UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[ X ] Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 1993
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Commission file number 1-7784
CENTURY TELEPHONE ENTERPRISES, INC.
A Louisiana Corporation I.R.S. Employer Identification
No. 72-0651161
100 Century Park Drive, Monroe, Louisiana 71203
Telephone number (318) 388-9500
Securities registered pursuant to Section 12(b) of the Act:Common
Stock, par value $1.00
Exchange on which registered:New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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 by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of Registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. [ ]
As of February 28, 1994, the aggregate market value of voting stock
held by non-affiliates (affiliates being for this purpose only
directors and executive officers) was approximately $1,378,192,000.
As of February 28, 1994, there were 53,230,538 shares of common
stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the Proxy Statement prepared in connection with the
1994 annual meeting of shareholders are incorporated in Part III of
this Report.
Appendix I of the Prospectus forming a part of Registration
Statement No. 33-50791 filed January 12, 1994 pursuant to Rule
424(b)(5) is incorporated in Part IV of this Report.
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PART I
Item 1. Business.
Century Telephone Enterprises, Inc. ("Century") is a regional
diversified telecommuni-cations company that is primarily engaged
in providing traditional telephone services and mobile
communications services. For the year ended December 31, 1993,
telephone operations and mobile communications operations provided
80% and 20%, respectively, of the consolidated revenues of Century
and its subsidiaries (the "Company"). All of the Company's
operations are conducted within the continental United States.
At December 31, 1993 the Company's telephone subsidiaries
operated over 434,000 telephone access lines, primarily in rural,
suburban and small urban areas in 14 states, with the largest
customer bases located in Wisconsin, Louisiana, Michigan, Ohio and
Arkansas. Based on the number of access lines served, the Company
is the fifteenth largest local exchange telephone company in the
United States.
Whenever used herein with respect to the Company, (i) the term
"pops" means the population of licensed cellular telephone markets
(based on 1993 population estimates of Donnelly Marketing
Information Services) multiplied by the Company's proportionate
equity interests in the licensed operators thereof, (ii) the term
"MSA" means any Metropolitan Statistical Area for which the
Federal Communications Commission (the "FCC") has granted a
cellular operating license and (iii) the term "RSA" means any
Rural Service Area for which the FCC has granted a cellular
operating license.
Through its cellular operations, including those operations
acquired in February 1994, the Company controls approximately 7.1
million pops in 27 MSAs, primarily concentrated in Michigan,
Louisiana, Mississippi and Texas, and 32 RSAs, most of which are
in Michigan, Louisiana, Arkansas and Wisconsin. The Company is
the majority owner and operator in 18 of the MSAs and 13 of the
RSAs, which collectively represent 5.5 million pops, and has
minority interests in nine other MSAs and 19 other RSAs, which
collectively represent 1.6 million pops. Of the Company's 7.1
million pops, approximately 73% are attributable to the Company's
MSA interests, with the balance attributable to its RSA interests.
Based on the population of the Company's majority-owned and
operated MSAs and RSAs, the Company is the fifteenth largest
operator of cellular telephone systems in the United States. At
December 31, 1993, the Company's majority-owned cellular systems
had more than 116,000 cellular subscribers, not
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including approximately 28,000 subscribers acquired by the Company
in connection with its February 1994 acquisition of Celutel, Inc.
described further below. The Company also provides paging
services to customers residing in Louisiana and Michigan in
conjunction with the operation of its cellular systems.
The FCC has awarded only two licenses to provide cellular
service in each market. During its licensing process, the FCC
reserved one license for companies offering local telephone
service in the market (the wireline carrier) and one license for
entities unaffiliated with the local telephone company (the non-
wireline carrier). Each of the MSAs that the Company operated as
of December 31, 1993 and all but one of the RSAs operated by the
Company are wireline markets.
In April 1993 the Company acquired San Marcos Telephone
Company, Inc. ("SMTC") and SM Telecorp, Inc., an affiliate of
SMTC. As a result of these acquisitions, the Company acquired
approximately 22,500 telephone access lines in and around San
Marcos, Texas, along with a 35% ownership interest in the Austin,
Texas MSA wireline cellular market and a 9.6% interest in the
Texas RSA #16 wireline cellular market, together representing
approximately 327,000 pops.
In September 1993 the Company signed a definitive merger
agreement to acquire a local exchange telephone company in
Michigan which serves approximately 2,400 access lines and owns
approximately 11% (representing approximately 33,000 pops) of a
Michigan cellular partnership which holds the wireline licenses
for two RSA cellular markets operated by the Company. This
transaction is expected to be completed in March 1994.
In February 1994 the Company acquired Celutel, Inc.
("Celutel"), which provides cellular mobile telephone services to
approximately 28,000 customers in three MSA non-wireline cellular
markets in Mississippi and two MSA non-wireline cellular markets
in Texas which have a combined population of 1.4 million.
Celutel's share of the pops is approximately 1.1 million.
The Company is continually evaluating the possibility of
acquiring additional telephone access lines and cellular interests
in exchange for either cash, securities or both. Although the
Company's primary focus will continue to be on acquiring telephone
and cellular interests that are proximate to its properties or
that serve a customer base large enough for the Company to operate
efficiently, other communications interests may also be acquired.
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Partially as a result of 1993 acquisitions, the Company also
provides long distance, operator and interactive services in
certain local and regional markets, as well as certain printing
and related services. The results of these operations, which are
not material individually or in the aggregate, are recorded for
financial reporting purposes as other income, net.
Century was incorporated under Louisiana law in 1968 to serve
as a holding company for several telephone companies acquired over
the previous 15 to 20 years. Century's principal executive
offices are located at 100 Century Park Drive, Monroe, Louisiana
71203 and its telephone number is (318) 388-9500. As of December
31, 1993, the Company employed approximately 2,800 persons, of
which approximately 200 were covered by a collective bargaining
agreement.
TELEPHONE OPERATIONS
The Company is the fifteenth largest local exchange telephone
company in the United States, based on the more than 434,000
access lines it served at December 31, 1993. An access line is a
single or multi-party circuit between a customer's business or
residence and a central switching office. Through its operating
telephone subsidiaries, Century provides services to predominately
rural, suburban and small urban markets in 14 states, with
Wisconsin, Louisiana, Michigan, Ohio and Arkansas accounting for
the greatest share of access lines served.
Future growth in telephone operations is expected to be
derived from (i) acquiring additional telephone companies, (ii)
providing service to new customers, (iii) upgrading existing
customers to higher grades of service, (iv) increasing network
usage and (v) providing additional services made possible by
advances in technology. For information on developing competitive
trends, see "-Regulation and Competition."
The replacement of mechanical switches with digital switches
is an important component of the Company's growth strategy because
it allows the Company to offer new services (such as call
forwarding, conference calling, caller identification, selective
call ringing and call waiting) and to thereby increase utilization
of existing access lines. In 1993 the Company expanded its list
of premium services offered in certain service areas and plans to
aggressively market these services in 1994. In addition, with
digital switching the Company has been able to construct central
electronic monitoring facilities that allow employees to detect
operating malfunctions in digital switches and, in many cases, to
correct the malfunctions without a site visit by the Company's
personnel, thereby reducing maintenance costs. Progress toward
increased digital switching of
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the Company's telephone systems is demonstrated by the change in
the number of digitally switched lines as a percentage of total
lines, which increased from 19% in 1982 to 93% in 1993.
In addition, the Company is installing fiber optic cable in
certain areas in which it operates and has provided alternative
routing of telephone service over fiber optic cable networks in
two of its larger operating areas.
Services
The Company's telephone subsidiaries derive revenue from
providing (i) local telephone services, (ii) network access and
long distance services and (iii) other related services. The
following table reflects the percentage of total telephone
revenues derived from these respective services:
1993 1992 1991
_________________________
Local service 25.4% 26.3 24.9
Network access and long distance 62.3 61.4 61.6
Other 12.3 12.3 13.5
_________________________
100.0% 100.0 100.0
=========================
Local service revenues are generated by the provision of local
exchange telephone services in the Company's franchised service
areas.
Network access and long distance revenues primarily relate to
services provided to interexchange carriers (long distance
carriers) in connection with the origination and termination of
long distance telephone calls. Substantially all of the Company's
interstate network access revenues are derived through pooling
arrangements administered by the National Exchange Carrier
Association ("NECA"). NECA receives access charges billed by the
Company and other participating local exchange carriers ("LECs")
to interstate long distance carriers for their use of the
participating LECs' local exchange networks to complete long
distance calls and subsequently distributes these revenues to such
LECs based on cost separations studies or average schedule
settlement agreements. The charges billed to the long distance
carriers are based on tariffed access rates filed with the FCC by
NECA on behalf of the Company and other participating LECs.
Interstate revenues as a percentage of total telephone revenues
amounted to 32.1%, 31.4% and 31.0% in 1993, 1992 and 1991,
respectively.
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Certain of the Company's intrastate network access revenues
are derived through access charges billed by the Company directly
to intrastate long distance carriers. Such intrastate network
access charges are based on access tariffs which are subject to
state regulatory commission approval. Additionally, certain of
the Company's telephone subsidiaries' intrastate network access
revenues, along with intrastate long distance revenues, are
derived through state pooling arrangements and are determined
based on cost separation studies or special settlement
arrangements. The various intrastate access charges and state
pooling arrangements are intended to compensate LECs for the use
of their facilities furnished in originating and terminating
intrastate long distance telephone calls.
Other revenues include revenues related to non-regulated
telecommunications equipment and services, billing and collection
services for interexchange carriers, network facilities leases and
directory revenues.
For further information on the regulation of the Company's
revenues, see "-Regulation and Competition."
Federal Financing Programs
Certain of the Company's telephone subsidiaries receive long-
term financing from the Rural Electrification Administration
("REA"), the Rural Telephone Bank ("RTB") and the Federal
Financing Bank ("FFB"). The REA has made long-term loans to
telephone companies since 1949 for the purpose of improving
telephone service in rural areas. The REA continues to make new
loans at interest rates that range from 5% to 7% based on borrower
qualifications and the cost of money to the United States
government. The RTB, established in 1971, makes long-term loans
at an interest rate based on its average cost of funds as
determined by statutory formula (6.35% for the fiscal year ended
September 30, 1993), and in some cases makes loans concurrently
with REA loans. In addition, the REA guarantees certain loans
made to telephone companies by the FFB or other qualified lenders.
A significant portion of the Company's telephone plant is pledged
or is subject to mortgages to secure obligations of the Company's
telephone subsidiaries to the REA, RTB and FFB. The amount of
common stock dividends that may be paid by the Company's
telephone subsidiaries is limited by certain financial
requirements set forth in the mortgages.
Certain of the Company's telephone subsidiaries have made
applications for additional loans from the REA and RTB and intend
to make further applications as needs arise. There is no
assurance that these applications will be accepted or that the
terms or interest rates of any future
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loan commitments will remain favorable. Federal budget proposals
which could significantly reduce the availability of new loan
commitments to the Company's telephone subsidiaries under the REA
and RTB programs in future fiscal years were considered in recent
years and are expected to continue to be considered. If the
Company's telephone subsidiaries are unable to borrow additional
funds through the REA and RTB programs and are forced to borrow from
conventional lenders at market rates, the Company's cost of new loans
might increase.
For additional information regarding the Company's financings,
see the Company's consolidated financial statements included in
Item 8 herein.
Regulation and Competition
Traditionally, LECs have operated as regulated monopolies.
Consequently, the majority of the Company's telephone operations
are regulated by various state regulatory agencies (generally
called public service commissions or public utility commissions)
and by the FCC. Although it is anticipated that regulation will
continue for some time, the form or degree of such regulation is
unknown. As discussed in greater detail below under "-
Developments Affecting Competition," in recent years various
aspects of federal and state regulation have been subject to
reexamination and ongoing modification. As further indicated
below, it is expected that regulation will decrease and
competition will increase in the traditionally monopolistic
portions of the industry.
Regulation of Rates and Related Matters. The FCC regulates
the interstate services provided by the Company's telephone
subsidiaries. This regulation primarily consists of the
regulation of interstate access charges that are billed to
interexchange carriers by the Company for use of its local network
in connection with the origination and termination of interstate
telephone calls. Additionally, the FCC prescribes rules and
regulations for telephone companies, including a uniform system of
accounts and rules regarding the separation of costs between
jurisdictions and, ultimately, between services.
Effective January 1, 1991 the FCC adopted price-cap regulation
relating to interstate access rates for the regional Bell
operating companies and GTE. An annual opportunity to elect
price-cap regulation is available for other LECs. Under price-
cap regulation, limits imposed on a company's interstate rates
will be adjusted periodically to reflect inflation, productivity
improvement and changes in certain non-controllable costs. This
alternative form of regulation took effect for AT&T's interstate
rates on July 1, 1989. In May 1993 the FCC adopted an optional
incentive regulatory plan for LECs not subject to price-cap
regulation. A LEC electing
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the optional incentive regulatory plan would, among other things,
file tariffs based primarily on historical costs and not be
allowed to participate in the relevant NECA pooling
arrangements. The Company has not elected price-cap
regulation or the incentive regulatory plan, but will continue to
reevaluate its options on a periodic basis. Consequently, the
Company's telephone subsidiaries' authorized interstate access
rate of return is 11.25%, which is the rate established by the FCC
for LECs not governed by price-cap regulation or the optional
incentive regulatory plan.
The local service rates and intrastate access charges of
substantially all of the Company's telephone subsidiaries are
regulated by state public service commissions. Most of these
commissions also (i) regulate the sale and acquisition of LECs,
(ii) prescribe depreciation rates and certain accounting
procedures and (iii) regulate various other matters, including
certain service standards and operating procedures. In certain
states, construction and/or financing plans are also subject to
regulatory approval.
In recent years, Ohio, Michigan, Wisconsin and a limited
number of other state legislatures and regulatory commissions have
begun to relax the regulation of LECs, including rates and
earnings. Other states have announced their intention to study
these issues and it is expected that several such states,
including states in which the Company operates, may also relax
their regulation of LECs. This relaxed regulatory oversight of
certain of the Company's telephone operations may permit the
Company to offer new and competitive services faster than under
the traditional regulatory process. Coincident with these efforts
is the introduction of competition into traditionally monopolistic
segments of the industry. For a more detailed discussion of these
developments, see "-Developments Affecting Competition".
Substantially all of the state commissions that have
regulatory jurisdiction over the Company's telephone operations
have statutory authority to initiate and conduct earnings reviews
of the LECs that they regulate. The specific limits of their
authority vary depending upon the state and their particular
statutory authority with respect to rate of return regulation and
authorized returns. As indicated above, several states are moving
away from traditional rate of return regulation, which reduces
both the incentive and authority that the respective regulatory
commissions have with respect to earnings reviews. Century does
not currently have any operating telephone company subject to a
formal earnings investigation. However, all independent LECs in
Louisiana have been the subject of an informal earnings review by
the Louisiana Public Service Commission during 1993. There is no
assurance that this informal review (or any other future review in
Louisiana or any other state) will not lead to future revenue
reductions. Moreover, in light of the movement away from
traditional rate of return regulation,
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no assurance can be given that the Company's telephone
subsidiaries will continue to earn the same rate of return
that they achieved in 1993.
Most of the Company's telephone subsidiaries concur with the
common line and traffic sensitive tariffs filed by NECA and
participate in the access revenue pools administered by NECA for
interstate services. All of the Company's telephone subsidiaries'
long distance and intrastate network access revenues are based on
access charges, cost separation studies or special settlement
arrangements. See "-Services."
Recently, the FCC and certain state public utility commissions
have explored or implemented initiatives to reduce the funding of
certain support mechanisms that have traditionally benefited LECs
serving small communities and rural areas. In 1993 the eight-year
phase-in of the FCC's mandated Universal Service Fund ("USF") was
completed. In December 1993 the FCC adopted a provision which
places certain limitations, including a cap, on the USF growth
rate during 1994 and 1995. The Company anticipates that,
subsequent to 1993, revenues from the USF will continue to
increase in the near term, but at a lesser percentage rate than
that associated with recent prior periods. The FCC has announced
that it intends to comprehensively study the USF during 1994 and
1995 to determine if permanent rule changes should be effected.
In addition, the Public Service Commission of Wisconsin ("PSCW")
has ordered the existing Wisconsin state support fund to be
phased-out over one and one-half years beginning July 1, 1993.
Certain of the Company's subsidiaries affected by the order have
filed requests with the PSCW to receive increased rates and/or
compensation which could potentially offset some or all of the
amounts that those subsidiaries have been receiving from such
support fund. All such additional revenue must be justified based
on each subsidiary's financial need as demonstrated by an
expedited rate case.
Certain long distance carriers have requested the Company to
reduce intrastate access tariffed rates for certain of its
telephone subsidiaries. Although intrastate access tariffed rates
are subject to state regulatory commission approval, there is no
assurance that final resolution of these requests will not result
in reduced intrastate access revenues.
Developments Affecting Competition. Primarily as a result of
regulatory and technological changes, competition has been
introduced and encouraged in certain sectors of the telephone
industry, including interstate and intrastate toll, special access
services and customer premise equipment. In 1992 the FCC took a
step toward introducing competition in the local exchange access
business by ordering that competitive access providers,
interexchange carriers and others
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have the right to directly interconnect facilities to the central
offices of certain larger (Tier One) telephone companies for the
provision of interstate special transport access services. The
intent of this order and other related FCC decisions
is to allow interstate special access competition with
telephone companies and provide telephone companies with
limited pricing flexibility. In a related proceeding the
FCC also issued proposals to expand competitive interconnection
to LECs' switched access services in the future.
Principally as a result of these and other regulatory actions,
competition from competitive access providers and others has
increased and is expected to continue to increase. Certain states
are considering steps that would further introduce competition
into the LEC business. Moreover, certain well-established
interexchange carriers have publicly announced their desire to
enter the LEC business. Although local exchange competition and
competitive access are expected to initially affect large urban
areas to a greater extent than rural, suburban and small urban
areas such as those in which the Company's telephone operations
are located, there is no assurance that these developments will
not have an adverse effect on the Company in the future.
Certain providers and users of toll service may seek to bypass
LECs' switching services and local distribution facilities,
particularly if services are not strategically priced. There are
three primary ways which users of toll service may bypass the
Company's switching services. First, users may construct and
operate or lease facilities to transmit their traffic to an
interexchange carrier. Second, certain interexchange carriers
provide services which allow users to divert their traffic from
LECs' usage-sensitive services to their flat-rate services.
Third, users may choose to use mobile communications services to
bypass LECs' switching services. Within the past two years, each
of the three largest interexchange carriers in the United States
has acquired, or has entered into preliminary or definitive
agreements to acquire interests in mobile communications
companies, presumably in part to obtain bypass capabilities.
Although certain of the Company's telephone subsidiaries have
experienced a loss of traffic to such bypass, the impact of such
loss on revenues has not been significant. The Company and the
exchange carrier industry are seeking to address bypass by
adopting flexible pricing of access and toll services where
appropriate, although no assurance can be given as to the ultimate
outcome of these efforts.
As the mobile communications industry matures, the Company
anticipates that existing and emerging mobile communications
technologies will increasingly compete with traditional LEC
services. Technological and regulatory developments in cellular
telephone, personal communications services, digital microwave,
coaxial cable, fiber optics and other wired and wireless
technologies are expected to further permit the development of
alternatives to traditional
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landline services . For further information on these
developments, see "Mobile Communications Operations - Regulation
and Competition."
In connection with the well-publicized convergence of
telecommunications, cable, video, computer and other technologies,
several large companies have recently announced plans to offer
products that would significantly enhance current communications
and data transmission services and, in some instances, introduce
new two-way video, entertainment, data, consumer and other
multimedia services. In particular, several large cable
television companies have announced plans that, if successfully
implemented, could provide significant competition with LECs'
traditional services. Other companies with wireline experience
(including electric utilities) are expected to explore
opportunities in this market, along with wireless companies and
other emerging technology companies. Although the development of
new multimedia services is expected to initially have a greater
effect on larger urban areas, no assurance can be given as to how
the offering of these products or services by others will affect
the Company. For information on the effects of these developments
on the Company's cellular operations, see "Mobile Communications
Operations - Regulation and Competition."
Several bills have been filed in the U. S. Congress that have
the potential to significantly alter the telecommunications
industry and its regulatory framework. Several of these bills are
designed to promote local telephone competition and obligate LECs
to provide competitors with universal access to their networks and
facilities. Several others are designed to remove barriers of
entry to several lines of telecommunications businesses, including
current barriers that prohibit the regional Bell operating
companies and others from providing interstate and intrastate
services and that prohibit LECs from providing cable television
services. In addition, the Clinton administration and Congress
have proposed legislative and regulatory initiatives to promote
wireless technologies as part of the development of a national
information infrastructure. Although it is currently impossible
to assess the ultimate effect of these initiatives, there can be
no assurances that those bills, or others that may follow, will
not materially affect the Company's telephone or cellular
operations.
The Company anticipates that the traditional operations of
LECs will increasingly be affected by continued technological
developments and continued legislative and regulatory initiatives
affecting the ability of LECs to provide new services and the
ability of cable companies, interexchange carriers, competitive
access providers and others to provide competitive LEC services.
The Company intends to actively monitor these developments, to
observe the effect of emerging competitive trends in initial test
markets (which are expected to be large urban
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areas) and to continue to evaluate new business opportunities that
may arise out of future technological, legislative and regulatory
developments.
MOBILE COMMUNICATIONS OPERATIONS
The Company is the fifteenth largest operator of cellular
telephone systems in the United States, based on the population of
the Company's majority-owned and operated MSAs and RSAs. The
number of pops owned by a cellular operator does not represent the
number of users of cellular service and is not necessarily
indicative of the number of potential subscribers. Rather, this
term is frequently used as a basis for comparing the size of
cellular system operators. At December 31, 1993, the Company's
pops exceeded 5.9 million. Over 1.1 million additional pops were
acquired in the February 1994 acquisition of Celutel. Of the
approximately 7.1 million pops controlled by the Company,
approximately 5.2 million (73%) are applicable to MSAs and
approximately 1.9 million (27%) are RSA pops.
Cellular Industry
The cellular telephone industry has been in existence for just
over ten years in the United States. Although the industry is
relatively new, it has grown significantly during this period.
According to the Cellular Telecommunications Industry Association,
at December 31, 1993 there were estimated to be approximately 16
million cellular customers across the United States. Cellular
service is now available to substantially all areas of the United
States.
Cellular mobile telephone technology was developed in response
to certain limitations of conventional mobile telephone systems.
Compared to such conventional systems, cellular mobile telephone
service is capable of high-quality, high-capacity communications
to and from vehicle-mounted and hand-held radio telephones. While
conventional mobile systems limit the number of people who can
utilize the service simultaneously, cellular systems, if properly
designed and equipped, are capable of handling thousands of calls
at any given time and are capable of providing service to tens of
thousands of subscribers in a market.
In a cellular telephone system, the licensed service area is
subdivided into geographic areas or cells. Each cell has its own
transmitter and receiver that communicates by radio signal with
cellular telephones located within the cell. Each cell is
connected by a telephone circuit or microwave to a Mobile
Switching Center ("MSC"), which in turn is connected to the
worldwide telephone network.
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Communications within a cellular system are controlled by the
MSC through a transfer process as a cellular telephone user moves
from one cell to another. In this process, when the signal
strength of a call declines to a predetermined level, the MSC
determines if the signal strength from an adjacent cell is greater
and, if so, transfers the call to the adjacent cell. Software
which facilitates the transfer between adjacent cells of different
cellular systems using equipment of different manufacturers has
been implemented by the Company in certain markets.
Cellular telephone systems have higher subscriber capacity
than conventional mobile telephone systems because of the
substantial frequency spectrum allocated to these systems by the
FCC and because frequencies can be reused throughout the system.
Frequency reuse is possible because the transmission power of cell
site equipment and mobile units is relatively low. Therefore,
signals on the same channel will not interfere with each other if
they are transmitted in cells that are sufficiently far apart.
Reuse multiplies the capacity of channels available to the system
operator and thereby increases the telephone calling capacity.
Until recently, substantially all of the radio transmissions
of cellular systems were conducted on an analog basis.
Technological developments involving the application of digital
radio technology may offer certain advantages over analog
technologies, including expanding the capacity of mobile
communications systems, improving voice transmission quality,
permitting the introduction of new services, and otherwise making
such systems more efficient, more accessible, more private and
eventually less expensive. Providers of certain competitive
services are currently incorporating digital technology into their
operations, and may be expected to continue to do so in the
future. See "-Regulation and Competition-Developments Affecting
Competition."
In recent years certain cellular carriers have begun to
install digital cellular voice transmission facilities in certain
larger markets. During 1993 the Company upgraded certain portions
of its cellular systems in Louisiana and Michigan to be capable of
providing digital service in the future. The Company will
continue to monitor the development and implementation of this
technology to determine when it will become beneficial for the
Company to install digital cellular voice transmission facilities.
See "-Regulation and Competition-Developments Affecting
Competition."
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Strategy
The Company's business development strategy for its cellular
telephone operations is to secure operating control of service
areas that are geographically clustered. Clustered cellular
systems aid the Company's marketing efforts and provide various
operating and service advantages. After giving effect to those
operations acquired in February 1994, 51% of the Company's pops in
markets operated by the Company were in a single, contiguous
cluster of eight MSAs and six RSAs in Michigan; another 19% were
in a cluster of four MSAs and seven RSAs in northern and central
Louisiana, southern Arkansas and eastern Texas.
Another component of the Company's strategy for cellular
operations includes capturing revenues from roaming service.
Roaming service revenues are derived from calls made in one
cellular service area by subscribers from other service areas.
Roaming service is made possible by technical standards requiring
that cellular telephones be functionally compatible with the
cellular systems in all United States market areas. The Company
charges premium rates (compared to rates charged to the Company's
customers) for roaming service provided to most non-Company
customers. The Company's Michigan cellular properties include a
significant portion of the interstate highway corridor between
Chicago and Detroit, and its Louisiana properties include an east-
west interstate highway and a north-south interstate highway which
intersect in its Louisiana cellular service area.
In connection with its February 1994 acquisition of Celutel,
the Company acquired over 84 percent of the Biloxi/Gulfport,
Mississippi MSA and over 82% the Pascagoula, Mississippi MSA.
The interstate highway between New Orleans, Louisiana and Mobile,
Alabama spans these markets. In connection with this acquisition,
the Company also acquired over 86% interest in the Jackson,
Mississippi MSA; over 77% in the Brownsville, Texas MSA; and over
67% in the McAllen, Texas MSA. Jackson is the state capital and
is located in central Mississippi where two interstate highways
intersect. The MSAs in Texas are adjacent to Mexico and consist of
urban, resort, farm and ranch areas and include two Foreign Trade
Zones.
Marketing
The Company coordinates the marketing strategy for each
cellular system in which it has a majority interest. The
Company's cellular sales force consists of approximately 60 sales
employees and approximately 200 independent agents. Each sales
employee and independent agent solicits cellular customers
exclusively for the Company. Company sales employees are
13
<PAGE>
compensated by salary and commission and independent sales agents
are paid commissions. The Company advertises its services through
various means, including direct mail, billboard, magazine, radio,
television and newspaper advertisements.
The Company is a founding partner and participant in a
national alliance of 15 leading mobile communications companies
which is marketing a national brand of cellular service under the
name MobiLink. This cellular alliance offers a customer
satisfaction guarantee and certain quality standards.
Services, Customers and System Usage
There are a number of different types of cellular telephones,
all of which are currently compatible with cellular systems
nationwide. The Company sells a full range of vehicle-mounted,
transportable, and hand-held portable cellular telephones.
Features offered in the cellular telephones sold by the Company
include hands-free calling, repeat dialing, horn alert and others.
The Company's customers are able to choose from a variety of
packaged pricing plans which are designed to fit different calling
patterns. The Company typically charges its customers separately
for custom-calling features, air time in excess of the packaged
amount, and toll calls. Custom-calling features provided by the
Company include call-forwarding, call-waiting, three-way calling
and no-answer transfer. The Company offers a voice message
service in many of its markets. This service, which functions
like a sophisticated answering machine, allows customers to
receive messages from callers when they are not available to take
calls.
Cellular customers come from a wide range of occupations.
They typically include a large proportion of individuals who work
outside of their office, such as employees in the construction,
real estate, wholesale and retail distribution businesses, and
professionals. More customers are selecting portable and other
transportable cellular telephones as these units become more
compact and fully featured, as well as more attractively priced.
It is anticipated that average revenue per customer will continue
to decline as additional non-commercial customers who generate
fewer local minutes of use are added as subscribers and as roaming
revenues grow more slowly.
An added service offered by the Company allows a customer to
place or receive a call in a cellular service area away from the
customer's home market area. The Company has entered into
"roaming agreements" with operators of other cellular systems
covering virtually all systems in
14
<PAGE>
the United States. These agreements offer the Company's customers
the opportunity to roam in these systems. These reciprocal
agreements automatically pre-register the customers of the Company's
system in the other carriers' systems. Also, a customer of a
participating non-Company system traveling in a market operated by
the Company where this arrangement is in effect is able to
automatically make and receive calls on the Company's system. The
charge to a non-Company customer for this service is typically at
premium rates, and is billed by the Company to the customer's home
system, which then bills the customer. Occasionally, the Company
will enter into reciprocal agreements with other cellular carriers to
settle roaming usage at a rate different from such premium rates. In
some instances, based on competitive factors, the Company may
charge a lower amount to its customers than the amount actually
charged by another cellular carrier for roaming. The Company
anticipates that competitive factors may place downward pressures
on charging premium roaming rates. For additional information on
roaming revenue, see"-Strategy."
During 1993, the Company's cellular subsidiaries experienced
strong subscriber growth in the fourth quarter, primarily due to
increased holiday season sales. According to the Cellular
Telecommunications Industry Association, industry-wide cellular
sales have been seasonally strong in the fourth quarter for the
past several years.
The following table summarizes, among other things, certain
information about the Company's customers and market penetration
(without giving effect to the operations acquired in February
1994):
<TABLE>
<CAPTION>
Year Ended or At December 31,
_____________________________
1993 1992 1991
____ ____ ____
<S> <C> <C> <C>
Majority-owned and operated MSA
and RSA systems (Note 1):
Cellular systems operated 26 25 22
Total population of systems
operated 5,015,463 4,813,985 4,312,712
Customers (Note 2):
At beginning of period 73,084 51,083 35,815
Additions during period 62,564 35,713 27,222
Disconnects during period 19,164 13,712 11,954
At end of period 116,484 73,084 51,083
Market penetration at end
of period (Note 3) 2.32% 1.52% 1.18%
Construction expenditures (000s) $ 56,070 $ 10,806 $ 12,387
All operated MSA and RSA systems
(Note 4):
Cellular systems operated 31 31 26
Total population of systems
operated 6,084,794 5,997,360 4,963,127
Customers at end of
period (Note 5) 124,908 77,106 52,411
Market penetration at end
of period 2.05% 1.29% 1.06%
________________
</TABLE>
15
<PAGE>
Notes:
1. Represents the number of systems in which the Company owned
at least a 50% interest and which it operated. The revenues and
expenses of these cellular markets are included in the Company's
consolidated revenues and expenses.
2. Represents the approximate number of revenue-generating
cellular telephones served by the cellular systems referred to in
footnote 1.
3. Computed by dividing the number of customers at the end of
the period by the total population of markets in service as
estimated by Donnelly Marketing Information Services for the
respective years.
4. Represents the total number of systems that the Company
operated, including systems in which it does not own a controlling
interest.
5. Represents the approximate number of revenue-generating
cellular telephones served in all systems that the Company
operated, including systems in which it does not own a controlling
interest.
The Company's Cellular Interests
The table below sets forth certain information with respect to
the interests in cellular systems that the Company owned or had the
right to acquire pursuant to definitive agreements as of
December 31, 1993:
<TABLE>
<CAPTION>
Other
1993 Ownership Net 1993 cellular
population percentage pops operator (1)
===================================================================================================
<S> <C> <C> <C> <C>
Majority-Owned MSAs
___________________
Grand Rapids, MI 718,689 97.92% 703,740 PACTEL
Lansing, MI 500,081 99.00% 495,080 PACTEL
Saginaw, MI 402,331 91.70% 368,938 PACTEL
Kalamazoo, MI 298,247 97.92% 292,043 Centennial
Battle Creek, MI 190,797 77.94% 148,700 Centennial
Muskegon, MI 185,830 97.92% 181,965 PACTEL
Benton Harbor, MI 161,539 97.92% 158,179 Masters Cellular
Jackson, MI 152,205 99.00% 150,683 Centennial
Shreveport, LA 371,681 62.00% 230,442 McCaw
Alexandria, LA 150,358 100.00% 150,358 Centennial
Monroe, LA 145,654 62.00% 90,305 McCaw
Jackson, MS (3) 406,000 86.06% 349,423 MCTA
Biloxi-Gulfport, MS (3) 213,986 84.82% 181,492 Cellular South
Pascagoula, MS (3) 120,464 82.57% 99,470 Cellular South
LaCrosse, WI 99,124 95.00% 94,168 U. S. Cellular
McAllen-Edinburg-Mission, TX (3) 419,283 67.27% 282,052 Southwestern Bell Mobile Systems
Brownsville-Harlingen, TX (3) 279,597 77.42% 216,456 Southwestern Bell Mobile Systems
Texarkana, AR/TX 134,891 89.00% 120,053 McCaw
_______________________________________________________________
4,950,757 4,313,547
_______________________________________________________________
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Other
1993 Ownership Net 1993 cellular
population percentage pops operator (1)
===================================================================================================
<S> <C> <C> <C> <C>
Minority-owned MSAs
___________________
Flint, MI 504,031 3.04% 15,323 (2)
Detroit, MI 4,596,929 3.04% 139,747 (2)
Appleton/Oshkosh/Neenah, WI 466,005 10.83% 50,468 (2)
Duluth, MN/WI 242,628 16.33% 39,621 (2)
Owensboro, KY 88,896 5.73% 5,094 (2)
Little Rock, AR 528,129 36.00% 190,126 (2)
Evansville, IN 316,107 5.73% 18,113 (2)
Lafayette, LA 251,746 49.00% 123,356 (2)
Austin, TX 850,163 35.00% 297,557 (2)
_______________________________________________________________
7,844,634 879,405
_______________________________________________________________
TOTAL MSAs 12,795,391 5,192,952
_______________________________________________________________
RSAs
____
Arizona 2 224,764 21.30% 47,875 (2)
Arizona 3 144,585 58.70% 84,865 Sprint Cellular
Arkansas 2 77,044 82.00% 63,176 Sterling Cellular
Arkansas 3 101,555 82.00% 83,275 Sterling Cellular
Arkansas 11 67,078 89.00% 59,699 Mercury Communications
Arkansas 12 188,142 80.00% 150,514 Mercury Communications
Colorado 6 62,251 25.00% 15,563 (2)
Colorado 7 44,328 20.00% 8,866 (2)
Iowa 13 66,743 10.00% 6,674 (2)
Louisiana 1 112,382 62.00% 69,677 McCaw
Louisiana 2 113,620 62.00% 70,444 Sterling Cellular
Louisiana 3 (B2) 93,171 62.00% 57,766 Mid South Cellular
Louisiana 4 71,196 100.00% 71,196 Mid South Cellular
Michigan 3 151,737 33.43% 50,725 Unitel
Michigan 5 149,145 33.43% 49,859 Unitel
Michigan 6 140,994 98.00% 138,174 Sterling Cellular
Michigan 7 233,450 36.50% 85,209 Sterling Cellular
Michigan 8 95,178 97.92% 93,198 Allegan Cellular
Michigan 9 289,415 43.38% 125,548 Centennial
Michigan 10 132,716 26.00% 34,506 (2)
Minnesota 6 (3) 241,382 100.00% 241,382 Cellular 2000
Minnesota 11 203,134 9.51% 19,324 (2)
New Mexico 1 245,584 22.22% 54,574 Sprint Cellular
New Mexico 3 76,635 25.00% 19,159 (2)
New Mexico 4W 123,643 35.71% 44,158 (2)
Texas 7 (B6) 57,709 89.00% 51,361 McCaw
Texas 16 308,447 9.60% 29,611 (2)
Wisconsin 1 105,662 8.44% 8,920 (2)
Wisconsin 2 83,672 12.81% 10,718 (2)
Wisconsin 3 134,703 14.29% 19,243 (2)
Wisconsin 6 114,135 28.57% 32,610 (2)
Wisconsin 10 126,854 15.00% 19,028 (2)
_______________________________________________________________
TOTAL RSAs 4,381,054 1,916,897
_______________________________________________________________
GRAND TOTALS 17,176,445 7,109,849
===============================================================
</TABLE>
17
<PAGE>
(1) To the best of the Company's knowledge.
(2) Markets not operated by the Company.
(3) Represents a non-wireline interest.
Certain Considerations Regarding Cellular Telephone Operations
The cellular industry has a relatively limited operating
history and there continues to be uncertainty regarding its
future. Among other factors, there is uncertainty regarding (i)
the continued growth in the number of customers, (ii) the usage
and pricing of cellular services, particularly as market
penetration increases and lower-usage customers subscribe for
service, (iii) the number of customers who will terminate service
each month, and (iv) the impact of changes in technology,
regulation and competition, any of which could have a material
adverse effect on the Company. See " - Regulation and
Competition."
Management believes that a significant portion of the
aggregate market value of Century's common stock is represented by
the current market value of its cellular interests. There can be
no assurance that the market value of its cellular interests will
remain at its current level. Management believes that decreases
in the market value of such interests could materially decrease
the trading price of Century common stock.
The market value of cellular interests is frequently
determined on the basis of the number of pops controlled by a
cellular provider. The population of a particular cellular
market, however, does not necessarily bear a direct relationship
to the number of subscribers or the revenues that may be realized
from the operation of the related cellular system. The future
market value of the Company's cellular interests will depend on,
among other things, the success of its cellular operations.
Paging
As part of the Company's strategy of focusing its resources in
the cellular and telephone businesses, the Company's Florida
paging operations were sold during 1991. The Company continues to
provide paging services to customers in Michigan and Louisiana in
conjunction with the operation of its majority-owned cellular
systems. As of December 31, 1993, the Company had approximately
9,500 pagers in service.
18
<PAGE>
Revenue
The following table reflects the major revenue categories for
the Company's mobile communications operations as a percentage of
total mobile communications revenues in 1993, 1992 and 1991.
1993 1992 1991
_________________________
Cellular access fees, toll revenues
and equipment sales 80.5% 78.6 72.4
Cellular roaming 14.5 14.3 16.4
Paging services 5.0 7.1 11.2
_________________________
100.0% 100.0 100.0
=========================
For further information on these revenue categories, see"-
Services, Customers and System Usage" and "- Paging."
Regulation And Competition
The FCC and various state public utility commissions regulate
the licensing, construction, operation, interconnection
arrangements, sale and acquisition of cellular telephone systems
and certain state public utility commissions also regulate certain
aspects of pricing by cellular operators.
Cellular Licensing Process. The FCC awarded only two licenses
to provide cellular service in each market. Each licensee is
required to provide service to a designated portion of the area or
population in its licensed area as a condition to maintaining that
license. Initially, one license was reserved for companies
offering local telephone service in the market (the wireline
carrier) and one license was available for firms unaffiliated with
the local telephone company (the non-wireline carrier). Since
mid-1986, the FCC has permitted telephone companies or their
affiliates to acquire control of non-wireline licenses in markets
in which they do not hold interests in the wireline license.
The completion of acquisitions involving the transfer of
control of a cellular system requires prior FCC approval and, in
certain cases, receipt of other federal and state regulatory
approvals. Acquisitions of minority interests generally do not
require FCC approval. Whenever FCC
19
<PAGE>
approval is required, any interested party may file a petition
to dismiss or deny the application for approval of the proposed
transfer.
Initial operating licenses are granted for ten-year periods
and are renewable upon application to the FCC for periods of ten
years. Licenses may be revoked and license renewal applications
denied for cause. There may be competition for licenses upon the
expiration of the initial ten-year terms and there is no assurance
that any license will be renewed, although the FCC has issued a
decision that grants a renewal expectancy during the license
renewal period to incumbent licensees that substantially comply
with the terms and conditions of their cellular authorizations and
the FCC's regulations. The licenses for the MSA markets operated
by the Company were initially granted between 1984 and 1987, and
licenses for operated RSAs were initially granted between 1989 and
1991.
Five years after initial operating licenses are granted,
unserved areas within markets previously granted to licensees may
be applied for by both wireline and non-wireline entities and by
third parties. The FCC has rules that govern the procedures for
filing and granting such applications and has established
requirements for constructing and operating systems in such areas.
The Company has not lost, and does not expect to lose, any
significant market areas as a result of not providing service to
such areas. In addition to regulation by the FCC, cellular
systems are subject to certain Federal Aviation Administration
tower height regulations respecting the siting and construction of
cellular transmitter towers and antennas.
Competition between cellular providers in each market is
conducted principally on the basis of services and enhancements
offered, the technical quality and coverage of the system, quality
and responsiveness of customer service, and price. Competition
may be intense. For a listing of the Company's competitors in
cellular markets operated by the Company, see "- The Company's
Cellular Interests." Under applicable law, the Company is
required to permit the reselling of its services. In certain
larger markets and in certain market segments, competition from
resellers may be significant. There is also competition for
agents. Some of the Company's competitors have greater assets and
resources than the Company.
Developments Affecting Mobile Communications Competition.
Continued and rapid technological advances in the communications
field, coupled with legislative and regulatory uncertainty, make
it impossible to (i) predict the extent of future competition to
cellular systems, (ii) determine which emerging technologies pose
the most viable alternatives to the Company's cellular operations,
or (iii) systematically list each development that may ultimately
impact the
20
<PAGE>
Company's cellular operations. No assurance can be
given that current or future technological advances, or
legislative or regulatory changes, will not impact the Company's
cellular operations.
Several recent FCC initiatives have resulted in the allocation
of additional radio spectrum or the issuance of experimental
licenses for emerging mobile communications technologies that will
or may be competitive with the Company's cellular and telephone
operations, including personal communication services ("PCS").
Due to PCS' next generation, high-capacity digital technology
(which has been tested under experimental licenses since late
1989), PCS may be able to offer wireless data, image and other
advanced wireless services. In late 1993, the FCC proposed rules
for auctioning up to seven PCS licenses per market, two of which
would entitle the licensees to use 30 megahertz ("MHz") of
frequency band each, one of which would entitle the licensee to
use 20 MHz, and four of which would entitle the licensees to use
10 MHz each. These rules would divide the United States into 540
licensed markets, none of which would be co-terminus with current
cellular markets. Under these rules, the Company will be
permitted to freely pursue PCS licenses outside its cellular
markets, but will be limited to acquiring only one 10 MHz block in
licensed areas where it controls more than a 20% interest in a
cellular licensee and serves more than 10% of the population
within the PCS licensed area. Auctioning of certain PCS licenses
is anticipated to commence in 1994. Due to several pending
petitions to reconsider these rules, it is possible that the final
rules will be modified.
In addition to PCS, users and potential users of cellular
systems may find their communication needs satisfied by other
current and developing technologies, several of which may enjoy
potential operational and service advantages through their use of
digital technology. The FCC has recently authorized the licensees
of certain specialized mobile radio service ("SMR") systems (which
currently are generally used by taxicabs and tow truck operators)
to configure their systems so as to operate in a manner similar to
cellular systems. The Company believes that SMR systems are
operating in a majority of its cellular markets. Certain well-
established SMR providers have announced their intention to create
a nationwide digital mobile communications system to compete with
cellular systems, and in connection therewith have sought and
obtained financial and other assistance from various other well-
established telecommunication companies. Other similar
communication services which have the technical capability to
handle mobile telephone calls may provide competition in certain
markets, although these services currently lack the subscriber
capacity of cellular systems. One-way paging or beeper services
that feature voice message and data display as well as tones may
be adequate for potential subscribers who do not need to transmit
back to the caller. Other two-way mobile services may also be
competitive with the Company's services. For example, the second
21
<PAGE>
generation of cordless telephone technology ("CT-2") will permit
the application of this technology to a public environment.
The FCC has taken various actions to authorize mobile
satellite systems in which transmissions from mobile units to
satellites would augment or replace transmissions to land-based
stations. It is anticipated that the first operational satellite-
based mobile communications system will serve primarily rural
customers in North America. However, other satellite-based
systems are being studied and designed, including a worldwide-
system backed by an international consortium, and no assurance can
be given that such systems will not ultimately be successful in
augmenting or replacing land-based cellular systems.
As described further under "Telephone Operations - Regulation
and Competition," in connection with the well-publicized
convergence of telecommunications, cable, video, computer and
other technologies, several large companies have recently
announced plans to offer products that would significantly enhance
current communications and data transmissions services and, in
some instances, introduce new services. Although much of the
resulting competition is expected to center on wireline services,
it is anticipated that these developments may also increase
competition in the mobile communications industry. Several
wireless data and computer companies are currently developing and,
in some instances, marketing small hand-held products that may
ultimately provide an additional source of competition for
cellular systems, and it is anticipated that this trend will
continue.
As also described further under "Telephone Operations -
Regulation and Competition," several bills have been filed in the
U.S. Congress that have the potential to significantly alter the
telecommunications industry, including various bills that focus on
the mobile communications industry.
It is uncertain how PCS, SMR, CT-2, mobile satellites and
other emerging technologies will ultimately affect the Company.
However, PCS, SMR, CT-2 and mobile satellites are not anticipated
to be significant sources of competition in the Company's markets
in the near term. Moreover, management believes that equipping
its current cellular networks with digital enhancements and
applying new microcellular technologies may permit its cellular
systems to provide services comparable with the emerging
technologies described above, although no assurances can be given
that this will happen or that future technological advances or
legislative or regulatory changes will not create additional
sources of competition.
22
<PAGE>
Paging. There is vigorous competition for paging customers in
most of the areas served by the Company. Some of the Company's
competitors have greater assets and resources than the Company.
The paging companies compete on the basis of price, the
reliability and strength of their signals, the size of the area
served and the customer service they provide. In recent months,
certain other companies have reduced prices on nationwide paging
services, a development which is not expected to have a
substantial impact on the Company's consolidated operations.
The FCC has authorized the use of cellular frequencies to
provide paging service, creating the potential for new
competitors. It is anticipated that all or substantially all of
the developments described in the immediately preceding section
will affect the Company's paging operations. It is too early to
predict the extent to which these developments may affect the
Company.
OTHER
The Company has certain obligations based on federal, state
and local laws relating to the protection of the environment.
Costs of compliance through 1993 have not been material and the
Company currently has no reason to believe that such costs will
become material.
For additional information concerning the business and
properties of the Company, see notes 2, 6, 7 and 12 of Notes to
Consolidated Financial Statements set forth in Item 8 elsewhere
herein.
Item 2. Properties.
The Company's properties consist principally of (i) telephone
lines, central office equipment, telephone instruments and related
equipment, and land and building related to telephone operations
and (ii) switching and cell site equipment related to cellular
telephone operations. As of December 31, 1993, the Company's
gross property, plant and equipment of approximately $1.2 billion
consisted of the following:
23
<PAGE>
Telephone:
General support 7.3%
Central office equipment 24.0
Information origination/termination equipment 3.1
Cable and wire 43.8
Construction in progress 4.6
Other .9
_____
83.7
Mobile Communications 9.7
Other 6.6
_____
100.0%
=====
"General support" consists primarily of land, buildings,
tools, furnishings, fixtures, motor vehicles and work equipment.
"Central office equipment" consists primarily of switching
equipment, circuit equipment, and related facilities.
"Information origination/termination equipment" consists primarily
of premise equipment (private branch exchanges and telephones) for
official company use. "Cable and wire" facilities consist
primarily of buried cable and aerial cable, poles, wire, conduit
and drops. "Construction in progress" includes property of the
foregoing categories that has not been placed in service because
it is still under construction. The properties of the Company's
telephone subsidiaries are subject to mortgages securing the
funded debt of such companies. The Company owns substantially all
of the central office buildings, local administrative buildings,
warehouses, and storage facilities used in its telephone
operations. The Company leases most of the offices used in its
cellular operations; certain of its transmitter sites are leased
while others are owned by the Company. For further information on
the location and type of the Company's properties, see the
descriptions of the Company's telephone and mobile communications
operations in Item 1.
Item 3. Legal Proceedings.
From time to time, the Company is involved in litigation
incidental to its business, including administrative hearings of
state public utility commissions relating primarily to rate
making, tort actions relating to employee claims and occasional
grievance hearings before labor regulatory agencies. Currently,
there are no material legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
24
<PAGE>
Executive Officers of the Registrant
Information concerning Executive Officers, set forth at Item
10 in Part III hereof, is incorporated in Part I of this Report by
reference.
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters.
Century's common stock is listed on the New York Stock
Exchange and is traded under the symbol CTL. The following table
sets forth the high and low sale prices, along with the quarterly
dividends, for each of the quarters indicated:
Sale prices
__________________ Dividend per
High Low common share
____ ___ ____________
1992:
First quarter $ 24-7/8 18-5/8 .0733
Second quarter $ 25-3/8 18-3/8 .0733
Third quarter $ 25 18-5/8 .0733
Fourth quarter $ 28-7/8 22-7/8 .0733
1993:
First quarter $ 33-3/8 26 .0775
Second quarter $ 33-1/8 28 .0775
Third quarter $ 31-5/8 27-1/8 .0775
Fourth quarter $ 30-3/8 23-1/4 .0775
Common stock dividends during 1992 and 1993 were paid each
quarter. As of February 28, 1994, there were approximately 5,900
stockholders of record of Century's common stock.
Item 6. Selected Financial Data.
The following table presents certain selected consolidated
financial data as of and for each of the years ended in the five-
year period ended December 31, 1993.
25
<PAGE>
Selected Income Statement Data
<TABLE>
<CAPTION>
Year ended December 31,
_________________________________________________
1993 1992 1991 1990 1989
_________________________________________________
(expressed in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
Revenues
Telephone $ 348,485 297,510 235,796 215,771 190,538
Mobile Communications 84,712 62,092 46,731 34,594 24,852
_________________________________________________
Total revenues $ 433,197 359,602 282,527 250,365 215,390
=================================================
Operating income (loss)
Telephone $ 114,902 103,672 80,039 70,654 61,153
Mobile Communications 9,906 5,956 (4,952) (9,553) (13,970)
_________________________________________________
Total operating
income $ 124,808 109,628 75,087 61,101 47,183
=================================================
Income before cumulative
effect of changes in
accounting principles $ 69,004 59,973 37,419 31,098 22,164
Cumulative effect of
changes in accounting
principles - (15,668) - - -
_________________________________________________
Net income $ 69,004 44,305 37,419 31,098 22,164
=================================================
Fully diluted earnings
per share before
cumulative effect of
changes in accounting
principles $ 1.32 1.22 .79 .66 .49
Cumulative effect of
changes in accounting
principles - (.31) - - -
_________________________________________________
Fully diluted earnings
per share $ 1.32 .91 .79 .66 .49
=================================================
Dividends per common
share $ .310 .293 .287 .280 .272
=================================================
Average fully diluted
shares outstanding 55,892 48,653 47,432 46,944 44,540
=================================================
</TABLE>
26
<PAGE>
Selected Balance Sheet Data
<TABLE>
<CAPTION>
December 31,
_________________________________________________
1993 1992 1991 1990 1989
_________________________________________________
(expressed in thousands)
<S> <C> <C> <C> <C> <C>
Net property, plant and
equipment $ 827,776 675,878 534,998 490,957 474,158
Excess cost of net assets
acquired, net $ 297,158 217,688 114,258 110,013 109,197
Total assets $1,319,390 1,040,487 764,539 706,411 691,569
Long-term debt $ 460,933 391,944 254,753 230,715 257,708
Stockholders' equity $ 513,768 385,449 319,977 280,915 256,530
</TABLE>
The following table presents certain selected consolidated
operating data as of the end of each of the years in the five-year
period ended December 31, 1993.
<TABLE>
<CAPTION>
Year ended December 31,
_____________________________________________
1993 1992 1991 1990 1989
_____________________________________________
<S> <C> <C> <C> <C> <C>
Telephone access lines 434,691 397,300 314,819 304,915 296,034
Cellular units in service
in majority-owned
markets 116,484 73,084 51,083 35,815 23,199
</TABLE>
See Items 1 and 2 in Part I and notes 4, 8 and 12 of Notes
to Consolidated Financial Statements set forth in Item 8
elsewhere herein for additional information.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
RESULTS OF OPERATIONS
The 1993 net income of Century Telephone Enterprises, Inc.
and subsidiaries (the "Company") increased to $69,004,000 from
$44,305,000 during 1992 and $37,419,000 during 1991. Income
before the cumulative effect of changes in accounting principles
during 1992 was $59,973,000.
Fully diluted earnings per share for 1993 increased to $1.32
from $.91 during 1992 and $.79 during 1991. Fully diluted
earnings per share in 1992 before the cumulative effect of
changes in accounting principles was $1.22.
27
<PAGE>
As of January 1, 1992, the Company adopted Statement of
Financial Accounting Standards No. 106 ("SFAS 106"), "Employers'
Accounting for Postretirement Benefits Other than Pensions," and
Statement of Financial Accounting Standards No. 109 ("SFAS 109"),
"Accounting for Income Taxes." The cumulative effect of the
changes in accounting principles related to SFAS 106 and SFAS 109
reduced 1992 net income by $14,755,000 ($.30 per share) and
$913,000 ($.01 per share), respectively.
The Company is a regional diversified telecommunications
company that is primarily engaged in providing traditional
telephone services and cellular mobile telephone services. The
Company's 1993 operating income was $124,808,000, an increase of
$15,180,000 (13.8%) over 1992 operating income of $109,628,000.
During 1993 the operating income of the telephone operations and
the mobile communications operations increased $11,230,000
(10.8%) and $3,950,000 (66.3%), respectively, compared to the
1992 results of operations. The Company's net operating income
during 1991 was $75,087,000.
Year ended December 31, 1993 1992 1991
==================================================================
(expressed in thousands,
except per share amounts)
Operating income (loss)
Telephone $ 114,902 103,672 80,039
Mobile Communications 9,906 5,956 (4,952)
__________________________________________________________________
124,808 109,628 75,087
Interest expense (30,149) (27,166) (22,504)
Earnings from unconsolidated
cellular partnerships 6,626 1,692 697
Gain on sales of assets 1,661 3,985 -
Other income, net 3,310 4,433 4,209
Income tax expense (37,252) (32,599) (20,070)
__________________________________________________________________
Income before cumulative effect
of changes in accounting
principles 69,004 59,973 37,419
Cumulative effect of changes in
accounting principles - (15,668) -
__________________________________________________________________
Net income $ 69,004 44,305 37,419
==================================================================
Fully diluted earnings per share:
Income before cumulative
effect of changes in
accounting principles $ 1.32 1.22 .79
Cumulative effect of changes
in accounting principles - (.31) -
__________________________________________________________________
Fully diluted earnings per share $ 1.32 .91 .79
==================================================================
The operating income of the telephone segment includes the
operations, subsequent to each respective acquisition, of Century
Telephone of San Marcos, Inc. ("San Marcos"), acquired
28
<PAGE>
in April 1993; Century Telephone of Ohio, Inc. ("Ohio"), acquired in
April 1992; and two other local exchange telephone companies
collectively with Ohio the "1992 Acquisitions") acquired during
the first quarter of 1992. See note 12 for additional
information applicable to these acquisitions.
The mobile communications operating income (loss) reflects
the operations of the cellular partnerships in which the Company
has a majority interest. The minority interest partners' share
of the income or loss of such partnerships is reflected in other
income, net. The Company's share of income or loss from the
cellular partnerships in which it has less than a majority
interest is reflected in earnings from unconsolidated cellular
partnerships. The operating income of the mobile communications
segment during 1993 includes the operations of the Alexandria,
Louisiana Metropolitan Statistical Area ("MSA") cellular system
("Alexandria"), which was acquired in December 1992.
According to published sources, the Company has the second
highest ratio of cellular subscribers to telephone access lines
among the 20 largest telephone companies in the United States.
Accordingly, the Company anticipates that its mobile
communications operations will continue to increasingly influence
the Company's overall operations as the cellular industry
matures. The following chart illustrates this trend:
Year ended December 31, 1993 1992 1991
==================================================================
Telephone Operations:
Revenues (% of total revenues) 80.4% 82.7 83.5
Operating income (% of total
operating income) 92.1% 94.6 106.6
Mobile Communications Operations:
Revenues (% of total revenues) 19.6% 17.3 16.5
Operating income (% of total
operating income) 7.9% 5.4 (6.6)
==================================================================
29
<PAGE>
TELEPHONE OPERATIONS
1993 1992 1991
==================================================================
(expressed in thousands)
Revenues
Local service $ 88,704 78,108 58,653
Network access and
long distance 217,055 182,711 145,279
Other 42,726 36,691 31,864
__________________________________________________________________
348,485 297,510 235,796
__________________________________________________________________
Expenses
Plant operations 80,578 66,878 52,546
Customer operations 32,225 26,242 19,502
Corporate and other 55,605 46,791 39,227
Depreciation and
amortization 65,175 53,927 44,482
__________________________________________________________________
233,583 193,838 155,757
__________________________________________________________________
Operating income $ 114,902 103,672 80,039
==================================================================
Telephone revenues increased $50,975,000 (17.1%) in 1993 and
$61,714,000 (26.2%) in 1992. Revenues applicable to San Marcos
and Ohio accounted for $15,681,000 and $14,833,000, respectively,
of the 1993 increase and revenues applicable to the 1992
Acquisitions accounted for $34,891,000 of the 1992 increase.
Amounts recorded as a result of revisions of prior years' revenue
settlements were $8,380,000 (exclusive of Ohio), $8,181,000 and
$8,206,000 in 1993, 1992 and 1991, respectively.
Local Revenues
Local service revenues are derived from the provision of
local exchange telephone services in the Company's franchised
service areas. During 1993 local service revenues increased
$2,219,000 and $5,252,000 due to San Marcos and Ohio,
respectively. During 1992 such revenues increased $15,670,000
due to the 1992 Acquisitions. Internal access line growth during
1993, 1992 and 1991 was 3.6%, 3.8% and 3.2%, respectively.
Network Access and Long Distance Revenues
Network access and long distance revenues increased
$34,344,000 (18.8%) in 1993 and $37,432,000 (25.8%) in 1992 due
to the following factors:
30
<PAGE>
1993 1992
==================================================================
(expressed in thousands)
San Marcos acquisition $ 11,279 -
1992 Acquisitions 8,458 13,687
Partial recovery of increased operating
expenses through revenue pools in
which the Company participates with
other telephone companies and
return on rate base 7,326 9,931
Increased recovery as a result of
additional investment and phase-in
of the Federal Communications
Commission ("FCC") mandated
Universal Service Fund 6,161 7,040
Increased minutes of use 3,444 3,607
Other (2,324) 3,167
__________________________________________________________________
$ 34,344 37,432
==================================================================
Network access and long distance revenues primarily relate
to services provided to interexchange carriers (long distance
carriers) in connection with the completion of long distance
telephone calls. Substantially all of the Company's interstate
network access revenues are received through pooling arrangements
administered by the National Exchange Carrier Association
("NECA") based on cost separations studies and average schedule
settlement agreements. The NECA receives access charges billed
by the Company and other participating local exchange carriers to
interstate long distance carriers for their use of the local
exchange network to complete long distance calls. These charges
to the long distance carriers are based on tariffed access rates
filed with the FCC by the NECA on behalf of the Company and other
participating local exchange telephone companies. Long distance
and intrastate network access revenues are based on access rates,
cost separations studies or special settlement arrangements with
intrastate long distance carriers.
In December 1993 the eight-year phase-in of the FCC
Universal Service Fund ("USF") was completed. Revenues from the
USF increased approximately $6,161,000 during 1993, of which
approximately $3,200,000 was the effect of the phase-in.
Revenues were unfavorably impacted in the amount of $1,000,000
during 1993 by reductions (which will aggregate
31
<PAGE>
approximately $3,500,000 annually upon final phase-in 1994) in
the level of certain settlements received from South Central
Bell by the Company's Louisiana subsidiaries.
Other Revenues
Other revenues include revenues related to nonregulated
telecommunications equipment and services, billing and collection
services for interexchange long distance carriers, network
facilities leases and directories. The increases in other
revenues during 1993 and 1992 were primarily due to the 1992
Acquisitions and, during 1993, to San Marcos.
Expenses
Plant operations expenses during 1993 and 1992 increased
$13,700,000 (20.5%) and $14,332,000 (27.3%), respectively.
Approximately $3,650,000 and $3,455,000 of the 1993 increase were
due to San Marcos and Ohio, respectively. Increases in salaries,
wages and benefits during 1993 accounted for approximately
$2,192,000. The remainder of the 1993 increase was due to
increases in other general operating expenses. Approximately
$10,269,000 and $1,105,000 of the 1992 increase were due to the
1992 Acquisitions and the SFAS 106 postretirement benefit costs,
respectively. The remainder of the 1992 increase was due to
increases in salaries and wages and other general operating
expenses.
Customer operations, corporate expenses and other expenses
increased $14,797,000 (20.3%) in 1993 and $14,304,000 (24.4%) in
1992. The operations of San Marcos and Ohio contributed
$6,467,000 and $4,532,000, respectively, to the 1993 increase.
The 1992 Acquisitions and the SFAS 106 postretirement benefit
costs accounted for approximately $11,186,000 and $806,000,
respectively, of the 1992 increase. The remainder of the 1993
and 1992 increases included increased operating costs, such as
salaries and wages, employee benefits, insurance and operating
taxes.
Depreciation and amortization increased $11,248,000 (20.9%)
and $9,445,000 (21.2%) in 1993 and 1992, respectively.
Approximately $5,447,000 of the 1993 increase was due to San
Marcos and Ohio. The 1992 Acquisitions accounted for $6,939,000
of the 1992 increase. Depreciation expense included one-time
depreciation charges in certain jurisdictions which aggregated
$3,336,000 in 1993 (exclusive of San Marcos), $2,938,000 in 1992
(exclusive of the 1992 Acquisitions) and $1,784,000 in 1991. In
addition, the Company obtained higher depreciation rates for
certain subsidiaries during the last three years. The first-year
effects of the
32
<PAGE>
higher rates were approximately $1,650,000 in 1993 (exclusive
of San Marcos), $700,000 in 1992 (exclusive of the 1992
Acquisitions) and $3,100,000 in 1991. The remaining
increases in depreciation and amortization are due to higher
levels of plant in service. The composite depreciation rate for
telephone properties, including the one-time additional
depreciation, was 7.1%, 6.6% and 6.7% for 1993, 1992 and 1991,
respectively.
See Other Matters for additional information.
MOBILE COMMUNICATIONS OPERATIONS
1993 1992 1991
==================================================================
(expressed in thousands)
Revenues
Cellular
Service $ 76,583 54,489 38,923
Equipment 3,930 3,194 2,592
Paging 4,199 4,409 5,216
__________________________________________________________________
84,712 62,092 46,731
__________________________________________________________________
Expenses
General, administrative
and customer service 23,872 19,685 18,144
Sales and marketing 19,894 13,167 13,403
Cost of sales and other
operating expenses 19,681 14,313 12,378
Depreciation and amortization 11,359 8,971 7,758
__________________________________________________________________
74,806 56,136 51,683
__________________________________________________________________
Operating income (loss) $ 9,906 5,956 (4,952)
==================================================================
Revenues
Revenues from cellular operations during 1993 increased to
$80,513,000 from $57,683,000 in 1992 and $41,515,000 in 1991.
Service revenues include monthly service fees for providing
access and airtime to customers, service fees for providing
airtime to users roaming through the Company's service areas and
toll revenue.
Service revenues increased $22,094,000 (40.5%) in 1993 and
$15,566,000 (40.0%) in 1992. Increases in access and usage
revenues, exclusive of Alexandria, accounted for $14,585,000 of
the 1993 increase in service revenues, compared to $12,871,000
during 1992. The increases in access and usage revenues in both
years were primarily attributable to increases in the number of
cellular customers. Roaming and toll revenues increased
$4,120,000 in 1993, exclusive of Alexandria, after increasing
$2,281,000 during 1992. The remainder of the 1993 increase in
cellular revenues was due substantially to the Alexandria
acquisition.
33
<PAGE>
Cellular units in service increased to 116,484 as of
December 31, 1993 from 73,084 as of December 31, 1992 (which
included the December 1992 acquisition of Alexandria) and 51,083
at December 31, 1991.
The average monthly service revenue per subscriber declined
to $71 in 1993 from $75 in 1992 and 1991, primarily due to the
trend that a higher percentage of new subscribers tend to be
lower usage customers. The decline in average monthly service
revenue per subscriber was also affected by the growth rate of
cellular units in service exceeding the growth rate of roaming
revenues. The average monthly service revenue per subscriber may
further decline as market penetration increases and additional
lower usage customers are activated. The Company will continue
to attempt to stimulate cellular usage by promoting the
availability of certain enhanced services and by increasing
coverage areas through the construction of additional cell sites.
Expenses
General, administrative and customer service expenses
increased $4,187,000 (21.3%) and $1,541,000 (8.5%) during 1993
and 1992, respectively. The increases were primarily due to
higher billing and other costs due to the increased number of
customers and, in 1993, to Alexandria.
During 1993 mobile communications sales and marketing
expenses increased $6,727,000 (51.1%) primarily due to an
increase in commissions paid to agents for selling cellular
services to the large volume of new customers. The remaining
increase during 1993 was primarily due to an increase in
advertising costs and to Alexandria. The Company implemented a
new cellular sales commission structure during 1992 which,
notwithstanding an increase in agent sales, contributed to the
1.8% decrease in mobile communications sales and marketing
expenses in 1992.
The increases in cost of sales and other operating expenses
in 1993 and 1992 were primarily due to growth in the business, to
the development and operation of the Company's Rural Service Area
("RSA") cellular systems and, in 1993, to Alexandria. Sixty-two
cell sites were placed in service during 1993 (compared to 21
during 1992 and 24 during 1991) in partnerships in which the
Company has a majority interest. In addition, as a result of the
December 1992 acquisition of Alexandria, the Company acquired
five additional cell sites. The Company operated 158 cell sites
at December 31, 1993 in partnerships in which it has a majority
interest.
34
<PAGE>
Depreciation and amortization increased $2,388,000 (26.6%)
in 1993 and $1,213,000 (15.6%) in 1992 primarily due to higher
levels of cellular plant in service.
See Other Matters for additional information.
INTEREST EXPENSE
Interest expense increased $2,983,000 (11.0%) during 1993
and $4,662,000 (20.7%) during 1992. Interest expense incurred
during 1993 due to an increase in average debt outstanding was
substantially offset by the effect of lower average interest
rates. Interest expense during 1992 increased primarily due to
the issuance of $115,000,000 of 6% convertible debentures during
the first quarter of 1992. The debenture interest of
approximately $6,200,000 during 1992 was partially offset by
reduced interest expense due to lower average interest rates.
EARNINGS FROM UNCONSOLIDATED CELLULAR PARTNERSHIPS
Earnings from unconsolidated cellular partnerships increased
$4,934,000 in 1993 and $995,000 in 1992. The Company's share of
income from the partnership interests acquired in the San Marcos
acquisition contributed substantially to the 1993 increase.
SALES OF ASSETS
During 1993 the Company sold a minority investment in a
telephone company which resulted in a pre-tax gain of $1,661,000
($1,080,000 after-tax).
During 1992 the Company consummated the sales of two
telephone subsidiaries which served approximately 2,000 access
lines; its minority interests in an MSA cellular partnership and
an RSA cellular partnership; and its 100% interest in an RSA
cellular market. The sales prices totaled $12,212,000 and the
aggregate pre-tax gain was $3,985,000 ($2,630,000 after-tax).
OTHER INCOME, NET
Other income, net decreased $1,123,000 (25.3%) primarily
because interest income earned during 1993 was less than interest
income during 1992.
35
<PAGE>
INCOME TAX EXPENSE
The effective income tax rate was 35.1%, 35.2% and 34.9% in
1993, 1992 and 1991, respectively. The additional federal income
taxes incurred during 1993 as a result of the 1% increase in the
statutory federal income tax rate in accordance with the
provisions of the Omnibus Budget Reconciliation Act of 1993 (the
"Act") was more than offset by the tax benefit applicable to the
deductibility of certain intangible assets also provided by the
Act.
CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES
The Company adopted SFAS 106 as of January 1, 1992. SFAS
106 requires that the expected cost of providing postretirement
health care and life insurance benefits be accrued during the
years an employee renders service to the Company. During 1991
the Company had recognized $1,475,000 of postretirement benefits
on the pay-as-you-go basis. The unrecognized obligation existing
at the date of initial application of SFAS 106 (the "Transition
Obligation") was $27,390,000. In accordance with the provisions
of Statement of Financial Accounting Standards No. 71 ("SFAS
71"), "Accounting for the Effects of Certain Types of
Regulation," the Company deferred approximately $3,450,000 of the
Transition Obligation; such costs are being expensed in
connection with recovery through the rate-making process. The
remaining $23,940,000, net of tax benefits which aggregated
$9,185,000, was reported as the cumulative effect of a change in
accounting principle and reduced 1992 fully diluted earnings per
share by $.30. The accrual of postretirement benefits during
1992, net of the related toll revenue and 1992 pay-as-you-go
costs, decreased income before income taxes and cumulative effect
of changes in accounting principles for 1992 by $2,023,000.
The Company also adopted SFAS 109 as of January 1, 1992,
under which the accounting for income taxes is based on an asset
and liability approach rather than the deferred method. The
cumulative effect of the change in accounting principle related
to SFAS 109 decreased net income for 1992 by $913,000 ($.01 per
fully diluted share). In accordance with the provisions of SFAS
71, the Company established a regulatory liability of
approximately $47,000,000 relative to the excess deferred income
taxes and the regulatory impact thereof.
INFLATION
The effects of increased costs are mitigated by the ability
to recover costs applicable to the Company's regulated telephone
operations through the rate-making process. As operating
36
<PAGE>
expenses increase in the nonregulated areas, the Company, to the
extent permitted by competition, recovers the costs by increasing
prices for its services and equipment.
While the regulatory process does not consider replacement
cost of physical plant, the Company has historically been able to
earn a return on any increased cost of its net investment when
facilities are replaced. Possible future regulatory changes may
alter the Company's ability to recover increased costs in its
regulated operations.
LIQUIDITY AND CAPITAL RESOURCES
The Company relies on cash provided by operations to provide
a substantial portion of its cash needs. The Company's telephone
operations have historically provided a stable source of cash
flow which has helped the Company continue its program of capital
improvements. Cash provided by mobile communications operations
has increased each year since that segment became cash-flow
positive in 1991.
Net cash provided by operating activities was $166,754,000,
$146,324,000 and $92,884,000 in 1993, 1992 and 1991,
respectively. For additional information relative to the
telephone operations and mobile communications operations of the
Company, see Results of Operations.
Although payments for property, plant and equipment during
1993 increased by $64,172,000, net cash used in investing
activities during 1993 was approximately the same as 1992
primarily because the amount of cash used in acquisitions during
1993 was approximately $80,083,000 less than in the previous
year. Net cash used in investing activities increased
$147,910,000 in 1992, primarily due to the 1992 Acquisitions and
to an increase of $44,335,000 in payments for property, plant and
equipment.
Cash provided by financing activities in 1993 was
$23,247,000 less than in 1992 primarily because net borrowings,
including long-term debt and notes payable, were $20,582,000 less
than in 1992. The $36,785,000 increase in notes payable
outstanding at December 31, 1993 compared to December 31, 1992
reflects the Company's utilization of borrowings under its short-
term credit facilities to take advantage of declining short-term
interest rates during 1993. The Company intends to eventually
refinance such short-term borrowings with long-term debt.
Proceeds from the issuance of debt during 1992 ($100,655,000 more
than during 1991) included
37
<PAGE>
$115,000,000 from the issuance of 6% convertible debentures in
February 1992 to provide the major portion of the purchase price
of Ohio.
In October 1993 the Company executed a merger agreement with
Celutel, Inc., under which Century acquired Celutel for
approximately $102,000,000 during the first quarter of 1994.
Approximately $51,400,000 of the purchase price was paid in cash,
with the remainder being paid through the issuance of 1,900,000
shares of Century common stock. In connection with the
acquisition, Century refinanced approximately $41,700,000 of
Celutel's debt. Century funded the cash portion of the merger
consideration and the debt prepayment from proceeds received from
a committed bridge term loan. It is currently anticipated that
the bridge term loan will be repaid prior to September 30, 1994
with proceeds from the issuance of long-term debt, the terms and
conditions of which have not yet been determined. Based on a
review of its financing alternatives, Century does not anticipate
any problems in obtaining such financing.
Budgeted capital expenditures for 1994 total $142,000,000
for telephone operations, $50,000,000 for mobile communications
operations (of which $10,000,000 will be funded by minority
interest owners in cellular partnerships operated by the Company)
and $4,000,000 for other operations.
As of December 31, 1993, Century's telephone subsidiaries
had available for use $84,000,000 of commitments for long-term
financing from the Rural Electrification Administration ("REA")
and the Company had $23,600,000 of undrawn committed bank lines
of credit. In addition, approximately $7,000,000 of uncommitted
credit facilities were available to the Company at December 31,
1993. Applications for additional long-term financing for
Century's telephone subsidiaries have been filed with the REA and
are in various stages of processing. The Company has experienced
no significant problems in obtaining funds for capital
expenditures or other purposes.
Stockholders' equity as a percentage of total capitalization
was 48.5% and 47.0% at December 31, 1993 and 1992, respectively.
ACCOUNTING PRONOUNCEMENT
The Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 112 ("SFAS 112"),
"Employers' Accounting for Postemployment Benefits," in November
1992. SFAS 112 requires the adoption of accrual accounting for
38
<PAGE>
workers compensation, disability and other benefits provided
after employment but before retirement by requiring accrual of
the expected cost when it is probable that a benefit obligation
has been incurred and the amount can be reasonably estimated.
The Company will be required to adopt SFAS 112 in the first
quarter of 1994. Liabilities for postemployment benefits
included in the consolidated balance sheet as of December 31,
1993 are not materially different than those required by SFAS
112.
OTHER MATTERS
In December 1993 the eight-year phase-in of the USF was
completed. Revenues from the USF increased approximately
$6,161,000 during 1993, of which approximately $3,200,000
reflected the effect of the phase-in. The Company anticipates
that, subsequent to 1993, revenues from the USF will continue to
increase in the near term, but at a lesser percentage rate than
that associated with recent prior periods. In addition, the
Public Service Commission of Wisconsin ("PSCW") has ordered that
the existing Wisconsin state support fund, from which certain of
the Company's subsidiaries received approximately $3,575,000
during 1993 and $3,755,000 during 1992, will be phased-out over
one and one-half years beginning July 1, 1993. Certain of the
Company's subsidiaries affected by the order have filed requests
with the PSCW to receive increased rates and/or compensation
which could potentially offset some or all of the amounts that
those subsidiaries have been receiving from the existing support
fund. All such additional revenue must be justified based on
each subsidiary's financial need as demonstrated by an expedited
rate case. The Wisconsin State Telephone Association has, among
other things, appealed the PSCW's planned phase-out of the
support fund. Also, the Louisiana Public Service Commission
("LPSC") is conducting an informal review of the earnings of all
independent local exchange telephone companies in Louisiana. It
is possible that reviews by state regulatory authorities, such as
the informal review being conducted by the LPSC, may result in
refunds and/or future reductions in revenues.
Revenues are being impacted by reductions (which will
aggregate approximately $3,500,000 annually upon completion in
the second quarter of 1994 of a one-year phase-in period) in the
level of certain settlements received from South Central Bell by
the Company's Louisiana subsidiaries. For information on the
effect of these reductions on the Company's 1993 operations, see
Results of Operations.
The telecommunications industry is currently undergoing
various regulatory, competitive and technological changes,
including the following. First, the FCC and a limited number of
state
39
<PAGE>
public utility commissions have begun to reduce the
regulatory oversight of the earnings and return rates of local
exchange carriers ("LEC's"). Coincident with this movement
toward reduced regulation is the introduction and encouragement
of local exchange competition by the FCC and various state public
utility commissions, along with the emergence of certain
companies providing competitive access and other services that
compete with LEC's services and the announcement by certain well-
established interexchange carriers of their desire to enter the
LEC business. Second, several recent FCC initiatives have
resulted in the allocation of additional frequency spectrum or
the issuance of experimental licenses for mobile communications
technologies that will or may be competitive with cellular,
including personal communications services (for which the FCC
intends to begin auctioning operating licenses in 1994) and
mobile satellite services. The FCC has also authorized certain
specialized mobile radio service licensees to configure their
systems so as to operate in a manner similar to cellular systems,
and certain of these licensees recently announced their intention
to create a nationwide mobile communications system to compete
with cellular systems. Third, in connection with the well-
publicized convergence of telecommunications, cable, video,
computer and other technologies, several large companies have
recently announced plans to offer products that would
significantly enhance current communications and data
transmission services and, in some instances, introduce new two-
way video, entertainment, data, consumer and other multimedia
services. Local exchange competition and competitive access are
expected to initially affect large urban areas to a greater
extent than rural, suburban and small urban areas such as those
in which the Company's telephone operations are located. The
same expectation holds true for emerging competitive wireless
technologies and the development of new multimedia services.
Therefore, the Company does not believe these developments are
likely to materially affect it in the near term. The Company
further believes that it may benefit from having the opportunity
to observe the effects of these developments in large urban
markets in the near term, thereby better preparing it for
competition. The Company will continue to monitor the ongoing
changes in regulation, competition and technology and consider
which developments provide the most favorable opportunities for
the Company to pursue.
The Company has certain obligations based on federal, state
and local laws relating to the protection of the environment.
Costs of compliance through 1993 have not been material and the
Company currently has no reason to believe that such costs will
become material.
40
<PAGE>
Item 8. Financial Statements and Supplementary Data.
Report of Management
____________________
To the Shareholders of
Century Telephone Enterprises, Inc.:
Management has prepared and is responsible for the Company's
consolidated financial statements. The consolidated financial
statements have been prepared in accordance with generally
accepted accounting principles and necessarily include amounts
determined using our best judgments and estimates with
consideration given to materiality.
The Company maintains internal control systems and related
policies and procedures designed to provide reasonable assurance
that the accounting records accurately reflect business
transactions and that the transactions are in accordance with
management's authorization. The design, monitoring and revision
of the systems of internal control involve, among other things,
our judgment with respect to the relative cost and expected
benefits of specific control measures. Additionally, the Company
maintains an internal auditing function which independently
evaluates the effectiveness of internal controls, policies and
procedures and formally reports on the adequacy and effectiveness
thereof.
The Company's consolidated financial statements have been
audited by KPMG Peat Marwick, independent certified public
accountants, who have expressed their opinion with respect to the
fairness of the consolidated financial statements. Their audit
was conducted in accordance with generally accepted auditing
standards, which includes the consideration of the Company's
internal controls to the extent necessary to form an independent
opinion on the consolidated financial statements prepared by
management.
The Audit Committee of the Board of Directors is composed of
directors who are not officers or employees of the Company. The
Committee meets periodically with the independent certified
public accountants, internal auditors and management. This
Committee considers the audit scope and discusses internal
control, financial and reporting matters. Both the independent
and internal auditors have free access to the Committee.
R. Stewart Ewing, Jr.
Senior Vice President and Chief Financial Officer
41
<PAGE>
Independent Auditors' Report
____________________________
The Board of Directors
Century Telephone Enterprises, Inc.:
We have audited the consolidated financial statements of Century
Telephone Enterprises, Inc. and subsidiaries as listed in Item
14a(i). In connection with our audits of the consolidated
financial statements, we also have audited the financial
statement schedules as listed in Item 14a(ii). These
consolidated financial statements and financial statement
schedules are the responsibility of the Company's management.
Our responsibility is to express an opinion on these consolidated
financial statements and financial statement schedules based on
our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of Century Telephone Enterprises, Inc. and subsidiaries
as of December 31, 1993 and 1992, and the results of their
operations and their cash flows for each of the years in the
three-year period ended December 31, 1993, in conformity with
generally accepted accounting principles. Also in our opinion,
the related financial statement schedules, when considered in
relation to the basic consolidated financial statements taken as
a whole, present fairly, in all material respects, the
information set forth therein.
As discussed in notes 4 and 8 to the consolidated financial
statements, the Company adopted the Financial Accounting
Standards Board's Statement of Financial Accounting Standards
No. 109, "Accounting for Income Taxes," and Statement of
Financial Accounting Standards No. 106, "Employers' Accounting
for Postretirement Benefits Other Than Pensions," in 1992.
KPMG PEAT MARWICK
Shreveport, Louisiana
February 4, 1994
42
<PAGE>
CENTURY TELEPHONE ENTERPRISES, INC.
Consolidated Statements of Income
Year ended December 31,
==================================================================
1993 1992 1991
__________________________________________________________________
(expressed in thousands,
except per share amounts)
REVENUES
Telephone $348,485 297,510 235,796
Mobile Communications
Cellular 80,513 57,683 41,515
Paging 4,199 4,409 5,216
__________________________________________________________________
Total revenues 433,197 359,602 282,527
__________________________________________________________________
EXPENSES
Cost of sales and operating
expenses 231,855 187,076 155,200
Depreciation and
amortization 76,534 62,898 52,240
__________________________________________________________________
Total expenses 308,389 249,974 207,440
__________________________________________________________________
OPERATING INCOME 124,808 109,628 75,087
__________________________________________________________________
OTHER INCOME (EXPENSE)
Interest expense (30,149) (27,166) (22,504)
Earnings from unconsolidated
cellular partnerships 6,626 1,692 697
Gain on sales of assets 1,661 3,985 -
Other income, net 3,310 4,433 4,209
__________________________________________________________________
Total other income
(expense) (18,552) (17,056) (17,598)
__________________________________________________________________
INCOME BEFORE INCOME TAXES AND
CUMULATIVE EFFECT OF CHANGES
IN ACCOUNTING PRINCIPLES 106,256 92,572 57,489
INCOME TAXES 37,252 32,599 20,070
__________________________________________________________________
INCOME BEFORE CUMULATIVE EFFECT OF
CHANGES IN ACCOUNTING PRINCIPLES 69,004 59,973 37,419
CUMULATIVE EFFECT OF CHANGES IN
ACCOUNTING PRINCIPLES - (15,668) -
__________________________________________________________________
NET INCOME $69,004 44,305 37,419
==================================================================
PRIMARY EARNINGS PER SHARE :
Income before cumulative effect of
changes in accounting principles $ 1.35 1.23 .79
Cumulative effect of changes in
accounting principles - (.32) -
__________________________________________________________________
PRIMARY EARNINGS PER SHARE $ 1.35 .91 .79
==================================================================
FULLY DILUTED EARNINGS PER SHARE :
Income before cumulative effect of
changes in accounting principles $ 1.32 1.22 .79
Cumulative effect of changes in
accounting principles - (.31) -
__________________________________________________________________
FULLY DILUTED EARNINGS PER SHARE $ 1.32 .91 .79
==================================================================
DIVIDENDS PER COMMON SHARE $ .310 .293 .287
==================================================================
See accompanying notes to consolidated financial statements.
43
<PAGE>
CENTURY TELEPHONE ENTERPRISES, INC.
Consolidated Balance Sheets
December 31,
===================================================================
1993 1992
___________________________________________________________________
(expressed in thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 9,777 9,771
Accounts receivable
Customers, less allowance for
doubtful accounts of $1,473,000
and $960,000 34,438 28,436
Other 21,771 14,111
Materials and supplies, at cost 4,418 4,512
Other 2,068 3,226
___________________________________________________________________
Total current assets 72,472 60,056
___________________________________________________________________
PROPERTY, PLANT AND EQUIPMENT
Telephone, at original cost 979,449 871,383
Accumulated depreciation (288,479) (280,242)
___________________________________________________________________
690,970 591,141
___________________________________________________________________
Mobile Communications, at cost 113,252 71,926
Accumulated depreciation (27,736) (27,613)
___________________________________________________________________
85,516 44,313
___________________________________________________________________
Other, at cost 77,737 61,110
Accumulated depreciation (26,447) (20,686)
___________________________________________________________________
51,290 40,424
___________________________________________________________________
Net property, plant and equipment 827,776 675,878
___________________________________________________________________
INVESTMENTS AND OTHER ASSETS
Excess cost of net assets acquired,
less accumulated amortization
of $29,253,000 and $21,975,000 297,158 217,688
Other investments 98,142 67,478
Deferred charges 23,842 19,387
___________________________________________________________________
Total investments and other assets 419,142 304,553
___________________________________________________________________
TOTAL ASSETS $1,319,390 1,040,487
===================================================================
See accompanying notes to consolidated financial statements.
44
<PAGE>
CENTURY TELEPHONE ENTERPRISES, INC.
Consolidated Balance Sheets
(continued)
December 31,
===================================================================
1993 1992
___________________________________________________________________
(expressed in thousands)
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 14,233 9,709
Notes payable to banks 69,200 32,415
Accounts payable 49,506 34,605
Accrued expenses and other current
liabilities
Taxes 9,327 10,343
Interest 6,476 6,412
Other 21,152 17,012
Advance billings and customer deposits 9,312 10,169
___________________________________________________________________
Total current liabilities 179,206 120,665
___________________________________________________________________
LONG-TERM DEBT 460,933 391,944
___________________________________________________________________
DEFERRED CREDITS AND OTHER LIABILITIES
Deferred income taxes 60,122 39,064
Deferred investment tax credits 10,431 11,833
Other 94,930 91,532
___________________________________________________________________
Total deferred credits and other
liabilities 165,483 142,429
___________________________________________________________________
STOCKHOLDERS' EQUITY
Common stock, $1.00 par value, authorized
100,000,000 shares, issued and outstanding
51,294,705 and 48,896,876 shares 51,295 48,897
Paid-in capital 262,294 191,522
Retained earnings 208,945 155,676
Employee Stock Ownership Plan commitment (9,220) (11,100)
Preferred stock - non-redeemable 454 454
___________________________________________________________________
Total stockholders' equity 513,768 385,449
___________________________________________________________________
TOTAL LIABILITIES AND EQUITY $1,319,390 1,040,487
===================================================================
See accompanying notes to consolidated financial statements.
45
<PAGE>
CENTURY TELEPHONE ENTERPRISES, INC.
Consolidated Statements of Cash Flows
Year ended December 31,
====================================================================
1993 1992 1991
____________________________________________________________________
(expressed in thousands)
OPERATING ACTIVITIES
Net income $69,004 44,305 37,419
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 86,175 70,762 57,306
Cumulative effect of changes in
accounting principles - 15,668 -
Equity in income of cellular
partnerships (7,592) (2,087) (984)
Deferred income taxes 6,781 (1,427) (335)
Gain on sales of assets (1,661) (3,985) -
Changes in current assets and
current liabilities:
Increase in accounts receivable (7,026) (2,307) (6,440)
Increase in accounts payable 11,024 11,694 4,581
Decrease in other current assets
and other current liabilities,
net 659 10,549 32
Other, net 9,390 3,152 1,305
____________________________________________________________________
Net cash provided by operating
activities 166,754 146,324 92,884
____________________________________________________________________
INVESTING ACTIVITIES
Acquisitions, net of cash acquired (54,916) (134,999) (4,600)
Payments for property, plant and
equipment (204,229) (140,057) (95,722)
Investments in unconsolidated
cellular partnerships (3,605) (2,161) (9,098)
Proceeds from sales of assets - 5,049 -
Purchase of life insurance investment (7,670) (6,160) (6,080)
Other, net 3,948 7,166 (7,752)
____________________________________________________________________
Net cash used in investing
activities (266,472) (271,162)(123,252)
____________________________________________________________________
FINANCING ACTIVITIES
Proceeds from issuance of
long-term debt 82,347 157,087 56,432
Payments of long-term debt (9,764) (44,552) (48,685)
Notes payable, net 36,785 17,415 6,000
Proceeds from issuance of common
stock 3,529 8,776 6,388
Cash dividends paid (15,735) (14,119) (13,388)
Other, net 2,562 (1,636) 2,668
____________________________________________________________________
Net cash provided by
financing activities 99,724 122,971 9,415
____________________________________________________________________
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 6 (1,867) (20,953)
____________________________________________________________________
CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR 9,771 11,638 32,591
____________________________________________________________________
CASH AND CASH EQUIVALENTS AT END OF YEAR $9,777 9,771 11,638
====================================================================
See accompanying notes to consolidated financial statements.
46
<PAGE>
CENTURY TELEPHONE ENTERPRISES, INC.
Consolidated Statements of Stockholders' Equity
<TABLE>
<CAPTION> Preferred
Stock
Common Total ESOP Non-
Shares Stockholders' Common Paid-in Retained Commit- redeem-
Outstanding Equity Stock Capital Earnings ment able
==============================================================================================================
(expressed in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
30,834,335 BALANCES, DECEMBER 31, 1990 $280,915 30,834 163,028 101,459 (14,860) 454
- Net income 37,419 - - 37,419 - -
Issuance of common stock through
dividend reinvestment, stock
purchase, 401K and incentive
332,190 plans 6,388 332 6,056 - - -
Issuance of common stock for
198,347 acquisitions 5,356 199 5,157 - - -
Amortization of unearned
- compensation and other 1,407 - 1,407 - - -
- Reduction of ESOP commitment 1,880 - - - 1,880 -
Common stock dividends -
- $.287 per share (13,356) - - (13,356) - -
- Preferred stock dividends (32) - - (32) - -
______________________________________________________________________________________________________________
31,364,872 BALANCES, DECEMBER 31, 1991 319,977 31,365 175,648 125,490 (12,980) 454
- Net income 44,305 - - 44,305 - -
Issuance of common stock through
dividend reinvestment, stock
purchase, 401K and incentive
490,275 plans 8,777 490 8,287 - - -
Issuance of common stock for
978,115 acquisitions 21,475 978 20,497 - - -
Amortization of unearned
- compensation and other 3,154 - 3,154 - - -
16,063,614 Three-for-two stock split - 16,064 (16,064) - - -
- Reduction of ESOP commitment 1,880 - - - 1,880 -
Common stock dividends -
- $.293 per share (14,087) - - (14,087) - -
- Preferred stock dividends (32) - - (32) - -
______________________________________________________________________________________________________________
48,896,876 BALANCES, DECEMBER 31, 1992 385,449 48,897 191,522 155,676 (11,100) 454
- Net income 69,004 - - 69,004 - -
Issuance of common stock through
dividend reinvestment, stock
purchase, 401K and inentive
214,954 plans 3,529 215 3,314 - - -
Issuance of common stock for
2,182,875 acquisitions 68,172 2,183 65,989 - - -
Amortization of unearned
- compensation and other 1,469 - 1,469 - - -
- Reduction of ESOP commitment 1,880 - - - 1,880 -
Common stock dividends -
- $.310 per share (15,703) - - (15,703) - -
- Preferred stock dividends (32) - - (32) - -
______________________________________________________________________________________________________________
51,294,705 BALANCES, DECEMBER 31, 1993 $513,768 51,295 262,294 208,945 (9,220) 454
==============================================================================================================
See accompanying notes to consolidated financial statements.
</TABLE>
47
<PAGE>
CENTURY TELEPHONE ENTERPRISES, INC.
Notes to Consolidated Financial Statements
December 31, 1993
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation - The consolidated financial
statements of Century Telephone Enterprises, Inc. and
subsidiaries (the "Company") include the accounts of Century
Telephone Enterprises, Inc. ("Century") and its majority-owned
subsidiaries and cellular partnerships. The Company's regulated
operations are subject to the provisions of Statement of
Financial Accounting Standards No. 71 ("SFAS 71"), "Accounting
for the Effects of Certain Types of Regulation." Unaffiliated
parties' interests in cellular partnerships which have been
consolidated are included in other liabilities at December 31,
1993 and 1992 in the amounts of $10,494,000 and $6,530,000,
respectively.
Investments in cellular partnerships where the Company does
not have a majority partnership interest are accounted for using
the equity method of accounting. The Company's share of income
from these partnerships was $7,592,000, $2,087,000 and $984,000
in 1993, 1992 and 1991, respectively, and is included in earnings
from unconsolidated cellular partnerships.
Revenue Recognition - Revenues are recognized when earned.
Certain of Century's telephone subsidiaries participate in
revenue pools with other telephone companies for interstate
revenue and for certain intrastate revenue. Such pools are
funded by toll revenue and/or access charges within state
jurisdictions and by access charges in the interstate market.
Revenue earned through the various pooling processes is initially
recorded based on estimates. The Company recorded adjustments,
based upon settlements of prior years' revenues for certain
subsidiaries, which increased revenues by $9,152,000, $8,181,000
and $8,206,000 in 1993, 1992 and 1991, respectively.
Excess Cost of Net Assets Acquired - The excess cost over net
assets acquired of substantially all acquisitions accounted for
as purchases (goodwill) is being amortized over 40 years.
Amortization of $6,215,000, $4,955,000 and $2,886,000 for 1993,
1992 and 1991, respectively, is included in depreciation and
amortization. Amortization of goodwill attributable to
48
<PAGE>
unconsolidated investments in cellular partnerships was $966,000,
$395,000 and $287,000 for 1993, 1992 and 1991, respectively, and
is included as a reduction in earnings from unconsolidated
cellular partnerships. The carrying value of goodwill is
reviewed for impairment whenever events or changes in
circumstances indicate that such carrying value may not be
recoverable by assessing the recoverability of such carrying
value through projected undiscounted future results.
Other Investments - The Company's other investments consist of
the following:
December 31, 1993 1992
==================================================================
(expressed in thousands)
Cash surrender value of life
insurance, partially pledged $ 38,642 30,446
Investments in unconsolidated
cellular partnerships 41,983 23,895
Investments in marketable
equity securities, at cost 8,478 7,008
Other 9,039 6,129
__________________________________________________________________
$ 98,142 67,478
==================================================================
Affiliated Transactions - Certain service subsidiaries of Century
provide installation and maintenance services, materials and
supplies, and managerial, technical and accounting services to
subsidiaries. In addition, Century provides and bills management
services to all subsidiaries and in certain instances makes
interest-bearing advances to finance construction of plant and
purchases of equipment. These purchases are recorded in the
telephone subsidiaries' accounts at their cost to the extent
permitted by regulatory authorities. Intercompany profits on
service subsidiaries' sales to regulated affiliates are limited
to a reasonable return on investment and have not been
eliminated. Intercompany profits on service subsidiaries' sales
to nonregulated affiliates have been eliminated.
Property, Plant and Equipment - Telephone plant is stated
substantially at original cost of construction.
Normal retirements of telephone property are charged against
accumulated depreciation, along with the costs of removal less
salvage, with no gain or loss recognized. Renewals and
betterments of plant and equipment are capitalized while repairs,
as well as renewals of minor items, are charged to operating
expense.
49
<PAGE>
Depreciation of telephone properties is provided on the
straight-line method, using class or overall composite rates
acceptable to the regulatory authorities. Included in 1993, 1992
and 1991 depreciation expense were additional one-time
depreciation charges of $3,621,000, $3,854,000 and $1,784,000,
respectively. The composite depreciation rate for telephone
properties was 7.1%, 6.6% and 6.7% for 1993, 1992 and 1991,
respectively.
When non-telephone property is sold or retired, a gain or
loss is recognized. Depreciation is provided on the straight-
line method over estimated service lives ranging from three to
thirty years.
Depreciation expense was $77,999,000, $64,340,000 and
$53,197,000 in 1993, 1992 and 1991, respectively.
Income Taxes - Century files a consolidated federal income tax
return with its subsidiaries.
In February 1992 the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standards No.
109 ("SFAS 109"), "Accounting For Income Taxes." SFAS 109
requires the use of a method under which deferred tax assets and
liabilities are established for the future tax consequences
attributable to differences between the financial statement
carrying amounts of assets and liabilities and their respective
tax bases.
Effective January 1, 1992, the Company adopted SFAS 109 and
reported an unfavorable $913,000 cumulative effect of the change
in the method of accounting for income taxes in the 1992
consolidated statement of income. Due to the reduction in
corporate federal income tax rates as a result of the Tax Reform
Act of 1986, there existed excess deferred income taxes.
Pursuant to SFAS 71, a regulatory liability in the amount of
approximately $47,000,000 and a corresponding reduction in net
deferred income taxes payable were recorded in 1992 relative to
the excess deferred income taxes and the regulatory impact
thereof. The regulatory liability, net of the related tax impact
(approximately $20,300,000 at adoption), is being amortized as a
reduction of federal income tax expense over the estimated
remaining lives of the assets which generated the deferred taxes.
50
<PAGE>
Investment tax credits related to telephone plant have been
deferred and amortized as a reduction of federal income tax
expense over the estimated useful lives of the assets giving rise
to the credits. In accordance with SFAS 109, unamortized
deferred investment tax credits are treated as temporary
differences.
Earnings Per Share - Primary earnings per share amounts are
determined on the basis of the weighted average number of common
shares and common stock equivalents outstanding during the year.
The number of shares used in computing primary earnings per share
was 51,206,000 in 1993, 48,500,000 in 1992 and 47,305,000 in
1991.
Fully diluted earnings per share amounts give further effect
to convertible securities, primarily the debentures, which are
not common stock equivalents. The number of shares used in
computing fully diluted earnings per share before the cumulative
effect of changes in accounting principles was 55,892,000 in
1993, 52,814,000 in 1992 and 47,432,000 in 1991. For the
computation of fully diluted earnings per share for 1992, the
debentures have been excluded as their inclusion would be anti-
dilutive. The number of shares used in computing fully diluted
earnings per share was 55,892,000, 48,653,000 and 47,432,000 in
1993, 1992 and 1991, respectively.
Cash Equivalents - The Company considers short-term investments
with a maturity at date of purchase of three months or less to be
cash equivalents.
Reclassifications - Certain amounts previously reported for prior
years have been reclassified to conform with the 1993
presentation.
51
<PAGE>
(2) LONG-TERM DEBT
December 31, 1993 1992
==================================================================
(expressed in thousands)
Century
6.0% convertible debentures, due 2007 $115,000 115,000
9.8% senior notes - 4,813
9.4% senior notes, due in installments
through 2004 69,600 71,200
10.8% notes, due in installments
through 2006 1,245 1,529
Notes payable to banks
(at money market rates - 3.9%) 81,500 30,000
8.4% Employee Stock Ownership Plan
commitment, due in installments
through 2000 9,220 11,100
__________________________________________________________________
Total Century 276,565 233,642
__________________________________________________________________
Subsidiaries
First mortgage debt
5.9% notes, payable to agencies of
the United States government and
cooperative lending associations,
due in installments through 2026 158,998 126,670
7.2% bonds, due in installments
through 2002 11,699 14,505
Other debt
9.0% notes, due in installments
through 2020 8,633 8,334
7.6% capital lease obligations, due
in installments through 1997 4,271 3,502
Notes payable to bank (at money
market rates - 4.1%), due 1995 15,000 15,000
__________________________________________________________________
Total subsidiaries 198,601 168,011
__________________________________________________________________
Total long-term debt 475,166 401,653
__________________________________________________________________
Less current maturities 14,233 9,709
__________________________________________________________________
Long-term debt, excluding current
maturities $460,933 391,944
==================================================================
Except for the 6% convertible debentures, each interest rate
shown in the preceding table is a weighted average interest rate
as of December 31, 1993.
The approximate annual debt maturities (including sinking
fund requirements) for the five years subsequent to December 31,
1993 are as follows: 1994 - $14,233,000; 1995 - $77,757,000;
1996 - $45,611,000; 1997 - $17,182,000; and 1998 - $16,077,000.
In February 1992 Century issued $115,000,000 of 6%
convertible debentures. Interest is payable semiannually in
August and February. The debentures are convertible into common
stock at a conversion price of $25.33 per share and will mature
on February 1, 2007 unless previously converted or redeemed. The
debentures may be redeemed by Century on or after February 1,
1995. Certain redemptions through a sinking fund are required
from 2002 through 2006. Under certain circumstances the
debentures are redeemable at the option of the holder. See note
12 for information applicable to the use of the proceeds.
52
<PAGE>
The Company's loan agreements contain various restrictions,
among which are limitations regarding issuance of additional
debt, payment of cash dividends on common and preferred stock,
reacquisition of the Company's capital stock and other matters.
All of the Company's year-end consolidated retained earnings was
available for the payment of cash dividends to stockholders.
The transfer of funds from consolidated subsidiaries to
Century is also restricted by various loan agreements.
Subsidiaries which have loans from government agencies and
cooperative lending associations, or have issued first mortgage
bonds, generally may not loan or advance any funds to Century,
but may pay dividends if certain financial ratios are met. Loan
agreements of subsidiaries with other major lenders provide
restrictions as to the payment of dividends, but do not formally
limit loans and advances to Century. At December 31, 1993,
restricted net assets of subsidiaries were $126,528,000 and
subsidiaries' retained earnings in excess of amounts restricted
by debt covenants were $286,340,000.
Substantially all of the telephone property, plant and
equipment is pledged to secure the long-term debt of
subsidiaries.
At December 31, 1993, Century had outstanding $30,500,000
under a $50,000,000 line of credit (two-year revolver,
convertible to a five-year term loan) with interest at the rate
chosen by the Company based on a number of interest rate options.
In addition, Century had $51,000,000 outstanding under a
$55,000,000 line of credit (three-year revolving credit facility)
with similar interest rate options.
Century's telephone subsidiaries had approximately
$84,000,000 in commitments for long-term financing from the Rural
Electrification Administration available at December 31, 1993.
In addition to the $23,500,000 available under the two lines of
credit mentioned above, approximately $7,100,000 of additional
borrowings, some of which would be classified as current
liabilities, were available at December 31, 1993 to the Company
through lines of credit with various banks.
Interest paid by the Company was $30,085,000, $24,035,000
and $23,407,000 during 1993, 1992 and 1991, respectively.
Interest capitalized by the Company during 1993, 1992 and 1991
was $76,000, $547,000 and $91,000, respectively.
53
<PAGE>
ESOP Commitment - The Employee Stock Ownership Plan ("ESOP") is
partially funded by loans guaranteed by Century. Each loan is to
be repaid over a 10-year period with level principal payments
throughout its term. The weighted average interest rate of the
loans is 8.4% per annum. The unpaid balances of the loans are
included in long-term debt. An equivalent amount, representing
unearned employee compensation, is reflected as a deduction in
stockholders' equity. Both the debt and the amount in
stockholders' equity are reduced in equal amounts as the ESOP
repays the loans.
(3) STOCKHOLDERS' EQUITY
Common Stock - At December 31, 1993, unissued shares of Century's
common stock were reserved as follows:
=================================================================
Conversion of convertible debentures 4,540,000
Stock option plans 2,958,000
Employee stock purchase plan 506,000
Dividend reinvestment plan 409,000
Conversion of convertible preferred stock 122,000
Other employee benefit plans 1,243,000
_________________________________________________________________
9,778,000
=================================================================
As amended in 1991, Article III of Century's Articles of
Incorporation eliminates prospectively the ability of holders to
qualify for ten votes per share by providing that only voting
shares beneficially owned continuously by the same person since
May 30, 1987 will entitle the holder thereof to ten votes per
share. All other shares are entitled to one vote per share.
Preferred Stock - As of December 31, 1993, Century had authorized
2,000,000 shares of preferred stock, redeemable or non-
redeemable. All outstanding non-redeemable preferred stock has a
liquidation price equivalent to its par value of $25 per share
and is cumulative as to dividends; each series has voting rights.
At December 31, 1993 and 1992, there were 18,162 total shares of
non-redeemable preferred stock outstanding that were convertible
to a total of approximately 122,000 common shares.
54
<PAGE>
Stock Split - In November 1992 Century's Board of Directors
declared a three-for-two common stock split effected as a 50%
stock dividend in December 1992. Per share data for periods
prior to December 1992 which are included in this report have
been restated to reflect this stock split. An amount equal to
the par value of the additional common shares issued pursuant to
the stock split was reflected as a transfer from paid-in-capital
to common stock on the consolidated financial statements in 1992.
Shareholders' Rights Plan - In 1986 the Board of Directors
declared a dividend of one preferred stock purchase right for
each common share outstanding or that shall become outstanding
prior to November 26, 1996. With certain exceptions, if a person
or group acquires ownership of 15% or more of Century's common
shares or commences a tender or exchange offer which upon
consummation would result in ownership of 30% or more of the
common shares, each right held by shareholders, other than such
person or group, may be exercised to buy at the then-current
exercise price of the right (currently $85) the number of shares
of Series AA Junior Participating Preferred Stock of Century
having a market value equal to two times the exercise price. The
rights, which do not have voting rights, expire on November 27,
1996 and may be redeemed by Century at a price of $.05 per right
at any time before they become exercisable. If, at any time the
rights are exercisable, Century is a party to a merger, reverse
merger or other business combination or certain other
transactions occur, each right will entitle its holder to
purchase at the exercise price of the right a number of shares of
common stock of the surviving company having a market value of
two times the exercise price of the right. At December 31, 1993,
519,000 shares of Series AA Junior Participating Preferred Stock
were reserved for issuance under the Rights Plan.
(4) INCOME TAXES
As discussed in note 1, the Company adopted SFAS 109 as of
January 1, 1992. The cumulative effect of this change in
accounting for income taxes resulted in a $913,000 decrease in
net income and was included in cumulative effect of changes in
accounting principles in the consolidated statement of income for
the year ended December 31, 1992.
55
<PAGE>
Total income tax expense (benefit) for the years ended
December 31, 1993 and 1992 was allocated as follows:
1993 1992
=================================================================
(expressed in thousands)
Income before cumulative effect of
changes in accounting principles $ 37,252 32,599
Cumulative effect of changes in
accounting principles - (8,272)
________________________________________________________________
Net tax expense in the consolidated
statement of income 37,252 24,327
Stockholders' equity, primarily for
compensation expense for tax
purposes in excess of amounts
recognized for financial reporting
purposes (800) (2,885)
_________________________________________________________________
$ 36,452 21,442
=================================================================
Income tax expense attributable to income before cumulative
effect of changes in accounting principles is composed of the
following:
Year ended December 31, 1993 1992 1991
=================================================================
(expressed in thousands)
Federal
Current $ 26,409 29,100 16,227
Deferred 6,133 (1,742) (335)
State
Current 4,062 4,926 4,178
Deferred 648 315 -
_________________________________________________________________
$ 37,252 32,599 20,070
=================================================================
The tax effects of temporary differences that gave rise to
significant portions of the deferred tax assets and deferred tax
liabilities at December 31, 1993 and 1992 were as follows:
56
<PAGE>
December 31, 1993 1992
=================================================================
(expressed in
thousands)
Deferred tax assets:
Postretirement benefit cost $ 10,809 10,194
Deferred compensation 2,522 2,246
Regulatory liability 12,011 14,705
Deferred investment tax credits 3,465 3,685
Other employee benefits 3,842 2,228
Other 630 4,817
_________________________________________________________________
Total gross deferred tax assets 33,279 37,875
Less valuation allowance - -
_________________________________________________________________
Net deferred tax assets 33,279 37,875
_________________________________________________________________
Deferred tax liabilities:
Property, plant and equipment, primarily
due to depreciation differences (84,159) (73,598)
Deferred intercompany profits (3,236) (2,929)
Other (6,006) (412)
_________________________________________________________________
Total gross deferred tax liabilities (93,401) (76,939)
_________________________________________________________________
Net deferred tax liability $ (60,122) (39,064)
=================================================================
A $20,910,000 deferred tax asset and a valuation allowance
of a like amount reported at December 31, 1992 have been netted
during 1993 based on a refined purchase price allocation.
For the year ended December 31, 1991, deferred tax expense
resulted from timing differences in the recognition of revenue
and expense for tax and financial accounting purposes. The
sources of these timing differences and the tax effects of each
were as follows:
Year ended December 31, 1991
=================================================================
(expressed
in thousands)
Excess tax depreciation over book depreciation $ 1,636
Employee benefits (949)
Removal costs 552
Amortization of investment tax credits (2,225)
Amortization of excess deferred federal income taxes (1,147)
Other 1,798
_________________________________________________________________
$ (335)
=================================================================
The following is a reconciliation from the statutory federal
income tax rate to the Company's effective income tax rate:
57
<PAGE>
Year ended December 31, 1993 1992 1991
=================================================================
(expressed as a percentage
of pre-tax income)
Statutory federal income tax rate 35.0% 34.0 34.0
State income taxes, net of federal
income tax benefit 2.9 3.7 4.8
Amortization of nondeductible
excess cost of net assets
acquired 1.2 2.0 1.7
Amortization of investment
tax credits (2.0) (2.3) (3.9)
Amortization of excess deferred
federal income taxes (1.8) (2.6) (2.0)
Other, net (.2) .4 .3
_________________________________________________________________
Effective income tax rate 35.1% 35.2 34.9
=================================================================
Income taxes paid by the Company were $37,092,000,
$30,518,000 and $19,962,000 during 1993, 1992 and 1991,
respectively.
(5) STOCK OPTION AND INCENTIVE PROGRAMS
Century's 1990 Incentive Compensation Program (the "1990
Program") allows the Board of Directors, through the Compensation
Committee, to grant incentives to employees in any one or a
combination of the following forms: incentive stock options and
non-qualified stock options; stock awards; restricted stock;
performance shares; and cash awards. During 1990, 836,904 stock
options were granted under the terms of the 1990 Program with an
average option price of $21.58 per share. During 1992, 960,639
stock options were granted with an option price of $27.67 per
share. Century has reserved 1,873,000 shares of common stock
which may be issued under the 1990 Program.
One-seventh of the options granted in 1990 were exercisable
on the date of grant. An additional one-seventh become
exercisable on each of the first six anniversary dates of the
date of grant. The dates on which some or all of the last two-
sevenths become exercisable are accelerated if specified average
market prices of Century's common stock are attained on one or
more of the first four anniversary dates of the date of grant.
The options granted in 1992 became exercisable in June 1993. The
options expire ten years after the date of grant.
The Company's 1988 Incentive Compensation Program (the "1988
Program") allows the Board, through the Compensation Committee,
to grant incentives to employees in any one or a combination of
the following forms: incentive stock options and non-qualified
stock options; stock appreciation rights; stock awards;
restricted stock; performance shares; and cash awards.
58
<PAGE>
Century has reserved 1,085,000 shares of common stock which may
be issued under the 1988 Program. The options under the 1988
Program expire ten years after the date of grant.
Stock option transactions during 1991, 1992 and 1993 were as
follows:
Number of Options
_________________
1990 1988
Program Program
=================================================================
Balance as of December 31, 1990 836,904 1,391,007
Exercised (average option price
per share: $8.85) - (239,283)
_________________________________________________________________
Balance as of December 31, 1991 836,904 1,151,724
Exercised (average option price
per share: $8.97) - (516,398)
Granted (option price per share:
$27.67) 960,639 -
_________________________________________________________________
Balance as of December 31, 1992 1,797,543 635,326
Exercised (average option price
per share: $20.42
and $9.32, respectively) (2,658) (48,462)
_________________________________________________________________
Balance as of December 31, 1993 1,794,885 586,864
=================================================================
At December 31, 1993, 1,499,104 and 586,864 shares were
issuable under exercisable options granted under the 1990 Program
and the 1988 Program, respectively. Option prices range from
$8.85 to $27.67.
(6) SALES OF ASSETS
During 1993 the Company sold a minority investment in a
telephone company which resulted in a pre-tax gain of $1,661,000
($1,080,000 after-tax).
During 1992 the Company sold two telephone subsidiaries
which served approximately 2,000 access lines; its minority
interest in a Metropolitan Statistical Area ("MSA") cellular
partnership and its minority interest in a Rural Service Area
("RSA") cellular partnership; and its 100% interest in an RSA
cellular market. The sales prices totaled $12,212,000, and the
transactions resulted in an aggregate pre-tax gain of $3,985,000
($2,630,000 after-tax).
(7) BUSINESS SEGMENTS
The Company currently operates in two principal segments -
traditional telephone services and mobile communications
services.
The Company's telephone customers are located in rural,
suburban and small urban communities in 14 states. Approximately
82% of the Company's telephone access lines are in
59
<PAGE>
Wisconsin, Ohio, Louisiana, Michigan and Arkansas. The Company's
mobile communications customers are located primarily in
Louisiana and Michigan.
Other accounts receivable are primarily amounts due from
various long distance carriers, principally AT&T.
Year ended December 31, 1993 1992 1991
=================================================================
(expressed in thousands)
Telephone Operations
Revenues
Local service $ 88,704 78,108 58,653
Network access, long
distance and other 259,781 219,402 177,143
_________________________________________________________________
348,485 297,510 235,796
_________________________________________________________________
Expenses
Cost of sales and operating
expenses 168,408 139,911 111,275
Depreciation and amortization 65,175 53,927 44,482
_________________________________________________________________
233,583 193,838 155,757
_________________________________________________________________
Operating income $ 114,902 103,672 80,039
=================================================================
Capital expenditures $ 131,180 108,974 73,913
Identifiable assets $1,027,390 843,356 616,992
=================================================================
Mobile Communications Operations
Revenues
Cellular $ 80,513 57,683 41,515
Paging 4,199 4,409 5,216
_________________________________________________________________
84,712 62,092 46,731
_________________________________________________________________
Expenses
Cost of sales and operating
expenses 63,447 47,165 43,925
Depreciation and amortization 11,359 8,971 7,758
_________________________________________________________________
74,806 56,136 51,683
_________________________________________________________________
Operating income (loss) $ 9,906 5,956 (4,952)
_________________________________________________________________
Capital expenditures $ 56,092 10,904 12,702
Identifiable assets $240,634 148,485 116,293
=================================================================
The effect of the change in accounting principle related to
accounting for postretirement benefits reduced 1992 operating
income of the telephone operations and mobile communications
operations by $1,773,000 and $250,000, respectively.
60
<PAGE>
(8) POSTRETIREMENT BENEFITS
The Company sponsors a defined benefit health care plan (the
"Retiree Plan") that provides postretirement medical, life and
dental benefits to substantially all retired full-time employees,
exclusive of the bargaining unit employees of Century Telephone
of Ohio, Inc. ("Ohio").
The acquisition of Ohio was consummated on April 1, 1992.
The employees of Ohio who are covered under a collective
bargaining agreement and who meet certain eligibility
requirements are provided postretirement medical and life
insurance benefits upon retirement under the provisions of a
separate plan (the "Ohio Plan" and, together with the Retiree
Plan, the "Benefit Plans").
The Company adopted Statement of Financial Accounting
Standards No. 106 ("SFAS 106"), "Employers' Accounting for
Postretirement Benefits Other Than Pensions," as of January 1,
1992 and elected immediate recognition of the transition
obligation. In accordance with the provisions of SFAS 71 the
Company deferred $3,450,000 of the $27,390,000 transition
obligation as a regulatory asset; such costs are being expensed
in connection with recovery through the rate-making process. The
remaining $23,940,000, net of tax benefits which aggregated
$9,185,000, was reported as the cumulative effect of a change in
accounting principles. The effects of adopting SFAS 106 on net
income and on income before cumulative effect of changes in
accounting principles for the year ended December 31, 1992 were
decreases of $16,009,000 and $1,254,000, respectively.
Postretirement benefit costs of approximately $1,475,000 for the
year ended December 31, 1991, which were recorded on a pay-as-
you-go basis, were not restated.
Net periodic postretirement benefit cost under the Benefit
Plans for 1993 and 1992 included the following components:
61
<PAGE>
Year ended December 31, 1993 1992
=================================================================
(expressed in thousands)
Service cost $ 1,640 1,040
Interest cost 3,008 2,521
Amortization of unrecognized
actuarial losses 365 -
Amortization of unrecognized
prior service cost 86 -
_________________________________________________________________
Net periodic postretirement
benefit cost $ 5,099 3,561
=================================================================
The following table sets forth the amounts recognized as
liabilities for postretirement benefits in the Company's
consolidated balance sheets at December 31, 1993 and 1992.
December 31, 1993 1992
=================================================================
(expressed in thousands)
Accumulated postretirement benefit
obligation:
Retirees and retirees' dependents $ 20,451 15,796
Fully eligible active plan
participants - 537
Other active plan participants 24,980 16,991
_________________________________________________________________
Accumulated postretirement
benefit obligation 45,431 33,324
Plan assets - -
Unrecognized prior service cost (1,177) -
Unrecognized net loss (6,302) -
_________________________________________________________________
Accrued postretirement benefit
costs included in other liabilities $ 37,952 33,324
=================================================================
For measurement purposes, an 8% health care cost rate was
assumed for 1993 through 1996; the rate was assumed to decrease
to 7% thereafter. If the assumed health care cost trend rate had
been increased by one percentage point in each year, the
accumulated postretirement benefit obligation as of December 31,
1993 would have increased $5,219,000 and the net periodic
postretirement benefit cost for the year ended December 31, 1993
would have increased $756,000.
The discount rate used in determining the accumulated
postretirement benefit obligation as of December 31, 1993 was 7%.
The average discount rate used in 1992 was 8.85%.
62
<PAGE>
(9) PENSION PLANS
Century sponsors an Outside Directors' Retirement Plan and a
Supplemental Executive Retirement Plan to provide directors and
officers, respectively, with supplemental retirement and
disability benefits. In addition, the bargaining unit employees
of Ohio, a wholly-owned subsidiary which was acquired April 1,
1992, are provided benefits under a defined benefit pension plan.
At December 31, 1993 and 1992, the combined accumulated benefit
obligation of the plans, substantially all of which was vested,
aggregated $16,321,000 and $15,167,000, respectively. The
projected benefit obligation in excess of plan assets was
$7,390,000 and $7,229,000, of which $3,371,000 and $3,704,000 was
accrued as of December 31, 1993 and 1992, respectively. The net
periodic pension cost for 1993, 1992 and 1991 was $1,057,000,
$930,000 and $965,000, respectively. Discount rates ranged from
7.0% - 7.25% for 1993 and from 7.0% - 8.3.% for 1992.
Century sponsors an Employee Stock Bonus Plan ("ESBP") and
an Employee Stock Ownership Plan ("ESOP"). These plans cover
most employees with one year of service with the Company and are
funded by Company contributions determined annually by the Board
of Directors.
The Company recorded contributions related to the ESBP in
the amount of $1,800,000, $1,120,000 and $540,000 during 1993,
1992 and 1991, respectively. At December 31, 1993, the ESBP
owned 4,454,403 shares of Century common stock.
The ESOP held 1,882,935 common shares of Century and had
outstanding debt of $9,220,000 at December 31, 1993. Interest
incurred by the ESOP on its debt was $895,000, $1,052,000 and
$1,205,000 in 1993, 1992 and 1991, respectively. As the Company
makes annual contributions to the ESOP, these contributions,
along with dividends earned on shares held by the ESOP, are used
to repay the debt. The Company contributed $2,596,000,
$2,427,000 and $2,728,000 during 1993, 1992 and 1991,
respectively, to the ESOP. Dividends on ESOP shares used for
debt service by the ESOP were $580,000, $560,000 and $554,000 in
1993, 1992 and 1991, respectively.
(10) FAIR VALUE OF FINANCIAL INSTRUMENTS
63
<PAGE>
Cash and Cash Equivalents, Accounts Receivable, Accounts Payable
and Notes Payable to Banks - The carrying amount approximates the
fair value due to the short maturity of these instruments.
Other Investments - The fair value of the Company's investments
in marketable equity securities, based on quoted market prices,
was $11,444,000 and $7,230,000 at December 31, 1993 and 1992,
respectively. The carrying amount of the cash surrender value of
life insurance approximates the fair value.
Long-Term Debt - The fair value ($502,826,000 and $399,783,000 at
December 31, 1993 and 1992, respectively) of the Company's long-
term debt is estimated by discounting the scheduled payment
streams to present value based upon rates currently offered to
the Company for debt of similar remaining maturities.
(11) COMMITMENTS AND CONTINGENCIES
Construction expenditures and investments in vehicles,
buildings and other work equipment during 1994 are estimated to
be $142,000,000 for telephone operations, $50,000,000 for mobile
communications operations (of which $10,000,000 will be funded by
minority interest owners in cellular partnerships operated by the
Company) and $4,000,000 for other operations.
The Company is involved in various claims and legal actions
arising in the ordinary course of business. In the opinion of
management, the ultimate disposition of these matters will not
have a material adverse effect on the Company's consolidated
financial position or results of operations.
(12) ACQUISITIONS
On April 8, 1993, the Company acquired San Marcos Telephone
Company, Inc. ("SMTC") in a stock and cash transaction and SM
Telecorp, Inc., an affiliate of SMTC, for cash. Subsequent to
the acquisitions, the Company changed the names of San Marcos
Telephone Company, Inc. and the principal operating subsidiary of
SM Telecorp, Inc. to Century Telephone of San Marcos, Inc. and
Century Telecommunications, Inc., respectively. The total
acquisition price for both companies approximated $100,000,000,
the stock portion (approximately $67,000,000) of which was
represented by approximately 2,151,000 shares of Century's common
stock. As a result of the acquisitions, which were accounted for
as purchases, the
64
<PAGE>
Company acquired approximately 22,500 telephone
access lines in and around San Marcos, Texas, along with a 35%
ownership interest in the Austin, Texas MSA wireline cellular
market and a 9.6% interest in the Texas RSA #16 wireline cellular
market. Approximately $87,000,000 of cost in excess of net
assets acquired was recorded as a result of the acquisitions.
On April 1, 1992 the Company acquired Central Telephone
Company of Ohio ("Central") for $120,000,000 and changed
Central's name to Century Telephone of Ohio, Inc. ("Ohio"). Ohio
is a local exchange telephone company with approximately 68,100
access lines located in suburbs of Cleveland, Ohio. The net
proceeds from the issuance of debentures were used to fund the
major portion of the acquisition of Ohio. The acquisition was
accounted for as a purchase and approximately $80,000,000 of cost
in excess of net assets acquired was recorded.
During the first quarter of 1992, the Company purchased
Ooltewah-Collegedale Telephone Company ("Ooltewah") and Chatham
Telephone Co., Inc. ("Chatham"). Ooltewah provides service to
6,200 customers in suburbs of Chattanooga, Tennessee. Chatham
owns a minority interest in a cellular partnership operated by
the Company and serves 1,500 telephone customers in north
Louisiana. In December 1992 the Company acquired 100% of the
Alexandria, Louisiana MSA wireline cellular market
("Alexandria").
The purchase prices of Ooltewah, Chatham and Alexandria
aggregated approximately $37,000,000, of which approximately
$21,475,000 was paid through the issuance of 978,115 shares of
Century's common stock.
The following pro forma information represents the
consolidated results of operations of the Company as if each 1993
and 1992 acquisition had been combined with the Company as of
January 1 of each respective period.
Year ended December 31, 1993 1992
===============================================================
(expressed in thousands,
except per share amounts)
(unaudited)
Revenues $438,418 395,033
Income before cumulative effect of
changes in accounting principles $69,122 58,324
Net income $69,122 42,656
Fully diluted earnings per share
before cumulative effect of
changes in accounting principles $ 1.31 1.12
Fully diluted earnings per share $ 1.31 .85
===============================================================
65
<PAGE>
The pro forma information is not necessarily indicative of
the operating results that would have occured if each 1993 and
1992 acquisition had been consummated as of January 1 of each
respective period, nor is it necessarily indicative of future
operating results. The actual results of operations of an
acquired company are included in the Company's consolidated
financial statements only from the date of acquisition.
(13) SUBSEQUENT EVENTS (UNAUDITED)
In September 1993 the Company signed a merger agreement
whereby it will acquire a local exchange telephone company in
Michigan which serves approximately 2,400 access lines and which
owns a minority interest of approximately 11% in a cellular
partnership operated by the Company. This transaction is
expected to be completed in the first quarter of 1994.
In October 1993 the Company executed a merger agreement with
Celutel, Inc. under which Century acquired Celutel for
approximately $102,000,000 during the first quarter of 1994.
Approximately $51,400,000 of the purchase price was paid in cash,
with the remainder being paid through the issuance of 1,900,000
shares of Century common stock. In connection with the
acquisition, Century refinanced approximately $41,700,000 of
Celutel's debt. The acquisition was accounted for as a purchase
and approximately $138,000,000 of cost in excess of net assets
acquired was recorded as a result of the acquisition. Celutel
provides cellular service to approximately 28,000 customers in
five non-wireline provider systems in MSAs in Mississippi and
Texas.
66
<PAGE>
CENTURY TELEPHONE ENTERPRISES, INC.
Consolidated Quarterly Income Information (unaudited)
<TABLE>
<CAPTION>
Quarter Ended
March 31 June 30 September 30 December 31
============================================================================
(expressed in thousands, except per share amounts)
<S> <C> <C> <C> <C>
1993
____________________________________________________________________________
Total revenues $96,825 107,338 112,765 116,269
Operating income $28,267 31,343 33,477 31,721
Net income $15,740 16,517 17,596 19,151
Fully diluted earnings
per share $ .31 .32 .33 .36
============================================================================
1992
____________________________________________________________________________
Total revenues $75,863 89,109 93,427 101,203
Operating income $22,239 26,040 28,685 32,664
Income before cumulative
effect of changes in
accounting principles $11,531 12,936 15,429 20,077
Net income (loss) $(4,137) 12,936 15,429 20,077
Fully diluted earnings
per share before
cumulative effect of
changes in accounting
principles $ .24 .27 .31 .40
============================================================================
</TABLE>
Fully diluted earnings per share for the fourth quarter of 1993
reflect a decrease of $.04 per share (compared to the fourth
quarter of 1992) related to cellular commissions incurred as a
result of the significant increase in the number of cellular
subscribers activated during December 1993; such decrease was
offset by non-recurring favorable income tax adjustments of $.04
per share.
Fully diluted earnings per share before cumulative effect of
changes in accounting principles for the fourth quarter of 1992
reflect a $.06 per share impact of favorable adjustments to
telephone revenues and a $.04 per share impact from gains on the
sales of assets.
Fully diluted earnings per share before cumulative effect of
changes in accounting principles for 1992 have been adjusted to
reflect the December 1992 stock split. See note 3 of Notes to
Consolidated Financial Statements.
Certain amounts previously reported for 1992 have been
reclassified to conform with 1993 presentation.
67
<PAGE>
Item 9. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure.
None.
PART III
Item 10. Directors and Executive Officers of the Registrant.
Executive Officers
The name, age and office(s) held by each of the Registrant's
executive officers are shown below. Each of the executive
officers listed below serves at the pleasure of the Board of
Directors, except Mr. Williams who has entered into an employment
agreement with the Registrant effective through May 1996 and from
year to year thereafter subject to the right of Mr. Williams or
the Company to terminate the employment agreement in accordance
with the terms of such agreement.
Name Age Office(s) held with Century
____ ___ ___________________________
Clarke M. Williams 72 Chairman of the Board
of Directors
Glen F. Post, III 41 Vice Chairman of the
Board of Directors, President
and Chief Executive Officer
R. Stewart Ewing, Jr. 42 Senior Vice President and Chief
Financial Officer
W. Bruce Hanks 39 President - Telecommunications
Services
Harvey P. Perry 49 Senior Vice President, General
Counsel and Secretary
Jim D. Reppond 52 President - Telephone Group
Each of the Registrant's executive officers has served as an
officer of the Registrant or one or more of its subsidiaries in
varying capacities for more than the past 5 years.
68
<PAGE>
The balance of the information required by Item 10 is
incorporated by reference to the Registrant's definitive proxy
statement relating to its 1994 annual meeting of stockholders (the
"Proxy Statement"), which Proxy Statement will be filed pursuant
to Regulation 14A within 120 days after the end of the last fiscal
year.
Item 11. Executive Compensation.
The information required by Item 11 is incorporated by
reference to the Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
The information required by Item 12 is incorporated by
reference to the Proxy Statement.
Item 13. Certain Relationships and Related Transactions.
The information required by Item 13 is incorporated by
reference to the Proxy Statement.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K.
a. Financial Statements
(i) Consolidated Financial Statements:
Independent Auditors' Report on Consolidated
Financial Statements and Financial Statement
Schedules
Consolidated Statements of Income for the Years
Ended December 31, 1993, 1992 and 1991
Consolidated Balance Sheets - December 31, 1993 and
1992
Consolidated Statements of Cash Flows for the Years
Ended December 31, 1993, 1992 and 1991
69
<PAGE>
Consolidated Statements of Stockholders' Equity for
the Years Ended December 31, 1993, 1992 and 1991
Notes to Consolidated Financial Statements
Consolidated Quarterly Income Information
(unaudited)
(ii) Schedules:*
III Condensed Financial Information of Registrant
V Property, Plant and Equipment
VI Accumulated Depreciation and Amortization of
Property, Plant and Equipment
IX Short-Term Borrowings
X Supplementary Income Statement Information
* Those Schedules not listed above are omitted as
not applicable or not required.
b. Report on Form 8-K.
The following Current Report on Form 8-K was filed
during the fourth quarter of 1993:
October 8, 1993
_______________
Item 5. Other Events - Execution of definitive
agreement and plan of merger pursuant to which
Century Telephone Enterprises, Inc. proposes to
acquire Celutel, Inc.
c. Exhibits:
70
<PAGE>
3(i) Amended and Restated Articles of Incorporation of
Registrant, dated December 15, 1988
(incorporated by reference to Exhibit 3.1 to
Registrant's Annual Report on Form 10-K for the
year ended December 31, 1988), as amended by the
Articles of Amendment dated May 2, 1989
(incorporated by reference to Exhibit 4.1 to
Registrant's Current Report on Form 8-K dated
May 5, 1989), by the Articles of Amendment dated
May 17, 1990 (incorporated by reference to
Exhibit 4.1 of the Registrant's Post-Effective
Amendment No. 2 on Form S-3 dated December 21,
1990, Registration No. 33-17114) and by the
Articles of Amendment dated May 30, 1991
(incorporated by reference to Exhibit 3.1 of
Registrant's Current Report on Form 8-K dated
June 12, 1991).
3(ii) Registrant's Bylaws, as amended through February
22, 1994, included elsewhere herein.
4.1 Loan Agreement, dated January 3, 1990, between
Registrant and National Bank of Detroit, First
National Bank of Commerce and Bank One, Texas,
National Association (incorporated by reference
to Exhibit 4.1 to Registrant's Annual Report on
Form 10-K for the year ended December 31, 1989)
and amendment thereto dated May 15, 1992
incorporated by reference to Exhibit 4.1 to
Registrant's Annual Report on Form 10-K for the
year ended December 31, 1992) and the second
amendment thereto dated March 31,1993
(incorporated by reference to Exhibit 19.1 to
Registrant's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1993).
4.2 Note Purchase Agreement, dated September 1, 1989,
between Registrant, Teachers Insurance and
Annuity Association of America and the Lincoln
National Life Insurance Company (incorporated by
reference to Exhibit 4.23 to Registrant's
Quarterly Report on Form 10-Q for the quarter
ended September 30, 1989).
4.3 Agreement, dated November 27, 1977, among
Registrant, The Travelers Insurance Company and
The Travelers Indemnity Company, and form of
Warrant (incorporated by reference to Exhibits 4
and 5 to
71
<PAGE>
Registrant's Annual Report on Form 10-K
for the year ended December 31, 1977).
4.10 Form of Indenture dated May 1, 1940 among Century
Telephone of Wisconsin, Inc. (formerly La Crosse
Telephone Corporation) and the First National
Bank of Chicago and William K. Stevens
(incorporated by reference to Exhibit 4.12 to
Registration No. 2-48478).
4.11 Supplemental Indenture No. 12 (incorporated by
reference to Exhibit 5.12 to Registration No. 2-
62172) and Supplemental Indentures 13 and 14
(incorporated by reference to Exhibit 5.11 to
Registration No. 2-68731), each of which are
supplemental indentures to the Form of Indenture
dated May 1, 1940 listed above as Exhibit 4.10.
4.12 Amended and Restated Rights Agreement dated as of
November 17, 1986 between Century Telephone
Enterprises, Inc. and the Rights Agent named
therein (incorporated by reference to Exhibit
4.1 to Registrant's Current Report on Form 8-K
dated December 20, 1988), the Amendment thereto
dated March 26, 1990 (incorporated by reference
to Exhibit 4.1 to Registrant's Quarterly Report
on Form 10-Q for the quarter ended March 31,
1990) and the Second Amendment thereto dated
February 23, 1993 (incorporated by reference to
Exhibit 4.12 to Registrant's Annual Report on
Form 10-K for the year ended December 31, 1992).
4.16 Note Purchase Agreement, dated May 6, 1986, among
Registrant, Teachers Insurance and Annuity
Association of America, Aetna Life Insurance
Company, the Aetna Casualty and Surety Company
and Lincoln National Pension Insurance Company
(incorporated by reference to Exhibit 4.23 to
Registration No. 33-5836), Amendatory Agreement
dated November 1, 1986 (incorporated by
reference to Exhibit 4.2 to Registrant's Annual
Report on Form 10-K for the year ended December
31, 1986), amendment thereto dated November 1,
1987 (incorporated by reference to Exhibit 4.2
to Registrant's Annual Report on Form 10-K for
the year ended December 31, 1987) and
Modification Letter dated September 1, 1989
(incorporated by
72
<PAGE>
reference to Exhibit 19.6 to Registrant's
Quarterly Report on Form 10-Q for
the quarter ended September 30, 1989).
4.21 * The Century Telephone Enterprises, Inc. Stock Bonus
Plan, PAYSOP and Trust, as amended and restated
September 10, 1987 and amendment thereto dated
February 29, 1988 (incorporated by reference to
Exhibit 4.21 to Registrant's Annual Report on
Form 10-K for the year ended December 31, 1987),
amendments thereto dated March 21, 1991 and
April 15, 1991, (incorporated by reference to
Exhibit 4.21 to Registrant's Annual Report on
Form 10-K for the year ended December 31, 1991),
amendment thereto dated March 31, 1992
(incorporated by reference to Exhibit 4.21 to
Registrant's Annual Report on Form 10-K for the
year ended December 31, 1992) and amendments
thereto dated June 1, 1993 and June 10, 1993,
included elsewhere herein.
4.22 Form of common stock certificate of the Registrant
(incorporated by reference to Exhibit 4.1 to
Registrant's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1993).
4.23 Indenture, dated February 1, 1992, between
Registrant and First American Bank and Trust of
Louisiana (incorporated by reference to Exhibit
4.23 to Registrant's Annual Report on Form 10-K
for the year ended December 31, 1991).
4.24 Revolving Credit Facility Agreement, dated February
7, 1992 between Registrant and NationsBank of
Texas, N.A. (incorporated by reference to
Exhibit 4.24 to Registrant's Annual Report on
Form 10-K for the year ended December 31, 1991),
amendment thereto dated April 8, 1993
(incorporated by reference to Exhibit 19.2 to
Registrant's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1993) and amendment
thereto dated July 9, 1993, included elsewhere
herein.
4.25 Credit Agreement, dated February 9, 1994 between
Registrant, NationsBank of Texas, N.A., Bank
One, Texas, N.A., The Bank of Nova Scotia, First
National Bank of Commerce and Texas Commerce
Bank National Association, included elsewhere
herein.
73
<PAGE>
10.1 * Employment Agreement, dated May 24, 1993, by and
between Clarke M. Williams and Registrant
(incorporated by reference to Exhibit 19.1 to
Registrant's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1993).
10.2 * Form of employment agreement that the registrant
has entered into with each Executive Officer
other than Mr. Williams (incorporated by
reference to Exhibit 10.2 to Registrant's Annual
Report on Form 10-K for the year ended December
31, 1990).
10.3 * Registrant's Outside Directors' Retirement Plan,
dated November 19, 1984 (incorporated by
reference to Registrant's Annual Report on Form
10-K for the year ended December 31, 1985),
amendment thereto dated February 21, 1989
(incorporated by reference to Registrant's
Annual Report on Form 10-K for the year ended
December 31, 1988) and amendment thereto dated
May 17, 1991 (incorporated by reference to
Exhibit 10.3 to Registrant's Annual Report on
Form 10-K for the year ended December 31, 1991).
10.4 * Registrant's Amended and Restated Supplemental
Executive Retirement Plan, as amended and
restated May 17, 1991 (incorporated by reference
to Exhibit 10.4 to Registrant's Annual Report on
Form 10-K for the year ended December 31, 1991)
and amendment thereto dated February 24, 1993
(incorporated by reference to Exhibit 10.4 to
Registrant's Annual Report on Form 10-K for the
year ended December 31, 1992).
10.5 * Registrant's 1983 Restricted Stock Plan, dated
February 21, 1984 (incorporated by reference to
Registrant's Annual Report on Form 10-K for the
year ended December 31, 1985).
10.6 * Registrant's Key Employee Incentive Compensation
Plan, dated January 1, 1984 (incorporated by
reference to Registrant's Annual Report on Form
10-K for the year ended December 31, 1985).
74
<PAGE>
10.7 * The Century Telephone Enterprises, Inc. Dollars &
Sense Plan and Trust, as amended and restated
April 1, 1992 (incorporated by reference to
Exhibit 10.7 to Registrant's Annual Report on
Form 10-K for the year ended December 31, 1992)
and amendments thereto dated as of January 1,
1993, April 1, 1993, April 9, 1993 and July 1,
1993, included elsewhere herein.
10.8 * Century Telephone Enterprises, Inc. Employee Stock
Ownership Plan and Trust, dated March 20, 1987
(incorporated by reference to Registrant's
Annual Report on Form 10-K for the year ended
December 31, 1986), amendment thereto dated
February 29, 1988 (incorporated by reference to
Exhibit 10.9 to Registrant's Annual Report on
Form 10-K for the year ended December 31, 1987),
amendments thereto dated March 21, 1991 and
April 15, 1991 (incorporated by reference to
Exhibit 10.8 to Registrant's Annual Report on
Form 10-K for the year ended December 31, 1991),
amendments thereto dated March 31, 1992
(incorporated by reference to Exhibit 10.8 to
Registrant's Annual Report on Form 10-K for the
year ended December 31, 1992) and amendments
thereto dated June 1, 1993 and June 10, 1993,
included elsewhere herein.
10.9 * Registrant's 1988 Incentive Compensation Program as
amended and restated August 22, 1989
(incorporated by reference to Exhibit 19.8 to
Registrant's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1989).
10.10 * Form of Stock Option Agreement entered into in
1988 by the Registrant, pursuant to 1988
Incentive Compensation Program, with certain of
its officers (incorporated by reference to
Exhibit 10.10 to Registrant's Annual Report on
Form 10-K for the year ended December 31, 1988)
and amendment thereto (incorporated by reference
to Exhibit 4.6 to Registrant's Registration No.
33-31314).
10.11 * Registrant's 1990 Incentive Compensation
Program, dated March 15, 1990 (incorporated by
reference to Exhibit 19.1 to Registrant's
Quarterly Report on Form 10-Q for the quarter
ended June 30, 1990).
75
<PAGE>
10.12 * Form of Stock Option Agreement entered into in
1990 by the Registrant, pursuant to 1990
Incentive Compensation Program, with certain of
its officers (incorporated by reference to
Exhibit 19.3 to Registrant's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1990).
10.13 * Disability Retirement Agreement, dated July
17, 1990, between Clarke M. Williams, Jr. and
Century Telephone Enterprises, Inc.
(incorporated by reference to Exhibit 19.2 to
Registrant's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1990).
10.15 Agreement and Plan of Merger dated as of September
24, 1992, as amended by Amendment No. 1 thereto,
by and among Registrant, San Marcos Telephone
Company, Incorporated, SM Telecorp, Inc., SMTC
Acquisition Corp. and SMT Acquisition Corp.
(incorporated by reference to Exhibit 2 of
Registrant's Registration on Form S-4 dated
February 3, 1993, Registration No. 33-57838).
10.16 * Registrant's Amended and Restated Salary
Continuation (Disability) Plan for Officers,
dated November 26, 1991 (incorporated by
reference to Exhibit 10.16 of Registrant's
Annual Report on Form 10-K for the year ended
December 31, 1991).
10.17 * Form of Stock Option Agreement entered into in
1992 by the Registrant, pursuant to 1990
Incentive Compensation Program, with certain of
its officers and employees (incorporated by
reference to Exhibit 10.17 to Registrant's
Annual Report on Form 10-K for the year ended
December 31, 1992).
10.18 * Form of Performance Share Agreement Under the
1990 Incentive Compensation Program, entered
into in 1993 with certain of its officers and
employees (incorporated by reference to Exhibit
28.1 to Registrant's Quarterly Report on Form
10-Q for the quarter ended March 31, 1993).
76
<PAGE>
10.19 * Form of Restricted Stock Agreement and
Performance Share Agreement Under the 1988
Incentive Compensation Program, entered into in
1993 with certain of its officers and employees
(incorporated by reference to Exhibit 28.2 to
Registrant's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1993).
10.20 Agreement and Plan of Merger dated October 8, 1993,
as amended by Amendment No. 1 thereto dated
January 5, 1994 by and among Registrant, Celutel
Acquisition Corp., Celutel, Inc. and the
Principal Stockholders of Celutel, Inc.
(incorporated by reference to Appendix I of
Registrant's Prospectus forming a part of its
Registration Statement No. 33-50791 filed
January 12, 1994 pursuant to Rule 424(b)(5)).
11 Computations of Earnings Per Share, included
elsewhere herein.
21 Subsidiaries of the Registrant, included elsewhere
herein.
23 Independent Auditors' Consent, included elsewhere
herein.
* Management contract or compensatory plan or arrangement.
77
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
CENTURY TELEPHONE ENTERPRISES,INC.
Date: March 16, 1994 By: /s/ Clarke M. Williams
Clarke M. Williams
Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on
the date indicated.
/s/ Clarke M. Williams Chairman of the Board
Clarke M. Williams of Directors March 16, 1994
Vice Chairman of the
Board of Directors,
/s/ Glen F. Post, III President, and Chief
Glen F. Post, III Executive Officer March 16, 1994
Senior Vice President
/s/ R. Stewart Ewing, Jr. and Chief Financial
R. Stewart Ewing, Jr. Officer March 16, 1994
Senior Vice President,
/s/ Harvey P. Perry Secretary, General
Harvey P. Perry Counsel and Director March 16, 1994
/s/ Jim D. Reppond President - Telephone
Jim D. Reppond Group and Director March 16, 1994
78
<PAGE>
Signatures
(Continued)
/s/ W. Bruce Hanks President - Telecommunications
W. Bruce Hanks Services and Director March 16, 1994
/s/ Murray H. Greer Controller (Principal
Murray H. Greer Accounting Officer) March 16, 1994
/s/ William R. Boles, Jr. Director
William R. Boles, Jr. March 16, 1994
/s/ Ernest Butler, Jr. Director
Ernest Butler, Jr. March 16, 1994
/s/ Calvin Czeschin Director
Calvin Czeschin March 16, 1994
/s/ James B. Gardner Director
James B. Gardner March 16, 1994
/s/ R. L. Hargrove, Jr. Director
R. L. Hargrove, Jr. March 16, 1994
/s/ Johnny Hebert Director
Johnny Hebert March 16, 1994
/s/ F. Earl Hogan Director
F. Earl Hogan March 16, 1994
79
<PAGE>
Signatures
(Continued)
/s/ Tom S. Lovett Director
Tom S. Lovett March 16, 1994
/s/ C. G. Melville Director
C. G. Melville March 16, 1994
80
<PAGE>
SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CENTURY TELEPHONE ENTERPRISES, INC.
(Parent Company)
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Year ended December 31
_____________________________________________________________________
1993 1992 1991
_____________________________________________________________________
(expressed in thousands)
<S> <C> <C> <C>
REVENUES $5,860 6,562 7,244
_____________________________________________________________________
EXPENSES
Operating expenses 6,014 6,281 7,578
Depreciation and amortization 5,877 4,086 2,146
_____________________________________________________________________
Total expenses 11,891 10,367 9,724
_____________________________________________________________________
OPERATING LOSS (6,031) (3,805) (2,480)
_____________________________________________________________________
OTHER INCOME (EXPENSE)
Interest expense (20,678) (18,630) (14,922)
Interest income 10,696 10,080 11,435
_____________________________________________________________________
Total other income (expense) (9,982) (8,550) (3,487)
_____________________________________________________________________
LOSS BEFORE INCOME TAXES, CUMULATIVE EFFECT
OF CHANGES IN ACCOUNTING PRINCIPLES AND
EQUITY IN SUBSIDIARIES' EARNINGS (16,013) (12,355) (5,967)
INCOME TAX BENEFIT 5,037 2,173 2,013
_____________________________________________________________________
LOSS BEFORE CUMULATIVE EFFECT OF CHANGES
IN ACCOUNTING PRINCIPLES AND EQUITY
IN SUBSIDIARIES' EARNINGS (10,976) (10,182) (3,954)
CUMULATIVE EFFECT OF CHANGES IN
ACCOUNTING PRINCIPLES - 1,292 -
_____________________________________________________________________
LOSS BEFORE EQUITY IN
SUBSIDIARIES' EARNINGS (10,976) (8,890) (3,954)
EQUITY IN SUBSIDIARIES' EARNINGS 79,980 53,195 41,373
_____________________________________________________________________
NET INCOME $69,004 44,305 37,419
=====================================================================
</TABLE>
81
<PAGE>
SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(continued)
CENTURY TELEPHONE ENTERPRISES, INC.
(Parent Company)
BALANCE SHEETS
December 31,
_____________________________________________________________________
1993 1992
_____________________________________________________________________
(expressed in thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 5,547 2,570
Receivables from subsidiaries 53,638 46,967
Other receivables 7,330 1,168
Prepayments and other 857 343
_____________________________________________________________________
Total current assets 67,372 51,048
_____________________________________________________________________
PROPERTY, PLANT
AND EQUIPMENT
Property and equipment 1,192 1,119
Accumulated depreciation (772) (681)
_____________________________________________________________________
Net property, plant and equipment 420 438
_____________________________________________________________________
INVESTMENTS AND
OTHER ASSETS
Investments in subsidiaries (at equity) 771,062 579,579
Receivables from subsidiaries 130,568 124,215
Other investments, at cost 22,368 3,117
Deferred charges 3,788 3,920
_____________________________________________________________________
Total investments and other assets 927,786 710,831
_____________________________________________________________________
TOTAL ASSETS $995,578 762,317
=====================================================================
82
<PAGE>
SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(continued)
CENTURY TELEPHONE ENTERPRISES, INC.
(Parent Company)
BALANCE SHEETS
(continued)
December 31,
____________________________________________________________________
1993 1992
____________________________________________________________________
(expressed in thousands)
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 4,450 4,027
Notes payable to banks 69,000 32,000
Payables to subsidiaries 93,540 91,469
Accrued interest 5,431 5,098
Other accrued liabilities 3,656 3,500
____________________________________________________________________
Total current liabilities 176,077 136,094
____________________________________________________________________
LONG-TERM DEBT 272,115 229,615
____________________________________________________________________
PAYABLES TO SUBSIDIARIES 25,696 3,919
____________________________________________________________________
DEFERRED CREDITS AND
OTHER LIABILITIES 7,922 7,240
____________________________________________________________________
STOCKHOLDERS' EQUITY
Common stock, $1.00 par value,
authorized 100,000,000 shares, issued
and outstanding 51,294,705 and
48,896,876 shares 51,295 48,897
Paid-in capital 262,294 191,522
Retained earnings 208,945 155,676
Employee Stock Ownership Plan commitment (9,220) (11,100)
Preferred stock - non-redeemable 454 454
____________________________________________________________________
Total stockholders' equity 513,768 385,449
____________________________________________________________________
TOTAL LIABILITIES AND EQUITY $995,578 762,317
====================================================================
83
<PAGE>
SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(continued)
CENTURY TELEPHONE ENTERPRISES, INC.
(Parent Company)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended December 31,
__________________________________________________________________________
1993 1992 1991
__________________________________________________________________________
(expressed in thousands)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $69,004 44,305 37,419
Adjustments to reconcile net income to
net cash provided by (used in)
operating activities:
Depreciation and amortization 5,877 4,086 2,146
Deferred income taxes (451) 2,886 538
Earnings of subsidiaries (79,980) (53,195) (41,373)
Cumulative effect of changes in
accounting principles - (1,292) -
Gain on sale of subsidiary - (641) -
Changes in current assets and
current liabilities:
Increase in receivables (6,692) (500) (665)
Increase in accounts payable 1,203 1,075 4,106
Change in other current assets and
other current liabilities, net 102 3,806 (2,121)
Other, net 1,934 635 473
________________________________________________________________________
Net cash provided by (used in)
operating activities (9,003) 1,165 523
________________________________________________________________________
INVESTING ACTIVITIES
Acquisitions (51,009) (135,131) (855)
Capital contributions to subsidiaries, net (16,819) (14,881) (14,588)
Dividends received from subsidiaries 908 12,030 28,612
(Increase) decrease in receivables
from subsidiaries 4,776 (6,020) (19,639)
Increase in payables to subsidiaries 23,848 20,471 2,269
Purchase of Industrial Development Revenue
bonds (19,000) - -
Other, net (321) 9,932 (9,629)
________________________________________________________________________
Net cash used in investing
activities (57,617) (113,599) (13,830)
________________________________________________________________________
FINANCING ACTIVITIES
Proceeds from issuance of long-term debt 51,500 122,987 35,300
Payments of long-term debt (6,697) (24,418) (21,125)
Notes payable, net 37,000 19,000 4,000
Proceeds from issuance of common stock 3,529 8,776 6,389
Cash dividends paid (15,735) (14,119) (13,388)
________________________________________________________________________
Net cash provided by financing
activities 69,597 112,226 11,176
________________________________________________________________________
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 2,977 (208) (2,131)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR 2,570 2,778 4,909
________________________________________________________________________
CASH AND CASH EQUIVALENTS AT END OF YEAR $5,547 2,570 2,778
========================================================================
</TABLE>
84
<PAGE>
SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(continued)
CENTURY TELEPHONE ENTERPRISES, INC.
(Parent Company)
NOTES TO CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(A) LONG-TERM DEBT
The approximate annual debt maturities (including sinking
fund requirements) for the five years subsequent to December 31,
1993 are as follows:
1994 - $ 4,450,000
1995 - $ 55,481,000
1996 - $ 37,566,000
1997 - $ 7,014,000
1998 - $ 9,817,000
(B) GUARANTEES
As of December 31, 1993, Century has guaranteed a promissory
note for a subsidiary of $2,889,000, as well as the applicable
interest and premium. Century has also guaranteed $1,085,000 in
Industrial Development Revenue Bonds originally issued by a
subsidiary; such bonds were assumed by the purchaser of the
subsidiary's assets.
(C) DIVIDENDS FROM SUBSIDIARIES
Dividends paid to Century by consolidated subsidiaries were
$908,000, $12,030,000 and $28,612,000 during 1993, 1992 and 1991,
respectively.
(D) INCOME TAXES AND INTEREST PAID
Income taxes paid by Century (including amounts reimbursed
from subsidiaries) were $31,500,000, $26,500,000 and $16,000,000
during 1993, 1992 and 1991, respectively.
Interest paid by Century was $20,870,000, $15,676,000 and
$15,379,000 during 1993, 1992 and 1991, respectively.
(E) CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES
Century adopted Statement of Financial Accounting Standards
No. 106 ("SFAS 106"), "Employer's Accounting for Postretirement
Benefits Other than Pensions" and Statement of Financial
Accounting Standards No. 109 ("SFAS 109"), "Accounting for Income
Taxes", as of January 1, 1992.
(F) SUPPLEMENTAL CASH FLOW INFORMATION
Century issued common stock in connection with certain
acquisitions during 1993, 1992 and 1991. The value at time of
issuance of such common stock was approximately $67,000,000,
$21,475,000 and $5,355,000, respectively. These amounts
represent the non-cash portion of the purchase prices for the
acquisitions and are not included on the Statement of Cash Flows.
85
<PAGE>
CENTURY TELEPHONE ENTERPRISES, INC. AND SUBSIDIARIES
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
For the year ended December 31, 1993
<TABLE>
<CAPTION>
Balance at Other Balance at
beginning of Additions changes- end of
period at cost Retirements add (deduct) period
___________________________________________________________________________________________
(expressed in thousands)
<S> <C> <C> <C> <C> <C>
Telephone:
General support $ 69,202 6,509 (3,666) 13,258 85,303
Central office 250,164 46,640 (25,941) 10,260 281,123
Information origination/
termination 45,081 16,507 (28,187) 3,524 36,925
Cable and wire 441,159 64,038 (10,175) 17,218 512,240
Construction in progress 55,758 (2,514) - 594 53,838
Other 10,019 - - 1 10,020
___________________________________________________________________________________________
871,383 131,180 (67,969) 44,855(1) 979,449
___________________________________________________________________________________________
Mobile Communications:
General support 16,314 7,359 (425) (274) 22,974
Cell site 43,939 51,422 (4,744) (9,089) 81,528
Construction in progress 4,913 (2,845) - 124 2,192
Pagers 3,384 - (68) (150) 3,166
Other 3,376 156 (39) (101) 3,392
___________________________________________________________________________________________
71,926 56,092 (5,276) (9,490)(2) 113,252
___________________________________________________________________________________________
Other:
General support 60,503 19,025 (5,743) 3,226 77,011
Other 607 (12) (1,182) 1,313 726
___________________________________________________________________________________________
61,110 19,013 (6,925) 4,539(3) 77,737
___________________________________________________________________________________________
$1,004,419 206,285 (80,170) 39,904 1,170,438
============================================================================================
(1) Includes $44,876,000 of assets at the date of acquisition of purchased subsidiaries.
(2) Includes $9,801,000 of equipment removed from service to be refurbished and/or held
for future use.
(3) Includes $4,234,000 of assets at the date of acquisition of purchased subsidiaries.
For additional information see note 1 of Notes to Consolidated Financial Statements
included in Item 8 elsewhere herein.
</TABLE>
86
<PAGE>
CENTURY TELEPHONE ENTERPRISES, INC. AND SUBSIDIARIES
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
(continued)
For the year ended December 31, 1992
<TABLE>
<CAPTION>
Balance at Other Balance at
beginning of Additions changes- end of
period at cost Retirements add (deduct) period
___________________________________________________________________________________________
(expressed in thousands)
<S> <C> <C> <C> <C> <C>
Telephone:
General support $ 53,057 6,756 (2,376) 11,765 69,202
Central office 205,554 32,228 (26,678) 39,060 250,164
Information origination/
termination 32,685 1,104 (67) 11,359 45,081
Cable and wire 363,189 43,763 (6,235) 40,442 441,159
Construction in progress 29,840 25,106 - 812 55,758
Other 9,980 17 - 22 10,019
___________________________________________________________________________________________
694,305 108,974 (35,356) 103,460 871,383
___________________________________________________________________________________________
Mobile Communications:
General support 13,890 2,184 (41) 281 16,314
Cell site 36,703 6,347 (119) 1,008 43,939
Construction in progress 2,706 2,207 - - 4,913
Pagers 4,113 94 (423) (400) 3,384
Other 3,328 72 (105) 81 3,376
___________________________________________________________________________________________
60,740 10,904 (688) 970 71,926
___________________________________________________________________________________________
Other:
General support 40,511 22,027 (2,486) 451 60,503
Other 585 22 - - 607
___________________________________________________________________________________________
41,096 22,049 (2,486) 451 61,110
___________________________________________________________________________________________
$796,141 141,927 (38,530) 104,881 (1) 1,004,419
===========================================================================================
</TABLE>
(1) Includes $110,667,000 of assets at the date of acquisition of
purchased subsidiaries, net of $5,064,000 of assets at the
date of disposition of subsidiaries sold.
For additional information see Note 1 of Notes to Consolidated
Financial Statements included in Item 8 elsewhere herein.
87
<PAGE>
CENTURY TELEPHONE ENTERPRISES, INC. AND SUBSIDIARIES
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
(continued)
For the year ended December 31, 1991
<TABLE>
<CAPTION>
Balance at Other Balance at
beginning of Additions changes- end of
period at cost Retirements add (deduct) period
______________________________________________________________________________________
(expressed in thousands)
<S> <C> <C> <C> <C> <C>
Telephone:
General support $ 47,882 5,156 (2,458) 2,477 53,057
Central office 198,889 24,937 (18,500) 228 205,554
Information origination/
termination 32,096 656 (75) 8 32,685
Cable and wire 332,045 38,119 (6,978) 3 363,189
Construction in progress 24,795 5,045 - - 29,840
Other 9,980 - - - 9,980
______________________________________________________________________________________
645,687 73,913 (28,011) 2,716 694,305
______________________________________________________________________________________
Mobile Communications:
General support 10,136 4,062 (297) (11) 13,890
Cell site 27,031 9,683 (11) - 36,703
Construction in progress 4,288 (1,582) - - 2,706
Pagers 5,802 291 (639) (1,341) 4,113
Other 3,737 248 (12) (645) 3,328
______________________________________________________________________________________
50,994 12,702 (959) (1,997)(1) 60,740
______________________________________________________________________________________
Other:
General support 37,629 11,701 (6,145) (2,674) 40,511
Other 516 22 - 47 585
______________________________________________________________________________________
38,145 11,723 (6,145) (2,627) 41,096
______________________________________________________________________________________
$734,826 98,338 (35,115) (1,908) 796,141
======================================================================================
</TABLE>
(1) Includes $2,032,000 of assets related to the Florida paging
operations which were sold in 1991.
For additional information see note 1 of Notes to
Consolidated Financial Statements included in Item 8 elsewhere
herein.
88
<PAGE>
CENTURY TELEPHONE ENTERPRISES, INC. AND SUBSIDIARIES
SCHEDULE VI - ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY,
PLANT AND EQUIPMENT
For the year ended December 31, 1993
<TABLE>
<CAPTION>
Additions
________________________
Balance at Charged Salvage less Balance at
beginning to profit removal Other end of
of period and loss costs Retirements changes period
______________________________________________________________________________________________________
(expressed in thousands)
<S> <C> <C> <C> <C> <C> <C>
Telephone:
General support $ 25,656 5,646 426 (3,666) 5,134 33,196
Central office 76,270 15,050 762 (25,941) 4,591 70,732
Information origination/
termination 42,580 10,916 91 (28,187) 2,051 27,451
Cable and wire 130,180 26,673 (1,419) (10,175) 4,784 150,043
Other 5,556 1,353 (7) - 155 7,057
______________________________________________________________________________________________________
280,242 59,638 (147) (67,969) 16,715 (1) 288,479
______________________________________________________________________________________________________
Mobile Communications:
General support 4,715 1,547 - (315) (324) 5,623
Cell site 18,248 7,770 - (3,053) (5,759) 17,206
Pagers 3,018 327 - (68) (150) 3,127
Other 1,632 204 - (37) (19) 1,780
______________________________________________________________________________________________________
27,613 9,848 - (3,473) (6,252)(2) 27,736
______________________________________________________________________________________________________
Other:
General support 20,374 8,327 - (3,648) 1,185 26,238
Other 312 186 - (626) 337 209
______________________________________________________________________________________________________
20,686 8,513 - (4,274) 1,522 (3) 26,447
______________________________________________________________________________________________________
$328,541 77,999 (147) (75,716) 11,985 342,662
======================================================================================================
</TABLE>
Depreciation and amortization charged to income -
Depreciation, as above $77,999
Amortization of cost of investment in subsidiaries
in excess of net assets acquired 7,512
Amortization of extraordinary retirements 664
______
$86,175
======
(1) Includes $16,771,000 of accumulated depreciation and
amortization at the date of acquisition of purchased
subsidiaries.
(2) Includes $6,277,000 of accumulated depreciation related
to equipment removed from service to be refurbished and/or
held for future use.
(3) Includes $1,447,000 of accumulated depreciation and
amortization at the date of acquisition of purchased
subsidiaries.
89
<PAGE>
CENTURY TELEPHONE ENTERPRISES, INC. AND SUBSIDIARIES
SCHEDULE VI - ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY,
PLANT AND EQUIPMENT
(continued)
For the year ended December 31, 1992
<TABLE>
<CAPTION>
Additions
________________________
Balance at Charged Salvage less Balance at
beginning to profit removal Other end of
of period and loss costs Retirements changes period
_____________________________________________________________________________________________________
(expressed in thousands)
<S> <C> <C> <C> <C> <C> <C>
Telephone:
General support $ 19,525 3,783 271 (2,376) 4,453 25,656
Central office 70,402 22,219 313 (26,678) 10,014 76,270
Information origination/
termination 30,376 1,654 - (67) 10,617 42,580
Cable and wire 99,241 21,900 (1,415) (6,235) 16,689 130,180
Other 5,574 121 (145) - 6 5,556
_____________________________________________________________________________________________________
225,118 49,677 (976) (35,356) 41,779 280,242
_____________________________________________________________________________________________________
Mobile Communications:
General support 3,280 1,423 - (40) 52 4,715
Cell site 12,249 5,724 - (119) 394 18,248
Pagers 2,925 860 - (421) (346) 3,018
Other 1,489 227 - (92) 8 1,632
_____________________________________________________________________________________________________
19,943 8,234 - (672) 108 27,613
_____________________________________________________________________________________________________
Other:
General support 15,836 6,363 - (2,102) 277 20,374
Other 246 66 - - - 312
_____________________________________________________________________________________________________
16,082 6,429 - (2,102) 277 20,686
_____________________________________________________________________________________________________
$261,143 64,340 (976) (38,130) 42,164(1) 328,541
======================================================================================================
</TABLE>
Depreciation and amortization charged to income -
Depreciation, as above $64,340
Amortization of cost of investment in subsidiaries
in excess of net assets acquired 5,396
Amortization of extraordinary retirements 1,026
_______
$70,762
=======
(1) Includes $43,154,000 of accumulated depreciation and
amortization at the date of acquisition of purchased
subsidiaries, net of $1,855,000 of accumulated depreciation
and amortization at the date of disposition of subsidiaries
sold.
90
<PAGE>
CENTURY TELEPHONE ENTERPRISES, INC. AND SUBSIDIARIES
SCHEDULE VI - ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY,
PLANT AND EQUIPMENT
(continued)
For the year ended December 31, 1991
<TABLE>
<CAPTION>
Additions
_________________________
Balance at Charged Salvage less Balance at
beginning to profit removal Other end of
of period and loss costs Retirements changes period
____________________________________________________________________________________________________
(expressed in thousands)
<S> <C> <C> <C> <C> <C> <C>
Telephone:
General support $17,149 2,771 356 (2,458) 1,707 19,525
Central office 70,965 17,480 582 (18,500) (125) 70,402
Information origination/
termination 27,007 3,143 (4) (75) 305 30,376
Cable and wire 89,567 17,802 (1,255) (6,978) 105 99,241
Other 5,384 111 53 - 26 5,574
____________________________________________________________________________________________________
210,072 41,307 (268) (28,011) 2,018 225,118
____________________________________________________________________________________________________
Mobile Communications:
General support 2,337 1,179 - (240) 4 3,280
Cell site 8,259 3,966 - (6) 30 12,249
Pagers 2,886 1,588 - (638) (911) 2,925
Other 1,262 615 - - (388) 1,489
____________________________________________________________________________________________________
14,744 7,348 - (884) (1,265)(1) 19,943
____________________________________________________________________________________________________
Other:
General support 18,610 4,507 - (5,201) (2,080) 15,836
Other 443 35 - - (232) 246
____________________________________________________________________________________________________
19,053 4,542 - (5,201) (2,312) 16,082
____________________________________________________________________________________________________
$243,869 53,197 (268) (34,096) (1,559) 261,143
====================================================================================================
</TABLE>
Depreciation and amortization charged to income -
Depreciation, as above $53,197
Amortization of cost of investment in subsidiaries
in excess of net assets acquired 3,173
Amortization of extraordinary retirements 936
_______
$57,306
=======
(1) Includes $1,300,000 of accumulated depreciation and
amortization related to the Florida paging operations
which were sold in 1991.
91
<PAGE>
CENTURY TELEPHONE ENTERPRISES, INC. AND SUBSIDIARIES
SCHEDULE IX - SHORT-TERM BORROWINGS
For the years ended December 31, 1993, 1992 and 1991
<TABLE>
<CAPTION>
Weighted (a) (b) (c)
average Maximum amount Average amount Weighted average
Category of aggregate Balance at interest rate outstanding outstanding interest rate
short-term borrowings end of period end of period during the period during the period during the period
____________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1993:
Notes payable to banks
(See Note 1) $69,200,000 3.823% $69,200,000 $54,121,000 3.743%
Year ended December 31, 1992:
Notes payable to banks
(See Note 1) $32,415,000 3.940% $32,415,000 $24,998,000 4.193%
Year ended December 31, 1991:
Notes payable to banks
(See Note 2) $15,000,000 5.413% $15,000,000 $ 2,597,000 5.477%
</TABLE>
Note 1
______
Notes payable to banks represent various promissory notes and
revolving credit notes.
Note 2
______
Notes payable to banks represent borrowings under promissory
notes and a money market revolving credit note.
(a) Maximum amount outstanding at any month-end during the period.
(b) Average amount outstanding during the period is computed by
dividing the total weighted daily balance outstanding by 360.
(c) Average interest rate for the year is computed by dividing
short-term interest expense by the average short-term debt
outstanding.
92
<PAGE>
CENTURY TELEPHONE ENTERPRISES, INC. AND SUBSIDIARIES
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
Year ended December 31,
_________________________________________________________________
1993 1992 1991
_________________________________________________________________
(expressed in thousands)
Maintenance and repairs $ 64,401 52,820 43,561
=================================================================
Taxes, other than payroll
and income taxes:
Property taxes $ 11,629 9,805 6,906
Gross receipts taxes 4,570 4,473 3,326
All other operating taxes 2,525 1,455 1,263
_________________________________________________________________
Taxes charged to costs and
expenses $ 18,724 15,733 11,495
=================================================================
Advertising costs $ 4,148 3,459 2,771
=================================================================
All other requirements of this schedule are either immaterial or
disclosed in the consolidated financial statements or related
notes.
93
<PAGE>
CENTURY TELEPHONE ENTERPRISES, INC.
INDEX TO EXHIBITS
December 31, 1993
Exhibit
Number
_______
3(i) Amended and Restated Articles of Incorporation of
Registrant, dated December 15, 1988 (incorporated by
reference to Exhibit 3.1 to Registrant's Annual Report
on Form 10-K for the year ended December 31, 1988), as
amended by the Articles of Amendment dated May 2, 1989
(incorporated by reference to Exhibit 4.1 to
Registrant's Current Report on Form 8-K dated May 5,
1989), by the Articles of Amendment dated May 17, 1990
(incorporated by reference to Exhibit 4.1 of the
Registrant's Post-Effective Amendment No. 2 on Form S-3
dated December 21, 1990, Registration No. 33-17114) and
by the Articles of Amendment dated May 30, 1991
(incorporated by reference to Exhibit 3.1 of
Registrant's Current Report on Form 8-K dated June 12,
1991).
3(ii) Registrant's Bylaws, as amended through February 22,
1994, included herein.
4.1 Loan Agreement, dated January 3, 1990, between
Registrant and National Bank of Detroit, First National
Bank of Commerce and Bank One, Texas, National
Association (incorporated by reference to Exhibit 4.1 to
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1989) and amendment thereto dated May
15, 1992 incorporated by reference to Exhibit 4.1 to
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1992) and the second amendment
thereto dated March 31,1993 (incorporated by reference
to Exhibit 19.1 to Registrant's Quarterly Report on Form
10-Q for the quarter ended March 31, 1993).
4.2 Note Purchase Agreement, dated September 1, 1989,
between Registrant, Teachers Insurance and Annuity
Association of America and the Lincoln National Life
Insurance Company (incorporated by reference to Exhibit
4.23 to Registrant's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1989).
4.3 Agreement, dated November 27, 1977, among Registrant,
The Travelers Insurance Company and The Travelers
Indemnity Company, and form of Warrant (incorporated by
reference to Exhibits 4 and 5 to Registrant's Annual
Report on Form 10-K for the year ended December 31,
1977).
4.10 Form of Indenture dated May 1, 1940 among Century
Telephone of Wisconsin, Inc. (formerly La Crosse
Telephone Corporation) and the First National Bank of
Chicago and William K. Stevens (incorporated by
reference to Exhibit 4.12 to Registration No. 2-48478).
4.11 Supplemental Indenture No. 12 (incorporated by reference
to Exhibit 5.12 to Registration No. 2-62172) and
Supplemental Indentures 13 and 14 (incorporated by
reference to Exhibit 5.11 to Registration No. 2-68731),
each of which are supplemental indentures to the Form of
Indenture dated May 1, 1940 listed above as Exhibit
4.10.
4.12 Amended and Restated Rights Agreement dated as of
November 17, 1986 between Century Telephone Enterprises,
Inc. and the Rights Agent named therein (incorporated by
reference to Exhibit 4.1 to Registrant's Current Report
on Form 8-K dated December 20, 1988), the Amendment
thereto dated March 26, 1990 (incorporated by reference
to Exhibit 4.1 to Registrant's Quarterly Report on Form
10-Q for the quarter ended March 31, 1990) and the
Second Amendment thereto dated February 23, 1993
(incorporated by reference to Exhibit 4.12 to
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1992).
4.16 Note Purchase Agreement, dated May 6, 1986, among
Registrant, Teachers Insurance and Annuity Association
of America, Aetna Life Insurance Company, the Aetna
Casualty and Surety Company and Lincoln National Pension
Insurance Company (incorporated by reference to Exhibit
4.23 to Registration No. 33-5836), Amendatory Agreement
dated November 1, 1986 (incorporated by reference to
Exhibit 4.2 to Registrant's Annual Report on Form 10-K
for the year ended December 31, 1986), amendment thereto
dated November 1, 1987 (incorporated by reference to
Exhibit 4.2 to Registrant's Annual Report on Form 10-K
for the year ended December 31, 1987) and Modification
Letter dated September 1, 1989 (incorporated by
reference to Exhibit 19.6 to Registrant's Quarterly
Report on Form 10-Q for the quarter ended September 30,
1989).
4.21 The Century Telephone Enterprises, Inc. Stock Bonus
Plan, PAYSOP and Trust, as amended and restated
September 10, 1987 and amendment thereto dated February
29, 1988 (incorporated by reference to Exhibit 4.21 to
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1987), amendments thereto dated March
21, 1991 and April 15, 1991, (incorporated by reference
to Exhibit 4.21 to Registrant's Annual Report on Form
10-K for the year ended December 31, 1991), amendment
thereto dated March 31, 1992 (incorporated by reference
to Exhibit 4.21 to Registrant's Annual Report on Form
10-K for the year ended December 31, 1992) and
amendments thereto dated June 1, 1993 and June 10, 1993,
included herein.
4.22 Form of common stock certificate of the Registrant
(incorporated by reference to Exhibit 4.1 to
Registrant's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1993).
4.23 Indenture, dated February 1, 1992, between Registrant
and First American Bank and Trust of Louisiana
(incorporated by reference to Exhibit 4.23 to
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1991).
4.24 Revolving Credit Facility Agreement, dated February 7,
1992 between Registrant and NationsBank of Texas, N.A.
(incorporated by reference to Exhibit 4.24 to
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1991), amendment thereto dated April
8, 1993 (incorporated by reference to Exhibit 19.2 to
Registrant's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1993) and amendment thereto
dated July 9, 1993, included herein.
4.25 Credit Agreement, dated February 9, 1994 between
Registrant, NationsBank of Texas, N.A., Bank One, Texas,
N.A., The Bank of Nova Scotia, First National Bank of
Commerce and Texas Commerce Bank National Association,
included herein.
10.1 Employment Agreement, dated May 24, 1993, by and between
Clarke M. Williams and Registrant (incorporated by
reference to Exhibit 19.1 to Registrant's Quarterly
Report on Form 10-Q for the quarter ended June 30,
1993).
10.2 Form of employment agreement that the registrant has
entered into with each Executive Officer other than Mr.
Williams (incorporated by reference to Exhibit 10.2 to
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1990).
10.3 Registrant's Outside Directors' Retirement Plan, dated
November 19, 1984 (incorporated by reference to
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1985), amendment thereto dated
February 21, 1989 (incorporated by reference to
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1988) and amendment thereto dated May
17, 1991 (incorporated by reference to Exhibit 10.3 to
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1991).
10.4 Registrant's Amended and Restated Supplemental Executive
Retirement Plan, as amended and restated May 17, 1991
(incorporated by reference to Exhibit 10.4 to
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1991) and amendment thereto dated
February 24, 1993 (incorporated by reference to Exhibit
10.4 to Registrant's Annual Report on Form 10-K for the
year ended December 31, 1992).
10.5 Registrant's 1983 Restricted Stock Plan, dated February
21, 1984 (incorporated by reference to Registrant's
Annual Report on Form 10-K for the year ended December
31, 1985).
10.6 Registrant's Key Employee Incentive Compensation Plan,
dated January 1, 1984 (incorporated by reference to
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1985).
10.7 The Century Telephone Enterprises, Inc. Dollars & Sense
Plan and Trust, as amended and restated April 1, 1992
(incorporated by reference to Exhibit 10.7 to
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1992) and amendments thereto dated as
of January 1, 1993, April 1, 1993, April 9, 1993 and
July 1, 1993, included herein.
10.8 Century Telephone Enterprises, Inc. Employee Stock
Ownership Plan and Trust, dated March 20, 1987
(incorporated by reference to Registrant's Annual Report
on Form 10-K for the year ended December 31, 1986),
amendment thereto dated February 29, 1988 (incorporated
by reference to Exhibit 10.9 to Registrant's Annual
Report on Form 10-K for the year ended December 31,
1987), amendments thereto dated March 21, 1991 and April
15, 1991 (incorporated by reference to Exhibit 10.8 to
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1991), amendments thereto dated March
31, 1992 (incorporated by reference to Exhibit 10.8 to
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1992) and amendments thereto dated
June 1, 1993 and June 10, 1993, included herein.
10.9 Registrant's 1988 Incentive Compensation Program as
amended and restated August 22, 1989 (incorporated by
reference to Exhibit 19.8 to Registrant's Quarterly
Report on Form 10-Q for the quarter ended September 30,
1989).
10.10 Form of Stock Option Agreement entered into in 1988 by
the Registrant, pursuant to 1988 Incentive Compensation
Program, with certain of its officers (incorporated by
reference to Exhibit 10.10 to Registrant's Annual Report
on Form 10-K for the year ended December 31, 1988) and
amendment thereto (incorporated by reference to Exhibit
4.6 to Registrant's Registration No. 33-31314).
10.11 Registrant's 1990 Incentive Compensation Program, dated
March 15, 1990 (incorporated by reference to Exhibit
19.1 to Registrant's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1990).
10.12 Form of Stock Option Agreement entered into in 1990 by
the Registrant, pursuant to 1990 Incentive Compensation
Program, with certain of its officers (incorporated by
reference to Exhibit 19.3 to Registrant's Quarterly
Report on Form 10-Q for the quarter ended June 30,
1990).
10.13 Disability Retirement Agreement, dated July 17, 1990,
between Clarke M. Williams, Jr. and Century Telephone
Enterprises, Inc. (incorporated by reference to Exhibit
19.2 to Registrant's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1990).
10.15 Agreement and Plan of Merger dated as of September 24,
1992, as amended by Amendment No. 1 thereto, by and
among Registrant, San Marcos Telephone Company,
Incorporated, SM Telecorp, Inc., SMTC Acquisition Corp.
and SMT Acquisition Corp. (incorporated by reference to
Exhibit 2 of Registrant's Registration on Form S-4 dated
February 3, 1993, Registration No. 33-57838).
10.16 Registrant's Amended and Restated Salary Continuation
(Disability) Plan for Officers, dated November 26, 1991
(incorporated by reference to Exhibit 10.16 of
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1991).
10.17 Form of Stock Option Agreement entered into in 1992 by
the Registrant, pursuant to 1990 Incentive Compensation
Program, with certain of its officers and employees
(incorporated by reference to Exhibit 10.17 to
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1992).
10.18 Form of Performance Share Agreement Under the 1990
Incentive Compensation Program, entered into in 1993
with certain of its officers and employees (incorporated
by reference to Exhibit 28.1 to Registrant's Quarterly
Report on Form 10-Q for the quarter ended March 31,
1993).
10.19 Form of Restricted Stock Agreement and Performance Share
Agreement Under the 1988 Incentive Compensation Program,
entered into in 1993 with certain of its officers and
employees (incorporated by reference to Exhibit 28.2 to
Registrant's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1993).
10.20 Agreement and Plan of Merger dated October 8, 1993, as
amended by Amendment No. 1 thereto dated January 5, 1994
by and among Registrant, Celutel Acquisition Corp.,
Celutel, Inc. and the Principal Stockholders of Celutel,
Inc. (incorporated by reference to Appendix I of
Registrant's Prospectus forming a part of its
Registration Statement No. 33-50791 filed January 12,
1994 pursuant to Rule 424(b)(5)).
11 Computations of Earnings Per Share, included herein.
21 Subsidiaries of the Registrant, included herein.
23 Independent Auditors' Consent, included herein.
EXHIBIT 3(ii)
BYLAWS
CENTURY TELEPHONE ENTERPRISES, INC.
TABLE OF CONTENTS
Article I - Officers..................................1
Section 1. Required and Permitted Officers.........1 - 3
Section 2. Election and Removal of Officer.........3
Article II - Board of Directors.......................4
Section 1. Powers..................................4
Section 2. Organization and Regular Meetings.......4
Section 3. Special Meetings........................4
Section 4. Quorum..................................5
Section 5. Notice of Adjournment...................5
Section 6. Consent of Board Obviating Necessity
of Meeting.............................5
Section 7. Voting..................................5
Section 8. Use of Communications Equipment.........6
Section 9. Indemnity ..............................6 - 10
Article III - Committees .............................10
Section 1. Standing Committees.....................10 - 12
Section 2. Appointment and Removal of
Committee Members......................12
Section 3. Procedures for Committees...............12
Section 4. Quorum Meetings ........................12
Section 5. Authority of Chairman to
Appoint Committees.....................11
Article IV - Shareholders' Meetings ..................13
Section 1. Place of Meetings ......................13
Section 2. Annual Meeting; Notice Thereof .........13
Section 3. Election of Directors ..................13
Section 4. Special Meeting ........................13
Section 5. Notice of Meetings .....................13
Section 6. List of Shareholders ..................14
Section 7. Quorum .................................14
Section 8. Voting .................................14
Section 9. Proxies ................................14
Section 10. Voting Power Present or Represented ....14
Section 11. Adjournments ...........................15
Section 12. Withdrawal .............................15
Section 13. Lack of Quorum .........................15
Section 14. Presiding Officer ......................15
Article V - Certificates of Stock .................15
Article VI - Registered Stockholders ...............15
Article VII - Loss of Certificate ...................16
Article VIII - Checks ................................16
Article IX - Dividends .............................16
Article X - Amendments.............................16
BYLAWS
(Amended entirely March 19, 1987)
(Article I, Section 1 Amended August 24, 1987)
(Article II, Section 9 Amended entirely February 22, 1988)
(Article II, Section 2, A., Amended May 16, 1988)
(Article I, Section 1 Amended June 24, 1988)
(Article IV Amended in its entirety November 22, 1988)
(Article 1, Section 1 Amended February 21, 1989)
(Article I, Section 1, A., B., and C., Amended April 25, 1989)
(Article I, Sec. 1, new "K", redesignation of "L" through "Q", July 10, 1989)
(Article I, Section 1, "Q" - Amended August 22, 1989)
(Article 1, Section 1 (B)(C) - Amended July 17, 1990)
(Article III, Section 1, Subsection "F" - Amended February 25, 1992)
(Article I, Section 2, and adding new Section 1A. to Article II - May 14, 1993)
(Article I, Section 1, Subsection "K" - May 6, 1993)
(Article I, Section 1, Amended in its entirety May 25, 1993)
Article I, Section 1(C) and Article III, Section 1(B) - February 22, 1994
ARTICLE I
OFFICERS
Section l. Required and Permitted Officers.
The officers of Century Telephone Enterprises, Inc., shall
be a Chairman of the Board; a Chief Executive Officer; a
President; a Secretary; and a Treasurer. The Board may elect
such other officers as the Board may determine. An officer need
not be a Director and any two or more of the offices may be held
by one person; provided, that a person holding more than one
office may not sign in more than one capacity any certificate or
any instrument required to be signed by two officers. The
required and permitted officers and duties thereof are as
follows:
A. Chairman of the Board (Chairman). The Chairman shall
preside at all meetings of the stockholders and Directors, see
that all orders, policies and resolutions of the Board are
carried out and perform such other duties as may be prescribed by
the Board of Directors or the Bylaws.
B. Vice Chairman. The Board may from time to time elect
one or more Vice Chairmen. The Vice Chairman shall serve in the
absence or inability of the Chairman to serve. In the event of
the death, resignation or permanent inability of the Chairman to
serve, the Vice Chairman shall automatically succeed to the
office of Chairman until such time as the Board of Directors
convenes at a properly called meeting to elect a new Chairman.
In the event that there is more than one Vice Chairman, then the
one who has served in that capacity for the longest period of
time shall serve in the absence of the Chairman or assume the
office of Chairman as the case may be.
C. Chief Executive Officer (CEO). The CEO shall, subject
to the powers of the Chairman, have general and active management
of the business of the Corporation. He may sign, execute and
deliver in the name of the corporation powers of attorney,
contracts, bonds and other obligations and shall perform such
other duties as may be prescribed from time to time by the
Board of Directors and the Bylaws. The CEO shall manage the
day-to-day affairs of the Corporation and direct the
activities of the President - Telephone Group, President -
Telecommunications Services, the General Counsel and the
Chief Financial Officer. Without limiting the generality of
the foregoing, the CEO shall, unless otherwise directed by the
Board, establish the annual salaries of each non-executive
officer of the Corporation and each officer of the Corporation's
subsidiaries.
D. President. The President may sign, execute and
deliver in the name of the Corporation powers of attorney,
contracts, bonds, and other obligations and shall perform such
other duties as may be prescribed from time to time by the Board
of Directors, the Chairman, the CEO, and the Bylaws.
E. Executive Vice President(s). The Executive Vice
President(s) shall assist the CEO in discharging the duties of
that office in any manner requested and perform any other duties
as may be prescribed by the CEO, the Board of Directors and/or
the Bylaws.
F. Chief Financial Officer. The Chief Financial Officer
shall be the principal financial officer of the Corporation. He
shall manage the financial affairs of the Corporation and direct
the activities of the Treasurer, Controller and other officers
responsible for functional areas within the Finance Group. He
may sign, execute and deliver in the name of the Corporation
powers of attorney, contracts, bonds, and other obligations and
shall perform such other duties as may be prescribed from time to
time by the Board of Directors or by the Bylaws. He shall be
responsible for all internal and external financial reporting.
G. Treasurer. As directed by the Chief Financial Officer,
the Treasurer shall have general custody of all the funds and
securities of the Corporation. He may sign, with the CEO,
President, Chief Financial Officer or such other person or
persons as may be designated for the purpose by the Board of
Directors, all bills of exchange or promissory notes of the
Corporation. He shall perform such other duties as may be
prescribed from time to time by the Chief Financial Officer or by
the Bylaws.
H. Controller. As directed by the Chief Financial
Officer, he shall be responsible for the development and
maintenance of the accounting systems used by the Corporation and
its subsidiaries. The Controller shall be authorized to
implement policies and procedures to ensure that the Corporation
and its subsidiaries maintain internal accounting control systems
designed to provide reasonable assurance that the accounting
records accurately reflect business transactions and that such
transactions are in accordance with managements' authorization.
Additionally, as directed by the Chief Financial Officer, the
Controller shall be responsible for internal and external
financial reporting for the Corporation and its subsidiaries.
I. Assistant Treasurer. The Assistant Treasurer shall
have such powers and perform such duties as may be assigned by
the Treasurer. In the absence or disability of the Treasurer,
the Assistant Treasurer shall perform the duties and exercise the
powers of the Treasurer.
J. Secretary. The Secretary shall keep the minutes of all
meetings of the stockholders, the Board of Directors and all
committees. He shall cause notice to be given of meetings of
stockholders, of the Board of Directors and of any committee
appointed by the Board. He shall have custody of the corporate
seal and general charge of the records, documents and papers of
the Corporation not pertaining to the duties vested in other
officers, which shall at all reasonable times be open to the
examination of any Director. He may sign or execute contracts
with any other officer thereunto authorized in the name of the
Corporation and affix the seal of Corporation thereto. He shall
perform such other duties as may be prescribed from time to time
by the Board of Directors or by the Bylaws.
K. Assistant Secretary. The Assistant Secretary shall
have powers and perform such duties as may be assigned by the
Secretary. In the absence or disability of the Secretary, the
Assistant Secretary shall perform the duties and exercise the
power of the Secretary.
L. President - Telecommunications Services. The President
- Telecommunications Services shall serve as President of all
Cellular and Paging subsidiaries and such other subsidiaries of
the Company as he is from time to time elected President by the
Board of Directors thereof. Subject to any limitation in these
or the subsidiary Bylaws, he shall be responsible for all
operations, marketing, construction, preparation of budgets and
business plans, and the profitability of all of the operations of
the company under his supervision.
M. President - Telephone Group. The President - Telephone
Group shall serve as President of all operating telephone
subsidiaries and subsidiaries operating in conjunction therewith.
Subject to any limitations in these or the subsidiary Bylaws, he
shall be responsible for all operations, marketing, construction,
preparation of budgets and business plans, and the profitability
of all of the operations of the company under his supervision.
N. General Counsel. The General Counsel shall be directly
responsible for advising the Board of Directors, the Company, and
all its officers and employees in all matters affecting the legal
affairs of the Company. He shall determine the need for and if
necessary, select outside counsel to represent the Company and
approve all fees in connection with their representation. He
shall also have such other powers, duties and authority as may be
prescribed to him from time to time by the CEO, Board of
Directors, or the Bylaws.
O. Senior Vice President(s). The Senior Vice President(s)
shall perform such duties as may be prescribed from time to time
by the Board of Directors, the CEO, or the Bylaws.
P. Vice President(s). The Vice President(s) shall have
such powers and perform such duties as may be assigned to them by
the Board of Directors, the CEO, the President, or the Executive
Vice President or Senior Vice President to whom they report. A
Vice President may sign and execute contracts and other
obligations pertaining to the regular course of his duties.
Q. Assistant Vice President(s). The Assistant Vice
President(s) shall have such powers and perform such duties as
may be assigned to them by the Board of Directors, the CEO, the
President or the office to whom they report. An Assistant Vice
President may sign and execute contracts and other obligations
pertaining to the regular course of his duties.
R. Executive Officer Group. The Executive Officer Group
shall be the Chairman of the Board, the Chief Executive Officer,
the Chief Financial Officer, the President - Telecommunications
Services, the President Telephone Group, and the General Counsel.
Section 2. Election and Removal of Officers
The officers shall be elected annually by the Board of
Directors at its first meeting following the annual meeting of
the shareholders and, at any time, the Board may remove any
officer (with or without cause, and regardless of any contractual
obligation to such officer) and fill a vacancy in any office; but
any election to, removal from or appointment to fill a vacancy in
any office, and the determination of the terms of employment,
shall require the affirmative votes of: (a) a majority of the
Directors then in office; and (b) a majority of the Continuing
Directors (as defined in the Articles of Incorporation), voting
as a separate group.
In addition, the Chief Executive Officer is empowered in his
sole discretion to remove or suspend any officer or other
employee of the Corporation who (1) fails to respond
satisfactorily to the Corporation respecting any inquiry by the
Corporation for information to enable it to make any
certification required by the Federal Communications Commission
under the Anti-Drug Abuse Act of 1988, (2) is arrested or
convicted of any offense concerning the distribution or
possession of, or trafficking in, drugs or other controlled
substances, or (3) the Chief Executive Officer believes to have
been engaged in actions that could lead to such an arrest or
conviction.
ARTICLE II
BOARD OF DIRECTORS
Section l. Powers
In addition to the powers and authorities by these Bylaws
expressly conferred upon it, the Board of Directors may exercise
all such powers of the Corporation and do all such lawful acts
and things as are not by statute or by the Articles of
Incorporation or by these Bylaws required to be exercised or done
by the stockholders.
A. No person shall be eligible for nomination, election or
service as a director of the Corporation who shall
(i) in the opinion of the Board of Directors fail to
respond satisfactorily to the Corporation
respecting any inquiry of the Corporation for
information to enable the Corporation to make
any certification required by the Federal
Communication's Commission under the Anti-Drug
Abuse Act of 1988 or to determine the
eligibility of such persons under this section;
(ii) have been arrested or convicted of any offense
concerning the distribution or possession of, or
trafficking in, drugs or other controlled
substances, provided that in the case of an arrest
the Board of Directors may in its discretion
determine that notwithstanding such arrest such
persons shall remain eligible under this Section;
or
(iii)have engaged in actions that could lead to such an
arrest or conviction and that the Board of
Directors determines would make it unwise for such
person to serve as a director of the Corporation.
B. Any person serving as a director of the Corporation
shall automatically cease to be a director on such date as he
ceases to have the qualifications set forth in Paragraph A of
this Section, and his position shall be considered vacant within
the meaning of Article VIII, Section B, Paragraph 2 of the
Articles of Incorporation of the Corporation.
Section 2. Organization and Regular Meetings.
A. The Board of Directors shall hold an annual
organization meeting, without notice, immediately following the
adjournment of the annual meeting of the shareholders and shall
hold a regular meeting on the first Tuesday after the twentieth
in the months of February, May, August and November of each year.
B. The Secretary shall give not less than ten days'
written notice to each Director of all regular meetings, which
notice shall state the time and place of the meeting.
C. Any Director may waive notice of a meeting by written
waiver executed either before or after the meeting.
Section 3. Special Meetings.
A. Special meetings of the Board of Directors may be
called by the Chairman of the Board or, if he is absent or unable
or unwilling to act, by the President. Upon the written request
of any two Directors delivered to the Chairman of the Board, the
President or the Secretary of the Corporation, a Special Meeting
shall be called.
B. Written notice of the time and place of special
meetings shall be delivered personally to the Directors or sent
to each Director by letter or by telegram, charges prepaid,
addressed to him at his address shown on such records or if not
readily ascertainable, at the place in which the meetings of the
Directors are regularly held. In case such notice is mailed or
telegraphed, it shall be deposited in the United States mail at
least seventy-two hours or delivered to an overnight mail
delivery service or to the telegraph company in the place in
which the principal office of the corporation is located at least
forty-eight hours prior to the time of the holding of the
meeting. In case such notice is personally delivered as
above provided, it shall be so delivered at least twenty-four
hours prior to the time of the holding of the meeting. The
foregoing notwithstanding, if the Chairman or the President shall
determine, in his sole discretion, that the subject of the
special meeting is urgent and must be considered by the Board
without delay, notice may be given by personal delivery or by
telephone not less than twelve hours prior to the time set for
the meeting, provided a confirming telegram or overnight letter
is sent to the Director contemporaneously. Such mailing,
telegraphing, telephoning or personal delivery as above provided
shall be due, legal and personal notice to such Director.
Section 4. Quorum.
A majority of the authorized number of Directors as fixed by
or pursuant to the Articles of Incorporation shall be necessary
to constitute a quorum for the transaction of business and the
action of a majority (or of a required super-majority as to those
matters specified in the Articles of Incorporation or these
Bylaws or by applicable law) of the Directors present at any
meeting at which there is a quorum, when duly assembled, is valid
as a corporate act; provided that a minority of the Directors, in
the absence of a quorum, may adjourn from time to time, but may
not transact any business.
Section 5. Notice of Adjournment.
Notice of the time and place of holding an adjourned meeting
need not be given to absent Directors, if the time and place be
fixed at the meeting adjourned.
Section 6. Consent of Board Obviating Necessity of Meeting.
Anything to the contrary contained in these Bylaws
notwithstanding, any action required or permitted to be taken by
the Board of Directors may be taken without a meeting, if all
members of the Board of Directors shall individually or
collectively consent in writing to such action. Such written
consent or consents shall be filed with the minutes of the
proceedings of the Board. Such action by written consent shall
have the same force and effect as a unanimous vote of such
Directors at a meeting.
Section 7. Voting.
At all meetings of the Board, each Director present shall
have one vote. At all meetings of the Board, all questions,
the manner of deciding which is not otherwise specifically
regulated by law, the Certificate of Incorporation or these
Bylaws, shall be determined by a majority of the Directors
present at the meeting; provided, however, that any shares of
other corporations owned by the Corporation shall be voted only
pursuant to resolutions duly adopted upon the affirmative votes
of (a) eighty percent of the Directors then in office and (b) a
majority of the Continuing Directors (as defined in the Articles
of Incorporation), voting as a separate group.
Section 8. Use of Communications Equipment.
Meetings of the Board of Directors may be held by means of
telephone conference calls or similar communications equipment
provided that all persons participating in the meeting can hear
and communicate with each other.
Section 9. Indemnification
9.1 Definitions. As used in this Section:
(a) The term "Expenses" shall mean any expenses or
costs (including, without limitation, attorney's fees, judgments,
punitive or exemplary damages, fines and amounts paid in
settlement). If any of the foregoing amounts paid on behalf of
Indemnitee are not deductible by Indemnitee for federal or state
income tax purposes, the Company will reimburse Indemnitee for
tax liability with respect thereto by paying to Indemnitee an
amount which, after taking into account taxes on such amount,
equals Indemnitee's incremental tax liability.
(b) The term "Claim" shall mean any threatened,
pending or completed claim, action, suit, or proceeding, whether
civil, criminal, administrative or investigative and whether made
judicially or extra-judicially, or any separate issue or matter
therein, as the context requires.
(c) The term "Determining Body" shall mean (i) those
members of the Board of Directors who are not named as parties to
the Claim for which indemnification is being sought ("Impartial
Directors"), if there are at least three Impartial Directors, or
(ii) a committee of at least three directors appointed by the
Board of Directors (regardless whether the members of the Board
of Directors voting on such appointment are Impartial Directors)
and composed of Impartial Directors or (iii) if there are fewer
than three Impartial Directors or if the Board of Directors or a
committee appointed thereby so directs (regardless whether the
members thereof are Impartial Directors), independent legal
counsel, which may be the regular outside counsel of the
Corporation.
(d) The term "Indemnitee" shall mean each director and
officer and each former director and officer of the Corporation.
9.2 Indemnity.
(a) To the extent any Expenses incurred by Indemnitee
are in excess of the amounts reimbursed or indemnified pursuant
to policies of liability insurance maintained by the Corporation,
the Corporation shall indemnify and hold harmless Indemnitee
against any such Expenses actually and reasonably incurred
in connection with any Claim against Indemnitee (whether as a
subject of or party to, or a proposed or threatened subject of or
party to, the Claim) or in which Indemnitee is involved solely as
a witness or person required to give evidence, by reason of his
position.
(i) as a director or officer of the Corporation
(ii) as a director or officer of any subsidiary of
the Corporation or as a fiduciary with respect to any employee
benefit plan of the Corporation or
(iii)as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
for profit or not for profit entity or enterprise, if such
position is or was held at the request of the Corporation,
whether relating to service in such position before or after the
effective date of this Section 9, if (i) the Indemnitee is
successful in his defense of the Claim on the merits or otherwise
or (ii) the Indemnitee has been found by the Determining Body
(acting in good faith) to have met the Standard of Conduct;
provided that (a) the amount of Expenses for which the
Corporation shall indemnify Indemnitee may be reduced by the
Determining Body to such amount as it deems proper if it
determines in good faith that the Claim involved the receipt of a
personal benefit by Indemnitee and (b) no indemnification shall
be made in respect of any Claim as to which Indemnitee shall have
been adjudged by a court of competent jurisdiction, after
exhaustion of all appeals therefrom, to be liable for willful or
intentional misconduct in the performance of his duty to the
Corporation or to have obtained an improper benefit, unless, and
only to the extent that, a court shall determine upon application
that, despite the adjudication of liability but in view of all
the circumstances of the case, the Indemnitee is fairly and
reasonably entitled to indemnity for such Expenses as the court
shall deem proper; and provided further that, if the Claim
involves Indemnitee by reason of his position with an entity or
enterprise described in clause (ii) or (iii) of this Section
3.2(a) and if Indemnitee may be entitled to indemnification with
respect to such Claim from such entity or enterprise, Indemnitee
shall be entitled to indemnification hereunder only (x) if
he as applied to such entity or enterprise for
indemnification with respect to the Claim and (y) to the extent
that indemnification to which he would be entitled hereunder but
for this proviso exceeds the indemnification paid by such other
entity or enterprise.
(b) For purposes of this Section, the Standard of
Conduct is met when conduct by an Indemnitee with respect to
which a Claim is asserted was conduct that he reasonably believed
to be in, or not opposed to, the best interest of the
Corporation, and, in the case of a Claim which is a criminal
action or proceeding, conduct that the Indemnitee had no
reasonable cause to believe was unlawful. The termination of any
Claim by judgment, order, settlement, conviction, or upon a plea
of nolo contendere or its equivalent, shall not, of itself,
create a presumption that Indemnitee did not meet the Standard of
Conduct.
(c) Promptly upon becoming aware of the existence of
any Claim, Indemnitee shall notify the Chief Executive Officer of
the existence of the Claim, who shall promptly advise the members
of the Board of Directors thereof and that establishing the
Determining Body will be a matter presented at the next regularly
scheduled meeting of the Board of Directors. After the
Determining Body has been established the Chief Executive Officer
shall inform Indemnitee thereof and Indemnitee shall immediately
notify the Determining Body of all facts relevant to the Claim
known to such Indemnitee. Within 60 days of the receipt of such
notice and information, together with such additional information
as the Determining Body may request of Indemnitee, the
Determining Body shall report to Indemnitee of its determination
whether Indemnitee has met the Standard of Conduct. The
Determining Body may extend the period of time for
determining whether the Standard of Conduct has been met, but in
no event shall such period of time be extended beyond an
additional sixty days.
(d) If, after determining that the Standard of Conduct
has been met, the Determining Body obtains facts of which it was
not aware at the time it made such determination, the Determining
Body on its own motion, after notifying the Indemnitee and
providing him an opportunity to be
heard, may, on the basis of such facts, revoke such
determination, provided that, in the absence of actual fraud by
Indemnitee, no such revocation may be made later than thirty days
after final disposition of the Claim.
(e) Indemnitee shall promptly inform the Determining
Body upon his becoming aware of any relevant facts not
theretofore provided by him to the Determining Body, unless the
Determining Body has obtained such facts by other means.
(f) In the case of any Claim not involving a proposed,
threatened or pending criminal proceeding,
(i) if Indemnitee has, in the good faith judgment
of the Determining Body, met the Standard of Conduct, the
Corporation may, in its sole discretion, assume all
responsibility for the defense of the Claim, and, in any event,
the Corporation and Indemnitee each shall keep the other informed
as to the progress of the defense of the Claim, including prompt
disclosure of any proposals for settlement; provided that if the
Corporation is a party to the Claim and Indemnitee reasonably
determines that there is a conflict between the positions of the
Corporation and Indemnitee with respect to the Claim, then
Indemnitee shall be entitled to conduct his defense with counsel
of his choice; and provided further that Indemnitee shall in any
event be entitled at his expense to employ counsel chosen by him
to participate in the defense of the Claim; and
(ii) the Corporation shall fairly consider any
proposals by Indemnitee for settlement of the Claim. If the
Corporation proposes a settlement of the Claim and such
settlement is acceptable to the person asserting the Claim or the
Corporation believes a settlement proposed by the person
asserting the Claim should be accepted, it shall inform
Indemnitee of the terms of such proposed settlement and shall fix
a reasonable date by which Indemnitee shall respond. If
Indemnitee agrees to such terms, he shall execute such documents
as shall be necessary to make final the settlement. If
Indemnitee does not agree with such terms, Indemnitee may proceed
with the defense of the Claim in any manner he chooses, provided
that if Indemnitee is not successful on the merits or otherwise,
the Corporation's obligation to indemnify such Indemnitee as to
any Expenses incurred by following his disagreement shall be
limited to the lesser of (A) the total Expenses incurred by
Indemnitee following his decision not to agree to such proposed
settlement or (B) the amount that the Corporation would have paid
pursuant to the terms of the proposed settlement. If, however,
the proposed settlement would impose upon Indemnitee any
requirement to act or refrain from acting that would materially
interfere with the conduct of Indemnitee's affairs, Indemnitee
shall be permitted to refuse such settlement and proceed with the
defense of the Claim, if he so desires, at the Corporation's
expense in accordance with the terms and conditions of this
Agreement without regard to the limitations imposed by the
immediately preceding sentence. In any event, the Corporation
shall not be obligated to indemnify Indemnitee for an amount paid
in settlement that the Corporation has not approved.
(g) In the case of a Claim involving a proposed,
threatened or pending criminal proceeding, Indemnitee shall be
entitled to conduct the defense of the Claim and to make all
decisions with respect thereto, with counsel of his choice;
provided that the Corporation shall not be obligated to indemnify
Indemnitee for an amount paid in settlement that the Corporation
has not approved.
(h) After notification to the Corporation of the
existence of a Claim, Indemnitee may from time to time request of
the Chief Executive Officer or, if the Chief Executive Officer
is a party to the Claim as to which indemnification is being
sought, any officer who is not a party to the Claim and who
is designated by the Chief Executive Officer (the
"Disbursing Officer"), which designation shall be made promptly
after receipt of the initial request, that the Corporation
advance to Indemnitee the Expenses (other than fines, penalties,
judgments or amounts paid in settlement) that he incurs in
pursuing a defense of the Claim prior to the time that the
Determining Body determines whether the Standard of Conduct has
been met. The Disbursing Officer shall pay to Indemnitee the
amount requested (regardless of Indemnitee's apparent ability
to repay the funds) upon receipt of an undertaking by
or on behalf of Indemnitee to repay such amount if it shall
ultimately be determined that he is not entitled to be
indemnified by the Corporation under the circumstances, provided
that if the Disbursing Officer does not believe such amount to be
reasonable, he shall advance the amount deemed by him to be
reasonable and Indemnitee may apply directly to the Determining
Body for the remainder of the amount requested.
(i) After a determination that the Standard of Conduct
has been met, for so long as and to the extent that the
Corporation is required to indemnify Indemnitee under this
Agreement, the provisions of Paragraph (h) shall continue to
apply with respect to Expenses incurred after such time except
that (i) no undertaking shall be required of Indemnitee and (ii)
the Disbursing Officer shall pay to Indemnitee the amount of any
fines, penalties or judgments against him which have become final
for which the Corporation is obligated to indemnify him or any
amount of indemnification ordered to be paid to him by a court.
(j) Any determination by the Corporation with respect
to settlement of a Claim shall be made by the Determining Body.
(k) The Corporation and Indemnitee shall keep
confidential to the extent permitted by law and their fiduciary
obligations all facts and determinations provided pursuant to or
arising out of the operation of this Agreement and the
Corporation and Indemnitee shall instruct its or his agents and
employees to do likewise.
9.3 Enforcement.
(a) The rights provided by this Section shall be
enforceable by Indemnitee in any court of competent jurisdiction.
(b) If Indemnitee seeks a judicial adjudication of his
rights under this Section, Indemnitee shall be entitled to
recover from the Corporation, and shall be indemnified by the
Corporation against, any and all Expenses actually and reasonably
incurred by him in connection with such proceeding, but only if
he prevails therein. If it shall be determined that Indemnitee
is entitled to receive part but not all of the relief sought,
then Indemnitee shall be entitled to be reimbursed for all
Expenses incurred by him in connection with such proceeding if
the indemnification amount to which he is determined to be
entitled exceeds 50% of the amount of his claim. Otherwise, the
Expenses sought incurred by Indemnitee in connection with such
judicial adjudication shall be appropriately prorated.
(c) In any judicial proceeding described in this
subsection, the Corporation shall bear the burden of proving that
Indemnitee is not entitled to Expenses sought with respect to any
Claim.
9.4 Saving Clause.
If any provision of this Section is determined by a court
having jurisdiction over the matter to require the Corporation to
do or refrain from doing any act that is in violation of
applicable law, the court shall be empowered to modify or reform
such provision so that, as modified or reformed, such provision
provides the maximum indemnification permitted by law and such
provision, as so modified or reformed, and the balance of this
Section, shall be applied in accordance with their terms.
Without limiting the generality of the foregoing, if any portion
of this Section shall be invalidated on any ground, the
Corporation shall nevertheless indemnify and Indemnitee to the
full extent permitted by any applicable portion of this Section
that shall not have been invalidated and to the full extent
permitted by law with respect to that portion that has been
invalidated.
9.5 Non-Exclusivity.
(a) The indemnification and payment of Expenses
provided by or granted pursuant to this Section shall not be
deemed exclusive of any other rights to which Indemnitee is or
may become entitled under any statute, article of incorporation,
by-law, authorization of shareholders or directors, agreement or
otherwise.
(b) It is the intent of the Corporation by this
Section to indemnify and hold harmless Indemnitee to the fullest
extent permitted by law, so that if applicable law would permit
the Corporation to provide broader indemnification rights than
are currently permitted, the Corporation shall indemnify and hold
harmless Indemnitee to the fullest extent permitted by applicable
law notwithstanding that the other terms of this Section would
provide for lesser indemnification.
9.6 Successors and Assigns. This Section shall be binding
upon the Corporation, its successors and assigns, and shall inure
to the benefit of Indemnitee's heirs, personal representatives,
and assigns and to the benefit of the Corporation, its successors
and assigns.
9.7 Indemnification of Other Persons. The Corporation may
indemnify any person not a director or officer of the Corporation
to the extent authorized by the Board of Directors or a committee
of the Board expressly authorized by the Board of Directors.
ARTICLE III
COMMITTEES
Section 1. Standing Committees:
The Board of Directors shall have six standing committees,
the names, functions and powers of each of which shall be as
follows:
A. The Executive Committee shall consist of not less than
three Directors, one of whom shall be the CEO, who shall also
serve as chairman of the Executive Committee. To the full extent
permitted by law and the Articles of Incorporation, the Executive
Committee shall have and may exercise all of the powers of the
Board in the management of the business and affairs of the
Corporation when the Board is not in session.
B. The Compensation Committee shall consist of two or more
Directors (the exact number of which shall be set from time to
time by the Board), each of whom shall (i) be a "disinterested
person" as defined under Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended, and (ii) not serve,
and shall not have served in the past, as an officer or employee
of the Corporation or any of its subsidiaries. The Compensation
Committee is empowered to:
1. after receiving and considering the
recommendations of the chief executive officer,
determine from time to time the salary of the
Corporation's executive officers (as defined by Rule
3b-7 promulgated under the Securities Exchange Act of
1934, as amended) and the fees of the Corporation's
directors;
2. administer each of the Corporations incentive
compensation plans and stock-based plans (including its
1983 Restricted Stock Plan, Key Employee Incentive
Compensation Plan, 1988 Incentive Compensation Program,
1990 Incentive Compensation Program, and any successor
plans), and exercise all powers provided for in such
plans;
3. approve any (i) proposed plan or arrangement
offering or providing any benefits to one or more of
the Corporation's executive officers or directors
(other than any plan or arrangement offering benefits
that do not discriminate in scope, terms or operation
in favor of executive officers or directors and that
are generally available to all salaried employees) and
(ii) proposed amendment or change to any such plan or
arrangement;
4. approve any (i) proposed employment contract
between the Corporation or one of its subsidiaries and
an employee or prospective employee thereof and (ii)
proposed amendment or extension of any such contract;
5. issue executive compensation reports to the
Corporation's shareholders in the manner required under
the rules and regulations of the U.S. Securities and
Exchange Commission; and
6. if requested by the Board, (i) review, determine
or approve the compensation of any non-executive
officer of the Corporation or any officer of the
Corporation's subsidiaries, (ii) review, determine or
approve any proposed amendments, contributions or
changes to any of the Corporation's employee benefit
plans, welfare plans, insurance or other benefit
arrangements that are not directly administered or
monitored by the Compensation Committee pursuant to the
powers granted in paragraphs 2 and 3 above, and (iii)
perform such other services as may be delegated to it
by the Board; and
7. retain independent consultants and legal advisors
who will report directly to the Committee and be paid
with Company funds.
No action of the type described in paragraphs 1 - 5 above
shall be valid unless it has been approved by the Compensation
Committee.
C. The Nominating Committee shall consist of two or more
Directors and shall perform the following functions:
1. To consider and recommend to the Board nominees for
election by shareholders or for appointment by the remaining
Directors to fill vacancies on the Board;
2. To review and consider the performance of and to
recommend the appointment or reappointment of officers of the
Corporation.
D. The Audit Committee shall consist of two or more
Directors, none of whom shall otherwise be employed by the
Corporation, and shall have the following responsibilities:
1. To recommend to the Board the engagement or discharge of
the Company's independent auditor of its financial statements;
2. To direct and supervise all investigations into matters
relating to or rising from the performance and results of each
independent audit;
3. To review with the Company's independent auditor the
plan and results of each independent audit engagement;
4. To review the scope, adequacy and results of the
Company's internal auditing procedures;
5. To review and to approve or disapprove each service to
be performed for the Company by the independent auditor before
such service is performed; except that the Committee is
authorized to permit the President or the Chief Financial Officer
to engage the independent auditor or perform any category of
service specified by the Committee under circumstances deemed
appropriate by the Audit Committee;
6. To review the degree of independence of the independent
auditor;
7. To consider the range of audit and non-audit fees;
8. To review the adequacy of the Company's system of
internal accounting controls.
E. The Insurance Evaluation Committee shall consist of two
or more Directors, and shall have the following responsibilities:
1. To review periodically the Company's insurance programs
and to advise and recommend any action deemed appropriate with
respect thereto; and
2. To review periodically the Company's insurance needs and
to advise and recommend any action deemed appropriate with
respect thereto.
F. The Shareholder Relations Committee shall consist of
three or more non officer directors and shall have the authority
of the Board of Directors with respect to investigating,
inquiring into and considering issues related to certain
shareholders' interest and rights and considering and acting upon
shareholder matters as assigned, from time to time, by the
Chairman of the Board.
Section 2. Appointment and Removal of Committee Members.
Directors shall be appointed to or removed from a
committee only upon the affirmative votes of:
1. A majority of the Directors then in office; and
2. A majority of the Continuing Directors (as defined in the
Articles of Incorporation), voting as a separate group.
Section 3. Procedures for Committees.
Each committee shall keep written minutes of its meetings.
All action taken by a committee shall be reported to the Board of
Directors at its next meeting, whether regular or special.
Failure to keep written minutes or to make such a report shall
not affect the validity of action taken by a committee. Each
committee shall adopt such regulations (not inconsistent with the
Articles of Incorporation, these bylaws or any regulations
specified for such committee by the Board of Directors) as it
shall deem necessary for the proper conduct of its functions and
the performance of its responsibilities.
Section 4. Quorum Meetings.
A majority of the members of any committee shall constitute
a quorum and action by a majority (or by any super majority
required by law, the Articles of Incorporation, these Bylaws or
any applicable resolution adopted by the Board of Directors) of a
quorum at any meeting of a committee shall be deemed action by
the committee. The committee may also take action without
meeting, if all members thereof consent in writing thereto.
Meetings of a committee may be held by telephone conference calls
or other communications equipment provided each person
participating may hear and be heard by all other meeting par-
ticipants.
Section 5. Authority of Chairman to Appoint Committees.
Whenever the Board of Directors is not in session, the
Chairman may create such committees as he deems necessary or
useful and may appoint Directors as members thereof. Any such
action by the Chairman, and any action taken by such a committee
shall be subject to ratification or disapproval by the Board at
its next meeting.
ARTICLE IV
SHAREHOLDERS' MEETINGS
Section l. Place of Meetings.
Unless otherwise required by law or these By-laws, all
meetings of the shareholders shall be held at the principal
office of the Corporation or at such other place, within or
without the State of Louisiana, as may be designated by the Board
of Directors.
Section 2. Annual Meeting; Notice Thereof.
An annual meeting of the shareholders shall be held on the
date and at the time specified by the Board of Directors in each
year. Notice of the annual meeting must state the purpose
thereof and the business to be conducted thereat shall be limited
to such purpose or purposes.
Section 3. Election of Directors.
The Board of Directors shall be divided into three classes
as nearly equal in number as may be possible. Any increase or
decrease in the number of directors shall be apportioned by the
Board of Directors so that all classes of directors shall be as
nearly equal in number as can be. At each annual meeting of
shareholders, directors shall be elected to succeed those
directors whose terms then expire. Such newly elected directors
shall serve until the third succeeding annual meeting of
shareholders after their election and until their successors are
elected and qualified. A director elected to fill a vacancy
shall hold office for a term expiring at the annual meeting at
which the term of the class to which he shall have been elected
expires. No decrease in the number of directors constituting
the Board of Directors shall shorten the term of any incumbent
director.
Section 4. Special Meeting.
Special meetings of the shareholders, for any purpose or
purposes, may be called by the Chairman of the Board, the
President or Board of Directors. At any time, upon the written
request of any shareholder or group of shareholders holding in
the aggregate at least eighty percent (80%) of the Total Voting
Power, as defined in Article IV, Section 8 of these By-laws, the
Secretary shall call a special meeting of shareholders to be held
at the registered office of the Corporation at such time as the
Secretary may fix, not less than fifteen nor more than sixty days
after the receipt of said request, and if the Secretary shall
neglect or refuse to fix such time or to give notice of the
meeting, the shareholder or shareholders making the request may
do so. Such requests must state the specific purpose or purposes
of the proposed special meeting, and the business to be conducted
thereat shall be limited to such purpose or purposes.
Section 5. Notice of Meetings.
Except as otherwise provided by law, the authorized person
or persons calling a shareholders' meeting shall cause written
notice of the time, place and purpose of the meeting to be given
to all shareholders entitled to vote at such meeting, at least
ten days and not more than sixty days prior to the day fixed for
the meeting.
Section 6. List of Shareholders.
At every meeting of shareholders, a list of shareholders
entitled to vote, arranged alphabetically and certified by the
Secretary or by the agent of the Corporation having charge of
transfers of shares, showing the number and class of shares held
by each shareholder on the record date for the meeting, shall be
produced on the request of any shareholder.
Section 7. Quorum.
At all meetings of shareholders, the holders of a majority
of the Total Voting Power, as defined in Article IV, Section 8 of
these By-laws, shall constitute a quorum, except that at any
meeting the notice of which sets forth any matter that, by law or
the Articles of Incorporation of the Corporation, must be
approved by the affirmative vote of a specified percentage in
excess of a majority of the Total Voting Power of the
Corporation, the holders of that specified percentage shall
constitute a quorum.
Section 8. Voting.
When a quorum is present at any meeting, the vote of the
holders of a majority of the Voting Power, as defined in Article
IV, Section 8 of these By-laws, present in person or represented
by proxy shall decide any question brought before such
meeting, unless the question is one uponwhich, by express
provision of law or the Articles of Incorporation of the
Corporation, a different vote is required, in which case such
express provision shall govern and control the decision of such
question. Directors shall be elected by plurality vote. As used
in these By-laws, the term "Voting Power" shall mean the right
vested by law or by these By-laws or the Corporation's Articles
of Incorporation in the shareholders or in one or more classes
of shareholders, and the right conferred by the
Corporation pursuant to La. R.S.12:75H upon the holders of any
bonds, debentures or other obligations issued by the Corporation,
to vote in the determination of a particular question or matter.
As used in these By-laws, the term "Total Voting Power" shall
mean the total number of votes that shareholders and holders of
any bonds, debentures or other obligations granted voting rights
by the Corporation are entitled to cast in the determination of a
particular question or matter.
Section 9. Proxies.
At any meeting of the shareholders, every shareholder having
the right to vote shall be entitled to vote in person or by proxy
appointed by an instrument in writing subscribed by such
shareholder and bearing a date not more than eleven months prior
to the meeting, unless the instrument provides for a longer
period, but in no case will an outstanding proxy be valid for
longer than three years from the date of its execution and in no
case may a proxy be voted at a meeting called pursuant to La.
R.S. 12:138 unless it is executed and dated by the shareholder
within 30 days of the date of such meeting. The person appointed
as proxy need not be a shareholder of the Corporation.
Section 10. Voting Power Present or Represented.
For purposes of determining the amount of Voting Power
present or represented at any annual or special meeting os
shareholders with respect to voting on a particular proposal,
shares as to which the proxy holders have been instructed to
abstain from voting on the proposal, and shares as to which the
proxy holders have been precluded from voting thereon (whether by
law, regulations of the Securities and Exchange Commission, rules
or by-laws of any self-regulatory organization or otherwise) will
not be treated as present.
Section 11. Adjournments.
Adjournments of any annual or special meeting of
shareholders may be taken without new notice being given unless a
new record date is fixed for other adjourned meeting, but any
meeting at which directors are to be elected shall be adjourned
only from day to day until such directors shall have been
elected.
Section 12. Withdrawal.
If a quorum is present or represented at a duly organized
meeting, such meeting may continue to do business until
adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum as fixed in Article IV,
Section 7 of these By-laws, or the refusal of any shareholders
present to vote.
Section 13. Lack of Quorum.
If a meeting cannot be organized because a quorum has not
attended, those present may adjourn the meeting to such time and
place as they may determine, subject, however, to the provisions
of Article IV, Section 10 hereof. In the case of any meeting
called for the election of directors, those who attend the
second of such adjourned meetings, although less that a
quorum as fixed in Article IV, Section 7 hereof, shall
nevertheless constitute a quorum for the purpose of electing
directors.
Section 14. Presiding Officer.
The Chairman of the Board, or in his absence, the President,
shall preside at all shareholders' meetings.
ARTICLE V
CERTIFICATES OF STOCK
The certificates of stock of the Corporation shall be
numbered and shall be entered into the books of the Corporation
as they are issued.
They shall exhibit the holder's name and number of shares
and shall be signed by the President or Vice-President and the
Secretary-Treasurer.
ARTICLE VI
REGISTERED STOCKHOLDERS
The Corporation shall be entitled to treat the holder of
record of any share or shares of stock as the holder in fact
thereof and accordingly shall not be bound to recognize any
equitable or other claim to or interest in such share on the
part of any other person, whether or not it shall have express or
other notice thereof, save as expressly provided by the laws of
Louisiana.
ARTICLE VII
LOSS OF CERTIFICATE
Any person claiming a certificate of stock to be lost or
destroyed, shall make an affidavit or affirmation of that fact,
and the Board of Directors may, in its discretion require the
owner of the lost of destroyed certificate or his legal
representative, to give the Corporation a bond, in such sum as
the Board of Directors of the Corporation may require to
indemnify the Corporation against any claim that may be made
against it on account of the alleged loss of any such
certificate; a new certificate of the same tenor and for the same
number of shares as the one alleged to be lost or destroyed, may
be issued without requiring any bond when, in the judgment of the
directors, it is proper to do so.
ARTICLE VIII
CHECKS
All checks, drafts and notes of the Corporation shall be
signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time
designate.
ARTICLE IX
DIVIDENDS
Dividends upon the capital stock of the Corporation, subject
to the provisions of the articles of incorporation if any, may be
declared by the Board of Directors at any regular or special
meetings, pursuant to law.
ARTICLE X
AMENDMENTS
These Bylaws may only be altered, amended or repealed as
follows;
A. By the stockholders, but only upon the affirmative votes
equivalent to those required by Subparagraph C.1(a) and (b) of
Article VIII of the Articles of Incorporation; or
B. By the Board of Directors, but only upon the affirmative
votes equivalent to those required by Subparagraph D.3(a) and
(9b) of Article VIII of the Articles of Incorporation.
EXHIBIT 4.21
AMENDMENT TO THE
CENTURY TELEPHONE ENTERPRISES, INC.
STOCK BONUS PLAN, PAYSOP AND TRUST
STATE OF LOUISIANA
PARISH OF OUACHITA
BE IT KNOWN, that this 1st day of June, 1993, before me, a
Notary Public, duly commissioned and qualified in and for the
Parish of Ouachita, State of Louisiana, therein residing and in
the presence of the undersigned witnesses:
PERSONALLY CAME AND APPEARED:
Century Telephone Enterprises, Inc. represented herein by
its Senior Vice President and Chief Financial Officer, R. Stewart
Ewing, Jr., as Settlor and Employer, which hereby executes the
following amendment to the Century Telephone Enterprises, Inc.
Stock Bonus Plan, PAYSOP and Trust, such amendment to be
effective January 1, 1994.:
Delete the first sentence of Section 1.17 and insert the
following in lieu thereof:
A computation period during which an Employee has completed
at least one thousand (1000) Hours of Service.
THUS DONE AND SIGNED on the day first above shown, in the
presence of the undersigned competent witnesses, who hereunto
sign their names with the said appearers and me, Notary, after
reading of the whole.
WITNESSES CENTURY TELEPHONE ENTERPRISES, INC.
/s/ Sandra B. Post By /s/ R. Stewart Ewing, Jr.
R. Stewart Ewing, Jr.
Senior Vice President and
/s/ Kay Buchart Chief Financial Officer
/s/ Elvis C. Stout
Notary Public
ACCEPTANCE OF AMENDMENT BY TRUSTEE
STATE OF LOUISIANA
PARISH OF OUACHITA
On this 15th day of June, 1993,
BEFORE ME, a Notary Public, and in the presence of the
undersigned competent witnesses, personally came and appeared:
FIRST AMERICAN BANK & TRUST OF LOUISIANA
which declared that it is appearing herein for the purpose of
accepting and it does hereby accept the amendment to the Century
Telephone Enterprises, Inc. Stock Bonus Plan, PAYSOP and Trust
adopted by the Settlor on June 1, 1993.
THUS DONE AND SIGNED at Monroe, Louisiana, on the first
above written.
WITNESSES FIRST AMERICAN BANK & TRUST OF
LOUISIANA
/s/ Ashley J. Akus By /s/ William W. Keith
William W. Keith, Executive
Vice President and
Trust Officer
/s/ Linda G. Todd
/s/ Cathy M. Yelverton
Notary Public
AMENDMENTS TO THE
CENTURY TELEPHONE ENTERPRISES, INC.
STOCK BONUS PLAN, PAYSOP AND TRUST
STATE OF LOUISIANA
PARISH OF OUACHITA
BE IT KNOWN, that on this 10th day of June, 1993, before me,
a Notary Public, duly commissioned and qualified in and for the
Parish of Ouachita, State of Louisiana, therein residing and in
the presence of the undersigned witnesses:
PERSONALLY CAME AND APPEARED:
Century Telephone Enterprises, Inc., represented herein by
its Senior Vice President and Chief Financial Officer, R. Stewart
Ewing, Jr., as Settlor and Employer, which hereby executes the
following amendments to the Century Telephone Enterprises, Inc.
Stock Bonus Plan, PAYSOP and Trust, such amendments to be
effective April 9, 1993:
Add the following paragraph at the end of Section 1.7:
For employees of San Marcos Telephone Company, Inc., SM
Telecorp, Inc., and subsidiaries thereof, who become
participants in the Plan on or after June 20, 1993,
Compensation for the Plan Year ending December 31, 1993
shall be recognized commencing as of the effective date of
participation of each such employee pursuant to Section 2.1.
Add the following paragraph as Section 1.17(f):
(f)Service with San Marcos Telephone Company, Inc., SM
Telecorp, Inc., and subsidiaries thereof, and any successors
thereto by merger or otherwise, shall be counted for all
purposes under this Plan.
THUS DONE AND SIGNED on the day first above shown, in the
presence of the undersigned competent witnesses, who
hereunto sign their names with the said appearers and
me, Notary, after reading of the whole.
WITNESSES CENTURY TELEPHONE ENTERPRISES, INC.
/s/ Linda Vaughn By /s/ R. Stewart Ewing, Jr.
R. Stewart Ewing, Jr.
Senior Vice President and
/s/ Sherry Bowen Chief Financial Officer
/s/ Kathy Tettleton Notary Public
ACCEPTANCE OF AMENDMENTS BY TRUSTEE
STATE OF LOUISIANA
PARISH OF OUACHITA
On this 10th day of June, 1993,
BEFORE ME, a Notary Public, and in the presence of the
undersigned competent witnesses, personally came and appeared:
FIRST AMERICAN BANK & TRUST OF LOUISIANA
which declared that it is appearing herein for the purpose of
accepting and it does hereby
accept the amendments to the Century Telephone Enterprises, Inc.
Stock Bonus Plan, PAYSOP and Trust adopted by the Settlor on June
10, 1993.
THUS DONE AND SIGNED at Monroe, Louisiana, on the date first
above written.
WITNESSES FIRST AMERICAN BANK & TRUST OF
LOUISIANA
/s/ Lisa K McGivney By /s/ William W. Keith
William W. Keith, Executive
Vice President and Trust Officer
/s/ Ashley J. Akus
/s/ Cathy M. Yelverton
Notary Public
EXHIBIT 4.24
SECOND AMENDMENT TO COMPETITIVE ADVANCE
AND REVOLVING CREDIT FACILITY AGREEMENT
THIS AMENDMENT, effective as of February 10, 1992, is
entered into by CENTURY TELEPHONE ENTERPRISES, INC., a Louisiana
corporation (the "Borrower"), the banks listed on the signature
page of this amendment (the "Banks"), and NATIONSBANK OF TEXAS,
N.A., a national banking association, as agent for the Banks (in
such capacity, the "Agent") and as auction administration agent
(in such capacity, the "Auction Administration Agent).
The Borrower, the Banks, the Agent, and the Auction
Administration Agent entered into the Competitive Advance and
Revolving Credit Facility Agreement (as amended on April 8, 1993,
and as further renewed, extended, amended, and supplemented, the
"Credit Agreement") dated as of February 7, 1992, providing for
the Banks to extend credit to the Borrower on a revolving credit
basis, not to exceed an aggregate principal amount of
$55,000,000. The Borrower and the Banks, the Agent, and the
Auction Administration Agent have agreed, upon the following
terms and conditions, to amend the Credit Agreement to provide
for, among other things, an increase in permitted sales of assets
by any Company (as defined in the Credit Agreement).
Accordingly, in consideration of the mutual agreements below, the
Borrower and the Banks, the Agent, and the Auction Administration
Agent agree as follows:
1. Certain Definitions. Unless otherwise stated, terms
defined in the Credit Agreement have the same meanings when used
in this amendment, and all references to "Sections," "Schedules,"
and "Exhibits" are to sections, schedules, and exhibits of or to
the Credit Agreement.
2. Amendments. The Credit Agreement is amended as
follows:
(a) Section 5.15 of the Credit Agreement is amended in
its entirety as follows:
5.15 Sale of Assets. No Company will sell,
lease, or otherwise dispose of all or any substantial
part of its assets other than (a) sales of inventory in
the ordinary course of business, (b) sales of equipment
for a fair and adequate consideration, provided that if
any such equipment is sold, and a replacement is
necessary for the proper operation of the business of
such Company, such Company will replace such equipment
with adequate equipment, (c) the exchange of assets --
other than equipment -- for similar assets of equal or
greater value, (d) the sale, discount, or transfer of
delinquent notes or accounts receivable in the ordinary
course of business for purposes of collection, and (e)
in any 12- month period, dispositions of assets (net of
acquisitions of similar assets) that, when added to all
other such dispositions by all Companies, do not exceed
10 percent of Consolidated Net Worth.
3. Conditions. This amendment shall not become effective
until (a) all the parties named below shall have executed and
delivered counterparts of this amendment to the Agent, and (b)
the Agent shall have received all the agreements, documents,
instruments, and other items listed on Annex A to this amendment.
4. Representations. The Borrower represents and warrants
to the Banks, the Agent, and the Auction Administration Agent
that (a) all representations and warranties stated in Section 3
of the Credit Agreement are true and correct in all material
respects the same as if restated verbatim in this amendment as of
the date of this amendment, and (b) as of the date of this
amendment, no Material Adverse Effect, Default, or Event of
Default has occurred and is continuing.
5. References. All references in the Loan Papers to the
"Credit Agreement" shall refer to the Credit Agreement as amended
by this amendment, and, because this amendment is a "Loan Paper"
referred to in the Credit Agreement, the provisions relating to
Loan Papers set forth in the Credit Agreement are incorporated in
this amendment by reference, the same as if set forth in this
amendment verbatim.
6. Scope of Amendment. Except as specifically amended and
modified in this amendment, (a) the Credit Agreement is unchanged
and continues in full force and effect, and (b) the Borrower
hereby confirms and ratifies the existence of and each and every
term, condition, and covenant contained in the Credit Agreement,
to the same extent and as though the same were set out in full in
this amendment.
7. Counterparts. This amendment has been executed in a
number of identical counterparts, each of which shall be deemed
an original. In making proof of this instrument, it shall not be
necessary for any party to account for all counterparts, and it
shall be sufficient for any party to produce but one such
counterpart.
8. Parties Bound. This amendment shall be binding upon
and shall inure to the benefit of the Borrower, each Bank, the
Agent, and Administrative Agent, and their respective successors
and assigns subject to Section 9.20 of the Credit Agreement.
9. ENTIRETY. THIS AMENDMENT AND THE LOAN PAPERS REPRESENT
THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
EXECUTED on July 9, 1993, effective as of the date first
stated.
CENTURY TELEPHONE ENTERPRISES, INC.,
as the Borrower
By /s/ R. Stewart Ewing Jr.
Name:R. Stewart Ewing, Jr.
Title:Senior Vice President
and Chief Financial Officer
NATIONSBANK OF TEXAS, N.A., as the
Agent, the Auction Administration Agent,
and a Bank
By /s/ W.H. McClendon IV
Name:W. H. McClendon IV
Title:Vice President
TEXAS COMMERCE BANK,
NATIONAL ASSOCIATION,
as a Bank
By /s/ Robert C. Stack
Name:Robert C. Stack
Title:Executive Vice President
THE BANK OF NOVA SCOTIA, as
a Bank
By /s/ F.C.H. Ashby
Name:F.C.H. Ashby
Title:Senior Assistant Agent
ANNEX A
CONDITIONS
Unless otherwise specified, all documents are dated as of the
date of this amendment
1. A CERTIFICATE from the president, secretary, chief financial
officer, or treasurer of the Borrower certifying as to (a)
the due incumbency of its officers authorized to execute or
attest to the Loan Papers, (b) whether any changes to the
corporate charter provided to Agent on February 7, 1992,
have been made (and, if any changes have been made, copies
of such changes), and (c) whether any changes to the Bylaws
provided to Agent on June 14, 1993, have been made (and, if
any changes have been made, copies of such changes), to
which will be attached:
Exhibit A Changes to Charter, if any
Exhibit B Changes to Bylaws, if any
2. Such other agreements, documents, instruments, and items as
any Bank may request.
EXHIBIT 4.25
CREDIT AGREEMENT
Dated as of
February 9, 1994
among
CENTURY TELEPHONE ENTERPRISES, INC.,
THE BANKS NAMED HEREIN,
and
NATIONSBANK OF TEXAS, N.A.,
as Agent
TABLE OF CONTENTS
SECTION 1. DEFINITIONS.........................................1
1.1 Certain Defined Terms...............................1
SECTION 2. LOANS...............................................8
2.1 Agreement to Lend...................................8
2.2 Borrowing Procedure.................................8
2.3 Refinancings........................................8
2.4 Loans...............................................8
2.5 Notes...............................................9
2.6 Interest on Loans...................................9
2.7 Interest on Overdue Amounts.........................9
2.8 Alternate Rate of Interest..........................9
2.9 Prepayment of Loans................................10
2.10 Reserve Requirements; Change in Circumstances......10
2.11 Change in Legality.................................11
2.12 Indemnity..........................................12
2.13 Pro Rata Treatment.................................12
2.14 Sharing of Setoffs.................................12
2.15 Payments...........................................13
2.16 Calculation of LIBO and CD Rates...................14
2.17 Booking Loans......................................14
2.18 Quotation of Rates.................................14
SECTION 3. REPRESENTATIONS AND WARRANTIES.....................14
3.1 Purpose of Credit Facility.........................14
3.2 Corporate Existence, Good Standing, and Authority..14
3.3 Subsidiaries.......................................14
3.4 Financial Statements...............................15
3.5 Compliance with Laws, Charter, and Agreements......15
3.6 Litigation.........................................15
3.7 Taxes..............................................15
3.8 Environmental Matters..............................15
3.9 Employee Benefit Plans.............................15
3.10 Properties; Liens..................................15
3.11 Holding Company and Investment Company Status......16
3.12 Transactions with Affiliates.......................16
3.13 Leases.............................................16
3.14 Labor Matters......................................16
3.15 Insurance..........................................16
3.16 Solvency...........................................16
3.17 Business...........................................16
3.18 General............................................16
SECTION 4. CONDITIONS PRECEDENT...............................16
4.1 Initial Loan.......................................16
4.2 Each Loan..........................................17
4.3 Materiality of Conditions..........................17
4.4 Waiver of Conditions...............................17
SECTION 5. COVENANTS..........................................17
5.1 Use of Proceeds....................................17
5.2 Books and Records..................................18
5.3 Items to be Furnished..............................18
5.4 Inspection.........................................18
5.5 Taxes..............................................19
5.6 Payment of Obligations.............................19
5.7 Expenses of Agent..................................19
5.8 Maintenance of Existence, Assets, Business, and
Insurance.........................................19
5.9 Preservation and Protection of Rights..............19
5.10 Employee Benefit Plans.............................19
5.11 Liens..............................................19
5.12 Acquisitions, Mergers, and Dissolutions............19
5.13 Loans, Advances, and Investments...................19
5.14 Transactions with Affiliates.......................20
5.15 Sale of Assets.....................................20
5.16 Compliance with Laws and Documents.................20
5.17 New Businesses.....................................21
5.18 Assignment.........................................21
5.19 Fiscal Year and Accounting Methods.................21
5.20 Holding Company and Investment Company Status......21
5.21 Environmental Laws.................................21
5.22 Environmental Indemnification......................21
5.23 Ratio of Funded Debt to Net Worth..................21
5.24 Ratio of EBIT to Interest Expense and Preferred
Stock Dividends...................................21
5.25 Tax Consolidation..................................22
SECTION 6. DEFAULT............................................22
6.1 Payment of Obligation..............................22
6.2 Covenants..........................................22
6.3 Debtor Relief......................................23
6.4 Attachment.........................................23
6.5 Payment of Judgments...............................23
6.6 Default Under Other Agreements.....................23
6.7 Antitrust Proceedings..............................23
6.8 Misrepresentation..................................23
SECTION 7. RIGHTS AND REMEDIES................................23
7.1 Remedies Upon Event of Default.....................23
7.2 Waivers............................................24
7.3 Performance by Agent...............................24
7.4 Delegation of Duties and Rights....................24
7.5 Banks Not in Control...............................24
7.6 Waivers by Banks...................................24
7.7 Cumulative Rights..................................24
7.8 Application of Proceeds............................24
7.9 Certain Proceedings................................25
SECTION 8. AGREEMENT AMONG BANKS..............................25
8.1 Agent..............................................25
8.2 Expenses...........................................26
8.3 Proportionate Absorption of Losses.................26
8.4 Delegation of Duties; Reliance.....................26
8.5 Limitation of Agent's Liability....................26
8.6 Default............................................27
8.7 Limitation of Liability of Banks...................27
8.8 Relationship of Banks..............................27
8.9 Foreign Banks......................................27
8.10 Benefits of Agreement..............................28
SECTION 9. MISCELLANEOUS......................................28
9.1 Changes in GAAP....................................28
9.2 Money and Interest.................................28
9.3 Number and Gender of Words.........................28
9.4 Headings...........................................28
9.5 Exhibits...........................................28
9.6 Communications.....................................29
9.7 Form and Number of Documents.......................29
9.8 Exceptions to Covenants............................29
9.9 Survival...........................................29
9.10 Governing Law......................................29
9.11 VENUE; SERVICE OF PROCESS; JURY TRIAL..............29
9.12 Maximum Interest Rate..............................29
9.13 Invalid Provisions.................................30
9.14 Entirety...........................................30
9.15 Amendments, Etc....................................30
9.16 Waivers............................................31
9.17 Taxes..............................................31
9.18 Governmental Regulation............................31
9.19 Multiple Counterparts..............................31
9.20 Successors and Assigns; Participations;
Assignments........................................31
9.21 Confidentiality....................................32
9.22 Conflicts and Ambiguities..........................33
9.23 General Indemnification............................33
9.24 Investment Representation..........................33
SCHEDULES
Parties, Addresses, Commitments, Wiring Information Schedule 1
Permitted Liens Schedule 2
Jurisdictions of Incorporation and Business Schedule 3.2
Subsidiaries Schedule 3.3
Litigation Schedule 3.6
Transactions with Affiliates Schedule 3.12
Business of Companies Schedule 3.17
EXHIBITS
Notice of Borrowing Exhibit A
Note Exhibit B
Opinion of Borrower's Counsel Exhibit C
Financial Report Certificate Exhibit D
CREDIT AGREEMENT
CREDIT AGREEMENT dated as of February 9, 1994, among
CENTURY TELEPHONE ENTERPRISES, INC., a Louisiana corporation (the
"Borrower"), the banks listed on the signature pages hereof (the
"Banks"), NATIONSBANK OF TEXAS, N.A., a national banking
association, as agent for the Banks (in such capacity, the
"Agent").
The Borrower has requested the Banks to extend credit
to the Borrower in order to enable it to borrow in one advance a
principal amount not in excess of $90,000,000. The Banks are
willing to extend such credit to the Borrower on the terms and
conditions herein set forth. Accordingly, the Borrower, the
Agent, and the Banks agree as follows:
SECTION 1. DEFINITIONS.
1.1 Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings
to be equally applicable to both the singular and plural forms of
the terms defined):
"Adjusted Consolidated Net Worth" means, as of the date of
determination, Consolidated Net Worth minus (i) deferred assets
other than prepaid insurance, prepaid taxes, prepaid interest,
extraordinary retirements, and deferred charges where such
deferred charges are considered by Tribunals when setting rates,
(ii) patents, copyrights, trademarks, trade names, franchises,
experimental expense, goodwill (other than goodwill arising from
the purchase of capital stock or assets of a Person engaged in
the telephone or cellular mobile communications business) and
similar intangible or intellectual property, and (iii)
unamortized debt discount and expense (other than debt discount
and expense of the Companies located in jurisdictions where such
items are considered by Tribunals when setting rates).
"Affiliate" means a Person that directly, or indirectly
through one or more intermediaries, controls or is controlled by
or is under common control with another Person.
"Agent" is defined in the introduction to this Agreement.
"Agreement" means this Credit Agreement, as the same may be
amended, supplemented, or modified from time to time.
"Applicable Lending Office" means, with respect to each
Bank, such Bank's Domestic Lending Office in the case of a Base
Loan or a CD Loan, and such Bank's Eurodollar Lending Office in
the case of a Eurodollar Loan.
"Assessment Rate" means, with respect to any CD Loan, the
actual (if known) or the estimated (if the actual rate is not
known) per annum assessment rate (rounded upwards, if necessary,
to the next higher 0.01%) payable by the Agent to The Federal
Deposit Insurance Corporation (or any successor) for insuring
liability for time deposits, as in effect from time to time.
"Banks" means those banks signatory hereto and other banks
which from time to time become party hereto pursuant to the
provisions of this Agreement.
"Base CD Rate" has the meaning specified in the definition
of Base Rate.
"Base Loan" means any Loan with respect to which the
Borrower shall have selected an interest rate based on the Base
Rate in accordance with the provisions of Section 2.
"Base Rate" means, for any date, a rate per annum (rounded
upwards, if not already a whole multiple of 1/16 of 1%, to the
next higher 1/16 of 1%) equal to the greatest of (a) the Prime
Rate in effect on such day, (b) the Base CD Rate in effect on
such day plus 1% and (c) the Federal Funds Effective Rate in
effect for such day plus 1/2 of 1%. For purposes hereof, the
term "Prime Rate" means that rate of interest established from
time to time by the Agent as its general reference rate of
interest, after taking into account such factors as the Agent may
from time to time, in its sole discretion, deem appropriate, it
being understood, however, that the Agent may from time to time
make various loans at rates of interest having no relationship to
such general reference rate of interest. "Base CD Rate" shall
mean the sum of (x) the product of (i) the Average Weekly
Three-Month Secondary CD Rate and (ii) Statutory Reserves and (y)
the Assessment Rate. "Average Weekly Three-Month Secondary CD
Rate" means the secondary market rate ("Secondary CD Rate") for
three-month certificates of deposit (secondary market) of major
United States money market banks for the most recent weekly
period ending Friday reported in the Federal Reserve Statistical
release entitled "Selected Interest Rates" (currently publication
H.15) or any successor publication released during the week for
which the Secondary CD Rate is being determined. The Secondary
CD Rate so reported shall be in effect, for the purpose of this
definition, for each day of the week in which the release date of
such publication occurs. If such publication or a substitute
containing the foregoing rate information is not published by the
Board for any week, such average rate shall be determined by the
Agent on the first Business Day of the week succeeding such week
for which such rate information is not published on the basis of
bids quoted to the Agent by three New York City negotiable
certificate of deposit dealers of recognized standing for
secondary market morning offerings of negotiable certificates of
deposit of major United States money market banks with maturities
of three months. Any change in the Base Rate due to a change in
the Average Weekly Three-Month Secondary CD Rate shall be
effective on the effective date of such change in the Average
Weekly Three-Month Secondary CD Rate. "Federal Funds Effective
Rate" means, for any period, a fluctuating interest rate per
annum equal for each day during such period to the weighted
average of the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds
brokers, as published on the succeeding Business Day by the
Federal Reserve Bank of New York, or, if such rate is not so
published for any day which is a Business Day, the average of the
quotations for the day of such transactions received by the Agent
from three federal funds brokers of recognized standing selected
by it. Any change in the Base Rate due to a change in the
Federal Funds Effective Rate shall be effective on the effective
date of such change in the Federal Funds Effective Rate. If for
any reason the Agent shall have determined (which determination
shall be conclusive absent manifest error) that it is unable to
ascertain both the Base CD Rate and the Federal Funds Effective
Rate for any reason, including, without limitation, the inability
or failure of the Agent to obtain sufficient bids or publications
in accordance with the terms hereof, the Base Rate shall be the
Prime Rate until the circumstances giving rise to such inability
no longer exist.
"Board" means the Board of Governors of the Federal Reserve
System of the United States.
"Borrower" is defined in the introduction to this Agreement.
"Borrowing" means simultaneous Loans from each Bank.
"Borrowing Date" means the Business Day upon which the
proceeds of the Loans are to be made available to the Borrower,
but not later than February 17, 1994, and any subsequent date
that such Loans are refinanced pursuant to Section 2.3.
"Business Day" means a day when the Agent and each Bank are
open for business, and if the applicable Business Day relates to
any Eurodollar Loan, a day on which dealings are carried on in
the Eurodollar Interbank Market and commercial banks are open for
domestic or international business in London, England, in New
York, New York, and in Dallas, Texas.
"CD Loans" means Loans which bear interest at the CD Rate.
"CD Rate" means a rate determined pursuant to the following
formula:
(Derivation CD Rate x Statutory Reserves) + Assessment Rate
"Code" means the Internal Revenue Code of 1986, as amended,
together with rules and regulations promulgated thereunder.
"Companies" means, collectively, Borrower and its
Subsidiaries and "Company" means any of the same.
"Consolidated Net Worth" means, as of the date of
determination, the amount of stated capital plus (or minus, in
the case of a deficit) the capital surplus and earned surplus of
the Companies, as calculated in accordance with GAAP (but
treating Minority Interests in Subsidiaries as liabilities and
excluding the contra-equity account resulting from the Borrower's
obligations under its employee stock ownership plan commitments).
For purposes of this Agreement, Consolidated Net Worth shall
exclude the effect of Statement No. 106 of the Financial
Accounting Standards Board.
"Current Date" means any date after January 1, 1994.
"Current Financials" means the consolidated Financial
Statements of the Companies for the fiscal year ended December
31, 1992, and the fiscal quarter ended September 30, 1993.
"Debt" of any Person means, from time to time and without
duplication, all indebtedness, liabilities, and obligations of
such Person (including, without limitation, indebtedness,
liabilities, and obligations secured by any assets of such Person
regardless whether such Person has assumed the liability so
secured), whether or not considered as liabilities according to
GAAP and whether matured or unmatured, liquidated or
unliquidated, primary or secondary, direct or indirect, or
absolute, fixed, or contingent.
"Debtor Relief Laws" means the Bankruptcy Code of the United
States of America and all other applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement,
receivership, insolvency, reorganization, fraudulent transfer or
conveyance, suspension of payments, or similar Laws from time to
time in effect affecting the Rights of creditors generally.
"Default" means the occurrence of any event which with the
giving of notice or the passage of time or both would become an
Event of Default.
"Default Rate" means an annual interest rate equal to the
lesser of (a) 2% plus the Base Rate and (b) the Highest Lawful
Rate.
"Derivation CD Rate" means, for any Interest Period for any
CD Loan, the per annum rate of interest quoted to the Agent on
the first day of such Interest Period by certificate of deposit
dealers of recognized standing for the purchase at face value in
the secondary market of certificates of deposit of the Agent
maturing on the last day of such Interest Period and in amounts
similar to such CD Loan.
"Domestic Lending Office" means, with respect to any Bank,
the office of such Bank specified as its "Domestic Lending
Office" on Schedule 1 to this Agreement or such other office of
such Bank as such Bank may from time to time specify to the
Borrower and the Agent.
"EBIT" means, for the applicable period, net income before
Tax expense and interest expense and excluding the effects of
nonrecurring and/or unusual non-cash transactions that reduce net
income and items that do not reduce the cash flow of the
Companies (e.g., write-off of intangibles, write-down of assets,
effects of new accounting pronouncements, etc.).
"Eligible Assignee" means (i) a commercial bank organized
under the Laws of the United States, or any state thereof, and
having total assets in excess of $1,000,000,000; (ii) a
commercial bank organized under the Laws of any other country
which is a member of the OECD, or a political subdivision of any
such country, and having total assets in excess of
$1,000,000,000; provided that such bank is acting through a
branch or agency located in the country in which it is organized
or another country which is also a member of the OECD; and (iii)
the central bank of any country which is a member of the OECD.
"Environmental Law" means any Law that relates to the
environment or handling or control of Hazardous Substances.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations
promulgated thereunder.
"ERISA Affiliate" means any company or trade or business
(whether or not incorporated) which is a member of a group of
which Borrower is a member and which is under common control with
Borrower within the meaning of section 414 of the Code.
"Eurocurrency Liabilities" is defined in Regulation D.
"Eurodollar Interbank Market" means the eurodollar interbank
market selected by the Agent in its sole discretion, acting in
good faith.
"Eurodollar Lending Office" means, with respect to each
Bank, the branches or affiliates of such Bank which such Bank has
designated on Schedule 1 as its "Eurodollar Lending Office" or
may hereafter designate from time to time as its "Eurodollar
Lending Office" by notice to the Borrower and the Agent.
"Eurodollar Loan" means any Loan with respect to which the
Borrower shall have selected an interest rate based on the LIBO
Rate in accordance with the provisions of Section 2.
"Event of Default" means any of the events described in
Section 6, provided there has been satisfied any requirement in
connection therewith for the giving of notice, lapse of time, or
happening of any further condition, event, or act.
"Federal Funds Effective Rate" has the meaning specified in
the definition of Base Rate.
"Financial Report Certificate" means a certificate
substantially in the form of Exhibit D.
"Financial Statements" means balance sheets, profit and loss
statements, statements of capital and surplus, and statements of
cash flow prepared in comparative form to the corresponding
period of the preceding fiscal year.
"Funded Debt" shall mean and include, as of any date as of
which the amount thereof is to be determined, (i) all funded
indebtedness of the Companies, (ii) all funded indebtedness of
any Subsidiary (other than funded indebtedness of such Subsidiary
owing to the Borrower or another Subsidiary), and (iii) all
indebtedness for borrowed money, but not (iv) indebtedness
secured by the cash surrender value of life insurance policies up
to the amount of such cash surrender value.
"GAAP" means generally accepted accounting principles of the
Accounting Principles Board of the American Institute of
Certified Public Accountants and the Financial Accounting
Standards Board which are applicable as of the date of the
Financial Statements in question.
"Hazardous Substance" means any hazardous or toxic waste,
pollutant, contaminant, or substance.
"Highest Lawful Rate" means at the particular time in
question the maximum rate of interest which, under applicable
Law, the Banks are then permitted to charge the Borrower on the
Obligation. If the maximum rate of interest which, under
applicable Law, the Banks are permitted to charge the Borrower on
the Obligation shall change after the date hereof, the Highest
Lawful Rate shall be automatically increased or decreased, as the
case may be, as of the effective time of such change without
notice to the Borrower.
"Interest Payment Date" means with respect to any Base Loan,
Eurodollar Loan, or CD Loan, the last day of the Interest Period
applicable thereto and, in addition in the case of a Eurodollar
Loan, CD Loan, or Base Loan with an Interest Period longer than
three months or 90 days, as applicable, each day that would have
been the Interest Payment Date for such Loan had an Interest
Period of three months or 90 days, respectively, been applicable
to such Loan.
"Interest Period" means, with respect to each Loan, the
duration of such Loan and:
(i) as to any Eurodollar Loan, the period commencing
on the date of such Loan and ending on the numerically
corresponding day (or if there is no corresponding day, the
last day) in the calendar month that is one, two, three, or
six months thereafter, as the Borrower may elect;
(ii) as to any CD Loan, the period commencing on the
date of such Loan and ending 30, 60, 90, or 180 days
thereafter; and
(iii)as to any Base Loan, the period commencing on the
date of such Loan and ending not later than 90 days later
or, if earlier, on the Maturity Date, or the date of
prepayment of such Loan;
provided, that (x) if any Interest Period would end on a day
which shall not be a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless, with respect
to Eurodollar Loans only, such next succeeding Business Day would
fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day, and (y) no
Interest Period may be selected that ends later than the Maturity
Date. Interest shall accrue from and including the first day of
an Interest Period to but excluding the last day of such Interest
Period.
"Laws" means all applicable statutes, laws, treaties,
ordinances, rules, regulations, orders, writs, injunctions,
decrees, judgments, or opinions of any Tribunal.
"LIBO Rate" means the rate (rounded upwards, if not already
a whole multiple of 1/16 of 1%, to the next higher 1/16 of 1%)
equal to the annual rate of interest at which dollar deposits
approximately equal to the principal amount of the applicable
Eurodollar Loan and with a maturity equal to the applicable
Interest Period are offered in immediately available funds to the
principal office of the Agent in London, England (or if the Agent
does not at the time any such determination is made maintain an
office in London, England, the principal office of any Affiliate
of the Agent in London, England), at 11:00 a.m., London time (or
as soon thereafter as practicable), two Business Days before the
first day of such Interest Period.
"Lien" means any lien, mortgage, security interest, pledge,
assignment, charge, title retention agreement, or encumbrance of
any kind, and any other Right of or arrangement with any creditor
to have his claim satisfied out of any property or assets, or the
proceeds therefrom, prior to the general creditors of the owner
thereof.
"Litigation" means any action conducted, pending, or
threatened by or before any Tribunal.
"Loan" means a Eurodollar Loan, a CD Loan, or a Base Loan
made by a Bank to the Borrower hereunder.
"Loan Papers" means (i) this Agreement, certificates
delivered pursuant to this Agreement, and exhibits and schedules
hereto, (ii) any notes, security documents, guaranties, and other
agreements in favor of the Agent or the Banks ever delivered in
connection with this Agreement, and (iii) all renewals,
extensions, or restatements of, or amendments or supplements to,
any of the foregoing.
"Majority Banks" means at any time Banks holding at least
66-2/3% of the then aggregate unpaid principal amount of the
Loans.
"Material Adverse Effect" means any set of one or more
circumstances or events which, individually or collectively, will
result in any of the following (a) a material and adverse effect
upon the validity or enforceability of any Loan Paper, (b) a
material and adverse effect on the consolidated financial
condition of the Companies represented in the latter of the
Current Financials or the most recent audited consolidated
Financial Statements, (c) a Default or (d) the issuance of an
accountant's report on the Companies' consolidated Financial
Statements containing an explanatory paragraph about the entity's
ability to continue as a going concern (as defined in accordance
with Generally Accepted Auditing Standards).
"Material Agreement" of any Person means any material
written or oral agreement, contract, commitment, or understanding
to which such Person is a party, by which such Person is directly
or indirectly bound, or to which any assets of such Person may be
subject, and which is not cancelable by such Person upon 30 days
or less notice without liability for further payment other than
nominal penalty, and which requires such Person to pay more than
1 percent of Consolidated Net Worth during any 12-month period.
"Maturity Date" means September 30, 1994.
"Minority Interest" means, with respect to any Subsidiary,
an amount determined by valuing preferred stock held by Persons
other than the Borrower and its wholly-owned Subsidiaries at the
voluntary or involuntary liquidating value of such preferred
stock, whichever is greater, and by valuing common stock or
partnership interests held by Persons other than the Borrower and
its wholly-owned Subsidiaries at the book value of capital and
surplus applicable thereto on the books of such Subsidiary
adjusted, if necessary, to reflect any changes from the book
value of common stock required by the foregoing method of valuing
Minority Interest attributable to preferred stock.
"Multiemployer Plan" means a multiemployer plan as defined
in sections 3(37) or 4001(a)(3) of ERISA or section 414 of the
Code to which any Company or any ERISA Affiliate is making, or
has made, or is accruing, or has accrued, an obligation to make
contributions.
"Note" means a promissory note of the Borrower payable to
the order of Bank, in substantially the form of Exhibit B hereto,
with the blanks appropriately completed, together with all
modifications, extensions, renewals, and rearrangements thereof.
"Notice of Borrowing" is defined in Section 2.2.
"Obligation" means all present and future indebtedness,
obligations, and liabilities, and all renewals, extensions, and
modifications thereof, owed to the Agent or the Banks by the
Borrower, arising pursuant to any Loan Paper, together with all
interest thereon and costs, expenses, and attorneys' fees
incurred in the enforcement or collection thereof.
"OECD" means the Organization for Economic Cooperation and
Development (or any successor).
"Participant" is defined in Section 9.20(b).
"PBGC" means the Pension Benefit Guaranty Corporation, or
any successor thereof, established pursuant to ERISA.
"Permitted Liens" means the Liens described on Schedule 2.
"Person" means and includes an individual, partnership,
joint venture, corporation, trust, Tribunal, unincorporated
organization, or government, or any department, agency, or
political subdivision thereof.
"Plan" means any plan defined in Section 4021(a) of ERISA in
respect of which the Borrower is an "employer" or a "substantial
employer" as such terms are defined in ERISA.
"Prime Rate" has the meaning specified in the definition of
Base Rate.
"Purchaser" is defined in Section 9.20(c).
"Regulation D" means Regulation D of the Board, as the same
is from time to time in effect, and all official rulings and
interpretations thereunder or thereof.
"Rights" means rights, remedies, powers, and privileges.
"Significant Subsidiary" means a Subsidiary of the Borrower
(i) the assets of which equal or exceed 5% of all assets of the
Borrower and its Subsidiaries as shown on a consolidated balance
sheet of the Borrower and its Subsidiaries, (ii) the operating
revenue of which, for the most recently ended period of twelve
consecutive months, equals or exceeds 5% of the operating
revenues of the Borrower and its Subsidiaries for such period, or
(iii) the net income of which, for the most recently ended period
of twelve consecutive months, equals or exceeds 5% of the net
income of the Borrower and its Subsidiaries for such period.
"Solvent" means, as to any Person at the time of
determination, that (a) the aggregate fair value of such Person's
assets exceeds the present value of its liabilities (whether
contingent, subordinated, unmatured, unliquidated, or otherwise),
and (b) such Person has sufficient cash flow to enable it to pay
its Debts as they mature.
"Statutory Reserves" means a fraction (expressed as a
decimal), the numerator of which is the number one and the
denominator of which is the number one minus the aggregate of the
maximum reserve percentages (including, without limitation, any
marginal, special, emergency, or supplemental reserves),
expressed as a decimal, established by the Board and any other
banking authority to which any of the Banks is subject with
respect to the CD Rate, for new negotiable time deposits in
dollars of over $100,000 with maturities approximately equal to
the applicable Interest Period. Such reserve percentages shall
include, without limitation, those imposed under Regulation D.
Statutory Reserves shall be adjusted automatically on and as of
the effective date of any change in any reserve percentage.
"Subsidiary" means any Person with respect to which Borrower
or any one or more Subsidiaries owns directly or indirectly 50%
or more of the issued and outstanding voting stock (or equivalent
interests).
"Taxes" means all taxes, assessments, fees, or other charges
at any time imposed by any Laws or Tribunal.
"Tribunal" means any municipal, state, commonwealth,
federal, foreign, territorial, or other court, governmental body,
subdivision, agency, department, commission, board, bureau, or
instrumentality.
"United States" and "U.S." each means United States of
America.
SECTION 2. LOANS.
2.1 Agreement to Lend. Subject to the terms and conditions
and relying upon the representations and warranties herein set
forth, each Bank, severally and not jointly, agrees to make a
Loan to the Borrower in a single advance on the Borrowing Date in
the amount indicated next to its name on Schedule 1.
2.2 Borrowing Procedure. In order to effect a Borrowing,
the Borrower shall hand deliver, telex, or telecopy to the Agent
a duly completed request for Borrowing, substantially in the form
of Exhibit A hereto (a "Notice of Borrowing"), (i) in the case of
Eurodollar Loans and CD Loans, not later than 11:00 a.m., Dallas,
Texas time, two Business Days before the Borrowing Date specified
for the Borrowing, and (ii) in the case of Base Loans, not later
than 11:00 a.m., Dallas, Texas time, on the Business Day which is
the Borrowing Date specified for a proposed Borrowing. Such
notice shall be irrevocable and shall in each case refer to this
Agreement and specify (x) whether the Loans then being requested
are to be Eurodollar Loans, CD Loans, or Base Loans, (y) the
Borrowing Date of such Loans (which shall be a Business Day) and
the aggregate amount thereof (which shall not be less than
$500,000 and shall be an integral multiple of $100,000), and (z)
the Interest Period with respect thereto (which shall not end
later than the Maturity Date). If no Interest Period with
respect to any Eurodollar Loan or CD Loan is specified in any
such Notice of Borrowing, then in the case of a Eurodollar Loan,
the Borrower shall be deemed to have selected an Interest Period
of one month's duration, and in the case of a CD Loan, the
Borrower shall be deemed to have selected an Interest Period of
30 days' duration. Promptly, and in any event on the same day
the Agent receives a Notice of Borrowing pursuant to this
Section 2.2, the Agent shall advise the other Banks of such
Notice of Borrowing and of each Bank's portion of the requested
Borrowing by telex or telecopier. Each Borrowing shall consist
of Loans of the same type made as of the same day and having the
same Interest Period.
2.3 Refinancings. The Borrower may refinance all or any
part of any Loan with a Loan of the same or a different type made
pursuant to Section 2.2, subject to the conditions and
limitations set forth herein and elsewhere in this Agreement.
Any Loan or part thereof so refinanced shall be deemed to be
repaid with the proceeds of a new Borrowing hereunder and the
proceeds of the new Loan.
2.4 Loans. (a) Each Borrowing made by the Borrower on any
date shall be in the case of Loans, in an integral multiple of
$100,000 and in a minimum aggregate principal amount of $500,000.
Loans shall be made by the Banks ratably in accordance with their
respective amounts on Schedule 1; provided, however, that the
failure of any Bank to make any Loan shall not in itself relieve
any other Bank of its obligation to lend hereunder. The initial
Loan by each Bank shall be made against delivery to such Bank of
an appropriate Note, respectively, payable to the order of such
Bank, as referred to in Section 2.5.
(b) Each Loan shall be a Eurodollar Loan, a CD Loan,
or a Base Loan, as the Borrower may request subject to and in
accordance with Section 2.2 or Section 2.3, as applicable. Each
Bank may at its option make any Eurodollar Loan by causing a
foreign branch of such Bank to make such Loan; provided, however,
that any exercise of such option shall not affect the obligation
of the Borrower to repay such Loan in accordance with the terms
of the applicable Note and this Agreement. Loans of more than
one interest rate option may be outstanding at the same time;
provided, however, that the Borrower shall not be entitled to
request any Loan which, if made, would result in an aggregate of
more than 10 separate Borrowings being outstanding hereunder at
any one time. For purposes of the foregoing, Loans having
different Interest Periods, regardless of whether they commence
on the same date, shall be considered separate Loans.
(c) Each Bank shall make its portion of each Borrowing
on the initial Borrowing Date thereof by paying the amount
required to the Agent in Dallas, Texas in immediately available
funds not later than 12:00 noon, Dallas, Texas time, and the
Agent shall by 2:00 p.m., Dallas, Texas time, credit the amounts
so received to the general deposit account of the Borrower with
the Agent or, if Loans are not made on such date because any
condition precedent to the initial Borrowing herein specified
shall not have been met, return the amounts so received to the
respective Banks as soon as practicable; provided, however, if
and to the extent the Agent fails to return any such amounts to a
Bank on the initial Borrowing Date, the Agent shall pay interest
on such unreturned amounts, for each day from the initial
Borrowing Date to the date such amounts are returned to such
Bank, at the Federal Funds Effective Rate.
2.5 Notes. The Loans made by each Bank shall be evidenced
by a single Note, payable to the order of such Bank in a
principal amount equal to that next to its name on Schedule 1.
The outstanding principal balance of each Loan, as evidenced by
the relevant Note, shall be payable on the last day of the
Interest Period applicable to such Loan. Each Note shall bear
interest from the date thereof on the outstanding principal
balance thereof as set forth in Section 2.6 and Section 2.7.
2.6 Interest on Loans. (a) Subject to the provisions of
Section 2.7, each Eurodollar Loan shall bear interest at a rate
per annum (computed on the basis of the actual number of days
elapsed over a year of 360 days) equal to the lesser of (i) the
Highest Lawful Rate and (ii) the LIBO Rate for the Interest
Period in effect for such Loan plus 3/8 of 1% per annum.
Interest on each Eurodollar Loan shall be payable on each
Interest Payment Date applicable thereto. The applicable LIBO
Rate for each Interest Period shall be determined by the Agent,
and such determination shall be conclusive absent manifest error.
(b) Subject to the provisions of Section 2.7, each CD
Loan shall bear interest at a rate per annum (computed on the
basis of the actual number of days elapsed over a year of 360
days) equal to the lesser of (i) the Highest Lawful Rate and (ii)
the CD Rate for the Interest Period in effect for such Loan, plus
1/2 of 1% per annum. Interest on each CD Loan shall be payable
on each Interest Payment Date applicable thereto. The applicable
CD Rate for each Interest Period shall be determined by the
Agent, and such determination shall be conclusive absent manifest
error.
(c) Subject to the provisions of Section 2.7, each
Base Loan shall bear interest at the rate per annum (computed on
the basis of the actual number of days elapsed over a year of (x)
365 or 366 days, as the case may be if the Base Rate is based on
the Prime Rate or (y) 360 days if the Base Rate is based on the
Base CD Rate or the Federal Funds Effective Rate) equal to the
lesser of (i) the Highest Lawful Rate and (ii) the Base Rate.
Interest on each Base Loan shall be payable on each Interest
Payment Date applicable thereto. The applicable Base Rate during
each Interest Period shall be determined by the Agent, and such
determination shall be conclusive absent manifest error.
2.7 Interest on Overdue Amounts. If the Borrower shall
default in the payment of the principal of or interest on any
Loan or any other amount becoming due hereunder, the Borrower
shall on demand from time to time pay interest, to the extent
permitted by Law, on such defaulted amount up to (but not
including) the date of actual payment (after as well as before
judgment) at a rate per annum equal to the lesser of (i) the
Highest Lawful Rate and (ii) the Default Rate.
2.8 Alternate Rate of Interest. (a) In the event, and on
each occasion, that on the day two Business Days prior to the
commencement of any Interest Period for a Eurodollar Loan, the
Agent in good faith shall have determined that dollar deposits in
the amount of the requested principal amount of such Eurodollar
Loan are not generally available in the Eurodollar Interbank
Market, or that dollar deposits of such Eurodollar Loan are not
generally available in the Eurodollar Interbank Market for the
requested Interest Period, or that the rate at which such dollar
deposits are being offered will not adequately and fairly reflect
the cost to any Bank of making or maintaining such Eurodollar
Loan during such Interest Period, or that reasonable means do not
exist for ascertaining the LIBO Rate, the Agent shall, as soon as
practicable thereafter, give written or telex notice of such
determination, stating the specific reasons therefor, to the
Borrower and the Banks. In the event of any such determination,
any request by the Borrower for a Eurodollar Loan shall, until
the circumstances giving rise to such notice no longer exist, be
deemed to be a request for a Base Loan. Each determination by
the Agent hereunder shall be conclusive absent manifest error.
(b) In the event, and on each occasion, that on the
day two Business Days prior to the commencement of any Interest
Period for a CD Loan, the Agent in good faith shall have
determined that dollar deposits in the amount of the requested
principal amount of such CD Loan are not generally available in
the secondary certificate of deposit market, or that dollar
deposits of such CD Loan are not generally available in the
secondary certificate of deposit market for the requested
Interest Period, or that the rate at which such dollar deposits
are being offered will not adequately and fairly reflect the cost
to any Bank of making or maintaining such CD Loan during such
Interest Period, or that reasonable means do not exist for
ascertaining the CD Rate, the Agent shall, as soon as practicable
thereafter, give written or telex notice of such determination,
stating the specific reasons therefor, to the Borrower and the
Banks. In the event of any such determination, any request by
the Borrower for a CD Loan shall, until the circumstances giving
rise to such notice no longer exist, be deemed to be a request
for a Base Loan. Each determination by the Agent hereunder shall
be conclusive absent manifest error.
2.9 Prepayment of Loans. (a) Prior to the Maturity Date,
the Borrower shall have the right at any time to prepay any
Borrowing, in whole or in part, subject to the requirements of
Section 2.12 but otherwise without premium or penalty, but
prepayment of Eurodollar Loans and CD Loans shall require at
least five Business Days prior written or telex notice to the
Agent; provided, however, that each such partial prepayment shall
be in an integral multiple of $100,000 and in a minimum aggregate
principal amount of $100,000. Each notice of prepayment shall
specify the prepayment date and the aggregate principal amount of
each Borrowing to be prepaid, shall be irrevocable and shall
commit the Borrower to prepay such Borrowing by the amount stated
therein.
(b) All prepayments under this Section 2.9 shall be
accompanied by accrued interest on the principal amount being
prepaid to the date of prepayment.
2.10 Reserve Requirements; Change in Circumstances. (a)
Notwithstanding any other provision herein, if after the date of
this Agreement any change in applicable Law or regulation or in
the interpretation or administration thereof by any Tribunal
charged with the interpretation or administration thereof
(whether or not having the force of Law) (i) shall change the
basis of taxation of payments to any Bank of the principal of or
interest on any Eurodollar Loan or CD Loan made by such Bank or
any other fees or amounts payable hereunder (other than (x) Taxes
imposed on the overall net income of such Bank by the
jurisdiction in which such Bank has its principal office or by
any political subdivision or taxing authority therein (or any Tax
which is enacted or adopted by such jurisdiction, political
subdivision, or taxing authority as a direct substitute for any
such Taxes) or (y) any Tax, assessment, or other governmental
charge that would not have been imposed but for the failure of
any Bank to comply with any certification, information,
documentation, or other reporting requirement), (ii) shall
impose, modify, or deem applicable any reserve, special deposit,
or similar requirement against assets of, deposits with or for
the account of, or credit extended by, such Bank, or (iii) shall
impose on such Bank or the Eurodollar Interbank Market any other
condition affecting this Agreement or any Eurodollar Loan or CD
Loan made by such Bank, and the result of any of the foregoing
shall be to increase the cost to such Bank of maintaining its
Loans or of making or maintaining any Eurodollar Loan or CD Loan
or to reduce the amount of any sum received or receivable by such
Bank hereunder (whether of principal, interest, or otherwise) in
respect thereof by an amount deemed in good faith by such Bank to
be material, then the Borrower shall pay to the Agent for the
account of such Bank such additional amount or amounts as will
compensate such Bank for such increase or reduction to such Bank
upon demand by such Bank (through the Agent). Notwithstanding
the foregoing, in no event shall any Bank be permitted to receive
any compensation hereunder constituting interest in excess of the
Highest Lawful Rate.
(b) If any Bank shall have determined in good faith
that the adoption of any applicable law, rule, regulation, or
guideline regarding capital adequacy, or any change therein, or
any change in the interpretation or administration thereof by any
Tribunal, central bank, or comparable agency charged with the
interpretation or administration thereof, or compliance by any
Bank (or any lending office of such Bank) with any request or
directive regarding capital adequacy (whether or not having the
force of Law) of any such authority, central bank, or comparable
agency, has or would have the effect of reducing the rate of
return on such Bank's capital as a consequence of its obligations
hereunder to a level below that which such Bank could have
achieved but for such adoption, change, or compliance (taking
into consideration such Bank's policies with respect to capital
adequacy) by an amount deemed by such Bank to be material, then
from time to time, the Borrower shall pay to the Agent for the
account of such Bank such additional amount or amounts as will
compensate such Bank for such reduction upon demand by such Bank
(through the Agent). Notwithstanding the foregoing, in no event
shall any Bank be permitted to receive any compensation hereunder
constituting interest in excess of the Highest Lawful Rate.
(c) A certificate of a Bank setting forth in
reasonable detail (i) such amount or amounts as shall be
necessary to compensate such Bank as specified in paragraph (a)
or (b) above, as the case may be, and (ii) the calculation of
such amount or amounts under clause (a)(i), shall be delivered to
the Borrower (with a copy to the Agent) promptly after such Bank
determines it is entitled to compensation under this
Section 2.10, and shall be conclusive and binding absent manifest
error. The Borrower shall pay to the Agent for the account of
such Bank the amount shown as due on any such certificate within
15 days after its receipt of the same. In preparing such
certificate, such Bank may employ such assumptions and
allocations of costs and expenses as it shall in good faith deem
reasonable and may use any reasonable averaging and attribution
method.
(d) Failure on the part of any Bank to demand
compensation for any increased costs or reduction in amounts
received or receivable or reduction in return on capital with
respect to any Interest Period shall not constitute a waiver of
such Bank's rights to demand compensation for any increased costs
or reduction in amounts received or receivable or reduction in
return on capital with respect to such Interest Period or any
other Interest Period. The protection of this Section 2.10 shall
be available to each Bank regardless of any possible contention
of invalidity or inapplicability of the law, regulation, or
condition which shall have been imposed, provided that, in the
event such law, regulation or condition is subsequently
determined to be invalid or inapplicable, bank shall promptly
repay compensation to Borrower.
(e) In the event any Bank shall seek compensation
pursuant to this Section 2.10, the Borrower may give notice to
such Bank (with copies to the Agent) that it wishes to seek one
or more Eligible Assignees (which may be one or more of the
Banks) to assume the obligations hereunder of such Bank and to
purchase its outstanding Loans and Notes. Each Bank requesting
compensation pursuant to this Section 2.10 agrees to sell its
obligations hereunder, Loans, Notes, and interest in this
Agreement and the other Loan Papers to any such Eligible Assignee
for an amount equal to the sum of the outstanding unpaid
principal of and accrued interest on such Loans and Notes plus
all other fees and amounts (including, without limitation, any
compensation claimed by such Bank under this Section 2.10 which
has accrued prior to the purchase of the Notes and as to which
such Bank has delivered the certificate required by
Section 2.10(c) on or before the date such obligations, Loans,
and Notes are purchased) due such Bank hereunder calculated, in
each case, to the date such obligations, Loans, Notes, and
interest are purchased, whereupon such Bank shall have no further
obligations or other obligation to the Borrower hereunder or
under any other Loan Paper.
(f) Without prejudice to the survival of any other
obligations of the Borrower hereunder, the obligations of the
Borrower under this Section 2.10 shall survive for one year after
the termination of this Agreement and/or the payment or
assignment of any of the Notes.
2.11 Change in Legality. (a) Notwithstanding anything to
the contrary herein contained, if any change in any Law or
regulation or in the interpretation thereof by any Tribunal
charged with the administration or interpretation thereof shall
make it unlawful for any Bank to make or maintain any Eurodollar
Loan or CD Loan or to give effect to its obligations as
contemplated hereby, then, by written notice to the Borrower and
to the Agent, such Bank may:
(i) declare that Eurodollar Loans or CD Loans, as the
case may be, will not thereafter be made by such Bank
hereunder, whereupon the Borrower shall be prohibited from
requesting Eurodollar Loans or CD Loans, as the case may be,
from such Bank hereunder unless such declaration is
subsequently withdrawn; and
(ii) require that all outstanding Eurodollar Loans or
CD Loans, as the case may be, made by it be converted to
Base Loans, in which event (A) all such Eurodollar Loans or
CD Loans, as the case may be, shall be automatically
converted to Base Loans as of the effective date of such
notice as provided in paragraph (b) below and (B) all
payments and prepayments of principal which would otherwise
have been applied to repay the converted Eurodollar Loans or
CD Loans, as the case may be, shall instead be applied to
repay the Base Loans resulting from the conversion of such
Eurodollar Loans or CD Loans, as the case may be.
(b) For purposes of this Section 2.11, a notice to the
Borrower (with a copy to the Agent) by any Bank pursuant to
paragraph (a) above shall be effective on the date of receipt
thereof by the Borrower.
2.12 Indemnity. The Borrower shall indemnify each Bank
against any loss or reasonable expense which such Bank may
sustain or incur as a consequence of (a) any failure by the
Borrower to borrow hereunder after the initial Notice of
Borrowing pursuant to Section 2 has been given, (b) any payment,
prepayment, or conversion, other than conversions under Section
2.11(a)(ii), of a Eurodollar Loan or CD Loan required by any
other provision of this Agreement or otherwise made on a date
other than the last day of the applicable Interest Period,
(c) any default in the payment or prepayment of the principal
amount of any Loan or any part thereof or interest accrued
thereon, as and when due and payable (at the due date thereof, by
notice of prepayment, or otherwise), or (d) the occurrence of any
Event of Default. The indemnity of the Borrower pursuant to the
immediately preceding sentence shall include, but not be limited
to, any loss or reasonable expense sustained or incurred or to be
sustained or incurred in liquidating or employing deposits from
third parties acquired to effect or maintain such Loan or any
part thereof as a Eurodollar Loan or CD Loan. Such loss or
reasonable expense shall include, without limitation, an amount
equal to the excess, if any, as reasonably determined in good
faith by each Bank of (i) its cost of obtaining the funds for the
Loan being paid, prepaid, or converted or not borrowed (based on
the LIBO Rate or CD Rate) for the period from the date of such
payment, prepayment, or conversion or failure to borrow to the
last day of the Interest Period for such Loan (or, in the case of
a failure to borrow, the Interest Period for the Loan which would
have commenced on the date of such failure to borrow) over
(ii) the amount of interest (as reasonably determined by such
Bank) that would be realized by such Bank in reemploying the
funds so paid, prepaid, or converted or not borrowed for such
period or Interest Period, as the case may be. A certificate of
each Bank setting forth any amount or amounts which such Bank is
entitled to receive pursuant to this Section 2.12 shall be
delivered to the Borrower (with a copy to the Agent) and shall be
conclusive, if made in good faith, absent manifest error. The
Borrower shall pay to the Agent for the account of each Bank the
amount shown as due on any certificate within 30 days after its
receipt of the same. Notwithstanding the foregoing, in no event
shall any Bank be permitted to receive any compensation hereunder
constituting interest in excess of the Highest Lawful Rate.
Without prejudice to the survival of any other obligations of the
Borrower hereunder, the obligations of the Borrower under this
Section 2.12 shall survive for one year after the termination of
this Agreement and/or the payment or assignment of any of the
Notes.
2.13 Pro Rata Treatment. (a) Each payment or prepayment of
principal and each payment of interest with respect to a
Borrowing shall be made pro rata among the Banks in accordance
with the respective principal amounts of the Loans extended by
each Bank with respect to such Borrowing, and (b) refinancings of
Loans shall be made pro rata among the Banks in accordance with
such respective principal amounts.
2.14 Sharing of Setoffs. Each Bank agrees that if it shall,
through the exercise of a right of banker's lien, setoff, or
counterclaim against the Borrower, including, but not limited to,
a secured claim under Section 506 of Title 11 of the United
States Code or other security or interest arising from, or in
lieu of, such secured claim, received by such Bank under any
applicable Debtor Relief Law or otherwise, obtain payment
(voluntary or involuntary) in respect of the Note held by it
(other than pursuant to Section 2.10 or Section 2.12) as a result
of which the unpaid principal portion of the Note held by it
shall be proportionately less than the unpaid principal portion
of the Note held by any other Bank, it shall be deemed to have
simultaneously purchased from such other Bank a participation in
the Note held by such other Bank, so that the aggregate unpaid
principal amount of the Note and participations in Notes held by
each Bank shall be in the same proportion to the aggregate unpaid
principal amount of all Notes then outstanding as the principal
amount of the Note held by it prior to such exercise of banker's
lien, setoff, or counterclaim was to the principal amount of all
Notes outstanding prior to such exercise of banker's lien,
setoff, or counterclaim; provided, however, that if any such
purchase or purchases or adjustments shall be made pursuant to
this Section 2.14 and the payment giving rise thereto shall
thereafter be recovered, such purchase or purchases or
adjustments shall be rescinded to the extent of such recovery and
the purchase price or prices or adjustment restored without
interest. The Borrower expressly consents to the foregoing
arrangements and agrees that any Bank holding a participation in
a Note deemed to have been so purchased may, upon the existence
of an Event of Default, exercise any and all rights of banker's
lien, setoff, or counterclaim with respect to any and all moneys
owing by the Borrower to such Bank as fully as if such Bank had
made a Loan directly to the Borrower in the amount of such
participation.
2.15 Payments. (a) The Borrower shall make each payment
hereunder and under any instrument delivered hereunder not later
than 1:00 p.m. (Dallas, Texas time) on the day when due in
dollars to the Agent at its address referred to on Schedule 1 for
the account of the Banks, in immediately available funds. The
Agent will promptly thereafter cause to be distributed like funds
relating to the payment of principal of or interest on Loans
(other than pursuant to Section 2.10 and Section 2.12) ratably to
the Banks payable to any Bank for the account of its Applicable
Lending Office, in each case to be applied in accordance with the
terms of this Agreement.
(b) Whenever any payment hereunder or under the Notes
shall be stated to be due on a day other than a Business Day,
such payment shall be made on the next succeeding Business Day,
and such extension of time shall in all such case be included in
the computation of payment of interest; provided, however, if
such extension would cause payment of interest on or principal of
a Eurodollar Loan to be made in the next following calendar
month, such payment shall be made on the next preceding Business
Day.
(c) Unless the Agent shall have received notice from
the Borrower prior to the date on which any payment is due to the
Banks hereunder that the Borrower will not make such payment in
full, the Agent may assume that the Borrower has made or will
make such payment in full to the Agent on such date and the Agent
may, in reliance upon such assumption, cause to be distributed to
each Bank on such due date an amount equal to the amount then due
such Bank. If and to the extent the Borrower shall not have so
made such payment in full to the Agent, each Bank shall repay to
the Agent forthwith on demand such amount distributed to such
Bank together with interest thereon, for each day from the date
such amount is distributed to such Bank until the date such Bank
repays such amount to the Agent, at the Federal Funds Effective
Rate.
(d) All payments (whether of principal, interest,
fees, reimbursements, or otherwise) by the Borrower under this
Agreement shall be made without setoff or counterclaim and shall
be made free and clear of and without deduction for any present
or future Tax, levy, impost, or any other charge against the
Borrower, if any, of any nature whatsoever now or hereafter
imposed by any Tribunal. If the making of such payments by the
Borrower is prohibited by Law unless such a Tax, levy, impost, or
other charge is deducted or withheld therefrom, the Borrower
shall pay to the Agent, on the date of each such payment, such
additional amounts (without duplication of any other amounts
required to be paid by the Borrower pursuant to Section 2.10) as
may be necessary in order that the net amounts received by the
Banks after such deduction or withholding shall equal the amounts
which would have been received if such deduction or withholding
were not required. The Borrower shall confirm that all
applicable Taxes, if any, imposed on this Agreement or
transactions hereunder shall have been properly and legally paid
by it to the appropriate taxing authorities by sending official
Tax receipts or notarized copies of such receipts to the Agent
within 30 days after payment of any applicable Tax.
(e) So long as no Event of Default has occurred and is
continuing, payments and prepayments of the Obligation shall be
applied first to accrued interest then due and payable and to the
remaining Obligation in the order and manner as the Borrower may
direct. At any time during which an Event of Default has
occurred and is continuing or if the Borrower fails to give
direction, any payment or prepayment shall be applied in the
following order: (i) to expenses and fees for which the Agent
and the Banks have not been reimbursed in accordance with the
Loan Papers; (ii) to accrued interest; and (iii) to the remaining
Obligation in the order and manner as the Majority Banks deem
appropriate.
2.16 Calculation of LIBO and CD Rates. The provisions of
this Agreement relating to calculation of the LIBO Rate and CD
Rate are included only for the purpose of determining the rate of
interest or other amounts to be paid hereunder that are based
upon such rate, it being understood that each Bank shall be
entitled to fund and maintain its funding of all or any part of a
Eurodollar Loan or CD Loan as it sees fit. All such
determinations hereunder, however, shall be made as if each Bank
had actually funded and maintained funding of each Eurodollar
Loan through the purchase in the Eurodollar InterBank Market of
one or more eurodollar deposits, and of each CD Loan through the
purchase at face value in the secondary market of one or more
certificates of deposit, in an amount equal to the principal
amount of such Loan and having a maturity corresponding to the
Interest Period for such Loan.
2.17 Booking Loans. Any Bank may make, carry, or transfer
Loans at, to, or for the account of any of its branch offices.
2.18 Quotation of Rates. It is hereby acknowledged that the
Borrower may call the Agent on or before the date on which notice
of a Borrowing is to be delivered by the Borrower in order to
receive an indication of the rate or rates then in effect, but
that such projection shall not be binding upon the Agent or any
Bank nor affect the rate of interest which thereafter is actually
in effect when the election is made.
SECTION 3. REPRESENTATIONS AND WARRANTIES. The Borrower
represents and warrants to the Agent and the Banks as follows:
3.1 Purpose of Credit Facility. The Borrower will use Loan
proceeds only for payment of the cash portion of the cost of its
acquisition pursuant to Agreement and Plan of Merger dated
October 18, 1993, among the Borrower, Celutel Acquisition Corp.
and Celutel, Inc. The proceeds loaned hereunder will not be used
directly or indirectly for the purpose of purchasing or carrying,
or for the purpose of extending credit to others for the purpose
of purchasing or carrying, any "margin stock" as that term is
defined in Regulation G, T, U, or X of the Board, as amended, or
to repay any Debt which was created for such purposes.
3.2 Corporate Existence, Good Standing, and Authority.
Each Company is, to the best of the Borrower's knowledge, duly
organized, validly existing, and in good standing under the Laws
of its state of incorporation (such jurisdictions being
identified on Schedule 3.2). Except where failure would not
reasonably be expected to have a Material Adverse Effect, each
Company (a) is duly qualified to transact business and is in good
standing as a foreign corporation in each jurisdiction where the
nature and extent of its business and properties require the same
(such jurisdictions being identified on Schedule 3.2) and (b)
possesses all requisite authority, power, licenses, permits, and
franchises to conduct its business as is now being, or is
contemplated herein to be, conducted. The Borrower possesses all
requisite authority, power, licenses, permits, and franchises to
execute, deliver, and comply with the terms of the Loan Papers,
all which have been duly authorized and approved by all necessary
corporate action and, except where failure would not reasonably
be expected to have a Material Adverse Effect, for which no
approval or consent of any Person or Tribunal is required which
has not been obtained and no filing or other notification to any
Person or Tribunal is required which has not been properly
completed.
3.3 Subsidiaries. Schedule 3.3 sets forth all existing
Subsidiaries of the Borrower and correctly lists, as to each
Subsidiary, (a) its name and (b) the percentage of its issued and
outstanding shares of capital stock owned by the Borrower or
another Subsidiary (specifying such Subsidiary). The shares of
capital stock of each Subsidiary owned by the Borrower (either
directly or indirectly through another Subsidiary) as set forth
on Schedule 3.3 are the duly authorized, validly issued, fully
paid, and nonassessable shares of such Subsidiary and are owned
by the Borrower free and clear of all Liens except as set forth
on Schedule 3.3.
3.4 Financial Statements. The Current Financials were
prepared in accordance with GAAP and present fairly the
consolidated financial condition and the results of operations of
the Companies as of, and for the periods ended, the dates
thereof. There were no material (to the Companies taken as a
whole) liabilities, direct or indirect, fixed or contingent, of
any Company as of the date of the Current Financials which are
not reflected therein. There have been no material adverse
changes in the consolidated financial condition of the Companies
from that shown in the Current Financials between such dates and
the date hereof, nor has any Company incurred any material (to
the Companies taken as a whole) liability , direct or indirect,
fixed or contingent, between the dates of the Current Financials
and the date hereof, except in the ordinary course of business,
such as in connection with acquisitions and financing activities.
3.5 Compliance with Laws, Charter, and Agreements. No
Company is, nor will the execution, delivery, performance, or
observance of the Loan Papers cause any Company to be, in
violation of any Laws or any Material Agreements to which it is a
party, other than such violations which would not reasonably be
expected to have a Material Adverse Effect. Neither the Borrower
nor any Significant Subsidiary is, nor will the execution,
delivery, performance, or observance of the Loan Papers cause the
Borrower or any Significant Subsidiary to be, in violation of its
bylaws or charter.
3.6 Litigation. Except as described on Schedule 3.6 and to
the knowledge of the Borrower, no Company is aware of any
"Material" Litigation, and there are no Material outstanding or
unpaid judgments against any Company. Material for purpose of
this Section 3.6 in relation to Litigation would include any
actions or proceedings pending or threatened against any Company
before any court or Tribunal seeking damages, net of insurance
proceeds to the Company, in excess of $1,000,000 in any case or
1% of Consolidated Net Worth in the aggregate, or which might
result in any Material Adverse Effect.
3.7 Taxes. All Tax returns of each Company required to be
filed have been filed (or extensions have been granted) except
where the failure to do so could not reasonably be expected to
have a Material Adverse Effect, and all Taxes imposed upon each
Company which are due and payable have been paid other than Taxes
for which the criteria for Permitted Liens have been satisfied.
3.8 Environmental Matters. No Company's ownership of its
assets violates any applicable Environmental Law, other than such
violations which would not reasonably be expected to have a
Material Adverse Effect. To the Borrower's knowledge, no
investigation or review is pending or threatened by any Tribunal
with respect to any alleged violation of any Environmental Law in
connection with any Company's assets. None of any Company's
assets have been used by such Company or, to the Borrower's
knowledge, any other Person as a dump site for any Hazardous
Substance.
3.9 Employee Benefit Plans. (a) No employee benefit plan
as defined in the Code and Title IV of ERISA of any Company has
incurred an accumulated funding deficiency in an amount
sufficient to have a Material Adverse Effect, (b) no Company has
incurred material liability to the PBGC in connection with any
such plan, (c) no Company has withdrawn in whole or in part from
participation in a Multiemployer Plan, and (d) to the best of the
Borrower's knowledge, no "prohibited transaction" (as defined in
section 406 of ERISA or section 4975 of the Code) or "reportable
event" (as defined in section 4043 of ERISA) has occurred which
could reasonably be expected to have a Material Adverse Effect.
3.10 Properties; Liens. Each Company has good and
marketable (except for Permitted Liens) title to all its property
reflected on the Current Financials (except for dispositions of
property in the ordinary course of business between the date or
dates thereof and the date hereof). Except for Permitted Liens,
there is no Lien on any property of any Company, and the
execution, delivery, performance, or observance of the Loan
Papers will not require or result in the creation of any Lien
other than Permitted Liens.
3.11 Holding Company and Investment Company Status. The
Borrower is not (a) a "holding company," a "subsidiary company"
of a "holding company," an "affiliate" of a "holding company" or
of a "subsidiary company" of a "holding company," or a "public
utility" within the meaning of the Public Utility Holding Company
Act of 1935, as amended, (b) a "public utility" within the
meaning of the Federal Power Act, as amended, (c) an "investment
company" within the meaning of the Investment Company Act of
1940, as amended, (d) an "investment adviser" within the meaning
of the Investment Advisers Act of 1940, as amended, or (e)
subject to the jurisdiction of the Federal Communications
Commission or any public service commission.
3.12 Transactions with Affiliates. Except as disclosed on
Schedule 3.12, no Company is a party to a material transaction
with any of its Affiliates other than transactions in the
ordinary course of business and upon fair and reasonable terms
not materially less favorable than such Company could obtain or
could become entitled to in an arm's-length transaction with a
Person that was not its Affiliate. For purposes of this
Section 3.12, such transactions are "material" if they,
individually or in the aggregate, require any Company to pay more
than 1 percent of Consolidated Net Worth over the course of such
transactions.
3.13 Leases. All material leases under which any Company is
lessee or tenant are in full force and effect, and no default or
potential default exists thereunder.
3.14 Labor Matters. There are no actual or, to the
Borrower's knowledge, threatened strikes, labor disputes, slow
downs, walkouts, or other concerted interruptions of operations
by any Company's employees, the effect of which would have a
Material Adverse Effect.
3.15 Insurance. Each Company maintains with financially
sound insurance companies or associations (or, as to workers'
compensation or similar insurance, with an insurance fund or by
self-insurance authorized by the jurisdictions in which it
operates) insurance concerning its properties and businesses
against such casualties and contingencies and of such types and
in such amounts (and with co-insurance and deductibles) as is
customary in the case of same or similar businesses; provided,
however, a program of self-insurance in such amounts and against
such risks as are prudent and which is consistent with accepted
business practice shall constitute compliance with this Section
3.15.
3.16 Solvency. The Companies are, and after giving effect
to the transactions contemplated under the Loan Papers will be,
solvent.
3.17 Business. The business of the Borrower, as presently
conducted and as proposed to be conducted, is set forth on
Schedule 3.17.
3.18 General. There is no material fact or condition
relating to the Loan Papers or the financial condition and
business of any Company which could reasonably be expected to
have a Material Adverse Effect and which has not been related, in
writing, to the Agent, other than industry-wide risks in the
ordinary course of business associated with the types of business
conducted by any Company. All writings exhibited or delivered to
the Agent by or on behalf of any Company are and will be genuine
and in all material respects what they purport and appear to be.
SECTION 4. CONDITIONS PRECEDENT.
4.1 Initial Loan. No Bank will be obligated to fund the
initial Loan unless the Agent has received all of the following
in form and substance satisfactory to the Agent and its special
counsel:
(a) Loan Papers. This Agreement, the Notes, a Notice
of Borrowing, and the Current Financials.
(b) Officers' Certificates. A certificate dated as of
the date hereof, executed and delivered by the Borrower,
certifying that (i) attached is a true, correct, and
complete copy of (A) the Borrower's charter, certified by
the appropriate state official and dated a Current Date, (B)
the Borrower's bylaws, and (C) resolutions of the Borrower's
board of directors authorizing the execution and delivery of
each Loan Paper to which the Borrower is a party; (ii) the
officers whose specimen signatures appear on such
certificate hold the corporate office indicated and are
authorized to sign agreements, documents, and instruments on
behalf of the Borrower; and (iii) the acquisition of
Celutel, Inc. pursuant to the agreement described in Section
3.1 of this Agreement has been completed pursuant to the
terms thereof, which terms have not been changed or waived
in any material respect since October 18, 1993.
(c) Good Standing, Existence, and Authority.
Certificates (dated a Current Date) relating to the
Borrower's existence, good standing, and authority to
transact business issued by appropriate state officials as
set forth on Schedule 3.2.
(d) Opinions of Counsel. The favorable opinion, dated
the Closing Date and substantially in the form of Exhibit C
of Boles, Boles & Ryan, special counsel to the Borrower.
(e) Fees. Payment from the Borrower of all fees then
due the Agent pursuant to this Agreement or any other
agreement.
(f) Other. Such other agreements, documents,
instruments, opinions, certificates, and evidences as the
Agent may reasonably request.
4.2 Each Loan. In addition, the Banks will not be
obligated to fund any Loan unless at the time of such funding (a)
the representations and warranties made in the Loan Papers are
true and correct in all material respects (except to the extent
that (i) the representations and warranties speak to a specific
date or (ii) the facts on which such representations and
warranties are based have been changed by transactions
contemplated or permitted by this Agreement), (b) neither any
Material Adverse Effect nor any Default or Event of Default shall
have occurred and shall be continuing, (c) the funding of such
Loan is permitted by Law, and (d) if requested by the Agent or
the Majority Banks, the Borrower shall have delivered to the
Agent evidence substantiating any of the matters contained in
this Agreement which are necessary to enable the Borrower to
qualify for such Loan.
4.3 Materiality of Conditions. Each condition precedent
herein is material to the transactions contemplated herein, and
time is of the essence in respect of each thereof.
4.4 Waiver of Conditions. Subject to the provisions of
Section 9.15, the Majority Banks may elect to fund any Loan
without all conditions being satisfied, but this shall not be
deemed to be a waiver of the requirement that each such condition
precedent be satisfied as a prerequisite for any subsequent Loan,
unless the Majority Banks (or, if required by Section 9.15, all
Banks) specifically waive each such item in writing.
SECTION 5. COVENANTS. So long as the Banks are committed to make
Loans under this Agreement and thereafter until the Obligation is
paid and performed in full, unless the Borrower receives a prior
written notice from the Majority Banks (or, if required by
Section 9.15, all Banks) that they do not object to a deviation,
the Borrower covenants and agrees with the Agent and the Banks as
follows:
5.1 Use of Proceeds. Proceeds advanced hereunder shall be
used only as represented herein.
5.2 Books and Records. Each Company shall keep, in
accordance with GAAP, proper and complete books, records, and
accounts.
5.3 Items to be Furnished. The Borrower shall cause the
following to be furnished to the Agent:
(a) Promptly after preparation, and no later than 120
days after the last day of each fiscal year of the Borrower,
Financial Statements showing the consolidated financial
condition and results of operations of the Companies as of,
and for the year ended on, such last day, accompanied by
(i) the opinion of KPMG Peat Marwick Main (or another firm
of nationally-recognized independent certified public
accountants reasonably acceptable to Majority Banks), based
on an audit using generally accepted auditing standards,
that such Financial Statements were prepared in accordance
with GAAP and present fairly the consolidated financial
condition and results of operations of the Companies (and
such accountants shall indicate in a letter to the Agent,
that during their audit no Default or Event of Default not
already reported was discovered or, if such Default or Event
of Default was discovered, the nature and period of
existence thereof) and (ii) a Financial Report Certificate
with respect to such Financial Statements.
(b) Promptly after preparation, and no later than 60
days after the last day of each of the first three quarters
of each fiscal year of the Borrower, (i) Financial
Statements showing the consolidated financial condition and
results of operations of the Companies as of, and for the
period from the beginning of the current fiscal year to,
such last day, and (ii) a Financial Report Certificate with
respect to such Financial Statements.
(c) Promptly after distribution, and, if filed with
the Securities and Exchange Commission), such filing, true
copies of all regular and periodic reports, statements,
documents, plans, and other written communications furnished
by or on behalf of any Company to stockholders or to the
Securities and Exchange Commission. However, only
registration statements covering more than 2 percent of the
Borrower's outstanding shares of common stock shall be
required to be furnished unless specifically requested by
the Agent.
(d) Promptly upon receipt thereof, copies of any
notices received from any Tribunal (including, without
limitation, state regulatory agencies) relating to the
possible violation or violation of any Law which might
materially and adversely affect the franchises, permits, or
rights for the operation of the business of any Company.
(e) Notice, promptly after the Borrower knows or has
reason to know of, (i) the existence of any Material
Litigation as defined in Section 3.6, (ii) any material
change in any material fact or circumstance represented or
warranted in any Loan Paper, or (iii) a Default or Event of
Default, specifying the nature thereof and what action the
Borrower or any other Company has taken, is taking, or
proposes to take with respect thereto.
(f) Promptly upon the Agent's reasonable request, such
information (not otherwise required to be furnished under
the Loan Papers) respecting the business affairs, assets,
and liabilities of any Company, and any opinions,
certifications, and documents, in addition to those
mentioned herein.
5.4 Inspection. The Borrower shall allow the Agent and
each Bank, when the Agent or such Bank reasonably deems
necessary, at such Bank's own expense if no Default then exists,
to inspect any of its properties, to review reports, files, and
other records and to make and take away copies thereof, to
conduct tests or investigations, and to discuss any of its
affairs, conditions, and finances with any director, officer, or
employee of such Company from time to time, upon reasonable
notice during reasonable business hours, or otherwise when
reasonably considered necessary.
5.5 Taxes. Each Company shall promptly pay when due any
Taxes, except those which if unpaid would not cause a Material
Adverse Effect and Taxes for which the criteria for Permitted
Liens have been satisfied. No Company shall use any proceeds of
Loans to pay the wages of employees unless a timely payment to or
deposit with the United States of America of all amounts of Tax
required to be deducted and withheld with respect to such wages
is also made.
5.6 Payment of Obligations. Each Company shall promptly
pay (or renew and extend) all of its material obligations as the
same become due, but no Company will make any voluntary
prepayment of the principal of any Debt other than the
Obligation, whether subordinate to the Obligation or not, if a
Default or Event of Default exists under any Loan Paper.
5.7 Expenses of Agent. The Borrower shall promptly pay all
reasonable and necessary out-of-pocket costs, fees, and expenses
paid or incurred by the Agent incident to any Loan Paper
(including, but not limited to, the reasonable fees and expenses
of counsel to the Agent in connection with the negotiation,
preparation, delivery, and execution of the Loan Papers and any
related amendment, waiver, or consent) or to the enforcement of
the obligations of any Company or the exercise of any Rights
(including, but not limited to, reasonable attorneys' fees and
court costs), all of which shall be a part of the Obligation.
5.8 Maintenance of Existence, Assets, Business, and
Insurance. Except as permitted by Section 5.12, each Company
shall at all times: Maintain its corporate existence and
authority to transact business and good standing in its
jurisdiction of incorporation or organization and all other
jurisdictions where the failure to so maintain could reasonably
be expected to have a Material Adverse Effect; maintain all
licenses, permits, and franchises necessary for its business,
where the failure to so maintain could reasonably be expected to
have a Material Adverse Effect; keep all of its assets which are
necessary to its business in good working order and condition
(ordinary wear and tear excepted), and make all necessary repairs
and replacements thereto; and maintain either (a) insurance with
such insurers, in such amounts, and covering such risks, as shall
be ordinary and customary in the industry or (b) a comparable
self-insurance program.
5.9 Preservation and Protection of Rights. Each Company
shall perform such acts and duly authorize, execute, acknowledge,
deliver, file, and record any additional agreements, documents,
instruments, and certificates as the Agent may reasonably deem
necessary or appropriate in order to preserve and protect the
Rights of the Agent or the Banks under any Loan Paper.
5.10 Employee Benefit Plans. No Company will, directly or
indirectly, if it would have a Material Adverse Effect, (a)
engage in any "prohibited transaction" (as defined in section 406
of ERISA or section 4975 of the Code), (b) permit the funding
requirements under ERISA with respect to any employee benefit
plan established or maintained by any Company to ever be less
than the minimum required by ERISA, (c) permit any employee
benefit plan established or maintained by any Company to ever be
subject to involuntary termination proceedings, or (d) fully or
partially withdraw from any Multiemployer Plan.
5.11 Liens. No Company will create, incur, or suffer or
permit to be created or incurred or to exist any Lien (other than
Permitted Liens) upon any of its assets.
5.12 Acquisitions, Mergers, and Dissolutions. No Company
will merge or consolidate with any Person other than any merger
or consolidation whereby the Borrower (or another Company, if the
Borrower is not a party thereto) is the surviving corporation and
immediately after such merger or consolidation there shall not
exist any Default or Event of Default.
5.13 Loans, Advances, and Investments. Except as permitted
by Section 5.12, no Company will make any loan, advance,
extension of credit, or capital contribution to, make any
investment in, or purchase or commit to purchase any stock or
other securities or evidences of Debt of, or interests in, any
other Person, other than (a) expense accounts for and other
advances to directors, officers, and employees of such Company in
the ordinary course of business not to exceed $1,000,000 in the
aggregate outstanding at any time; (b) investments in (or secured
by) obligations of the United States of America and agencies
thereof and obligations guaranteed by the United States of
America maturing within one year from the date of acquisition;
(c) certificates of deposit issued by any of the Banks; (d)
certificates of deposit which are fully insured by the Federal
Deposit Insurance Corporation or are issued by commercial banks
organized under the Laws of the United States of America or any
state thereof and having combined capital, surplus, and undivided
profits of not less than $100,000,000 (as shown on such Person's
most recently published statement of condition), and, unless
Borrower has a written commitment to borrow funds from such
commercial bank, which certificates of deposit have one of the
two highest ratings from Moody's Investors Service, Inc., or
Standard & Poors Corporation; (e) commercial paper rated A-1 by
Moody's Investors Service, Inc., or P-1 by Standard & Poors
Corporation; (f) investments having one of the two highest
ratings from Moody's Investors Service, Inc., or Standard & Poors
Corporation; (g) extensions of credit in connection with trade
receivables and overpayments of trade payables, in each case
resulting from transactions in the ordinary course of business;
(h) loans from any Company to any other Company and investments
by any Company in any other Company; (i) investments in the cash
surrender value of life insurance policies issued by Persons with
a financial rating from A. M. Best Company (as reported in Best's
Insurance Reports) of at least "A+"; provided, however, that if
such Person's financial rating is downgraded to less than "A+",
then within 90 days following such downgrading, either (i) such
cash value life insurance policies will be transferred to another
insurance company with a financial rating of at least "A+", (ii)
such cash value insurance policies will be collapsed and the cash
value thereof will be collected by the investing Company, or
(iii) such investment will become an investment subject to the
limitations of subparagraph (l) of this Section 5.13; (j)
investments in the capital stock or securities of or loans to any
Person engaged in business comparable to the general business of
any Company (x) in which a Company possesses (or will possess,
after such investment) an equity ownership interest in such
Person or (y) secured by the borrower's interest in such
business; (k) in the ordinary course of business and investments
in the capital stock of the Rural Telephone Bank, National Bank
for Cooperatives, or the National Rural Utilities Cooperative
Finance Corporation, or any other lender from whom the investing
Company is intending to borrow money which requires such Company
to make an equity investment in such lender in order to so
borrow; and (l) other loans, advances, and investments which
never exceed in the aggregate at any time 25% of Adjusted
Consolidated Net Worth (valued on the basis of original cost,
plus subsequent cash and stock additions, less any write-down in
value).
5.14 Transactions with Affiliates. No Company will enter
into any material transaction with any of its Affiliates, other
than transactions in the ordinary course of business and upon
fair and reasonable terms not materially less favorable than such
Company could obtain or could become entitled to in an
arm's-length transaction with a Person that was not its
Affiliate. For purposes of this Section 5.14, such transactions
are "material" if they, individually or in the aggregate, require
any Company to pay more than 1 percent of Consolidated Net Worth
over the course of such transactions.
5.15 Sale of Assets. No Company will sell, lease, or
otherwise dispose of all or any substantial part of its assets
other than (a) sales of inventory in the ordinary course of
business, (b) sales of equipment for a fair and adequate
consideration, provided that if any such equipment is sold, and a
replacement is necessary for the proper operation of the business
of such Company, such Company will replace such equipment with
adequate equipment, (c) the exchange of assets -- other than
equipment -- for similar assets of greater or equal value,
(d) the sale, discount, or transfer of delinquent notes or
accounts receivable in the ordinary course of business for
purposes of collection, and (e) in any 12-month period,
dispositions of assets (net of acquisitions of similar assets)
that, when added to all such other dispositions by all Companies,
do not exceed 10 percent of Consolidated Net Worth.
5.16 Compliance with Laws and Documents. No Company will
violate the provisions of any Laws or any Material Agreement if
such violation alone, or when aggregated with all other such
violations, could reasonably be expected to have a Material
Adverse Effect. No Company will violate the provisions of its
charter or bylaws or modify, repeal, replace, or amend any
provision of its charter or bylaws if such action could
reasonably be expected to have a Material Adverse Effect. The
Borrower will provide to the Agent a copy of each document that
materially modifies, repeals, replaces, or amends the charter or
bylaws of the Borrower.
5.17 New Businesses. No Company will engage in any material
business other than the businesses in which it is presently
engaged or businesses related thereto, as described on Schedule
3.17.
5.18 Assignment. The Borrower will not assign or transfer
any of its Rights, duties, or obligations under any of the Loan
Papers.
5.19 Fiscal Year and Accounting Methods. The Borrower will
not change its fiscal year or accounting methods (other than
immaterial changes and changes required by changes in GAAP)
without the prior written consent of the Agent (which shall not
be unreasonably withheld).
5.20 Holding Company and Investment Company Status. The
Borrower will not conduct its business in such a way that it will
become (a) a "holding company," a "subsidiary company" of a
"holding company," an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company," or a "public
utility" within the meaning of the Public Utility Holding Company
Act of 1935, as amended, (b) a "public utility" within the
meaning of the Federal Power Act, as amended, (c) an "investment
company" within the meaning of the Investment Company Act of
1940, as amended, or (d) an "investment adviser" within the
meaning of the Investment Advisers Act of 1940, as amended.
5.21 Environmental Laws. Each Company shall conduct its
business so as to comply with all applicable Environmental Laws
and shall promptly take corrective action to remedy any
non-compliance with any Environmental Law, except where failure
to so comply or take such action would not reasonably be expected
to have a Material Adverse Effect. Each Company shall maintain a
system which, in its reasonable business judgment, will assure
its continued compliance with Environmental Laws.
5.22 Environmental Indemnification. Borrower shall
indemnify, protect, and hold each Indemnified Party harmless from
and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims,
proceedings, costs, expenses (including, without limitation, all
reasonable attorneys' fees and legal expenses whether or not suit
is brought), and disbursements of any kind or nature whatsoever
which may at any time be imposed on, incurred by, or asserted
against such Indemnified Parties, with respect to or as a direct
or indirect result of the violation by any Company of any
Environmental Law; or with respect to or as a direct or indirect
result of any Company's generation, manufacture, production,
storage, release, threatened release, discharge, disposal or
presence in connection with its properties of a Hazardous
Substance including, without limitation, (a) all damages of any
such use, generation, manufacture, production, storage, release,
threatened release, discharge, disposal, or presence, or (b) the
costs of any required or necessary environmental investigation,
monitoring, repair, cleanup, or detoxification and the
preparation and implementation of any closure, remedial, or other
plans. The provisions of and undertakings and indemnification
set forth in this paragraph shall survive the satisfaction and
payment of the Obligation and termination of this Agreement for a
period of time set forth in the statute of limitations in any
applicable Environmental Law.
5.23 Ratio of Funded Debt to Net Worth. As calculated at
the end of each fiscal quarter of the Borrower, the Borrower
shall not permit (a) Funded Debt of the Companies to exceed 185%
of Consolidated Net Worth or (b) Funded Debt of the Companies
other than the Borrower to exceed 150% of Consolidated Net Worth
(excluding Borrower's portion thereof).
5.24 Ratio of EBIT to Interest Expense and Preferred Stock
Dividends. As calculated at the end of each fiscal quarter of
the Borrower (but computed for the four fiscal quarters ending on
the last day of such fiscal quarter), the Borrower shall not
permit EBIT of the Companies to be less than 150% of the sum of
(a) consolidated interest expense of the Companies and (b)
dividends declared or paid by any Company (other than to another
Company) on its preferred capital stock (but if such dividends
are declared and paid during such four-quarter period, the amount
shall not be counted twice).
5.25 Tax Consolidation. If the Borrower is acquired by
another Person and, as a result of such acquisition, the Borrower
or the Borrower and any Subsidiary becomes an "includible
corporation" within the meaning of section 1504(b) of the Code
and files a consolidated federal income tax return as a member of
an "affiliated group" of corporations within the meaning of
section 1504(a) of the Code, the Borrower shall require the
parent corporation of the affiliated group to enter into an
agreement which shall provide that if the Borrower or such
Subsidiary shall sustain any loss that may be applied to reduce
the consolidated taxable income of the affiliated group of which
the Borrower or the Borrower and such Subsidiary is or was a
member, such parent corporation will pay, or cause all
corporations (other than the Borrower and the Subsidiaries) which
were members of the affiliated group for the year in which such
loss is applied to pay, to the Borrower or such Subsidiary, as
the case may be, promptly after filing the consolidated federal
income tax return for such taxable year, an amount equal to the
excess of (i) the consolidated federal income tax liability of
the affiliated group for such year, computed without reducing the
consolidated taxable income of such group by the amount of the
Borrower's or such Subsidiary's loss, over (ii) the consolidated
federal income tax liability of such group for such year computed
by including the Borrower's or such Subsidiary's loss in
consolidated taxable income. If any corporation (other than the
Borrower or a Subsidiary) which is a member of such affiliated
group shall sustain any such loss in a taxable year, the Borrower
and each Subsidiary which is or was a member of such affiliated
group for such year may agree to pay to the member sustaining
such loss, or to pay to the parent corporation of such affiliated
group for distribution to such member, an amount equal to the
excess of (i) the consolidated federal income tax liability which
the Borrower and said Subsidiaries would have incurred for such
year, if such liability had been computed on a basis which was
not consolidated with the other members of such affiliated group,
over (ii) the total federal income tax liability (taking into
account such member's loss) which the Borrower and said
Subsidiaries actually were required to pay for such year.
SECTION 6. DEFAULT. The term "Event of Default" means the
occurrence and continuance of any one or more of the following
events (including the passage of time, if any, specified
therefor) (provided that, if any such event occurs and the Banks
or Majority Banks, as required by the provisions of Section 9.15,
subsequently agree in writing that they will not exercise any
remedies hereunder as a result thereof, the occurrence and
continuance of such event shall no longer be deemed an Event of
Default hereunder insofar as the state of facts giving rise to
such event is concerned):
6.1 Payment of Obligation. The failure or refusal of the
Borrower to pay any portion of the Obligation, as the same become
due in accordance with the terms of the Loan Papers and, in the
case of an interest payment, such failure or refusal continues
for a period of 5 Business Days (no grace period being given for
failure or refusal to make a principal payment). Notwithstanding
the foregoing, the Borrower's failure to pay, if caused solely by
a wire transfer malfunction or similar problem outside the
Borrower's control, shall not be deemed an Event of Default.
6.2 Covenants.
(a) The failure or refusal of the Borrower (and, if
applicable, any other Company) to punctually and properly
perform, observe, and comply with any covenant, agreement,
or condition contained in Sections 5.11, 5.12, 5.14, 5.17,
5.18, 5.19, 5.20, 5.23, and 5.24.
(b) The failure or refusal of the Borrower (and, if
applicable, any other Company) to punctually and properly
perform, observe, and comply with any covenant, agreement,
or condition contained in any of the Loan Papers to which
such Company is a party, other than covenants to pay the
Obligation and the covenants listed in clause (a) preceding,
and such failure or refusal continues for 10 days after
notice from the Agent to the Borrower.
6.3 Debtor Relief. The Companies shall not be Solvent, or
any Company (a) fails to pay its Debts generally as they become
due, (b) voluntarily seeks, consents to, or acquiesces in the
benefit of any Debtor Relief Law, or (c) becomes a party to or is
made the subject of any proceeding provided for by any Debtor
Relief Law, other than as a creditor or claimant, that could
suspend or otherwise adversely affect the Rights of the Agent or
the Banks granted in the Loan Papers (unless, in the event such
proceeding is involuntary, the petition instituting same is
dismissed within 60 days after its filing).
6.4 Attachment. The failure of any Company to have
discharged within 60 days after commencement any attachment,
sequestration, or similar proceeding which, individually or
together with all such other proceedings then pending, affects
assets of such Company having a value (individually or
collectively) of 1 percent of Consolidated Net Worth or more.
6.5 Payment of Judgments. Any Company fails to pay any
judgments or orders for the payment of money in excess of 1
percent of Consolidated Net Worth (individually or collectively)
rendered against it or any of its assets and either (a) any
enforcement proceedings shall have been commenced by any creditor
upon any such judgment or order or (b) a stay of enforcement of
any such judgment or order, by reason of pending appeal or
otherwise, shall not be in effect prior to the time its assets
may be lawfully sold to satisfy such judgment.
6.6 Default Under Other Agreements. A default exists under
any Material Agreement to which any Company is a party, the
effect of which is to cause, or which permits the holder thereof
(or a trustee or representative of such holder) to cause, unpaid
consideration of at least $5,000,000 (individually or in the
aggregate) to become due prior to the stated maturity or prior to
the regularly scheduled dates of payment.
6.7 Antitrust Proceedings. A petition or complaint is
filed before or by any Tribunal (including, without limitation,
the Federal Trade Commission, the United States Justice
Department, or the Federal Communications Commission) seeking to
cause the Borrower or any Subsidiary to divest a significant
portion of its assets or any of its Subsidiaries pursuant to any
antitrust, restraint of trade, unfair competition, or similar
Laws, and such petition or complaint is not dismissed or
discharged within 270 days after the filing thereof.
6.8 Misrepresentation. Either Agent or any Bank discovers
that any statement, representation, or warranty in the Loan
Papers, any Financial Statement of the Borrower, or any writing
ever delivered to either Agent or any Bank pursuant to the Loan
Papers is false, misleading, or erroneous when made or delivered
in any material respect.
SECTION 7. RIGHTS AND REMEDIES.
7.1 Remedies Upon Event of Default.
(a) Should an Event of Default occur and be continuing
under Section 6.3, the commitment of the Banks to make Loans
shall automatically terminate and the entire unpaid balance
of the Obligation shall automatically become due and payable
without any action of any kind whatsoever.
(b) Should any other Event of Default occur and be
continuing, subject to any agreement among the Banks, the
Agent may (and shall upon the request of the Majority
Banks), at its (or the Majority Banks') election, do any one
or more of the following: (i) If the maturity of the
Obligation has not already been accelerated under
Section 7.1(a), declare the entire unpaid balance of the
Obligation, or any part thereof, immediately due and
payable, whereupon it shall be due and payable (and notice
of such declaration shall promptly be given thereafter by
the Agent to the Borrower); (ii) terminate commitments to
make Loans hereunder; (iii) reduce any claim to judgment;
(iv) exercise (or request each Bank to exercise) the Rights
of offset or banker's Lien against the interest of the
Borrower in and to every account and other property of the
Borrower which are in the possession of any Bank to the
extent of the full amount of the Obligation; and (v)
exercise any and all other legal or equitable Rights
afforded by the Loan Papers, the Laws of the State of Texas
or any other jurisdiction as the Agent shall deem
appropriate, or otherwise, including, but not limited to,
the Right to bring suit or other proceedings before any
Tribunal either for specific performance of any covenant or
condition contained in any of the Loan Papers or in aid of
the exercise of any Right granted to the Banks in any of the
Loan Papers.
7.2 Waivers. The Borrower hereby waives presentment and
demand for payment, protest, notice of intention to accelerate,
notice of acceleration, and notice of protest and nonpayment, and
agrees that its liability with respect to the Obligation, or any
part thereof, shall not be affected by any renewal or extension
in the time of payment of the Obligation, by any indulgence, or
by any release or change in any security for the payment of the
Obligation.
7.3 Performance by Agent. If any covenant, duty, or
agreement of any Company is not performed in accordance with the
terms of the Loan Papers, the Agent may, at its option (but
subject to the approval of the Majority Banks), perform or
attempt to perform such covenant, duty, or agreement on behalf of
such Company. In such event, any amount expended by the Agent in
such performance or attempted performance shall be reasonable,
payable by the Borrower to the Agent on demand, shall become part
of the Obligation, and shall bear interest at the Default Rate
from the date of such expenditure by the Agent until paid.
Notwithstanding the foregoing, it is expressly understood that
the Agent does not assume and shall never have, except by its
express written consent, any liability or responsibility for the
performance of any covenant, duty, or agreement of any Company.
7.4 Delegation of Duties and Rights. The Agent and the
Banks may perform any of their duties or exercise any of their
Rights under the Loan Papers by or through the Agent and the
Agent's officers, directors, employees, attorneys, agents, or
other representatives.
7.5 Banks Not in Control. None of the covenants or other
provisions contained in this Agreement or in any other Loan Paper
shall, or shall be deemed to, give the Agent or the Banks the
Right to exercise control over the assets (including, without
limitation, real property), affairs, or management of any
Company, the power of the Agent and the Banks being limited to
the Right to exercise the remedies provided in this Section 7.
7.6 Waivers by Banks. The acceptance by the Agent or the
Banks at any time and from time to time of partial payment on the
Obligation shall not be deemed to be a waiver of any Event of
Default then existing. No waiver by the Agent, the Majority
Banks, or all of the Banks of any Event of Default shall be
deemed to be a waiver of any other then-existing or subsequent
Event of Default. No delay or omission by the Agent, the
Majority Banks, or all of the Banks in exercising any Right under
the Loan Papers shall impair such Right or be construed as a
waiver thereof or any acquiescence therein, nor shall any single
or partial exercise of any such Right preclude other or further
exercise thereof, or the exercise of any other Right under the
Loan Papers or otherwise.
7.7 Cumulative Rights. All Rights available to the Agent
and the Banks under the Loan Papers are cumulative of and in
addition to all other Rights granted to the Agent and the Banks
at law or in equity, whether or not the Obligation is due and
payable and whether or not the Agent or the Banks have instituted
any suit for collection, foreclosure, or other action in
connection with the Loan Papers.
7.8 Application of Proceeds. Any and all proceeds ever
received by the Agent or the Banks from the exercise of any
Rights pertaining to the Obligation shall be applied to the
Obligations in the order and manner set forth in Section 2.15.
7.9 Certain Proceedings. The Borrower will promptly
execute and deliver or cause the execution and delivery of, all
applications, certificates, instruments, registration statements,
and all other documents and papers the Agent or the Banks may
reasonably request in connection with the obtaining of any
consent, approval, registration, qualification, permit, license,
or authorization of any other Tribunal or other Person necessary
or appropriate for the effective exercise of any Rights under the
Loan Papers. Because the Borrower agrees that the Agent's and
the Banks' remedies at Law for failure of the Borrower to comply
with the provisions of this paragraph would be inadequate and
that such failure would not be adequately compensable in damages,
the Borrower agrees that the covenants of this paragraph may be
specifically enforced.
SECTION 8. AGREEMENT AMONG BANKS.
8.1 Agent.
(a) Each Bank hereby irrevocably appoints and
authorizes the Agent to act on its behalf and to exercise such
powers under this Agreement as are specifically delegated to or
required of the Agent by the terms hereto, together with such
powers as are reasonably incidental thereto. As to any matters
not expressly provided for by this Agreement or the Notes
(including, without limitation, enforcement or collection of the
Notes), the Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Majority
Banks, and such instructions shall be binding upon all Banks and
all holders of Notes; provided, however, that Agent shall not be
required to take any action which exposes the Agent to personal
liability or which is contrary to this Agreement or applicable
Law.
(b) The Agent may resign at any time by giving written
notice thereof to the Banks and the Borrower and may be removed
as the Agent under this Agreement and the Notes at any time with
cause by all Banks other than the Agent (the "Removing Banks").
Upon any such resignation or removal, the Majority Banks shall
have the right, with the consent of the Borrower, not to be
unreasonably withheld, to appoint a successor Agent from among
the Banks (other than the resigning Agent). If no successor
Agent shall have been so appointed by the Majority Banks, and
shall have accepted such appointment, within 30 calendar days
after the retiring Agent's giving notice of resignation or the
Removing Banks' removal of the retiring Agent, then the retiring
Agent may, on behalf of the Banks, with the consent of the
Borrower, not to be unreasonably withheld, appoint a successor
Agent, which shall be a commercial bank organized under the Laws
of the United States of America or of any state thereof and
having a combined capital and surplus of at least $100,000,000.
Upon the acceptance of any appointment as the Agent hereunder and
under the Notes by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all rights, powers,
privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations under
this Agreement and the Notes. After any retiring Agent's
resignation or removal as the Agent hereunder and under the
Notes, the provisions of this Section 8 shall inure to its
benefit as to any actions taken or omitted to be taken by it
while it was the Agent under this Agreement and the Notes.
(c) If the Agent fails to take any action under any
Loan Paper after an Event of Default and within a reasonable time
after being reasonably requested to do so by any Bank (when such
Bank is entitled to make such request under the Loan Papers and
after such requesting Bank has obtained the concurrence of such
other Banks as may be required hereunder), the Agent shall not
suffer or incur any liability as a result of such failure or
refusal, but such requesting Bank may request the Agent to resign
as the Agent, whereupon the Agent shall so resign upon receiving
such request.
(d) The Agent, in its capacity as a Bank, shall have
the same Rights under the Loan Papers as any other Bank and may
exercise the same as though it were not acting as the Agent; the
term "Bank" shall, unless the context otherwise indicates,
include the Agent; and any resignation by the Agent hereunder
shall not impair or otherwise affect any Rights which it has or
may have in its capacity as an individual Bank.
(e) Subject in all respects to the terms and
conditions of the Loan Papers, the Agent may be engaged in, or
may hereafter engage in, one or more loan, letter of credit,
leasing, or other financing transactions (collectively, the
"other financings") not the subject of the Loan Papers, with one
or more of the Companies, or may act as trustee on behalf of, or
depositary for, or otherwise engage in other business
transactions with one or more of the Companies, in each case with
no responsibility to account therefor to the Banks. Without
limiting Rights to which the Banks are specifically entitled
under the Loan Papers, no other Banks shall have, by virtue of
their being parties hereto, any interest in (i) any such other
financings, (ii) any present or future guaranties by or for the
account of any Company which are not contemplated or included in
the Loan Papers, (iii) any present or future offset exercised by
the Agent in respect of such other financings, or (iv) any
present or future property taken as security for any such other
financings, even if such property may become security for the
obligations of any Company arising under the Loan Papers by
reason of a general description of indebtedness related to any
such other financings; provided that, if any payments in respect
of such guaranties or such property or the proceeds thereof shall
be applied to reduce the Obligations, then each Bank shall be
entitled to share in such application according to its pro rata
part thereof.
8.2 Expenses. Each Bank shall pay its pro rata part of any
reasonable expenses (including, without limitation, court costs,
reasonable attorneys' fees, and other costs of collection)
incurred by the Agent in connection with any of the Loan Papers
if the Agent does not receive reimbursement therefor from other
sources within 60 days after incurred; provided that each Bank
shall be entitled to receive its pro rata part of any
reimbursement for such expenses, or part thereof, which the Agent
subsequently receives from such other sources.
8.3 Proportionate Absorption of Losses. Except as herein
provided, nothing in the Loan Papers shall be deemed to give any
Bank any advantage over any other Bank insofar as the portion of
the Obligation arising under the Loan Papers is concerned, or to
relieve any Bank from absorbing its pro rata part of any losses
sustained with respect to the Obligation (except to the extent
unilateral actions or inactions by any Bank result in any credit,
allowance, setoff, defense, or counterclaim solely with respect
to all or any part of such Bank's pro rata part of the
Obligation).
8.4 Delegation of Duties; Reliance. The Agent may exercise
any of its duties under the Loan Papers by or through its
officers, directors, employees, attorneys, or agents
(collectively, "Representatives"), and the Agent and its
Representatives shall (a) be entitled to rely upon (and shall be
protected in relying upon) any writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telecopy,
telegram, telex or teletype message, statement, order, or other
documents or conversation believed by it or them to be genuine
and correct and to have been signed or made by the proper Person
and, with respect to legal matters, upon opinion of counsel
selected by the Agent, (b) be entitled to deem and treat each
Bank as the owner and holder of its pro rata part of the
Obligation for all purposes until, subject to Section 9.20,
written notice of the assignment or transfer thereof shall have
been given to and received by the Agent (and, any request,
authorization, consent, or approval of any Bank shall be
conclusive and binding on each subsequent holder, assignee, or
transferee of such Lender's pro rata part of the Obligation or
Participant therein), and (c) not be deemed to have notice of the
occurrence of an Event of Default unless an officer of the Agent
has actual knowledge thereof or the Agent has been notified
thereof by a Bank or the Borrower.
8.5 Limitation of Agent's Liability.
(a) Neither the Agent nor any of its Representatives
(as defined in Section 8.4) shall be liable for any action taken
or omitted to be taken by it or them under the Loan Papers in
good faith and believed by it or them to be within the discretion
or power conferred upon it or them by the Loan Papers or be
responsible for the consequences of any error of judgment, except
for fraud, gross negligence, or willful misconduct (it being the
express intention of the parties that the Agent and its
Representatives shall have no liability for actions and omissions
resulting from their ordinary contributory negligence), and
neither the Agent nor any of its Representatives has a fiduciary
relationship with any Bank by virtue of the Loan Papers (provided
that nothing herein shall negate the obligation of the Agent to
account for funds received by it for the account of any Bank).
(b) Unless indemnified to its satisfaction against
loss, cost, liability, and expense, the Agent shall not be
compelled to do any act under the Loan Papers or to take any
action toward the execution or enforcement of the powers thereby
created or to prosecute or defend any suit in respect of the Loan
Papers. If the Agent requests instructions from the Banks or from
the Majority Banks, as the case may be, with respect to any act
or action (including, but not limited to, any failure to act) in
connection with any Loan Paper, the Agent shall be entitled (but
shall not be required) to refrain (without incurring any
liability to any Person by so refraining) from such act or action
unless and until it has received such instructions. In no event,
however, shall the Agent or any of its Representatives be
required to take any action which it or they reasonably determine
could incur for it or them criminal or onerous civil liability.
(c) The Agent shall not be responsible in any manner
to any Bank or any Participant for, and each Bank represents and
warrants that it has not relied upon the Agent in respect of, (i)
the creditworthiness of the Borrower and the risks involved to
such Bank, (ii) the effectiveness, enforceability, genuineness,
validity, or the due execution of any Loan Paper, (iii) any
representation, warranty, document, certificate, report, or
statement made therein or furnished thereunder or in connection
therewith, or (iv) observation of or compliance with any of the
terms, covenants, or conditions of any Loan Paper on the part of
any Company. Each Bank also acknowledges and agrees that it
will, independently and without reliance upon the Agent or any
other Bank and based on such documents and information as it
shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this
Agreement. Each Bank agrees to indemnify the Agent and its
respective Representatives and hold them harmless from and
against (but limited to such Bank's pro rata part of) any and all
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, reasonable expenses, and reasonable
disbursements of any kind or nature whatsoever which may be
imposed on, asserted against, or incurred by them in any way
relating to or arising out of the Loan Papers or any action taken
or omitted by them under the Loan Papers, except to the extent
the same result solely from fraud, gross negligence, or willful
misconduct by the Agent or its Representatives (it being the
express intention of the parties that the Agent and its
Representatives shall have no liability for actions and omissions
resulting from their ordinary contributory negligence).
8.6 Default. Upon the occurrence and continuance of an
Event of Default, the Banks agree to promptly confer in order
that the Majority Banks (or, if required by Section 9.15, all
Banks) may agree upon a course of action for the enforcement of
the Rights of the Banks; provided that the Agent shall be
entitled (but not obligated) to proceed to take any actions
necessary in its reasonable judgment to preserve the Rights of
the Agent and the Banks hereunder, pending agreement by the
Majority Banks (or, if required by Section 9.15, all Banks) on
the course of action to be taken.
8.7 Limitation of Liability of Banks. No Bank or any
Participant shall incur any liability to any other Bank or
Participant except for acts or omissions in bad faith, and no
Bank or any Participant shall incur any liability to any Company
or any other Person for any act or omission of any other Bank or
any Participant.
8.8 Relationship of Banks. Nothing herein shall be
construed as creating a partnership or joint venture among the
Agent and the Banks, or the Banks.
8.9 Foreign Banks. Each Bank that is organized under the
laws of any jurisdiction other than the United States of America
or any State thereof (a) represents to the Agent and the Borrower
that (i) under applicable Laws and treaties no Taxes will be
required to be withheld by the Agent or the Borrower with respect
to any payments to be made to such Bank in respect of the
Obligation and (ii) it has furnished to the Agent and the
Borrower two duly completed copies of either U.S. Internal
Revenue Service Form 4224 or U.S. Internal Revenue Service Form
1001 (wherein such Bank claims entitlement to complete exemption
from U.S. federal withholding tax on all interest payments
hereunder), and (b) covenants to (i) provide the Agent and the
Borrower a new Form 4224 or Form 1001 upon the obsolescence of
any previously delivered form in accordance with applicable U.S.
laws and regulations and amendments duly executed and completed
by such Bank and (ii) comply from time to time with all
applicable U.S. laws and regulations with regard to such
withholding tax exemption.
8.10 Benefits of Agreement. Except for requiring the
Borrower's consent under Section 8.1(b) and the representations
and covenants in Section 8.9 in favor of the Borrower, none of
the provisions of this Section 8 shall inure to the benefit of
any Company or any Person other than the Agent, the Banks, and
the Participants; consequently, neither any Company nor any other
Person shall be entitled to rely upon, or to raise as a defense,
in any manner whatsoever, the failure of either Agent or any Bank
to comply with such provisions.
SECTION 9. MISCELLANEOUS.
9.1 Changes in GAAP. All accounting and financial terms
used in any of the Loan Papers and the compliance with each
covenant contained in the Loan Papers which relates to financial
matters shall be determined in accordance with GAAP, except to
the extent that a deviation therefrom is expressly stated in such
Loan Papers. Should a change in GAAP require a change in any
method of accounting or should any voluntary change in the
accounting methods be permitted pursuant to Section 5.19, then
such change shall not result in an Event of Default if, at the
time of such change, such Event of Default had not occurred and
was not then continuing, based upon the former methods of
accounting used by or on behalf of the Borrower; provided that,
after any such change in accounting methods, the Financial
Statements required to be delivered shall either be
(a) supplemented with financial information prepared in
comparative form, in compliance with the former methods of
accounting used prior to such change, as well as with the new
method or methods of accounting and, for the purpose of
determining whether an Event of Default has occurred, Lenders
shall look solely to that portion of such supplemental
information that complies with the former methods of accounting,
or (b) supplemented with financial information prepared in
compliance with such new method or methods of accounting but
accompanied by such information, in form and detail satisfactory
to Lenders, that will allow Lenders to readily determine the
effect of such changes in accounting methods on such Financial
Statements, and, for the purpose of determining whether an Event
of Default has occurred, Lenders shall look solely to such
supplemental information as adjusted to reflect compliance with
such former method or methods of accounting.
9.2 Money and Interest. Unless stipulated otherwise
(a) all references in any of the Loan Papers to "dollars,"
"money," "payments," or other similar financial or monetary terms
are references to currency of the United States of America and
(b) all references to interest are to simple and not compound
interest.
9.3 Number and Gender of Words. Whenever in any Loan Paper
the singular number is used, the same shall include the plural
where appropriate, and vice versa; and words of any gender in any
Loan Paper shall include each other gender where appropriate. The
words "herein," "hereof," and "hereunder," and other words of
similar import refer to the relevant Loan Paper as a whole and
not to any particular part or subdivision thereof.
9.4 Headings. The headings, captions, and arrangements
used in any of the Loan Papers are, unless specified otherwise,
for convenience only and shall not be deemed to limit, amplify,
or modify the terms of the Loan Papers, nor affect the meaning
thereof.
9.5 Exhibits. If any Exhibit, which is to be executed and
delivered, contains blanks, the same shall be completed correctly
and in accordance with the terms and provisions contained and as
contemplated herein prior to, at the time of, or after the
execution and delivery thereof.
9.6 Communications. Unless specifically otherwise
provided, whenever any Loan Paper requires or permits any
consent, approval, notice, request, or demand from one party to
another, such communication must be in writing (which may be by
telex or telecopy) to be effective and shall be deemed to have
been given on the day actually delivered or, if mailed, on the
Business Day it is received by the party to be notified at the
address indicated on Schedule 1 (unless changed by notice
pursuant hereto), properly stamped, sealed, and deposited in the
appropriate official postal service.
9.7 Form and Number of Documents. Each agreement,
document, instrument, or other writing to be furnished under any
provision of this Agreement must be in form and substance and in
such number of counterparts as may be reasonably required by the
Agent and its counsel.
9.8 Exceptions to Covenants. The Borrower shall not take
any action or fail to take any action which is permitted as an
exception to any of the covenants contained in any of the Loan
Papers if such action or omission would result in the breach of
any other covenant contained in any of the Loan Papers.
9.9 Survival. All covenants, agreements, undertakings,
representations, and warranties made in any of the Loan Papers
(a) shall survive all closings under the Loan Papers, (b) except
as otherwise indicated, shall not be affected by any
investigation made by any party, and (c) unless otherwise
provided herein shall terminate upon the later of the termination
of this Agreement and the payment in full of the Obligation.
9.10 Governing Law. The Loan Papers are being executed and
delivered, and are intended to be performed, in the State of
Texas, and the laws (other than conflict-of-laws provisions
thereof) of such State and of the United States of America shall
govern the Rights and duties of the parties hereto and the
validity, construction, enforcement, and interpretation of the
Loan Papers.
9.11 VENUE; SERVICE OF PROCESS; JURY TRIAL. EACH PARTY
HERETO, IN EACH CASE FOR ITSELF, ITS SUCCESSORS AND ASSIGNS,
HEREBY (a) IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION
OF THE STATE AND FEDERAL COURTS OF THE STATE OF TEXAS AND AGREES
AND CONSENTS THAT SERVICE OF PROCESS MAY BE MADE UPON IT IN ANY
LEGAL PROCEEDING ARISING OUT OF OR IN CONNECTION WITH THE LOAN
PAPERS AND THE OBLIGATION BY SERVICE OF PROCESS AS PROVIDED BY
TEXAS LAW, (b) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF VENUE OF ANY LITIGATION ARISING OUT OF OR
IN CONNECTION WITH THE LOAN PAPERS AND THE OBLIGATION BROUGHT IN
DISTRICT COURTS OF DALLAS COUNTY, TEXAS, OR IN THE UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS, DALLAS
DIVISION, (c) IRREVOCABLY WAIVES ANY CLAIMS THAT ANY LITIGATION
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM, (d) AGREES TO DESIGNATE AND MAINTAIN AN AGENT FOR SERVICE
OF PROCESS IN DALLAS, TEXAS, IN CONNECTION WITH ANY SUCH
LITIGATION AND TO DELIVER TO THE AGENT EVIDENCE THEREOF, IF
REQUESTED, (e) IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT
OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH LITIGATION BY THE
MAILING OF COPIES THEREOF BY CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, POSTAGE PREPAID, AT ITS ADDRESS SET FORTH HEREIN,
(f) IRREVOCABLY AGREES THAT ANY LEGAL PROCEEDING AGAINST ANY
PARTY HERETO ARISING OUT OF OR IN CONNECTION WITH THE LOAN PAPERS
ON THE OBLIGATION SHALL BE BROUGHT IN ONE OF THE AFOREMENTIONED
COURTS, AND (g) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ITS RIGHT TO A JURY TRIAL IN ANY LITIGATION
ARISING OUT OF OR IN CONNECTION WITH THE LOAN PAPERS AND THE
OBLIGATION.
9.12 Maximum Interest Rate. Regardless of any provision
contained in any of the Loan Papers, no Bank shall ever be
entitled to contract for, charge, take, reserve, receive, or
apply, as interest on the Obligation, or any part thereof, any
amount in excess of the Highest Lawful Rate, and, in the event
the Banks ever contract for, charge, take, reserve, receive, or
apply as interest any such excess, it shall be deemed a partial
prepayment without penalty of principal and treated hereunder as
such and any remaining excess shall be refunded to the Borrower.
In determining whether or not the interest paid or payable, under
any specific contingency, exceeds the Highest Lawful Rate, the
Borrower and the Banks shall, to the maximum extent permitted
under applicable Law, (a) treat all Borrowings as but a single
extension of credit (and the Banks and the Borrower agree that
such is the case and that provision herein for multiple
Borrowings and multiple Notes is for convenience only),
(b) characterize any nonprincipal payment as an expense, fee, or
premium rather than as interest, (c) exclude voluntary
prepayments and the effects thereof, and (d) "spread" the total
amount of interest throughout the entire contemplated term of the
Obligation; provided that, if the Obligation is paid and
performed in full prior to the end of the full contemplated term
thereof, and if the interest received for the actual period of
existence thereof exceeds the Highest Lawful Rate, the Banks
shall refund such excess, and, in such event, the Banks shall not
be subject to any penalties provided by any Laws for contracting
for, charging, taking, reserving, or receiving interest in excess
of the Highest Lawful Rate. To the extent the Laws of the State
of Texas are applicable for purposes of determining the "Highest
Lawful Rate," such term shall mean the "indicated rate ceiling"
from time to time in effect under Article 1.04, Title 79, Revised
Civil Statutes of Texas, as amended, or, if permitted by
applicable Law and effective upon the giving of the notices
required by such Article 1.04 (or effective upon any other date
otherwise specified by applicable Law), the "monthly ceiling,"
the "quarterly ceiling," or "annualized ceiling" from time to
time in effect under such Article 1.04, whichever the Banks shall
elect to substitute for the "indicated rate ceiling," and vice
versa, each such substitution to have the effect provided in such
Article 1.04; and the Banks shall be entitled to make such
election from time to time and one or more times and, without
notice to the Borrower, to leave any such substitute rate in
effect for subsequent periods in accordance with subsection
(h)(1) of such Article 1.04. Pursuant to Article 15.10(b) of
Chapter 15, Subtitle 79, Revised Civil Statutes of Texas, 1925,
as amended, the Borrower agrees that such Chapter 15 (which
regulates certain revolving credit loan accounts and revolving
triparty accounts) shall not govern or in any manner apply to the
Obligation.
9.13 Invalid Provisions. If any provision in any Loan Paper
is held to be illegal, invalid, or unenforceable, such provision
shall be fully severable; the appropriate Loan Paper shall be
construed and enforced as if such provision had never comprised a
part thereof; and the remaining provisions thereof shall remain
in full force and effect and shall not be affected by such
provision or by its severance therefrom. Furthermore, in lieu of
such provision there shall be added automatically as a part of
such Loan Paper a provision as similar thereto as may be possible
and be legal, valid, and enforceable.
9.14 Entirety. A LOAN AGREEMENT IN WHICH THE AMOUNT
INVOLVED EXCEEDS $50,000 IN VALUE IS NOT ENFORCEABLE UNLESS THE
AGREEMENT IS IN WRITING AND SIGNED BY THE PARTY TO BE BOUND OR BY
THAT PARTY'S AUTHORIZED REPRESENTATIVE. THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO SHALL BE DETERMINED SOLELY FROM
WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR
ORAL AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED
INTO SUCH WRITINGS. THIS AGREEMENT (AS AMENDED IN WRITING FROM
TIME TO TIME) AND THE OTHER WRITTEN LOAN PAPERS EXECUTED BY THE
BORROWER, THE AGENT, AND THE BANKS (OR BY THE BORROWER FOR THE
BENEFIT OF THE AGENT OR ANY BANK) REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES HERETO AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS
BY THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES. THIS PARAGRAPH IS INCLUDED HEREIN PURSUANT TO
SECTION 26.02 OF THE TEXAS BUSINESS AND COMMERCE CODE, AS AMENDED
FROM TIME TO TIME.
9.15 Amendments, Etc. No amendment or waiver of any
provision of any Loan Paper nor consent to any departure
therefrom by the Borrower shall be effective unless the same
shall be in writing and signed by the Majority Banks and the
Borrower, and then, such amendment, waiver or consent shall be
effective only in the specific instance and for the specific
purpose for which given; provided, however, that no amendment,
waiver, or consent shall, unless in writing and signed by all
Banks, do any of the following: (a) extend the due date for
payment of any of the Obligation, (b) reduce the principal amount
of Loans due hereunder or any interest rate or the amount of fees
applicable to the Obligation (except such reductions as are
contemplated by this Agreement), (c) amend or waive compliance
with this Section 9.15 or (d) amend the definition of Majority
Banks; provided that no amendment, waiver, or consent shall,
unless in writing and signed by the Agent in addition to the
Banks required above to take such action, affect the rights or
duties of the Agent under this or any other Loan Paper.
9.16 Waivers. No course of dealing nor any failure or delay
by the Agent, any Bank, or any of their respective officers,
directors, employees, agents, representatives, or attorneys with
respect to exercising any Right of the Banks hereunder shall
operate as a waiver thereof. A waiver must be in writing and
signed by the Banks (or the Majority Banks, if permitted
hereunder) to be effective, and such waiver will be effective
only in the specific instance and for the specific purpose for
which it is given.
9.17 Taxes. Any Taxes (excluding income taxes) payable or
ruled payable by any Tribunal in respect of this Agreement or any
other Loan Paper shall be paid by the Borrower, together with
interest and penalties, if any.
9.18 Governmental Regulation. Anything contained in this
Agreement to the contrary notwithstanding, the Banks shall not be
obligated to extend credit to the Borrower in violation of any
Law.
9.19 Multiple Counterparts. This Agreement may be executed
in a number of identical counterparts, each of which shall be
deemed an original for all purposes and all of which constitute,
collectively, one Agreement; but, in making proof of this
Agreement, it shall not be necessary to produce or account for
more than one such counterpart. It is not necessary that each
Bank execute the same counterpart so long as identical
counterparts are executed by the Borrower and each Bank. This
Agreement shall become effective when counterparts hereof shall
have been executed and delivered to the Agent by each Bank, the
Agent, and the Borrower, or, in the case only of the Banks, when
the Agent shall have received telecopied, telexed, or other
evidence satisfactory to it that each Bank has executed and is
delivering to the Agent a counterpart hereof.
9.20 Successors and Assigns; Participations; Assignments.
(a) This Agreement shall be binding upon, and inure to
the benefit of the parties hereto and their respective
successors and assigns, except that (i) the Borrower may
not, directly or indirectly, assign or transfer, or attempt
to assign or transfer, any of its Rights, duties, or
obligations under any Loan Papers to which it is a party
without the express written consent of all Banks, and
(ii) except as permitted under Section 2.17 and this Section
9.20, no Bank may transfer, pledge, assign, sell
participations in, or otherwise encumber its portion of the
Obligation.
(b) Subject to the provisions of this Section 9.20,
any Bank may sell to one or more Persons (each a
"Participant") participating interests (in each case not
less than $5,000,000 and in an integral multiple of
$500,000) in its portion of the Obligation; provided that
each Bank's Loan must be at least 50 percent of its Loan on
the date of this Agreement at all times and the Agent and
the Borrower shall have the right to approve any Participant
which is not a financial institution. In the event of any
such sale to a Participant, (i) such Bank shall remain a
"Bank" under this Agreement and the Participant shall not
constitute a "Bank" hereunder, (ii) such Bank's obligations
under this Agreement shall remain unchanged, (iii) such Bank
shall remain solely responsible for the performance thereof,
(iv) such Bank shall remain the holder of its share of the
Obligation for all purposes under this Agreement, and
(v) the Borrower and the Agent shall continue to deal solely
and directly with such Bank in connection with such Bank's
Rights and obligations under the Loan Papers. Participants
shall have no Rights under the Loan Papers, other than
certain voting rights as provided below. Each Bank shall be
entitled to obtain (on behalf of its Participants) the
benefits of Section 2 with respect to all participations in
its Loans outstanding from time to time. No Bank shall sell
any participating interest under which the Participant shall
have any Rights to approve any amendment, modification, or
waiver of any Loan Paper, except to the extent such
amendment, modification, or waiver extends the due date for
payment of any amount in respect of principal, interest, or
fees due under the Loan Papers, or reduces the interest rate
or the amount of principal or fees applicable to the
Obligation (except such reductions as are contemplated by
this Agreement); provided that in those cases where a
Participant is entitled to the benefits of Section 2 or a
Bank grants Rights to its Participants to approve amendments
to or waivers of the Loan Papers respecting the matters
previously described in this sentence, such Bank must
include a voting mechanism in the relevant participation
agreement whereby a majority of such Bank's portion of the
Obligation (whether held by such Bank or participated) shall
control the vote for all of such Bank's portion of the
Obligation. Except in the case of the sale of a
participating interest to a Bank, the relevant participation
agreement shall not permit the Participant to transfer,
pledge, assign, sell participations in, or otherwise
encumber its portion of the Obligation.
(c) Subject to the provisions of this Section 9.20,
any Bank may, with the prior written consent of the Agent
and the Borrower (which will not be unreasonably withheld),
sell to one or more financial institutions (each a
"Purchaser") a proportionate part (in each case not less
than $5,000,000 and in an integral multiple of $500,000) of
its Rights and obligations under the Loan Papers pursuant to
an assignment agreement between such Purchaser and such
Bank; provided that each Bank's Loan must be at least 50
percent of its Loan on the date of this Agreement at all
times. Upon (i) delivery of an executed copy of the
assignment to the Borrower and the Agent and (ii) payment of
a fee of $2500 from such Bank to the Agent, from and after
the assignment's effective date (which shall be after the
date of such delivery), such Purchaser shall for all
purposes be a Bank hereunder and shall have all the Rights
and obligations of a Bank hereunder to the same extent as if
it were an original party hereto with commitments as set
forth in the assignment agreement, and the transferor Bank
shall be released from its obligations hereunder to a
corresponding extent. Upon any transfer pursuant to this
Section 9.20(c), Schedule 1 shall automatically be deemed to
reflect the name, address, and Loan of such Purchaser and
the Agent shall deliver to the Borrower and the Banks an
amended Schedule 1 reflecting such changes. A Purchaser
shall be subject to all the provisions in this Section 9.20
the same as if it were a Bank as of the date hereof.
(d) If pursuant to Section 9.20(c) any interest in the
Obligation is transferred to any Purchaser which is
organized under the laws of any jurisdiction other than the
United States of America or any State thereof, the
transferor Bank shall cause such Purchaser, concurrently
with the effectiveness of such transfer, (i) to represent to
the transferor Bank (for the benefit of the transferor Bank,
the Agent, and the Borrower) that under applicable Laws and
treaties no Taxes will be required to be withheld by the
Agent, the Borrower, or the transferor Bank with respect to
any payments to be made to such Purchaser in respect of the
Obligation, (ii) to furnish to each of the transferor Bank,
the Agent, and the Borrower two duly completed copies of
either U.S. Internal Revenue Service Form 4224 or U.S.
Internal Revenue Service Form 1001 (wherein such Purchaser
claims entitlement to complete exemption from U.S. federal
withholding tax on all interest payments hereunder), and
(iii) to agree (for the benefit of the transferor Bank, the
Agent, and the Borrower) to provide the transferor Bank, the
Agent, and the Borrower a new Form 4224 or Form 1001 upon
the obsolescence of any previously delivered form in
accordance with applicable U.S. laws and regulations and
amendments duly executed and completed by such Purchaser,
and to comply from time to time with all applicable U.S.
laws and regulations with regard to such withholding tax
exemption.
9.21 Confidentiality. All nonpublic information furnished
by the Companies to the Agent or the Banks in connection with the
Loan Papers and the transactions contemplated thereby will be
treated as confidential, but nothing herein contained shall limit
or impair the Agent's or any Bank's right, and the Agent and the
Banks shall be entitled, (a) to disclose the same to any Tribunal
or as otherwise required by Law or to any prospective or actual
Participant or Purchaser or to the respective affiliates,
directors, officers, employees, attorneys, and agents of any
prospective or actual Participant or Purchaser (provided that
such prospective or actual Participant or Purchaser has agreed in
writing to comply with this Section 9.21), (b) to use such
information to the extent pertinent to an evaluation of the
Obligation, (c) to enforce compliance with the terms and
conditions of the Loan Papers, and (d) to take any action which
the Agent or any Bank deems necessary to protect its interests if
an Event of Default has occurred and is continuing.
9.22 Conflicts and Ambiguities. Any conflict or ambiguity
between the terms and provisions herein and terms and provisions
in any other Loan Paper shall be controlled by the terms and
provisions herein.
9.23 General Indemnification. The Borrower shall indemnify,
protect, and hold the Agent and the Banks and their respective
parents, subsidiaries, directors, officers, employees,
representatives, agents, successors, assigns, and attorneys
(collectively, the "Indemnified Parties") harmless from and
against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, expenses
(including, without limitation, attorneys' fees and legal
expenses whether or not suit is brought and settlement costs),
and disbursements of any kind or nature whatsoever which may be
imposed on, incurred by, or asserted against the Indemnified
Parties, in any way relating to or arising out of the Loan Papers
or any of the transactions contemplated therein (collectively,
the "Indemnified Liabilities"), to the extent that any of the
Indemnified Liabilities results, directly or indirectly, from any
claim made or action, suit, or proceeding commenced by or on
behalf of any Person other than the Indemnified Parties;
provided, however, that although each Indemnified Party shall
have the Right to be indemnified from its own ordinary
negligence, no Indemnified Party shall have the Right to be
indemnified hereunder for its own fraud, gross negligence, or
willful misconduct. The provisions of and undertakings and
indemnification set forth in this paragraph shall survive the
satisfaction and payment of the Obligation and termination of
this Agreement for the period of time set forth in any applicable
statute of limitations.
9.24 Investment Representation. The Notes are being
acquired by the Banks for their own respective account for
investment and not with the view to, or for sale in connection
with, any distribution thereof. The Banks understand that the
Notes will not be registered under the Securities Act of 1933 or
any securities act of any state pursuant to an exemption from the
registration provisions thereof. Each Bank shall indemnify the
Borrower against and hold it harmless from any claim, and any
cost or expense therefrom, that the Borrower shall have committed
a violation of applicable Law by virtue of the exercise by such
Bank of its right to sell participations or make assignments
hereunder.
[Remainder of page intentionally blank. Signature pages follow.]
EXECUTED as of the day and year first mentioned.
CENTURY TELEPHONE ENTERPRISES, INC.
By /s/ Glen F. Post, III
Name: Glen F. Post, III
Title: President and Chief
Executive Officer
NATIONSBANK OF TEXAS, N.A.
as the Agent, and a Bank
By /s/ W. H. McClendon, IV
Name: W. H. McClendon, IV
Title: Vice President
Signature Page to that certain Credit Agreement dated as of
February 9, 1994, among Century Telephone Enterprises, Inc., as
Borrower, NationsBank of Texas, N.A. as Agent, and certain Banks
named therein, including the undersigne
EXECUTED the 9th day of February, 1994, but effective as of
the date first mentioned on the initial page of this Credit
Agreement.
BANK ONE, TEXAS, N.A.
as a Bank
By /s/ Gina A. Norris
(Name)Gina A. Norris
(Title)Vice President
Signature Page to that certain Credit Agreement dated as of
February 9, 1994, among Century Telephone Enterprises, Inc., as
Borrower, NationsBank of Texas, N.A. as Agent, and certain Banks
named therein, including the undersigned.
EXECUTED the 9th day of February, 1994, but effective as of
the date first mentioned on the initial page of this Credit
Agreement.
THE BANK OF NOVA SCOTIA
as a Bank
By /s/ A. S. Norsworthy
(Name)A.S. Norsworthy
(Title)Assistant Agent
Signature Page to that certain Credit Agreement dated as of
February 9, 1994, among Century Telephone Enterprises, Inc., as
Borrower, NationsBank of Texas, N.A. as Agent, and certain Banks
named therein, including the undersigned.
EXECUTED the 9th day of February, 1994, but effective as of
the date first mentioned on the initial page of this Credit
Agreement.
FIRST NATIONAL BANK OF COMMERCE
as a Bank
By /s/ Michael P. Kirby
(Name)Michael P. Kirby
(Title)Vice President
Signature Page to that certain Credit Agreement dated as of
February 9, 1994, among Century Telephone Enterprises, Inc., as
Borrower, NationsBank of Texas, N.A. as Agent, and certain Banks
named therein, including the undersigned.
EXECUTED the 9th day of February, 1994, but effective as of
the date first mentioned on the initial page of this Credit
Agreement.
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
as a Bank
By /s/ Perry B. Stephenson
(Name)Perry B. Stephenson
(Title)Senior Vice President
SCHEDULES
The following Schedules are not filed herewith:
Schedule 1 Parties, Addresses, Commitments, Wiring
Information
Schedule 2 Permitted Liens
Schedule 3.2 Jurisdictions of Incorporation and Business
Schedule 3.3 Subsidiaries
Schedule 3.6 Litigation
Schedule 3.12 Transactions with Affiliates
Schedule 3.17 Business of Companies
Copies of the Schedules listed above will be furnished to the
Securities and Exchange Commission upon request.
EXHIBIT A
FORM OF NOTICE OF BORROWING
______________, 19__
NationsBank of Texas, N.A.
as Agent for the Banks as defined in
the Credit Agreement referred to below
NationsBank Plaza, 67th Floor
901 Main Street
Dallas, TX 75202
Attn:Communications Finance
Reference is made to the Credit Agreement dated as of
February 9, 1994 (as amended, supplemented, or replaced from time
to time, the "Credit Agreement"), among the undersigned, the
Banks named therein, and NationsBank of Texas, N.A. as Agent.
Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to such terms in the Credit
Agreement. The undersigned hereby gives you notice pursuant to
Section 2.2 of the Credit Agreement that it requests a Borrowing
under the Credit Agreement, and in that connection sets forth
below the terms on which such Borrowing is requested to be made:
(A) Borrowing Date of Borrowing (a Business Day)
(B) Principal Amount of Borrowing*
(C) Type of Loan**
(D) Interest Period and the last day thereof***
On the date the rate is set, please confirm the interest
rate below and return by facsimile transmission to our Director
of Cash Management, 318-388-9602.
Very truly yours,
CENTURY TELEPHONE ENTERPRISES, INC.
By ____________________________
Name:
Title:
Rate:________
Confirmed by:_________________________
* Not less than $500,000 or greater than $90,000,000 minus
other outstanding Borrowings and in integral multiples of
$100,000.
** Eurodollar Loan, CD Loan, or Base Loan.
*** Eurodollar Loan -- 1, 2, 3, or 6 months.
CD Loan -- 30, 60, 90, or 180 days.
Base Loan -- 90 or fewer days.
In no event may the interest period end after the Maturity Date.
EXHIBIT B
FORM OF NOTE
$_______ _________ , 1994
FOR VALUE RECEIVED, the undersigned, CENTURY
TELEPHONE ENTERPRISES, INC., a Louisiana corporation (the
"Company"), hereby promises to pay to the order of______________
(the "Bank") on or before the Maturity Date the lesser of
(i)________________ ($_____________) and (ii) the aggregate amount
of Loans made by the Bank to the Company and outstanding on the
Maturity Date. The principal amount of each Loan made by the Bank
to the Company pursuant to the Credit Agreement (as hereinafter
defined) shall be due and payable on the last day of the Interest
Period for such Loan.
This note has been executed and delivered under,
and is subject to the terms of, the Credit Agreement dated as of
February 9, 1994 (as amended, supplemented, or replaced from time
to time, the "Credit Agreement"), among the Company, the Banks
and the Agent, and is one of the "Notes" referred to therein.
Unless defined herein or the context otherwise requires,
capitalized terms used herein have the meaning given to such
terms in the Credit Agreement. Reference is made to the Credit
Agreement for provisions affecting this note regarding applicable
interest rates, principal and interest payment dates, final
maturity, voluntary and mandatory prepayments, acceleration of
maturity, exercise of Rights, payment of attorneys' fees, court
costs and other costs of collection, certain waivers by the
Company and others now or hereafter obligated for payment of any
sums due hereunder and security for the payment hereof. Without
limiting the immediately preceding sentence, reference is made to
Section 9.12 of the Credit Agreement for usury savings
provisions.
This note is being executed and delivered, and
is intended to be performed, in the State of Texas, and the Laws
of such State and of the United States of America shall govern
the Rights and duties of the Company and the Bank and the
validity, construction, enforcement, and interpretation hereof.
CENTURY TELEPHONE ENTERPRISES, INC.
By ______________________________
Name:
Title:
EXHIBIT C
FORM OF OPINION OF BORROWER'S COUNSEL
_____________, 19___
NationsBank of Texas, N.A.,
as Agent for the Banks as defined in
the Credit Agreement referred to below
NationsBank Plaza, 67th Floor
901 Main Street
Dallas, TX 75202
Attn:Communications Finance
We have acted as counsel for Century Telephone Enterprises,
Inc., a Louisiana corporation (the "Borrower"), in connection
with the execution and delivery of the $90,000,000 Credit
Agreement of even date herewith (the "Credit Agreement") among
the Borrower, the Agent, and the Banks party thereto.
This opinion is delivered to you pursuant to Section 4.1 of
the Credit Agreement and upon the express instruction of the
Borrower. Unless defined herein, capitalized terms have the
meanings given to such terms in the Credit Agreement.
In connection with this opinion, we have examined executed
copies of the Credit Agreement and Notes executed by Borrower and
payable to each Bank (collectively, the "Loan Papers"). We have
also examined and relied upon the representations and warranties
as to factual matters contained in or made pursuant to the Loan
Papers and such corporate documents and records of the Borrower,
certificates of public officials, officers of the Borrower, and
such other documents as we have deemed necessary or appropriate
for the purposes of this opinion. In stating our opinion, we
have assumed the genuineness of all signatures of, and the
authority of, persons signing the Loan Papers on behalf of the
parties thereto other than the Borrower, the authenticity of all
documents submitted to us as originals, the conformity to
authentic original documents of all documents submitted to us as
certified, conformed, or photostatic copies, and that all
documents, books, and records made available to us by the
Borrower are accurate and complete.
We are qualified to practice law in the State of Louisiana
and our opinion is restricted to the laws of the State and the
federal law of the United States of America. We have assumed
that insofar as the substantive laws of states other than
Louisiana that may be applicable to any matters opined on herein,
such laws are identical to the substantive laws of the State of
Louisiana applied by us herein.
Based upon the foregoing, we are of the opinion that:
1. The Borrower and each Significant Subsidiary are
each a corporation duly organized, validly existing, and in good
standing under the laws of its state of incorporation. Except
where failure would not reasonably be expected to have a Material
Adverse Effect, the Borrower and each Significant Subsidiary (a)
are each duly qualified to transact business and are in good
standing as a foreign corporation in each jurisdiction where the
nature and extent of its business and properties require the same
and (b) each possesses all requisite authority, power, licenses,
permits, and franchises to conduct its business as is now being
conducted. The Borrower possesses all requisite authority,
power, licenses, permits, and franchises to execute, deliver, and
comply with the terms of the Loan Papers, all which have been
duly authorized and approved by all necessary corporate action
and, except where failure would not reasonably be expected to
have a Material Adverse Effect, for which no approval or consent
of any Person or Tribunal is required which has not been obtained
and no filing or other notification to any Person or Tribunal is
required which has not been properly completed.
2. The Borrower is not, nor will the execution,
delivery, performance, or observance of the Loan Papers cause the
Borrower to be, (a) to the best of our knowledge, in violation of
any laws or any Material Agreements to which it is a party, other
than such violations which would not reasonably be expected to
have a Material Adverse Effect, or (b) in violation of its bylaws
or charter.
3. We have no knowledge of any Material Litigation
or outstanding or unpaid Material judgments against the Borrower,
except as described on Schedule 3.6 attached to the Credit
Agreement.
4. The Borrower is not (a) a "holding company," a
"subsidiary company" of a "holding company," an "affiliate" of a
"holding company" or of a "subsidiary company" of a "holding
company," or a "public utility" within the meaning of the Public
Utility Holding Company Act of 1935, as amended, (b) a "public
utility" within the meaning of the Federal Power Act, as amended,
(c) an "investment company" or "controlled" by an "investment
company" within the meaning of the Investment Company Act of
1940, as amended, (d) an "investment advisor" within the meaning
of the Investment Advisors Act of 1940, as amended, or (e)
subject to the jurisdiction of the Federal Communications
Commission or any public service commission as a common carrier.
5. Each of the Loan Papers constitutes a valid, and
binding obligation of the Borrower, enforceable against the
Borrower in accordance with its terms, except as enforceability
may be limited by (a) applicable bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium, or other similar
laws affecting creditors' rights generally, (b) general
principles of equity (whether enforcement is sought by
proceedings in equity or at law), and (c) the qualification that
certain provisions of the Loan Papers may be unenforceable in
whole or in part under the laws of the State, but the inclusion
of such provisions does not affect the validity of any Loan Paper
and each Loan Paper contains adequate provisions for enforcing
payment of the Obligations secured thereby or provided for
therein, as the case may be, and for the practical realization of
the rights and benefits afforded thereby, though they may result
in delays thereof (and we express no opinion as to the economic
consequences, if any, of such delays).
6. To our knowledge, without independent
verification, the Borrower's Subsidiaries are legally empowered
by franchise, permit, or otherwise to operate their respective
properties in the territory or territories in which such
corporations now operate, and based upon facts known to us and
applicable law currently in effect, such operations may continue
to be conducted as they now are being conducted.
7. The Borrower owns, beneficially and of record,
directly or indirectly, all of the issued and outstanding capital
shares of each Significant Subsidiary, and such shares are
validly issued, fully paid, and nonassessable and are so owned by
the Borrower free and clear of all Liens, except as may be
indicated on Schedule 3.3 attached to the Credit Agreement.
8. Under the circumstances of the transactions as
contemplated by the Credit Agreement, courts of the State of
Louisiana would honor the choice of law agreed to by the parties
in the Credit Agreement.
This opinion is furnished solely in connection with the
transactions referred to in the Credit Agreement and may not,
without our permission, be circulated to any Person, except you,
your legal counsel, the Banks, bank supervisory authorities,
prospective Participants or Purchasers, or as required by law or
order of a court or other legal process and may not be relied
upon except by you, your legal counsel, the Banks or actual
Participants or Purchasers.
Very truly yours,
BOLES, BOLES & RYAN
_____________________________
EXHIBIT D
FINANCIAL REPORT CERTIFICATE
FOR _____________ ENDED _____________ , 19__
AGENT: NationsBank of Texas, N.A.
DATED AS OF: ________________ , 19__
BORROWER: Century Telephone Enterprises, Inc.
FOR: $90,000,000 Credit Agreement
_________________________________________________________________
This certificate is delivered pursuant to Section 5.3 of the
Credit Agreement dated as of February 9, 1994 (as amended,
supplemented, or replaced from time to time, the "Credit
Agreement"), among the Borrower, the Banks, the Agent, and the
Auction Administration Agent. Unless defined herein, capitalized
terms have the meanings given to such terms in the Credit
Agreement.
I certify to the Agent that I am the ___________________
(president, chief financial officer, or treasurer) of the
Borrower on the date hereof and that:
(i) The Financial Statements attached hereto were prepared
in accordance with GAAP and present fairly the consolidated
financial condition and results of operations of the Companies as
of, and for the _____________________ ended, ____________ , 19
(the "Subject Period").
(ii) A review of the Borrower's activities during the
Subject Period has been made under my supervision with a view to
determining whether, during the Subject Period, the Borrower has
kept, observed, performed and fulfilled all of its obligations
under the Loan Papers, and during the Subject Period, to my
knowledge, the Borrower kept, observed, performed and fulfilled
each and every covenant and condition of the Loan Papers in all
material respects (except for any deviations set forth on the
attached schedule).
(iii) During the Subject Period, no Event of Default has
occurred which has not been cured or waived (except for any
Events of Default set forth on the attached schedule).
(iv) Evidence of compliance by Borrower with Sections 5.23
and 5.24 of the Credit Agreement as of the last day of the
Subject Period is set forth on the attached schedule.
(v) This certificate is being delivered on behalf of the
Borrower. No person or entity other than the Agent and the Banks
(collectively, the "Subject Recipients") shall be entitled to
receive or rely upon this certificate for any purpose. The
Subject Recipients agree by their acceptance hereof that (a) they
shall look solely to the Borrower for any loss, cost, damage,
expense, claim, demand, suit or cause of action arising out of or
relating in any way to this certificate or its preparation and
delivery, and (b) the undersigned shall not under any
circumstances have any personal liability whatsoever for the
preparation or execution of this certificate.
CENTURY TELEPHONE ENTERPRISES, INC.
By:___________________________
Name:
Title:
NOTE
$25,000,000 February 9, 1994
FOR VALUE RECEIVED, the undersigned, CENTURY TELEPHONE
ENTERPRISES, INC., a Louisiana corporation (the "Company"),
hereby promises to pay to the order of Bank One, Texas, N.A.
(the "Bank") on or before the Maturity Date the lesser of (i)
Twenty-Five Million and No/100 Dollars ($25,000,000) and (ii) the
aggregate amount of Loans made by the Bank to the Company and
outstanding on the Maturity Date. The principal amount of each
Loan made by the Bank to the Company pursuant to the Credit
Agreement (as hereinafter defined) shall be due and payable on
the last day of the Interest Period for such Loan.
This note has been executed and delivered under, and is
subject to the terms of, the Credit Agreement dated as of
February 9, 1994 (as amended, supplemented, or replaced from time
to time, the "Credit Agreement"), among the Company, the Banks
and the Agent, and is one of the "Notes" referred to therein.
Unless defined herein or the context otherwise requires,
capitalized terms used herein have the meaning given to such
terms in the Credit Agreement. Reference is made to the Credit
Agreement for provisions affecting this note regarding applicable
interest rates, principal and interest payment dates, final
maturity, voluntary and mandatory prepayments, acceleration of
maturity, exercise of Rights, payment of attorneys' fees, court
costs and other costs of collection, certain waivers by the
Company and others now or hereafter obligated for payment of any
sums due hereunder and security for the payment hereof. Without
limiting the immediately preceding sentence, reference is made to
Section 9.12 of the Credit Agreement for usury savings
provisions.
This note is being executed and delivered, and is
intended to be performed, in the State of Texas, and the Laws of
such State and of the United States of America shall govern the
Rights and duties of the Company and the Bank and the validity,
construction, enforcement, and interpretation hereof.
CENTURY TELEPHONE ENTERPRISES, INC.
By /s/ Glen F. Post, III
_____________________
Name:Glen F. Post, III
Title:President and Chief Executive
Officer
NOTE
$8,000,000 February 9, 1994
FOR VALUE RECEIVED, the undersigned, CENTURY TELEPHONE
ENTERPRISES, INC., a Louisiana corporation (the "Company"),
hereby promises to pay to the order of The Bank of Nova Scotia
(the "Bank") on or before the Maturity Date the lesser of (i)
Eight Million and No/100 Dollars ($8,000,000) and (ii) the
aggregate amount of Loans made by the Bank to the Company and
outstanding on the Maturity Date. The principal amount of each
Loan made by the Bank to the Company pursuant to the Credit
Agreement (as hereinafter defined) shall be due and payable on
the last day of the Interest Period for such Loan.
This note has been executed and delivered under, and is
subject to the terms of, the Credit Agreement dated as of
February 9, 1994 (as amended, supplemented, or replaced from time
to time, the "Credit Agreement"), among the Company, the Banks
and the Agent, and is one of the "Notes" referred to therein.
Unless defined herein or the context otherwise requires,
capitalized terms used herein have the meaning given to such
terms in the Credit Agreement. Reference is made to the Credit
Agreement for provisions affecting this note regarding applicable
interest rates, principal and interest payment dates, final
maturity, voluntary and mandatory prepayments, acceleration of
maturity, exercise of Rights, payment of attorneys' fees, court
costs and other costs of collection, certain waivers by the
Company and others now or hereafter obligated for payment of any
sums due hereunder and security for the payment hereof. Without
limiting the immediately preceding sentence, reference is made to
Section 9.12 of the Credit Agreement for usury savings
provisions.
This note is being executed and delivered, and is
intended to be performed, in the State of Texas, and the Laws of
such State and of the United States of America shall govern the
Rights and duties of the Company and the Bank and the validity,
construction, enforcement, and interpretation hereof.
CENTURY TELEPHONE ENTERPRISES, INC.
By /S/ Glen F. Post, III
_____________________
Name: Glen F. Post, III
Title: President and Chief
Executive Officer
NOTE
$8,000,000 February 9, 1994
FOR VALUE RECEIVED, the undersigned, CENTURY TELEPHONE
ENTERPRISES, INC., a Louisiana corporation (the "Company"),
hereby promises to pay to the order of First National Bank of
Commerce (the "Bank") on or before the Maturity Date the lesser
of (i) Eight Million and No/100 Dollars ($8,000,000) and (ii) the
aggregate amount of Loans made by the Bank to the Company and
outstanding on the Maturity Date. The principal amount of each
Loan made by the Bank to the Company pursuant to the Credit
Agreement (as hereinafter defined) shall be due and payable on
the last day of the Interest Period for such Loan.
This note has been executed and delivered under, and is
subject to the terms of, the Credit Agreement dated as of
February 9, 1994 (as amended, supplemented, or replaced from time
to time, the "Credit Agreement"), among the Company, the Banks
and the Agent, and is one of the "Notes" referred to therein.
Unless defined herein or the context otherwise requires,
capitalized terms used herein have the meaning given to such
terms in the Credit Agreement. Reference is made to the Credit
Agreement for provisions affecting this note regarding applicable
interest rates, principal and interest payment dates, final
maturity, voluntary and mandatory prepayments, acceleration of
maturity, exercise of Rights, payment of attorneys' fees, court
costs and other costs of collection, certain waivers by the
Company and others now or hereafter obligated for payment of any
sums due hereunder and security for the payment hereof. Without
limiting the immediately preceding sentence, reference is made to
Section 9.12 of the Credit Agreement for usury savings
provisions.
This note is being executed and delivered, and is
intended to be performed, in the State of Texas, and the Laws of
such State and of the United States of America shall govern the
Rights and duties of the Company and the Bank and the validity,
construction, enforcement, and interpretation hereof.
CENTURY TELEPHONE ENTERPRISES, INC.
By /s/ Glen F. Post, III
_____________________
Name:Glen F. Post, III
Title:President and Chief Executive
Officer
NOTE
$37,000,000 February 9, 1994
FOR VALUE RECEIVED, the undersigned, CENTURY TELEPHONE
ENTERPRISES, INC., a Louisiana corporation (the "Company"),
hereby promises to pay to the order of NationsBank of Texas, N.A.
(the "Bank") on or before the Maturity Date the lesser of (i)
Thirty-Seven Million and No/100 Dollars ($37,000,000) and
(ii) the aggregate amount of Loans made by the Bank to the
Company and outstanding on the Maturity Date. The principal
amount of each Loan made by the Bank to the Company pursuant to
the Credit Agreement (as hereinafter defined) shall be due and
payable on the last day of the Interest Period for such Loan.
This note has been executed and delivered under, and is
subject to the terms of, the Credit Agreement dated as of
February 9, 1994 (as amended, supplemented, or replaced from time
to time, the "Credit Agreement"), among the Company, the Banks
and the Agent, and is one of the "Notes" referred to therein.
Unless defined herein or the context otherwise requires,
capitalized terms used herein have the meaning given to such
terms in the Credit Agreement. Reference is made to the Credit
Agreement for provisions affecting this note regarding applicable
interest rates, principal and interest payment dates, final
maturity, voluntary and mandatory prepayments, acceleration of
maturity, exercise of Rights, payment of attorneys' fees, court
costs and other costs of collection, certain waivers by the
Company and others now or hereafter obligated for payment of any
sums due hereunder and security for the payment hereof. Without
limiting the immediately preceding sentence, reference is made to
Section 9.12 of the Credit Agreement for usury savings
provisions.
This note is being executed and delivered, and is
intended to be performed, in the State of Texas, and the Laws of
such State and of the United States of America shall govern the
Rights and duties of the Company and the Bank and the validity,
construction, enforcement, and interpretation hereof.
CENTURY TELEPHONE ENTERPRISES, INC.
By /s/ Glen F. Post, III
_____________________
Name:Glen F. Post, III
Title:President and Chief Executive
Officer
NOTE
$12,000,000 February 9, 1994
FOR VALUE RECEIVED, the undersigned, CENTURY TELEPHONE
ENTERPRISES, INC., a Louisiana corporation (the "Company"),
hereby promises to pay to the order of Texas Commerce Bank,
National Association (the "Bank") on or before the Maturity Date
the lesser of (i) Twelve Million and No/100 Dollars ($12,000,000)
and (ii) the aggregate amount of Loans made by the Bank to the
Company and outstanding on the Maturity Date. The principal
amount of each Loan made by the Bank to the Company pursuant to
the Credit Agreement (as hereinafter defined) shall be due and
payable on the last day of the Interest Period for such Loan.
This note has been executed and delivered under, and is
subject to the terms of, the Credit Agreement dated as of
February 9, 1994 (as amended, supplemented, or replaced from time
to time, the "Credit Agreement"), among the Company, the Banks
and the Agent, and is one of the "Notes" referred to therein.
Unless defined herein or the context otherwise requires,
capitalized terms used herein have the meaning given to such
terms in the Credit Agreement. Reference is made to the Credit
Agreement for provisions affecting this note regarding applicable
interest rates, principal and interest payment dates, final
maturity, voluntary and mandatory prepayments, acceleration of
maturity, exercise of Rights, payment of attorneys' fees, court
costs and other costs of collection, certain waivers by the
Company and others now or hereafter obligated for payment of any
sums due hereunder and security for the payment hereof. Without
limiting the immediately preceding sentence, reference is made to
Section 9.12 of the Credit Agreement for usury savings
provisions.
This note is being executed and delivered, and is
intended to be performed, in the State of Texas, and the Laws of
such State and of the United States of America shall govern the
Rights and duties of the Company and the Bank and the validity,
construction, enforcement, and interpretation hereof.
CENTURY TELEPHONE ENTERPRISES, INC.
By /s/ Glen F. Post, III
_____________________
Name:Glen F. Post, III
Title:President and Chief Executive
Officer
EXHIBIT 10.7
CENTURY TELEPHONE ENTERPRISES, INC.
DOLLARS & SENSE PLAN AND TRUST
FIRST AMENDMENT
Effective January 1, 1993
Century Telephone Enterprises, Inc. hereby amends the
Century Telephone Enterprises, Inc. Dollars & Sense Plan and
Trust, effective as of January 1, 1993, as follows:
Section 5.1(b) of the Plan is hereby deleted in its entirety
and the following is inserted in lieu thereof.
(b) Allocation Method. The Match Contributions for
each period shall be a percentage of each eligible
Participant's Pre-Tax Contributions for the
period, as determined by the Board of Directors of
the Employer by resolution thereof, provided that
no Match Contributions shall be made based upon a
Participant's Contributions in excess of six
percent (6%) of his or her pay for such period.
The Match Contribution percentage in effect as of
the effective date of this amendment shall remain
in force and effect until modified by a resolution
of the Board of Directors, and each Match
Contribution percentage established by the Board
of Directors thereafter shall remain in force and
effect until modified by a subsequent resolution
of the Board of Directors.
Date: April 1, 1993 Century Telephone Enterprises,
Inc.
By: /s/ R. Stewart Ewing, Jr.
R. Stewart Ewing, Jr.
Senior Vice President and
Chief Financial Officer
Accepted by Trustee:
Date: May 18, 1993 Wells Fargo Bank, National
Association
By: /s/ Dolores Upton
TitleVice President
Date: May 19, 1993 Wells Fargo Bank, National
Association
By: /s/ Katherine M. Olson
TitleAssistant Vice
President
Trust Officer
CENTURY TELEPHONE ENTERPRISES, INC.
DOLLARS & SENSE PLAN AND TRUST
SECOND AMENDMENT
Effective April 1, 1993
Century Telephone Enterprises, Inc. hereby amends the
Century Telephone Enterprises, Inc. Dollars & Sense Plan and
Trust, effective as of April 1, 1993, as follows:
Section 1.29 of the Plan is hereby deleted in its entirety
and the following is inserted in lieu thereof.
1.29 "Pay". The base pay paid to an Eligible Employee
by an Employer while a Participant during the
current period. In addition, Pay shall include
commissions paid to salespersons, but only for
salespersons who receive both a salary and
commissions.
Pay is neither increased nor decreased by any
salary credit or reduction pursuant to Code
sections 125 or 402(a)(8). Pay is limited to
$200,000 (as indexed for the cost of living
pursuant to Code sections 401(a)(17) and 415(d)
per Plan Year.
Date: April 1, 1993 Century Telephone Enterprises,
Inc.
By: /s/ R. Stewart Ewing, Jr.
R. Stewart Ewing, Jr.
Senior Vice President and
Chief Financial Officer
Accepted by Trustee:
Date: May 18, 1993 Wells Fargo Bank, National
Association
By: /s/ Dolores Upton
TitleVice President
Date: May 19, 1993 Wells Fargo Bank, National
Association
By: /s/ Katherine M. Olson
TitleAssistant Vice
President
Trust Officer
CENTURY TELEPHONE ENTERPRISES, INC.
DOLLARS & SENSE PLAN AND TRUST
THIRD AMENDMENT
Effective April 9, 1993
Century Telephone Enterprises, Inc. hereby amends the
Century Telephone Enterprises, Inc. Dollars & Sense Plan and
Trust, effective as of April 9, 1993, as follows:
The following sentence is hereby inserted at the end of
Section 1.17 of the Plan:
Notwithstanding the foregoing, San Marcos
Telephone Company, Inc., SMTelecorp, Inc., and subsidiaries
thereof, and any successors thereto by merger orotherwise,
shall become participating Employers under the Plan as of
the first payperiod commencing on or after June 20, 1993.
Date: June 10, 1993 Century Telephone Enterprises,
Inc.
By: /s/ R. Stewart Ewing, Jr.
R. Stewart Ewing, Jr.
Senior Vice President and
Chief Financial Officer
Accepted by Trustee:
Date: August 3, 1993 Wells Fargo Bank, National
Association
By: /s/ Katherine M. Olson
TitleAssistant Vice
President
Date: August 3, 1993 Wells Fargo Bank, National
Association
By: /s/ Peter H. Sorensen
TitleVice President
Amendment No. 4
to the
Century Telephone Enterprises, Inc.
Dollars & Sense Plan and Trust
WHEREAS, Century Telephone Enterprises, Inc. approved and
adopted the Century Telephone Enterprises, Inc. Dollars & Sense
Plan (the "Plan") and Trust Agreement (the "Trust") which were
originally effective May 1, 1986, and most recently restated
effective April 1, 1992, and subsequently amended;
WHEREAS, Section 19.1 of the Plan provides that the Company
reserves the right to amend the Plan and Trust;
NOW THEREFORE RESOLVED, that the Plan is amended effective
July 1, 1993, as follows:
1. Section 16 is amended to revise subsection 16.2 to add a new
subsection (e) and redesignate the existing subsection (e)
as (f) as follows:
16.2 Investment Funds
(e)shares of a registered investment company, whether
or not the Trustee or any of its affiliates is an
advisor to, or other service provider to, such
company, which the Trustee designates as a
permissible asset under the Plan; and
2. Section 16 is amended to add a new subsection 16.6 and to
redesignate the existing subsections 16.6 through 16.9 as
16.7 through 16.10 as follows:
16.6 Voting and Shareholder Rights of Registered Investment
Company Shares
The Administrator shall be entitled to vote proxies or
exercise any shareholder rights relating to shares held
on behalf of the Plan in a registered investment
company, whether or not the Trustee or any of its
affiliates is an advisor to, or other service provider
to, such company.
Date: December 6, 1993 Century Telephone Enterprises,
Inc.
By: /s/ R. Stewart Ewing, Jr.
Senior Vice President and
Chief Financial Officer
CENTURY TELEPHONE ENTERPRISES, INC. Amendment No. 4
DOLLARS & SENSE PLAN AND TRUST
The provisions of the above amendment which relate to the Trustee
are hereby approved and executed.
Date: December 10, 1993 Wells Fargo Bank, National
Association
By: /s/ Dolores Upton
TitleVice President
Wells Fargo Bank, National
Association
By: /s/ Frances Williams
TitleVice President
EXHIBIT 10.8
AMENDMENT TO THE
CENTURY TELEPHONE ENTERPRISES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST
STATE OF LOUISIANA
PARISH OF OUACHITA
BE IT KNOWN, that on this 1st day of June, 1993, before me,
a Notary Public, duly commissioned and qualified in and for the
Parish of Ouachita, State of Louisiana, therein residing and in
the presence of the undersigned witnesses:
PERSONALLY CAME AND APPEARED:
Century Telephone Enterprises, Inc., represented herein by
its Senior Vice President and Chief Financial Officer, R. Stewart
Ewing, Jr., as Settlor and Employer, which hereby executes the
following amendment to the Century Telephone Enterprises, Inc.
Employee Stock Ownership Plan and Trust, such amendment to be
effective January 1, 1994:
Delete the first sentence of Section 1.17 and insert the
following in lieu thereof:
A computation period during which an Employee has completed
at least one thousand (1000) Hours of Service.
THUS DONE AND SIGNED on the day first above shown, in the
presence of the undersigned competent witnesses, who hereunto
sign their names with the said appearers and me, Notary, after
reading of the whole.
WITNESSES CENTURY TELEPHONE ENTERPRISES,
INC.
/s/ Sandra B. Post By /s/ R. Stewart Ewing, Jr.
R. Stewart Ewing, Jr.
Senior Vice President and
/s/ Kay Buchart Chief Financial Officer
/s/ Elvis C. Stout
Notary Public
ACCEPTANCE OF AMENDMENT BY TRUSTEE
STATE OF LOUISIANA
PARISH OF OUACHITA
On this 15th day of June, 1993,
BEFORE ME, a Notary Public, and in the presence of the
undersigned competent witnesses, personally came and appeared:
FIRST AMERICAN BANK & TRUST OF LOUISIANA
which declared that it is appearing herein for the purpose of
accepting and it does hereby accept the amendment to the Century
Telephone Enterprises, Inc. Employee Stock Ownership Plan and
Trust adopted by the Settlor on June 1, 1993.
THUS DONE AND SIGNED at Monroe, Louisiana, on the date first
above written.
WITNESSES FIRST AMERICAN BANK AND TRUST OF
LOUISIANA
/s/ Linda G. Todd By /s/ William W. Keith
William W. Keith, Executive
Vice President and Trust
Officer
/s/ Ashley J. Akus
/s/ Cathy M. Yelverton
Notary Public
AMENDMENTS TO THE
CENTURY TELEPHONE ENTERPRISES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST
STATE OF LOUISIANA
PARISH OF OUACHITA
BE IT KNOWN, that on this 10th day of June, 1993, before me,
a Notary Public, duly commissioned and qualified in and for the
Parish of Ouachita, State of Louisiana, therein residing and in
the presence of the undersigned witnesses:
PERSONALLY CAME AND APPEARED:
Century Telephone Enterprises, Inc., represented herein by
its Senior Vice President and Chief Financial Officer, R. Stewart
Ewing, Jr., as Settlor and Employer, which hereby executes the
following amendments to the Century Telephone Enterprises, Inc.
Employee Stock Ownership Plan and Trust, such amendments to be
effective April 9, 1993:
Add the following paragraph at the end of Section 1.7:
For employees of San Marcos Telephone Company, Inc., SM
Telecorp, Inc., and subsidiaries thereof, who become
participants in the Plan on or after June 20, 1993,
Compensation for the Plan Year ending December 31, 1993
shall be recognized commencing as of the effective date of
participation of each such employee pursuant to Section 2.1
Add the following paragraph as Section 1.17(f):
(f)Service with San Marcos Telephone Company, Inc., SM
Telecorp, Inc., and subsidiaries thereof, and any successors
thereto by merger or otherwise, shall be counted for all
purposes under this Plan.
THUS DONE AND SIGNED on the day first above shown, in the
presence of the undersigned competent witnesses, who hereunto
sign their names with the said appearers and me, Notary, after
reading of the whole.
WITNESSES CENTURY TELEPHONE ENTERPRISES,
INC.
/s/ Linda Vaughn By /s/ R. Stewart Ewing, Jr.
R. Stewart Ewing, Jr.
Senior Vice President and
/s/ Sherry Bowen Chief Financial Officer
/s/ Kathy Tettleton
Notary Public
ACCEPTANCE OF AMENDMENTS BY TRUSTEE
STATE OF LOUISIANA
PARISH OF OUACHITA
On this 10th day of June, 1993,
BEFORE ME, a Notary Public, and in the presence of the
undersigned competent witnesses, personally came and appeared:
FIRST AMERICAN BANK & TRUST OF LOUISIANA
which declared that it is appearing herein for the purpose of
accepting and it does hereby accept the amendments to the Century
Telephone Enterprises, Inc. Employee Stock Ownership Plan and
Trust adopted by the Settlor on June 10, 1993.
THUS DONE AND SIGNED at Monroe, Louisiana, on the date first
above written.
WITNESSES FIRST AMERICAN BANK AND TRUST OF
LOUISIANA
/s/ Lisa K. McGivney By /s/ William W. Keith
William W. Keith, Executive
Vice
/s/ Ashley J. Akus President and Trust Officer
/s/ Cathy M. Yelverton
Notary Public
EXHIBIT 11
CENTURY TELEPHONE ENTERPRISES, INC.
COMPUTATIONS OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Year ended December 31,
______________________________________________________________________
1993 1992 1991
______________________________________________________________________
(expressed in thousands,
except per share amounts)
<S> <C> <C> <C>
Income before cumulative effect of
changes in accounting principles $ 69,004 59,973 37,419
Dividends applicable to preferred stock (24) (24) (24)
______________________________________________________________________
Income before cumulative effect of
changes in accounting principles
applicable to common stock 68,980 59,949 37,395
Dividends applicable to preferred stock 24 24 24
Interest on 6% convertible debentures,
net of taxes 4,583 4,201 -
______________________________________________________________________
Income before cumulative effect of
changes in accounting principles
as adjusted for purposes of
computing fully diluted earnings
per share $ 73,587 64,174 37,419
======================================================================
Net income $ 69,004 44,305 37,419
Dividends applicable to preferred stock (24) (24) (24)
______________________________________________________________________
Net income applicable to common stock 68,980 44,281 37,395
Dividends applicable to preferred stock 24 24 24
Interest on 6% convertible debentures,
net of taxes 4,583 - -
______________________________________________________________________
Net income as adjusted for purposes of
computing fully diluted earnings
per share $ 73,587 44,305 37,419
======================================================================
Weighted average number of shares:
Outstanding during period 50,512 47,982 46,583
Common stock equivalent shares 694 518 722
______________________________________________________________________
Number of shares for computing primary
earnings per share 51,206 48,500 47,305
Incremental common shares attributable
to additional dilutive effect of
convertible securities 4,686 4,314 127
______________________________________________________________________
Number of shares as adjusted for purposes
of computing fully diluted earnings
per share before cumulative effect of
changes in accounting principles 55,892 52,814 47,432
Less antidilutive effect of 6% convertible
debentures - (4,161) -
______________________________________________________________________
Number of shares as adjusted for purposes
of computing fully diluted earnings
per share 55,892 48,653 47,432
======================================================================
</TABLE>
<PAGE>
CENTURY TELEPHONE ENTERPRISES, INC.
COMPUTATIONS OF EARNINGS PER SHARE
Year ended December 31,
_________________________________________________________________
1993 1992 1991
_________________________________________________________________
Primary earnings per share:
Income before cumulative effect
of changes in accounting
principles $ 1.35 1.23 .79
Cumulative effect of changes
in accounting principles - (.32) -
_________________________________________________________________
Primary earnings per share $ 1.35 .91 .79
=================================================================
Fully diluted earnings per share:
Income before cumulative effect
of changes in accounting
principles $ 1.32 1.22 .79
Cumulative effect of changes
in accounting principles - (.31) -
_________________________________________________________________
Fully diluted earnings per share $ 1.32 .91 .79
=================================================================
<PAGE>
EXHIBIT 21
CENTURY TELEPHONE ENTERPRISES, INC.
SUBSIDIARIES OF THE REGISTRANT
AS OF DECEMBER 31, 1993
State of
Subsidiary incorporation
Adamsville Telephone Company, Inc. Tennessee
Caddoan Telephone Co. Louisiana
Central Indiana Telephone Company, Inc. Indiana
Central Louisiana Telephone Company, Inc. Louisiana
Century Area Long Lines (CALL), Inc. Wisconsin
Century Business Communications, Inc. Louisiana
Century Cellunet, Inc. Louisiana
Century Cellunet of Alexandria, Inc. Louisiana
Century Cellunet of Battle Creek, Inc. Louisiana
Century Cellunet of Jackson, Inc. Louisiana
Century Cellunet of LaCrosse, Inc. Louisiana
Century Cellunet of Lansing, Inc. Delaware
Century Cellunet of Michigan RSAs, Inc. Louisiana
Century Cellunet of Minnesota RSA #6, Inc. Minnesota
Century Cellunet of North Arkansas, Inc. Louisiana
Century Cellunet of North Louisiana, Inc. Louisiana
Century Cellunet of Saginaw, Inc. Louisiana
Century Cellunet of Shreveport, Inc. Louisiana
Century Cellunet of South Arkansas, Inc. Louisiana
Century Cellunet of Southern Michigan, Inc. Delaware
Century Cellunet of Texarkana, Inc. Louisiana
Century Investments, Inc. Louisiana
Century Paging, Inc. Louisiana
Century Service Group, Inc. Louisiana
Century Supply Group, Inc. Louisiana
Century Telecommunications, Inc. Texas
Century Telelink, Inc. Louisiana
Century Telephone Company, Inc. Louisiana
Century Telephone Midwest, Inc. Michigan
Century Telephone of Arkansas, Inc. Arkansas
Century Telephone of Idaho, Inc. Delaware
Century Telephone of Michigan, Inc. Michigan
Century Telephone of North Louisiana, Inc. Louisiana
Century Telephone of North Mississippi, Inc. Mississippi
Century Telephone of Ohio, Inc. Ohio
Century Telephone of San Marcos, Inc. Texas
Century Telephone of Wisconsin, Inc. Wisconsin
Chatham Telephone Co., Inc. Louisiana
Chester Telephone Company Iowa
Claiborne Telephone Company Tennessee
Coastal Telephone & Electronics Corporation Louisiana
Evangeline Telephone Company Louisiana
Forestville Telephone Company, Inc. Wisconsin
Larsen-Readfield Telephone Company Wisconsin
Louisiana Western Telephone Co. Louisiana
Metro Access Networks, Inc. Delaware
Monroe County Telephone Company Wisconsin
Mountain Home Telephone Co., Inc. Arkansas
Mustang Telephone Company Texas
Odon Telephone Co., Inc. Indiana
Ooltewah-Collegedale Telephone Company Tennessee
Redfield Telephone Company, Inc. Arkansas
Solon Springs Telephone Co. Wisconsin
Union Telephone Company, Inc. Arkansas
Universal Cellular for Arizona RSA #3-B, Inc. Arizona
Universal Telephone, Inc. Wisconsin
Universal Telephone Company of Colorado Colorado
Universal Telephone Company of Northern
Wisconsin, Inc. Wisconsin
Universal Telephone Company of Southwest New Mexico
Certain of the Company's smaller subsidiaries have been
intentionally omitted from this exhibit pursuant to rules and
regulations of the Securities and Exchange Commission.
EXHIBIT 23
Independent Auditors' Consent
The Board of Directors
Century Telephone Enterprises, Inc.:
We consent to incorporation by reference in the Registration
Statements (No. 33-17114 and No. 33-47211) on Form S-3, the
Registration Statements (No. 33-5836, No. 33-17113, No. 33-46562,
and No. 33-48554) on Form S-8, the Registration Statements (No.
33-31314 and No. 33-46473) on combined Form S-8 and Form S-3, and
the Registration Statements (No. 33-39196, No. 33-48956, and No.
33-50791) on Form S-4 of Century Telephone Enterprises, Inc. of
our report dated February 4, 1994, relating to the consolidated
balance sheets of Century Telephone Enterprises, Inc. and
subsidiaries as of December 31, 1993 and 1992, and the related
consolidated statements of income, stockholders' equity, and cash
flows and related Financial Statement Schedules for each of the
years in the three-year period ended December 31, 1993, which
report appears in the December 31, 1993 annual report on Form 10-
K of Century Telephone Enterprises, Inc. Our report refers to
changes in the methods of accounting for income taxes and
postretirement benefits other than pensions in 1992.
KPMG PEAT MARWICK
Shreveport, Louisiana
March 16, 1994
