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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, 2000 to DECEMBER 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER. 0-11174
WARWICK VALLEY TELEPHONE COMPANY 401K PLAN
(Full title of the Plan)
WARWICK VALLEY TELEPHONE COMPANY
47 MAIN STREET
PO BOX 592
WARWICK, NEW YORK 10990
(Address of principal executive office)
(Name of Issuer and address of principal executive office)
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WARWICK VALLEY TELEPHONE COMPANY 401K PLAN
INDEX
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 3
Statement of Net Assets Available for Benefits as of December 31, 2000 4
and 1999.
Statement of Changes in Net Assets Available for Benefits for the periods
of December 31, 2000, December 31, 1999 and December 31, 1998. 5
Notes to Financial Statements 6 - 11
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BUSH & GERMAIN, PC
CERTIFIED PUBLIC ACCOUNTS
901 LODI STREET
SYRACUSE, NEW YORK 13203
PHONE: (315) 424-1145
FAX: (315) 424-1457
June 29, 2001
To the Benefits Committee
Warwick Valley Telephone Company
401K Plan
P.O. Box 592
Warwick, New York 10990
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying statements of net assets available for benefits
of the Warwick Valley Telephone Company 401(K) Plan as of December 31, 2000 and
1999 and the related statements of changes in net assets available for benefits
for the periods ended December 31, 2000, 1999 and 1998. These financial
statements are the responsibility of the Plan's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit 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 as of December 31,
2000 and 1999 and the changes in net assets available for benefits for the
periods ended December 31, 2000, 1999 and 1998, in conformity with generally
accepted accounting principals.
As discussed in Note 1 to the financial statements, effective January 1, 1999
the Company merged its three separate 401(k) plans (Management, IBEW and WVTEA)
into one plan. Prior year amounts in these financial statements have been
restated to reflect the merger of these three plans into one.
/s/ Bush & Germain, P.C.
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WARWICK VALLEY TELEPHONE COMPANY 401K PLAN
Statement of Net Assets Available for Benefits
December 31, 2000 and 1999
2000 1999
---------- ----------
Investments, at fair value:
Mutual Funds $3,501,929 $2,963,314
Warwick Valley Telephone
Company Stock 4,095,603 4,897,118
---------- ----------
7,597,532 7,860,432
---------- ----------
Cash 691,383 562,537
Participant Loan Receivables 186,291 84,206
---------- ----------
TOTAL ASSETS 8,475,206 8,507,175
---------- ----------
NET ASSETS AVAILABLE FOR BENEFITS $8,475,206 $8,507,175
========== ==========
The accompanying notes are an integral part of these financial statements.
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WARWICK VALLEY TELEPHONE COMPANY 401K PLAN
Statement of Changes in Net Assets Available for Benefits
Periods Ended December 31, 2000, 1999 and 1998
(12 Months) (12 Months) (9 Months)
12/31/00 12/31/99 12/31/98
----------- ----------- -----------
ADDITIONS
Additions to net assets attributed to:
Interest/market appreciation/depreciation $ (722,935) $ 2,832,366 $ 1,046,699
Dividends on company stock 158,333 158,707 135,993
----------- ----------- -----------
(564,602) 2,991,073 1,182,692
Contributions: elective and rollover 979,566 863,409 532,134
----------- ----------- -----------
TOTAL ADDITIONS 414,964 3,854,482 1,714,826
----------- ----------- -----------
DEDUCTIONS
Deductions from net assets attributed to:
Distributions to participants 446,933 1,507,397 16,500
----------- ----------- -----------
TOTAL DEDUCTIONS 446,933 1,507,397 16,500
----------- ----------- -----------
NET INCREASE (31,969) 2,347,085 1,698,326
----------- ----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS
Beginning of year 8,507,175 6,160,090 4,461,764
----------- ----------- -----------
END OF YEAR $ 8,475,206 $ 8,507,175 $ 6,160,090
=========== =========== ===========
The accompanying notes are an integral part of these financial statements
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WARWICK VALLEY TELEPHONE COMPANY 401K PLAN
NOTES TO FINANCIAL STATEMENTS
(1) PLAN DESCRIPTION:
Effective January 1, 1999, the Company consolidated its three
separate 401(K) plans (Management, IBEW and WVTEA) into one plan
called the Warwick Valley Telephone Company 401(K) Plan. The plan
year from January 1 through December 31 and the Company's stock is
valued using current market prices from the NASDAQ (The Company's
stock started trading on the NASDAQ in April, 1998). The Charles
Schwab Trust Company is trustee of the plan and they will administer
the investment activity of the plan. Prior year amounts in these
financial statements have been restated to reflect the consolidation
of three separate plans into one plan.
The following description of the Warwick Valley Telephone Company
401K Plan (the "Plan") is provided for general information purposes
only. Participants should refer to the summary plan description and
the plan agreement for a more complete description of the plan's
provisions.
GENERAL-
The Plan covers all eligible employees of the Warwick Valley
Telephone Company (the "Company") as allowed under section 401(k) of
the Internal Revenue Code and is subject to the provisions of the
Employee Retirement Income Security Act of 1974 ("ERISA"). The
Trustee controls and manages the operations of the Plan. As of
December 31, 2000 there were 117 employees contributing to the Plan
from a total of 123 eligible to contribute. As of December 31, 2000
there were 126 total participants (including inactive participants
as defined by the Plan).
CONTRIBUTIONS-
PARTICIPANTS-
Eligible employees may participate in the Plan by contributing to
the Deferred Feature (before-tax) of the Plan. The participant may
contribute no more than 15% of base compensation to the Deferred
Feature.
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PLAN SPONSOR-
The Plan Sponsor contributes to the Plan 100% of each Participant's
contributions, subject to certain limitations. The Management
Participants matching contributions may not exceed 8% of their
annual compensation for the year 2000 and 9% effective January 1,
2001. Warwick Valley Telephone Employee Association ("WVTEA")
Participants matching contributions are not to exceed 7% of their
annual compensation from January 1, 1999 through October 31, 1999,
8% of their annual compensation from November 1, 1999 through
November 5, 2000 and 9% effective November 6, 2000. International
Brotherhood of Electrical Workers ("IBEW") Participants matching
contributions are not to exceed 4.5% of their annual compensation
through May 2, 1999 and 6% of their annual compensation effective
May 2, 1999.
PARTICIPANT ROLLOVERS-
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.
VESTING-
Participant accounts are fully vested and nonforfeitable at all
times.
LOANS-
The Plan permits participants to borrow up to 50% of their account
balance up to a maximum of $50,000 and an interest rate of 1% plus
prime and at other terms established in the plan agreement.
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.
PAYMENT OF WARWICK VALLEY TELEPHONE COMPANY STOCK UPON TERMINATION -
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.
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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.
USE OF ESTIMATES-
The preparation of financial statements in conformity with generally
accepted accounting principles 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's
financial statement presentation, including the merging of the three plans
into one.
PLAN EXPENSES-
Expenses related to the administration of the Plan have been paid by
Warwick Valley Telephone Company (the Plan "Sponsor"). These costs
represent professional services in the amount of approximately $45,100 for
the twelve month period ending December 31, 2000, $50,500 for the twelve
month period ending December 31, 1999, and $33,712 for the nine months
ended December 31, 1998.
INVESTMENTS-
The investments included in the statement of net assets available for
benefits are stated at fair value. Shares of registered investment
companies 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.
Effective January 1, 1999 the Company's common stock is valued using
quoted market prices from the NASDAQ, which it started trading on in
April, 1998. Prior to January 1, 1999 under the terms of the three
predecessor plans, the Company's common stock was valued using an annual
independent appraisal. The value was changed on April 1 of each year for
an appraisal done as under the appraisal method, of the preceding December
31, and this valuation would remain the same until the next April 1st.
Consequently the fair value as of December 31, 1998 was based on the
appraisal done December 31, 1997. Due to this change in the method of
valuation, as of January 1, 1999 the fair value of the Company's common
stock increased by approximately $1,340,000.
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DISTRIBUTIONS TO PARTICIPANTS-
Distributions are recorded when paid.
(3) INVESTMENTS:
Through December 31, 2000, participants could invest their funds in
eleven available investment vehicles as described below:
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.
WILLIAM BLAIR INCOME FUND - A fund that seeks current income
consistent with preservation of capital. The fund ordinarily invests
at least 90% of assets in domestic or foreign U.S. dollar
denominated high-quality debt securities, U.S. government
obligations and collateralized obligations. Up to 10% of assets may
be invested in unrated securities.
FREEMONT 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.
FIDELITY PURITAN FUND - This fund seeks income consistent with
preservation of capital. The 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.
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.
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.
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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.
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.
WEITZ 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.
GAM INTERNATIONAL A FUND - This fund seeks long-term capital
appreciation. The fund normally invests at least 65% of assets in
securities issued in at least three foreign countries. It invests
primarily in equities, but may also purchase debt securities.
WARWICK VALLEY TELEPHONE COMPANY COMMON STOCK FUND - This fund
invests entirely in common stock of Warwick Valley Telephone
Company.
The fair value of investments that exceed 5% of net assets available for
benefits are as follows:
12/31/00 12/31/99
Warwick Valley Telephone Company
Common Stock $4,095,603 $4,897,118
Fidelity Magellan Fund 1,196,902 1,176,254
Fidelity Growth and Income Fund 906,383 917,377
Fidelity Puritan Fund 289,083 289,285
William Blair Income Fund 58,944 35,585
Freemont Bond Fund 137,234 112,481
Vanguard Wellington Fund 153,718 76,532
Vanguard U.S. Growth Fund 350,762 196,180
Weitz Value Fund 396,302 150,029
GAM International A Fund 12,601 9,591
---------- ----------
TOTAL INVESTMENTS $7,597,532 $7,860,432
========== ==========
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(4) FEDERAL INCOME TAX STATUS:
The Company received determination letters from the Internal Revenue
Service, dated December 2, 1996 and May 19, 1997, respectively,
stating that the Plan, as amended, is qualified under Sections 401 and
501 of the Internal Revenue Code. Participants in a qualified plan are
not subject to income taxes on Company contributions or dividend income
allocated to their accounts until a distribution is made from the Plan.
(5) PLAN TERMINATION:
The terms of the Plan do not contemplate any specific termination date.
However, the Plan may be terminated at any time by the Board of
Directors. Upon a complete discontinuance of contributions, partial
termination, or termination of this Plan, each participant, former
participant, and beneficiary will continue to have a nonforfeitable
interest in their Plan account.
(6) RELATED PARTY TRANSACTIONS:
Certain expenses of administration and servicing of the Plan, including
equipment, supplies, and payroll expenses of administrative and
clerical personnel and fees of the Trustee, are provided by the Company
without charge to the Plan.
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SIGNATURES
THE PLAN. 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 SAVINGS PLAN
By /s/ Colleen Shannon
-------------------
By Colleen Shannon, Assistant Secretary of
Warwick Valley Telephone Company, Plan
Administrator
Date June 29, 2001
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EXHIBIT INDEX
SEQUENTIALLY
EXHIBIT NUMBER EXHIBIT NUMBERED PAGE
23 Independent Auditors
Consent
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