WVT Communications Reports Financial Results for the Year Ended 2007

WARWICK, NY -- (MARKET WIRE) -- 03/20/08 -- Warwick Valley Telephone Company (the "Company," "WVT Communications") (NASDAQ: WWVY) announced today its financial results for the twelve months ended December 31, 2007. The Company increased its net income by 37% to $5,493,000 from $3,997,000 for the twelve-month period over the same period in 2006 as compared to a decrease in net income by 23% to $3,997,000 from $5,170,000 for the twelve-month period over the same period in 2005. The Company's net income for the twelve-month period in 2006 included $611,000 derived from the sale of an investment. That income did not recur in 2007. If it is excluded from the net income for the twelve months of 2006, the Company's net income for the comparable twelve-month period in 2007 increased by 53% over 2006.

Operating revenues decreased 5% from $25,236,000 to $24,042,000 for the twelve months ended December 31, 2007 compared to the same period in the prior year and decreased 8% from $27,342,000 to $25,236,000 for the twelve months ended December 31, 2006 compared to the same period in the prior year. While revenues have continued to decline compared to last year, the rate of decline has been somewhat lessened. The Company also extended the footprint of its video services and added High Definition TV during the year.

As a result of aggressive cost controls, operating expenses decreased a significant 13% from $29,030,000 to $25,140,000 for the twelve months ended December 31, 2007 and decreased 4% from $30,289,000 to $29,030,000 for the twelve months ended December 31, 2006 compared to the same periods in the prior year. These decreases derived largely from greater oversight of outside vendors and through improved operating efficiencies.

The Company has a long history in successful deployments of new technology. WVT Communications was one of the first rural telephone companies to install digital switching, to offer Internet access as an Internet Service Provider (ISP), and to offer video service as an alternative to cable TV companies. The Company has continued to invest in its operations to gain enhanced operating efficiencies and to enable the introduction of new services to our customers. During 2007, the Company upgraded its core network with new technology. The Company has continued to deploy capital to extend video services and higher speed broadband Internet to a greater number of our customers.

Commenting on the year end results, Duane Albro, the President and CEO, said, "2007 was a milestone year for our company as we delivered improvement in net income and the overall efficiency of the business. Our results were principally due to the diligence of our employees in the execution of our business plan. The focus during the year has been to continue our aggressive control of expenses in order to improve our operating margin, lower our cost structure to enhance our competitiveness, and to position our infrastructure and products for increased marketing and sales in 2008. We remain firmly committed to creating value for our shareholders by the successful planning and deployment of the above initiatives. We also remain committed to expansion of our Competitive Local Exchange Carrier (CLEC) activities through either building or acquiring the capability. WVT Communications continues to demonstrate that it is a great company with great customers and great employees... with a solid plan for growth."

About WVT Communications

WVT Communications is a leading voice, Internet, video and wireless provider servicing consumers and businesses in the lower Hudson Valley of New York and New Jersey. Additional information about the Company is available at www.wvtc.com.

Forward-looking Statements

This press release forward-looking statements as defined be the Private Securities Litigation Reform Act of 1995. These include statements concerning expectations, estimates, and projections about the industry, management beliefs and assumptions of Warwick Valley Telephone Company ("Warwick," "we," "us," or "our"). Words such as "anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates," and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that difficult to forecast. Therefore, our actual results may materially differ from those expressed or forecasted in any such forward-looking statements. When considering these risks, uncertainties and assumptions, you should keep in mind the cautionary statements elsewhere in this report and in any document incorporated herein by reference. New risks and uncertainties arise from time to time and we can not predict those events or how they may affect us. For a more detailed discussion of the risks and uncertainties that may affect Warwick's operating and financial results and its ability to achieve its financial objectives, interested parties should review the "Risk Factors" sections in the Warwick's reports filed with the Securities and Exchange Commission, including the Annual Report on Form 10-K for the fiscal year ended December 31, 2007. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

WARWICK VALLEY TELEPHONE COMPANY

CONSOLIDATED STATEMENTS OF INCOME

For the Years Ended December 31, ------------------------------- 2007 2006 2005 --------- --------- --------- ($ in thousands except share and per share amounts) Operating Revenues: Local network service $ 3,367 $ 3,550 $ 3,903 Network access service 8,150 8,648 9,711 Long distance services 3,618 3,498 3,586 Directory advertising 1,325 1,348 1,390 Online services 5,733 6,223 6,734 Other services and sales 1,849 1,969 2,018 --------- --------- ---------Total operating revenues 24,042 25,236 27,342 --------- --------- ---------Operating Expenses: Plant specific 4,415 5,388 4,911 Plant non-specific: Depreciation & amortization 5,252 5,407 5,652 Other 2,932 3,531 3,561 Customer operations 4,232 4,164 4,460 Corporate operations 5,750 8,153 8,717 Cost of services and sales 1,341 1,199 1,578 Property, revenue and payroll taxes 1,218 1,188 1,410 --------- --------- ---------Total operating expenses 25,140 29,030 30,289 --------- --------- ---------Operating (loss) income (1,098) (3,794) (2,947) Other Income (Expenses): Interest income (expense), net (213) (30) (210) Income from equity method investments, net 9,651 9,367 10,638 Gain on sale of investment -- 611 889 Loss on write-down of investment -- -- (705) Other income (expense), net (52) (117) 291 --------- --------- ---------Total other income 9,386 9,831 10,903 --------- --------- ---------Income before income taxes 8,288 6,037 7,956 Income Taxes 2,795 2,040 2,786 --------- --------- ---------Net Income 5,493 3,997 5,170 Preferred Dividends 25 25 25 --------- --------- ---------Income Applicable to Common Stock $ 5,468 $ 3,972 $ 5,145 ========= ========= ========Basic & Diluted Earnings per Share of Outstanding Common Stock $ 1.02 $ 0.74 $ 0.96 ========= ========= ========Weighted Average Shares of Common Stock Outstanding 5,351,780 5,351,780 5,359,862 ========= ========= ========

WARWICK VALLEY TELEPHONE COMPANY

CONSOLIDATED BALANCE SHEETS

December 31, December 31, 2007 2006 ------------- ------------- ($ in thousands except share and per share amounts) ASSETS Current Assets: Cash and cash equivalents $ 5,849 $ 12,296 Accounts receivable -- net of allowance for uncollectibles -- $214 and $107 in 2007 and 2006, respectively 3,067 4,121 Other accounts receivable 152 262 Materials and supplies 1,591 957 Prepaid expenses 769 695 Deferred income taxes 119 228 ------------- -------------Total Current Assets 11,547 18,559 ------------- ------------- Property, plant and equipment, net 35,791 37,087 Unamortized debt issuance costs 65 77 Other deferred charges 762 814 Investments 8,276 3,733 Other assets 210 179 ------------- -------------Total Assets $ 56,651 $ 60,449 ============= ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 940 $ 1,013 Current maturities of long-term debt 1,519 1,519 Advance billing and payments 234 251 Customer deposits 116 128 Accrued taxes 80 1,221 Pension and post retirement benefit obligations 929 1,435 Other accrued expenses 1,830 2,199 ------------- -------------Total Current Liabilities 5,648 7,766 ------------- ------------- Long-term debt, net of current maturities 5,695 7,214 Deferred income taxes 3,334 4,490

Long-term income taxes payable 640 -- Other liabilities and deferred credits 591 624 Pension and postretirement benefit obligations 4,324 7,583 ------------- -------------Total Liabilities 20,232 27,677 ------------- -------------Shareholders' Equity Preferred Shares -- $100 par value; authorized and issued shares of 5,000; $0.01 par value authorized and unissued shares of 10,000,000; 500 500 Common stock -- $0.01 par value; authorized shares of 10,000,000 issued 5,985,463 shares 60 60 Treasury stock -- at cost, 633,683 common shares (4,748) (4,748) Additional paid in capital 3,487 3,487 Accumulated other comprehensive loss (875) (3,554) Retained earnings 37,995 37,027 ------------- -------------Total Shareholders' Equity 36,419 32,772 ------------- -------------Total Liabilities and Shareholders' Equity $ 56,651 $ 60,449 ============= ============

Contact: WVT Communications Kenneth H. Volz Executive Vice President, Chief Financial Officer and Treasurer 845-986-8080

2008-03-20 16:30:05 0317622 MARKETWIRE