-----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, WIFJq59uGulcgU5DGKDXoRZWC8AwmfNc1ENAeAfe2JJr+QDTgZJEN3zNc7cR6fJy R2GFj29ae22edVWjO8dysQ== /in/edgar/work/20000815/0000950110-00-000905/0000950110-00-000905.txt : 20000922 0000950110-00-000905.hdr.sgml : 20000921 ACCESSION NUMBER: 0000950110-00-000905 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000815 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WARWICK VALLEY TELEPHONE CO CENTRAL INDEX KEY: 0000104777 STANDARD INDUSTRIAL CLASSIFICATION: [4813 ] IRS NUMBER: 141160510 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-11174 FILM NUMBER: 702813 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 0001.txt FORM 10-Q ================================================================================ 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, 2000 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 (IRS Employer incorporation or organization) Identification No.) 47 MAIN STREET, WARWICK, NEW YORK 10990 - ---------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (914) 986-8080 --------------------------------------------------- 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: 1,820,120 common shares, no par value, outstanding at June 30, 2000. ================================================================================ PART 1- FINANCIAL INFORMATION Item 1. Financial Statements WARWICK VALLEY TELEPHONE COMPANY CONSOLIDATED BALANCE SHEET
JUNE 30, DECEMBER 31, 2000 1999 ----------- ----------- (Unaudited) (Audited) CURRENT ASSETS: Cash ............................................. $ 298,219 $ 865,521 Accounts receivable, less accounts Receivable allowance 2000-$59,877; 1999-$65,800; 4,456,807 4,015,673 Materials and supplies ........................... 1,137,566 983,222 Prepaid expenses ................................. 624,032 401,090 ----------- ----------- 6,516,624 6,256,506 ----------- ----------- NONCURRENT ASSETS: Unamortized debt issuance expense ................ 18,272 23,374 Other deferred charges ........................... 59,844 224,845 Investments ...................................... 3,246,495 2,858,301 ----------- ----------- 3,324,611 3,106,520 ----------- ----------- PROPERTY, PLANT & EQUIPMENT: Plant in service ................................. 47,335,037 45,049,356 Plant under construction ......................... 1,751,256 1,718,296 ----------- ----------- 49,096,293 46,767,652 Less: Accumulated depreciation ............... 20,991,870 19,163,148 ----------- ----------- TOTAL PLANT ........................................ 28,104,423 27,604,504 ----------- ----------- TOTAL ASSETS .................................. $37,945,658 $36,976,530 =========== ===========
Item 1. Financial Statements WARWICK VALLEY TELEPHONE COMPANY CONSOLIDATED BALANCE SHEET
JUNE 30, DECEMBER 31, LIABILITIES AND STOCKHOLDERS' EQUITY 2000 1999 ------------ ------------ (Unaudited) (Audited) CURRENT LIABILITIES: Current maturities-long term debt .................................. $ 0 $ 3,000,000 Notes payable ...................................................... 3,000,000 900,000 Accounts payable ................................................... 2,950,865 2,716,427 Advance billing and payments ....................................... 81,678 0 Customer deposits .................................................. 133,970 129,660 Accrued taxes ...................................................... 59,621 22,168 Accrued interest ................................................... 23,683 73,067 Other accrued expenses ............................................. 203,996 356,990 ----------- ----------- 6,453,812 7,198,312 ----------- ----------- LONG TERM DEBT & DEFERRED CREDITS: Long-term debt ..................................................... 4,000,000 4,000,000 Accumulated deferred federal income taxes .......................... 2,096,807 2,079,064 Unamortized investment tax credits ................................. 99,047 118,247 Other deferred credits ............................................. 65,331 65,040 Post retirement benefit obligation ................................. 868,914 786,159 ----------- ----------- 7,130,099 7,048,510 ----------- ----------- STOCKHOLDERS' EQUITY: Preferred stock - 5% cumulative; $100 par value; Authorized 7,500 shares; Issued and outstanding 5,000 shares .............................. 500,000 500,000 Common stock - no par value; Authorized shares: 2,160,000 Issued 1,993,472 for 6/30/00 and 1,991,462 for 12/31/99 .......... 3,444,992 3,367,607 Retained earnings .................................................. 23,197,046 21,642,391 ----------- ----------- 27,142,038 25,509,998 Less: Treasury stock at cost, 173,352 shares 6/30/00 and 12/31/99, respectively ................................................... 2,780,290 2,780,290 ----------- ----------- 24,361,747 22,729,708 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ....................... $37,945,658 $36,976,530 =========== ===========
The accompanying notes are an integral part of the financial statements. Item 1. Financial Statements WARWICK VALLEY TELEPHONE COMPANY CONSOLIDATED STATEMENT OF INCOME FOR THE THREE and SIX MONTHS ENDED June 30, 2000 AND 1999 (Unaudited)
Three Months Ended Six Months Ended ----------------------------- ---------------------------- 2000 1999 2000 1999 ----------------------------- ---------------------------- OPERATING REVENUES: Local network service .............. $ 1,003,829 $ 907,880 $ 2,033,538 $ 1,757,455 Network access and long distance Network service .................. 2,254,375 2,098,159 4,654,426 4,561,884 Other services and sales ........... 3,072,225 2,693,800 5,894,831 5,058,519 ------------ ------------ ------------ ------------ 6,330,429 5,699,839 12,582,796 11,377,858 Less: Provision for uncollectibles . (10,002) (10,150) (20,004) (21,400) ------------ ------------ ------------ ------------ Total operating revenues .......... 6,320,427 5,689,689 12,562,792 11,356,458 ------------ ------------ ------------ ------------ OPERATING EXPENSES: Plant specific ..................... 818,947 621,115 1,517,174 1,173,381 Plant non-specific: Depreciation ..................... 909,837 810,785 1,810,053 1,599,288 Other ............................ 365,626 319,631 735,921 663,766 Customer operations ................ 996,126 977,707 2,080,980 2,031,277 Corporate operations ............... 742,872 532,879 1,543,998 1,017,569 Cost of services and sales ......... 513,958 389,286 1,015,066 890,876 ------------ ------------ ------------ ------------ Total operating expenses .......... 4,347,366 3,651,403 8,703,191 7,376,157 ------------ ------------ ------------ ------------ OPERATING TAXES: Federal income taxes ............... 754,235 690,465 1,471,700 1,288,375 Property, revenue and payroll ...... 424,582 383,272 799,865 778,761 ------------ ------------ ------------ ------------ Total operating taxes ............ 1,178,817 1,073,737 2,271,565 2,067,136 ------------ ------------ ------------ ------------ Operating income ................. 794,244 964,549 1,588,036 1,913,165 NONOPERATING INCOME (EXPENSES)-NET: ... 842,543 555,177 1,619,644 946,795 ------------ ------------ ------------ ------------ Income available for fixed charges 1,636,788 1,519,726 3,207,680 2,859,960 ------------ ------------ ------------ ------------ FIXED CHARGES: Interest on funded debt ............ 93,125 138,375 231,500 276,750 Other interest charges ............. 49,390 8,312 57,778 16,796 Amortization ....................... 1,936 3,167 5,103 6,334 ------------ ------------ ------------ ------------ Total fixed charges .............. 144,451 149,854 294,380 299,880 ------------ ------------ ------------ ------------ NET INCOME ....................... 1,492,337 1,369,872 2,913,300 2,560,080 PREFERRED DIVIDENDS ................... 6,250 6,250 12,500 12,500 ------------ ------------ ------------ ------------ INCOME APPLICABLE TO COMMON STOCK ... $ 1,486,087 $ 1,363,622 $ 2,900,800 $ 2,547,580 ============ ============ ============ ============ NET INCOME PER AVERAGE SHARE OF OUTSTANDING COMMON STOCK .......... $ 0.83 $ 0.75 $ 1.59 $ 1.40 ============ ============ ============ ============ CASH DIVIDENDS PAID PER SHARE ...... $ 0.37 $ 0.31 $ 0.74 $ 0.62 ============ ============ ============ ============ AVERAGE SHARES OF COMMON STOCK OUTSTANDING ....................... 1,819,115 1,817,274 1,818,613 1,817,274 ============ ============ ============ ============
The accompanying notes are an integral part of the financial statements Item 1. Financial Statements WARWICK VALLEY TELEPHONE COMPANY CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999 (Unaudited)
2000 1999 ----------- ----------- CASH FLOW FROM OPERATING ACTIVITIES: Net Income .................................... $ 2,913,300 $ 2,560.080 Adjustments to reconcile net income to net cash Provided by operating activities: Depreciation and amortization ............... 1,815,156 1,605,622 Deferred income tax and investment tax credit ..................................... 81,589 (824) Interest charged to construction ............ (39,030) (72,537) Change in assets and liabilities: (Increase) Decrease in accounts receivable .... (441,134) (590,063) (Increase) Decrease in materials and supplies . (154,344) (135,833) (Increase) Decrease in prepaid expenses ....... (222,942) (241,369) (Increase) Decrease in deferred charges ....... 165,001 55,879 Increase (Decrease) in accounts payable ....... 234,436 889,170 Increase (Decrease) in customers' deposits .... 4,310 2,941 Increase (Decrease) in advance billing and payment ...................................... 81,678 (20,540) Increase (Decrease) in accrued expenses ....... (11,931) 136,793 Increase (Decrease) in other liabilities ...... (152,994) (95,821) ----------- ----------- Net cash provided by operating activities ........... 4,273,095 4,093,498 ----------- ----------- CASH FLOW FROM INVESTING ACTIVITIES: Purchase of property, plant and equipment ..... (2,309,973) (3,394,074) Interest charged to construction .............. 39,030 72,537 Changes in other investments .................. (388,194) 138,085 ----------- ----------- Net cash used in investing activities ............... (2,659,137) (3,183,452) ----------- ----------- CASH FLOW FROM FINANCING ACTIVITIES: Increase (Decrease) in notes payable .......... 2,100,000 200,000 Repayment of long term debt ................... (3,000,000) 0 Sale of common stock .......................... 77,835 0 Dividends ..................................... (1,358,645) (1,139,210) ----------- ----------- Net cash provided by (used in) financing activities ......................................... (2,181,260) (939,210) ----------- ----------- Increase (Decrease) in cash and cash equivalents .... (567,302) (29,164) Cash and cash equivalents at beginning of year ...... 865,521 593,867 ----------- ----------- Cash and cash equivalents at end of period .......... $ 298,219 $ 564,703 =========== ===========
The accompanying notes are an integral part of the financial statements. Item 1. Financial Statements 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, 2000 and December 31, 1999, its income for the three-month and six-month periods ended June 30, 2000 and 1999 and its cash flow for the six-month period ended June 30, 2000 and 1999. 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, 1999. 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 six-month and six-month periods ended June 30, 2000 and 1999 were as follows: Three Months Ended Six Months Ended June 30, June 30, ---------------------- ------------------------ 2000 1999 2000 1999 ---------- --------- ---------- --------- Interest income .......... $ 6,622 $ 3,537 $ 11,805 $ 7,017 Interest during construction ............ 19,170 46,533 39,030 72,537 G/L disposition certain property ................ 40,553 52,606 74,565 53,491 Special charges .......... (10,590) (6,966) (18,874) (11,831) Other non-operating income .................. $786,788 $459,467 $1,513,118 $825,581 -------- -------- ---------- -------- $842,543 $555,177 $1,619,644 $946,795 ======== ======== ========== ======== 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, 2000 - The Company's net income from all sources increased $353,220 (or 13.8%) to $2,913,300 for the six-month period ended June 30, 2000, as compared to the same period in 1999. Operating revenues increased by $1,206,334 (or 10.6%) after provision for uncollectibles, to $12,562,792 for the six-month period ended June 30, 2000 as compared to $11,356,458 for the corresponding period of 1999. The change in operating revenues was primarily the result of increases in local network service of $276,083 (or 15.7%) and other services and sales of $836,312 (or 16.5%) during the period as compared to the same six-month period of 1999. Operating expenses increased by $1,327,034 (or 18.0%) to $8,703,191 for the six-month period ended June 30, 2000 as compared to the same period in 1999 due primarily to increased costs of salaries and benefits (approximately $496,000), depreciation ($211,000), trunkline agreements ($255,100) and non-qualified pension expense ($185,000). Non-operating income and expenses increased by $672,849 from $946,795 in the six-month period ended June 30, 1999 to $1,619,644 in the same period of 2000 largely as a result of improved earnings in the Company's cellular partnership. (See Liquidity and Capital Resources). RESULTS OF OPERATIONS -THREE MONTHS ENDED JUNE 30, 2000 - The Company's net income from all sources increased $122,466 (or 8.9%) to $1,492,337 for the three-month period ended June 30, 2000, as compared to $537,296 for the same period in 1999. Operating revenues increased by $631,238 (or 11.1%) after provisions for uncollectibles, to $6,320,427 for the three-month period ended June 30, 2000 as compared to $5,689,189 for the corresponding period of 1999. The increase in operating revenues was caused mainly by the increase in other services and sales over the 2000 period. Operating expenses increased by $695,963 (or 19.1%) to $4,347,366 for the three-month period ended June 30, 2000 as compared to the same period in 1999. The change in operating expenses was primarily the result of increases in salaries and benefits (approximately $236,000), costs of trunk line agreements ($143,000), depreciation ($100,000), non-qualified pension ($93,000) and toll study expense ($24,000). Non-operating income and expenses increased by $287,366 to $842,543 in the three month period ended June 30, 2000 as compared to the same period of 1999 largely as a result of increased earnings in our cellular partnership referred to above under Results of Operations - Six Months ended June 30, 2000. (See Liquidity and Capital Resources below.) LIQUIDITY AND CAPITAL RESOURCES -- The Company's working capital increased to $62,812 at June 30, 2000 from $($987,452) at June 30, 1999 largely due to the payment of the Company's $3,000,000 Series I bond at its maturity on May 1, 2000. 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. The Company's share in the partnership's earnings was approximately $1,513,000 during the first six months of 2000, compared to $828,000 for the corresponding 1999 period. 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 $118,000 in WVMT since its operations began on April 1, 1989. WVMT earned approximately $31,000 during the first six months of 2000, compared to $38,000 for the corresponding 1999 period. 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 and has been profitable since then, earning approximately $166,000 during the first six months of 2000, compared to $201,000 for the corresponding 1999 period. 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 was in operation during 1997 with Warwick Valley Telephone Company connecting in July of that year. To this date not all members have been added to the network. WVN has invested approximately $52,000 in NYSINET to date. Another wholly-owned subsidiary, Hometown Online, Inc. (ONLINE) was organized during 1995. ONLINE is the corporate entity through which WVTC provides personal computer users connectivity to the Internet as well as local and regional information services. Service is offered within WVTC's service area as well as in nearby areas of New York, New Jersey and Pennsylvania. ONLINE began service in July 1995. WVTC has invested approximately $623,000 in ONLINE since its inception. ONLINE earned approximately $440,000 during the first six months of 2000, compared to $249,000 for the corresponding 1999 period. On July 28, 2000 the Company made purchased 8.9% interest of the outstanding units of a new limited liability corporation called Hudson Valley DataNet, L.L.C. (HVDN) for $1,000,000. HVDN is a competitive telecommunications company that will begin to offer high speed bandwidth throughout the region by the fourth quarter of 2000. No further capital contributions are currently scheduled. The Company may voluntarily increase or be asked to increase its investment from time to time. The Telecommunications Act of 1996 (the "Act") creates a nationwide structure in which competition is allowed and encouraged between local exchange carriers, interexchange carriers, competitive access providers, cable TV companies and other entities. The markets affected first have been the regional toll areas in both states. Regional toll competition was implemented in New York on January 1, 1997 and in New Jersey in May 1997. The competition in these areas has had the effect of reducing Warwick=s revenues. The reduction in regional toll revenues for the first six months of 2000 was 16.3% in New York and 10.4% in New Jersey. Under the Act the Company itself can provide competitive local exchange telephone service outside its franchised territory. Certification as a common carrier in the State of New York was received on October 2, 1998 and in the State of New Jersey on March 3, 1999. As a result, the Company negotiated agreements for local wireline network interconnection with Citizens Telecommunications of New York, Inc. in the Middletown, New York area. The New York State Public Service Commission (ANYSPSC@) approved the Company's application on December 23, 1998. Based upon this agreement the Company installed a central office at 24 John Street in Middletown, New York on February 10, 1999, where it began providing extended local service on June 10, 1999. The Company is reviewing plans to provide limited service in other surrounding areas in both New York and New Jersey. There can be no assurances that the Company will implore any such additional plans, or that other companies will not begin providing competitive local exchange telephone service in the Company's franchise territory. CONSOLIDATION -- The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All material intercompany transactions and balances have been eliminated in the consolidated financial statements. Certain prior year amounts have been reclassified to conform with the financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, 1999. ITEM 3. QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK -- The Company does not hold or issue derivatives instruments for any purposes or other financial instruments for trading purposes. The Company's only assets exposed to market risk are its interest bearing bank accounts, into which the Company deposits its excess operating funds on a daily basis. The Company's mortgage liabilities currently bear interest at fixed rates. If the Company refinances its liabilities when they mature the nature and amount of the applicable interest rate or rates will be determined at that time. The Company also has a line of credit which accrues interest at 0.75% below prime rate. On May 1, 2000 the Company repaid its $3,000,000 Series I bond with short-term borrowing. The Company has the option of renewing such short-term borrowing every thirty, sixty or ninety days at prime rate or LIBOR rate plus 1.75%. PART II -- OTHER INFORMATION ITEMS 1. (Legal Proceedings), 2 (Changes in Securities), 3 (Defaults Upon Senior Securities), 4 (Submission of Matters to a Vote of Securities Holders) and 5 (Other Information) are inapplicable. 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 8/14/00 /s/ HERBERT GAREISS, JR. --------------------------------- Herbert Gareiss, Jr., Vice President (Duly Authorized Officer) Date 8/14/00 /s/ ROBERT A. SIECZEK --------------------------------- Robert A. Sieczek, Treasurer (Principal Financial and Chief Accounting Officer) 10 EX-27 2 0002.txt FINANCIAL DATA SCHEDULE
UT 6-MOS DEC-31-1999 JUN-30-2000 PER-BOOK 28,104,423 3,246,495 6,516,624 78,116 0 37,945,658 3,444,992 0 23,197,046 26,642,038 0 500,000 4,000,000 3,000,000 0 0 0 0 0 0 3,803,621 37,945,658 12,582,796 1,417,700 799,865 8,703,191 1,588,036 1,619,644 3,207,680 62,881 2,913,300 12,500 2,900,800 1,346,145 231,500 4,273,095 1.59 0
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