ------------------------------- Lawrence J. Goldstein, President Dated: September 30, 2005 SANTA MONICA PARTNERS OPPORTUNITY FUND, L.P. By: SANTA MONICA PARTNERS ASSET MANAGEMENT LLC By: ------------------------------- Lawrence J. Goldstein, President Dated: September 30, 2005 SANTA MONICA PARTNERS II, L.P. By: SANTA MONICA PARTNERS ASSET MANAGEMENT LLC By: ------------------------------- Lawrence J. Goldstein, President