<PAGE>
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-Q/A

              |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                  For the quarterly period ended June 30, 2002

                                       or

             | | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
            For the transition period from ___________ to ___________

                        Commission File Number: 000-20709

                            D&E Communications, Inc.
             (Exact name of registrant as specified in its charter)

                                  PENNSYLVANIA
                         (State or other jurisdiction of
                         incorporation or organization)

                I.R.S. Employer Identification Number: 23-2837108

                            Brossman Business Complex
                              124 East Main Street
                                  P. O. Box 458
                           Ephrata, Pennsylvania 17522
                    (Address of principal executive offices)

                  Registrant's Telephone Number: (717) 733-4101

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 issuer's classes of
common stock, as of the latest practicable date.

<TABLE>
<CAPTION>
                      Class                 Outstanding at August 9, 2002
                      -----                 -----------------------------
<S>                                         <C>
Common Stock, par value $0.16 per share          15,396,575 Shares
</TABLE>

<PAGE>

                    D&E Communications, Inc. and Subsidiaries
                                   Form 10Q/A

                                EXPLANATORY NOTE


This Quarterly Report on Form 10-Q/A is being filed to restate and reclassify
financial statement and footnote information included in the Consolidated
Financial Statements included in Item 1 of Part I, and related disclosures in
Management's Discussion and Analysis of Financial Condition and Results of
Operations in Item 2 of Part I of the Registrant's original Quarterly Report on
Form 10-Q for the period ended June 30, 2002 filed on August 14, 2002. Such
changes were made to: (1) restate certain financial information relating to the
purchase price allocation of the Company's acquisition of Conestoga Enterprises,
Inc.; (2) reclassify Conestoga's wireless operations held for sale from
discontinued operations to continuing operations; (3) reclassify Conestoga and
D&E's paging operations from continuing operations to discontinued operations;
and (4) correct the maturities of long-term debt table included in the footnotes
for incorrect amounts for years 2004, 2005 and 2006. Note 1 to the Consolidated
Financial Statements in this Quarterly Report on Form 10-Q/A discloses the
impact on the Company's financial statements for the changes related to (1), (2)
and (3) above. The change in disclosure for (4) above had no effect on the
Registrant's balance sheets, statements of operations, statements of cash flows
and statements of shareholders' equity included in the original Form 10-Q.



                                       i

<PAGE>

                    D&E Communications, Inc. and Subsidiaries
                                   Form 10Q/A

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
Item No.                                                                                  Page
--------                                                                                  ----

                                PART I.  FINANCIAL INFORMATION

<S>                                                                                       <C>
    1.  Financial Statements

               Consolidated Statements of Operations --
                      For the three months and six months ended
                      June 30, 2002 and 2001 ..........................................      1

               Consolidated Balance Sheets --
                      June 30, 2002 and December 31, 2001 .............................      2

               Consolidated Statements of Cash Flows --
                      For the six months ended
                      June 30, 2002 and 2001 ..........................................      3

               Consolidated Statements of Shareholders' Equity --
                      For the six months ended
                      June 30, 2002 and 2001 ..........................................      4

               Notes to Consolidated Financial Statements .............................      5

    2.  Management's Discussion and Analysis of Financial
               Condition and Results of Operations.....................................     19
    3.  Quantitative and Qualitative Disclosures
           about Market Risk...........................................................     43

                                 PART II. OTHER INFORMATION

    1.   Legal Proceedings ............................................................     44

    4.   Submission of Matters to a Vote of Security Holders...........................     44

    6.   Exhibits and Reports on Form 8-K .............................................     45

SIGNATURES.............................................................................     46

CERTIFICATIONS.........................................................................     47
</TABLE>


                                       ii

<PAGE>

Form 10-Q/A Part I - Financial Information
Item 1. Financial Statements

                   D & E Communications, Inc. and Subsidiaries
                    Consolidated Statements of Operations (in
                      thousands, except per-share amounts)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                            Three Months Ended         Six Months Ended
                                                                  June 30,                  June 30,
                                                         (As restated               (As restated
                                                          see Note 1)                see Note 1)
OPERATING REVENUES                                            2002         2001         2002         2001
                                                              ----         ----         ----         ----
<S>                                                      <C>             <C>        <C>            <C>
  Communication service revenues .....................      $ 22,673     $ 15,310     $ 38,582     $ 30,012
  Communication products sold ........................         3,690        3,197        6,968        6,222
  Other ..............................................           467          376          857          778
                                                            --------     --------     --------     --------
    Total operating revenues .........................        26,830       18,883       46,407       37,012
                                                            --------     --------     --------     --------

OPERATING EXPENSES

  Communication service expenses (exclusive of
    depreciation and amortization below) .............         8,618        6,449       15,624       12,787
  Cost of communication products sold ................         3,257        2,602        6,032        5,042
  Depreciation and amortization ......................         5,847        3,690        9,728        7,216
  Marketing and customer services ....................         2,865        2,523        5,007        4,578
  Merger-related costs ...............................           973           --          973           --
  General and administrative services ................         5,961        3,561        9,497        7,221
                                                            --------     --------     --------     --------
    Total operating expenses .........................        27,521       18,825       46,861       36,844
                                                            --------     --------     --------     --------
      Operating income (loss) ........................          (691)          58         (454)         168
                                                            --------     --------     --------     --------
OTHER INCOME (EXPENSE)

  Equity in net income (losses) of affiliates ........          (702)       1,730       (1,177)         442
  Interest expense ...................................        (2,048)        (465)      (2,756)        (918)
  Other-than-termporary loss on investments ..........        (2,999)          --       (2,999)          --
  Other, net .........................................           194          413          201          744
                                                            --------     --------     --------     --------
    Total other income (expense) .....................        (5,555)       1,678       (6,731)         268
                                                            --------     --------     --------     --------
      Income (loss) from continuing operations
         before income taxes and dividends on
         utility preferred stock .....................        (6,246)       1,736       (7,185)         436

INCOME TAXES AND DIVIDENDS ON
 UTILITY PREFERRED STOCK

  Income taxes .......................................        (2,288)         138       (2,437)         255
  Dividends on utility preferred stock ...............            17           17           33           33
                                                            --------     --------     --------     --------
    Total income taxes and dividends
      on utility preferred stock .....................        (2,271)         155       (2,404)         288
                                                            --------     --------     --------     --------
        Income (loss) from continuing operations .....        (3,975)       1,581       (4,781)         148

  Discontinued operations:
   Loss from operations of discontinued D&E Wireless
     segment prior to December 31, 2001, net of income
     tax benefit of $881 and $1,552 ..................            --       (1,644)          --       (2,999)
   Gain on disposal of discontinued D&E Wireless
     segment, net of operating losses during phase-out
     period and net of income taxes of $29,199 .......        55,785           --       55,785           --
   Loss from operations of Paging business, net of
     income tax benefit of $2, $3, $5, and $11 .......            (6)          (4)          (9)         (17)
                                                            --------     --------     --------     --------
      Income (loss) before extraordinary item ........        51,804          (67)      50,995       (2,868)

  Extraordinary item, income tax benefit of $107 .....            --           --           --          107
                                                            --------     --------     --------     --------
NET INCOME (LOSS) ....................................      $ 51,804     $    (67)    $ 50,995     $ (2,761)
                                                            ========     ========     ========     ========
  Weighted average common shares outstanding .........        10,722        7,387        9,047        7,386

BASIC AND DILUTED EARNINGS (LOSS)
  PER COMMON SHARE
  Income (loss) from continuing operations ...........      $  (0.37)    $   0.21     $  (0.53)    $   0.02
  Income (loss) from discontinued operations .........          5.20        (0.22)        6.17        (0.40)
  Extraordinary item .................................          0.00         0.00         0.00         0.01
                                                            --------     --------     --------     --------
    Net income (loss) per common share ...............      $   4.83     $  (0.01)    $   5.64     $  (0.37)
                                                            ========     ========     ========     ========

  Dividends per common share .........................      $   0.13     $   0.13     $   0.25     $   0.25
                                                            ========     ========     ========     ========
</TABLE>


                                       1



<PAGE>

                   D & E Communications, Inc. and Subsidiaries
                           Consolidated Balance Sheets
                      (in thousands, except share amounts)
                                  (Unaudited)
<TABLE>
<CAPTION>
                                                                       (As restated
                                                                       see note 1)
                                                                        June 30,       December 31,
                            ASSETS                                         2002            2001
                            ------                                         ----            ----
<S>                                                                    <C>             <C>
CURRENT ASSETS
        Cash and cash equivalents .................................    $     7,151     $       615
        Accounts receivable .......................................         21,413          10,105
        Accounts receivable - PCS ONE .............................          2,978           5,938
        Inventories, lower of cost or market, at average cost .....          3,602           1,781
        Prepaid expenses ..........................................          7,525           3,817
        Other .....................................................          1,030             494
                                                                       -----------     -----------
          TOTAL CURRENT ASSETS ....................................         43,699          22,750
                                                                       -----------     -----------
INVESTMENTS
        Investments in and advances to affiliated companies .......          5,962           6,431
        Investments available-for-sale ............................          1,355           4,425
                                                                       -----------     -----------
                                                                             7,317          10,856
                                                                       -----------     -----------
PROPERTY, PLANT AND EQUIPMENT
        In service ................................................        294,255         178,274
        Under construction ........................................          9,467           5,034
                                                                       -----------     -----------
                                                                           303,722         183,308
        Less accumulated depreciation .............................         95,631          88,163
                                                                       -----------     -----------
                                                                           208,091          95,145
                                                                       -----------     -----------
OTHER ASSETS
        Conestoga wireless and paging assets held for sale ........          6,665              --
        Goodwill ..................................................        147,488           5,126
        Intangible assets, net of amortization ....................        182,079           1,017
        Deferred income taxes .....................................             --             905
        Other .....................................................         16,008           7,079
                                                                       -----------     -----------
                                                                           352,240          14,127
                                                                       -----------     -----------
        TOTAL ASSETS ..............................................    $   611,347     $   142,878
                                                                       ===========     ===========
                LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
        Borrowings under line of credit ...........................    $        --     $     1,757
        Long-term debt maturing within one year ...................            126              52
        Accounts payable and accrued liabilities ..................         21,040          16,319
        Accrued taxes .............................................         22,666             352
        Accrued interest and dividends ............................          1,885             333
        Advance billings, customer deposits and other .............          5,645           3,668
                                                                       -----------     -----------
          TOTAL CURRENT LIABILITIES ...............................         51,362          22,481
                                                                       -----------     -----------
LONG-TERM DEBT ....................................................        247,783          58,124
                                                                       -----------     -----------
OTHER LIABILITIES
        Equity in net losses of discontinued D&E Wireless
          operations in excess of investments and advances ........             --          10,388
        Deferred income taxes .....................................         88,558              --
        Other .....................................................         11,221           6,564
                                                                       -----------     -----------
                                                                            99,779          16,952
                                                                       -----------     -----------
PREFERRED STOCK OF UTILITY SUBSIDIARY, Series A 4 1/2%,
        par value $100, cumulative, callable at par at the option
        of the Company, authorized 20,000 shares,
        outstanding 14,456 shares .................................          1,446           1,446
                                                                       -----------     -----------
COMMITMENTS
SHAREHOLDERS' EQUITY
        Common stock, par value $0.16, authorized shares 30,000,000          2,502           1,219
          Outstanding shares: 15,386,444 at June 30, 2002
                              7,362,226 at December 31, 2001
        Additional paid-in capital ................................        157,658          39,956
        Accumulated other comprehensive income (loss) .............         (2,876)         (2,833)
        Retained earnings .........................................         58,797          10,637
        Treasury stock at cost, 276,904 shares at June 30, 2002
          276,900 shares at December 31, 2001 .....................         (5,104)         (5,104)
                                                                       -----------     -----------
                                                                           210,977          43,875
                                                                       -----------     -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ........................    $   611,347     $   142,878
                                                                       ===========     ===========
</TABLE>

                 See notes to consolidated financial statements.


                                       2
<PAGE>

                   D & E Communications, Inc. and Subsidiaries

                      Consolidated Statements of Cash Flows

                                 (in thousands)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                                    June 30
                                                                              2002            2001
                                                                              ----            ----
                                                                          (As restated
                                                                           see Note 1)
<S>                                                                       <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES OF
     CONTINUING OPERATIONS ............................................    $     2,721     $     7,738
                                                                           -----------     -----------
CASH FLOWS FROM INVESTING ACTIVITIES
     Capital expenditures, net of proceeds from sales and removal costs        (10,763)        (17,201)
     Business acquisition costs, net of cash acquired of $989 .........       (156,143)             --
     Proceeds from sale of temporary investments ......................             --          17,336
     Purchase of temporary investments ................................             --         (17,333)
     Increase in investments and advances to affiliates ...............         (1,267)         (3,813)
     Decrease in investments and repayments from affiliates ...........            550             374
                                                                           -----------     -----------
      Net Cash Used In Investing Activities from Continuing Operations        (167,623)        (20,637)
                                                                           -----------     -----------
CASH FLOWS FROM FINANCING ACTIVITIES
     Dividends on common stock ........................................         (2,718)         (1,720)
     Payments on long-term debt .......................................        (42,210)            (36)
     Proceeds from long-term debt financing ...........................        160,000              --
     Payment of debt issuance costs ...................................         (7,922)             --
     Net proceeds from (payments on) revolving lines of credit ........        (11,757)         21,383
     Proceeds from issuance of common stock ...........................            570             170
     Purchase of treasury stock........................................             --            (209)
                                                                           -----------     -----------
      Net Cash Provided By Financing Activities from
       Continuing Operations ..........................................         95,963          19,588
                                                                           -----------     -----------
CASH PROVIDED BY (USED IN) CONTINUING OPERATIONS ......................        (68,939)          6,689

CASH PROVIDED BY (USED IN) DISCONTINUED OPERATIONS
     Cash Provided by (Used in) Operating Activites of
      Discontinued Operations .........................................             40             495
     Cash Provided by (Used in) Investing Activities of
      Discontinued Operations .........................................         75,435          (9,343)
                                                                           -----------     -----------
      Net Cash Provided By (Used In ) Discontinued Operations .........         75,475          (8,848)
                                                                           -----------     -----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ......................          6,536          (2,159)

CASH AND CASH EQUIVALENTS
   BEGINNING OF PERIOD ................................................            615           3,527
                                                                           -----------     -----------

   END OF PERIOD ......................................................    $     7,151     $     1,368
                                                                           ===========     ===========
</TABLE>

                 See notes to consolidated financial statements.


                                       3
<PAGE>

                   D&E Communications, Inc. and Subsidiaries

                 Consolidated Statements of Shareholders' Equity

                 For the six months ended June 30, 2002 and 2001

                                 (In thousands)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                         2002                       2001
                                                                         ----                       ----
                                                               (As restated see Note 1)
                                                                  Shares      Amount        Shares       Amount
                                                                ---------    ---------     ---------    ---------
<S>                                                            <C>           <C>           <C>          <C>
COMMON STOCK
   Balance at beginning of year ............................        7,639    $   1,219         7,608    $   1,214

   Common stock issued for acquisition .....................        7,869        1,259            --           --
   Common stock issued for Employee Stock Purchase, Long-
     Term Incentive and Dividend Reinvestment Plans ........          115           18            17            2
   Common stock issued for stock options exercised .........           40            6            --           --
                                                                ---------    ---------     ---------    ---------
   Balance at June 30 ......................................       15,663        2,502         7,625        1,216
                                                                ---------    ---------     ---------    ---------
ADDITIONAL PAID-IN CAPITAL
   Balance at beginning of year ............................                    39,956                     39,374
   Common stock issued for acquisition .....................                   115,668                         --
   Common stock issued for Employee Stock Purchase, Long-
     Term Incentive and Dividend Reinvestment Plans ........                     1,667                        289
   Common stock issued for stock options exercised .........                       367                         --
                                                                             ---------                  ---------
   Balance at June 30 ......................................                   157,658                     39,663
                                                                             ---------                  ---------
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
   Balance at beginning of year ............................                    (2,833)                       467
   Unrealized gain (loss) on investments ...................                    (1,868)                     1,156
   Loss realized on other-than-temporary decline, net of tax                     1,825                         --
                                                                             ---------                  ---------
   Balance at June 30 ......................................                    (2,876)                     1,623
                                                                             ---------                  ---------
RETAINED EARNINGS
   Balance at beginning of year ............................                    10,637                     18,366
   Net income (loss) .......................................                    50,995                     (2,761)
   Dividends on common stock: $.25, $.25 per share .........                    (2,835)                    (1,840)
                                                                             ---------                  ---------
   Balance at June 30 ......................................                    58,797                     13,765
                                                                             ---------                  ---------
TREASURY STOCK
   Balance at beginning of year ............................         (277)      (5,104)         (226)      (4,059)
   Treasury stock acquired .................................           --           --           (11)        (209)
                                                                ---------    ---------     ---------    ---------
   Balance at June 30 ......................................         (277)      (5,104)         (237)      (4,268)
                                                                ---------    ---------     ---------    ---------
TOTAL SHAREHOLDERS' EQUITY .................................       15,386    $ 210,977         7,388    $  51,999
                                                                =========    =========     =========    =========
</TABLE>

<TABLE>
<CAPTION>
                                                                 Three Months Ended           Six Months Ended
                                                                        June 30                    June 30
                                                                  2002         2001          2002         2001
                                                                  ----         ----          ----         ----
<S>                                                             <C>          <C>           <C>          <C>
COMPREHENSIVE INCOME (LOSS)
   Net income (loss) .......................................    $  51,804         ($67)    $  50,995      ($2,761)
   Unrealized gain (loss) on investments, net of income
     taxes of ($774), $445, ($1,198) and $664 ..............       (1,211)         691        (1,868)       1,156
   Loss realized on other-than-temporary decline,
     net of tax of $1,174 ..................................        1,825           --         1,825           --
                                                                ---------    ---------     ---------    ---------
   Total comprehensive income (loss) .......................    $  52,418    $     624     $  50,952      ($1,605)
                                                                =========    =========     =========    =========
</TABLE>

                 See notes to consolidated financial statements.


                                       4
<PAGE>

                    D&E Communications, Inc. and Subsidiaries
                   Part I - Financial Information (continued)

               Item 1. Notes to Consolidated Financial Statements
                        (Dollar amounts are in thousands)
                                   (Unaudited)

(1) RESTATEMENT AND DISCONTINUED OPERATIONS

      RESTATEMENT


      The financial statements for the three and six months ended June 30, 2002
      have been restated in order to properly state the purchase price
      allocation for the Company's acquisition of Conestoga Enterprises, Inc. on
      May 24, 2002, including depreciation and amortization changes necessary to
      reflect proper asset lives for tangible and intangible assets.


      The financial statements for the three and six months ended June 30, 2002
      included a preliminary purchase price allocation for D&E's acquisition of
      Conestoga Enterprises, Inc. As part of the preliminary purchase price
      allocation, the Company estimated the fair value of assets acquired and
      liabilities assumed including one intangible asset of $30,000 for customer
      base and a resultant goodwill of $230,647. The Company also estimated
      depreciable asset lives on property, plant and equipment similar to D&E's
      existing lives.

      Prior to the issuance of our financial statements for the year ended
      December 31, 2002, the Company finalized its valuation with the
      independent appraisers. The final valuation resulted in recognition of
      additional intangible assets, changes in estimated fair values and changes
      in estimated useful lives of the tangible and intangible assets. The most
      significant impact resulted from changes to shorten the estimated useful
      life of property, plant and equipment from the lives used in the Company's
      preliminary evaluation. See note 2 for an updated footnote regarding the
      acquisition and purchase price allocation.

      DISCONTINUED OPERATIONS

      In order to present appropriate comparative information to our investors,
      the financial statements for the three and six months ended June 30, 2002
      have been reclassified in order to classify the operations of the
      Conestoga Wireless Company within continuing operations versus
      discontinued operations. Prior to the issuance of our financial statement
      for the year ended December 31, 2002, the Company became aware of certain
      factors related to the Company's November 12, 2002 Conestoga Wireless
      Company sale agreement, which sale was consummated on January 12, 2003,
      that were deemed to constitute continuing involvement thus precluding
      recognition of the operations as discontinued operations under Statement
      of Financial Accounting Standard No. 144 "Accounting for the Impairment or
      Disposal of Long-Lived Assets". Subsequent to sale, D&E will continue to
      guarantee payment on cell site leases and D&E will have certain financial
      and construction responsibilities under a cell site build-to-suit
      agreement.

      In order to present appropriate comparative information to our investors,
      the Company also has reclassified the results of our paging business as a
      discontinued operation. The paging business met the requirements for
      classification as a discontinued operation in the 3rd Quarter of 2002. As
      such, in order to present appropriate comparative information, the Company
      has reclassified the results of this business as a discontinued operation
      in within this amended Form 10-Q.


                                       5
<PAGE>

                    D&E Communications, Inc. and Subsidiaries
                   Part I - Financial Information (continued)

               Item 1. Notes to Consolidated Financial Statements
                        (Dollar amounts are in thousands)
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                              PURCHASE      CONESTOGA        PAGING
   THREE MONTHS ENDED JUNE 30, 2002          AS PREVIOUSLY     PRICE        WIRELESS       OPERATIONS
                                                REPORTED     RESTATEMENT     RECLASS         RECLASS      AS RESTATED
<S>                                           <C>            <C>            <C>            <C>            <C>
Operating Revenues:
   Communication service revenue              $   22,019     $       --     $      735     $      (81)    $   22,673
   Communication products sold                     3,663             --             30             (3)         3,690
   Other revenue                                     467             --             --             --            467
      Total revenues                              26,149             --            765            (84)        26,830
Operating Expenses:
   Communication service expenses                  8,260             --            416            (58)         8,618
   Cost of communication products sold             3,098             --            164             (5)         3,257
   Depreciation and amortization                   5,581            258             15             (7)         5,847
   Marketing and customer services                 2,713             --            159             (7)         2,865
   Merger-related costs                            1,058            (85)            --             --            973
   General and administrative services             5,601             85            291            (16)         5,961
      Total operating expense                     26,311            258          1,045            (93)        27,521
Operating income (loss)                             (162)          (258)          (280)             9           (691)
Income taxes (benefit)                            (2,060)          (109)          (121)             2         (2,288)
Income (loss) from continuing operations          (3,674)          (149)          (159)             7         (3,975)
Income (loss) from discontinued operations        55,626             --            159             (6)        55,779
Net income (loss)                             $   51,952     $     (149)    $       --     $        1     $   51,804
Basic and diluted earnings per share
   From continuing operations                 $    (0.34)    $    (0.02)    $    (0.01)    $       --     $    (0.37)
   From discontinued operations               $     5.19     $       --     $     0.01     $       --     $     5.20
   Net income (loss) per common share         $     4.85     $    (0.02)    $       --     $       --     $     4.83
</TABLE>



                                       6
<PAGE>

                    D&E Communications, Inc. and Subsidiaries
                   Part I - Financial Information (continued)

               Item 1. Notes to Consolidated Financial Statements
                        (Dollar amounts are in thousands)
                                   (Unaudited)



<TABLE>
<CAPTION>

                                                              PURCHASE      CONESTOGA        PAGING
SIX MONTHS ENDED JUNE 30, 2002              AS PREVIOUSLY      PRICE         WIRELESS      OPERATIONS
                                               REPORTED      RESTATEMENT     RECLASS        RECLASS       AS RESTATED
Operating Revenues:
<S>                                           <C>            <C>            <C>            <C>            <C>
   Communication service revenue              $   37,954     $       --     $      735     $     (107)    $   38,582
   Communication products sold                     6,942             --             30             (4)         6,968
   Other revenue                                     857             --             --             --            857
     Total revenues                               45,753             --            765           (111)        46,407
Operating Expenses:
   Communication service expenses                 15,284             --            416            (76)        15,624
   Cost of communication products sold             5,874             --            164             (6)         6,032
   Depreciation and amortization                   9,465            258             15            (10)         9,728
   Marketing and customer services                 4,862             --            159            (14)         5,007
   Merger-related costs                            1,058            (85)            --             --            973
   General and administrative services             9,140             85            291            (19)         9,497
     Total operating expense                      45,683            258          1,045           (125)        46,861
Operating income (loss)                               70           (258)          (280)            14           (454)
Income taxes (benefit)                            (2,212)          (109)          (121)             5         (2,437)
Income (loss) from continuing operations          (4,482)          (149)          (159)             9         (4,781)
Income (loss) from discontinued operations        55,626             --            159             (9)        55,776
Net income (loss)                             $   51,144     $     (149)    $       --     $       --     $   50,995


Basic and diluted earnings per share
   From continuing operations                 $    (0.50)    $    (0.01)    $    (0.02)    $       --     $    (0.53)
   From discontinued operations               $     6.15     $       --     $     0.02     $       --     $     6.17
   Net income (loss) per common share         $     5.65     $    (0.01)    $       --     $       --     $     5.64

Cash flows provided by operating activities   $    5,448     $   (2,577)    $     (159)    $        9     $    2,721
Cash flows from investing activities          $ (170,200)    $    2,577     $       --     $       --     $ (167,623)
Cash flows from discontinued operations       $   75,325     $       --     $      159     $       (9)    $   75,475
</TABLE>



                                       7
<PAGE>

                    D&E Communications, Inc. and Subsidiaries
                   Part I - Financial Information (continued)

               Item 1. Notes to Consolidated Financial Statements
                        (Dollar amounts are in thousands)
                                   (Unaudited)



<TABLE>
<CAPTION>
                                                              PURCHASE      CONESTOGA        PAGING
AT JUNE 30, 2002                             AS PREVIOUSLY     PRICE         WIRELESS      OPERATIONS
                                               REPORTED      RESTATEMENT     RECLASS        RECLASS       AS RESTATED
<S>                                           <C>            <C>            <C>            <C>            <C>
Current assets                                $   44,002     $     (303)            --             --     $   43,699
Property, plant and equipment                    304,889         (1,167)            --             --        303,722
Accumulated depreciation                         (95,456)           182             --             --        (95,631)
Assets held for sale                              19,000        (12,335)            --             --          6,665
Goodwill                                         231,664        (84,176)            --             --        147,488
Intangible assets, net                            30,455        151,624             --             --        182,079
Other                                             18,755         (2,747)            --             --         16,008
   Total assets                               $  560,626     $   50,721             --             --     $  611,347

Current liabilities                           $   52,747     $   (1,485)            --             --     $   51,362
Deferred income taxes                             36,995         51,563             --             --         88,558
Other                                             10,812            409             --             --         11,221
Retained earnings                                 58,946           (149)            --             --         58,797
Shareholders' equity                             210,843            134             --             --        210,977
  Total liabilities and equity                $  560,626     $   50,721             --             --     $  611,347
</TABLE>


(2) BASIS OF PRESENTATION

            The accompanying consolidated financial statements include the
      accounts of D&E Communications, Inc. and its wholly owned subsidiaries.
      D&E Communications, Inc., including its subsidiary companies, is defined
      and referred to herein as D&E. On May 24, 2002, D&E completed its
      acquisition of Conestoga Enterprises, Inc. (Conestoga). The following
      subsidiaries of Conestoga are included in D&E's June 30, 2002 results
      since the date of the completion of the acquisition:

            The Conestoga Telephone and Telegraph Company and Buffalo Valley
      Telephone Company, which are independent local exchange carriers providing
      both regulated and nonregulated communication services;

            CEI Networks, Inc., which provides long distance and competitive
      local telephone services;

            Conestoga Mobile Systems, Inc., which provides paging communication
      services;

            Infocore, Inc., which provides communication consulting services
      including the design and installation of communications systems;


                                       8
<PAGE>

                    D&E Communications, Inc. and Subsidiaries
                   Part I - Financial Information (continued)

               Item 1. Notes to Consolidated Financial Statements
                        (Dollar amounts are in thousands)
                                   (Unaudited)

            Conestoga Investment, Inc., an investment holding company; and

            Conestoga Wireless Company, which provides wireless personal
      communication services (PCS).

            The accompanying financial statements are unaudited and we have
      prepared them pursuant to generally accepted accounting principles and the
      rules and regulations of the Securities and Exchange Commission (SEC). In
      the opinion of management, the financial statements include all
      adjustments (consisting of normal recurring adjustments) necessary to
      present fairly our results of operations, financial position and cash
      flows for the periods presented. Certain items in the financial statements
      for the three months and six months ended June 30, 2001 have been
      reclassified for comparative purposes to conform to the current periods'
      presentation. In addition, certain information and footnote disclosures
      normally included in financial statements prepared in accordance with
      accounting principles generally accepted in the United States of America
      have been condensed or omitted pursuant to SEC rules and regulations. The
      use of generally accepted accounting principles requires management to
      make estimates and assumptions that affect the reported amounts of assets
      and liabilities and disclosure of contingent assets and liabilities at the
      date of the financial statements and the reported amount of revenues and
      expenses during the reporting period. Actual results could differ from
      those estimates. We believe that the disclosures made are adequate to make
      the information presented not misleading. These financial statements
      should be read in conjunction with D&E's financial statements and notes
      thereto included in our Annual Report on Form 10-K/A for the fiscal year
      ended December 31, 2001 and with D&E's Current Report on Form 8-K related
      to the completion of its acquisition of Conestoga filed with the
      Securities and Exchange Commission on June 10, 2002.

(3) ACQUISITION OF BUSINESS

            On May 24, 2002, we completed the acquisition of Conestoga
      Enterprises, Inc. (Conestoga), a neighboring rural local telephone company
      providing integrated communications services throughout the eastern half
      of Pennsylvania. The acquisition was completed through the merger of
      Conestoga with and into D&E Acquisition Corp., a wholly-owned subsidiary
      of D&E, pursuant to the Amended and Restated Agreement and Plan of Merger,
      dated as of January 9, 2002.

            As of June 30, 2002, the purchase price allocation was preliminary
      and had been determined by D&E based on the report of independent
      appraisers. As disclosed in Note 1, the final appraisal was completed
      subsequently. The final purchase-price allocation reflecting the results
      from the final appraisal is as follows:

            Consideration paid:


                                       9
<PAGE>

                    D&E Communications, Inc. and Subsidiaries
                   Part I - Financial Information (continued)

               Item 1. Notes to Consolidated Financial Statements
                        (Dollar amounts are in thousands)
                                   (Unaudited)


<TABLE>
<S>                                                                         <C>
           Cash consideration to Conestoga stockholders ................    $149,422
           Transaction costs ($937 paid in 2001 and $5,105 paid as of
               June 30, 2002) ..........................................       6,718
           D&E stock to Conestoga stockholders (7,876,655 shares) at
               $14.57 per share based on 3-day average market price per
               share prior to close of the merger on May 24, 2002 ......     114,763
           Fair value of Conestoga stock options .......................       2,165
                                                                            --------
           Purchase price ..............................................    $273,068
                                                                            ========
        Assets acquired:
           Cash ........................................................    $    989
           Accounts receivable .........................................       9,542
           Inventories .................................................       1,918
           Prepaid expenses ............................................      14,596
           Other current assets ........................................         103
           Property, plant and equipment ...............................     111,788
           Other non-current assets ....................................       1,601
           Net assets of wireless and paging operations, held for sale .       6,665
           Customer base (10-15 year life) .............................      75,700
           Franchise (indefinite life) .................................     104,800
           Trademark (3 year life) .....................................       1,200
           Goodwill ....................................................     142,362
                                                                            --------
           Total assets acquired .......................................    $471,264
                                                                            --------

        Liabilities assumed:
           Long-term debt and lines of credit ..........................    $ 79,178
           Accounts payable and accrued liabilities ....................       8,542
           Accrued transaction costs ($2,605 paid through June 30, 2002)       2,605
           Accrued taxes ...............................................      10,298
           Advance billings, customer deposits and other ...............       1,208
           Deferred income taxes .......................................      86,172
           Other .......................................................       7,427
           Capital lease obligations ...................................       2,766
                                                                            --------
           Total liabilities assumed ...................................    $198,196
                                                                            --------

        Net assets acquired ............................................    $273,068
                                                                            ========
</TABLE>



      The Statement of Operations include $973 of costs related to the merger
      including $839 of costs related to an abandoned debt offering contemplated
      to finance the acquisition, as well as $134 of severance costs for
      terminating certain D&E employees as a result of the merger.


      The following unaudited pro forma combined results of operations is
      provided for illustrative purposes only and assumes that this acquisition
      had occurred as of the beginning of each of the periods presented. The
      following unaudited pro forma information should not be relied upon as
      necessarily being indicative of the historical results that would have
      been obtained if this acquisition had actually occurred during those
      periods, nor the results that may be obtained in the future.


                                       10
<PAGE>

                    D&E Communications, Inc. and Subsidiaries
                   Part I - Financial Information (continued)

               Item 1. Notes to Consolidated Financial Statements
                        (Dollar amounts are in thousands)
                                   (Unaudited)



<TABLE>
<CAPTION>
                                                 Three months ended            Six months ended
                                                       June 30,                     June 30,
                                                 2002           2001           2002           2001
                                                 ----           ----           ----           ----
<S>                                            <C>            <C>            <C>            <C>
        Pro forma operating revenues           $ 40,712       $ 41,314       $ 84,190       $ 82,001
        Pro forma income (loss) before
             extraordinary items               $ 52,010          ($496)      $ 51,384        ($1,331)
        Pro forma net income                   $ 52,010          ($496)      $ 51,384        ($1,224)
        Pro forma income (loss) per share      $   2.80         ($0.03)      $   3.05         ($0.08)
</TABLE>


(4) DISCONTINUED OPERATIONS

            D&E WIRELESS

            D&E's fifty percent partnership interest in D&E/Omnipoint Wireless
      Joint Venture, L.P. (PCS ONE) and the related contract services D&E
      provides to PCS ONE constitute a separate segment of our business. On
      October 17, 2001, D&E entered into a definitive agreement to sell its
      interest in PCS ONE to VoiceStream Wireless Corporation for $117,000 less
      working capital and long-term debt adjustments. The related contract
      services we provide to PCS ONE will be discontinued subsequent to the
      sale, but will continue for up to six months post closing.

            During December 2001, D&E obtained required lender approvals and
      passed compliance of the Hart-Scott-Rodino Act requirements. Remaining
      regulatory approvals and other customary closing conditions were deemed to
      be perfunctory. As such, the assets and liabilities and results of
      operations of D&E Wireless are reported as discontinued operations in
      accordance with APB Opinion No. 30 with a measurement date of December 31,
      2001. The only assets or liabilities held for sale were the equity in net
      losses of PCS ONE, which were classified as equity in net losses of
      discontinued D&E Wireless operations in excess of investments and advances
      in the balance sheet.

            In accordance with EITF 85-36, beginning January 1, 2002, through
      disposal date (the phase-out period), losses from D&E Wireless were
      deferred because it was reasonably assured that the ultimate disposition
      of this business would result in the recognition of a gain. Losses were
      deferred until a gain on sale was recognized.

            On April 1, 2002, we consummated our sale of PCS ONE. We received
      $74,168 in cash, which remains subject to post closing adjustments as set
      forth in the sale agreement that are expected to be finalized in the third
      quarter of 2002. In addition, we received equipment with a fair value of
      approximately $2,014. Selling and other estimated costs, offset by
      estimated post-closing adjustments, are approximately $175 and associated
      income taxes are estimated at $29,164. The gain on sale recognized was
      $55,736 after eliminating the $8,893 liability for the equity in net
      losses of discontinued D&E Wireless operations in excess of investments
      and advances. The proceeds from the sale of PCS ONE were used to help
      finance the acquisition of Conestoga Enterprises, Inc. (see Note 3).
      Contract services will continue into the third quarter of 2002.


                                       11

<PAGE>

                    D&E Communications, Inc. and Subsidiaries
                   Part I - Financial Information (continued)

               Item 1. Notes to Consolidated Financial Statements
                        (Dollar amounts are in thousands)
                                   (Unaudited)

            Summarized financial information for the discontinued operations of
      D&E Wireless Services is as follows:

<TABLE>
<CAPTION>
                                                Three months ended June 30,        Six months ended June 30,
                                                ---------------------------        -------------------------
                                                    2002            2001             2002             2001
                                                    ----            ----             ----             ----
<S>                                             <C>               <C>              <C>              <C>
      Revenue                                     $  1,230        $  2,884         $  4,012         $  5,571
      Expenses                                       1,146           2,659            3,591            5,110
                                                  --------        --------         --------         --------
         Operating income                               84             225              421              461
      Equity in net loss of PCS ONE                     --          (2,779)          (1,605)          (5,044)
      Phase-out losses deferred until sale              --              --            1,268               --
      Gain on sale of PCS ONE                       84,900              --           84,900               --
      Other income (expense)                            --              29               --               32
                                                  --------        --------         --------         --------
         Income (loss) from D&E wireless
         operations before taxes                    84,984          (2,525)          84,984           (4,551)
      Income taxes                                  29,199            (881)          29,199           (1,552)
                                                  --------        --------         --------         --------
         Income (loss) from D&E wireless
         operations, net of taxes                 $ 55,785        ($ 1,644)        $ 55,785         ($ 2,999)
                                                  --------        --------         --------         --------
</TABLE>

            The summarized results of operations of PCS ONE were as follows:

<TABLE>
<CAPTION>
                                                 Three months ended June 30,       Six months ended June 30,
                                                 ---------------------------       -------------------------
                                                      2002            2001             2002             2001
                                                      ----            ----             ----             ----
<S>                                              <C>              <C>              <C>              <C>
      Net sales                                   $     --        $ 10,592         $ 12,312         $ 20,266
      Net loss                                          --         ($5,558)         ($3,211)         (10,088)
      Our share of loss                                 --         ($2,779)         ($1,605)          (5,044)
</TABLE>

(5) SALE OF CONESTOGA WIRELESS

            On May 24, 2002, we acquired Conestoga Enterprises, Inc. (see Note
      3). From the date of acquisition, D&E had committed to a plan to sell the
      assets of Conestoga's wireless segment. As such, certain assets are held
      for sale in accordance with Statement of Financial Accounting Standards
      No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets."
      The assets are not depreciated while they are held for sale. D&E expects
      to sell the business within a year from acquisition. No liabilities are
      expected to be included as part of the sale. The carrying amount of the
      major classes of assets included as part of the Conestoga wireless
      business to be sold are as follows:

<TABLE>
<S>                                                                 <C>
      Inventories                                                   $   166
      Property & equipment                                            9,084
      PCS licenses                                                      400
                                                                    -------
         Total assets held for sale                                   9,650
      Less: Fair value of lease guarantee remaining with D&E         (3,200)
                                                                    -------
         Net assets held for sale                                   $ 6,450
                                                                    -------
</TABLE>


                                       12
<PAGE>

                    D&E Communications, Inc. and Subsidiaries
                   Part I - Financial Information (continued)

               Item 1. Notes to Consolidated Financial Statements
                        (Dollar amounts are in thousands)
                                   (Unaudited)

(6) INVESTMENTS IN AFFILIATED COMPANIES

            As of December 31, 2001, D&E owned a one-third investment in EuroTel
      L.L.C. (EuroTel), a domestic corporate joint venture. EuroTel held a 100%
      investment in PenneCom, B.V. (PenneCom), an international
      telecommunications holding company that held a 100% investment in Pilicka
      Telefonia, Sp.zo.o (Pilicka), a telecommunications company located in
      Poland.

            As of December 31, 2001, PenneCom was indebted to EuroTel for
      $10,656 and to the investors in EuroTel for $36,751 (including $14,623 to
      D&E). PenneCom agreed with EuroTel and the EuroTel investors to satisfy a
      portion of its indebtedness to EuroTel and the founders by transferring
      PenneCom's entire equity interests in Pilicka to EuroTel and the founders.
      PenneCom satisfied $3,384 of its indebtedness to EuroTel by transferring
      22.56% of the capital stock of Pilicka to EuroTel, satisfied $4,650 of its
      indebtedness to D&E by transferring 31.00% of the capital stock of Pilicka
      to D&E, and satisfied $6,966 of indebtedness to the other EuroTel
      investors by transferring 46.44% of the capital stock of Pilicka to the
      other EuroTel investors. The total amount of indebtedness satisfied by
      PenneCom was equal to the total estimated fair value of Pilicka at
      December 31, 2001. These transactions were effective as of January 1,
      2002. As a result of these transactions, D&E now has a 31.00% direct
      ownership in Pilicka and an indirect 7.52% ownership in Pilicka, through
      its continuing one-third interest in EuroTel. D&E accounts for both its
      investment in EuroTel and its investment in Pilicka using the equity
      method of accounting.

      The summarized results of operations of EuroTel were as follows:

<TABLE>
<CAPTION>
                                                  Three months ended June 30,      Six months ended June 30,
                                                  ---------------------------      -------------------------
                                                    2002            2001             2002             2001
                                                    ----            ----             ----             ----
<S>                                               <C>             <C>              <C>              <C>
      Net sales                                   $     --        $  1,966         $     --         $  3,674
      Net income (loss)                              ($354)       $  5,909           (1,047)           2,046
      Our share of income (loss)                     ($118)       $  1,730             (349)             442
</TABLE>

      The summarized results of operations of Pilicka were as follows:

<TABLE>
<CAPTION>
                                    Three months ended June 30,         Six months ended June 30,
                                    ---------------------------         -------------------------

                                                2002                               2002
                                              -------                            -------
<S>                                 <C>                                 <C>
      Net sales                               $ 2,415                            $ 4,723
      Net loss                                ($1,136)                           ($1,924)
      Our share of loss                         ($352)                             ($596)
      Investment amortization                   ($232)                             ($232)
      Total loss                                ($584)                             ($828)
</TABLE>


                                       13
<PAGE>

                    D&E Communications, Inc. and Subsidiaries
                   Part I - Financial Information (continued)

               Item 1. Notes to Consolidated Financial Statements
                        (Dollar amounts are in thousands)
                                   (Unaudited)

(7) ACCOUNTING CHANGES AND RECENT ACCOUNTING PRONOUNCEMENTS

            On January 1, 2002, D&E adopted Statement of Financial Accounting
      Standards No. 142, "Goodwill and Other Intangible Assets" (SFAS 142),
      which addresses the accounting for goodwill and intangible assets
      subsequent to their acquisition. With the adoption of SFAS 142, goodwill
      is no longer subject to amortization. As an indefinite lived asset,
      goodwill is still subject to at least an annual assessment for impairment.
      D&E has completed our transitional intangible impairment test, and based
      upon a discounted future cash flows model, the goodwill has been deemed to
      not be impaired.

            The elimination of goodwill amortization would have reduced net loss
      by approximately $377 for the three months and $786 for the six months
      ended June 30, 2001, or $0.05 and $0.10 respectively per basic and diluted
      share. Pro forma net loss and loss per share information are shown as if
      the provisions of SFAS No. 142 were in effect for fiscal 2001.

<TABLE>
<CAPTION>
                                                   Three months ended June 30,        Six months ended June 30,
                                                   ---------------------------        -------------------------
      (Dollars in thousands, except
         per share amounts)                          2002              2001             2002              2001
                                                     ----              ----             ----              ----
<S>                                                <C>               <C>              <C>               <C>
      Reported net income (loss)                   $ 51,804              ($67)        $ 50,995           ($2,761)
      Add: Goodwill amortization                         --               377               --               786
                                                   --------          --------         --------          --------
      Adjusted net income (loss)                   $ 51,804          $    310         $ 50,995           ($1,975)
                                                   --------          --------         --------          --------

      Basic and diluted earnings per share:
      Reported net income (loss)                   $   4.83            ($0.01)        $   5.64            ($0.37)
      Add: Goodwill amortization                         --              0.05               --              0.10
                                                   --------          --------         --------          --------
      Adjusted net income (loss)                   $   4.83          $   0.04         $   5.64            ($0.27)
                                                   --------          --------         --------          --------
</TABLE>


            During the first quarter 2002, D&E also adopted Statement of
      Financial Accounting Standards No. 144, "Accounting for the Impairment or
      Disposal of Long-Lived Assets" (SFAS 144) which addresses issues relating
      to the implementation of Statement of Financial Accounting Standards No.
      121, "Accounting for the Impairment of Long-Lived Assets and for
      Long-Lived Assets to Be Disposed Of." D&E has determined that there is no
      impairment to any long-lived assets. We have also accounted for the
      planned sale of the Conestoga wireless operations in accordance with SFAS
      144 (Note 5).


            Statement of Financial Accounting Standards No. 143, "Accounting for
      Obligations Associated with the Retirement of Long-Lived Assets" (SFAS
      143) was recently issued to provide accounting guidance for legal
      obligations associated with the retirement of long-lived assets. SFAS 143
      is effective for fiscal years beginning after June 15, 2002. D&E is
      currently evaluating the impact this statement will have on our financial
      position and results of operations.


                                       14
<PAGE>

                    D&E Communications, Inc. and Subsidiaries
                   Part I - Financial Information (continued)

               Item 1. Notes to Consolidated Financial Statements
                        (Dollar amounts are in thousands)
                                   (Unaudited)

(8) LONG-TERM DEBT


            During the second quarter of 2002 in connection with the Conestoga
      acquisition (Note 3), D&E incurred additional indebtedness to finance a
      portion of the acquisition and to repay certain existing indebtedness and
      related fees and we also assumed certain existing indebtedness of
      Conestoga. In addition, in the second quarter D&E incurred $839 of costs
      in connection with an abandoned note offering which have been expensed in
      merger-related costs in the statement of operations. The following table
      sets forth total long-term debt outstanding:



<TABLE>
<CAPTION>
                                      Interest                        June 30,       December 31,
      Description                       rate       Maturity             2002            2001
      -----------                     --------     --------           --------       ------------
<S>                                   <C>          <C>                <C>            <C>
      Senior Secured Term Loan B        5.69%        2010             $125,000         $     --
      Senior Secured Term Loan A        5.97%        2011               50,000           50,000
      Senior Secured Revolving
          Credit Facility               5.65%        2009               35,000            8,000
      Secured Term Loan                 9.34%        2014               20,000               --
      Secured Term Loan                 9.36%        2014               15,000               --
      Capital lease obligations                                          2,909              176
                                                                      --------          -------
                                                                       247,909           58,176
      Less current maturities                                              126               52
                                                                      --------          -------
      Total long-term debt                                            $247,783          $58,124
                                                                      ========          =======
</TABLE>

Senior Secured Term Loan B:

D&E has outstanding a new 8 1/2-year variable rate Senior Secured Term Loan B
("Term Loan B") for $125,000. Term Loan B bears interest at our option at either
the U.S. prime rate plus 1.75% to 3.00% or at LIBOR plus 2.50% to 4.00%,
depending on our total leverage ratio. At June 30, 2002 the average interest
rate was 5.69%. Term Loan B requires interest only payments for two years with
increasing quarterly principal payments from the third quarter of 2004 through
the fourth quarter of 2010.

Senior Secured Term Loan A:

The Secured Senior Term Loan A ("Term Loan A") bears interest at a base rate or
at one, two, three or six month LIBOR rates plus an applicable margin based on
our leverage ratio. At June 30, 2002 the average interest rate was 5.97%. The
Term Loan A requires interest only payments for three years with increasing
quarterly principal payments from the third quarter of 2004 through the second
quarter of 2011.

Senior Secured Revolving Credit Facility:

The Senior Secured Revolving Credit Facility ("Credit Facility") is a $75,000 8
1/2-year senior secured reducing revolving credit facility. The Credit Facility
requires interest only payments for two years with increasing quarterly
principal reductions of the amount available to borrow from the third quarter of
2004 through the fourth quarter of 2010. Interest is payable at a base rate or
at one, two, three or six month LIBOR rates plus an applicable margin based on
our leverage ratio. At June 30, 2002 the interest rate was 5.65%. The Credit
Facility also requires a quarterly commitment fee on the unused portion.


                                       15
<PAGE>

                    D&E Communications, Inc. and Subsidiaries
                   Part I - Financial Information (continued)

               Item 1. Notes to Consolidated Financial Statements
                        (Dollar amounts are in thousands)
                                   (Unaudited)

9.34% Secured Term Loan:

The 9.34% Secured Term Loan was assumed as a result of the Conestoga acquisition
(Note 3) and has been recorded at its book value, which approximates fair value.
The 9.34% Secured Term Loan requires interest to be paid quarterly at the stated
rate and also requires principal to be paid in quarterly installments of $500
from 2005 through 2014.

9.36% Secured Term Loan:

The 9.36% Secured Term Loan was assumed as a result of the Conestoga acquisition
(Note 3) and has been recorded at its book value, which approximates fair value.
The 9.36% Secured Term Loan requires interest to be paid quarterly at the stated
rate and also requires principal to be paid in quarterly installments of $375
from 2005 through 2014.


D&E's indebtedness requires that the Company maintains certain financial and
operational covenants. The most restrictive covenant is the total leverage
ratio. At June 30, 2002, D&E was in compliance with all covenants. D&E is also
required to maintain interest rate protection on one-half of the total amount of
senior indebtedness outstanding, with a weighted average life of at least 2
years, beginning on November 24, 2002.


Based on the borrowing rate currently available to us for bank loans, the book
value of long-term debt approximates the fair market value.

Maturities of long-term debt, for each year ending December 31, 2002 through
2006, excluding capital lease obligations are as follows:


<TABLE>
<CAPTION>
                           Year   Aggregate Amount
                           ----   ----------------
<S>                               <C>
                           2002      $     --
                           2003            --
                           2004         8,750
                           2005        21,000
                           2006        27,250
</TABLE>


At December 31, 2001, D&E had $1,757 outstanding under our lines of credit with
domestic banks. As of May 24, 2002, we terminated our lines of credit and repaid
all amounts outstanding.

Capital lease obligations:

      As a result of the Conestoga acquisition, D&E assumed a long-term lease
agreement for a building that requires monthly rent payments of approximately
$24, including interest at 7.95% through April 2020. In addition, D&E has
equipment leases that require monthly payments of $5 through October 2004.

(9) INVESTMENTS, AVAILABLE-FOR-SALE

            During the second quarter of 2002, the company determined that the
      decline in value of two of its available-for-sale securities was other
      than temporary. As such, D&E recorded a $2,999 realized loss with a
      corresponding tax benefit of $1,174.


                                       16
<PAGE>

                    D&E Communications, Inc. and Subsidiaries
                   Part I - Financial Information (continued)

               Item 1. Notes to Consolidated Financial Statements
                        (Dollar amounts are in thousands)
                                   (Unaudited)

(10) BUSINESS SEGMENT DATA


            Our segments are RLEC, CLEC, Internet Services, Systems Integration
      and Conestoga Wireless. In the first quarter of 2002 we renamed our ILEC
      segment our "RLEC" segment and our Networking Services segment our
      "Systems Integration" segment to better define these businesses. The
      measure of profitability for our segments is operating income.


Financial results for D&E's business segments are as follows:

<TABLE>
<CAPTION>
                                    External Revenues       Intersegment Revenues       Operating Income (Loss)
                                    -----------------       ---------------------       -----------------------
                                    Three months ended       Three months ended           Three months ended
                                          June 30,                 June 30,                     June 30,
               Segment              2002         2001         2002          2001          2002          2001
               -------              ----         ----         ----          ----          ----          ----
<S>                                <C>          <C>         <C>            <C>          <C>            <C>
      RLEC ..................      $14,867      $10,171      $   955       $ 1,211       $ 1,131       $ 2,666
      CLEC ..................        3,903        1,729          120            58        (1,068)         (902)
      Internet Services .....          981          365           37             4          (182)         (487)
      Systems Integration ...        5,996        5,650           18            14          (658)       (1,160)
      Conestoga Wireless ....          765           --            6            --          (404)           --
      Corporate, Other
        and Eliminations ....          318          968       (1,136)       (1,287)          490           (59)
                                   -------      -------      -------       -------       -------       -------
      Total .................      $26,830      $18,883      $    --       $    --       $  (691)      $    58
                                   =======      =======      =======       =======       =======       =======
</TABLE>

<TABLE>
<CAPTION>
                                    External Revenues        Intersegment Revenues      Operating Income (Loss)
                                    -----------------        ---------------------      -----------------------
                                    Six months ended            Six months ended           Six months ended
                                         June 30,                   June 30,                   June 30,
               Segment              2002         2001         2002          2001          2002          2001
               -------              ----         ----         ----          ----          ----          ----
<S>                                <C>          <C>          <C>           <C>          <C>           <C>
      RLEC ..................      $25,467      $20,033      $ 1,801       $ 2,185       $ 3,421       $ 4,904
      CLEC ..................        5,592        3,410          227           111        (1,941)       (1,590)
      Internet Services .....        1,860          618           43            11          (471)       (1,140)
      Systems Integration ...       11,486       11,349           25            38        (1,355)       (1,913)
      Conestoga Wireless ....          765           --            6                        (404)
      Corporate, Other
        and Eliminations ....        1,237        1,602       (2,102)       (2,345)          296           (93)
                                   -------      -------      -------       -------       -------       -------
      Total .................      $46,407      $37,012      $    --       $    --       $  (454)      $   168
                                   =======      =======      =======       =======       =======       =======
</TABLE>


                                       17
<PAGE>

                    D&E Communications, Inc. and Subsidiaries
                   Part I - Financial Information (continued)

               Item 1. Notes to Consolidated Financial Statements
                        (Dollar amounts are in thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                        Segment Assets
                                        --------------
                                       June        December
               Segment               30, 2002      31, 2001
                                     --------      ---------
<S>                                  <C>           <C>
      RLEC ....................      $493,392      $ 151,303
      CLEC ....................        63,652         12,232
      Internet Services .......         6,374          1,775
      Systems  Integration ....        22,760         14,787
      Conestoga Wireless ......         6,854             --
      Corporate, Other
        and Eliminations ......        18,315        (37,219)
                                     --------      ---------
      Total ...................      $611,347      $ 142,878
                                     ========      =========
</TABLE>

            The following table shows a reconciliation of the results for the
      business segments to the applicable line items in the consolidated
      financial statements as follows:


<TABLE>
<CAPTION>
                                                              Three months ended             Six months ended
                                                                   June 30,                      June 30,
                                                              2002           2001           2002           2001
                                                              ----           ----           ----           ----
<S>                                                         <C>            <C>            <C>            <C>
      Operating income (loss) from reportable segments      $ (1,181)      $    117       $   (750)      $    261
      Corporate, other and eliminations ..............           490            (59)           296            (93)
      Equity in net income (losses) of affiliates ....          (702)         1,730         (1,177)           442
      Interest expense ...............................        (2,048)          (465)        (2,756)          (918)
      Loss on investments ............................        (2,999)                       (2,999)
      Other, net .....................................           194            413            201            744
                                                            --------       --------       --------       --------
      Income (loss) from continuing operations
        before income taxes and dividends
        on utility preferred stock ...................      $ (6,246)      $  1,736       $ (7,185)      $    436
                                                            ========       ========       ========       ========
</TABLE>



                                       18
<PAGE>

                    D&E Communications, Inc. and Subsidiaries
                   Part I - Financial Information (continued)

       Item 2. Management's Discussion and Analysis of Financial Condition
                            and Results of Operations

The following discussion should be read in conjunction with our consolidated
financial statements, including the notes thereto, included in this quarterly
report on Form 10-Q. Monetary amounts presented in the following discussion are
rounded to the nearest thousand dollars. Certain items in the financial
statements for the three months and six months ended June 30, 2001 have been
reclassified for comparative purposes.

OVERVIEW

      We are a leading rural local telephone company providing integrated
communications services to residential and business customers in markets
throughout south central Pennsylvania. We operate an incumbent rural local
telephone company, or RLEC, in parts of Berks, Lancaster, Union and smaller
portions of three other adjacent counties in Pennsylvania, and a competitive
local telephone company, or CLEC, in the Lancaster, Harrisburg, Reading,
Altoona, Pottstown, State College and Williamsport, Pennsylvania metropolitan
areas, which we refer to as our edge-out markets. We offer our customers a
comprehensive package of communications services including local and long
distance telephone, high speed data, and Internet access services. We also
provide business customers with integrated voice and data network solutions.


     Our segments, excluding our D&E Wireless and paging services, which, as
discussed below, are reported as discontinued segments, are RLEC, CLEC, Internet
Services, Systems Integration and Conestoga Wireless. The measure of
profitability for our segments is operating income.


     Our RLEC revenue is derived primarily from network access charges, local
telephone service, enhanced telephone services and regional toll service.
Network access revenue consists of charges paid by long distance and wireless
companies for access to our network in connection with the completion of long
distance telephone calls. Local telephone service revenue consists of charges
for local telephone services, including monthly charges for basic local service.
Enhanced telephone services revenue is derived from providing special calling
features, such as caller ID, call waiting and a telemarketer call-blocking
service. Regional long distance revenue is derived from providing regional long
distance services to our RLEC customers.

     Our CLEC revenue is derived primarily from network access charges, local
telephone service, enhanced telephone services and long distance service
revenue. Network access revenue consists of charges paid by long distance
companies and other non-CLEC customers for access to our network in connection
with the completion of long distance telephone calls. Local telephone service
revenue consists of charges for local telephone services, including monthly
charges for basic local service. Enhanced telephone services revenue is derived
from providing special calling features, such as caller ID, call waiting and a

                                       19
<PAGE>

                    D&E Communications, Inc. and Subsidiaries
                   Part I - Financial Information (continued)

       Item 2. Management's Discussion and Analysis of Financial Condition
                            and Results of Operations

telemarketer call-blocking service. Long distance revenue consists of charges
for both national and regional long-distance services, a portion of which is
provided on a resale basis.

     Our Internet Services revenue is derived from dial-up and high speed
Internet access services, in addition to web hosting services. We market these
services primarily in our RLEC and CLEC service areas.

     Our Systems Integration revenue is derived from sales of services that
support the design, implementation and maintenance of local and wide area
networks and telecommunications systems. In addition, we sell data and voice
communications equipment and provide custom computer programming service. We
market these products and services primarily in our RLEC and CLEC service areas.


     Conestoga Wireless revenue is derived from providing wireless Personal
Communication Service, including local and long distance telephone services, and
from the sale of wireless communications equipment. We market these products and
services in certain of our RLEC and CLEC markets.



     Our operating costs and expenses primarily include wages and related
employee benefit costs, depreciation and amortization, selling and advertising,
software and information system services and general and administrative
expenses. Our RLEC segment incurs costs related to network access charges,
directory expense, and other operations expenses such as digital electronic
switch expense, engineering and testing costs. Our CLEC incurs costs related to
leased network facilities associated with providing local telephone service to
customers, engineering costs, and network access costs for local calls and long
distance expense. Our Internet Services segment incurs leased network facilities
costs for our dial-up Internet service and for our DSL Internet service. Our
Systems Integration business incurs expenses primarily related to wages and
employee benefit costs, and equipment and materials used in the course of the
installation and provision of our products and services. Our Conestoga Wireless
Segment incurs costs related to network facilities to provide wireless Personal
Communications Service, engineering costs, network access costs and costs of
wireless communications equipment sold.


      We incur access line-related capital expenditures associated with access
line growth, expenditures for upgrading existing facilities and costs related to
the provision of DSL and dial-up Internet services in our RLEC and CLEC
territories. We believe that our capital expenditures related to CLEC access
line growth are generally associated with additional customers and therefore
tend to result in incremental revenue. We believe that our additional capital
expenditures relating to our investment in software and systems will provide us
with a competitive advantage in the marketplace and generally allow for
corresponding reductions in operating expenses.

      As of December 31, 2001, we owned a one-third investment in EuroTel L.L.C.
(EuroTel), a domestic corporate joint venture. EuroTel held a 100% investment in
PenneCom, B.V. (PenneCom), an international telecommunications holding company
that held a 100% investment in Pilicka Telefonia, Sp.zo.o (Pilicka), a
telecommunications company located in Poland.

      As of December 31, 2001, PenneCom was indebted to EuroTel and the
investors in EuroTel, including D&E. PenneCom agreed with EuroTel and the
EuroTel investors to satisfy a portion of its indebtedness to EuroTel and the
founders by transferring PenneCom's entire equity interests in Pilicka to
EuroTel and the founders. The total amount of indebtedness satisfied by PenneCom
was


                                       20
<PAGE>

                    D&E Communications, Inc. and Subsidiaries
                   Part I - Financial Information (continued)

       Item 2. Management's Discussion and Analysis of Financial Condition
                            and Results of Operations

equal to the total estimated fair value of Pilicka at December 31, 2001. As a
result of these transactions, we now have a 31.00% direct ownership in Pilicka
and a 7.52% indirect ownership in Pilicka, through our continuing one-third
interest in EuroTel. We account for both our investment in EuroTel and Pilicka
using the equity method of accounting. We currently are exploring strategic
alternatives with regard to this investment.

      On April 1, 2002, we completed the sale of our investment in PCS ONE,
which has been reported as a discontinued segment resulting in a gain of
$55,785. In the corresponding quarter in 2001, D&E's net loss included a loss of
$1,644 from the wireless services segment. In addition, our share of losses from
our European investments declined from an income of $1,730 in the second quarter
of 2001 to a loss of $702 in the quarter ended June 30, 2002.


      On May 24, 2002, we completed our acquisition of Conestoga Enterprises,
Inc. ("Conestoga"), a neighboring rural local exchange carrier providing
integrated communications services throughout the eastern half of Pennsylvania.
The acquisition was completed through the merger of Conestoga with and into D&E
Acquisition Corp. (the "Merger Sub"), a wholly-owned subsidiary of D&E, pursuant
to the Amended and Restated Agreement and Plan of Merger, dated as of January 9,
2002 (the "Merger Agreement"), by and among D&E, Conestoga and the Merger Sub
(the "Merger"). We paid cash consideration of $149,422 and issued 7,876,655
shares of D&E common stock to Conestoga shareholders pursuant to the Merger
Agreement. We also assumed existing indebtedness of Conestoga and outstanding
options issued pursuant to Conestoga equity compensation plans.


      In connection with the Merger, D&E entered into an Amended and Restated
Credit Agreement dated May 24, 2002 (the "Credit Agreement") with CoBank, ACB
("CoBank"), as a lender and administrative agent and certain other lenders. The
Credit Agreement provides for a new $125 million 8-1/2 year variable rate senior
secured term loan and a $25 million increase to D&E's existing $50 million
revolving credit facility provided by CoBank. The Credit Agreement is also the
governing document for D&E's existing $50 million term loan from CoBank. On May
24, 2002, D&E borrowed the $125 million term loan and $35 million under the
revolving credit facility. These borrowings, along with proceeds from the sale
of our interest in PCS ONE, were used to pay the cash portion of the Merger as
well as to repay certain existing indebtedness and related fees and expenses.
The $125 million term loan and borrowings under the $75 million revolving credit
facility bear interest at D&E's option at either the U.S. prime rate plus 1.75%
to 3.00% or at LIBOR plus 2.50% to 4.00%, depending on D&E's total leverage
ratio. The $50 million term loan bears interest at D&E's option at either the
U.S. prime rate plus 2.00% to 3.125% or at LIBOR plus 2.625% to 4.125%,
depending on D&E's total leverage ratio. D&E is also required to maintain
interest rate protection on one-half of the total amount of senior indebtedness
outstanding, with a weighted average life of at least 2 years, beginning on
November 24, 2002.


                                       21
<PAGE>

                    D&E Communications, Inc. and Subsidiaries
                   Part I - Financial Information (continued)

       Item 2. Management's Discussion and Analysis of Financial Condition
                            and Results of Operations

      The access line data presented below counts access lines associated with
T-1 carrier systems related to our acquired Conestoga business using a different
methodology than our non-Conestoga business. We are in the process of conforming
these two access line count approaches. Management expects the access line count
to be conformed during the third quarter of 2002. We anticipate that any
adjustment to our disclosed access line data (a) will be a positive adjustment
and (b) will be immaterial as T-1 carrier system lines are a relatively small
population of our access lines.


RESULTS OF OPERATIONS

            The following table is a summary of our operating results by segment
            for the three months ended June 30, 2002 and 2001:

<TABLE>
<CAPTION>
                                                                                             CORPORATE,
                                                     INTERNET      SYSTEMS       CONESTOGA    OTHER AND       TOTAL
                                RLEC       CLEC      SERVICES    INTEGRATION     WIRELESS    ELIMINATIONS    COMPANY
                                ----       ----      --------    -----------     --------    ------------    -------
<S>                           <C>        <C>         <C>         <C>             <C>         <C>             <C>
       JUNE 30, 2002
Revenues - External           $ 14,867   $  3,903    $    981    $      5,996    $    765    $        318    $ 26,830
Revenues - Intercompany            955        120          37              18           6          (1,136)         --
                              --------   --------    --------    ------------    --------    ------------    --------
Total Revenues                  15,822      4,023       1,018           6,014         771            (818)     26,830
                              --------   --------    --------    ------------    --------    ------------    --------

Depreciation and                 4,740        479         113             359          --             156       5,847
Amortization
Other Operating Expenses         9,951      4,612       1,087           6,313       1,175          (1,464)     21,674
                              --------   --------    --------    ------------    --------    ------------    --------
Total Operating Expenses        14,691      5,091       1,200           6,672       1,175          (1,308)     27,521
                              --------   --------    --------    ------------    --------    ------------    --------

Operating Income (Loss)          1,131     (1,068)       (182)           (658)       (404)           (490)       (691)
                              --------   --------    --------    ------------    --------    ------------    --------

       JUNE 30, 2001
Revenues - External           $ 10,171   $  1,729    $    365    $      5,650                $        968    $ 18,883
Revenues - Intercompany          1,211         58           4              14                      (1,287)         --
                              --------   --------    --------    ------------                ------------    --------
Total Revenues                  11,382      1,787         369           5,664                        (319)     18,883
                              --------   --------    --------    ------------                ------------    --------

Depreciation and                 2,664        198          50             659                         119       3,690
Amortization
Other Operating Expense          6,052      2,491         806           6,165                        (379)     15,135
                              --------   --------    --------    ------------                ------------    --------
Total Operating Expenses         8,716      2,689         856           6,824                        (260)     18,825
                              --------   --------    --------    ------------                ------------    --------

Operating Income (Loss)          2,666       (902)       (487)         (1,160)                        (59)         58
                              --------   --------    --------    ------------                ------------    --------
</TABLE>

                                       22
<PAGE>

                    D&E Communications, Inc. and Subsidiaries
                   Part I - Financial Information (continued)

       Item 2. Management's Discussion and Analysis of Financial Condition
                            and Results of Operations

            The following table is a summary of our operating results by segment
            for the six months ended June 30, 2002 and 2001:



<TABLE>
<CAPTION>
                                                                                              CORPORATE,
                                                     INTERNET      SYSTEMS       CONESTOGA    OTHER AND       TOTAL
                                RLEC       CLEC      SERVICES    INTEGRATION     WIRELESS    ELIMINATIONS    COMPANY
                                ----       ----      --------    -----------     ---------   ------------    -------
       JUNE 30, 2002
<S>                           <C>        <C>         <C>         <C>             <C>         <C>             <C>
Revenues - External           $ 25,467   $  5,592    $  1,860    $     11,486         765    $      1,237    $ 46,407
Revenues - Intercompany          1,801        227          43              25           6          (2,102)         --
                              --------   --------    --------    ------------    --------    ------------    --------
Total Revenues                  27,268      5,819       1,903          11,511         771            (865)     46,407
                              --------   --------    --------    ------------    --------    ------------    --------

Depreciation and                 7,856        725         211             673          --             263       9,728
Amortization
Other Operating Expenses        15,991      7,035       2,163          12,193       1,175          (1,424)     37,133
                              --------   --------    --------    ------------    --------    ------------    --------
Total Operating Expenses        23,847      7,760       2,374          12,866       1,175           1,161      46,861
                              --------   --------    --------    ------------    --------    ------------    --------

Operating Income (Loss)          3,421     (1,941)       (471)         (1,355)       (404)            296        (454)
                              --------   --------    --------    ------------    --------    ------------    --------
</TABLE>




<TABLE>
<CAPTION>
                                                                                              CORPORATE,
                                                     INTERNET      SYSTEMS                    OTHER AND       TOTAL
                                RLEC       CLEC      SERVICES    INTEGRATION                 ELIMINATIONS    COMPANY
                                ----       ----      --------    -----------                 ------------    -------
<S>                           <C>        <C>         <C>         <C>                         <C>             <C>
       JUNE 30, 2001
Revenues - External .......   $ 20,033   $  3,410    $    618    $     11,349                $      1,602    $ 37,012
Revenues - Intercompany ...      2,185        111          11              38                      (2,345)         --
                              --------   --------    --------    ------------                ------------    --------
Total Revenues ............     22,218      3,521         629          11,387                        (743)     37,012
                              --------   --------    --------    ------------                ------------    --------

Depreciation and ..........      5,179        416          95           1,306                         220       7,216
Amortization
Other Operating Expense ...     12,135      4,695       1,674          11,994                        (870)     29,628
                              --------   --------    --------    ------------                ------------    --------
Total Operating Expenses ..     17,314      5,111       1,769          13,300                        (650)     36,844
                              --------   --------    --------    ------------                ------------    --------

Operating Income (Loss) ...      4,904     (1,590)     (1,140)         (1,913)                        (93)        168
                              --------   --------    --------    ------------                ------------    --------
</TABLE>



CONSOLIDATED OPERATIONS

Three months ended June 30, 2002 compared
to the three months ended June 30, 2001

      Consolidated operating revenues from continuing operations increased
$7,947, or 42.1%, to $26,830 for the three months ended June 30, 2002 from
$18,883 in the same period of 2001. The revenue increase was primarily due to
$8,047 in incremental revenue attributable to the acquisition of Conestoga on
May 24, 2002.

      Consolidated operating income from continuing operations decreased $749 to
a loss of $691 for the three months ended June 30, 2002 from income of $58 in
the same period of 2001. The decrease was primarily attributable to $839 of
financing costs expensed as merger-related costs


                                       23
<PAGE>

                    D&E Communications, Inc. and Subsidiaries
                   Part I - Financial Information (continued)

       Item 2. Management's Discussion and Analysis of Financial Condition
                            and Results of Operations

during the current quarter related to an abandoned debt offering, $134 of
severance charges expensed as merger-related costs during the current quarter
for D&E employees terminated as a result of the merger and a charge to bad debt
expense of $490 for WorldCom receivables due as of June 30, 2002 as a result of
their bankruptcy filing. Management anticipates an additional expense of $176 in
the third quarter related to providing service to WorldCom from the end of the
quarter to the date of their bankruptcy filing. The decrease was partially
offset by the discontinuance of goodwill amortization in 2002 due to the
adoption of SFAS 142 (see Note 7 to our consolidated financial statements), and
lower Internet Services advertising and marketing costs.

      Other income and expense was a net expense of $5,555 in the second quarter
of 2002 compared to a net income of $1,678 in the same period of the prior year.
The equity in the operations of our European affiliates decreased to a loss of
$702 in the second quarter of 2002 from income of $1,730 in 2001 as a result of
a portion of an arbitration award included in 2001. Interest expense increased
to $2,048 from $465 in the second quarter of 2001, as a result of increased
borrowings to finance the acquisition of Conestoga. A loss of $2,999 was
recognized in the second quarter of 2002 for the decline in market value of
certain publicly traded investments that were determined to be other than
temporary declines.

      Income taxes were a benefit of $2,288 in the second quarter of 2002
compared to an expense of $138 in the same period of 2001. Discontinued
operations from D&E Wireless resulted in after-tax income of $55,785 in the
second quarter of 2002 primarily from the completion of the sale of our wireless
partnership interest, compared with the loss of $1,644 in the second quarter of
2001. Our net income was $51,804, or $4.83 in the second quarter of 2002
compared to a net loss of $67, or $0.01 in the second quarter of 2001.


Six months ended June 30, 2002 compared to the six months ended June 30, 2001

      Consolidated operating revenues from continuing operations increased 25.4%
to $46,407 for the six months ended June 30, 2002 from $37,012 in the same
period of 2001. The revenue increase was primarily due to $8,047 in incremental
revenue attributable to the acquisition of Conestoga on May 24, 2002 as well as
an increase of approximately 80% in the number of D&E's customers in our
Internet Services segment and 35% more access lines in our CLEC segment before
including Conestoga's lines.

      Consolidated operating income from continuing operations decreased $622 to
a loss of $454 for the six months ended June 30, 2002 from an income of $168 in
the same period of 2001. The decrease was primarily attributable to $839 of
financing costs expensed as merger-related costs during the current quarter
related to an abandoned debt offering, $134 of severance charges expensed as
merger-related costs during the current quarter for D&E employees terminated as
a result of the merger and a charge to bad debt expense of $490 for WorldCom
receivables due as of


                                       24
<PAGE>

                    D&E Communications, Inc. and Subsidiaries
                   Part I - Financial Information (continued)

       Item 2. Management's Discussion and Analysis of Financial Condition
                            and Results of Operations

June 30, 2002 as a result of their bankruptcy filing. Management anticipates an
additional expense of $176 in the third quarter for the loss related to
providing service to WorldCom from the end of the quarter to the date of their
bankruptcy filing. The decrease was partially offset by the discontinuance of
goodwill amortization in 2002 due to the adoption of SFAS 142 (see Note 7 to our
financial statements), and reduced Internet Services advertising and marketing
expense.

      Other income and expense was a net expense of $6,731 in the first half of
2002 compared to a net income of $268 in the same period of the prior year. The
equity in the operations of our European affiliates decreased to a loss of
$1,177 in the first half of 2002 from an income $442 in 2001 as a result of a
portion of an arbitration award included in 2001. Interest expense increased to
$2,756 from $918 in the first half of 2001, as a result of increased borrowings
to finance the acquisition of Conestoga. A loss of $2,999 was recognized in the
second quarter of 2002 for the decline in market value of certain publicly
traded investments that were determined to be other than temporary declines.

      Income taxes were a benefit of $2,437 in the first half of 2002 compared
to an expense of $255 in the same period of 2001. Discontinued operations of D&E
Wireless resulted in an income of $55,785 after tax in the first half of 2002
primarily from the completion of the sale of our wireless partnership interest,
compared with the loss of $2,999 in the first half of 2001. Our net income was
$50,995, or $5.64 in the first half of 2002 compared to a net loss of $2,761, or
$0.37 in the first half of 2001.

RLEC SEGMENT RESULTS

<TABLE>
<CAPTION>
                             THREE MONTHS ENDED JUNE 30,        SIX MONTHS ENDED JUNE 30,
                             2002       2001      Change       2002       2001      Change
                             ----       ----      ------       ----       ----      ------
<S>                        <C>        <C>        <C>         <C>        <C>        <C>
Revenues:
    Local Telephone        $  4,889   $  2,927   $  1,962    $  8,425   $  6,031   $  2,394
Service
    Network Access            8,248      6,511      1,737      13,957     12,396      1,561
    Other                     2,685      1,944        741       4,886      3,791      1,095
                           --------   --------   --------    --------   --------   --------
Total Revenues               15,822     11,382      4,440      27,268     22,218      5,050
                           --------   --------   --------    --------   --------   --------

Depreciation
and                           4,740      2,664      2,076       7,856      5,179      2,677
Amortization
Other Operating Expenses      9,951      6,052      3,899      15,991     12,135      3,856
                           --------   --------   --------    --------   --------   --------
Total Operating Expenses     14,691      8,716      5,975      23,847     17,314      6,533
                           --------   --------   --------    --------   --------   --------

Operating Income              1,131      2,666     (1,535)      3,421      4,904     (1,483)
                           --------   --------   --------    --------   --------   --------

Access Lines at June 30     146,902     61,720                146,902     61,720
                           --------   --------               --------   --------
</TABLE>


                                       25
<PAGE>

                    D&E Communications, Inc. and Subsidiaries
                   Part I - Financial Information (continued)

       Item 2. Management's Discussion and Analysis of Financial Condition
                            and Results of Operations

      RLEC segment revenues increased 39.0% to $15,822 in the second quarter of
2002 from $11,382 in the same period of 2001. The Conestoga acquisition added
$4,749 while our D&E RLEC revenue decreased $309 from the same period of 2001.
Our D&E local telephone service revenues increased 20.0% to $3,514 in the second
quarter of 2002, from $2,927 in the same period of 2001, driven by a rate
increase effective in December 2001. We experienced a decrease of 13.9% to
$5,607 in D&E's network access revenues in the second quarter of 2002, from
$6,511 in the same period of 2001, as a result of lower call volumes and a
decrease in certain network access rate elements. The access line increase was
the result of 287 additional D&E lines and 84,895 Conestoga lines acquired.

      RLEC operating expenses increased 68.6% to $14,691 in the second quarter
of 2002 from $8,716 in the same period of the prior year. The increase was
primarily attributable to financing costs expensed during the quarter related to
an abandoned debt offering, severance related costs and a charge to bad debt
expense of $428 for WorldCom receivables due as of June 30, 2002 as a result of
their bankruptcy filing. Depreciation expense increased $2,076 as a result of
the Conestoga acquisition and D&E's capital additions in the prior year,
primarily from a new building placed into service in July 2001.

      RLEC segment revenues increased 22.7% to $27,268 in the first half of 2002
from $22,218 in the same period of 2001. The Conestoga acquisition added $4,749
while our D&E RLEC revenue increased $301 from the same period of 2001. Our D&E
local telephone service revenues increased 16.9% to $7,051 in the first half of
2002, from $6,031 in the same period of 2001, driven by a rate increase
effective in December 2001. We experienced a decrease of 8.7% to $11,316 in
D&E's network access revenues in the first half of 2002, from $12,396 in the
same period of 2001, as a result of lower call volumes and a decrease in certain
network access rate elements.

      RLEC operating expenses increased 37.7% to $23,847 in the first half of
2002 from $17,314 in the same period of the prior year. The increase was
primarily attributable to financing costs expensed during the quarter related to
an abandoned debt offering, severance related costs and a charge to bad debt
expense of $428 for WorldCom receivables due as of June 30, 2002 as a result of
their bankruptcy filing. Depreciation expense increased $2,677 as a result of
the Conestoga acquisition and D&E's capital additions in the prior year,
primarily from a new building placed into service in July 2001.


                                       26
<PAGE>

                    D&E Communications, Inc. and Subsidiaries
                   Part I - Financial Information (continued)

       Item 2. Management's Discussion and Analysis of Financial Condition
                            and Results of Operations

CLEC SEGMENT RESULTS


<TABLE>
<CAPTION>
                                 THREE MONTHS ENDED JUNE 30,          SIX MONTHS ENDED JUNE 30,
                                2002        2001      Change        2002        2001      Change
                                ----        ----      ------        ----        ----      ------
<S>                           <C>         <C>         <C>         <C>         <C>         <C>
Revenues:
    Local Telephone           $  1,041    $    346    $    695    $  1,601    $    631    $    970
Service
    Network Access                 611         401         210         995         745         250
    Long Distance                2,279         803       1,476       3,054       1,582       1,472
    Other                           92         237        (145)        169         563        (394)
                              --------    --------    --------    --------    --------    --------
Total Revenues                   4,023       1,787       2,236       5,819       3,521       2,298
                              --------    --------    --------    --------    --------    --------

Depreciation and
Amortization                       479         198         281         725         416         309
Other Operating Expenses         4,612       2,491       2,121       7,035       4,695       2,340
                              --------    --------    --------    --------    --------    --------
Total Operating Expenses         5,091       2,689       2,402       7,760       5,111       2,649
                              --------    --------    --------    --------    --------    --------

Operating Loss                  (1,068)       (902)       (166)     (1,941)     (1,590)       (351)
                              --------    --------    --------    --------    --------    --------

Access Lines at June 30         29,541       5,571                  29,541       5,571
                              --------    --------                --------    --------
</TABLE>


      CLEC segment revenues increased 125.1% to $4,023 in the second quarter of
2002 from $1,787 in same period of 2001. Of this increase, the Conestoga
acquisition added $2,046 while our D&E CLEC revenue increased $190 from the same
period of 2001. The D&E increase was primarily from the addition of access lines
for new customers that increased basic area service revenues. The access line
increase was the result of 3,550 additional D&E lines and 20,420 Conestoga lines
acquired.

      CLEC operating expenses increased 89.3% to $5,091 in the second quarter of
2002 from $2,689 in the same period of the prior year. The increase was
primarily related to the Conestoga acquisition and additional network operating
costs consistent with the larger customer base, higher depreciation expense for
additional equipment added and increased sales and marketing expense related to
commencement of operations in our Harrisburg, Pennsylvania market. The expenses
included a charge to bad debt expense of $62 for WorldCom receivables due as of
June 30, 2002 as a result of their bankruptcy filing.

      CLEC segment revenues increased 65.3% to $5,819 in the first half of 2002
from $3,521 in same period of 2001.The Conestoga acquisition added $2,046 while
our D&E CLEC revenue increased $252 from the same period of 2001. The D&E
increase was primarily from the addition of access lines for new customers that
increased basic area service revenues.

      CLEC operating expenses increased 51.8% to $7,760 in the first half of
2002 from $5,111 in the same period of the prior year. The increase was
primarily related to the Conestoga acquisition and additional network operating
costs consistent with the larger customer base, higher


                                       27
<PAGE>

                    D&E Communications, Inc. and Subsidiaries
                   Part I - Financial Information (continued)

       Item 2. Management's Discussion and Analysis of Financial Condition
                            and Results of Operations

depreciation expense for additional equipment added and increased sales and
marketing expense related to commencement of operations in our Harrisburg,
Pennsylvania market. The expenses included a charge to bad debt expense of $62
for WorldCom receivables due as of June 30, 2002 as a result of their bankruptcy
filing.

INTERNET SERVICES SEGMENT RESULTS

<TABLE>
<CAPTION>

                                 THREE MONTHS ENDED JUNE 30,         SIX MONTHS ENDED JUNE 30,
                                2002        2001       Change       2002        2001       Change
                                ----        ----       ------       ----        ----       ------
<S>                           <C>         <C>         <C>         <C>         <C>         <C>
Revenues                      $  1,018    $    369    $    649    $  1,903    $    629    $  1,274

Depreciation
and                                113          50          63         211          95         116
Amortization
Other Operating Expenses         1,087         806         281       2,163       1,674         489
                              --------    --------    --------    --------    --------    --------
Total Operating Expenses         1,200         856         344       2,374       1,769         605
                              --------    --------    --------    --------    --------    --------

Operating Loss                    (182)       (487)        305        (471)     (1,140)        669
                              --------    --------    --------    --------    --------    --------

Customers at June 30
     DSL                         2,729       1,450                   2,729       1,450
     Dial-up Access             11,906       6,296                  11,906       6,296
     Web-hosting Services          560         310                     560         310
</TABLE>

      Internet Services segment revenues increased 175.9% to $1,018 in the
second quarter of 2002 from $369 in the same period of 2001. Dial-up services
for single user residential and business customers, as well as DSL customers and
web-hosting subscribers increased over 80% in the second quarter of 2002 from
the second quarter 2001. A minimal portion of the increase was attributable to
the Conestoga acquisition. Customer count increases are attributable only to
D&E.

      Internet Services segment operating expenses increased 40.2% to $1,200 in
the second quarter of 2002 from $856 in the same period of the prior year. The
direct cost of operations increased as a result of providing service to the
larger customer base.

      Internet Services segment revenues increased 202.5% to $1,903 in the first
half of 2002 from $629 in the same period of 2001. Dial-up services for single
user residential and business customers, as well as DSL customers and
web-hosting subscriber increases accounted for the revenue increase, with a
minimal portion of the increase attributable to the Conestoga acquisition.

      Internet Services segment operating expenses increased 34.2% to $2,374 in
the first half of 2002 from $1,769 in the same period of the prior year. The
direct cost of operations increased as a result of providing service to the
larger customer base.


                                       28
<PAGE>

                    D&E Communications, Inc. and Subsidiaries
                   Part I - Financial Information (continued)

       Item 2. Management's Discussion and Analysis of Financial Condition
                            and Results of Operations

SYSTEMS INTEGRATION SEGMENT RESULTS

<TABLE>
<CAPTION>
                                THREE MONTHS ENDED JUNE 30,           SIX MONTHS ENDED JUNE 30,
                                2002        2001      Change        2002        2001      Change
                                ----        ----      ------        ----        ----      ------
<S>                           <C>         <C>         <C>         <C>         <C>         <C>
Revenues                      $  6,014    $  5,664    $    350    $ 11,511    $ 11,387    $    124

Depreciation
and                                359         659        (300)        673       1,306        (633)
Amortization
Other Operating Expenses         6,313       6,165         148      12,193      11,994         199
                              --------    --------    --------    --------    --------    --------
Total Operating Expenses         6,672       6,824        (152)     12,866      13,300        (434)
                              --------    --------    --------    --------    --------    --------

Operating Loss                    (658)     (1,160)        502      (1,355)     (1,913)        558
                              --------    --------    --------    --------    --------    --------
</TABLE>

      Systems Integration segment revenues increased 6.2% to $6,014 in the
second quarter of 2002 from $5,664 in the same period of 2001. The Conestoga
acquisition added $610, D&E's product sales increased $202 and D&E's service
revenues decreased $462 from the second quarter of 2001. We believe the decrease
partially relates to the effects of a slowing economy and reductions in customer
spending for communications related infrastructure and consulting services.


      Systems Integration segment operating expenses decreased 2.2% to $6,672 in
the second quarter of 2002 from $6,824 in the same period of the prior year. The
decrease in depreciation and amortization primarily relates to the
discontinuance of amortizing goodwill from two acquisitions in 2000 due to the
adoption of a new accounting pronouncement which amounted to $377 in the second
quarter of 2001. Other operating expense changes in the second quarter of 2002
primarily related to increased cost of equipment sold offset by lower computer
services expense.


      Systems Integration segment revenues increased 1.1% to $11,511 in the
first half of 2002 from $11,387 in the same period of 2001. The Conestoga
acquisition added $610, D&E's product sales increased $415 and D&E's service
revenues decreased $901 from the first half of 2001. We believe the decrease
partially relates to the effects of a slowing economy and reductions in customer
spending for communications related infrastructure and consulting services.


      Systems Integration segment operating expenses decreased 3.3% to $12,866
in the first half of 2002 from $13,300 in the same period of the prior year. The
decrease in depreciation and amortization primarily relates to the
discontinuance of amortizing goodwill from two acquisitions in 2000 due to the
adoption of a new accounting pronouncement, which amounted to $786 for the
six-months ended June 30, 2001. Other operating expense changes in the first
half of 2002 primarily related to increased cost of equipment sold offset by
lower computer services expense.



                                       29
<PAGE>

                    D&E Communications, Inc. and Subsidiaries
                   Part I - Financial Information (continued)

       Item 2. Management's Discussion and Analysis of Financial Condition
                            and Results of Operations

CONESTOGA WIRELESS SEGMENT RESULTS

Conestoga Wireless segment revenues were $771 from the May 24, 2002 date of
acquisition to June 30, 2002. The second quarter and June 30, 2002 year to date
operating loss was $404. The sale of this segment was completed on January 14,
2003.

OTHER INCOME (EXPENSE)

      Other income (expense) for the three months ended June 30, 2002 was a net
expense of $5,555, compared to a net income of $1,678 in the same period of
2001. The equity in the operations of our European affiliates decreased to a
loss of $702 in the second quarter of 2002 from an income $1,730 in 2001 as a
result of a portion of an arbitration award included in 2001. Interest expense
increased to $2,048 from $465 in the second quarter of 2001, as a result of
increased borrowings for the Conestoga acquisition and capital expenditures. A
loss of $2,999 was recognized in the second quarter of 2002 for the decline in
market value of certain publicly traded investments that were determined to be
other than temporary declines.

      Other income (expense) for the first half of 2002 was a net expense of
$6,731, compared to a net income of $268 in the same period of 2001. The equity
in the operations of our European affiliates decreased to a loss of $1,177 in
the first half of 2002 from an income of $442 in 2001 as a result of a portion
of an arbitration award included in 2001. Interest expense increased to $2,756
from $918 in the first half of 2001, as a result of increased borrowings for the
Conestoga acquisition and capital expenditures. A loss of $2,999 was recognized
in the second quarter of 2002 for the decline in market value of certain
publicly traded investments that were determined to be other than temporary
declines.

INCOME TAXES

      Income taxes were a benefit of $2,288 in the second quarter of 2002
compared to an expense of $138 in the same period of 2001. The change in tax
primarily resulted from the taxable income in 2001 changing to a taxable loss in
2002.

      Income taxes were a benefit of $2,437 in the first half of 2002 compared
to an expense of $255 in the same period of 2001. The change in tax primarily
resulted from the taxable income in 2001 changing to a taxable loss in 2002.

DISCONTINUED OPERATIONS

      On April 1, 2002, we completed the sale of our investment in PCS ONE,
which has been reported as a discontinued segment resulting in a gain of
$55,785. In the corresponding quarter in 2001, our loss included a loss of
$1,644 from the wireless services segment.


                                       30
<PAGE>

                    D&E Communications, Inc. and Subsidiaries
                   Part I - Financial Information (continued)

       Item 2. Management's Discussion and Analysis of Financial Condition
                            and Results of Operations

EXTRAORDINARY ITEM

      As a result of moving to an alternative form of regulation during the
first quarter of 2001, in accordance with SFAS 101 "Regulated Enterprises -
Accounting for the Discontinuation of Application of FASB No. 71," $107 of
previously established regulatory tax liabilities were eliminated.

FINANCIAL CONDITION

LIQUIDITY AND CAPITAL RESOURCES

      We have historically generated cash from our operating activities. Our
overall capital resource strategy is to finance capital expenditures for new and
existing lines of businesses and acquisitions partly with operating cash and
through external sources, such as bank borrowings and offerings of debt or
equity securities.

      Net cash provided by continuing operations was $2,721 in the first half of
2002 compared with $7,738 in the same period of the prior year. Increased
operating expenses relating to the expansion of our CLEC and Internet Services
segments and payments related to severance and merger acquired liabilities paid
in the second quarter of 2002 were the major causes of the decline.

      Net cash used in investing activities was $167,623 in the first half of
2002 primarily due to $156,143 in business acquisition costs. Other capital
additions were $10,763 for the period. Capital additions were primarily for
$5,597 for network infrastructure expansion plus $2,284 for CLEC additions and
$1,537 for computers. In the first half of 2001, $17,221 was invested in capital
additions including $6,260 for construction of an office building.

      Net cash provided by financing activities was $95,963 in the first half of
2002. Long-term debt was increased $160,000. The majority of the additional debt
was used to fund the Conestoga acquisition. Of the remainder, $61,889 was used
to repay other long-term loans and lines of credit and to pay debt issuance
costs. Quarterly dividends paid were $2,718, which included dividends paid on
shares issued to Conestoga shareholders in the merger. In the first half of
2001, $21,383 was provided from bank lines of credit and $1,720 was used to pay
quarterly dividends.

EXTERNAL SOURCES OF CAPITAL AT JUNE 30, 2002

      During the second quarter of 2002, we abandoned an offering of senior
notes due to market conditions. We completed our financing from a bank to amend
our existing credit facility to provide a new 8 1/2-year variable rate senior
secured term loan for $125,000 and a $25,000 increase


                                       31
<PAGE>

                    D&E Communications, Inc. and Subsidiaries
                   Part I - Financial Information (continued)

       Item 2. Management's Discussion and Analysis of Financial Condition
                            and Results of Operations

to our existing 8 1/2-year revolving credit facility. In connection with the
amended agreement, we incurred debt issuance costs of approximately $7,922,
which will be amortized over the 8 1/2-year life of the debt. We amended our
existing credit facility to, among other things, increase certain interest rate
provisions, grant the lender a secured position with respect to all credit
facility borrowings and include additional financial covenants.

      As of June 30, 2002, we had $285,000 in credit facilities consisting of
the following:

-     $50,000 single draw 10-year term loan, of which $50,000 was outstanding,

-     $75,000 senior reducing revolving credit loan for 8 1/2 years, of which
      $35,000 was drawn,

-     $125,000 single draw 8 1/2-year term loan, of which $125,000 was
      outstanding,

-     $35,000 single draw 12-year term loan, of which $35,000 was outstanding.

      The $50,000 term loan requires interest only payments for three years with
increasing quarterly principal payments from the third quarter of 2004 through
the second quarter of 2011. The revolving credit facility requires interest only
payments for two years with increasing quarterly principal reductions of the
amount available to borrow from the third quarter of 2003 through the fourth
quarter of 2009. The $125,000 term loan requires interest only payments for two
years with increasing quarterly principal payments from the third quarter of
2004 through the fourth quarter of 2010. The $35,000 term loan requires interest
only payments for three years with equal quarterly payment from the first
quarter of 2005 through the fourth quarter of 2014. Interest on both the $50,000
and $125,000 term loans and the revolving credit facility is payable at a base
rate or at LIBOR rates plus an applicable margin based on our leverage ratio.
Interest on the $35,000 term loan was fixed at 9.34% for $20,000 and 9.36% for
the remaining $15,000 supplement. A commitment fee must be paid on the unused
portion of the revolving credit facility. We are required to maintain interest
rate protection on one-half of the total amount of senior indebtedness
outstanding, with a weighted average life of at least 2 years, beginning on
November 24, 2002.

      The credit facilities include a number of significant covenants that
impose restrictions on our business. These covenants include, among others,
restrictions on additional indebtedness, mergers, acquisitions and the
disposition of assets, sale and leaseback transactions and capital lease
payments. In addition, we are required to comply with financial covenants with
respect to the maximum indebtedness to total capitalization ratio, a maximum
leverage ratio, a debt service ratio and a fixed charge ratio.

      Upon completion of the sale of our interest in PCS ONE on April 1, 2002,
we received approximately $74,168 and subsequently repaid the outstanding
balances on our revolving credit facility and our bank lines of credit. As of
May 24, 2002 we discontinued the previous two lines of credit totaling $20,000.

      For further information regarding our lines of credit and long-term debt,
see Note 8 to our consolidated financial statements included in this Quarterly
Report on Form 10-Q/A.


                                       32
<PAGE>

                    D&E Communications, Inc. and Subsidiaries
                   Part I - Financial Information (continued)

       Item 2. Management's Discussion and Analysis of Financial Condition
                            and Results of Operations

COMMITMENTS, CONTINGENCIES AND PROJECTED USES OF CAPITAL

      Having completed the Conestoga acquisition, we believe that our most
significant commitments, contingencies and projected uses of funds in 2002,
other than for operations, include capital expenditures, the payment of annual
common stock dividends and other contractual obligations.

      We hold a 31% direct interest in Pilicka and a 33% interest in EuroTel,
both of which we account for under the equity method of accounting. Thus,
neither the assets nor the liabilities of Pilicka or EuroTel are presented on a
consolidated basis on our balance sheets. We have committed to loan EuroTel, on
an equal basis with the other investors in EuroTel, certain of its operating
cash needs. In 2001, we made advances of $9,920 pursuant to this commitment. We
advanced $674 in funds to EuroTel in the six months ended June 30, 2002, and we
expect that our total 2002 funding requirements for EuroTel will be
approximately $1,000. We have provided a letter of commitment to advance funds
to EuroTel for 2002.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

      Our discussion and analysis of our results of operations and financial
condition is based upon our consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States. The preparation of the financial statements requires us to make
estimates and judgments that affect the reported amounts. On an on-going basis,
we evaluate our estimates, including those related to intangible assets, income
taxes, revenues, contingencies and impairment of long-lived assets. We base our
estimates on historical experience and other assumptions that are believed to be
reasonable under the circumstances. Actual results may differ from these
estimates under different assumptions or conditions, as further described below.

      Note 2 to our consolidated financial statements included in our Annual
Report on Form 10-K for the year ended December 31, 2001 provides a summary of
all significant accounting policies that we follow in the preparation of our
financial statements. We have identified the following critical accounting
policies as those that are the most significant to our financial statement
presentation and that require difficult, subjective and complex judgments:

Revenue Recognition

      Revenues for all of our business segments are generally recorded when
services are provided or products are delivered. Our RLEC and CLEC pricing is
subject to oversight by both state and federal regulatory commissions. Such
regulation also covers services, competition and other public policy issues.
Different interpretations by regulatory bodies may result in adjustments in


                                       33
<PAGE>

                    D&E Communications, Inc. and Subsidiaries
                   Part I - Financial Information (continued)

       Item 2. Management's Discussion and Analysis of Financial Condition
                            and Results of Operations

future periods to revenues derived from our RLEC and CLEC operations. We monitor
these proceedings closely and make adjustments to revenue accordingly.

      We receive a portion of our interstate access revenues in our RLEC and
CLEC segments from settlement pools in which we participate with other telephone
companies through the National Exchange Carrier Association, Inc. (NECA). These
pools were established at the direction of the FCC and are funded by interstate
access service revenues, which the FCC regulates. Revenues earned through this
pooling process are initially recognized based on estimates and are subject to
adjustments that may either increase or decrease the amount of interstate access
revenues. If the actual amounts that we receive from the settlement pools differ
from the amounts that we have recorded as accounts receivables on our balance
sheets, we would be required to record the amount of such a reduction or
increase as an adjustment to our earnings. Historically, we have not experienced
significant adjustments to our revenues as a result of our participation in
these pools.

Regulated Asset Depreciation

      We use a composite group remaining life method and straight-line composite
rates to depreciate the regulated property assets of our RLEC and CLEC segments.
Under this method, when we replace or retire such assets, we deduct the net book
value of these assets and charge it to accumulated depreciation. The effect of
this accounting is to amortize any gains or losses on dispositions over the
service lives of the remaining regulated telephone property assets rather than
recognizing such gain or loss in the period of retirement.

      In addition, use of the composite group remaining life method requires
that we periodically revise our depreciation rates. Such revisions are based on
asset retirement activity, cost of removal and salvage values and often require
that we make related estimates and assumptions. If actual outcomes differ from
our estimates and assumptions, we may be required to adjust depreciation and
amortization expense, which could impact our earnings.

Goodwill and Intangible Assets

      Purchase price accounting requires extensive use of accounting estimates
and judgments to allocate the purchase price to the fair market value of the
assets and liabilities purchased. In our recording of the purchase of Conestoga
Enterprises, we have engaged a valuation expert to assist us in determining the
fair value of these assets and liabilities. Included in the preliminary asset
valuation for this purchase was the valuation of intangible assets that will be
amortized over their estimated useful lives.

      Effective January 1, 2002, we adopted SFAS No. 142, "Goodwill and Other
Intangible Assets" which requires that goodwill and indefinite-lived intangible
assets resulting from business combinations no longer be amortized, but instead
be reviewed for recoverability which may result


                                       34
<PAGE>

                    D&E Communications, Inc. and Subsidiaries
                   Part I - Financial Information (continued)

       Item 2. Management's Discussion and Analysis of Financial Condition
                            and Results of Operations

in periodic write-downs. We will assess on an annual basis the fair values of
the reporting units holding the goodwill and any intangibles and, if necessary,
assess on an interim basis for any impairments. Any write-offs would result in a
charge to earnings and a reduction in equity in the period.

Impairment of Long-Lived Assets

      Based upon the provisions of SFAS No. 144, "Accounting for the Impairment
or Disposal of Long-Lived Assets," we review assets and finite-lived intangibles
for impairment whenever events or changes in circumstances indicate that the
carrying value of the asset may not be recoverable. Our assets subject to SFAS
No. 144 include our property, plant and equipment and certain intangibles. A
determination of impairment is made based on estimates of future cash flows.
While we have never recorded an impairment charge under SFAS 144, future events
or changes in circumstances could result in a charge to earnings.

Investment in Unconsolidated Affiliates

      We have investments and advances to affiliated entities that are accounted
for under the equity method of accounting. We periodically evaluate whether
there have been declines in value in these investments, and if so, whether these
declines are considered temporary or other-than-temporary. Other-than-temporary
declines would be recognized as realized losses in earnings. Evidence of a loss
in value includes, but is not limited to, our inability to recover the carrying
amount of the investment or the inability of the investee to sustain an earnings
capacity, which would justify the carrying amount of the investment. The fair
value of an investment that is less than its book value may indicate a loss in
value of the investment. Our evaluations are based on many factors, including
the duration and extent to which the fair value is less than carrying amount;
the financial health of and business outlook for the investee, including
industry performance, changes in technology, and operational and financing cash
flow factors; and our intent and ability to hold the investment, including
strategic factors.

Retirement Benefits

      Retirement benefits are a significant cost of doing business and yet
represent obligations that will be settled in the future. Retirement benefit
accounting is intended to reflect the recognition of future benefit costs over
the employee's approximate service period based on the terms of the plans and
the investment and funding decisions made by a company. We record the costs of
providing retirement benefits in accordance with SFAS No. 87 "Employers'
Accounting for Pensions". Our estimates include assumptions regarding the
discount rate to value the future


                                       35
<PAGE>


                    D&E Communications, Inc. and Subsidiaries
                   Part I - Financial Information (continued)

       Item 2. Management's Discussion and Analysis of Financial Condition
                            and Results of Operations

obligation and the expected return on our plan assets. We use discount rates in
line with current market interest rates on high quality fixed rate debt
securities. Our return on assets is based on our current expectation of the
long-term returns on assets held by the plan. Changes in these key assumptions
can have a significant impact on the projected benefit obligations, funding
requirements and periodic benefit costs that we incur.

Income Taxes

      We file a consolidated federal income tax return. We have two categories
of income taxes: current and deferred. Current taxes are those amounts we expect
to pay when we file our tax returns. Since we must report some of our revenues
and expenses differently for our financial statements than we do for income tax
purposes, we record the tax effects of those differences as deferred tax assets
and liabilities in our consolidated balance sheets. These deferred tax assets
and liabilities are measured using the enacted tax rates that are currently in
effect.

      Management judgment is required in determining the provision for current
income taxes, deferred tax assets and liabilities, and any valuation allowance
recorded against the net deferred tax assets. A valuation allowance is
established for any deferred tax asset that we may not be able to use in the
preparation and filing of our future tax returns. We have recorded a valuation
allowance due to uncertainties related to the ability to utilize some of the
deferred tax assets, consisting primarily of equity income losses carried
forward before they expire.

RECENT ACCOUNTING PRONOUNCEMENTS

      During the first quarter 2002, we adopted Statement of Financial
Accounting Standards No. 142, "Goodwill and Other Intangible Assets" (SFAS 142),
which addresses the accounting for goodwill and intangible assets subsequent to
their acquisition. Annual goodwill amortization of approximately $1,440 ceased
as of January 1, 2002 as a result of adopting SFAS 142. During the first quarter
2002, we also adopted Statement of Financial accounting Standards No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets" (SFAS 144)
which addresses issues relating to the implementation of Financial Accounting
Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of." We have determined that there is no
impairment to any long-lived assets. However we have accounted for our planned
sale of Conestoga Wireless segment in accordance with SFAS 144.

      Statement of Financial Accounting Standards No. 143, "Accounting for
Obligations Associated with the Retirement of Long-Lived Assets" (SFAS 143) was
recently issued to provide accounting guidance for legal obligations associated
with the retirement of long-lived assets. SFAS 143 is effective for fiscal years
beginning after June 15, 2002. We are currently evaluating the impact this
statement will have on our financial position and results of operations.


                                       36
<PAGE>

                    D&E Communications, Inc. and Subsidiaries
                   Part I - Financial Information (continued)

       Item 2. Management's Discussion and Analysis of Financial Condition
                            and Results of Operations

FORWARD-LOOKING STATEMENTS

      This quarterly report contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Forward looking statements provide our current
expectations or forecasts of future events. You can identify these statements by
the fact that they do not relate strictly to historical or current facts. These
statements may relate to our financial condition, results of operations, plans,
objectives, future performance and business. Often these statements include
words such as "believes," "expects," "anticipates," "estimates," "intends,"
"strategy," "plan," or similar words or expressions. In particular, statements,
express or implied, concerning future operating results, the ability to generate
income or cash flows, or our capital resources or financing plans are
forward-looking statements. These forward-looking statements involve certain
risks and uncertainties. Our actual performance or achievements may differ
materially from those contemplated by these forward-looking statements.

      You should understand that various factors, in addition to those discussed
in the section titled "Factors Affecting Our Prospects" and elsewhere in this
document, could affect our future results and could cause results to differ
materially from those expressed in these forward-looking statements. You are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date of this document. All subsequent written and oral
forward-looking statements attributable to us are expressly qualified in their
entirety by the cautionary statements contained or referred to in this report.
We do not undertake any obligation to release publicly any revisions to these
forward-looking statements to reflect events or circumstances after the date of
this document or to reflect the occurrence of unanticipated events.

            FACTORS AFFECTING OUR PROSPECTS

            THE COMMUNICATIONS INDUSTRY IS BECOMING INCREASINGLY COMPETITIVE,
            AND THIS COMPETITION HAS RESULTED IN PRICING PRESSURE ON OUR SERVICE
            OFFERINGS.

            As a provider of integrated communications services, we face
            competition from:

            - competitive local exchange carriers, including Adelphia Business
            Solutions (which has received regulatory approval to compete with us
            in our RLEC territory using its own facilities), Commonwealth
            Telephone Enterprises and XO Communications;

            - Internet service providers, including AOL, EarthLink and MSN;

            - cable television companies, including Adelphia Communications,
            Comcast, AT&T Broadband and Pencor Services;


                                       37
<PAGE>

                    D&E Communications, Inc. and Subsidiaries
                   Part I - Financial Information (continued)

       Item 2. Management's Discussion and Analysis of Financial Condition
                            and Results of Operations

            - wireless services providers, including AT&T Wireless, Cingular
            Wireless, Sprint PCS and VoiceStream Wireless;

            - providers of communications services such as long distance
            services, including, AT&T, MCI WorldCom and, as a consequence of its
            recently received regulatory approval to provide long distance
            services in Pennsylvania, Verizon Communications; and

            - systems integration providers, including Morefield, Williams,
            IntelliMark and Weidenhammer Systems.

            Many of our competitors have substantially greater financial,
            technical and marketing resources, greater name recognition and more
            established relationships with a larger base of current and
            potential customers than us. Accordingly, it may be difficult to
            compete against these communications providers. In addition, we
            cannot assure you that we will be able to achieve or maintain
            adequate technology to remain competitive. Accordingly, it may be
            difficult to compete in our markets.

            WE ARE SUBJECT TO A COMPLEX AND UNCERTAIN REGULATORY ENVIRONMENT
            THAT MAY REQUIRE US TO ALTER OUR BUSINESS PLANS AND FACE INCREASED
            COMPETITION.

            The United States communications industry is subject to federal,
            state and other regulations that are continually evolving. As new
            communications laws and regulations are issued, we may be required
            to modify our business plans or operations and may not be able to do
            so in a cost-effective manner. Federal and state regulatory trends
            toward a more competitive marketplace through reduced competitive
            entry standards are likely to have negative effects on our business
            and our ability to compete. The regulatory environment governing
            ILEC operations has been and will likely continue to be very liberal
            in its approach to promoting competition and network access, which
            may increase the likelihood of new competitors offering similar
            services to our service areas. The introduction of new competitors
            could have a negative effect on our operating results.

            WE HAVE RECEIVED A LIMITED SUSPENSION FROM CERTAIN INTERCONNECTION
            REQUIREMENTS OF THE TELECOMMUNICATIONS ACT OF 1996. UPON EXPIRATION
            OF THE SUSPENSION, WE MAY BE SUBJECT TO ADDITIONAL COMPETITION FOR
            TELECOMMUNICATIONS SERVICES.

            Congress specifically recognized that the movement towards increased
            competition under the Telecommunications Act of 1996 (TA-96)
            requires accommodation for the different market characteristics of
            areas served by rural and small incumbent carriers. In this regard,
            the Pennsylvania Public Utility Commission (PA PUC) previously
            granted our RLECs a limited suspension until July 2002 from certain
            interconnection requirements of the TA-96. The suspension reduces
            our interconnection obligations in the RLEC territory


                                       38
<PAGE>

                    D&E Communications, Inc. and Subsidiaries
                   Part I - Financial Information (continued)

       Item 2. Management's Discussion and Analysis of Financial Condition
                            and Results of Operations

            by excluding us from requirements that would allow competitors
            access to our customers by relying upon our service and facilities.

            In June 2002, our RLECs petitioned the PA PUC for an extension of
            certain protections provided in the original suspension. Our RLECs
            anticipate PA PUC action on the petition during the third quarter of
            2002. While the request is under review, the terms and conditions of
            the original suspension remain in effect. Although narrower in
            scope, the June 2002 petition, if granted, would continue to
            preclude the use of our RLEC services and facilities by a
            competitor. If our RLECs do not receive additional extensions of
            this suspension, competitors will be allowed to seek removal of our
            rural exemption for the purposes of using our services and
            facilities through interconnection agreements to provide competitive
            services. If this event were to occur, our RLECs would exercise
            their right to petition the PA PUC to deny the competitor's request.
            The prospective competitor would have the burden of proof to show
            that the request is not unduly economically burdensome, is
            technically feasible, and is consistent with universal service
            principles.

            The introduction of new competitors could result in the loss of
            customers and have a negative effect on our operating results.
            However, such loss would be partially offset by charges paid to our
            RLECs by said competitors for utilization of our services and
            networks.

            WE MUST SECURE UNBUNDLED NETWORK ELEMENTS AT REASONABLE RATES OR
            CLEC GROWTH MAY BE DELAYED AND THE QUALITY OF SERVICE MAY DECLINE.

            In providing our CLEC service, we interconnect with and use other
            telephone companies' networks to access certain of their customers.
            Therefore, we depend, in certain circumstances, upon the technology
            and capabilities of these other telephone companies, the quality and
            availability of other telephone companies' lines and other telephone
            companies' maintenance of these lines. We must also maintain
            efficient procedures for ordering, provisioning, maintaining and
            repairing lines from these other telephone companies. We may not be
            able to obtain the lines and services of satisfactory quality that
            we require from other telephone companies, or on other satisfactory
            terms and conditions, in which case we may experience delays in the
            growth of our competitive local exchange carrier networks and the
            degradation of the quality of our service to customers.

            We also provide digital subscriber line services. To provide
            unbundled DSL-capable lines that connect each end-user to our
            equipment, we rely on other telephone companies. The
            Telecommunications Act of 1996 generally requires that charges for
            these unbundled network elements be cost-based and
            nondiscriminatory. Charges for DSL-capable lines and other unbundled
            network elements may vary based on rates proposed by other telephone
            companies and approved by state regulatory commissions. Increases in
            these


                                       39
<PAGE>

                    D&E Communications, Inc. and Subsidiaries
                   Part I - Financial Information (continued)

       Item 2. Management's Discussion and Analysis of Financial Condition
                            and Results of Operations

            rates or reductions in ILEC unbundling obligations could harm our
            CLEC business.

            Many of the FCC's rules governing the rates, terms and conditions on
            which unbundled network elements are offered by ILECs are under
            challenge in various Courts of Appeal and the U.S. Supreme Court.
            Any decision which limits the FCC's ability to regulate the rates,
            terms and conditions on which unbundled network elements are offered
            to CLECs may adversely impact our ability to compete. Additionally,
            the FCC's rules concerning the availability of unbundled network
            elements and the regulatory status of the rates, terms and
            conditions on which they are offered are subject to revision. If the
            FCC constricts the list of elements it regulates as unbundled
            network elements, such an action may have an adverse impact on our
            ability to compete.

            IF WE EXPAND OUR CLEC OPERATIONS INTO NEW MARKETS, THE SUCCESS OF
            THIS EXPANSION WILL BE DEPENDENT ON INTERCONNECTION AGREEMENTS,
            PERMITS AND RIGHTS-OF-WAY, AND THE FAILURE TO OBTAIN THESE
            AGREEMENTS AND PERMITS COULD HAMPER ANY SUCH EXPANSION.

            If we expand our CLEC operations into new markets, our success will
            depend, in part, on our ability to manage existing interconnection
            agreements and to enter into and implement new interconnection
            agreements with other telephone companies. Our failure to obtain
            these agreements and permits could hamper this expansion.
            Interconnection agreements are subject to negotiation and
            interpretation by the parties to the agreements and are subject to
            state regulatory commission, FCC and judicial oversight. If the
            terms of these interconnection agreements need to be renegotiated,
            we may not be able to renegotiate existing or enter into new
            interconnection agreements in a timely manner or on favorable terms.
            We must also maintain existing, and obtain new, local permits,
            including rights to utilize underground conduit and pole space and
            other rights-of-way. We may not be able to maintain our existing
            permits and rights or obtain and maintain other required permits and
            rights on acceptable terms. Cancellation or nonrenewal of
            interconnection agreements, permits, rights-of-way or other
            arrangements could significantly harm our business.

            DEMAND FOR OUR SYSTEMS INTEGRATION OFFERINGS IS SENSITIVE TO
            DOWNTURNS IN THE UNITED STATES ECONOMY GENERALLY.

            Unlike our RLEC, CLEC and Internet services businesses which
            generate revenues of a monthly recurring nature, demand for our
            systems integration offerings is generally more sensitive to
            downturns in the United States economy. In an economic downturn,
            consumers and businesses often curtail spending on voice and data
            network infrastructure. As a result, we may experience lower than
            expected revenues for our systems integration business during an
            economic downturn. Reduced demand for our systems integration
            offerings could adversely affect the operating profitability of our
            systems integration


                                       40
<PAGE>

                    D&E Communications, Inc. and Subsidiaries
                   Part I - Financial Information (continued)

       Item 2. Management's Discussion and Analysis of Financial Condition
                            and Results of Operations

            segment, which could have an adverse effect on our operating results
            and financial condition.

            OUR CHAIRMAN AND FOUR OTHER MEMBERS OF OUR BOARD OF DIRECTORS CAN
            SIGNIFICANTLY INFLUENCE THE ELECTION OF DIRECTORS AND OTHER MATTERS
            IN THEIR CAPACITIES AS TRUSTEES OF A VOTING TRUST.

            Certain of our shareholders are parties to a Voting Trust Agreement,
            dated as of November 19, 1992, pursuant to which the voting trustees
            have the right to exercise sole voting power on all matters
            submitted to our shareholders for a vote. The trustees of the voting
            trust are our chairman and four of our other directors. The shares
            represented by the voting trust are voted in accordance with
            resolutions adopted by a majority of the voting trustees. The Voting
            Trust Agreement will expire on November 19, 2002. It is our
            understanding that the parties to the voting trust intend to renew
            this agreement, although the terms, including the number of shares
            covered by the agreement, of any such renewal may differ from the
            terms of the current agreement.

            As of August 9, 2002, the voting trust beneficially owned 18.9% of
            our outstanding shares of common stock. As a result, these directors
            are able to significantly influence the election of directors and
            other matters submitted to shareholders for a vote. There can be no
            assurance that the interests of the trustees of the voting trust
            will not conflict with the interests of our other security holders.

            WE MAY BE UNABLE TO INTEGRATE SUCCESSFULLY THE BUSINESS OPERATIONS
            OF D&E AND CONESTOGA AND SUCH INABILITY COULD HAVE AN ADVERSE IMPACT
            ON OUR PROFITABILITY.

            The integration of the systems and operations of D&E and Conestoga
            will involve significant risks. D&E and Conestoga have different
            operating support systems, including billing, accounting, order
            management, toll rating, trouble reporting and customer service
            systems, which may be difficult to integrate. In addition, some of
            Conestoga's employees are members of a labor union and are subject
            to the terms of a collective bargaining agreement. Because D&E
            employees are not unionized, management of the combined company may
            face difficulties in integrating employees with different work
            rules. Even if integration of the operating systems and employees is
            ultimately successful, the amount of management attention diverted
            to integration efforts may limit their ability to work on other
            business matters.

            OUR INCREASED INDEBTEDNESS COULD RESTRICT OUR OPERATIONS.

            As of June 30, 2002, we had approximately $247,909 of total
            indebtedness, including current maturities, which increased in
            connection with the Conestoga acquisition. This


                                       41
<PAGE>

                    D&E Communications, Inc. and Subsidiaries
                   Part I - Financial Information (continued)

       Item 2. Management's Discussion and Analysis of Financial Condition
                            and Results of Operations

            increased indebtedness could restrict our operations due to the
            following factors, among others:

            - we will use a substantial portion of our cash flow from
            operations, if any, to pay principal and interest on our
            indebtedness, which would reduce the funds available for working
            capital, capital expenditures, acquisitions and other general
            corporate purposes;

            - our indebtedness may limit our ability to obtain additional
            financing on satisfactory terms, if at all;

            - insufficient cash flow from operations may cause us to attempt to
            sell assets, restructure or refinance our debt, or seek additional
            equity capital, which we may be unable to do at all or on
            satisfactory terms;

            - our level of indebtedness may make us more vulnerable to economic
            or industry downturns;

            - we may not have the ability to pay dividends to our shareholders;
            and

            - our debt service obligations increase our vulnerabilities to
            competitive pressures, as we may be more leveraged than many of our
            competitors.

            OUR CREDIT FACILITIES CONTAIN COVENANTS THAT COULD SIGNIFICANTLY
            RESTRICT OUR OPERATIONS.

            The agreements governing our indebtedness contain covenants imposing
            financial and operating restrictions on our business. These
            restrictions may limit our ability to take advantage of potential
            business opportunities as they arise and adversely affect the
            conduct of our business. These covenants will place restrictions on
            our ability and the ability of our subsidiaries to, among other
            things:

            - incur more indebtedness

            - pay dividends, redeem or repurchase our stock or make other
              distributions;

            - make acquisitions or investments;

            - use assets as security in other transactions;

            - enter into transactions with affiliates;

            - merge or consolidate with others;

            - dispose of assets or use asset sale proceeds;

            - create liens on our assets; and

            - extend credit.

            In addition, our credit facilities require that we maintain
            specified financial ratios. Our ability to maintain these financial
            ratios can be affected by operating performance or other events
            beyond our control. Accordingly, we cannot assure you that we will
            meet these ratios. Our ability to comply with the provisions
            governing our indebtedness may be adversely affected by our
            operations and by changes in economic or business conditions or


                                       42
<PAGE>
                    D&E Communications, Inc. and Subsidiaries
                   Part I - Financial Information (continued)

            other events beyond our control. In addition, our failure to comply
            with our indebtedness-related obligations could result in an event
            of default under our credit facilities or future indebtedness.

            THE SALE OF THE WIRELESS BUSINESSES OF CONESTOGA WITH ONGOING
            GUARANTEES COULD RESULT IN A DECREASE OF OUR EXPECTED RESOURCES
            AVAILABLE FOR THE OPERATION OF OUR BUSINESS, AND MAY ADVERSELY
            AFFECT THE CONTINUING OPERATIONS OF THE BUSINESS.

            As contemplated by the merger agreement with Conestoga, D&E intended
            to dispose of Conestoga's wireless assets and business. We closed
            the sale of Conestoga's entire wireless business on January 14,
            2003. The requirement to complete the build out of certain tower
            sites and the continued guarantee of certain lease obligations of
            the purchaser may adversely affect our other businesses by requiring
            additional financing to meet those obligations.

                 Item 3. Quantitative and Qualitative Disclosure
                               About Market Risks

D&E does not invest in derivative financial instruments or other market risk
sensitive instruments for the purpose of managing its foreign currency exchange
rate risk or for any other purpose. We will enter into an interest rate
protection agreement on one-half of the total amount of senior indebtedness
outstanding, with a weighted average life of at least 2 years, by November 24,
2002 as required by the loan agreement.


                                       43
<PAGE>
                    D&E Communications, Inc. and Subsidiaries
                           Part II - Other Information

Item 1.  Legal Proceedings

      We are involved in various legal proceedings arising in the ordinary
course of our business. In the opinion of management, the ultimate resolution of
these matters will not have a material adverse effect on our consolidated
financial condition or results of operations.

Item 4.  Submission of Matters to a Vote of Security Holders

(a) Date of meeting. The Annual Meeting of Shareholders was held on May 23,
2002.

(b) Matters Voted Upon at Annual Meeting. The vote tabulations in respect to the
three matters voted upon at the 2002 Annual Meeting were as follows:

      (1)   Election of the following directors to hold office for a three year
            term to expire in 2004.

<TABLE>
<CAPTION>
        Director                  For              Withheld
        --------                  ---              --------
<S>                             <C>                <C>
     John Amos                  6,545,194           85,091
     G. William Ruhl            6,475,728          154,357
     W. Garth Sprecher          6,469,214          161,071
</TABLE>

      (2)   Approval of the acquisition of Conestoga Enterprises, Inc.

<TABLE>
<CAPTION>
                                       For         Against      Abstain
                                       ---         -------      -------
<S>                                 <C>           <C>           <C>
                                    4,768,341     1,414,465     37,078
</TABLE>

      (3)   Ratification of the Board of Directors' selection of
            PricewaterhouseCoopers LLP as independent accountants in 2002.

<TABLE>
<CAPTION>
                                       For         Against      Abstain
                                       ---         -------      -------
<S>                                 <C>            <C>          <C>
                                    6,597,128       13,743       19,414
</TABLE>


                                       44
<PAGE>

                    D&E Communications, Inc. and Subsidiaries
                   Part I - Financial Information (continued)

Item 6.  Exhibits and Reports on Form 8-K

(a) Exhibits:

<TABLE>
<CAPTION>
    Exhibit                      Identification                     Reference
       No.                         of Exhibit                       ---------
    -------                      --------------
<S>                 <C>                                          <C>
      99.1          Certification of Chief Executive Officer     Filed herewith.

      99.2          Certification of Chief Financial Officer.    Filed herewith.
</TABLE>

(b) Reports on Form 8-K:

      A current report on Form 8-K dated April 15, 2002, was filed during the
quarter ended June 30, 2002. The report announced the completion of the sale of
our partnership interest in the D&E/Omnipoint Joint Venture on April 1, 2002.

      A current report on Form 8-K dated May 1, 2002, was filed during the
quarter ended June 30, 2002. The report announced our earnings results for the
first quarter of 2002 and disclosed information that could become public in
regard to a possible offering of senior notes under Rule 144A of the Securities
Act.

      A current report on Form 8-K/A dated May 2, 2002, was filed during the
quarter ended June 30, 2002. The report corrected certain inadvertent errors on
our May 1, 2002 8-K.

      A current report on Form 8-K dated June 10, 2002, was filed during the
quarter ended June 30, 2002. The report announced the completion of our merger
with Conestoga and the terms of the related debt financing also completed on May
24, 2002.


                                       45
<PAGE>

                    D&E Communications, Inc. and Subsidiaries

                                   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.

                                        D&E Communications, Inc.

Date: March 31, 2003
                                        By: /s/ G. William Ruhl
                                           ------------------------------
                                                G. William Ruhl
                                            Chief Executive Officer

Date: March 31, 2003
                                        By: /s/ Thomas E. Morell
                                           ------------------------------
                                                Thomas E. Morell
                                        Senior Vice President, Chief Financial
                                        Officer and Treasurer


                                       46
<PAGE>

                    D&E Communications, Inc. and Subsidiaries

                             OFFICER CERTIFICATIONS
                 REQUIRED BY SECTION 13A-14 OF THE EXCHANGE ACT

CERTIFICATIONS

I, G. William Ruhl, certify that:

      1.    I have reviewed this quarterly report on Form 10-Q/A of D&E
            Communications, Inc.;

      2.    Based on my knowledge, this quarterly report does not contain any
            untrue statement of a material fact or omit to state a material fact
            necessary to make the statements made, in light of the circumstances
            under which such statements were made, not misleading with respect
            to the period covered by this quarterly report;

      3.    Based on my knowledge, the financial statements, and other financial
            information included in this quarterly report, fairly present in all
            material respects the financial condition, results of operations and
            cash flows of the registrant as of, and for, the periods presented
            in this quarterly report.

Date: March 31, 2003
                                                   /s/ G. William Ruhl
                                                   -----------------------------
                                                   G. William Ruhl
                                                   Chief Executive Officer


                                       47
<PAGE>

                    D&E Communications, Inc. and Subsidiaries

I, Thomas E. Morell, certify that:

      1.    I have reviewed this quarterly report on Form 10-Q/A of D&E
            Communications, Inc.;

      2.    Based on my knowledge, this quarterly report does not contain any
            untrue statement of a material fact or omit to state a material fact
            necessary to make the statements made, in light of the circumstances
            under which such statements were made, not misleading with respect
            to the period covered by this quarterly report;

      3.    Based on my knowledge, the financial statements, and other financial
            information included in this quarterly report, fairly present in all
            material respects the financial condition, results of operations and
            cash flows of the registrant as of, and for, the periods presented
            in this quarterly report.

Date: March 31, 2003
                                                      /s/ Thomas E. Morell
                                                   -----------------------------
                                                   Thomas E.Morell
                                                   Chief Financial Officer


                                       48
<PAGE>

                    D&E Communications, Inc. and Subsidiaries

                                INDEX TO EXHIBITS

<TABLE>
<CAPTION>
    Exhibit                      Identification                     Reference
       No.                         of Exhibit                       ---------
    -------                      --------------
<S>                 <C>                                          <C>
      99.1          Certification of Chief Executive Officer.    Filed herewith.

      99.2          Certification of Chief Financial Officer.    Filed herewith.
</TABLE>


                                       49