CONESTOGA ENTERPRISES, INC.
CONSOLIDATED BALANCE SHEETS ( UNAUDITED )
March 31, 1997, March 31, 1996 and December 31, 1996
ASSETS
3/31 3/31 12/31
1997 1996 1996
Current Assets
Cash and Cash Equivalents $5,426,974 $1,352,444 $1,956,554
Accounts receivable, including
unbilled revenue 6,048,308 4,247,147 6,888,667
Inventories, at average cost 887,615 579,755 867,205
Prepaid expenses 122,215 102,244 206,351
Total Current Assets 12,485,112 6,281,590 9,918,777
Investments and Other Assets
Cost in Excess of Net Assets of
Business Acquired 38,096,101 0 38,337,140
Investments in partnerships 3,803,071 2,845,320 3,377,027
Investments in equity
securities 1,585,395 2,212,252 1,622,107
Prepaid Pension Costs 2,200,845 1,460,504 2,148,700
Other 343,583 649,592 1,513,920
46,028,995 7,167,668 46,998,894
Plant
In Service 123,596,870 86,865,781 123,137,474
Under Construction 1,094,737 1,194,502 557,293
124,691,607 88,060,283 123,694,767
Less accumulated depreciation 62,483,675 42,403,565 60,760,620
62,207,932 45,656,718 62,934,147
Total Assets $120,722,039 $59,105,976 $119,851,818
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CONESTOGA ENTERPRISES, INC.
CONSOLIDATED BALANCE SHEETS ( UNAUDITED )
March 31, 1997, March 31, 1996 and December 31, 1996
LIABILITIES AND STOCKHOLDERS' EQUITY
3/31 3/31 12/31
1997 1996 1996
Current Liabilities
Notes payable 0 0 0
Current maturities of long term
debt $1,081,000 $390,000 $831,000
Accounts payable 2,531,134 1,724,291 2,769,189
Accrued:
Taxes 548,122 529,157 0
Interest 97,190 0 0
Payroll & Vacation Pay 731,253 557,245 855,981
Advance billings/Customer Deposits 803,170 493,807 307,806
Total Current Liabilities 5,791,869 3,694,500 4,763,976
Long Term Liabilities
Long Term Debt, less Current
Maturities 27,323,000 4,547,500 27,218,000
Accrued Post Retirement Cost 634,960 484,717 596,742
Other 609,052 245,865 834,201
28,567,012 5,278,082 28,648,943
Deferred Income Taxes 10,159,177 7,122,170 10,185,015
Minority Interest 391,924 244,138 400,198
Convertible\Redeemable Preferred Stock
Par value $65 per share; authorized
900,000 shares; issues and
outstanding 196,618 shares 12,780,170 0 12,780,170
Common Stockholders' Equity
Common Stock par value $5 per share; authorized
10,000,000 shares; issued and outstanding;
3/31/97 3/31/96 12/31/96
4,568,500 3,848,922 4,568,500 22,842,500 19,244,610 22,842,500
Additional Paid-In Capital 20,420,005 4,769,183 20,420,005
Retained earnings 21,634,490 18,493,568 20,863,934
Net unrealized appreciation on
marketable equity securities 291,869 259,725 315,602
Less cost of treasury stock;
3/31/97 91,273 shares,
12/31/96 58,400 shares (2,156,977) 0 (1,368,525)
63,031,887 42,767,086 63,073,516
Total Liabilities and
Stockholders' Equity $120,722,039 $59,105,976 $119,851,818
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CONESTOGA ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 1997 and 1996
1997 *1996
Operating Revenues:
Local Service $2,224,015 $1,493,414
Access Service 5,743,404 3,761,375
Long Dist. Service 2,410,239 2,088,409
Nonreg. Sales & Lease 1,541,967 1,148,571
Miscellaneous 270,269 202,255
12,189,894 8,694,024
Operating Expenses:
Plant Operations 1,720,364 1,111,146
Depreciation and Amortization 2,246,332 1,328,872
Customer Operations 2,159,538 1,564,941
Corporate Operations 877,477 612,429
Nonreg. Sales & Lease 950,137 701,649
Taxes, other than income 474,276 343,259
8,428,124 5,662,296
Operating Income 3,761,770 3,031,728
Other Income(Deductions), Net:
Interest Expense (536,366) (110,459)
Income from unconsolidated partnerships intere 307,544 293,050
Other, Net 102,926 41,949
(125,896) 224,540
Income Before Income Taxes 3,635,874 3,256,268
Income Taxes 1,528,927 1,344,523
Income Before Minority Interest 2,106,947 1,911,745
Minority Interest in net loss of Subsidiary 8,274 9,229
Net Income $2,115,221 $1,920,974
Earnings per common share $0.43 $0.50
Dividends per common share $0.30 $0.30
CONESTOGA ENTERPRISES, INC.
Consolidated Statement of Cash Flow (Unaudited)
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
1997 1996
Cash Flows from Operating Activities
Net Income $2,115,221 $1,920,974
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and Amortization $2,389,704 $1,328,872
Income from unconsolidated partnership interes (307,544) (293,050)
Minority interest in loss of subsidiary (8,274) (9,229)
Changes in assets and liabilities:
(Increase) decrease in:
Accounts Receivable 840,359 (495,965)
Material and supplies (20,410) (2,969)
Prepaid expenses 84,136 302,027
Prepaid pension costs (52,145) (34,920)
Other Assets 743,322 62,181
Increase (decrease) in:
Accounts Payable (238,055) (258,398)
Accrued expenses and other current
liabilities 1,002,538 705,221
Other liabilities (186,931) 92,992
Deferred income taxes (25,838) (99,966)
4,220,862 1,296,796
Net cash provided by operating activities 6,336,083 3,217,770
Cash Flows From Investing Activities
Purchase of Plant, net of removal costs and
salvage (1,396,058) (882,140)
Purchase of Investments 0
Proceeds from surrender of Life Insurance
Policy 427,015 0
Capital investments in unconsolidated
partnershp interests (118,500) 0
Capital distributions from unconsolidated
partnershp interest 0 97,496
Acquisition of business, net of cash and
cash equivalents 0 0
Net cash used in investing activities (1,087,543) (784,644)
Cash Flows From Financing Activities
Proceeds from long-term borrowing 5,000,000 0 0
Principal payments on long term borrowing (4,645,000) (97,500)
Borrowing on line of credit 0 300,000
Principal payments on line of credit 0 (800,000)
Proceeds from issuance of stock under the
employee stock purchase plan 0 0
Common and preferred dividends paid (1,344,668) (1,154,677)
Purchase of common stock for the treasury (788,452) 0
Minority interest investment in subsidiary 0 0
Net cash provided by (used in) financing
activities (1,778,120) (1,752,177)
Increase (decrease) in cash and cash equivalents 3,470,420 680,949
Cash and cash equivalents
Beginning 1,956,554 671,495
Ending $5,426,974 $1,352,444
1997 1996
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash Payments for:
Interest $440,248 $109,600
Income Taxes $482,350 $180,456
CONESTOGA ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
NOTE 1: BASIS OF PRESENTATION
The financial information included herein is unaudited; however, such
information reflects all adjustments (consisting solely of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
statement of results for the interim periods.
The results of operations for the three month period ended March 31, 1997
are not necessarily indicative of the results to be expected for the full year.
NOTE 2: LONG TERM DEBT
Long-term debt is summarized as follows:
3/31/97 3/31/96 12/31/96
Promissory note, interest payable monthly
at prime, with a ceiling of 8.5%, principal
due in 1997, unsecured $0 $2,500,000 $0
Promissory note, interest payable monthly
at prime, with a ceiling of 8.4%, through
May, 1997, quarterly principal payments of
$97,500 through 2002, unsecured 0 2,437,500 0
Series A Senior Note interest payable
quarterly at 6.91%, annual principal
payments of $2,000,000 starting June 30,
1998 through June 30, 2000, unsecured 6,000,000 0 6,000,000
Series B Senior Note interest payable
quarterly at 7.59%, annual principal
payments of $1,454,545 starting June 30,
2001 through June 30, 2011, unsecured 16,000,000 0 16,000,000
Promissory note, interest payable June 1
and December 1, at 8.5%, annual principal
payments of $81,000 through 1997, final
payment of $1,323,000 on June 1, 1998,
unsecured 1,404,000 0 1,404,000
Promissory note, interest payable quarterly
at 6.89%. Quarterly principal payments of
$250,000 through February 1, 2002,
unsecured. 5,000,000 0 4,645,000
$28,404,000 $4,937,500 $28,049,000
Less current Maturities 1,081,000 390,000 831,000
$27,323,000 $4,547,500 $27,218,000
CONESTOGA ENTERPRISES, INC.
NOTE 3: ACQUISITION
On May 31, 1996, Conestoga Enterprises, Inc. (CEI) acquired all of the
outstanding shares of Buffalo Valley Telephone Company (BVT) an independent
local exchange carrier which provides both regulated and nonregulated
communication services in Central Pennsylvania. The consideration for the
stock included 196,618 shares of CEI $3.42 Series A Preferred Stock, 719,578
shares of CEI Common Stock, and approximately $25 million in cash.
The acquisition has been accounted for as a purchase and the results of
operation of BVT since the date of acquisition are included in the consolidated
financial statements. The excess of the purchase price over the book value
acquired of $38,964,613 is being amortized over 40 years using the straight
line method. The allocation of purchase price is in accordance with Statement
of Financial Accounting Standards No. 71 "Accounting for Certain Types of
Regulation." This practice differs from the requirements of Accounting
Principles Board Opinion No. 16 "Business Combinations" which requires
adjusting assets and liabilities to their fair values and which is applicable
for nonregulated entities.
NOTE 4: PENDING ACQUISITION
On February 13, 1997, the Company signed a letter of intent to acquire all
of the common stock of Infocore, Inc., a telecommunications company based in
King of Prussia, Pennsylvania. Under the terms of the agreement, the Company
will issue 200,000 shares of common stock to Infocore, Inc.'s shareholders in
exchange for all outstanding shares of Infocore, Inc. The transaction will be
accounted for by the purchase method, and effective May 1, 1997. Infocore
Inc.'s shareholders approved the merger on April 21, 1997.
NOTE 5: OTHER
Certain items of the March 31, 1996 consolidated financial statements have
been restated to conform to the March 31, 1997 financial statements. There
was no impact on net income.
Inventories, at average cost, are material and supplies used to provide
service.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE QUARTERLY INCOME STATEMENTS
Conestoga Enterprises, Inc. (CEI, or the Company) is a Pennsylvania
corporation that is doing business as a holding company which owns all of the
outstanding shares of the Conestoga Telephone and Telegraph Company (CTT),
Buffalo Valley Telephone Company (BVT), Northern Communications, Inc. (NCI),
Conestoga Mobile Systems Inc.,(CMS), and Conestoga Investment Company (CIC).
CEI has a 1 % general partnership interest in the Berks Reading Area Cellular
Enterprises Partnership (BRACE) and a 10% partnership interest in the Lancaster
Area Cellular Enterprises Partnership (LACE). It also has a 60% interest in
Conestoga Wireless Company (CWC), a limited liability company formed to
operate the new wireless service PCS. CWC was a successful bidder
CONESTOGA ENTERPRISES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE QUARTERLY INCOME STATEMENTS (continued)
in the FCC radio spectrum D,E, and F Block Auction. CWC plans to build and
operate PCS systems in four BTA's. CEI through CTT has an 11.85% limited
partnership interest in Penteledata Limited Partnerships I. 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
to do or exercise under such act. CIC owns 69% limited partnership interest
in BRACE.
On May 31, 1996, CEI acquired BVT in accordance with the terms and
provisions of an Agreement and Plan of Merger dated October 18, 1995, among
BVT, CEI and a CEI subsidiary, CB Merger Corporation. In the acquisition
transaction, BVT was merged into CB Merger Corporation, thus becoming a
subsidiary of CEI, and the name of CB Merger Corporation was changed to BVT.
CEI acquired all of the outstanding shares of BVT and paid or exchanged (i)
$65.00 in cash, (ii) one share of CEI $3.42 Series A Convertible Preferred
Stock, par value $65.00, or (iii) 2.4 shares of CEI common stock, for each
BVT share, as elected by the BVT shareholders. The total consideration
for the transaction was approximately $58,000,000. The holders of 43.8%
of BVT shares elected to receive cash, 22.3% elected CEI Preferred Stock and
33.9% elected CEI Common Stock. The acquisition was accounted for as a
purchase.
FINANCIAL CONDITION
The cash and cash equivalents for the first three months of the current year
increased $3,470,420, with substantial increases recorded from CTT and BVT.
The net cash provided by operating activities was $6.6 million for the first
quarter of 1997, compared with $3.2 million for the first quarter of 1996.
Capital expenditures are provided primarily by internally generated funds.
There was no outside short term borrowing required during the first quarter of
1997. The Company has available lines of credit with two regional banks
totaling $15.0 million at March 31, 1997. Management believes that except for
the build out of the PCS network, through CWC, the cash provided from
operations will be sufficient to fund those capital projects.
The building of the PCS infrastructure will require additional amounts of long
term debt and/or capital during the third or fourth quarter of 1997.
The cash part of the acquisition of BVT was financed through outside
financing as follows;
Series A Senior Note $6,000,000, maturing June 30, 2000 with fixed
interest rate at 6.91% to be paid quarterly in arrears,
amortized in three (3) equal annual principal payments beginning
at the end of year two (2).
Series B Senior Note $16,000,000, maturing June 30, 2011 with fixed
interest rate at 7.59% to be paid quarterly in arrears,
amortized in eleven (11) equal annual principal payments beginning
at the end of year five (5).
Cash on hand was used for the remaining cash requirement of $3,136,000.
CONESTOGA ENTERPRISES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE QUARTERLY INCOME STATEMENTS (continued)
The Senior Notes are unsecured and contain certain financial covenants with
which the Company must comply. These covenants include, among other things,
restrictions on certain types of investments, payment of dividends beyond
certain levels and limits upon additional debt that the Company and its
subsidiaries may incur. The Company is currently in compliance with all debt
covenants and expects to remain in compliance for the foreseeable future.
196,618 shares of CEI's $3.42 Series A Preferred stock and 719,578 of CEI
Common Stock were issued to BVT shareholders as part of the acquisition. The
preferred stock is convertible into common stock at any time and can be
redeemed by the holder after May 31, 1998. The redemption rate is $65 per
share. The preferred stock may also be called for redemption
by the Company after May 31, 2000. The Company believes that internally
generated cash flow, along with the existing lines of credit, will be adequate
to meet any cash requirements arising out of the redemption of the preferred
stock.
The debt (including CEI Convertible Preferred Stock ) to equity ratio as of
March 31, 1997 was 40% debt to 60% equity.
RESULTS OF OPERATIONS
Net income for the first three months of 1997, of $2,115,221, increased
10.1% when compared with the first three months of 1996. The consolidated
financial statements (unaudited ) for the period include results from the
Company and its subsidiaries as follows:
CEI Parent Company ($277,090)
CTT Local Exchange Carrier $1,710,724
BVT Local Exchange Carrier $76,675
NCI Reseller of Long Dist. Svc. $141,628
CMS Paging Services $2,470
CWC PCS Company ($12,410)
CIC Investment Company $473,223
OPERATING REVENUES
Operating revenues for the first three months of 1997 were $12,189,894, an
increase of 40.2% when compared with the first three months of 1996.
The increases in operating revenue for the first three months of 1997, are
primarily due to the merger of BVT, and are comprised of the following:
Increase/
(Decrease) %
Local Service $730,601 48.9%
Access Service $1,982,029 52.7%
Long Distance Ser $321,830 15.4%
Nonregulated Sale $393,396 34.3%
Miscellaneous (net of
uncollectibles) $68,014 33.6%
CONESTOGA ENTERPRISES, INC.
OPERATING REVENUES (continued)
Local Service revenues include regulated revenues from CTT, BVT and CMS.
CTT and CMS both recorded increases in local service revenues for the first
three months of 1997, and BVT added $624,000 in local service revenues.
Total access lines in service on March 31, 1997 were 73,197. CTT had
48,879 in service, CMS had 4,976, and BVT had 19,342. Total access lines
added during the first three months of 1997 were 931.
The record setting pace of access line growth during 1996 has continued for
both local exchange carriers (CTT & BVT) during the first quarter of 1997, and
is reflected in the local service revenue increase. Local service revenues
are also positively impacted by the increased demand for the custom calling
service features.
Access Service revenues from CTT continued to grow due to increased
interlata minutes of use on the network (15%). BVT added $1.8 million in
access service revenues during the first quarter of 1997.
Long Distance Service revenues include intralata toll revenues from CTT
and BVT, as well as the resale of long distance service from NCI. All three
entities recorded slight decreases during the first three months of 1997 when
compared with the first three months of 1996. BVT added $438,000 in long
distance service revenues.
Nonregulated Sales and Lease revenues include sale and lease of telephone
equipment and directory advertising from CTT and BVT, as well as sale and lease
of pager and cellular equipment from CMS. CTT's and CMS's nonregulated
revenues decreased during the first three months of 1997, but BVT added
nonregulated revenues of $488,537.
Miscellaneous revenues include billing and collection revenues from CTT and
BVT. When comparing the current quarter of 1997 with the same quarter of 1996,
CTT has experienced decreases in miscellaneous revenues. The consolidated
increase is a direct result of the addition of BVT.
OPERATING EXPENSES
Operating Expenses for the first three months of 1997 were $8,428,124, an
increase of 48.8% when compared with the first three months of 1996.
The increase in operating expenses for the first three months, partially due
to the addition of BVT and to the amortization expense of the BVT acquisition,
is comprised of the following:
Increase/
(Decrease) %
Plant Operations $609,218 54.8%
Depreciation and Amortization $1,104,240 83.1%
Customer Operations $594,597 38.0%
Corporate Operations $265,048 43.3%
Nonregulated Sales and Lease $248,488 35.4%
Operating Taxes $131,017 38.2%
CONESTOGA ENTERPRISES, INC.
OPERATING EXPENSES (continued)
Plant Operations expenses include CTT, BVT and CMS regulated expenses. When
comparing the first quarter of 1997 with the first quarter of 1996, CTT's plant
operations expenses decreased, and BVT added $689,500. BVT's current quarter
expenses include a one time charge for digital switch software upgrade of
$265,000.
Depreciation and Amortization expenses include charges from CTT, CMS and
BVT. CTT depreciation expenses are up 7.8% for the first three months of 1997
when compared with the first three months of 1996. BVT added $574,000 in
depreciation expense as well as $241,000 in goodwill amortization expense.
Customer Operations expenses include expenses for CTT, BVT, NCI, and CMS .
When comparing the first quarter of 1997 with the first quarter of 1996,
customer operations expenses increased 38%, of which BVT added $631,000. CTT's
intralata termination charges increased 1.7% for the first three months of 1997
when compared with the first three months of 1996. BVT's intralata termination
charges increased for the same period 39% due to an accounting change made
during the first three months of 1997.
Corporate Operations expenses for the first quarter increased 43.3% due to
payroll allocation changes for certain operating officers of the Company, and
to the addition the addition of Vice President Regulatory and External Affairs
during the second quarter of 1996. BVT added $176,000 in corporate operation
expenses.
Nonregulated Sales and Lease expenses include expenses for CTT, BVT and CMS.
The increase is primarily due to the addition of BVT, which had $310,000 in
nonregulated expenses.
Taxes, other than income, increased 38.2% which was due to the addition of
BVT.
OTHER INCOME (DEDUCTIONS), NET
Interest expense for the first three months of1997 includes expenses from
CTT, CEI, and BVT. The interest expense for the period reflects the
additional long term debt financing required for the merger with BVT.
BVT previously had funded debt in the form of long-term notes issued May,
1978, at 8.5% interest rate paid semi-annually, with $81,000 annual principal
payment. The current balance is $1,404,000, with maturity date and final
payment of $1,323,000 due June, 1998.
CTT on January 31, 1997 secured, through a local bank, a $5.0 million
promissory note, which will require quarterly interest and principal payments
through May, 2002. The interest rate is 6.89% per annum. The funds were used
to refinance existing more expensive debt of CTT.
The before tax earnings from the partnerships interests increased during
the quarter due to increased earnings from the cellular ventures. The before
tax earnings were $341,000, an increase of 21.3%. CTT's partnership, which
primarily provides access to the internet, recorded a before tax loss of
$33,200 for the first three months of 1997.
CONESTOGA ENTERPRISES, INC.
MINORITY INTEREST
The minority interest recorded during the first three months of 1997
reflects Infocore, Inc.'s 40% interest in net loss of CWC.
INCOME TAXES
Income taxes for the first three months of 1997 are $1,528,927, an increase
of 13.7% when compared with the first three months of 1996. BVT had $99,600
in income taxes for the period.
OTHER
PCS SERVICE; During the first quarter of 1997 CWC was a successful bidder
in the Federal Communication Commission (FCC) Personal Communication Services
(PCS) radio spectrum D,E, and F Block Auction in four basic trading areas,
covering nine counties in Pennsylvania and a population of 840,000. The
granting of the licenses is expected to be in June, 1997. CWC is currently
investigating the equipment which it will use to operate the wireless system
as well as the financing which may be required. The PCS network will require
significant investment of capital which could be funded by additional debt, or
equity, or a combination of the two. CWC was 40% owned by Infocore, Inc., and
with the pending merger, CEI will become the 100% owner.
COMMON STOCK BUYBACK; At the Board of Directors meeting held on September
24, 1996, the Board authorized the purchase of up to 100,000 common shares on
the open market and/or private negotiated transactions, though June 30, 1997.
All purchases shall be in accordance with the Securities and Exchange
Commission regulations. As of the end of the first quarter of 1997, 91,273
shares have been bought back as treasury stock.
TELECOMMUNICATIONS ACT OF 1996; On February 8, 1996, the
Telecommunications Act of 1996 (TA96) was signed into law. TA96 amends the
Communications Act of 1934 and contains extensive ground rules for the
evolution of the telecommunications marketplace to full competition. The
legislation contained a specific time frame for action by the Federal
Communications Commission (FCC) in order to implement various aspects of the
new law.
The first major action by the FCC occurred on August 8, 1996 when the FCC
issued its Interconnection Order. The order contained provisions regarding
operational and pricing guidelines required to facilitate the interconnection
of competing local networks. In response to the FCC's actions, several Bell
operating companies (among others) initiated legal action to block the
implementation of this order. On October 15, 1996, the 8th Circuit Federal
Court of Appeals issued a stay on certain aspects of the FCC's order,
until the courts can decide if the FCC overstepped its authority regarding
interconnection price setting. A decision is currently pending. In addition,
the FCC is planning to address the issues of universal service and access
charge reform. An FCC order regarding universal service is expected in early
May, 1997. An order related to access charge reform is also expected before
the end of May, 1997.
CONESTOGA ENTERPRISES, INC.
OTHER (continued)
There were also significant events in the state regulatory arena. On May
23, 1996, the Pennsylvania Public Utility Commission (Pa. P.U.C.)issued an
order which requires new local telephone companies that wish to provide
telephone service in areas that are currently served by rural telephone
companies to commit to serving the entire territory served by the rural
telephone company. Since CTT and BVT are both classified as rural telephone
companies in the Telecommunications Act of 1996, this means that new
competitors will not be able to "cherry pick" our best customers. This order
was designed to promote fair and equal competition in rural areas. In January
of 1997, the Pa. P.U.C. issued an order addressing universal service. In
response to this order, several petitions for reconsideration were filed by
interested parties. The Pa. P.U.C. is expected to act on these petitions in
the near future. In addition, the Pa. P.U.C. has initiated a generic
investigation in the area of access reform. This process will begin with
comments from interested parties due in June, 1997. A final order in the
proceeding is expected in late 1997 or early 1998.
Due to the changes described above, competition will have an impact on
CEI in the not too distant future. It is anticipated that in spite of CEI's
rural status, competitors will attempt to enter our markets and therefore some
segment of the existing business could be at risk. In that regard, however,
the Company is confident in its ability to meet this challenge and to continue
to grow the existing business in a competitive environment. Competition
will also create opportunities for CEI in markets that were heretofore closed
to CEI in a monopoly telecommunications environment. The Company is currently
evaluating the new opportunities available to it and will aggressively
pursue expansion into these markets, some of which are expected to begin during
the third quarter of 1997.
ITEM 4
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
NONE
PART II. OTHER INFORMATION
Item 6 (b) EXHIBITS AND REPORTS ON FORM 8-K
NONE
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 May 14, 1997 By /s/ John R. Bentz
_______________ _________________________________
John R. Bentz
President
Date May 14, 1997 By /s/ Albert H. Kramer
_________________ ________________________________
Albert H. Kramer
Vice President, Finance and Administration
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