SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

-------

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)

For the fiscal year ended December 31, 1998

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from ____to____

Commission File No. 0-11174

WARWICK VALLEY TELEPHONE COMPANY
------------------------------------------------------
(Exact name of registrant as specified in its charter)

New York 14-1160510
------------------------------- ----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

47-49 Main Street, Warwick, New York 10990
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (914) 986-8080
--------------
Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock (Without Par Value)
--------------------------------
(Title of Class)

Indicate by check mark 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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this form 10-K. [X]

Aggregate market value of voting stock held by non-affiliates as of March 30,
1999. [72,690,960]

Common shares outstanding, March 30, 1999 - 1,817,274

DOCUMENTS INCORPORATED BY REFERENCE

Name Incorporated Into
---- -----------------
Annual Report to Shareholders for the year
ended December 31, 1998 Parts II

Proxy statement for the 1999 Annual Meeting
of Shareholders Part III

The Exhibit Index for this report is located on page 11.
--

The total number of pages contained in this report is 35.
--

PART 1.

Item 1. BUSINESS.

Warwick Valley Telephone Company (the 'Company') was incorporated in New
York on January 16, 1902 and is qualified to do business as a foreign
corporation in New Jersey. The Company's executive offices are located at 47
Main Street, Warwick, New York 10990 (Tel. No. 914-986-8080).

The Company is an independent telephone company with 16,908 access lines
in New York State and 9,878 in New Jersey at December 31, 1998. The Company
manages its operations as two business segments, telephone service (including
local, long distance and cellular) and internet service. Financial information
regarding the Company's two business segments is found in Note 16 to the
Consolidated Financial Statements incorporated in Part II hereof by reference.
The Company provides telephone service to customers in the contiguous towns of
Warwick and Goshen, New York, and the townships of West Milford and Vernon, New
Jersey. The Company operates exchanges in Warwick (11,767 access lines), Florida
(3,569 access lines) and Pine Island (1,572 access lines), New York and Vernon
(6,900 access lines) and Upper Greenwood Lake (2,978 access lines), New Jersey.
On February 10, 1999 the Company activated its new switch in Middletown, New
York where it intends to provide extended local service beginning March 31,
1999. The Company's service area is primarily rural and has an estimated
population of 50,000.

In 1998, 25,059,702 toll calls were made on the Company's system,
representing an increase of 6.7% from 23,429,227 in 1997. Business customers
represent 21.1% of total access lines, and no single customer's annual billings
represent a significant portion of the Company's gross revenues.

The Company has installed advanced digital switching equipment in all of
its exchanges and fiber optic routes between central offices and to most
neighboring telephone companies, and is currently constructing fiber optic
routes in other specific locations.

The Company sells, as well as leases, telephone equipment both within
its territory and within the territories of other telephone companies.
Residential telephone equipment sales are made through the Company's retail
stores, which are located in the Company's main office in Warwick, New York and
at Route 515 and Guthrie Drive in Vernon, New Jersey. The Company also sells and
leases business telephone systems both in its own territory and elsewhere. At
present, the sale of telephone and other equipment does not constitute a
material part of the Company's business.

The Company holds a 7.5% limited partnership interest in a cellular
mobile telephone partnership which is licensed to operate as the wire-line
licensee in both Orange and Dutchess Counties, New York. The general partner is
New York Cellular Geographic Service Area, Inc. (an affiliate of Bell Atlantic
Mobile), and the other limited partners are Frontier Telephone Company and
Taconic Telephone Corporation. Since the inception of the partnership, the
Company has made capital contributions of $249,750; no further capital
contributions are expected to be required in 1999. The partnership began
offering cellular service in both counties in February 1988. The partnership's
pre-tax income for the year ended December 31, 1998 was $14,600,000, and the
Company's share of that pre-tax income was $1,095,000.

The Company has four wholly-owned subsidiaries, three of which belong to
the telephone segment of its operations. Warwick Valley Mobile Telephone
Company, Inc. ('WVMT') resells cellular telephone service to the Company's
subscribers as well as to others. WVMT also sells and installs cellular
telephone sets. For the year ended December 31, 1998, WVMT had a pre-tax profit
of $97,344. Warwick Valley Long Distance Company, Inc. ('WVLD') resells toll
telephone service to the Company's subscribers. WVLD commenced operation in New
Jersey in December, 1993 and in New York in May, 1994. WVLD had a pre-tax profit
in 1998 of $658,470. Warwick Valley Networks, Inc. ('WVN') was established
during 1994 and 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 a data connections network. NYSINET makes 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 although not all members have become part of the system to
date. NYSINET had a net loss of $191,840 during 1998, of which Warwick Valley
Networks' (WVN) share was $7,890.

The Company's fourth subsidiary, Hometown Online, Inc. ('Online'), was
established to provide connectivity to the Internet as well as local and
regional information services to personal computer users. All of the activities
of the Company's internet service segment are conducted through Online. Service
is offered within WVTC's service area as well as in nearby areas in New York,
New Jersey and Pennsylvania. Online, which began business in July, 1995, had a
pre-tax profit of $923,240 in 1998 and has approximately 16,000 customers.

In 1998 the Company filed an application to have its Common Stock listed
on the NASDAQ National Market. On April 28, 1998 the Company stock began trading
under the symbol WWVY.

The Company incurred costs during 1998 and expects to incur additional
costs during 1999 addressing the impact of the Year 2000 problem on its
information systems. The Year 2000 problem, which affects most corporations to
varying degrees, concerns the inability of information systems, primarily
computer software programs, to properly recognize and process date sensitive
information as the year 2000 approaches. This inability results largely from the
use in earlier software of two, rather than four digits to identify years. The
Company has completed an assessment of its systems and has developed a specific
work plan to address this issue. The Company currently believes it will be able
to modify or replace its affected systems in time to minimize any detrimental
effects on operations. If it cannot, the Company could, in the worst case, have
inaccurate dating of its telephone toll records or be unable to provide internet
service.

As a telephone company and provider of other telecommunications
services, the Company depends for its operations on various kinds of hardware
and software that may require modification or replacement in order to properly
treat certain dates, including dates beginning on January 1, 2000. Since 1994,
the Company has been making the necessary modifications in all software that it
has generated internally. In 1997, it began a broader program to address the
readiness of its systems for Year 2000 date-change issues. In the second quarter
of 1997, the Company created a continually updated document that is intended to
contain all procedures and plans related to the Company's Year 2000 remediation
efforts. The first part of the planning and implementation document to be
created was an inventory of all computer applications and a ranking of those
applications by potential business impact. The management of the Company
reviewed and adopted this document in the third quarter of 1997. In the fourth
quarter of 1997, the Company's Management Information Systems Department began a
more detailed analysis of the software and hardware in each of the applications
identified in the inventory. This analysis was completed in the second quarter
of 1998. In the third quarter of 1998, the Company began making the software
modifications identified as being necessary and is replacing all date-dependent
computer chips in its personal computers. In the first quarter of 1999 the
management of the Company expects to finish making all necessary modifications
to the software programs for which upgrades will not be purchased from outside
suppliers.

The Company's operations depend largely on two different main computer
systems, an IBM AS/400 operating system used for processing orders, billing and
accounting, and a NorTel DMS 100/200 telephone switching system, which performs
all telephone switching operations. The IBM AS/400 operating system software has
been upgraded to a version that IBM has certified as Year 2000 compliant. The
NorTel DMS 100/200 software will be upgraded during the second quarter of 1999
to a version that NorTel has certified as Year 2000 compliant. The Company will
be able to test the software of the AS/400 systems for compliance in the program
test environment of the system, but it must rely on NorTel's certification with
respect to the NorTel DMS 100/200 system, since the Company has no effective
means of shutting down its switches for testing. During 1998 the cost of
upgrading the Company's personal computers and operating systems has been
expensed and has not exceeded $18,000. The cost of upgrading the NorTel DMS
100/200, anticipated to total approximately $660,000, will be incurred in 1999
and capitalized. The cost for upgrading the AS/400 software was included with
the price of the new AS/400 system installed in the first quarter of 1999.

The Company does not directly interface with third parties in connection
with the operations that are run on its AS/400 system. All third-party data
utilized on the AS/400 is transmitted in tape form and is in a

standard format, for which the Company has plans to make programming adaptations
as necessary. The operating systems of the Company's internet and local area
network servers have also been represented to be Year 2000 compliant by the
systems providers.

The Company is able to handle partial failures of AS/400 system and
would utilize normal back-up procedures in the event of such partial failures.
The Company, however, has no contingency plan for the eventuality that its
NorTel DMS 100/200 switches could fail, both because management considers the
likelihood of such a failure to be very low and because switching equipment is
built with totally parallel hardware to deal with hardware, but not software,
failure.

The Company's ability to supply long-distance and internet service to
its customers in the future will depend in part on the effectiveness of the Year
2000 remediation efforts of the companies with which it interconnects. The
Company has communicated with most of those companies and will continue to
communicate with them. In addition, there can be no guarantee that the systems
of those other companies will be timely corrected, or that a failure to correct
by another company would not have a material adverse effect on the Company.

COMPETITION

Residential customers can purchase telephone sets (including cellular
sets) and equipment compatible and operational with the Company's telephone and
cellular systems at other retail outlets inside and outside the Company's
territory and not affiliated with the Company. Such outlets include other
telephone company telephone stores, department stores, discount stores and
mail-order services. Businesses in the Company's service area are also allowed
to purchase equipment compatible and operational with the Company's system from
other telephone and 'interconnect' companies. The Company's territory is
surrounded by the territories of Bell Atlantic, Citizens Utilities,
Sprint-United Telephone and Frontier Telephone, all of which offer residential
and business telephone equipment. There are also several interconnect companies
located within a 30-mile radius of Warwick, New York. WVMT competes against Bell
Atlantic Mobile Communication Retail Company, Orange County Cellular Telephone
Corporation and others offering either cellular service or the sale and
installation of cellular equipment.

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 1998 was 5.7% in New York and 11.0% 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 has 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 intends to provide
extended local service beginning March 31, 1999. The Company is reviewing plans
to provide limited service in other surrounding areas in both New York and New
Jersey.

The cellular partnership referred to above is in competition with two
non-wire-line licensees, one of which is currently operating a cellular system
in Dutchess County, New York, and the other in Orange County, New York and with
personal communication service (PCS) providers.

The Company currently provides access to the national and international
calling markets as well as a significant portion of the intrastate calling
markets through all interested inter-exchange carriers, including WVLD. Equal
access ('one-plus') service to all toll carriers has been available to the
Company's customers since

August 1, 1991. Access to the remainder of the intrastate calling markets is
provided through Bell Atlantic. WVLD, as an inter-exchange carrier, competes
against all such other carriers, providing full toll services to its customers
at discounted rates.

There are numerous competitors throughout Online's market area whose
services are available to customers. Online competes both on the basis of
service and price. Despite the presence of many competitors, it is experiencing
rapid growth. Whether growth and pricing levels can be maintained depends, in
part, on the actions of existing competitors, the possible entry into the market
of new competitors, the rate of technological change and the level of demand for
services.

Should NYSINET offer services to non-members, WVN will indirectly be
competing against Bell Atlantic and others.

STATE AND FEDERAL REGULATION

The Company's New York telephone service operations are subject to the
jurisdiction of the NYSPSC; its New Jersey telephone service operations, to
the jurisdiction of the New Jersey Board of Public Utilities (the 'NJBPU').
These two bodies have regulatory authority over the Company with respect to
rates, facilities, services, reports, issuance of securities and other matters.
Interstate toll and access services are subject to the jurisdiction of the FCC.

The Company, like many other telephone companies of its size, depends
heavily for its revenues on inter- and intrastate toll usage, receiving
approximately 62.6% of its revenues from these sources.

With regard to interstate toll calls, the Company receives reimbursement
from toll carriers in the form of charges for providing toll carriers access to
and from the Company's local network.

Pursuant to FCC requirements, the Company was obligated to make
contributions to a long-term support fund of the National Exchange Carrier
Association. On January 1, 1998, a new funding mechanism went into effect,
pursuant to which all carriers contribute to a Universal Service Fund
established by the FCC to cover high cost areas, low income customers, schools,
libraries and rural health care providers. The Company's obligation to this fund
for 1998 was $88,823 and for 1999 will be approximately $86,000. Quarterly
updates modify the amounts contributed. Management does not currently expect
that the amount contributed by the Company will change significantly.

Also as of January 1, 1998, the Company began receiving substantial
funds from the Universal Service Fund. As a result of the FCC order establishing
the Fund, all local exchange carriers were required to reduce access charges
billed to toll carriers. To offset this revenue reduction, the high cost portion
of the Universal Service Fund provides payments monthly to carriers satisfying
the characteristics set forth in the order. At the current level of support, the
Company received $2.6 million in 1998 and expects to receive $2.7 million in
1999.

The Company also receives access charges from toll carriers for all
intrastate toll usage. The Company is obligated to make contributions to the New
York State Access Settlement Pool (the 'NYSASP') but does not pool its toll or
access revenues therein. The NYSASP began operations on October 1,1992 and
supports the operations of certain telephone companies other than the Company.
The Company contributed approximately $286,000 to the NYSASP for 1998 and is
expected to contribute approximately $230,000 for 1999.

In October 1998, the NYSPSC implemented the Targeted Accessibility Fund
("TAF") of New York to provide universal service in rural, high costs areas of
the state. The Company's contribution to the TAF for 1998 was $7,200 and is
expected to be approximately $22,000 for 1999.

In the Company's two New Jersey exchanges, intrastate toll revenues are
retained by toll carriers, of

which the Company is one. The associated access charges are retained by the
Company. Revenues resulting from traffic between the Company and Bell Atlantic
and United Telephone are adjusted by charges payable to each company for
terminating traffic.

In addition to charging for access to and from the Company's local
network, the Company bills and collects charges for most inter- and intrastate
toll messages carried on its facilities. Interstate billing and collection
services provided by the Company are not regulated. They are provided under
contract by the Company. Intrastate billing and collection remain partly
regulated in New York and fully regulated in New Jersey. The regulated services
are provided under tariff. Some carriers provide their own billing and
collection services.

EMPLOYEES

The Company has 120 full-time and part-time employees, including 93 non-
management employees. Sixty of the non-management employees (primarily the
office staff and operators) are represented by the Warwick Valley Telephone
Company Employees' Association ('WVTEA'). A new three-year contract between the
Company and WVTEA went into effect on November 2, 1998. The agreement provides
for increases in wages, benefits and certain changes in working conditions.

Twenty-eight non-management employees (primarily plant employees) are
represented by Local 503 of the International Brotherhood of Electrical Workers
(IBEW). The current five-year agreement between the Company and IBEW Local 503
expires April 30, 2003.

EXECUTIVE OFFICERS OF THE REGISTRANT

Name Age Position and Period Served
- ---- --- --------------------------

Fred M. Knipp 68 President since 1988

Philip S. Demarest 62 Vice President 1989 - October 1998
Secretary 1972 - April 1998;
Treasurer 1989 - April 1998

Herbert Gareiss, Jr. 53 Vice President since 1989;
Assistant Treasurer 1989-1997;
Assistant Secretary 1980-1997;

Larry D. Drake 55 Vice President since August 1998;

Barbara Barber 56 Secretary since April 1998
Assistant Secretary 1997-1998;

Robert A. Sieczek 55 Treasurer since April 1998
Assistant Treasurer 1997-1998;

Bonnie A. Jackowitz 52 Assistant Secretary since 1998;

Colleen Shannon 42 Assistant Secretary since 1998;

Dorinda M. Masker 47 Assistant Treasurer since 1998;

There are no arrangements between any officer and any other person
pursuant to which he was selected an officer.

Item 2. PROPERTIES.

The Company owns an approximately 22,000 square-foot building in
Warwick, New York, which houses its general offices, operators, data processing
equipment and the central office switch for the Warwick exchange. In addition,
the Company owns several smaller buildings which serve as workshops, storage
space or garages or which house switching equipment at the Company's other
exchanges. The Company purchased a building at 24 John Street in Middletown, New
York in order to support its expanded dial tone operations in its Middletown
exchange. Of the Company's investment in telephone plant in service, central
office equipment represents approximately 42.1%; connecting lines and related
equipment, 35.8%; telephone instruments and related equipment, 3.0%; land and
buildings, 5.4%; and other plant equipment, 13.7%. A substantial portion of the
Company's properties is subject to the lien of the Company's Indenture of
Mortgage.

Item 3. LEGAL PROCEEDINGS

Not applicable

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable

PART II.

Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS. (1)

Item 6. SELECTED FINANCIAL DATA. (1)

Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS. (1)

Item 7A. QUANTITATIVE 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
asset exposed to market risk is 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 1.0% below prime rate.

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. (1)

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.

Not applicable

PART III.

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. (2)

Item 11. EXECUTIVE COMPENSATION. (2)

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. (2)

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. (2)

1 The material called for by Items 5, 6, 7, and 8 is included on the
Company's Annual Report to its Shareholders for the year ended
December 31, 1998, the relevant pages of which are incorporated by
reference herein.

2 With the exception of the identification of executive officers as
listed on page 5, the material called for by Items 10-13 is included in
the Company's definitive proxy statement, incorporated by reference
herein, for its 1999 Annual Meeting of Shareholders, to be filed
pursuant to Section 14(a) of the Securities Exchange Act of 1934.

PART IV.

Item 14. EXHIBITS, FINANCIAL SCHEDULES AND REPORTS ON FORM 8-K.

(a) The following documents are filed as part of this report:

1. Financial Statements: The following financial statements of the Company,
included in the Annual Report of the Company to its Shareholders for the year
ended December 31, 1998, are included in Exhibit Number 3, filed herewith:

Reference Pages
Annual Report
On Form 10-K

Consolidated Statement of Income - Years
Ended December 31, 1998, 1997 and 1996

Consolidated Balance Sheet - December 31,
1998 and 1997

Consolidated Statement of Stockholders'
Equity - Years Ended December 31, 1998,
1997 and 1996

Consolidated Statement of Cash Flows -
Years Ended December 31, 1998, 1997
and 1996

Notes to Consolidated Financial Statements

2. Financial Statement Schedules:

Report of Independent Certified
Public Accountants on Financial
Statement Schedules

Schedules:

VIII. Valuation and Qualifying Accounts

3. Exhibits:

EXHIBIT NO. DESCRIPTION OF EXHIBIT REFERENCE
---------- ---------------------- ---------
3(a) Articles of Incorporation, Incorporated by reference to
as amended Exhibit 3(a) to the Company's
Annual Report on Form 10-K
for 1997

3(b) By-Laws Incorporated by reference to
as amended Exhibit 3(b) to the Company's
Annual Report on Form 10-K
for 1997

4(a) Form of Common Stock Incorporated by reference to
Certificate, as amended Exhibit 4(a) to the Company's
Annual Report on Form 10-K
for 1997

4(b) Indenture of Mortgage, dated Incorporated by reference to
November 1, 1952, and all Exhibit 4(d) to the Company's
indentures supplemental Registration Statement on
thereto, except the Eighth Form 10 (File No. 0-11174),
Supplemental Indenture dated April 29, 1983

4(c) Eighth Supplemental Incorporated by reference to
Indenture, dated as of Exhibit 4(d) to the Company's
May 1, 1990, to the Annual Report on Form 10-K
Indenture of Mortgage, for 1995
dated November 1, 1952,
including form of 9.05%
First Mortgage Bond,
Series I, Due May 1, 2000

4(d) Ninth Supplemental Incorporated by reference to
Indenture, dated as of Exhibit 4(e) to the Company's
October 1, 1993, to the Annual Report on Form 10-K
Indenture of Mortgage, for 1997
dated November 1, 1952,
including form of 7.05%
First Mortgage Bond,
Series J, Due October 1, 2003

13 Annual Report to Share- Filed herewith
holders for the year ended
December 31, 1998, together
with separate manually
executed Independent
Auditor's Report.

23 Consent of Independent Filed herewith
Auditor

(b) No reports on Form 8-K were filed during the last quarter of the
year ended December 31, 1998.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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

Dated: March 30, 1999 By /S/ FRED M. KNIPP
-----------------------------
Fred M. Knipp
President

Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant in the capacities indicated and on the 30th day of March, 1999.

SIGNATURE TITLE
--------- -----
/s/ FRED M. KNIPP President and Director
-------------------------- (Principal Executive Officer)
Fred M. Knipp

/S/ ROBERT A. SIECZEK Treasurer
-------------------------- (Principal Financial and Accounting
Robert A. Sieczek Officer)

Director
--------------------------
Earl V. Barry

/S/ WISNER H. BUCKBEE Director
--------------------------
Wisner H. Buckbee

/S/ HOWARD CONKLIN, JR. Director
--------------------------
Howard Conklin, Jr.

/S/ JOSEPH E. DELUCA Director
--------------------------
Joseph E. DeLuca

/S/ PHILIP S. DEMAREST Director
--------------------------
Philip S. Demarest

/S/ ROBERT J. DEVALENTINO Director
--------------------------
Robert J. DeValentino

Director
--------------------------
Corinna S. Lewis

/S/ HENRY L. NIELSEN, JR. Director
--------------------------
Henry L. Nielsen, Jr.

WARWICK VALLEY TELEPHONE COMPANY

SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS

Years Ended December 31, 1998, 1997 and 1996

Col. A Col. B Col. C Col. D Col. E
------ ------ ------ ------ ------
Additions
------------------------
Balance at Charged to Charged to Balance at
Beginning Costs and Other End
Description of Period Expenses Accounts Deductions of Period
- ----------- --------- -------- -------- -------- ----------
(Note a) (Note b) (Note c)
Allowance for
uncollectibles:

Year 1998 $65,155 $44,309 $58,780 $103,089 $65,155

Year 1997 $65,154 $46,289 $53,124 $ 99,412 $65,155

Year 1996 $65,154 $35,085 $15,695 $ 50,780 $65,154

- ----------
(a) Provision for uncollectibles as stated in statements of income.

(b) Amounts previously written-off which were credited directly to this account
when recovered.

EXHIBIT INDEX

EXHIBIT NO. DESCRIPTION OF EXHIBIT PAGE
- ----------- ---------------------- ----
13 Annual Report to Shareholders for the year
ended December 31, 1998

23 Consent of Independent Auditors

27 Financial Data Schedule

Exhibits 3(a), 3(b), 4(a) and 4(d) are incorporated by reference to Exhibits
3(a), 3(b), 4(a) and 4(e), respectively, to the Company's Annual Report on Form
10-K for the year ended December 31, 1997. Exhibit 4(b) is incorporated by
reference to Exhibit 4(d) to the Company's Registration Statement on Form 10
(File No. 0-11174), dated April 29, 1983. Exhibit 4(c) is incorporated by
reference to Exhibit 4(d) to the Company's Annual Report on Form 10-k for the
years ended December 31, 1995.