FORM 10-Q QUARTERLY REPORT UNDER SECTION 13
OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
For quarter Ended March 31, 1995 Commission File Number 33-30715
CONESTOGA ENTERPRISES, INC.
(Exact name of Registrant as specified in its charter)
PENNSYLVANIA 23-2565087
(State of Incorporation) (IRS Employer Number)
202 East First Street, Birdsboro, Pennsylvania 19508
(Address of Principal executive offices)
Registrant's telephone number, including area code (610) 582-8711
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_______
As of March 31, 1995 the number of shares of Common Stock, par value $5.00
outstanding was 3,848,922
CONESTOGA ENTERPRISES, INC.
CONSOLIDATED BALANCE SHEETS ( UNAUDITED )
March 31, 1995, March 31, 1994 and December 31, 1994
ASSETS
3/31 3/31 12/31
1995 1994 1994
Current Assets
Cash and Cash Equivalents $1,930,950 $1,211,312 $907,050
Accounts receivable, including unbilled
revenue 3,368,953 3,698,725 3,602,102
*Material and Supplies, at average cost 536,559 454,206 596,716
Prepaid expenses 44,587 49,965 361,535
Total Current Assets 5,881,049 5,414,208 5,467,403
Investments and Other Assets
Investments in equity securities 1,982,077 1,727,830 1,913,165
Investments in partnerships 1,658,281 1,290,566 1,664,744
Nonregulated property and equipment, 912,729 810,992 945,387
Prepaid Pension Costs 1,196,430 971,297 1,096,731
Other 70,448 129,438 57,812
5,819,965 4,930,123 5,677,839
Plant, at Cost
In Service 79,998,070 74,885,118 79,340,171
Under Construction 591,268 1,211,071 502,215
80,589,338 76,096,189 79,842,386
Less accumulated depreciation 36,315,811 32,146,208 35,188,512
Net plant in service 44,273,527 43,949,981 44,653,874
$55,974,541 $54,294,312 $55,799,116
*Material and supplies are used to provide service
CONESTOGA ENTERPRISES, INC.
LIABILITIES AND STOCKHOLDERS' EQUITY
3/31 3/31 12/31
1995 1994 1994
Current Liabilities
Current maturities of long term debt $390,000 $390,000 $390,000
Accounts payable 1,273,885 1,354,950 1,868,367
Accrued:
Taxes 174,292 780,918 2,768
Payroll & Vacation Pay 467,162 408,462 392,745
Advance billings / Customer Deposits 1,201,393 615,558 910,893
Total Current Liabilities 3,506,732 3,549,888 3,564,773
Long Term Liabilities
Long Term Debt, less Current Maturities 4,937,500 5,327,500 5,035,000
Accumulated Post Retirement Cost 338,351 186,521 302,247
Other 171,228 147,404 165,258
5,447,079 5,661,425 5,502,505
Deferred Income Taxes 6,785,541 6,722,580 6,823,482
Stockholders' Equity:
Common stock, par value $5 per
share; authorized 10,000,000 shares;
issued and outstanding;
3/31/95 3/31/94 12/31/94
3,848,922 3,660,494 3,665,967 19,244,610 18,302,470 18,329,835
Additional Paid-In Capital 4,769,183 837,032 950,049
Common stock dividend payable 0 0 4,733,909
Retained earnings 16,100,014 19,220,917 15,814,593
Net unrealized appreciation on marketable
equity securities, net of tax 121,382 0 79,970
Total Capital 40,235,189 38,360,419 39,908,356
$55,974,541 $54,294,312 $55,799,116
Note - Long-term debt consisted of the
following at March 31, 1995, March 31, 1994 and December 31, 1994
10 year term note at prime rate due 1997 2,500,000 2,500,000 2,500,000
10 year term note at prime rate due 2002 2,827,500 3,217,500 2,925,000
$5,327,500 $5,717,500 $5,425,000
Less current Maturities 390,000 390,000 390,000
$4,937,500 $5,327,500 $5,035,000
CONESTOGA ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 1995 and 1994
1995 1994
Operating Revenues:
Local Network Service $1,373,317 $1,496,366
Network Access 2,357,975 2,391,206
Long Dist. Network Svc. 2,532,549 2,861,150
Nonreg. Sales & Lease 809,901 826,710
Miscellaneous 248,588 236,885
7,322,330 7,812,317
less uncollectible
operating revenues (14,636) (5,755)
7,336,966 7,818,072
Operating Expenses:
Plant Specific 720,882 665,998
Plant Non-Specific:
Network & Other 320,963 313,065
Depreciation 1,249,576 1,177,185
Customer Operations 1,086,578 1,134,958
Corporate Operations 528,867 456,246
Nonreg. Sales & Lease 595,451 663,436
Operating taxes, other 319,794 325,708
4,822,111 4,736,596
Operating Income 2,514,855 3,081,476
Other (Income)Deductions, Net:
Interest Expense 115,664 86,583
Income from Partnerships (30,338) 0
Other, Net 7,191 (37,671)
92,517 48,912
Income Before Income Taxes 2,422,338 3,032,564
Income Taxes 982,766 1,296,326
Net Income 1,439,572 1,736,238
*Earnings per common share $0.37 $0.45
*Dividends per common share $0.30 $0.266
* Adjusted to reflect 5% stock dividend Paid February 28, 1995
CONESTOGA ENTERPRISES, INC.
Consolidated Statement of Cash Flow (Unaudited)
THREE MONTHS ENDED MARCH 31, 1995 AND 1994
1995 1994
Cash Flows from Operating Activities:
Net Income $1,439,572 $1,736,238
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation & Amortization $1,248,278 $1,176,076
Changes in assets and liabilities:
Accounts Receivable $233,150 ($179,197)
Inventories $60,157 ($57,767)
Other Current Assets and Prep $391,541 $33,561
Accounts Payable ($594,482) ($208,892)
Other accrued Expenses $364,917 $91,864
Income Taxes Payable ($2,768) $529,863
Deferred Taxes ($37,941) ($10,754)
Net Deferred Charges/Credits $29,437 $1,692,289 ($30,137) $1,344,617
Net Cash Provided by
Operating Activities $3,131,861 $3,080,855
Cash Flows From Investing Activities:
Capital Expenditures ($867,932) ($978,476)
Increase in Investments $11,620 ($697,320)
Net Cash Used in
Investing Activities ($856,312) ($1,675,796)
Cash Flows From Financing Activities:
Proceeds From Issuance of Common Stock:
Dividend Reinvestment $0 $0
Employee Stock Purc Prg. $0 $0
Proceeds from Notes Pay.(cr ln) $0 $0
Proceeds from Long Term Debt $0 $0
Refinancing of Long Term Debt $0 $0
Principal Pay. Long Term Debt ($97,500) ($97,500)
Dividends Paid ($1,154,150) ($1,024,938)
Net Cash Provided
By Financing Activities ($1,251,650) ($1,122,438)
Net Increase in Cash & Cash Equivalents $1,023,899 $282,621
Cash & Cash Equivalents at Beg. Of Year $907,051 $928,691
Cash & Cash Equivalents at MARCH 31 $1,930,950 $1,211,312
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash Payments for:
Interest $128,759 $86,487
Income Taxes $245,950 $543,666
CONESTOGA ENTERPRISES, INC.
The information shown in this interim report is unaudited for March 31, 1995 and
March 31, 1994. However, the information reflects all normal recurring
adjustments which are, in the opinion of management, necessary to a fair
statement of results for the interim periods.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE QUARTERLY INCOME STATEMENTS
On December 31, 1989, a Plan of Merger became effective, resulting in Conestoga
Enterprises, Inc.(CEI) becoming the parent company of The Conestoga Telephone
and Telegraph Company(CTT). The merger was accounted for as a pooling of
interests. The net operating profits of CTT for the first quarter of 1995 and
1994 were $1,286,251 and $1,639,235 respectively.
On January 1, 1991, CEI accepted assignment of CTT interests in its joint
ventures to offer cellular telephone service. CTT had two such interests,
(1) Berks Reading Area Cellular Enterprises (BRACE), and (2) Lancaster Area
Cellular Enterprises (LACE). The interests were transferred as a non cash
dividend.
On January 1, 1991, CTT transferred 100% ownership of its subsidiary, Northern
Communications, Inc.(NCI) to the parent company CEI. The transaction was
handled as a non cash dividend. The first quarter profits of NCI for 1995 and
1994 were $146,241 and $142,828 respectively.
On April 1, 1991, Conestoga Mobile Systems, Inc.(CMS) was formed as a new
subsidiary to provide pager services to the Central Pennsylvania area. The
acquisition of certain United Telephone Company of Pennsylvania paging stations
was completed and CMS began operations on May 29, 1992. The first quarter of
1995 and 1994 profits (loss) were $7,480 and ($48,796) respectively.
On August 1, 1992, CEI received from CTT its investment in deregulated pager
equipment and the associated depreciation reserve. The transaction was handled
as a non cash dividend.
On August 1, 1992, CEI transferred the pager equipment and associated
depreciation reserve to CMS. This transaction was recorded as additional paid
in capital to the subsidiary.
These transfers had no effect on the consolidated financial statements.
FINANCIAL CONDITIONS
The cash and cash equivalents for the first three months of the current year
increased $1,023,899, which is an increase over the previous year's first three
months primarily due to no additional investments in marketable equity
securities of other telecommunications companies, increases in accounts
receivables, and other prepaid expenses.
Capital expenditures are primarily provided by internally generated funds.
There was no outside short term borrowing outstanding on March 31, 1995.
RESULTS OF OPERATIONS
Net income for the first three months decreased 6.6% when compared with the
first three months of the previous year. The consolidated financial statements
(unaudited) for the period include profits (losses) from the company's
subsidiaries and joint ventures as follows:
CT&T Local Exchange Carrier $1,286,251
NCI Reseller of Long Dist. $146,241
CMS Paging Services $7,480
BRACE/LACE Cellular Svc. Partners $30,388 (LACE RESULTS ONLY)
OPERATING REVENUES
Operating Revenues for the first quarter of 1995 were $7,336,966, a decrease of
6.2% when compared with the first quarter of 1994. Operating Revenues for the
twelve month period ended March 31, 1995 were $29.3 million an increase of 9.8%
when compared with the previous twelve month period ended March 31, 1994.
When comparing the first quarter of 1995 with the first quarter of 1994, Local
Service Revenues decreased 8.2% due to the elimination of the touch tone line
charge during the second half of 1994 as a result of the settlement of the show
cause order with the Pennsylvania Public Utility Commission. Long Distance
Network Service Revenues decreased 11.4% due to an optional EAS plan
implemented during 1994 and due to high minutes of use recorded on the network
during the first quarter of 1994.
OPERATING EXPENSES
Operating Expenses for the first quarter of 1995 were $4,822,111, an increase of
1.8% when compared with the first quarter of 1994. Operating Expenses for the
twelve month period ended March 31, 1995 were $19.2 million an increase of 2.9%
when compared with the previous twelve month period ended Mach 31, 1994.
When comparing the first quarter of 1995 with the first quarter of 1994, Plant
Specific Operating Expenses increased 8.2% partially due to one time charges
for renovations. Depreciation Expense increased 6.2% Corporate Operations
Expense increased 15.9% partially due to consulting and legal fees incurred
during the current quarter.Nonregulated Sales & Lease Expenses decreased 10.3%.
OTHER (INCOME) DEDUCTIONS, NET
Interest on Funded Debt for the first three months of the current year increased
33.6%. This reflects the increase in the prime interest rate during 1995 when
compared with 1994. Income from partnerships reflects the recording of first
quarter results for Lancaster Area Cellular Enterprises, only and none recorded
for the previous year.
INCOME TAXES
Income Taxes for the first quarter of 1995 are $982,766, a decrease of 24.2%
when compared with the first quarter of 1994.
CONESTOGA ENTERPRISES, INC.
PART II. OTHER INFORMATION
Item 6 (b) EXHIBITS AND REPORTS ON FORM 8-K
No reports on Form 8-K have been filed during the quarter for which this
report is filed.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CONESTOGA ENTERPRISES, INC.
Date __05/11/95______ By_______John R Bentz______________
John R. Bentz
Executive Vice President
Date___05/11/95_______ By______Donald R Breitenstein_______
Donald R. Breitenstein
Controller
