-----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, GSxpDsV4msrWl2XpqHetgCujwGFx2+M6lI/GWUY2Sq8J1nQfPbXDgG9T26kcQh0Q 93+01wFTkYIYvmTTVoau1Q== 0000950152-03-006536.txt : 20030630 0000950152-03-006536.hdr.sgml : 20030630 20030630105525 ACCESSION NUMBER: 0000950152-03-006536 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20021231 FILED AS OF DATE: 20030630 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: 11-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-11174 FILM NUMBER: 03762915 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 11-K 1 l01721ae11vk.txt WARWICK VALLEY TELEPHONE CO. | FORM 11-K Page 1 of 16 Pages Exhibit Index on Page 14 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 11-K [X] ANNUAL REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended JANUARY 1, 2002 to DECEMBER 31, 2002 ---------------- ----------------- [ ] TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number , 0-11174 WARWICK VALLEY TELEPHONE COMPANY 401(K) PLAN (Full title of the Plan) WARWICK VALLEY TELEPHONE COMPANY 47 Main Street P.O. Box 592 Warwick, New York 10990 (Address of principal executive office) (Name of Issuer and address of principal executive office) WARWICK VALLEY TELEPHONE COMPANY 401(k) PLAN FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2002 1 WARWICK VALLEY TELEPHONE COMPANY 401(k) PLAN INDEX TO FINANCIAL STATEMENTS, SCHEDULES AND EXHIBITS
PAGE ---- Report of Independent Public Accountants 3 STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, 4 as of December 31, 2002 and 2001 STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, 5 For the Years Ended December 31, 2002, 2001 and 2000 Notes to Financial Statements 6-11 Schedule of Assets Held for Investment Purposes as of December 31, 2002 12 Signatures 13 Exhibit Index 14 Consent Form 15 Certification 16
2 June 19, 2003 To the Benefits Committee Warwick Valley Telephone Company 401(k) Plan P.O. Box 592 Warwick, New York 10990 INDEPENDENT AUDITOR'S REPORT We have audited the accompanying statement of net assets available for benefits of Warwick Valley Telephone Company 401(k) Plan (the Plan) as of December 31, 2002 and 2001, and the related statement of changes in net assets available for benefits for the years ended December 31, 2002, 2001 and 2000. These financial statements and the schedule referred to below are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2002 and 2001, and the changes in its net assets available for benefits, for the years ended December 31, 2002, 2001 and 2000, in conformity with accounting principles generally accepted in the United States of America. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule listed in the accompanying index is presented for purposes of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. 3 WARWICK VALLEY TELEPHONE COMPANY 401(K) PLAN STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS DECEMBER 31, 2002 AND 2001
2002 2001 ----------- ----------- Investments, at fair value: Cash Equivalents (Money Market Fund) $ 1,925,279 $ 1,254,268 Warwick Valley Telephone Company Stock 5,168,368 5,295,980 Registered Investment Companies 3,658,254 3,858,868 ----------- ----------- 10,751,901 10,409,116 Participant Loan Receivables 274,890 219,123 ----------- ----------- TOTAL ASSETS 11,026,791 10,628,239 ----------- ----------- NET ASSETS AVAILABLE FOR BENEFITS $11,026,791 $10,628,239 =========== ===========
The accompanying notes are an integral part of these financial statements. 4 WARWICK VALLEY TELEPHONE COMPANY 401(K) PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
2002 2001 2000 ----------- ----------- ----------- ADDITIONS: Additions to net assets attributed to: Net appreciation (depreciation) in fair value of investments $ (25,900) $ 1,194,554 $(1,058,595) Participant loan interest income 18,465 18,728 10,625 Interest and dividends 229,025 289,161 483,368 ----------- ----------- ----------- 221,590 1,502,443 (564,602) ----------- ----------- ------------ Contributions: Participants' 572,497 586,071 566,561 Employer's 406,761 426,815 388,636 Other 5,912 10,585 24,369 ----------- ----------- ----------- 985,170 1,023,471 979,566 ----------- ----------- ----------- TOTAL ADDITIONS 1,206,760 2,525,914 414,964 ----------- ----------- ----------- DEDUCTIONS: Deductions from net assets attributed to: Benefits paid to participants 808,208 372,881 446,933 ----------- ----------- ----------- TOTAL DEDUCTIONS 808,208 372,881 446,933 ----------- ----------- ----------- NET INCREASE (DECREASE) 398,552 2,153,033 (31,969) NET ASSETS AVAILABLE FOR BENEFITS: Beginning of year 10,628,239 8,475,206 8,507,175 ----------- ----------- ----------- END OF YEAR $11,026,791 $10,628,239 $ 8,475,206 =========== =========== ===========
The accompanying notes are an integral part of these financial statements. 5 WARWICK VALLEY TELEPHONE COMPANY 401(K) PLAN NOTES TO FINANCIAL STATEMENTS 1. DESCRIPTION OF PLAN The following description of the Warwick Valley Telephone Company ("Company") 401(k) Plan ("Plan") provides only general information. Participants should refer to the Plan agreement for a more complete description of the Plan's provisions. GENERAL The Plan is a defined contribution plan covering all eligible employees of the Company who are scheduled to work 1,000 hours per year. It is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). CONTRIBUTIONS Each year, participants may contribute up to 100% of pretax annual compensation, as defined in the Plan, subject to certain IRS limitations. Participants direct the investment of their contributions into various investment options offered by the Plan. The Plan currently offers a variety of mutual funds, as well as the stock of the Company, as investment options for participants. The Company will match 100% of each participant's contributions, subject to certain limitations. The matching contributions range from 6% to 9% of the annual compensation of eligible participants. The Plan permits eligible participants, as defined in the Plan, to rollover cash or other property acceptable to the Plan Administrator from another qualified plan in addition to making qualified voluntary participant contributions. PARTICIPANT ACCOUNTS Each participant's account is updated daily to reflect activity (contributions, fund transfers, loan repayments, loans and/or withdrawals) and the earnings or losses of the Plan assets in the account. VESTING Participant accounts are fully vested and nonforfeitable at all times. PARTICIPANT LOANS Participants may borrow from their fund accounts a minimum of $1,000 up to a maximum of $50,000 or 50% of their account balance, whichever is less. The loans are secured by the balance in the participant's account and bear interest at prime plus 1%, with prime being the rate published on the first business day of the month in which the loan is requested. The interest rate does not change for the duration of the loan. Principal and interest is paid ratably through monthly payroll deductions. 6 WARWICK VALLEY TELEPHONE COMPANY 401(K) PLAN NOTES TO FINANCIAL STATEMENTS 1. DESCRIPTION OF PLAN (CONTINUED) PAYMENT OF BENEFITS On termination of service due to disability or retirement, a participant may elect to receive either a lump-sum amount equal to the value of the participant's vested interest in his or her account, or equal periodic payments. For termination of service due to death, a participant's beneficiary may receive the value of the vested interest in the participant's account as a lump-sum distribution. If a participant has any portion of their account invested in Warwick Valley Telephone Company Stock, he or she may take the stock as an "in-kind" distribution or take the stock as cash. "In-kind" distribution means the participant will receive a stock certificate for the whole shares in his or her account. Fractional shares will be paid in cash. If the participant wishes to take the stock portion of their account as a cash distribution, the Company will buy the stock at the bid price on the day the withdrawal is processed. WITHDRAWALS Participants may make withdrawals under the hardship provisions of the Plan while still employed by the Company. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF ACCOUNTING The accompanying financial statements of the Plan have been prepared on the accrual method of accounting. Contributions due from the Company are recorded on the cash basis, as the weekly remittance of contributions to the Plan results in a negligible amount being due at the end of any month. ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires the plan administrator to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results may differ from those estimates. Prior year amounts have been restated to conform to the current year presentation. RISKS AND UNCERTAINTIES The Plan provides participants with various investment options: money market and fixed income securities, bonds, and equity funds, as well as the stock of Warwick Valley Telephone Company. All investment securities are exposed to some type of risk, including, but not limited to, exposure to changes in interest rates, market fluctuations, economic conditions, and currency devaluation. Due to the level of risk associated with certain investment securities, it is possible that changes in near term risk factors could materially affect participants' account balances and the amounts reported in the Statement of Net Assets Available for Benefits and the Statement of Changes in Net Assets Available for Benefits. 7 WARWICK VALLEY TELEPHONE COMPANY 401(K) PLAN NOTES TO FINANCIAL STATEMENTS 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) INVESTMENT VALUATION AND INCOME RECOGNITION The Plan's investments are stated at fair value. Quoted market prices are used to value investments. Shares of mutual funds and the Company's common stock are valued at quoted market prices, which represent the net asset value of shares held by the Plan at year-end. The Company's common stock is traded on the NASDAQ. Purchases and sales of securities are recorded on a trade-date basis. Dividends are recorded on the ex-dividend date. Interest and dividends include distributions from the investments in mutual funds, interest from the money market fund and dividends from the Company stock. PLAN EXPENSES Expenses related to the administration of the Plan have been paid by the Company. These costs represent professional services and amounted to approximately $49,525, $41,000 and $45,000, for the years ending December 31, 2002, 2001 and 2000, respectively. 3. INVESTMENTS As of December 31, 2002, participants could invest their funds in the following investment vehicles: SCHWAB INSTITUTIONAL ADVANTAGE MONEY MARKET FUND A fund that purchases short-term bonds from a diversified selection of government entities and businesses including utilities, energy, financial, durables, staples, services, retail, health and technology. WARWICK VALLEY TELEPHONE COMPANY COMMON STOCK FUND The fund invests entirely in common stock of Warwick Valley Telephone Company. FIDELITY MAGELLAN FUND This fund seeks capital appreciation. The fund invests primarily in common stocks and convertible securities, with up to 20% of assets invested in debt securities of all types and qualities. It features domestic corporations operating primarily in the U.S., domestic corporations that have significant activities and interests outside the U.S., and foreign companies. FIDELITY GROWTH AND INCOME FUND This fund seeks long-term growth, current income and growth of income, consistent with reasonable investment risk. The fund invests primarily in dividend-paying common stocks with growth potential. 8 WARWICK VALLEY TELEPHONE COMPANY 401(K) PLAN NOTES TO FINANCIAL STATEMENTS 3. INVESTMENTS (CONTINUED) FIDELITY PURITAN FUND This fund seeks income consistent with preservation of capital. This fund invests in a diversified array of high-yielding securities such as common stocks, preferred stocks and bonds. The fund may purchase foreign securities, zero-coupon bonds and indexed securities. FREMONT BOND FUND This fund seeks total return consistent with preservation of capital. The fund ordinarily invests at least 65% of assets in debt securities, such as U.S. and foreign government obligations, domestic and foreign corporate debt and mortgage and asset-backed securities. VANGUARD WELLINGTON FUND This fund seeks conservation and reasonable income. The fund normally invests 60% to 70% of assets in common stocks and convertible securities. It typically invests the balance of assets in investment-grade corporate debt and U.S. government obligations. The fund may invest up to 10% of assets in foreign securities. VANGUARD U.S. GROWTH FUND This fund seeks long-term growth of capital. The fund invests primarily in common stocks and convertible securities issued by established U.S. companies. In selecting investments, the advisor emphasizes companies that it believes to have exceptional growth records, strong market positions, reasonable financial strength and relatively low sensitivity to changing economic conditions. WELTZ VALUE FUND This fund seeks capital appreciation, current income is secondary. The fund invests primarily in equity securities. The advisor seeks securities trading at prices lower than their intrinsic values. The fund may invest in foreign securities and securities that are not readily marketable. It may also write covered call options. INVESCO DYNAMICS FUND This Fund seeks capital appreciation by investing primarily in common stocks of domestic companies. OPPENHEIMER INTERNATIONAL GROWTH FUND Oppenheimer International Growth Fund seeks capital appreciation. The fund normally invests at least 65% of assets in foreign equities; it typically invests in at least three foreign countries, including emerging-market nations. 9 WARWICK VALLEY TELEPHONE COMPANY 401(K) PLAN NOTES TO FINANCIAL STATEMENTS 3. INVESTMENTS (CONTINUED) PILGRIM GNMA INCOME FUND Pilgrim GNMA Income Fund seeks current income consistent with liquidity and safety of principal. The fund normally invests at least 80% of assets in Government National Mortgage Association (GNMA) certificates. STATE STREET RESEARCH AURORA FUND State Street Research Aurora Fund seeks high total return. The fund normally invests at least 65% of assets in small company value stocks. It invests in companies that appear to be trading below their true worth. The fund normally invests in convertible securities, warrants, common and preferred stocks. The fair value of investments as of December 31, 2002 and 2001 are as follows:
12/31/02 12/31/01 ----------- ----------- Schwab Money Market Fund $ 1,925,279* $ 1,254,268* Warwick Valley Telephone Company Common Stock 5,168,368* 5,295,980* Fidelity Magellan Fund 850,824* 1,141,370* Fidelity Growth and Income Fund 695,507* 938,019* Fidelity Puritan Fund 197,403 306,193 Fremont Bond Fund 278,934 182,060 Vanguard Wellington Fund 292,262 271,167 Vanguard U.S. Growth Fund 255,411 340,039 Weitz Value Fund 515,671 544,619* Invesco Dynamics Fund 16,984 8,631 Oppenheimer Int'l Growth Fund 18,496 5,425 Pilgrim GNMA Income Fund 286,977 27,204 State Street Research Aurora Fund 249,785 94,141 ----------- ----------- TOTAL INVESTMENTS $10,751,901 $10,409,116 =========== ===========
*Individual investments representing 5% or more of the Plan's net assets. The Plan's investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated (depreciated) in value during the year ending December 31, 2002 as follows:
Mutual Funds $ (819,901) $ (418,464) Warwick Valley Telephone Company Common Stock 794,001 1,613,018 ----------- ----------- $ (25,900) $ 1,194,554 =========== ===========
4. FEDERAL INCOME TAX STATUS The Internal Revenue Service has determined and informed the Company by a letter dated March 19, 2002 that the Plan and related trust are designed in accordance with applicable sections of the Internal Revenue Code (IRC). Accordingly, the Plan is exempt from paying income taxes. 10 WARWICK VALLEY TELEPHONE COMPANY 401(K) PLAN NOTES TO FINANCIAL STATEMENTS 5. PLAN TERMINATION Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants will continue to have a non forfeitable interest in their Plan account. 6. RELATED PARTY TRANSACTIONS Certain expenses of administration and servicing of the Plan, including payroll related expenses of administrative and clerical personnel and fees of the Trustee are provided by the Company without charge to the Plan. The Plan has certain investments that qualify as party-in-interest investments. These would consist of the Plan's investments in the Warwick Valley Telephone Company Common Stock and the Schwab Money Market Fund, as the Charles Schwab Trust Company is a trustee for the Plan. 11 WARWICK VALLEY TELEPHONE COMPANY 401(K) PLAN SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES DECEMBER 31, 2002 EIN: 14-1160510 PN: 006
NUMBER OF MARKET SHARES VALUE ----------- -------- Cash Equivalents: *Schwab Money Market Fund 1,925,279 $ 1,925,279 Common Stock: *Warwick Valley Telephone Company 74,365 5,168,368 Investments in Registered Investment Companies: Fidelity Magellan Fund 10,775 850,824 Fidelity Growth and Income Fund 22,946 695,507 Fidelity Puritan Fund 12,502 197,403 Fremont Bond Fund 26,795 278,934 Vanguard Wellington Fund 11,900 292,262 Vanguard U.S. Growth Fund 21,178 255,411 Weitz Value Fund 18,470 515,671 Invesco Dynamics Fund 1,593 16,984 Oppenheimer Int'l Growth Fund 1,693 18,496 Pilgrim GNMA Income Fund 31,816 286,977 State Street Research Aurora Fund 9,682 249,785 ----------- 3,658,254 Participant Loans: Participant loan accounts (rates 5.75%-10.50%) (Maturities range from 2003-2007) 274,890 ----------- TOTAL INVESTMENTS $11,026,791 ===========
*Denotes party-in-interest The accompanying notes to financial statements are an integral part of this schedule. 12 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, Warwick Valley Telephone Company, The Trustee, has duly caused this annual report to be signed on its behalf by the undersigned thereunto duly authorized. Warwick Valley Telephone Company 401(k) Plan By: /s/ Colleen Shannon ---------------------------------- Colleen Shannon Plan Administrator Date: June 26, 2003 13 EXHIBIT INDEX EXHIBIT NUMBER EXHIBIT - -------------- ------- 23 Consent of Independent Public Accountants (Filed herewith) 99 Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 14 EX-23 3 l01721aexv23.txt EX-23 CONSENT EXHIBIT 23 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation, by reference, of our report included in this Annual Report on form 11-K into the Warwick Valley Telephone Company Registration Statement No. on Form S-8. Syracuse, New York June 26, 2003 EX-99 4 l01721aexv99.txt EX-99 CERTIFICATIONS Exhibit 99 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Warwick Valley Telephone Company 401(k) Plan on Form 11K for the period ending March 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Colleen Shannon, Plan Administrator, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial conditions and results of operations of the Company to the best of my knowledge. A signed original of this written statement required by section 906 has been provided to Warwick Valley Telephone Company and will be retained by Warwick Valley Telephone Company and furnished to the Securities and Exchange Commission or its staff upon request. /s/ Colleen Shannon ------------------- Colleen Shannon Plan Administrator June 26, 2003 -----END PRIVACY-ENHANCED MESSAGE-----