-----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, WN08wZLab0usUIbqBUtqWJNf5AC0EJVlb0xFWgbjZTE2aAolY+zZW9z5/5C05DH9 Ls+w97miCOFD2yGgd1H/Bw== /in/edgar/work/0000950152-00-007991/0000950152-00-007991.txt : 20001115 0000950152-00-007991.hdr.sgml : 20001115 ACCESSION NUMBER: 0000950152-00-007991 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001114 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: 766620 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 l84570ae10-q.txt WARWICK VALLEY TELEPHONE COMPANY FORM 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, 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: 1,803,022 common shares, no par value, were outstanding at September 30, 2000. 2 PART 1 - FINANCIAL INFORMATION Item 1. Financial Statements - ---------------------------- WARWICK VALLEY TELEPHONE COMPANY CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, DECEMBER 31, 2000 1999 ----------- ----------- (Unaudited) (Audited) CURRENT ASSETS: Cash $ 438,072 $ 865,521 Accounts receivable, less accounts receivable allowance 2000 -$68,720; 1999- $65,155; 4,879,120 4,015,673 Materials and supplies 1,615,593 983,222 Prepaid expenses 558,786 401,090 ----------- ----------- 7,491,571 6,256,506 ----------- ----------- NONCURRENT ASSETS: Unamortized debt issuance expense 16,951 23,374 Other deferred charges 23,301 224,845 Investments 5,175,329 2,858,301 ----------- ----------- 5,215,581 3,106,520 ----------- ----------- PROPERTY, PLANT & EQUIPMENT: Plant in service 48,210,026 45,049,356 Plant under construction 1,873,100 1,718,296 ----------- ----------- 50,083,126 46,767,652 Less: Accumulated depreciation 21,876,169 19,163,148 ----------- ----------- TOTAL PLANT 28,206,957 27,604,504 ----------- ----------- TOTAL ASSETS $40,914,109 $36,976,530 =========== ===========
2 3 Item 1. Financial Statements (Continued) - ---------------------------------------- WARWICK VALLEY TELEPHONE COMPANY CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, DECEMBER 31, LIABILITIES AND STOCKHOLDERS' EQUITY 2000 1999 ----------- ----------- (Unaudited) (Audited) CURRENT LIABILITIES: Current maturities-long term debt $ 0 $ 3,000,000 Notes payable 3,800,000 900,000 Accounts payable 3,600,800 2,716,427 Advance billing and payments 59,402 0 Customer deposits 132,470 129,660 Accrued taxes 547,818 22,168 Accrued interest 94,087 73,067 Other accrued expenses 136,904 356,990 ----------- ----------- 8,371,481 7,198,312 ----------- ----------- LONG TERM DEBT & DEFERRED CREDITS: Long-term debt 4,000,000 4,000,000 Accumulated deferred federal income taxes 2,105,678 2,079,064 Unamortized investment tax credits 89,447 118,247 Other deferred credits 65,710 65,040 Post retirement benefit obligation 906,773 786,159 ----------- ----------- 7,167,608 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 1,993,519 for 9/30/00 and 1,991,462 for 12/31/99 3,446,848 3,367,607 Retained earnings 24,812,972 21,642,391 ----------- ----------- 28,759,820 25,509,998 Less: Treasury stock at cost, 190,497 shares for 9/30/00 and 173,352 for 12/31/99 3,384,800 2,780,290 ----------- ----------- 25,375,020 22,729,708 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $40,914,109 $36,976,530 =========== ===========
Please see the accompanying notes, which are an integral part of these financial statements. 3 4 Item 1. Financial Statements (Continued) - ---------------------------------------- WARWICK VALLEY TELEPHONE COMPANY CONSOLIDATED STATEMENT OF INCOME FOR THE THREE and NINE MONTHS ENDED September 30, 2000 AND 1999 (Unaudited)
Three Months Ended Nine Months Ended September 30, September 30, 2000 1999 2000 1999 ---------------------------- ---------------------------- OPERATING REVENUES: Local network service $ 1,005,437 $ 921,447 $ 3,038,975 $ 2,678,902 Network access and long distance network service 2,378,253 2,233,468 7,032,679 6,795,352 Other services and sales 4,036,792 2,787,044 9,931,623 7,845,563 ------------ ------------ ------------ ------------ 7,420,482 5,941,959 20,003,277 17,319,817 Less: Provision for uncollectibles (12,498) (7,950) (32,502) (29,350) ------------ ------------ ------------ ------------ Total operating revenues 7,407,984 5,934,009 19,970,775 17,290,467 ------------ ------------ ------------ ------------ OPERATING EXPENSES: Plant specific 816,538 650,385 2,333,712 1,823,766 Plant non-specific: Depreciation 825,987 847,485 2,636,041 2,446,774 Other 383,305 324,856 1,119,226 988,622 Customer operations 1,023,038 978,821 3,104,018 3,010,097 Corporate operations 744,727 504,624 2,288,724 1,522,193 Cost of services and sales 470,741 384,293 1,485,807 1,275,169 ------------ ------------ ------------ ------------ Total operating expenses 4,264,336 3,690,464 12,967,528 11,066,621 ------------ ------------ ------------ ------------ OPERATING TAXES: Federal income taxes 1,192,652 764,856 2,664,352 2,053,231 Property, revenue and payroll 424,852 390,766 1,224,717 1,169,526 ------------ ------------ ------------ ------------ Total operating taxes 1,617,504 1,155,622 3,889,069 3,222,757 ------------ ------------ ------------ ------------ Operating income 1,526,144 1,087,923 3,114,178 3,001,089 NONOPERATING INCOME (EXPENSES)-NET: 971,889 584,618 2,591,533 1,531,413 ------------ ------------ ------------ ------------ Income available for fixed charges 2,498,033 1,672,541 5,705,711 4,532,502 ------------ ------------ ------------ ------------ FIXED CHARGES: Interest on funded debt 70,500 138,375 302,000 415,125 Other interest charges 82,824 16,719 140,602 33,515 Amortization 1,321 3,167 6,424 9,501 ------------ ------------ ------------ ------------ Total fixed charges 154,645 158,261 449,026 458,141 ------------ ------------ ------------ ------------ NET INCOME 2,343,388 1,514,280 5,256,685 4,074,361 PREFERRED DIVIDENDS 6,250 6,250 18,750 18,750 ------------ ------------ ------------ ------------ INCOME APPLICABLE TO COMMON STOCK $ 2,337,138 $ 1,508,030 $ 5,237,935 $ 4,055,611 ============ ============ ============ ============ NET INCOME PER AVERAGE SHARE OF OUTSTANDING COMMON STOCK $ 1.32 $ 0.83 $ 2.91 $ 2.25 ============ ============ ============ ============ CASH DIVIDENDS PAID PER SHARE $ 0.41 $ 0.35 $ 1.15 $ 0.97 ============ ============ ============ ============ AVERAGE SHARES OF COMMON STOCK OUTSTANDING 1,806,087 1,817,549 1,814,437 1,817,366 ============ ============ ============ ============
Please see the accompanying notes, which are an integral part of these financial statements. 4 5 Item 1. Financial Statements (Continued) - ---------------------------------------- WARWICK VALLEY TELEPHONE COMPANY CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 (Unaudited)
SEPTEMBER 30, SEPTEMBER 30, 2000 1999 ----------- ----------- CASH FLOW FROM OPERATING ACTIVITIES: Net Income $ 5,256,685 $ 4,074,361 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,642,465 2,456,275 Deferred income tax and investment tax credit 119,098 (647) Interest charged to construction (60,200) (116,632) Change in assets and liabilities: (Increase) Decrease in accounts receivable (863,447) (651,974) (Increase) Decrease in materials and supplies (632,371) 265,336 (Increase) Decrease in prepaid expenses (157,696) (199,259) (Increase) Decrease in deferred charges 201,544 51,777 Increase (Decrease) in accounts payable 884,371 (293,794) Increase (Decrease) in customers' deposits 2,810 979 Increase (Decrease) in advance billing and payment 59,402 (42,250) Increase (Decrease) in accrued expenses 546,670 213,648 Increase (Decrease) in other liabilities (220,084) 45,020 ----------- ----------- Net cash provided by operating activities 7,779,247 5,802,840 ----------- ----------- CASH FLOW FROM INVESTING ACTIVITIES: Purchase of property, plant and equipment (3,238,495) (4,830,627) Interest charged to construction 60,200 116,632 Changes in other investments (2,317,028) (367,613) ----------- ----------- Net cash used in investing activities (5,495,323) (5,081,608) ----------- ----------- CASH FLOW FROM FINANCING ACTIVITIES: Increase (Decrease) in notes payable 2,900,000 1,000,000 Repayment of long term debt (3,000,000) 0 Sale of common stock 79,241 14,355 Purchase of treasury stock (604,510) 0 Dividends (2,086,104) (1,781,621) ----------- ----------- Net cash provided by (used in) financing activities (2,711,373) (767,266) ----------- ----------- Increase (Decrease) in cash and cash equivalents (427,449) (46,034) Cash and cash equivalents at beginning of year 865,521 593,867 ----------- ----------- Cash and cash equivalents at end of period $ 438,072 $ 547,833 =========== ===========
Please see the accompanying notes, which are an integral part of these financial statements. 5 6 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, 2000, its income for the three-month and nine-month periods ended September 30, 2000 and 1999 and its cash flow for the nine-month periods ended September 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 on the year ended December 31, 1999. The Consolidated Balance Sheet as of December 31, 1999 has been derived from the audited consolidated financial statements 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 unaudited and 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, 2000 and 1999 were as follows:
Three Months Ended Nine Months Ended September 30, September 30, 2000 1999 2000 1999 ----------- ----------- ----------- ----------- Interest income $ 6,957 $ 4,850 $ 18,762 $ 11,867 Interest during construction 21,170 44,095 60,200 116,632 G/L disposition certain property 37,452 (18,811) 112,017 34,680 Special charges (22,517) (19,181) (41,391) (31,012) Other non-operating income $ 928,827 $ 573,665 $ 2,441,945 $ 1,399,246 ----------- ----------- ----------- ----------- $ 971,889 $ 584,618 $ 2,591,533 $ 1,531,413 =========== =========== =========== ===========
6 7 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, 2000 - The Company"s net income from all sources increased $1,182,324 (or 29.0%) to $5,256,685 for the nine-month period ended September 30, 2000, as compared to $933,413 for the same period in 1999. Operating revenues increased by $2,680,308 (or 15.5%) after provision for uncollectibles, to $19,970,775 for the nine-month period ended September 30, 2000, as compared to $17,290,467 for the corresponding period of 1999. The change in operating revenues was primarily the result of increases in other services and sales of $2,086,060 (or 26.6%) during the period as compared to the same nine-month period of 1999. Operating expenses increased by $1,900,907 (or 17.2%) to $12,967,528 for the nine-month period ended September 30, 2000, as compared to $1,045,822 for the same period in 1999. This increase was due primarily to increased costs of salaries and benefits (approximately $615,400), trunkline agreements (approximately $417,000), depreciation (approximately $189,000), and non-qualified pension expense (approximately $255,300). Non-operating income and expenses increased by $1,060,120 (or 69.2%) to $2,591,533 for the nine-month period ended September 30, 2000, as compared to $1,531,413 for the same period of 1999 largely as a result of improved earnings in the Company"s cellular partnership. See "Liquidity and Capital Resources" RESULTS OF OPERATIONS -THREE MONTHS ENDED SEPTEMBER 30, 2000 -The Company's net income from all sources increased $829,108 (or 54.8%) to $2,343,388 for the three-month period ended September 30, 2000, as compared to $1,514,280 for the same period in 1999. Operating revenues increased by $1,473,975 (or 24.8%) after provisions for uncollectibles, to $7,407,984 for the three-month period ended September 30, 2000, as compared to $5,934,009 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 $573,872 (or 13.5%) to $4,264,336 for the three-month period ended September 30, 2000, as compared to $424,726 for the same period in 1999. The change in operating expenses was primarily the result of increases in costs of trunk line agreements (approximately $162,000), non-qualified pension (approximately $92,000) and other services and sales (approximately $86,000). Non-operating income and expenses increased by $387,271 (or 66.2%) to $971,889 in the three month period ended September 30, 2000, as compared to $196,364 for the same period of 1999 largely as a result of increased earnings in the Company's cellular partnership referred to above under "Results of Operations - Nine Months ended September 30, 2000." See "Liquidity and Capital Resources" below. LIQUIDITY AND CAPITAL RESOURCES - The Company"s working capital decreased to ($879,910) at September 30, 2000, compared to a decrease of ($1,196,750) at September 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 a cellular mobile telephone partnership, Verizon Wireless, 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 $2,442,000 during the first nine months of 2000, compared to $1,399,000 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 $107,000 in WVMT since its operations began on April 1, 1989. WVMT earned approximately $42,300 during the first nine months of 2000, compared to $56,400 for the corresponding 1999 period. 7 8 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 such time, earning approximately $272,700 during the nine month period ended September 30, 2000, compared to $312,700 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 makes it unnecessary for its member companies to rely on outside companies for these services and also offers 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 with connection 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 $149,900 in ONLINE since its inception. ONLINE earned approximately $789,000 during the nine-month period ended September 30, 2000, compared to $543,600 for the corresponding 1999 period. On July 28, 2000 the Company purchased 8.9% of the outstanding units of Hudson Valley DataNet, L.L.C. ("HVDN") for $1,000,000. HVDN is a competitive telecommunications company that expects to offer high speed bandwidth throughout the region by the fourth quarter of 2000. No further capital contributions are currently scheduled, although the Company may voluntarily increase or be asked to increase its investment from time to time. On, October 20, 2000 the Company purchased 17.0% of Zephyr Wireless, LLC, a licensed reseller of wireless service nationwide, with a $1,000,000 cash investment and an additional commitment of up to $1,000,000 in the form of a promissory note to be drawn upon when needed. Zephyr Wireless will allow the Company to resell wireless services under private labeling. The Telecommunications Act of 1996 (the "Act") created 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 New York and New Jersey. 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 nine months of 2000 was $142,162 (or 15.8%) in New York and $119,429 (or 9.8%) 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 by the Company 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 ("NYSPSC") 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 September 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 implement any such additional plans, or that other companies will not begin providing competitive local exchange telephone service in the Company's franchise territory. 8 9 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 - None 9 10 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 11/14/00 /S/ Herbert Gareiss, Jr. -------- -------------------------- Herbert Gareiss, Jr., Vice President (Duly Authorized Officer) Date 11/14/00 /S/ Robert A. Sieczek -------- --------------------- Robert A. Sieczek, Treasurer (Principal Financial and Chief Accounting Officer) 10 EX-27 2 l84570aex27.txt EXHIBIT 27
UT 9-MOS DEC-31-1999 SEP-30-2000 PER-BOOK 28,206,957 5,175,329 7,491,571 40,252 0 40,914,109 3,446,848 0 24,812,972 28,259,820 0 500,000 4,000,000 3,800,000 0 0 0 0 0 0 4,354,289 40,914,109 20,003,277 2,664,352 1,224,717 12,967,528 3,114,178 2,591,533 5,705,711 147,026 5,256,685 18,750 5,237,935 2,067,354 302,000 7,779,247 2.91 0
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