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, 1998
Commission File Number 0-24064
CONESTOGA ENTERPRISES, INC.
(Exact name of Registrant as specified in its charter)
PENNSYLVANIA
(State of Incorporation)
23-2565087
(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 31,1998, the number of shares of Common Stock, par value $5.00
outstanding was 4,624,200
CONESTOGA ENTERPRISES, INC.
CONSOLIDATED BALANCE SHEETS ( UNAUDITED )
March 31, 1998, March 31, 1997 and December 31, 1997
( In Thousands, Except Shares and Per Share Data)
ASSETS
3/31 3/31 12/31
1998 1997 1997
Current Assets
Cash and Cash Equivalents $18,531 $5,427 $2,517
Accounts receivable, including unbilled
revenue 6,359 6,048 6,895
Inventories, at average cost 984 888 1,104
Prepaid expenses 196 122 214
Total Current Assets 26,070 12,485 10,730
Investments and Other Assets
Cost in Excess of Net Assets of Business Acquire 39,036 38,096 39,506
Investments in partnerships 3,308 3,803 2,979
Investments in equity securities 2,569 1,585 2,308
Prepaid Pension Costs 2,424 2,201 2,423
Other 777 344 772
48,114 46,029 47,988
Plant
In Service 127,307 123,597 126,337
Under Construction 16,833 1,095 10,778
144,140 124,692 137,115
Less accumulated depreciation 67,889 62,484 66,543
76,251 62,208 70,572
Total Assets $150,435 $120,722 $129,290
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CONESTOGA ENTERPRISES, INC.
CONSOLIDATED BALANCE SHEETS ( UNAUDITED )
March 31, 1998, March 31, 1997 and December 31, 1997
( In Thousands, Except Shares and Per Share Data)
LIABILITIES AND STOCKHOLDERS' EQUITY
3/31 3/31 12/31
1998 1997 1997
Current Liabilities
Current maturities of long term debt $3,000 $1,081 $3,000
Accounts payable 6,461 2,532 4,858
Accrued:
Taxes 788 548 667
Interest 224 97 0
Payroll & Vacation Pay 1,012 731 1,070
Advance billings/Customer Deposits 976 803 860
Total Current Liabilities 12,461 5,792 10,455
Long Term Liabilities
Long Term Debt, less Current Maturities 44,000 27,323 23,250
Accrued Post Retirement Cost 820 635 749
Other 965 609 987
45,785 28,567 24,986
Deferred Income Taxes 9,417 10,159 9,516
Minority Interest 392
Convertible\Redeemable Preferred Stock
Par value $65 per share; authorized 900,000
shares; issues and outstanding 196,618 shares 12,780 12,780 12,780
Common Stockholders' Equity
Common Stock par value $5 per share; authorized
10,000,000 shares; issued;
3/31/98 3/31/97 12/31/97
4,775,301 4,568,500 4,775,301 23,876 22,843 23,876
Additional Paid-In Capital 24,791 20,420 24,742
Retained earnings 24,586 21,634 23,958
Net unrealized appreciation on
marketable equity securities 1,037 292 762
Less cost of treasury stock;
3/31/98 151,101 shares, 3/31/97 91,273 shares
12/31/97 75,536 share (4,298) (2,157) (1,785)
69,992 63,032 71,553
Total Liabilities and Stockholders' Equity $150,435 $120,722 $129,290
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CONESTOGA ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 1998 and 1997
( In Thousands, Except Per Share Data)
1998 *1997
Operating Revenues:
Local Service $2,504 $2,313
Access Service 6,430 5,743
Long Dist. Service 2,683 2,410
Eguipment Sales & Lease 1,961 689
Other 1,587 1,034
15,165 12,189
Operating Expenses:
Plant Operations and Cost of Sales 3,245 2,966
Depreciation and Amortization 2,757 2,403
Customer Operations 3,461 1,614
Corporate Operations 1,350 971
Taxes, other than income 504 474
11,317 8,428
Operating Income 3,848 3,761
Other Income(Deductions), Net:
Interest Expense (660) (536)
Income from unconsolidated
partnerships interests 329 308
Other, Net 291 111
(40) (117)
Income Before Income Taxes 3,808 3,644
Income Taxes 1,747 1,529
Net Income $2,061 $2,115
Basic earnings per common share $0.40 $0.43
Diluted earnings per common share $0.40 $0.43
Dividends per common share $0.305 $0.30
* Some amounts have been adjusted for comparative purposes.
CONESTOGA ENTERPRISES, INC.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 1998 and 1997
( In Thousands, Except Per Share Data)
1998 1997
Net Income $2,061 $2,115
Unrealized gains on Securities
Unrealized holding gains
during period 314 -24
Less: reclassification adjustment
for gains included in net income -38 0
Comprehensive Income $2,337 $2,091
CONESTOGA ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
( In Thousands)
1998 1997
Cash Flows from Operating Activities
Net Income $2,062 $2,115
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and Amortization $2,757 $2,390
Income from unconsolidated partnership interests (329) (307)
Minority interest in loss of subsidiary 0 (8)
Gain on sale of marketable secutities (102) 0
Changes in assets and liabilities:
(Increase) decrease in:
Accounts Receivable 536 840
Material and supplies 120 (20)
Prepaid expenses 138 84
Prepaid pension costs (1) (52)
Other Assets (5) 743
Increase (decrease) in:
Accounts Payable 1,602 (238)
Accrued expenses and other current liabilit 283 1,002
Other liabilities 49 (187)
Deferred income taxes (191) (26)
4,857 4,221
Net cash provided by operating activities 6,919 6,336
Cash Flows From Investing Activities
Purchase of Plant, net of removal costs and salvage (7,960) (1,396)
Proceeds from sale of marketable equity securities 208 0
Proceeds from surrender of Life Insurance Policy 0 427
Capital investments in unconsolidated partnershp in 0 (119)
Net cash used in investing activities (7,752) (1,088)
Cash Flows From Financing Activities
Proceeds from long-term borrowing 21,000 5,000
Principal payments on long term borrowing (250) (4,645)
Proceeds from issuance of stock under the
employee stock purchase plan 28 0
Common stock dividends paid (1,263) (1,345)
Purchase of common stock for the treasury (2,668) (788)
Net cash provided by (used in) financing activ 16,847 (1,778)
Increase (decrease) in cash and cash equivalen 16,014 3,470
Cash and cash equivalents
Beginning 2,517 1,957
Ending $18,531 $5,427
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash Payments for:
Interest $493 $440
Income Taxes $363 $482
CONESTOGA ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with the instructions to Form 10-Q and do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting only of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results for the three
months ended March 31, 1998 are not necessarily indicative of the results that
may be expected for the year ending December 31, 1998. The December 31, 1997
condensed balance sheet data was derived from audit financial statements, but
does not include all disclosures required by generally accepted accounting
principals. For further information, refer to the consolidated financial
statements and footnotes included in Conestoga's 1997 Annual Report on Form
10-K.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
NOTE 2: LONG TERM DEBT
Long term debt is summarized as follows:
(In thousands)
3/31/98 3/31/97 12/31/97
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 6,000 6,000
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 16,000 16,000
CONESTOGA ENTERPRISES, INC.
Promissory Note 0 1,404 0
Promissory note, interest payable
quarterly at 6.89%. Quarterly principal
payments of $250,000 through
February 1, 2002 unsecured. 4,000 5,000 4,250
Senior Note interest payable
quarterly at 6.22%, quarterly
principal payments of $750,000
starting May 11, 2001 through
February 11, 2008,
unsecured 21,000 0 0
$47,000 $28,404 $26,250
Less current Maturities 3,000 1,081 3,000
$44,000 $27,323 $23,250
NOTE 3: ACQUISITIONS
On May 1, 1997, the Company acquired all of the outstanding shares of
Infocore, Inc. (INF), a telecommunications company based in King of Prussia,
Pennsylvania. The Company issued 199,923 shares of common stock to Infocore,
Inc. Shareholders as consideration for all outstanding shares of Infocore,
Inc. Stock.
The acquisition has been accounted for as a purchase and the results of
operations of INF since that date are included in the consolidated financial
statements. The excess of the purchase price over the book value acquired of
$2,722,155 is being amortized over 36 months using the straight line method.
NOTE 4: Comprehensive Income
The Financial Accounting Standards Board issued Statement No. 130, "Reporting
Comprehensive Income"' in June 1997. The Company adopted the provision of the
new standard in the first quarter of 1998. In accordance with the statement,
prior year financial statements have been reclassified in order to be
consistent with the current year presentation.
CONESTOGA ENTERPRISES, INC.
NOTE 5: OTHER
Certain items of the March 31, 1997 consolidated financial statements have
been restated to conform to the March 31, 1998 financial statements. There
was no impact on net income.
Inventories, at average cost, are both material and supplies used to provide
service, and equipment held for resale.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE QUARTERLY INCOME STATEMENTS
The Company has six operating subsidiaries. Conestoga Telephone and
Telegraph Company ("CTT") provides regulated local telephone service in parts
of Berks, Lancaster, Chester and Montgomery Counties, Pennsylvania. Buffalo
Valley Telephone Company ("BVT") provides regulated local telephone service
in parts of Union County, Pennsylvania. Conestoga Communications, Inc. ("CC")
provides long distance telephone service. Conestoga Mobile Systems, Inc.
("CMS") provides paging and related services. Infocore, Inc. ("INF") provides
telecommunications consulting services and equipment. Conestoga Wireless
Company ("CWC") provides digital wireless telephone services known as Person
Communications Services ("PCS"). CWC commenced commercial operations of its
PCS system on May 1, 1998.
RESULTS OF OPERATIONS
Net income during the first three months of 1998 was $2.06 million, a 2.6%
decrease when compared with the first three months of 1997. The consolidated
financial statements of the Company and its subsidiaries for the period
include net incomes as follows:
Local Exchange Carriers $ 2.5 million
Parent Company and Others* $-0.4 million
*Including various subsidiaries that provide long distance,
paging and wireless PCS, sale and lease of
telecommunications equipment, and design and install
telecommunications systems.
The net income for the first quarter includes $102 thousand in capital gains
derived from the sale of a portion of the marketable
CONESTOGA ENTERPRISES, INC.
securities held by the Company for investment. It also includes start-up costs
and additional interest expense incurred by CWC with regard to the
construction and development of PCS.
Operating Revenues
Operating revenues for the first three months of 1998 were $15.2 million,
compared to $12.2 million during the first quarter of 1997, a 24.4% increase
over the same period of 1997 and a 5.6% over the fourth quarter of 1997. The
increases in operating revenues over the first quarter of 1997 by category
are as follows:
Increase/(Decrease) %
(In thousands)
Local Service $ 191 8.3%
Access Service 687 12.0%
Long Distance Service 273 11.3%
Equipment Sales and Lease 1,272 184.6%
Other (net of uncollectibles) 553 53.5%
The operating revenues for the first quarter of 1998 include operating
revenues of INF totaling $1.6 million. INF was acquired by the Company on
May 1, 1997.
Local service revenues include regulated revenues of CTT and BVT. Both
reported increases in local service revenues when compared with the first
quarter of 1997. Combined local service revenues were 8.3% higher in the
first quarter of 1998 than in the first quarter of 1997.
The increase in local service revenues resulted directly from the growth in
the number of telephone access lines in service. During the first quarter of
1998 the access lines in service increased by 1,241 to a total of 72,380.
Much of the increase was due to the installation of residential second lines
and the increased demand for custom calling service features.
The Company's total access revenues in the first quarter of 1998 were $6.4
million, 12.0% higher than during the first quarter of 1997. CTT's and BVT's
access service revenues grew during the first quarter of 1998 due to an
increase in combined interstate and intrastate minutes of use through their
respective networks.
CONESTOGA ENTERPRISES, INC.
Compared to the first quarter of 1997, CTT's minutes of use grew in excess of
22%, and BVT's grew in excess of 18%.
Long distance service revenues include CTT's and BVT's intralata toll
revenues and CC's resale of long distance service revenues and, long distance
service revenues. On August 1, 1997, CC commenced to provide long distance
services directly to its customers. During the first quarter of 1998, CC's
long distance service revenues were $1.0 million compared to $650 thousand
during the same period of 1997; and the Company's total long distance revenues
increased 11.3% over the quarter of 1997 and 9.8% over the fourth quarter of
1997.
Equipment Sales and Lease Revenues include CTT's and BVT's sale and lease of
telephone equipment, CMS's sale and lease of pager and cellular equipment, and
INF's equipment sales. In the first quarter of 1998, equipment sales and lease
revenues increased 184.6% when compared with the first quarter of 1997. CTT,
BVT and CMS reported slight increases in equipment sales and lease revenues
during the first quarter of 1998. INF contributed $1.0 million of equipment
sales revenue during the first quarter, which accounts for the large increase
in equipment sales and lease revenues when comparing the first quarters of 1998
and 1997.
Other revenues include CTT's and BVT's billing and collection revenues, and
directory advertising revenue, as well as facility management and consulting
revenues from INF. CTT's other revenues were lower during the first quarter
of 1998 when compared with the first quarter of 1997, primarily due to
decreased directory advertising revenue because of a sign-on bonus in 1997.
The increase in the consolidated other revenue was caused by the acquisition
of INF, which contributed $591 thousand during the period.
Operating Expenses
Operating Expenses for the first three months of 1998 were $11.3 million a
34.3% increase over the same period of 1997. This increase was due in part
to the acquisition of INF and the goodwill amortization resulting therefrom,
and to the start up expenses of CWC. When comparing the first quarter with
the fourth quarter of 1997, operating expenses are up 9.7%.
CONESTOGA ENTERPRISES, INC.
The increases over the first quarter of 1997 are comprised of the following:
Increase/(Decrease) %
(In thousands)
Plant Operations and
Cost of Sales $ 3,245 9.4%
Depreciation and Amortization 2,757 14.7%
Customer Operations 3,461 114.4%
Corporate Operations 1,350 39.0%
Taxes, other than income 504 6.3%
Plant operations and cost of sales expenses include local exchange carrier
(LEC) expenses of CTT and BVT, as well as expenses from CMS, CWC and INF.
CTT's plant operations and cost of sales expenses for the first quarter of 1998
where about the same as the first quarter of 1997. BVT's expenses were lower,
partially due to a digital switch software upgrade during the first quarter of
1997. The acquisition of INF accounted for $300 thousand in plant operations
and cost of sales expense, and CWC added $171 thousand. Neither was included
in the first quarter of 1997.
Depreciation and amortization expenses include charges from CTT, CMS, BVT,
INF and CWC. They were 14.7% higher during the first quarter of 1998 than the
first quarter of 1997. CTT and BVT experienced normal increases in
depreciation expenses for the first quarter of 1998 compared with the same
period of 1997. INF accounted for $264 thousand of expenses of which $227
thousand was goodwill amortization expense resulting from the acquisition.
Customer operations expenses include expenses of all the subsidiaries of the
Company. CTT and BVT recorded modest increases during the first quarter of
1998, when compared with the first quarter of 1997. CC's customer operations
expenses increased $648 thousand, more than double the first quarter of 1997,
due to start up costs for the new long distance service offering. The
acquisition of INF added $1.2 million of customer operations expense during the
first quarter of 1998.
Corporate operations expenses include charges from all the subsidiaries of
the Company. CTT's and BVT's corporate operations expenses for the first
quarter of 1998 were in line with the first
CONESTOGA ENTERPRISES, INC.
quarter of 1997. INF added $133 thousand to corporate operations expenses and
CWC another $147 thousand.
Taxes, other than income, increased 6.3% in the first quarter of 1998, when
compared with the first quarter of 1997, most of which is from the two local
exchange carriers, CTT and BVT.
Other Income (Deductions), Net
Interest expenses incurred during the first quarter of 1998 exceeded those of
the first quarter of 1997 by $124 thousand. In February, 1998 the Company
incurred additional long term debt of $21 million at an interest rate of 6.22%
to finance CWC's wireless PCS system. On June 1, 1997, BVT, using internally
generated funds, paid off the balance of $1.4million of funded debt from
long-term notes issued May, 1978, with attendant decrease in interest expense.
Income from unconsolidated partnership interests includes income from Berks
Reading Area Cellular Enterprises ("BRACE"), which owns a partnership interest
in the entity which provides cellular services in the Reading and Berks County
area, and Penteledata Limited Partnership One which primarily provides
Internet access. Income for the first quarter of 1997 included income from the
Lancaster Area Cellular Enterprises ("LACE"), which provides cellular service
in the Harrisburg, Lancaster and York metropolitan areas. However, on
September 5, 1997, the Company sold its partnership interest in LACE. During
the first quarter of 1998, the Company derived before tax earnings in the
amount of $350 thousand from its interest in BRACE and recorded a before tax
loss of $26 thousand from its interest in the Penteledata Limited Partnership
One.
The Company's income during the first quarter of 1998 also includes a net
capital gain of $102 thousand from the sale of certain equity securities held
by the Company.
Income Taxes
Income taxes for the first quarter of 1998 were $1.7 million, an increase of
14.3% over the same period of 1997.
Financial Condition
Cash and cash equivalents for the first quarter of 1998 increased to $18.5
million, which reflects the additional debt added. The net cash provided by
operating activities increased by 9.2% to $6.9 million, compared with $6.3
million for the first three months of
CONESTOGA ENTERPRISES, INC.
1997. As of March 31, 1998, the Company had available lines of credit with
two regional banks totaling $15 million.
Capital expenditures through the first quarter, except for the wireless PCS
build out, were financed primarily by internally generated funds. No outside
short term borrowing was required during the first quarter of 1998.
Management believes that, except for the development and construction of the
PCS network, the cash provided from operations will be sufficient to fund
current capital projects. The Company borrowed $21 million, as mentioned
above, to finance part of the development and construction of the PCS
infrastructure, which is likely to be as much as $30 million by December 31,
1998. The Company's cash flow is greater than net income, for financial
reporting purposes, as a result of the amortization of goodwill, from the
acquisitions of BVT and INF as expense deductions for financial reporting
purposes without actual cash outlays therefor. The annual amortization of
the goodwill of BVT and INF will be approximately $1.9 million.
The long-term Senior Notes are unsecured but impose certain financial
covenants upon the Company, including, but not limited to, restrictions upon
types of investments, the amount of dividends paid and the incurrance of
additional debt by the Company and its subsidiaries. The Company is currently
in compliance with all loan covenants.
The holders of the preferred stock may convert it into common stock at any
time and may redeem it after May 31, 1998, at $65 per share. The Company
believes that internally generated cash flow, along with existing lines of
credit, will be adequate to fund any cash requirements for the redemption of
preferred stock.
As of March 31, 1998, the Company's debt (including the CEI $3.42 Series A
Preferred Stock) to equity ratio was 46% debt to 54% equity.
The Company from time to time buys back large blocks of its commons stock
as such stock becomes available. During the first quarter of 1998 the Company
bought a block of 86,074 shares which are held as treasury stock.
CONESTOGA ENTERPRISES, INC.
Other
PCS SERVICE; During the first quarter of 1998 CWC undertook construction of
its infrastructure with the goal of commencing operations. On May 1, 1998, CWC
commenced commercial operation, offering wireless digital PCS in Berks, Union,
Snyder, Northumberland and Montour counties in Pennsylvania. The PCS network
will eventually cover the nine county area in which CWC was granted Federal
Communication Commission (FCC) licenses.
The complete PCS network will require significant investment of capital,
which could be funded by additional debt, or equity, or a combination of the
two. The Company believes that it has adequate debt capacity to finance any
additional capital requirements to complete the PCS project build out.
Since the Company will have invested up to $30 million in PCS by the end of
1998, the impact on 1998's financial statements will be significant. Interest
expense and depreciation expense, will both increase substantially while CWC
will just be building its customer base. The Company anticipates that the
start up of CWC will negatively impact earnings for the next several years
until CWC builds its customer base. PCS is a capital intensive, long term
investment on the part of the Company and the Company believes that its low
acquisition costs for its FCC licenses and its expertise in telephony will
allow it to compete effectively in the PCS marketplace.
BRACE; On May 14, 1998 BRACE sold its interest in the Reading SMSA cellular
partnership to Cellco Partnership, d.b.a. Bell Atlantic Mobile ("Bam"), which
provides cellular wireless service in the Reading and Berks County area. From
the anticipated liquidation of BRACE, the Company should receive $11.1 million
for its 70% partnership interest in BRACE. Upon BRACE's sale of its interest
in the Reading SMSA cellular partnership, the Company will no longer have any
investment in partnerships providing cellular service.
REGULATED INDUSTRY;
CTT, and BVT are subject to a rate making process regulated by the Pennsylvania
Public Utility Commission (PUC) called "rate of return regulation".
An amendment to the Pennsylvania Public Utility Act passed in 1993 provides
for streamlined rate regulation and a method
CONESTOGA ENTERPRISES, INC.
For determining rates other than the rate of return regulation and procedures.
This new regulation referred to as Chapter 30, provides a price stability
mechanism in which a telephone company's annual revenues from non-competitive
services may be permitted to change in line with the gross domestic product
price index, minus a productivity offset, with no limitation on earnings by
the regulated company. In order for the Company to avail itself of the
procedures permitted by chapter 30, CTT and BVT must commit to providing
universal broadband services by 2015. Both Companies plan to file a Chapter
30 Plan in the third quarter 1998.
The telecommunication industry continues to undergo fundamental changes,
which may have a significant impact on financial performance. The Federal
Telecommunications Act of 1996 (TA 96) creates a regulatory environment that
encourages competition. As rural companies, CTT and BVT are exempt from many
of the most onerous aspects of competition, unless prospective competitors
can pass a public interest standard and agree to offer service throughout the
telephone companies' territories. In order to strengthen this position, CTT
and BVT petitioned the Pa. P.U.C. for a suspension of the interconnection
requirements of TA96. A favorable ruling on the petition was received on
March 26, 1998.
Management believes that competition will bring many new opportunities for
the local exchange companies. Management is endeavoring to position the
Company to take advantage of these opportunities as they arise, and remains
optimistic about the future. In this regard, during 1997 CC received approval
from the Pa. P.U.C. to provide 1+ long distance service. In addition in
February 1998 CC received Pa. P.U.C. approval to provide competitive local
exchange service in the franchise territories of Bell Atlantic of Pa. and GTE.
Forward-Looking Statements
Management's Discussion and Analysis of Results of Operations and Financial
Conditions relating to Liquidity and Capital Commitments, and other statements
relating to anticipated growth, anticipated sources of funding for continuing
operating activities and construction expenditures (see . . . above)
constitute "forward-looking statements" as defined in the Securities
Litigation Reform Act of 1995. Such forward-looking statements involve risks
and uncertainties which could cause actual results or outcome to differ
materially from those expressed in forward-looking statements. The
CONESTOGA ENTERPRISES, INC.
projections made herein are expressed in good faith and believed by the
Company to have a reasonable basis, but there can be no assurance that actual
outcomes or results will not differ materially from the expected outcomes or
results described herein. Important factors that could cause actual results
to differ materially from the forward-looking statements identified in this
paragraph are discussed in the above-reference sections and accompany such
forward-looking statements.
CONESTOGA ENTERPRISES, INC.
ITEM 4
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
NONE
PART II. OTHER INFORMATION
ITEM 6(B) EXIBITS AND REPORTS ON FORM 8-K
NONE
CONESTOGA ENTERPRISES, INC.
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.
DATE __May 15, 1998__ ___/s/ Albert H Kramer___
Albert H Kramer
President
DATE __May 15, 1998__ ___/s/ Donald R Breitenstein___
Donald R Breitenstein
Controller
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<INCOME-BEFORE-INTEREST-EXPEN> 4,468,089
<TOTAL-INTEREST-EXPENSE> 659,652
<NET-INCOME> 2,061,868
168,108
<EARNINGS-AVAILABLE-FOR-COMM> 1,893,760
<COMMON-STOCK-DIVIDENDS> 1,433,624
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 6,918,774
<EPS-PRIMARY> .40
<EPS-DILUTED> .40
</TABLE>
