SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1994 Commission File Number 33-30715
CONESTOGA ENTERPRISES, INC.
a Pennsylvania Corporation Employer IRS No. 23-2565087
202 East First Street, Birdsboro, Pennsylvania 19508
Registrant's telephone number, including area code (610) 582-8711
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock (par value $5.00 per share)
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 the number of shares outstanding of each of the issuers' classes of
Common Stock, as of the close of the period covered by this report.
Class Outstanding at December 31, 1994
Common Stock, $5.00 par value 3,665,967
The aggregate market value of the voting stock held by non-affiliates on 2/28/95
was $85,331,070. The stock of the Company is traded on NASDAQ Small Cap
market (ticker symbol "CENI"). Therefore, the price is based on the most recent
price at which the Company's stock has been traded.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement relating to the Annual Meeting of
Shareholders to be held on May 6, 1995, are incorporated by reference into
Part III of this report.
PART I
ITEM 1. BUSINESS
Conestoga Enterprises, Inc. (CEI) is a Pennsylvania corporation that is doing
business as a holding company owning all of the outstanding shares of the
Conestoga Telephone and Telegraph Company (CTT), Northern Communications, Inc.
(NCI), and the Conestoga Mobile Systems, Inc. (CMS). It also has a 70% limited
partnership interest in the Berks and Reading Area Cellular Enterprises
Partnership (BRACE) and a 10% limited partnership interest in the Lancaster Area
Cellular Enterprises Partnership (LACE). CEI was incorporated on January 27,
1989 under the provisions of the Business Corporation Law of Pennsylvania, Act
of May 5, 1933, P.L. 364, as amended and supplemented, to do all things and
exercise all powers, rights and privileges which a business corporation may now
or hereafter be organized or authorized to do or exercise under such act.
CEI owns all of the outstanding shares of CTT, an independent telephone utility,
which furnishes communication services, mainly local and toll telephone service,
to an area of approximately 300 square miles which includes parts of the
Counties of Berks,Chester, Lancaster, and Montgomery, in the Commonwealth of
Pennsylvania. CTT's services are distributed through its telephone exchanges
and system of overhead and underground wire and cables. CTT's entire telephone
system is dial equipped. The population of CTT's service area is estimated to
be 118,850, with an average annual growth rate of .76%.
CEI became the owner of all of the outstanding stock of CTT on December 31,
1989, pursuant to a plan of merger in which the owners of all of the outstanding
shares of voting stock of CTT exchanged their shares for outstanding shares of
CEI.
CEI's shares are registered under the Securities Act of 1933.
CTT was organized and incorporated on August 20, 1902, under the laws of the
Commonwealth of Pennsylvania as a telephone utility company. CTT's geographic
service area is authorized and established by the Pennsylvania Public Utility
Commission. Such authorization is perpetual. Within this area, it is not in
competition with any other company in providing ordinary telephone services.
This is very important to CTT and more important to its customers, because it
establishes one and only one network for local dial tone services.
CTT is subject to the jurisdiction of the Federal Communications Commission
(FCC) with respect to interstate services and certain related matters. CTT is
also subject to the jurisdiction of the Pennsylvania Public Utility Commission
(PUC) with respect to intrastate service on certain related matters.
CTT faces competition from private communication systems and interexchange
carriers who have the capacity to originate and/or terminate calls without the
use of the company's facilities in the company service area. It also competes
with other suppliers in the area of private branch service exchanges, paging
systems and mobile radio telephone services.
ITEM 1. BUSINESS (Continued)
The current year's earnings were impacted by several events throughout the year
as follows:
1. During the first quarter of 1994 the PUC issued it's final order for
the settlement of the Show Cause proceedings, instituted against CTT by the
Pennsylvania Public Utility Commission. Contained in the settlement was the
elimination of the Touch Tone line charge, and establishment of"Optional EAS"
for some of our toll routes.
2. During the second quarter of 1994, CTT added additional Signalling
System 7 (SS7) software which was expensed.
3. The declaration of the 5% common stock dividend declared at the October,
1994 Board of Directors meeting, payable February 28, 1995.
On January 1, 1991, CTT transferred to CEI 100% stock ownership of Northern
Communications, Inc. (NCI), which had been organized in March 1981 as a
non-regulated commercial enterprise operated for the resale of long distance
service. This transfer had no effect on the consolidated financial statements.
The net operating profits of NCI for 1992, 1993, and 1994 were $259,890,
$336,559, and $475,762 respectively.
On January 1, 1991, CTT assigned to CEI, CTT's interests in two joint
ventures which provide cellular telephone services. The assigned interests
consist of:
1. A 70% limited partnership interest in the Berks and Reading Area Cellular
Enterprises Partnership (BRACE) which in turn owns a 39% interest in the Reading
SMSA Limited Partnership providing cellular telephone service in the Reading
Metropolitan Area; and
2. A 10% limited partnership interest in the Lancaster Area Cellular
Enterprises Partnership (LACE) which in turn owns an 18.4% limited partnership
in the Susquehanna Cellular Communications Limited Partnership providing
cellular telephone service in the Harrisburg, Lancaster, and York
Metropolitan Areas.
These transfers had no effect on the consolidated financial statements of CEI.
As of December 31, 1994, CEI had invested $1,065,824 in BRACE and $598,920 in
LACE; BRACE had in turn invested $1,513,022 in the Reading SMSA Limited
Partnership; and LACE had invested $5,992,999 in the Susquehanna Cellular
Communications Limited Partnership.
Conestoga Mobile Systems, Inc. (CMS) was incorporated on April 1, 1991 to
provide pager services. It began operating on June 1, 1992 in the central
Pennsylvania area, after receiving regulatory approvals to acquire and operate
certain radio paging systems owned by United Telephone Company of Pennsylvania.
ITEM 1. BUSINESS (Continued)
During the last half of 1992, CTT transferred its non-regulated paging and
cellular property and equipment to CEI as a non-cash dividend and CEI in turn
transferred the same to CMS as additional paid in capital. Since the end of
1992 all paging operations of CEIand its subsidiaries have been provided by CMS.
The transactions described above had no effect on consolidated financial
statements. During the Second quarter of 1994, CTT instituted monthly bulk
rates for paging access lines, and established CMS as a reseller of pager
access lines. The net operating profit(loss) for CMS for 1992, 1993, and
1994 were $1,214, ($82,663), and ($56,189)respectively.
Percentages of the Company's consolidated gross revenue in local, long
distance,and other services are shown on the following table:
1990 1991 1992 1993 1994
Local 21% 22% 21% 20% 19%
Long Distance
and Access 65% 65% 65% 65% 66%
Other 14% 13% 14% 15% 15%
100% 100% 100% 100% 100%
CTT bills for local service on a flat rate basis.
The relative contributions of each service to net income is substantially
the same as to gross revenues.
The Company had 48,314 access lines in service on December 31, 1994. CTT
had 44,176 access lines in service and CMS 4,138 access lines. Approximately
14,400 access lines served business customers.
CTT had a total of 122 employees as of December 31, 1994, of which 81 are
covered by one collective bargaining agreement.
ITEM 2. PROPERTIES
Since the business of CTT is that of furnishing communication service, and
as its plant is widely distributed in the territory serviced by it, its
properties do not lend themselves to description by character and location of
principal unit.
As of December 31, 1994, central office equipment represented approximately
34% of CTT's investment in telephone plant in service; land and buildings
occupied principally by central office equipment) 5%; connecting lines not on
subscribers'premises (a majority of which are on or under public highways,
treets, and alleys,and the remainder on or under private property) 56%; general
purpose computers 2%; and trucks and other work equipment and furniture and
office equipment 3% of such investment.
ITEM 2. PROPERTIES (Continued)
Conestoga Mobile Systems, Inc.'s business is that of furnishing radio paging
service, and as its plant is widely distributed in the territory serviced by it
its properties do not lend themselves to description by character and location
of principal unit.
As of December 31, 1994, Land, Buildings, and Towers represented approximately
36% of CMS's investment in plant; transmitters and terminal equipment 54%, and
0computers and other plant 10%.
CTT owns all of its occupied buildings as well as most of the land on which the
buildings are located. Several of the remote switching center buildings are
located on properties which are leased. During 1992 all the remaining principal
amounts of the mortgage indenture were retired.
The following tables set forth additional information in connection with the
properties of the Company:
TELEPHONE PLANT STATISTICS
YR END MI MI OF WIRE MI OF MI OF FIB CENTRAL DIAL
12/31 POLE LN IN AER CA. AER WIRES OPTICS CA OFFICES
1990 652 318,709 783 205 10
1991 651 334,671 726 230 10
1992 651 345,770 694 249 10
1993 651 355,914 665 256 10
1994 651 364,761 637 271 10
ACCESS LINES BY EXCHANGE
YR END
12/31 BRDS BLLY BOTW DGVL GNHL MGTW OLEY SNVL TOTN YLHS TOT CMS
1990 8160 2968 12283 2456 1523 4198 2014 2001 5165 1870 42638
1991 8441 2921 12585 2570 1516 4442 2135 2104 4989 1904 43607
1992 7880* 3009 12843 2621 1558 4705 2213 2200 5033 1966 44028 1249
1993 8155 3097 13110 2726 1596 4866 2296 2305 5124 2054 45329 1190
1994 7613 3148 12256 2840 1651 5115 2471 2400 4575 2107 44176 ** 4138
Standard practices prevailing in the telephone industry are followed by CTT in
the construction and maintenance of its plants and facilities, and CTT considers
that its plants and facilities are, as a whole, in sound physical and operating
condition.
* 731 Paging Access Lines transferred to CMS
** Includes CTT reseller access lines
ITEM 3. LEGAL PROCEEDINGS
The Company settled on May 9, 1994, all of the matters raised in the Show Cause
action instituted by the Pennsylvania Public Utility Commission on April 9, 1993
The Company was not involved in any material legal proceedings as of December 31
1994.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There was nothing submitted to a vote of security holders during the
fourth quarter of the fiscal year covered by this report.
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED
SECURITY HOLDER MATTERS
(a) On June 9, 1994 CEI's Common Stock began trading in the NASDAQ Over-
the-Counter Small Cap Market. The Ticker Symbol is CENI. The high and low
sales prices for each quarter of 1994 are listed below.
High Low
2nd Quarter $28.00 $27.00
3rd Quarter $27.50 $26.00
4th Quarter $27.25 $25.25
(b) Approximate Number of Equity Security Holders.
Approximate Number of
Record Holders (as of
Title of Class December 31, 1994)
Common Stock 1,726 (1)
(1) Included in the number of stockholders of record are shares held
in "nominee"or "street" name.
(c) Dividends
Payments of dividends will be within the discretion of the Company's Board of
Directors and will depend, among other factors, on earnings, capital
requirements, and the operating and financial condition of the Company. During
the year 1993, the total cash dividend paid by the Company was $1.15 per share.
During 1994 the total cash
dividend paid by the Company was $1.16 per share. Dividends were paid quarterly
throughout the years with a special dividend of $.05 paid December 15, 1993.A 5%
stock dividend was declared by the Board of Directors during 1994, payable
February 28, 1995 to shareholders of record on January 31, 1995. Under the most
restrictive covenants of the Company's debt agreement, $14,828,386 of the
consolidated retained earnings is available forpayment ofcash dividends in 1995.
ITEM 6. SELECTED FINANCIAL DATA
Selected Income Statement Data:
1994 1993 1992 1991 1990
Oper Revenue $29,828,193 $28,360,336 $27,233,776 $25,270,329 $25,101,843
Net Inc-Operations 6,293,983 6,135,813 6,373,077 5,316,957 5,640,628
Earnings per Com Sh* $1.64 $1.60 $1.66 $1.38 $1.47
Cash Dividends declared
per Common Share* $1.11 $1.10 $1.09 $1.05 $ .90
*adjusted for 5% stock dividend
Selected Balance Sheet Data:
1994 1993 1992 1991 1990
Net Plant and
Non-regulated Prop $45,599,261 $44,989,591 $44,581,057 $43,032,644 $42,105,146
Total Assets 55,799,116 53,231,772 52,041,087 51,550,445 49,665,787
Long-term Debt
Less Current Mat 5,035,000 5,425,000 5,815,000 6,515,000 6,825,000
Minority Interest in
Operating Company** 0 0 0 1,490,100 1,500,000
Stockholders' Eq 39,908,356 37,649,118 35,772,871 33,522,757 32,227,393
**Conestoga Telephone and Telegraph Company Preferred Stock
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Summary
The following table sets forth for the periods indicated (a) percentages which
certain items reflected in the financial data bear to total revenues and (b) the
percentage increase of such items as compared to the indicated prior period.
Relationship to Total Revenues Period to Period Increase (Decrease)
Year Ended December 31 Years Ended
1992 1993 1994 1992-93 1993-94
Local Svc Rev 21.2% 20.2% 19.1% (1%) (.5%)
Long Distance and
Access Rev 65.3% 65.1% 66.0% 3.8% 6.6%
Other Rev 13.5% 14.7% 14.9% 14.0% 6.6%
100.0% 100.0% 100.0% 4.1% 5.2%
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
Relationship to Total Revenues Period to Period Increase (Decrease)
Year Ended December 31 Years Ended
1992 1993 1994 1992-93 1993-94
Operating Exp 57.3% 64.1% 64.3% 16.4% 5.6%
Inc from Operations 42.7% 35.9% 35.7% (12.4%) 4.5%
Inc Deductions (Net) 1.9% (.5%) (.2%) (128.2%) (52.9%)
Income Taxes 17.2% 14.7% 14.8% (10.2%) 5.3%
Minority Interest 0.2% 0 0 (100.0%) 0
Net Income 23.4% 21.6% 21.1% (3.7%) 2.6%
RESULTS OF OPERATIONS:
Conestoga Enterprises, Inc. was organized in 1989 to become a holding
company. To date it has the following subsidiaries:
1 - The Conestoga Telephone and Telegraph Company (CTT)
2 - Northern Communications (NCI)
3 - Conestoga Mobile Systems, Inc. (CMS)
It also has two partnership interests to provide cellular telephone service:
1 - Berks and Reading Area Cellular Enterprises (70% interest)
2 - Lancaster Area Cellular Enterprises (10% interest)
It formed Conestoga Wireless Company in February, 1995, a limited liability
company, in order to bid on an FCC license to provide Personal Communication
Service (PCS) in eastern Pennsylvania.
Operating Revenues: Operating Revenues increased 5.2% during 1994 when
compared with 1994. During the 1992-94 period they increased 9.5%. Local Service
Revenues decreased .5% during the current year, when compared with 1993. This
decrease is directly attributable to the elimination of the touch tone monthly
line charge which was part of the telephone company's stipulation in settlement
of the show cause order instituted against it by the Pennsylvania Public Utility
Commission in 1993. After normalizing Local Service Revenues for that
elminiation there would have been an increase of about 2.6%. Access lines
increased 3.8% during 1994,adding 1,795 lines. The total access lines in service
as of December 31 1994 is 48,314. Conestoga Telephone has 44,176 and Conestoga
Mobile Systems has 4,138 access lines in service.
Access Service Revenues increased 7.5% during 1994, and for the 1992-94 period
increased 10.7%. The interstate minutes of use increased
ITEM 7.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
8.8% and intrastate minutes of use increased 21.8% this year. Long Distance
Service Revenues increased 5.9% during 1994 when compared with 1993, and for the
1992-94 period increased 10.6%, the majority of which was in intralata
settlements. Nonregulated Sales and Lease Revenues increased 11.9% during the
current year and increased 31.1% during the 1992-94 period.
Increased nonregulated revenues were recorded on both Conesotga Telephone and
Conestoga Mobile Systems during 1994 when compared with 1993. Miscellaneous
Revenues decreased 8.3% during 1994 and for the 1992-94 period decreased 12.5%.
Billing and Collection revenue decline accounted for most of this difference.
Miscellaneous Revenues continue to be a non growth part of the company's revenue
stream. Uncollectible Operating Revenues increased 28.9% during 1994 when
compared with 1993, but for the 1992-94 period decreased 24%. The current year's
increase is due to a true-up adjustment during 1993 which had the effect of
lowering 1993's annual writeoff. Uncollectibles are .5% of the total operating
revenues.
Operating Expenses: Operating Expenses increased 5.6% during 1994 when
compared with 1993 and increased 22.9% during the 1992-94 period. Plant Specific
Expenses decreased 9.9% in 1994 but over the 1992-94 period increased 25%. The
1992-94 period increase can be attributed to the expense of the SS7 central
office software, which amounted to about $645,000 in 1993. The software addition
during 1994 was only about half of the 1993 amount. It is anticipated that
central office software updates will continue over the next few years. Plant
Nonspecific Network expenses for 1994 increased 16.7% over 1993 and for the two
year period increased 19.9%. The increase is due to one time provisioning
expense charges during the current year.
Depreciation Expense increased 7.9% during the current year when compared with
the previous year, but increased 25% during the 1992-94 period. This is a
direct result ofthe Capital Cost Recovery Study completed by an outside firm
during 1993. The new depreciation rates increased operating expenses by about
$430,000 in 1993 and $476,000 in 1994. The composite rate for the year to 6.58%.
Customer Operations Expense increased 13.6% during 1994 when compared with 1993,
and increased 25.2% over the two year period. Corporate Operations Expense
decreased 3.4% during 1994 when compared with the previous year. Corporate
Operations Expenses increased during the 1992-94 period 20.5%, which reflects
the additional one time charges in connection with the telephone company's show
cause order issued by the Pennsylvania Public Utility Commission during 1993.
Labor sensitive operating expenses experienced increases as a result of the
three year contract negotiated with the union during 1993. Effective May 10,
1994, the second year of the contract, wages rates increased
4%, which has the effect of increasing labor sensitive benefits, as well.
Non-regulated Sales and Lease Expenses increased 10.59% during 1994 with
increases in both Conestoga Telephone Company and Conestoga Mobile Systems.
Nonregulated expense increased 25.4% for the two year period which reflects the
first two full years of operations for Conestoga Mobile Systems.Taxes other than
income taxes increased 7.7% during 1994 when compared with 1993.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
Other Income/Deductions (net): Interest expense increased 14.6% during 1994
when compared with 1993, reflecting some interim financing required throughout
the year, and increases in the prime rate. Interest expense declined 8% during
the 1992-94 period.
The telephone company'spromissory notes were retired during the first quarter of
1992, with the remaining mortgage bonds refinanced during the second quarter of
1992. These mortgage bonds required early retirement premium payments which is
identified separately as other income deductions. The refinancing was completed
with a 10-year unsecured term loan obtained through the local bank, with
interest rate at prime and a ceiling of 8.4% for the first five years. The
undistributed net income from partnerships
decreased 9.3% during 1994, but over the two year period, reflects a
substantial increase in profits from our cellular ventures.
Income Taxes: Income taxes increased 5.3% during 1994 when compared with
1993 but during the two year period 1992-94 decreased 5.5%. The federal income
tax rates over the period remained unchanged, but the state income tax rate
during 1994 decreased from 12.25% to 11.99%.
Preferred Stock (Minority Interest): The Board of Directors of Conestoga
Telephone and Telegraph Company during the January 1992 monthly meeting decided
to redeem and retire all ofits outstanding 4 1/2% Preferred Stock on September
1,1992 in an effort to save administrative costs. The redemption was paid
through internally generated funds.
Net Income: Net Income for 1994 increased 2.6% over 1993, but for the 1992-94
period decreased 1.2%.The current year's increase can be attributed to increased
growth in access lines,increased usage for access and long distance services,
and less software expense installed in the switch. The slight decrease during
the two year period is a direct result of the loss of revenues associated with
the settlement of the telephone company's show cause order, the legal and
consulting expenses associated with it, and to increased software and
depreciation expenses starting in 1993.
Balance Sheet Items: During 1994 the company adopted FASB Statement No.
115, Accounting for Certain Investments in Debt and Equity Securities, which
requires that these securities be recorded at fair value based on quoted market
price and unrealized appreciation and depreciationn, net of taxes, be reported
as stockholders'equity until realized. The negative cash flow during 1994 when
compared with 1993 reflects the additional purchases of such investments.
During 1993 the company made two accounting changes.
One was the adoption of FASB Statement No. 109, Accounting
for Income Taxes, which changes the accounting method for income taxes from
the deferred method to the liability method with no significant effect on net
income. The other one was the adoption of FASB Statement No. 106, Accounting for
Post Retirement Benefits, which accrues expenses over the employees' active
service period, as well as the unfunded costs which existed on January
1, 1993.There was no significant effect on net income. When comparing the cash
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION
AND RESULTS OF OPERATIONS (continued)
flow during the 1992-94 period the debt reductions are reflected.
Liquidity and Capital Commitments: The Company has commitments at December
31, 1994 of $670,000 for the purchase of equipment and materials to continue to
upgrade its telecommunications plant base. The Company has continued to invest
in the future of the telecommunications industry through the purchase of
marketable securities of other telecommunication companies. During 1992
$999,490 was invested. During 1994 the company increased its investment by
$776,000.
Inflation over the period had minimal effect on operating expenses.
Management continues to believe that any future impact inflation might have on
operating expenses will be partially offset by customer growth and by general
rate increases to the extent necessary to maintain reasonable earnings. The line
of credit with the bank remained at $3 million during 1994. The interest rate
remained at base rate (prime) less 1/2%.
The line of credit was utilized several times during the current year to cover
curren texpenses but was usually paid back before the then current month end.
There was no balance outstanding on December 31, 1994.
The Company's management believes that the current working capital is adequate
to meet the immediate operating requirements, and that the current available
credit facilities are adequate to provide short term financing for unforeseen
requirements. The projected capital budget requirements for 1995 will be
financed through internally generated funds.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information as to the Directors and Executive Officers of the Company set
forth under the Subcaption "Election of Directors " on pages 3 through 9 of the
Proxy Statement relating to the Annual Meeting of Shareholders to be held on
May 6, 1995 is incorporated by reference into this Report.
ITEM 11. EXECUTIVE COMPENSATION
The information as to the Executive Officers' Compensation set forth under the
caption "Executive Compensation" and beginning on page 9 of the Proxy Statement
relating to the Annual Meeting of Shareholders to be held on May 6, 1995 is
incorporated
by reference into this Report.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The information set forth under the captions "Election of Directors"
beginning on page 3 and "Security Ownership of Management" beginning on page 8
of the Proxy Statement relating to the Annual Meeting of Shareholders to be held
on May 6, 1995 is incorporated by reference into this Report.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There are no relationships or related transactions as described in Item 404 of
Regulation S-K.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
CONTINUED
(a)(3) Exhibits - 10K Exhibit Table
Articles of Incorporation and by-laws (as amended) Att. A*
Instruments defining the rights of security holders, Att.B*
including indentures
Voting trust agreement N/A
Material contracts Att. C*
Statement re computation of per share earnings N/A
Statements re computation of ratios N/A
Annual report to security holders, Form 10-Q or N/A
quarterly report to security holders
Letter re change in certifying accountant N/A
Letter re change in accounting principles N/A
Previously unfiled documents N/A
Subsidiaries of the registrant Att. D*
Published report regarding matters submitted to vote
of security holders N/A
Consents of experts and counsel N/A
Power of Attorney N/A
Additional exhibits N/A
Information from reports furnished to state insurance
regulatory authorities N/A
(b) Reports on Form 8-K
No reports on Form 8-K have been filed by the Registrant
during the period covered by this report.
* These attachments appear in the 1992 10K.
INDEX TO EXHIBITS
Page
(a) Articles of Incorporation, as amended 53-56*
(b) By-laws 57-66*
Instruments defining the rights of security holders
(b) Relevant portions of the by-laws 67*
Material contracts
(a) Agreement dated January 28, 1987 with
John R. Bentz, Executive Vice President 68-74*
(b) Agreement dated March 22, 1989 with
Donald R. Breitenstein, Controller 75-81*
Subsidiaries of the registrant 82*
*These exhibits appear in the 1992 10K.
Pursuant to the requirement of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
CONESTOGA ENTERPRISES, INC.
Date _3/22/95_ By____F. M. BROWN_________
F. M. Brown
President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report signed below by the following persons on behalf of the Company and
in the capacities and on the dates indicated.
Date _3/22/95_ __ALVIN W SPONAGLE__________
Alvin W. Sponagle
Chairman of the Board
Date _3/22/95_ __JOHN R BENTZ_______________
John R. Bentz
Executive Vice President
Date _3/22/95_ _JAMES H MURRAY_______________
James H. Murray
Vice President
Date _3/22/95_ _KENNETH A BENNER_____________
Kenneth A. Benner
Secretary/Treasurer
Date _3/22/95_ _DONALD R BREITENSTEIN________
Donald R. Breitenstein
Controller
Date _3/22/95_ _EMMA F MULLEN_________________
Emma F. Mullen
Director
Date _3/22/95_ _JOHN M SAUSEN_________________
John M. Sausen
Director
Date _3/22/95_ _RICHARD G WEIDNER_______________
Richard G. Weidner
Director
CONESTOGA ENTERPRISES, INC.
CONSOLIDATED BALANCE SHEETS
December 31, 1994 1993
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 907,050 $ 928,691
Accounts receivable, including unbilled revenue 3,602,102 3,519,528
Inventories, at average cost 596,716 396,439
Prepaid expense 361,535 82,732
Total current assets 5,467,403 4,927,390
INVESTMENTS AND OTHER ASSETS
Investments in equity securities 1,913,165 999,490
Investments in partnerships 1,664,744 1,290,567
Nonregulated property and equipment 945,387 842,011
Prepaid pension costs 1,096,731 972,091
Other 57,812 52,643
5,677,839 4,156,802
PLANT
In service 79,340,171 73,902,347
Under construction 502,215 1,323,271
79,842,386 75,225,618
Less accumulated depreciation 35,188,512 31,078,038
44,653,874 44,147,580
$ 55,799,116 $ 53,231,772
See Notes to Consolidated Financial Statements.
December 31, 1994 1993
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 390,000 $ 390,000
Accounts payable 1,868,367 1,563,842
Accrued:
Taxes 2,768 251,055
Payroll and vacation pay 392,745 351,639
Advance billings and customer deposits 910,893 580,517
Total current liabilities 3,564,773 3,137,053
LONG-TERM LIABILITIES
Long-term debt, less current maturities 5,035,000 5,425,000
Accrued postretirement cost 302,247 145,890
Other 165,258 141,377
5,502,505 5,712,267
DEFERRED INCOME TAXES 6,823,482 6,733,334
COMMITMENTS
STOCKHOLDERS' EQUITY
Common stock, par value $ 5 per share; authorized
10,000,000 shares; issued and outstanding 1994
3,665,967 shares; 1993 3,660,494 shares 18,329,835 18,302,470
Additional paid-in capital 950,049 837,032
Common stock dividend distributable 4,733,909 -
Retained earnings 15,814,593 18,509,616
Net unrealized appreciation on marketable equity
securities, net of tax of $ 57,705 79,970 -
39,908,356 37,649,118
$ 55,799,116 $ 53,231,772
CONESTOGA ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF INCOME
Three Years Ended December 31, 1994 1993 1992
Operating revenues:
Local service $ 5,699,215 $ 5,727,580 $ 5,782,961
Access service 9,112,441 8,476,734 8,232,947
Long distance service 10,564,165 9,977,452 9,551,073
Nonregulated sales and lease 3,673,849 3,281,851 2,803,110
Miscellaneous 932,102 1,015,897 1,065,722
Uncollectible operating revenues (153,579) (119,178) (202,037)
29,828,193 28,360,336 27,233,776
Operating expenses:
Plant specific 2,988,336 3,318,203 2,390,391
Plant nonspecific:
Network and other 1,282,990 1,099,094 1,069,922
Depreciation 4,822,211 4,471,427 3,858,807
Customer operations 4,439,584 3,908,112 3,546,728
Corporate operations 1,773,415 1,835,812 1,471,798
Nonregulated sales and lease 2,502,042 2,262,348 1,994,705
Taxes other than income 1,368,848 1,270,589 1,269,096
19,177,426 18,165,585 15,601,447
Operating income 10,650,767 10,194,751 11,632,329
Other (income) deductions, net:
Interest expense 422,106 368,273 458,995
Expense related to early
retirement of debt - - 226,996
Income from unconsolidated
partnership interests (385,077) (424,432) (45,660)
Other, net (105,048) (88,286) (127,979)
(68,019) (144,445) 512,352
Income before income taxes 10,718,786 10,339,196 11,119,977
Income taxes 4,424,803 4,203,383 4,679,846
Income before minority interest 6,293,983 6,135,813 6,440,131
Minority interest - - 67,054
Net income $ 6,293,983 $ 6,135,813 $ 6,373,077
Earnings per common share $ 1.64 $ 1.60 $ 1.66
Weighted average common shares
outstanding 3,843,174 3,843,174 3,843,174
See Notes to Consolidated Financial Statements.<PAGE>
CONESTOGA ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Three Years Ended December 31, 1994, 1993 and 1992
Net
Common Unrealized
Additional Stock Appr (Depr)
Common Paid-In Dividend Retained On Inv
Stock Capital DistributableEarnings Secur Total
Balance,
December 31, 1991 $18,302,470 $837,032 $- $14,383,255 $- 33,522,757
Net income - - - 6,373,077 - 6,373,077
Cash div($1.09/share) - - - (4,172,963) - (4,172,963)
Balance,
December 31, 1992 18,302,470 837,032 - 16,583,369 - 35,722,871
Net income - - - 6,135,813 - 6,135,813
Cash div($1.10/share) - - - (4,209,566) - (4,209,566)
Balance,
December 31, 1993 18,302,470 837,032 - 18,509,616 - 37,649,118
Adjust.to begin. bal.
for change in acctg
method, net of taxes - - - - 153,260 153,260
Net income - - - 6,293,983 - 6,293,983
Cash div($1.11/share) - - - (4,246,172) - (4,246,172)
Iss.of stock under empl
stock purchase plan 27,365 113,017 - - - 140,382
5% stock div distrib. - - 4,733,909 (4,742,834) - (8,925)
Net change in unrealized
appreciation on invest.
avail.for sale,
net of taxes - - - - (73,290) (73,290)
Bal, Dec.31, 1994 $18,329,835 $950,049$4,733,909$15,814,593 $79,970 $39,908,356
See Notes to Consolidated Financial Statements.
CONESTOGA ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Years Ended December 31, 1994 1993 1992
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $6,293,983 $6,135,813 $6,373,077
Adjustments to reconcile
net income to net cash provided by
operating activities:
Depreciation 5,188,997 4,875,540 4,271,857
Amortization - - 42,519
Income from unconsolidated
partnership interests (385,077) (424,432) (45,660)
Change in assets and liabilities:
(Increase) decrease in:
Accounts receivable (82,574) (265,756) (134,095)
Materials and supplies (200,277) 123,849 (3,258)
Prepaid expenses (278,803) (15,026) (12,307)
Prepaid pension costs (124,640) (70,619) (378,894)
Other assets (5,169) 20,437 (4,265)
Increase (decrease) in:
Accounts payable 295,600 (242,762) (346,189)
Accrued expenses and other
current liabilities 123,195 (162,402) 318,950
Other liabilities 180,238 168,459 21,650
Deferred income taxes 32,443 (108,857) 406,217
Net cash provided by operating
activities 11,037,916 10,034,244 10,509,602
CASH FLOWS FROM INVESTING ACTIVITIES
Plant removal costs (125,808) (131,366) (122,009)
Salvage from plant retired 196,937 502,653 202,489
Purchase of plant (5,869,796) (5,655,363) (5,900,750)
Purchase of investments (776,000) - (999,490)
Net capital distributions from
unconsolidated partnership interests 10,900 - 181,697
Net cash used in invest activities (6,563,767) (5,284,076) (6,638,063)
CONESTOGA ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
Three Years Ended December 31, 1994 1993 1992
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term borrowings $ - $ - $ 3,900,000
Prin. payments on long-term borrow. (390,000) (390,000) (4,520,000)
Proceeds from issuance of stock under
the employee stock purchase plan 140,382 - -
Cash dividends paid (4,246,172) (4,209,566) (4,172,963)
Subsidiary stock transactions - - (1,490,100)
Net cash used in finance activity (4,495,790) (4,599,566) (6,283,063)
Increase (decrease) in cash / cash
equivalents (21,641) 150,602 (2,411,524)
Cash and cash equivalents:
Beginning 928,691 778,089 3,189,613
Ending $ 907,050 $ 928,691 $ 778,089
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION
Cash payments for:
Interest $ 422,106 $ 368,273 $ 509,191
Income taxes $ 4,859,254 $ 4,631,869 $ 4,195,146
See Notes to Consolidated Financial Statements.
CONESTOGA ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1
SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation:
The consolidated financial statements include the accounts of Conestoga
Enterprises, Inc.(CEI) and its subsidiaries:
The Conestoga Telephone and Telegraph Company (CTT), an independent telephone
utility providing both regulated and nonregulated communication services.
Northern Communications, Inc. (NCI), which resells long distance services.
Conestoga Mobile Systems, Inc. (CMS), which provides paging communication
services.
CEI, CTT, NCI and CMS are collectively referred to herein as the Company. All
significant intercompany transactions have been eliminated in consolidation.
The Company's primary service area is eastern Pennsylvania.
Accounting and rate regulation:
CTT is subject to accounting and rate regulation by the Pennsylvania Public
Utility Commission.
Cash and cash equivalents:
For purposes of reporting cash flows, the Company considers all highly liquid
debt instruments purchased with a maturity of three months or less to be cash
equivalents. At times cash balances exceed F.D.I.C. limits.
Depreciation methods and plant accounting policies:
Depreciation is computed by the straight-line method. Individual rates are
used for each class of depreciable property. The effective composite
depreciation rates for the years 1994, 1993 and 1992 were 6.58%, 6.59% and
6.04% respectively.
Normal renewals and betterments of units of property are charged to plant
accounts, and the costs of units of depreciable property retired are charged
to the accumulated depreciation account along with removal cost less salvage
applicable thereto. Ordinary repairs and replacements of items considered to
be less than units of property are charged to plant specific expenses. No gain
or loss is recognized in connection with ordinary retirements of depreciable
property.
CONESTOGA ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Investments in equity securities:
Effective January 1, 1994, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities" (SFAS 115). All marketable equity securities are
classified as available for sale. These securities are recorded at fair value
based on quoted market prices and unrealized appreciation and depreciation,
net of taxes, are reported as a separate component of
stockholders' equity until realized. Gains and losses are determined using
the specific-identification method.
Prior to 1994, marketable equity securities were carried at the lower of
aggregate cost or market value.
Investment in partnerships:
The Company is accounting for its investments in partnerships by the equity
method.
Income taxes:
Deferred taxes are provided on a liability method whereby deferred tax assets
are recognized for deductible temporary differences and deferred tax
liabilities are recognized for taxable temporary differences. Temporary
differences are the differences between the
reported amounts of assets and liabilities and their tax basis. Deferred tax
assets are reduced by a valuation allowance when, in the opinion of management,
it is more likely than not that some portion or all of the deferred tax assets
will not be realized. Deferred tax assets and liabilities are adjusted for
the effects of changes in tax laws and rates on the date of enactment.
Per share amounts:
Net income and cash dividends per share of common stock are based on the
weighted average number of shares outstanding each year after giving
retroactive effect to stock dividends.
CONESTOGA ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2
INVESTMENTS IN EQUITY SECURITIES
The following is a summary of the Company's investments in equity securities
as of December 31, 1994 and 1993:
1994 1993
Marketable equity securities:
Aggregate cost $ 999,490 $ 999,490
Gross unrealized appreciation 137,675 265,075
Fair value 1,137,165 1,264,565
Nonmarketable equity securities, at cost 776,000 -
$ 1,913,165 $ 1,264,565
The Company's investments in equity securities are concentrated in the
telephone utility industry.
3
INVESTMENTS IN PARTNERSHIPS
1994 1993
Berks and Reading Area Cellular Enterprises
(BRACE), 70% interest $ 1,065,824 $ 808,483
Lancaster Area Cellular Enterprises (LACE),
10% interest 598,920 482,084
$ 1,664,744 $ 1,290,567
BRACE is a 39% limited partner in the Reading SMSA Limited Partnership, which
provides cellular telephone service to the Reading metropolitan area. LACE is
an 18.4% limited partner in the Susquehanna Cellular Communications Limited
Partnership, which provides cellular telephone service in the Harrisburg,
Lancaster and York metropolitan areas. The Company's equity in
undistributed net income of the partnerships was $ 385,077, $ 424,432 and
$ 45,660 for 1994, 1993 and 1992 respectively.
CONESTOGA ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4
TELEPHONE PLANT AND NONREGULATED PROPERTY AND EQUIPMENT
Telephone plant and nonregulated property and equipment are carried at cost
and consist of the following:
December 31,
1994 1993
Telephone plant:
In service:
Land and buildings $ 3,958,199 $ 3,875,148
Central office 26,515,216 24,281,031
Other equipment 4,418,948 4,021,406
Cable and wire facilities 44,447,808 41,724,762
79,340,171 73,902,347
Under construction 502,215 1,323,271
79,842,386 75,225,618
Less accumulated depreciation 35,188,512 31,078,038
$ 44,653,874 $ 44,147,580
Nonregulated property and equipment:
Buildings $ 112,527 $ 112,527
Equipment 2,321,171 2,159,496
2,433,698 2,272,023
Less accumulated depreciation 1,488,311 1,430,012
$ 945,387 $ 842,011
5
LINE OF CREDIT
At December 31, 1994 and 1993, CTT had an unused line of credit, with interest
at one-half of one percent below prime, from a bank in the amount of
$ 3,000,000 available until May 31,1995.
CONESTOGA ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6
LONG-TERM DEBT
Long-term debt is summarized as follows:
December 31,
1994 1993
Promissory note, interest payable monthly at
prime, subject to a ceiling of 8.5%, principal
due in 1997, unsecured $ 2,500,000 $ 2,500,000
Promissory note, interest payable monthly at
prime, subject to a ceiling of 8.4% through May
1997, principal due in quarterly installments of
$ 97,500 through 2002, unsecured 2,925,000 3,315,000
5,425,000 5,815,000
Less current maturities 390,000 390,000
$ 5,035,000 $ 5,425,000
Among other things, CTT's long-term debt agreements include various financial
covenants related to the maintenance of certain net worth and debt to net worth
ratios. At December 31,1994, restricted net assets of CTT are $ 25,000,000 or
62.6% of consolidated net assets. Under the most restrictive covenants of the
debt agreements, $ 14,828,386 of the consolidated
retained earnings is available for payment of cash dividends in 1995.
The aggregate amount of maturities for each of the five years subsequent to
December 31, 1994 are as follows:
1995 $ 390,000
1996 390,000
1997 2,890,000
1998 390,000
1999 390,000
The prime interest rate on the promissory notes and line of credit was 8.5%
and 6% at December 31, 1994 and 1993 respectively.
The Company recorded expense of $ 226,996 in 1992 for the early retirement of
debt which consists of redemption premiums paid to the holders of the first
mortgage bonds and promissory notes and the write-off of deferred debt expense
associated with the retired debt.
CONESTOGA ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7
MINORITY INTEREST
Effective September 1, 1992, CTT redeemed and retired all the shares of
outstanding preferred stock at par value. The preferred stock of CTT was not
owned by CEI and, accordingly, had been classified as minority interest. The
minority interest expense of $ 67,054 for 1992 relates
to dividends paid to the owners of the aforementioned preferred stock by CTT.
8
COMMON STOCK
CTT has a Stock Purchase Plan for all employees who meet minimum eligibility
requirements which provides for the issuance and sale of CEI common stock.
The Plan is being implemented by a series of offerings. Under the third
offering of the Plan, participating employees of CTT authorized deductions for
a period of two years ended October 31, 1992.
There were no shares issued under the third offering in 1992. Under the fourth
offering of the Plan, participating employees of CTT authorized deductions for
a period of two years ended December 31, 1994. As of December 31, 1994, the
Company issued 5,473 shares under the fourth offering of the Plan. A maximum
of 146,237 shares are authorized for subscription under subsequent offerings.
On October 26, 1994, the Company declared a 5% common stock dividend, effective
February 28, 1995, to stockholders of record on January 31, 1995. Average
shares outstanding and all per share amounts have been restated to give
retroactive effect to the stock dividend.
9
DIVIDEND REINVESTMENT PLAN
Effective January 18, 1993, the Company instituted a Stock Reinvestment Plan
for all shareholders who wish to participate. Participants' dividends will be
used to purchase shares on the open market. A participant's purchase price per
share will be the average market price per share for all shares purchased
under the Plan for each dividend period.
CONESTOGA ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10
INCOME TAX MATTERS
Effective January 1, 1993, the Company adopted FASB Statement No. 109,
Accounting for Income Taxes. The adoption of Statement 109 changes the
Company's method of accounting for income taxes from the deferred method to the
liability method. Under the deferred method, the Company deferred the past
tax effects of timing differences between financial reporting and
taxable income. As explained in Note 1, the liability method requires the
recognition of deferred tax assets and liabilities for the expected future tax
consequences of temporary differences between the reported amounts of assets
and liabilities and their tax basis.
In accordance with normalization provisions of current tax law and regulatory
orders, the effect of adoption of Statement 109 on deferred taxes relating to
depreciation are amortized over the remaining life of the plant that gave rise
to the deferred taxes.
Net deferred tax liabilities consist of the following components as of
December 31, 1994 and 1993:
1994 1993
Deferred tax liabilities:
Plant, in service $ 6,664,880 $ 6,515,771
Prepaid pension costs 399,939 389,793
Investments 131,380 72,122
7,196,199 6,977,686
Deferred tax assets 372,717 244,352
$ 6,823,482 $ 6,733,334
CONESTOGA ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10
INCOME TAX MATTERS (CONTINUED)
The provision for income taxes for the years ended December 31, 1994, 1993 and
1992 was as follows:
1994 1993 1992
Current:
Federal $ 3,129,698 $ 3,050,411 $ 3,033,997
State 1,262,662 1,261,829 1,239,632
4,392,360 4,312,240 4,273,629
Deferred:
Federal 23,312 (77,146) 288,060
State 9,131 (31,711) 118,157
32,443 (108,857) 406,217
$4,424,803 $4,203,383 $4,679,846
The income tax provision differs from the amount of income tax determined by
applying the federal income tax rate to pretax income for the years ended
December 31, 1994, 1993 and 1992 due to the following:
1994 1993 1992
Normal statutory federal income
tax rate 34.0% 34.0% 34.0%
Increase resulting from:
State income tax, net of federal
tax benefit 8.0 8.1 8.1
Other (0.7) (1.4) -
41.3% 40.7% 42.1%
CONESTOGA ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
11
DEFINED BENEFIT PENSION PLANS
CTT has two qualified pension plans covering its union and salaried employees.
The plans provide benefits based on years of service and employee compensation.
CTT's funding policy is to make contributions in compliance with applicable
regulations.
The components of the pension cost charged (credited) to expense for 1994,
1993 and 1992 consisted of the following:
1994 1993 1992
Service cost (benefits earned) $ 317,134 $ 263,284 $ 215,416
Interest cost on projected
benefit obligation 568,597 492,966 407,634
Actual return on plan assets 78,407 (576,322) (385,943)
Net amortization and deferral (777,411) (99,657) (273,990)
Total expense $ 186,727 $ 80,271 $ (36,883)
Assumptions used in the determination of pension plan information for 1994,
1993 and 1992 consisted of the following:
1994 1993 1992
Discount rate 8.0% 7.0% 7.5%
Rate of increase in compensation
levels 5.0 5.0 5.0
Expected long-term rate of return
on plan assets 8.5 9.0 9.0
CONESTOGA ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
11
DEFINED BENEFIT PENSION PLANS (CONTINUED)
The following table sets forth the plans' funded status as of December 31, 1994
and 1993 and the amount recognized in the accompanying consolidated balance
sheets:
1994 1993
Actuarial present value of benefit obligations:
Vested benefits $ 5,267,417 $ 5,308,237
Accumulated benefits $ 5,282,191 $ 5,326,935
Projected benefits $ (7,653,847) $ (8,209,982)
Plan assets at fair value, primarily U.S.
Government securities, corporate bonds and
common stocks 7,951,129 7,911,880
Plan assets in excess of (less than) projected
benefit obligation 297,282 (298,102)
Unrecognized net loss 1,098,883 1,596,564
Unrecognized net (asset) (547,906) (588,879)
Unrecognized prior service cost 248,472 262,508
Prepaid pension cost $ 1,096,731 $ 972,091
CONESTOGA ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
12
SAVINGS AND INVESTMENT PLAN AND 401(k) PLAN
CTT has a savings and investment plan whereby participants may contribute two
percent to ten percent of their salaries. CTT contributes an additional amount
equal to a percentage (from twenty-five percent to one-hundred percent, as
announced each year) of the participants'contributions up to six percent.
The Plan covers substantially all nonunion employees.
CTT contributed $ 96,144, $ 93,425 and $ 84,542 to the Plan for 1994, 1993
and 1992 respectively.
CTT has a 401(k) Plan for its union employees. Participants may contribute one
percent to eight percent of their wages. CTT currently contributes fifty
percent of the participants'contributions. CTT contributed $ 91,161,
$ 77,109 and $ 67,317 to the Plan during 1994, 1993 and 1992 respectively.
13
DEFERRED COMPENSATION PLAN
CTT has entered into deferred compensation agreements with two executives
which provide benefits payable to them upon retirement from CTT. The estimated
liabilities under the agreements are being accrued over the expected remaining
years of employment.
14
POSTRETIREMENT BENEFIT PLAN
CTT sponsors a postretirement health care plan for salaried employees and their
spouses. The plan is contributory, with retirees contributing 50% of the
premiums. The plan is unfunded. Effective January 1, 1993, the Company
adopted Financial Accounting Standards Board Statement No. 106 to account for
its share of the costs of the benefits under the plan. Under that
Statement, the Company's share of the estimated costs that will be paid after
retirement is generally being accrued by charges to expense over the employees'
active service periods to the dates they are fully eligible for benefits,
except that the Company's unfunded cost that existed at January 1, 1993 is
being accrued primarily in a straight-line manner that will result in
its full accrual by December 31, 2012. Prior to 1993, the Company expensed its
share of costs as they were paid.
CONESTOGA ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
14
POSTRETIREMENT BENEFIT PLAN (CONTINUED)
The components of the net periodic post-retirement benefit cost charged to
expense for 1994 and 1993 consisted of the following:
1994 1993
Service cost $ 41,903 $ 31,951
Interest cost on projected benefit obligation 92,350 83,208
Amortization of transition obligation 56,267 56,267
Total expense $ 190,520 $ 171,426
Postretirement benefit cost recognized in 1992 under the Company's prior
accounting policy was $ 20,246.
The following sets forth the plans' funded status reconciled with the amount
recognized in the Company's consolidated balance sheets as of December 31,
1994 and 1993:
1994 1993
Actuarial present value of accumulated
postretirement benefit obligations:
Retirees $ (437,030) $ (406,187)
Fully eligible active employees (343,172) (414,796)
Other active members (427,341) (525,655)
(1,207,543) (1,346,638)
Unrecognized transition obligation 1,012,796 1,069,063
Unrecognized net (gain) loss (107,500) 131,685
Obligation included on balance sheets $ (302,247) $ (145,890)
CONESTOGA ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
14
POSTRETIREMENT BENEFIT PLAN (CONTINUED)
Assumptions used by the Company in the determination of postretirement benefit
plan information consisted of the following:
1994 1993
Projected health care cost trend rate 10.5% 11.5%
Ultimate trend rate 6.0 5.5
Year ultimate trend rate is achieved 2000 2000
Discount rate 8.0% 7.0%
Increasing the assumed health care cost trend rates by one percentage point in
each year will increase the accumulated postretirement benefit obligation as
of December 31, 1994 and 1993 by $ 165,268 and $ 187,470 and the aggregate
service and interest cost components of net periodic
postretirement benefit cost for 1994 and 1993 by $ 22,288 and $ 20,877
respectively.
15
COMMITMENTS
At December 31, 1994, the Company had commitments for the purchase of
equipment and materials approximating $ 670,000.
16
INDEPENDENT DEPRECIATION STUDY
Effective January 1, 1993, the estimated useful lives of certain telephone
plant-in-service were changed as a result of an independent depreciation study.
The effect of this change in estimate for 1994 and 1993 was to increase
depreciation expense by $ 476,316 and $ 430,356 and decrease net income
by $ 276,676 ($ .07 per common share) and $ 249,391 ($ .06 per
common share) respectively.
CONESTOGA ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
17
QUARTERLY DATA (UNAUDITED)
First Second Third Fourth
Year 1994
Operating revenues $ 7,818,072 $ 7,617,533 $ 7,404,827 $ 6,987,761
Operating income 3,081,476 2,681,691 2,734,284 2,153,316
Net income 1,736,238 1,628,286 1,579,322 1,350,137
Earnings per share 0.45 0.43 0.41 0.35
Year 1993
Operating revenues $ 7,118,804 $ 7,132,083 $ 6,954,792 $ 7,154,657
Operating income 2,946,787 2,076,178 2,390,776 2,781,010
Net income 1,718,725 1,199,712 1,447,317 1,770,059
Earnings per share 0.45 0.31 0.38 0.46
PART II
Item 8. Financial Statements and
Supplementary Data
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a)(1) Financial Statements:
The following consolidated financial statements of Conestoga Enterprises, Inc.
and subsidiaries are included in Part II, Item 8:
Opinion of Independent Certified Public Accountants
Consolidated balance sheets - December 31, 1994 and 1993
Consolidated statements of income - years ended December 31, 1994, 1993
and 1992
Consolidated statements of stockholders' equity - years ended December 31,
1994, 1993 and 1992
Consolidated statements of cash flows - years ended December 31, 1994, 1993
and 1992
Notes to consolidated financial statements
(a)(2) Financial Statement Schedules:
Schedule III - Separate Condensed Financial Statements of the Registrant
Schedule V - Property, plant and equipment
Schedule VI - Accumulated depreciation, depletion and amortization of property,
plant and equipment
Schedule X - Supplementary income statement information
All other schedules are omitted because they are not applicable, not required,
or because the required information is included in the financial statements or
notes thereto.
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Conestoga Enterprises, Inc.
Birdsboro, Pennsylvania
We have audited the accompanying consolidated balance sheets of Conestoga
Enterprises, Inc. and subsidiaries as of December 31, 1994 and 1993, and the
related consolidated statements of income, changes in stockholders' equity
and cash flows for each of the three years in the period ended December 31,
1994, and the supporting schedules listed in the Index at Item 14(a)(2).
These financial statements and the supporting schedules are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements and the supporting schedules 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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Conestoga
Enterprises, Inc. and subsidiaries as of December 31, 1994 and 1993, and the
results of their operations and their cash flows for each of the three years
in the period ended December 31, 1994, and the supporting schedules present
fairly the information required to be set forth therein in conformity with
generally accepted accounting principles.
As described in Note 1 to the consolidated financial statements, the Company
changed its method of accounting for investments in equity securities,
effective January 1, 1994.
BEARD & COMPANY, INC.
Reading, Pennsylvania
January 20, 1995
Schedule III
CONESTOGA ENTERPRISES, INC.
CONDENSED FINANCIAL STATEMENTS OF THE REGISTRANT (PARENT)
BALANCE SHEETS
December 31, 1994 1993
ASSETS
CURRENT ASSETS
Cash and cash equivalents $187,391 $200,276
Accounts receivable, due from subsidiaries
eliminated in consolidation 1,003,663 3,014,393
Total current assets 1,191,054 3,214,669
INVESTMENTS AND OTHER ASSETS 3,579,776 2,301,491
INVESTMENT IN WHOLLY-OWNED SUBSIDIARIES 35,286,400 32,277,883
$40,057,230 $37,794,043
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $17,494 $3,913
Accrued expenses - 68,890
Total current liabilities 17,494 72,803
DEFERRED INCOME TAXES 131,380 72,122
STOCKHOLDERS' EQUITY
Common stock 18,329,835 18,302,470
Additional paid-in capital 11,831,250 11,718,233
Common stock dividend distributable 4,733,909 -
Retained earnings 4,933,392 7,628,415
Net unrealized appreciation on securities
available for sale, net of tax of $ 57,705 79,970 -
39,908,356 37,649,118
$40,057,230 $37,794,043
See Notes to Condensed Financial Statements.
Schedule III
CONESTOGA ENTERPRISES, INC.
CONDENSED FINANCIAL STATEMENTS OF THE REGISTRANT (PARENT)
STATEMENTS OF INCOME
Years Ended December 31, 1994 1993 1992
Operating revenues $ - $ - $ -
Operating expenses:
Corporate operations 111,527 85,616 69,143
Taxes other than income 123,128 7,743 4,505
234,655 93,359 73,648
Other income, net:
Income from partnership interests 385,077 424,432 45,660
Other, net 203,709 177,848 109,243
588,786 602,280 154,903
Income before income taxes and
equity in net income of subsidiaries 354,131 508,921 81,255
Income taxes 128,261 157,071 23,047
Income before equity in net income
of subsidiaries 225,870 351,850 58,208
Equity in net income of
subsidiaries 6,068,113 5,783,963 6,314,869
Net income $6,293,983 $6,135,813 $6,373,077
See Notes to Condensed Financial Statements.
Schedule III
CONESTOGA ENTERPRISES, INC.
CONDENSED FINANCIAL STATEMENTS OF THE REGISTRANT (PARENT)
STATEMENTS OF STOCKHOLDERS' EQUITY
Three Years Ended December 31, 1994, 1993 and 1992
Net
Unrealized
Common Gain
Addt'l Stock (Loss) on
Common Paid-in Dividend Retained Investment
Stock Capital Distributable Earnings Securities Total
Bal,Dec 31,1991 18,302,470 11,718,233 - 3,502,055 - 33,522,758
Net income - - - 6,373,077 - 6,373,077
Cash div($1.09/sh) - - - (4,172,963) - (4,172,963)
Bal,Dec 31,1992 18,302,470 11,718,233 - 5,702,169 - 35,722,872
Net income - - - 6,135,813 - 6,135,813
Cash div($1.10/sh) - - - (4,209,567) - (4,209,567)
Bal,Dec 31,1993 18,302,470 11,718,233 - 7,628,415 - 37,649,118
Adjustment to
beginning balance
for change in
accounting method,
net of taxes - - - - 153,260 153,260
Net income - - - 6,293,983 - 6,293,983
Cash div($1.11/sh) - - - (4,246,172) - (4,246,172)
Issuance of stock
under employee
stock purch plan 27,365 113,017 - - - 140,382
5% stock dividend
distributable - - 4,733,909 (4,742,834) - (8,925)
Net change in
unrealized
appreciation
on investments
available for sale,
net of taxes - - - - (73,290) (73,290)
Bal,Dec 31,1994 18,329,835 11,831,250 4,733,909 4,933,392 79,970 39,908,356
See Notes to Condensed Financial Statements.
Schedule III
CONESTOGA ENTERPRISES, INC.
CONDENSED FINANCIAL STATEMENTS OF THE REGISTRANT (PARENT)
STATEMENTS OF CASH FLOWS
Years Ended December 31, 1994 1993 1992
CASH FLOWS FROM OPERATING ACTIVITIES
Income before equity in net income
of subsidiaries $225,870 $351,850 $58,208
Adjustments to reconcile income
before net income of subsidiaries
to net cash used in operating
activities:
Amortization 11,435 11,436 11,436
Income from partnership interests (385,077) (424,432) (45,660)
Change in assets and liabilities:
Decrease in accounts receivable and
other current assets 8,861 26,095 32,344
Increase (decrease) in:
Accrued expenses (68,890) 57,869 (84,649)
Deferred income taxes 1,553 (68,539) (27,710)
Accounts payable 4,656 3,913 -
Net cash used in operating
activities (201,592) (41,808) (56,031)
CASH FLOWS FROM INVESTING ACTIVITIES
Dividends received from subsidiaries 3,059,597 5,400,597 4,936,268
Purchase of investments (776,000) - (999,490)
Net capital distributions from
partnership interests 10,900 - 181,697
Investment in subsidiary - - (235,000)
Net change in advances to
subsidiaries 2,000,000 (1,232,000) (1,643,000)
Net cash provided by investing
activities 4,294,497 4,168,597 2,240,475
Schedule III
CONESTOGA ENTERPRISES, INC.
CONDENSED FINANCIAL STATEMENTS OF THE REGISTRANT (PARENT)
STATEMENTS OF CASH FLOWS (CONTINUED)
Years Ended December 31, 1994 1993 1992
CASH FLOWS USED IN FINANCING
ACTIVITIES
Proceeds from issuance of stock
under employee stock purchase plan $ 140,382 $ - $ -
Cash dividends paid (4,246,172) (4,209,567) (4,172,963)
(4,105,790) (4,209,567) (4,172,963)
Decrease in cash (12,885) (82,778) (1,988,519)
Cash:
Beginning 200,276 283,054 2,271,573
Ending $ 187,391 $ 200,276 $ 283,054
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION
Cash payments for income taxes $ 194,200 $ 350,041 $ 99,447
See Notes to Condensed Financial Statements.
Schedule V
CONESTOGA ENTERPRISES, INC.
PROPERTY, PLANT AND EQUIPMENT
December 31, 1994
Col. A Col. B Col. C Col. D Col. E Col. F
Bal. At Bal At
Begin. Additions End
Depr. of At Retire- Other Of
Classification Rates Period Cost Ments Chngs. Period
Regulated:
Land - % $ 210,824 $ 5,125 $ - $ - $ 215,949
Motor vehicles 7.5 1,262,625 119,863 91,516 - 1,290,972
Other work
equipment 6.1 453,700 60,198 742 - 513,156
Buildings 3.4 3,664,324 77,926 - - 3,742,250
Towers and
transmitters 10.0 187,551 119,400 - - 306,951
Furniture 4.6 280,147 16,529 - - 296,676
Office equip 8.6 146,806 26,756 - - 173,562
General purpose
computers 11.5 1,315,712 191,627 45,474 - 1,461,865
Embedd. items 12.5 92,893 - - - 92,893
Central office;
switching 7.0 20,310,779 2,038,961 87,853 - 22,261,887
transmission 6.0 3,970,253 284,337 1,263 - 4,253,327
Public telephone
equipment 5.6 238,431 4,411 3,505 - 239,337
Term equipment20.0 43,439 - - - 43,439
Poles 7.3 5,132,130 477,015 86,681 - 5,522,464
Aerial cable 6.4 22,351,472 1,834,169 343,772 - 23,841,869
U.G. cable 5.9 3,856,719 300,060 38,362 - 4,118,417
Buried cable 7.1 5,094,928 515,860 18,184 - 5,592,604
Aerial wire 15.0 147,982 - 16,587 - 131,395
Conduit syst. 2.3 5,141,532 99,526 - - 5,241,058
Organization - 100 - - - 100
$73,902,347 $6,171,763 $733,939 $- $79,340,171
Nonregulated:
Buildings 3.3% $ 112,527 $ - $ - $ - $ 112,527
Central office
equipment 15.1 274,762 213,167 - - 487,929
Station
apparatus 20.0 1,846,880 372,955 357,411 (67,036) 1,795,388
Private branch
exchanges 20.0 17,301 - - - 17,301
Furniture and
office equip 6.3 20,553 - - - 20,553
$2,272,023 $ 586,122 $ 357,411 $(67,036) $2,433,698
Plant under
Construction $1,323,271 $6,127,321 $6,948,377 $ - $ 502,215
Depreciation
The annual provisions for depreciation have been computed on the straight-line
method.
Schedule V
CONESTOGA ENTERPRISES, INC.
PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
December 31, 1993
Col. A Col. B Col. C Col. D Col. E Col. F
Bal. At Bal At
Begin Additions End
Depr Of At Retire- Other Of
Classification Rate Period Cost ments Chngs. Period
Regulated:
Land - % $ 205,824 $ 5,000 $ - $ - $ 210,824
Motor vehicles 7.5 1,268,134 111,408 116,917 - 1,262,625
Other work
equipment 6.1 417,676 40,742 4,718 - 453,700
Buildings 3.4 3,534,406 135,518 5,600 - 3,664,324
Towers and
transmitters 10.0 187,593 - 42 - 187,551
Furniture 4.6 278,913 6,399 5,165 - 280,147
Office equip 8.6 144,882 4,768 2,844 - 146,806
General purpose
computers 11.5 1,030,600 295,060 9,948 - 1,315,712
Embedd. items 12.5 92,893 - - - 92,893
Central office;
switching 7.0 19,531,281 1,269,643 500,757 10,612 20,310,779
transmission 5.1 3,838,054 164,039 21,228 (10,612) 3,970,253
Public telephone
equipment 5.6 225,686 13,427 682 - 238,431
Term equip 20.0 43,439 - - - 43,439
Poles 7.3 4,811,976 401,948 81,794 - 5,132,130
Aerial cable 6.4 21,009,395 1,708,943 366,866 - 22,351,472
U.G. cable 5.9 3,703,502 159,067 5,850 - 3,856,719
Buried cable 7.1 4,603,477 507,334 15,883 - 5,094,928
Aerial wire 15.0 165,486 - 17,504 - 147,982
Conduit sys 2.3 4,931,981 209,551 - - 5,141,532
Organization - 100 - - - 100
$70,025,298 $5,032,847 $1,155,798 $ - $73,902,347
Nonregulated:
Buildings 3.3% $ 112,527 $ - $ - $ - $ 112,527
Central office
equipment 15.1 274,762 - - - 274,762
Station
apparatus 20.0 1,771,990 357,604 282,714 - 1,846,880
Private branch
exchanges 20.0 17,301 - - - 17,301
Furniture and
office equip 6.3 37,624 1,018 18,089 - 20,553
$ 2,214,204 $ 358,622 $ 300,803 $ - $2,272,023
Plant under
construction $ 1,059,333 $5,983,991 $5,720,053 $ - $1,323,271
Depreciation
The annual provisions for depreciation have been computed on the straight-line
method.
Schedule V
CONESTOGA ENTERPRISES, INC.
PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
December 31, 1992
Col. A Col. B Col. C Col. D Col. E Col. F
Bal At Bal At
Begin Additions End
Depr. Of At Retire- Other Of
Classification Rate Period Cost Ments Chngs. Period
Regulated:
Land - % $ 165,824 $ 40,000 $ - $ - $ 205,824
Motor vehicles 10.8 1,277,108 82,857 91,831 - 1,268,134
Other work
equipment 6.7 375,176 42,500 - - 417,676
Buildings 3.2 3,270,615 277,419 13,628 - 3,534,406
Towers and
transmitters 10.0 - 187,593 - - 187,593
Furniture 5.6 272,657 6,256 - - 278,913
Office equip 9.7 140,697 4,968 783 - 144,882
General purpose
computers 14.3 1,031,132 30,447 30,979 - 1,030,600
Embedded items 12.5 92,893 - - - 92,893
Central office,
switching 5.9 18,396,351 1,543,102 408,172 - 19,531,281
Central office,
transmission 9.0 3,544,913 302,389 9,248 - 3,838,054
Public telephone
equipment 10.0 226,491 - 805 - 225,686
Terminal equip 20.0 - 43,439 - - 43,439
Poles 5.7 4,504,485 369,107 61,616 - 4,811,976
Aerial cable 6.0 19,593,633 1,732,140 316,378 - 21,009,395
Underground
cable 3.6 3,593,355 128,250 18,103 - 3,703,502
Buried cable 4.2 4,198,072 414,020 8,615 - 4,603,477
Aerial wire 15.0 178,132 - 12,646 - 165,486
Conduit systems 2.3 4,818,860 118,121 5,000 - 4,931,981
Organization - 100 - - - 100
$65,680,494$5,322,608 $977,804 $- $70,025,298
Nonregulated:
Buildings 3.3% $112,527 $- $- $- $112,527
Central office
equipment 15.1 224,826 49,936 - - 274,762
Station
apparatus 20.0 1,665,504 298,739 192,253 - 1,771,990
Private branch
exchanges 20.0 64,125 - 46,824 - 17,301
Furniture and
office equip 6.3 82,463 1,559 46,398 - 37,624
$2,149,445 $350,234 $285,475 $- $2,214,204
Plant under
construction 831,424 5,364,643 5,136,734 - 1,059,333
Depreciation
The annual provisions for depreciation have been computed on the straight-line
method.
Schedule VI
CONESTOGA ENTERPRISES, INC.
ACCUMULATED DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT
December 31, 1994
Col. A Col. B Col. C Col. D
Additions Deductions
Beginning at Charged to Retirements
Beginning Charged to Other Renewals
Classification of Period Income Accounts(1) Replacements Other(2)
Regulated:
Motor vehicles $785,977 $95,759 $10,300 $91,516 $-
Other work equip 211,524 29,489 100 742 -
Buildings 1,390,460 125,673 - - -
Towers and
transmitters 28,135 24,725 - - -
Furniture 143,167 13,267 - - -
Office equipment 75,145 13,763 - - -
General purpose
computers 587,862 159,711 100 45,474 -
Embedded items 76,659 4,059 - - -
Central office,
switching 7,245,694 1,490,043 87,853 87,853 -
Central office,
transmission 2,666,840 247,310 - 1,263 -
Public telephone
equipment 182,144 13,378 - 3,505 -
Terminal equipment 13,031 8,688 - - -
Poles 2,116,256 388,892 15,908 86,681 44,970
Aerial cable 10,704,677 1,468,689 23,695 343,772 68,700
Underground cable 1,498,172 236,214 13,374 38,362 11,177
Buried cable 1,614,046 378,077 1,120 18,184 961
Aerial wire 147,347 634 - 16,587 -
Conduit systems 1,590,902 119,400 - - -
$31,078,038 $4,817,771 $152,450 $733,939 $125,808
Nonregulated:
Buildings 28,741 3,713 - - -
Central office
equipment 175,416 58,653 - - -
Station apparatus 1,199,621 314,256 44,487 357,410 -
Private branch
exchanges 17,301 - - - -
Furniture and
office equipment 8,933 1,304 - - -
$1,430,012 $377,926 $44,487 $357,410 $ -
(1) All amounts in this column represent salvage recovered from plant
retired.
(2) All amounts in this column represent cost of removal charges for plant
retired.
Col. E Col. F
Other Balance at
Changes End of Period
$ - $ 800,520
- 240,371
- 1,516,133
- 52,860
- 156,434
- 88,908
- 702,199
- 80,718
- 8,735,737
- 2,912,887
- 192,017
- 21,719
- 2,389,405
- 11,784,589
- 1,698,221
- 1,974,098
- 131,394
- 1,710,302
$ - $35,188,512
$ - $32,454
- 234,069
(6,704) 1,194,250
- 17,301
- 10,237
$(6,704) $1,488,311
Schedule VI
CONESTOGA ENTERPRISES, INC.
ACCUMULATED DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
December 31, 1993
Col. A Col. B Col. C Col. D
Classification Additions Deductions
Beginning at Charged to Retirements
Beginning Charged To Other Renewals
of Period Income Accounts(1) Replacements Other(2)
Regulated:
Motor vehicles $ 801,336 $ 94,903 $ 6,655 $116,917 $ -
Other work equip 189,665 26,577 - 4,718 -
Buildings 1,278,604 122,140 - 5,600 4,684
Towers and
transmitters 9,378 18,757 - - -
Furniture 135,474 12,858 - 5,165 -
Office equipment 65,467 12,522 - 2,844 -
General purpose
computers 462,708 134,913 189 9,948 -
Embedded items 72,600 4,059 - - -
Central office;
switching 5,947,258 1,394,844 400,000 500,757 2,289
transmission 2,492,873 198,795 4,860 21,228 1,822
Public telephone
equipment 169,781 12,995 50 682 -
Terminal equipment 4,343 8,688 - - -
Poles 1,848,297 363,179 29,305 81,794 42,731
Aerial cable 9,754,575 1,379,113 14,959 366,866 77,104
Underground cable 1,281,418 223,836 - 5,850 1,232
Buried cable 1,287,268 342,963 566 15,883 868
Aerial wire 165,487 - - 17,504 636
Conduit systems 1,475,057 115,845 - - -
$27,441,589 $4,466,987 $456,584 $1,155,756 $131,366
Nonregulated:
Buildings $ 25,028 $ 3,713 $ - $ - $ -
Central office
equipment 132,857 42,559 - - -
Station apparatus 1,075,823 360,442 46,070 282,714 -
Private branch
exchanges 17,301 - - - -
Furniture and office
equipment 25,180 1,842 - 18,089 -
$ 1,276,189 $ 408,556 $ 46,070 $ 300,803 $ -
(1) All amounts in this column represent salvage recovered from plant
retired.
(2) All amounts in this column represent cost of removal charges for plant
retired.
Col. E Col. F
Other Balance At
Changes End Of
Balance At Period
$- $ 785,977
- 211,524
- 1,390,460
- 28,135
- 143,167
- 75,145
- 587,862
- 76,659
6,638 7,245,694
(6,638) 2,666,840
- 182,144
- 13,031
- 2,116,256
- 10,704,677
- 1,498,172
- 1,614,046
- 147,347
- 1,590,902
$- $31,078,038
$- $ 28,741
- 175,416
- 1,199,621
- 17,301
- 8,933
$- $1,430,012
Schedule VI
CONESTOGA ENTERPRISES, INC.
ACCUMULATED DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
December 31, 1992
Col. A Col. B Col. C Col. D
Classification Additions Deductions
Balance At Charged To Retirements
Beginning Charged To Other Renewals
Of Period Income Accounts(1) Replacements Other(2)
Regulated:
Motor vehicles $ 715,161 $ 137,444 $ 40,562 $ 91,831 $ -
Other work equip 163,105 26,560 - - -
Buildings 1,186,351 108,881 - 13,628 3,000
Towers and
transmitters - 9,378 - - -
Furniture 120,030 15,444 - - -
Office equipment 52,301 13,949 - 783 -
General purpose
computers 346,273 147,414 - 30,979 -
Embedded items 68,541 4,059 - - -
Central office,
switching 5,241,565 1,118,865 - 408,172 5,000
Central office,
transmission 2,221,062 279,192 2,567 9,248 700
Public telephone
equipment 147,977 22,609 - 805 -
Terminal equipment - 4,343 - - -
Poles 1,645,202 265,690 33,212 61,616 34,191
Aerial cable 8,862,835 1,217,911 56,536 316,378 66,329
Underground cable 1,178,239 131,343 - 18,103 10,061
Buried cable 1,111,643 184,833 680 8,615 1,273
Aerial wire 177,233 2,284 - 12,646 1,384
Conduit systems 1,363,063 112,136 4,929 5,000 71
$24,600,581 $3,802,335 $138,486 $977,804 $122,009
Nonregulated:
Buildings $21,315 $3,713 $ - $ - $ -
Central office
equipment 94,603 38,254 - - -
Station apparatus 867,415 336,658 64,003 192,253 -
Private branch
exchanges 14,444 49,681 - 46,824 -
Furniture and office
equipment 30,360 41,218 - 46,398 -
$1,028,137 $469,524 $64,003 $285,475 $ -
(1) All amounts in this column represent salvage recovered from plant retired.
(2) All amounts in this column represent cost of removal charges for plant
retired.
Col. E Col. F
Other Balance At
Changes End of Period
$ - $801,336
- 189,665
- 1,278,604
- 9,378
- 135,474
- 65,467
- 462,708
- 72,600
- 5,947,258
- 2,492,873
- 169,781
- 4,343
- 1,848,297
- 9,754,575
- 1,281,418
- 1,287,268
- 165,487
- 1,475,057
$ - $27,441,589
$ - $25,028
- 132,857
- 1,075,823
- 17,301
- 25,180
$ - $1,276,189
Schedule X
CONESTOGA ENTERPRISES, INC.
SUPPLEMENTARY INCOME STATEMENT INFORMATION
Col. A Col. B
Charged To Costs and Expenses
Years Ended December 31,
Item 1994 1993 1992
Maintenance and repairs $2,988,336 $3,318,203 $2,390,391
Amortization of intangible
assets (A) (A) (A)
Taxes, other than payroll
and income taxes:
State capital stock 676,354 538,318 553,116
State gross receipts 532,387 543,551 561,651
Royalties (A) (A) (A)
Advertising costs (A) (A) (A)
(A) Amounts are not presented as such amounts are none or are less than 1% of
revenues.
<TABLE> <S> <C>
<ARTICLE> UT
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 44,653,874
<OTHER-PROPERTY-AND-INVEST> 4,523,296
<TOTAL-CURRENT-ASSETS> 5,467,403
<TOTAL-DEFERRED-CHARGES> 0
<OTHER-ASSETS> 1,154,543
<TOTAL-ASSETS> 55,799,116
<COMMON> 18,329,835
<CAPITAL-SURPLUS-PAID-IN> 950,049
<RETAINED-EARNINGS> 20,628,472
<TOTAL-COMMON-STOCKHOLDERS-EQ> 39,908,356
0
0
<LONG-TERM-DEBT-NET> 5,035,000
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 390,000
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 10,465,760
<TOT-CAPITALIZATION-AND-LIAB> 55,799,116
<GROSS-OPERATING-REVENUE> 29,828,193
<INCOME-TAX-EXPENSE> 4,424,803
<OTHER-OPERATING-EXPENSES> 0
<TOTAL-OPERATING-EXPENSES> 19,177,426
<OPERATING-INCOME-LOSS> 10,650,767
<OTHER-INCOME-NET> 490,125
<INCOME-BEFORE-INTEREST-EXPEN> 11,140,892
<TOTAL-INTEREST-EXPENSE> 422,106
<NET-INCOME> 6,293,983
0
<EARNINGS-AVAILABLE-FOR-COMM> 6,293,983
<COMMON-STOCK-DIVIDENDS> 4,246,172
<TOTAL-INTEREST-ON-BONDS> 422,106
<CASH-FLOW-OPERATIONS> 11,037,916
<EPS-PRIMARY> 1.64
<EPS-DILUTED> 1.64
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