UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 30, 1995
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.
(Exact name of registrant as specified in its charter)
Louisiana 72-0651161
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 Century Park Drive, Monroe, Louisiana 71203
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (318) 388-9500
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.
[X] Yes [ ] No
As of July 31, 1995, there were 58,373,038 shares of common stock
outstanding.
CENTURY TELEPHONE ENTERPRISES, INC.
TABLE OF CONTENTS
Page No.
Part I. Financial Information:
Consolidated Statements of Income--Three Months and Six
Months Ended June 30, 1995 and 1994
Consolidated Balance Sheets--June 30, 1995 and
December 31, 1994
Consolidated Statements of Stockholders' Equity--
Six Months Ended June 30, 1995 and 1994
Consolidated Statements of Cash Flows--
Six Months Ended June 30, 1995 and 1994
Notes to Consolidated Financial Statements
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Part II. Other Information
Submission of Matters To a Vote of Security Holders
Other Information
Exhibits and Reports on Form 8-K
Signature
Index to Exhibits
PART I. FINANCIAL INFORMATION
CENTURY TELEPHONE ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three months Six months
ended June 30 ended June 30
---------------- ----------------
1995 1994 1995 1994
------- ------- ------- -------
(Dollars, except per share
amounts, and shares
expressed in thousands)
OPERATING REVENUES
Telephone $101,857 94,969 202,133 186,739
Mobile Communications 47,877 37,911 90,026 67,121
------- ------- ------- -------
Total operating revenues 149,734 132,880 292,159 253,860
------- ------- ------- -------
OPERATING EXPENSES
Cost of sales and
operating expenses 74,252 68,233 143,268 131,894
Depreciation and
amortization 26,670 22,934 52,523 44,367
------- ------- ------- -------
Total operating expenses 100,922 91,167 195,791 176,261
------- ------- ------- -------
OPERATING INCOME 48,812 41,713 96,368 77,599
------- ------- ------- -------
OTHER INCOME (EXPENSE)
Interest expense (10,451) (10,824) (21,847) (19,326)
Income from unconsolidated
cellular entities 3,374 3,411 8,098 5,975
Gain on sales of assets - - 5,909 -
Minority interest (1,895) (857) (3,841) (1,555)
Other income and expense 2,127 795 2,975 1,684
------- ------- ------- -------
Total other income
(expense) (6,845) (7,475) (8,706) (13,222)
------- ------- ------- -------
INCOME BEFORE INCOME TAX
EXPENSE 41,967 34,238 87,662 64,377
Income tax expense 15,800 12,753 34,495 23,691
------- ------- ------- -------
NET INCOME $ 26,167 21,485 53,167 40,686
======= ======= ======= =======
PRIMARY EARNINGS PER SHARE $ .45 .40 .93 .76
======= ======= ======= =======
FULLY DILUTED EARNINGS PER
SHARE $ .45 .39 .92 .74
======= ======= ======= =======
DIVIDENDS PER COMMON SHARE $ .0825 .0800 .1650 .1600
======= ======= ======= =======
AVERAGE PRIMARY SHARES
OUTSTANDING 58,453 53,546 57,318 53,157
======= ======= ======= =======
AVERAGE FULLY DILUTED SHARES
OUTSTANDING 58,659 58,288 58,659 57,859
======= ======= ======= =======
See accompanying notes to consolidated financial statements.
CENTURY TELEPHONE ENTERPRISES, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
June 30, December 31,
1995 1994
------------ ------------
(Dollars in thousands)
ASSETS
------
CURRENT ASSETS
Cash and cash equivalents $ 6,150 7,154
Accounts receivable
Customers, less allowance for doubtful
accounts of $2,371 and $2,360 43,502 40,824
Other 22,264 23,180
Materials and supplies, at average cost 5,972 7,090
Other 3,523 2,980
--------- ---------
81,411 81,228
--------- ---------
NET PROPERTY, PLANT AND EQUIPMENT 1,004,249 947,131
--------- ---------
INVESTMENTS AND OTHER ASSETS
Excess cost of net assets acquired,
less accumulated amortization of
$46,857 and $40,756 444,283 441,436
Other 188,742 173,458
--------- ---------
633,025 614,894
--------- ---------
$1,718,685 1,643,253
========= =========
LIABILITIES AND EQUITY
----------------------
CURRENT LIABILITIES
Current maturities of long-term debt $ 43,293 12,718
Notes payable to banks 159,500 158,000
Accounts payable 58,300 52,331
Accrued expenses and other liabilities
Salaries and benefits 17,768 17,884
Taxes 15,671 16,530
Interest 5,167 8,243
Other 4,102 9,237
Advance billings and customer deposits 12,430 11,725
--------- ---------
316,231 286,668
--------- ---------
LONG-TERM DEBT 393,994 518,603
--------- ---------
DEFERRED CREDITS AND OTHER LIABILITIES 195,922 187,746
--------- ---------
STOCKHOLDERS' EQUITY
Common stock, $1.00 par value, authorized
175,000,000 shares, issued and outstanding
58,368,072 and 53,574,361 shares 58,368 53,574
Paid-in capital 431,749 319,235
Retained earnings 335,553 291,999
Unearned ESOP shares (15,400) (16,840)
Preferred stock - non-redeemable 2,268 2,268
--------- ---------
812,538 650,236
--------- ---------
$1,718,685 1,643,253
========= =========
See accompanying notes to consolidated financial statements.
CENTURY TELEPHONE ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(UNAUDITED)
Six months
ended June 30
-------------------
1995 1994
--------- --------
(Dollars in thousands)
COMMON STOCK
Balance at beginning of period $ 53,574 51,295
Issuance of common stock for acquisitions - 2,000
Issuance of common stock through conversion
of debentures 4,540 -
Issuance of common stock through dividend
reinvestment, incentive and benefit plans 254 89
Conversion of preferred stock into common stock - 1
------- -------
Balance at end of period 58,368 53,385
------- -------
PAID-IN CAPITAL
Balance at beginning of period 319,235 262,294
Issuance of common stock for acquisitions - 50,311
Issuance of common stock through conversion
of debentures 108,596 -
Issuance of common stock through dividend
reinvestment, incentive and benefit plans 3,479 1,593
Amortization of unearned compensation and other 439 384
Conversion of preferred stock into common stock - 26
------- -------
Balance at end of period 431,749 314,608
------- -------
RETAINED EARNINGS
Balance at beginning of period 291,999 208,945
Net income 53,167 40,686
Cash dividends declared
Common stock-$.1650 and $.1600 per share,
respectively (9,552) (8,527)
Preferred stock (61) (39)
------- -------
Balance at end of period 335,553 241,065
------- -------
UNEARNED ESOP SHARES
Balance at beginning of period (16,840) (9,220)
Commitment to ESOP - (10,000)
Release of ESOP shares 1,440 940
------- -------
Balance at end of period (15,400) (18,280)
------- -------
PREFERRED STOCK - NON-REDEEMABLE
Balance at beginning of period 2,268 454
Issuance of preferred stock for acquisition - 1,875
Conversion of preferred stock into common stock - (27)
------- -------
Balance at end of period 2,268 2,302
------- -------
TOTAL STOCKHOLDERS' EQUITY $812,538 593,080
======= =======
See accompanying notes to consolidated financial statements.
CENTURY TELEPHONE ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six months
ended June 30
-------------------
1995 1994
-------- --------
(Dollars in thousands)
OPERATING ACTIVITIES
Net income $ 53,167 40,686
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 56,907 48,883
Deferred income taxes 2,055 (3,059)
Income from unconsolidated cellular
entities (8,098) (5,975)
Gain on sales of assets (5,909) -
Changes in current assets and current
liabilities:
(Increase) decrease in accounts
receivable (2,905) 2,658
Increase (decrease) in accounts payable 5,837 (10,157)
Increase (decrease) in other accrued
taxes (952) 7,391
Changes in other current assets and other
current liabilities, net (6,393) 5,251
Increase in other noncurrent liabilities 6,099 4,533
Other, net 1,275 277
------- -------
Net cash provided by operating activities 101,083 90,488
------- -------
INVESTING ACTIVITIES
Payments for property, plant and equipment (98,438) (90,426)
Acquisitions, net of cash acquired (6,009) (54,847)
Proceeds from sales of assets 17,922 -
Investments in unconsolidated cellular
entities (7,044) (1,227)
Distributions from unconsolidated cellular
entities 1,386 1,836
Purchase of life insurance investment (6,409) (7,094)
Note receivable - (25,000)
Other, net (156) 855
------- -------
Net cash used in investing activities (98,748) (175,903)
------- -------
FINANCING ACTIVITIES
Proceeds from issuance of long-term debt 6,498 147,547
Payments of long-term debt (5,310) (46,551)
Notes payable, net 1,500 6,000
Proceeds from issuance of common stock 3,496 1,682
Cash dividends (9,613) (8,566)
Other, net 90 180
------- -------
Net cash provided by (used in)
financing activities (3,339) 100,292
------- -------
Net increase (decrease) in cash and cash
equivalents (1,004) 14,877
Cash and cash equivalents at beginning
of period 7,154 9,777
------- -------
Cash and cash equivalents at end of period $ 6,150 24,654
======= =======
Supplemental cash flow information:
Income taxes paid $ 34,672 17,257
======= =======
Interest paid $ 24,923 17,604
======= =======
See accompanying notes to consolidated financial statements.
CENTURY TELEPHONE ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1995
(UNAUDITED)
(1) Basis of Financial Reporting
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to rules and
regulations of the Securities and Exchange Commission; however, the
Company believes the disclosures which are made are adequate to make the
information presented not misleading. The financial statements and
footnotes included in this Form 10-Q should be read in conjunction with
the financial statements and notes thereto included in the Company's
annual report on Form 10-K for the year ended December 31, 1994. Certain
1994 amounts have been reclassified to be consistent with the 1995
presentation.
The unaudited financial information for the three months and six
months ended June 30, 1995 and 1994 has not been audited by independent
public accountants; however, in the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to present
fairly the results of operations for the three-month and six-month periods
have been included therein. The results of operations for the first six
months of the year are not necessarily indicative of the results of
operations which might be expected for the entire year.
(2) Net Property, Plant and Equipment
Net property, plant and equipment is composed of the following:
June 30, December 31,
1995 1994
---------- ----------
(Dollars in thousands)
Telephone, at original cost $1,147,202 1,076,496
Accumulated depreciation (330,076) (295,255)
--------- ---------
817,126 781,241
--------- ---------
Mobile Communications, at cost 172,676 152,305
Accumulated depreciation (45,233) (38,552)
--------- ---------
127,443 113,753
--------- ---------
Other, at cost 96,368 85,406
Accumulated depreciation (36,688) (33,269)
--------- ---------
59,680 52,137
--------- ---------
$1,004,249 947,131
========= =========
(3) Conversion of Debentures
In February 1995 all $115.0 million of Century's outstanding 6%
convertible debentures due 2007 were converted into Century common stock
by the debenture holders at a conversion price of $25.33 per share.
(4) Earnings from Unconsolidated Cellular Entities
The following summarizes the unaudited combined results of operations
of the cellular entities in which the Company's investments (as of June
30, 1995 and 1994) were accounted for by the equity method.
Six months
ended June 30
---------------------
1995 1994
-------- --------
(Dollars in thousands)
Results of operations
Revenues $336,812 150,606
Operating income $111,677 38,996
Net income $112,833 37,704
(5) Sales of Assets
In the first quarter of 1995 the Company sold, for an aggregate of
approximately $17.9 million cash, its ownership interests in certain non-
strategic cellular RSAs located primarily in western states and two MSAs
in the midwest, which represented an aggregate of approximately 253,000
pops. These transactions resulted in a pre-tax gain of $5.9 million ($2.0
million after tax).
CENTURY TELEPHONE ENTERPRISES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and
Results of Operations ("MD&A") included herein should be read in
conjunction with MD&A and the other information included in the Company's
annual report on Form 10-K for the year ended December 31, 1994. The
results of operations for the three months and/or six months ended June
30, 1995 are not necessarily indicative of the results of operations which
might be expected for the entire year.
RESULTS OF OPERATIONS
Three Months Ended June 30, 1995 Compared
to Three Months Ended June 30, 1994
Net income for the second quarter of 1995 was $26.2 million compared
to $21.5 million during the second quarter of 1994, a 21.8% increase. The
increase was principally due to a $7.1 million increase in operating
income which was partially offset by, among other things, a $3.0 million
increase in income tax expense. Fully diluted earnings per share
increased to $.45 for the three months ended June 30, 1995 from $.39
during the three months ended June 30, 1994, a 15.4% increase.
Three months
ended June 30
---------------
1995 1994
------ ------
(Dollars in thousands,
except per share amounts)
Operating income
Telephone $35,025 33,896
Mobile Communications 13,787 7,817
------ ------
48,812 41,713
Interest expense (10,451) (10,824)
Income from unconsolidated cellular entities 3,374 3,411
Minority interest (1,895) (857)
Other income and expense 2,127 795
Income tax expense (15,800) (12,753)
------ ------
Net income $26,167 21,485
====== ======
Fully diluted earnings per share $ .45 .39
====== ======
Contributions to operating revenues and operating income by the
Company's telephone operations and mobile communications operations for
the three months ended June 30, 1995 and 1994 were as follows:
Three months
ended June 30
---------------
1995 1994
------ ------
Operating revenues
Telephone operations 68.0% 71.5
Mobile Communications operations 32.0% 28.5
Operating income
Telephone operations 71.8% 81.3
Mobile Communications operations 28.2% 18.7
Telephone Operations
Three months
ended June 30
---------------
1995 1994
------ ------
(Dollars in thousands)
Operating revenues
Local service $ 27,638 23,967
Network access and
long distance 62,571 60,018
Other 11,648 10,984
------- -------
101,857 94,969
------- -------
Operating expenses
Plant operations 21,039 20,377
Customer operations 9,940 8,356
Corporate and other 15,245 14,584
Depreciation and amortization 20,608 17,756
------- -------
66,832 61,073
------- -------
Operating income $ 35,025 33,896
======= =======
Telephone operating income increased $1.1 million (3.3%) due to an
increase in operating revenues of $6.9 million (7.3%) which more than
offset an increase in operating expenses of $5.8 million (9.4%).
The increase in revenues was primarily due to a $1.3 million increase
in amounts received from the Federal Communications Commission mandated
Universal Service Fund; a $1.9 million contribution to revenues from a
local exchange telephone company acquired during the first quarter of
1995; $1.6 million from increased rates for basic services which was
partially offset by an $839,000 decrease in intrastate high cost
assistance revenues; a $1.1 million increase in revenues as a result of an
increase in the number of customer access lines; and a $919,000 increase
in the partial recovery of increased operating expenses through revenue
pools in which the Company participates with other telephone companies.
During the second quarter of 1995, operating expenses, exclusive of
depreciation and amortization, were $2.9 million (6.7%) higher than during
the second quarter of 1994. Approximately $1.1 million of the increase
was attributable to a one-time reduction in expenses recorded in the
second quarter of 1994 due to a reduction (as a result of the death of a
former executive officer) in the Company's liability for long-term
disability. Of the remaining $1.8 million, approximately $1.1 million was
due to added expenses resulting from the acquisition of a local exchange
telephone company and approximately $700,000 was due to increases in other
general operating expenses.
Depreciation and amortization increased $2.9 million (16.1%) which
included $1.2 million of depreciation due to higher recurring rates
approved in 1994 or anticipated to be approved in 1995 for certain
subsidiaries. The remaining increase in depreciation and amortization was
primarily due to higher levels of plant in service.
Mobile Communications Operations
Three months
ended June 30
---------------
1995 1994
------ ------
(Dollars in thousands)
Operating revenues
Cellular service $46,422 34,954
Equipment and other 1,455 2,957
------ ------
47,877 37,911
------ ------
Operating expenses
Cost of sales and other operating expenses 9,580 8,119
General, administrative and customer
service 9,068 8,503
Sales and marketing 9,380 8,294
Depreciation and amortization 6,062 5,178
------ ------
34,090 30,094
------ ------
Operating income $13,787 7,817
====== ======
Mobile communications operating income reflects the operations of
the cellular entities in which the Company owns a majority interest. The
minority interest owners' share of the income or loss of such entities
($1.9 million during the second quarter of 1995 and $857,000 during the
second quarter of 1994) is reflected as an expense in "Minority interest"
on the Company's consolidated statements of income. The Company's share
of income or loss from the cellular entities in which it owns less than a
majority interest ($3.4 million during both the three months ended June
30, 1995 and 1994) is reflected in "Income from unconsolidated cellular
entities" on the Company's consolidated statements of income.
Mobile communications operating income increased $6.0 million
(76.4%) to $13.8 million in the second quarter of 1995 from $7.8 million
in the second quarter of 1994. Mobile communications operating revenues
increased $10.0 million (26.3%) which more than offset an increase in
operating expenses of $4.0 million (13.3%).
The increase in cellular service revenues was substantially due to
an increase in the number of cellular units in service. The average
number of cellular units in service in majority-owned markets during the
second quarter of 1995 and 1994 was 232,300 and 169,000, respectively.
The average monthly cellular service revenue per customer declined
to $67 during the second quarter of 1995 from $69 during the second
quarter of 1994. It has been an industry-wide trend that early subscribers
have normally been the heaviest users and that a higher percent of new
subscribers tend to be lower usage customers. The average monthly service
revenue per customer may further decline (i) as market penetration
increases and additional lower usage customers are activated and (ii) as
competitive pressures intensify and continue to place downward pressure on
rates. The Company is responding to such competitive pressures by, among
other things, modifying certain of its price plans and implementing
certain other plans and promotions, all of which may result in lower
average revenue per customer. The Company will continue to focus on
customer service and attempt to stimulate cellular usage by promoting the
availability of certain enhanced services and by improving the quality of
its service through the construction of additional cell sites and
enhancements to its system.
Equipment and other revenues decreased to $1.5 million during
the second quarter of 1995 from $3.0 million during the second quarter of
1994, substantially because the second quarter of 1994 included $930,000
of revenues applicable to the Company's paging operations which were sold
in October 1994. Revenues from the sale of cellular phones decreased
$572,000 in the second quarter of 1995 compared to the second quarter of
1994. Although the Company sold more phones in the second quarter of 1995
than in the second quarter of 1994, revenues decreased because of certain
promotions which were based on equipment discounting.
Cost of sales and other operating expenses during the second
quarter of 1995 increased $1.5 million substantially due to an $890,000
increase in cost of sales caused by an increase in the number of units
sold. The remaining increase was primarily due to costs incurred in
connection with providing service to a larger number of customers.
General, administrative and customer service expenses increased
$565,000 primarily due to costs associated with serving a larger
number of customers.
Sales and marketing costs increased $1.1 million partially due to
a $430,000 increase in the costs of sales promotions. The remaining
increase was primarily due to an increase in commissions paid to
agents and employees for selling cellular service to new customers.
Depreciation and amortization increased $884,000 (17.1%) due
primarily to a higher level of plant in service.
Interest Expense
Interest expense decreased $373,000 (3.4%) during the second
quarter of 1995 compared to the second quarter of 1994. Average debt
outstanding decreased primarily due to the conversion of $115.0 million of
6% convertible debentures into common stock in February 1995. The
resulting decrease in interest expense was substantially offset by an
increase in interest expense caused by higher average interest rates.
Income from Unconsolidated Cellular Entities
Earnings from unconsolidated cellular entities, net of the
amortization of associated goodwill, was $3.4 million in both the second
quarter of 1995 and the second quarter of 1994. In the second quarter of
1995, the Company recorded a $1.0 million reduction in earnings from
unconsolidated cellular entities as a result of a multi-year retroactive
adjustment recorded by the operator of a cellular partnership in which the
Company owns less than a majority interest. This unfavorable adjustment
was offset by improved profitability, exclusive of the above mentioned
adjustment, in the cellular entities in which the Company owns less than a
majority interest.
Minority Interest
The increased profitability during the second quarter of 1995 of
the Company's majority-owned and operated cellular entities resulted in
a corresponding increase of $1.0 million in the expense recorded by the
Company to reflect the minority interest owners' share of the profits.
Other Income and Expense
Other income and expense for the second quarter of 1995 was $2.1
million compared to $795,000 during the second quarter of 1994. The
results of operations of subsidiaries of the Company which are not
included in the telephone or mobile communications operations increased
$956,000 in the second quarter of 1995 compared to the second quarter of
1994 primarily as a result of a $600,000 non-recurring charge against
earnings during the second quarter of 1994. Interest income increased
$373,000 in the second quarter of 1995, substantially all of which was due
to interest on a $25.0 million note receivable issued to Century in May
1994.
Income Tax Expense
Income tax expense increased $3.0 million (23.9%) during the
second quarter of 1995 compared to the second quarter of 1994 primarily
due to the increase in income before taxes.
Six Months Ended June 30, 1995 Compared
to Six Months Ended June 30, 1994
Net income for the first six months of 1995 increased $12.5
million (30.7%) to $53.2 million from $40.7 million during the first six
months of 1994. The increase was principally due to an $18.8 million
increase in operating income (of which $14.2 million was applicable to the
Company's mobile communications operations) and a $5.9 million pre-tax
gain on the sale of certain non-strategic cellular entities, which were
partially offset by, among other things, an increase in income tax expense
of $10.8 million. Fully diluted earnings per share increased to $.92 for
the six months ended June 30, 1995 from $.74 during the six months ended
June 30, 1994, a 24.3% increase.
Six months
ended June 30
---------------
1995 1994
------ ------
(Dollars in thousands,
except per share amounts)
Operating income
Telephone $69,370 64,786
Mobile Communications 26,998 12,813
------ ------
96,368 77,599
Interest expense (21,847) (19,326)
Income from unconsolidated cellular entities 8,098 5,975
Gain on sales of assets 5,909 -
Minority interest (3,841) (1,555)
Other income and expense 2,975 1,684
Income tax expense (34,495) (23,691)
------ ------
Net income $53,167 40,686
====== ======
Fully diluted earnings per share $ .92 .74
====== ======
Contributions to operating revenues and operating income by the
Company's telephone operations and mobile communications operations
for the six months ended June 30, 1995 and 1994 were as follows:
Six months
ended June 30
---------------
1995 1994
------ ------
Operating revenues
Telephone operations 69.2% 73.6
Mobile Communications operations 30.8% 26.4
Operating income
Telephone operations 72.0% 83.5
Mobile Communications operations 28.0% 16.5
Telephone Operations
Six months
ended June 30
---------------
1995 1994
------ ------
(Dollars in thousands)
Operating revenues
Local service $ 54,478 47,472
Network access and long distance 124,156 117,925
Other 23,499 21,342
------- -------
202,133 186,739
------- -------
Operating expenses
Plant operations 42,674 41,590
Customer operations 19,090 16,864
Corporate and other 30,120 28,688
Depreciation and amortization 40,879 34,811
------- -------
132,763 121,953
------- -------
Operating income $ 69,370 64,786
======= =======
Telephone operating income increased $4.6 million (7.1%) due
to an increase in operating revenues of $15.4 million (8.2%) which more
than offset an increase in operating expenses of $10.8 million (8.9%).
The increase in revenues was primarily due to a $3.5 million
increase in amounts received from the Federal Communications Commission
mandated Universal Service Fund; a $4.1 million contribution to revenues
from two local exchange telephone companies acquired in 1994 and 1995;
$3.2 million from increased rates for basic services which was partially
offset by a $1.6 million decrease in intrastate high cost assistance
revenues; a $1.9 million increase in revenues as a result of an increase
in the number of customer access lines; and a $1.1 million increase in the
partial recovery of increased operating expenses through revenue pools in
which the Company participates with other telephone companies.
During the first six months of 1995, operating expenses, exclusive
of depreciation and amortization, increased $4.7 million (5.4%)
partially due to $2.2 million of expenses incurred as a result of the
acquisition of two local exchange telephone companies. Operating expenses
were $1.1 million higher during the first six months of 1995 as a result
of a $1.1 million reduction in expenses recorded in the second quarter of
1994 due to a reduction in the Company's liability for long-term
disability. The remaining increase was primarily due to an increase in
other general operating expenses.
Depreciation and amortization increased $6.1 million (17.4%) which
included $2.8 million of depreciation due to higher recurring rates approved
in 1994 or anticipated to be approved in 1995 for certain subsidiaries.
The remaining increase in depreciation and amortization was primarily due
to higher levels of plant in service.
Mobile Communications Operations
Six months
ended June 30
---------------
1995 1994
------ ------
(Dollars in thousands)
Operating revenues
Cellular service $87,243 62,029
Equipment and other 2,783 5,092
------ ------
90,026 67,121
------ ------
Operating expenses
Cost of sales and other operating expenses 17,112 14,497
General, administrative and customer service 17,848 15,683
Sales and marketing 16,424 14,572
Depreciation and amortization 11,644 9,556
------ ------
63,028 54,308
------ ------
Operating income $26,998 12,813
====== ======
The mobile communications operating income reflects the operations
of the cellular entities in which the Company owns a majority interest
and includes the operations of Celutel, Inc. ("Celutel") subsequent to
its acquisition in February 1994. The minority interest owners' share of
the income or loss of such entities ($3.8 million during the first six
months of 1995 and $1.6 million during the first six months of 1994) is
reflected as an expense in "Minority interest" on the Company's consolidated
statements of income. The Company's share of income or loss from the
cellular entities in which it owns less than a majority interest ($8.1
million and $6.0 million during the six months ended June 30, 1995 and
1994, respectively) is reflected in "Income from unconsolidated cellular
entities" on the Company's consolidated statements of income.
Mobile communications operating income increased $14.2 million
(110.7%) to $27.0 million in the first six months of 1995 from $12.8
million in the first six months of 1994. Mobile communications operating
revenues increased $22.9 million (34.1%) which more than offset an increase
in operating expenses of $8.7 million (16.1%).
The increase in cellular service revenues was substantially due
to (i) an increase in the number of cellular units in service and (ii)
a $5.8 million increase in revenues generated by Celutel. Celutel was
acquired on February 10, 1994; accordingly, the six months ended June 30,
1995 included six months of revenues applicable to Celutel while the six
months ended June 30, 1994 included only revenues recorded subsequent to
the acquisition date. The average number of cellular units in service in
majority-owned markets during the first six months of 1995 and 1994 was
224,500 and 152,800, respectively.
The average monthly cellular service revenue per customer
declined to $65 during the first six months of 1995 from $68 during the
first six months of 1994. It has been an industry-wide trend that early
subscribers have normally been the heaviest users and that a higher
percent of new subscribers tend to be lower usage customers. The average
monthly service revenue per customer may further decline (i) as market
penetration increases and additional lower usage customers are activated
and (ii) as competitive pressures intensify and continue to place downward
pressure on rates. The Company is responding to such competitive pressures
by, among other things, modifying certain of its price plans and
implementing certain other plans and promotions, all of which may result
in lower average revenue per customer. The Company will continue to focus
on customer service and attempt to stimulate cellular usage by promoting the
availability of certain enhanced services and by improving the quality of
its service through the construction of additional cell sites and
enhancements to its system.
Equipment and other revenues decreased $2.3 million to $2.8 million
during the six months ended June 30, 1995 compared to $5.1 million
during the six months ended June 30, 1994. The six months ended June 30,
1994 included $1.9 million of revenues applicable to the Company's paging
operations which were sold in October 1994. Revenues from the sale of
cellular phones decreased $431,000 during the first six months of 1995
compared to the first six months of 1994. Although the Company sold more
phones in the first six months of 1995 than in the first six months of
1994, revenues decreased because of certain promotions which were based on
equipment discounting.
Cost of sales and other operating expenses during the first six
months of 1995 increased $2.6 million substantially as a result of a $1.4
million increase in cost of sales caused by an increase in the number
of units sold. The remaining increase was primarily due to costs incurred
in connection with providing service to a larger number of customers.
General, administrative and customer service expenses increased
$2.2 million primarily due to the costs associated with serving a larger
number of customers.
Sales and marketing expenses increased $1.9 million primarily due
to a $1.1 million increase in commissions paid to agents and employees
for selling cellular service to new customers. The remainder of the
increase was primarily due to costs of sales promotions.
Depreciation and amortization increased $2.1 million (21.9%)
due primarily to a higher level of plant in service.
Interest Expense
Interest expense increased $2.5 million (13.0%) during the first
six months of 1995 compared to the first six months of 1994 primarily due
to the effect of higher average interest rates which increased interest
expense $3.6 million. Such increase was partially offset by a decrease in
interest expense due to a decrease in average debt outstanding. The
decrease in average debt outstanding was partially due to the conversion
of $115.0 million of 6% convertible debentures into common stock in
February 1995.
Income from Unconsolidated Cellular Entities
Earnings from unconsolidated cellular entities, net of the
amortization of associated goodwill, increased $2.1 million (35.5%) during
the first six months of 1995 compared to the first six months of 1994 due
to improvement in profitability of the cellular entities in which the
Company owns less than a majority interest. During the first six months
of 1995, the Company recorded an $800,000 reduction in earnings from
unconsolidated cellular entities as a result of a multi-year retroactive
adjustment recorded by the operator of a cellular partnership in which the
Company owns less than a majority interest.
Gain on Sales of Assets
During the first quarter of 1995, the Company sold its ownership
interests in certain non-strategic cellular entities which resulted in a
pre-tax gain of $5.9 million ($2.0 million after-tax; $.03 per fully
diluted share). For additional information, see Note 5 of Notes
to Consolidated Financial Statements.
Minority Interest
The increased profitability during the first six months of
1995 of the Company's majority-owned and operated cellular entities
resulted in a corresponding increase of $2.3 million in the expense
recorded by the Company to reflect the minority interest owners' share
of the profits.
Other Income and Expense
Other income and expense for the first six months of 1995 was
$3.0 million compared to $1.7 million during the first six months of 1994.
Interest income increased $995,000 in the first six months of 1995,
substantially all of which was due to interest income on a $25.0 million
note receivable issued to Century in May 1994. For additional information
on other income and expense, see Three Months Ended June 30, 1995 Compared
to Three Months Ended June 30, 1994 - Other Income and Expense.
Income Tax Expense
Income tax expense increased $10.8 million (45.6%) during the
first six months of 1995 compared to the first six months of 1994
primarily due to the increase in income before taxes. The effective
income tax rate for the first six months of 1995 increased primarily
because of the income tax expense attributable to the gain on sales of
assets during the first quarter of 1995.
LIQUIDITY AND CAPITAL RESOURCES
Excluding cash used for acquisitions, 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 long-
term 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 $101.1 million
during the first six months of 1995 compared to $90.5 million during the
first six months of 1994. The Company's accompanying consolidated
statements of cash flows identify major differences between net income and
net cash provided by operating activities for each of these periods. For
additional information relating to the telephone operations and mobile
communications operations of the Company, see Results of Operations.
Net cash used in investing activities was $98.7 million and
$175.9 million for the six months ended June 30, 1995 and 1994,
respectively. Cash used in connection with the Celutel acquisition during
the first six months of 1994 was $54.8 million. Payments for property,
plant and equipment were $8.0 million more in the first six months of 1995
than in the comparable period during 1994. Capital expenditures for the
six months ended June 30, 1995 were $61.2 million for telephone
operations, $26.4 million for mobile communications operations and $11.6
million for other operations. The $98.7 million of net cash used in
investing activities in 1995 was net of $17.9 million of proceeds from the
sale of certain cellular entities. In connection with the corporate
restructuring of a local exchange telephone company that has been viewed
from time to time as an acquisition candidate, Century loaned the
telephone company's then-newly-formed parent company $25.0 million in May
1994.
Net cash used in financing activities was $3.3 million
during the first six months of 1995; net cash provided by financing
activities was $100.3 million during the first six months of 1994. Net
borrowings, including notes payable and long-term debt, were $2.7 million
during the first six months of 1995 compared to net borrowings of $107.0
million during the first six months of 1994. During the first six months
of 1994, the Company filed a shelf registration statement registering
$400.0 million of senior unsecured debt securities under which the Company
issued $150.0 million of senior notes on May 6, 1994. The proceeds were
used to discharge the Company's indebtedness under a $90.0 million bridge
loan incurred to fund substantially all of the Company's cash requirements
in connection with the acquisition of Celutel in February 1994, and to
reduce the Company's short-term bank indebtedness under various credit
facilities.
Revised budgeted capital expenditures for 1995 total $120.0
million for telephone operations, $63.0 million for mobile communications
operations and $15.0 million for other operations.
As of June 30, 1995, Century's telephone subsidiaries had
available for use $160.8 million of commitments for long-term financing
from the Rural Utilities Service ("RUS") and the Company had $72.1 million
of undrawn committed bank lines of credit. In addition, approximately
$19.5 million of uncommitted credit facilities were available to Century
at June 30, 1995. The Company also has access to debt and equity capital
markets. Applications for additional long-term financing for Century's
telephone subsidiaries have been filed with the RUS and are in various
stages of processing. The Company has experienced no significant problems
in obtaining funds through the issuance of debt or equity for capital
expenditures or other purposes.
ACCOUNTING PRONOUNCEMENT
In March 1995 the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets To Be Disposed
Of" ("SFAS 121"), effective for fiscal years beginning after December 15,
1995. SFAS 121 establishes guidance for recognizing and measuring
impairment losses and requires that the carrying amount of an impaired
asset be reduced to fair value when events or circumstances indicate that
the carrying value may not be recoverable. Recoverability would generally
be determined by estimating future cash flows resulting from use and
eventual disposition of the asset. The effect on the Company's financial
statements of the adoption of SFAS 121 has not yet been determined.
OTHER
During the second quarter of 1995, the Louisiana Public Service
Commission ("LPSC") culminated its two-year investigation into the earnings
of independent telephone companies in Louisiana by adopting a new
regulatory plan for such companies effective July 1, 1995. The plan
provides that independent telephone companies in Louisiana will be
regulated on an incentive-type rate of return basis in a manner yet to be
determined.
Under this plan, the Company will be required to reduce its
intrastate switched access rates over a two-year period beginning July 1,
1995 to match the rates currently in effect for South Central Bell. The
Company anticipates that this directive will reduce its access revenues by
approximately $500,000 in 1995 and up to $4.2 million annually upon
completion of the two year phase-in.
The plan also establishes a target rate of return of between
10.75% and 12.75% after giving effect to the access rate reductions
described above. Beginning July 1, 1996, companies earning in excess of
12.75% will be required to lower their prospective rate of return to
12.25%, either by further reducing access rates (subject to certain
limits) or taking such other actions as may be directed by the LPSC.
Although the impact of this directive on the Company cannot be readily
determined until the LPSC provides additional guidance on the operation
and methodology of the plan, the Company anticipates that the impact of
these changes will adversely affect its results of operations and there is
no assurance that the effect will not be material. The Company
anticipates that certain of its Louisiana telephone subsidiaries may take
action to reduce earnings levels as a result of this plan.
The United States Senate and the House of Representatives
have each recently passed separate telecommunications bills that propose
to substantially alter the regulatory framework of the telecommunications
industry by, among other things, promoting deregulation and local exchange
competition. The bills will not become law until their conflicting terms
can be reconciled and consolidated into a single bill by a conference
committee composed of members of the House and Senate, which must be
approved by both chambers and signed or otherwise allowed to take effect
by President Clinton. Assuming these measures become law in substantially
their current form, the Company does not believe the resulting competition
is likely to materially affect it in the near term, although there can be
no assurance to this effect or to the effect that these bills will not be
substantially altered by the conference committee.
In July 1995 the Federal Communications Commission ("FCC")
issued a Notice of Proposed Rulemaking and Notice of Inquiry, in which it
is seeking comments on the proposals and policy changes relating to
certain federal high cost assistance mechanisms, including the Universal
Service Fund. The FCC's stated goals are to ensure that universal service
can be maintained, but still hold the total level of assistance to a
reasonable level and, where possible, reduce barriers to competitive entry
and to promote efficient investment in and operation of local service
networks. Although the Company anticipates that these initiatives may
result in a reduction of its federal support revenues, management believes
it is premature to assess or estimate the ultimate impact thereof.
PART II. OTHER INFORMATION
CENTURY TELEPHONE ENTERPRISES, INC.
Item 4. Submission of Matters to a Vote of Security Holders
At the Company's annual meeting of shareholders held on May 11, 1995,
the shareholders elected five Class I directors and approved each of the
proposals set forth in the Company's proxy statement dated March 24, 1995.
The following number of votes were cast for or were withheld from the
following nominees:
Class I Nominees For Withheld
------------------------------------------------------------------------------
William R. Boles, Jr. 117,779,152 2,696,924
W. Bruce Hanks 118,909,569 1,566,507
C. G. Melville, Jr. 118,790,197 1,685,879
Glen F. Post, III 118,869,610 1,606,466
Clarke M. Williams 119,343,843 1,132,233
The following number of votes were cast in the manner indicated below
with respect to the following proposals.
Broker
For Against Abstain Non-Votes
---------------------------------------------
Proposal to amend
the Company's articles
of incorporation to:
(1) increase the number
of authorized shares
of common stock to
175 million shares; 110,843,212 8,502,201 1,130,663 -
(2) clarify and expand the
protections currently
afforded under the
Company's "fair price"
article by:
(A) clarifying the
definition of
Related Person; 107,118,232 7,456,329 1,478,281 4,423,234
and
(B) clarifying the
definition of
Business
Combinations; 110,159,192 4,421,773 1,471,877 4,423,234
and
(3) clarify, simplify and
update the articles by:
(A) adding a new article
regarding directors'
qualifications; 116,779,360 2,611,072 1,085,644 -
(B) clarifying the
Board's authority to
limit management's
liability; 113,649,701 5,393,768 1,432,607 -
(C) deleting a provision
mandating the use
of stock
certificates; 108,227,037 5,804,946 2,020,859 4,423,234
(D) adding a clarifying
definition of total
voting power; 112,869,159 1,581,276 1,602,407 4,423,234
and
(E) adding a clarifying
definition of capital
stock. 111,822,774 2,793,981 1,436,087 4,423,234
Proposal to approve the
Company's 1995 Incentive
Compensation Plan 103,198,683 14,542,436 2,734,957 -
Item 5. Other Information
On May 23, 1995, the Board of Directors amended the Company's bylaws to
conform them to the amendments to the Company's articles of incorporation
described in Item 4 above and to effect various other changes. Among these
changes was the addition of a bylaw requiring shareholders of record who
wish to nominate directors or submit other matters for consideration at
shareholders' meetings to provide timely advance written notice to the
Company (the "Advance Notice Bylaw"). Subject to certain exceptions, to be
timely the notice must be received by the Company not less than 70 days nor
more than 210 days prior to the anniversary date of the previous year's
annual meeting.
The notice to the Company from a shareholder intending to nominate a
person for election as a director or to propose other matters at a
shareholders' meeting must contain certain information, including the name,
age and address of the shareholder proposing such action and any persons
acting in concert with such shareholder and a representation by such
shareholder that such shareholder is a holder of record of the Company's
capital stock and intends to appear at the meeting in person to make the
nomination or propose the specified matter. In the case of nominations for
directors, the notice must also include (i) the name, age, address and
principal occupation of each nominee, (ii) a description of all
arrangements between the nominating shareholder and each nominee, (iii)
other information required to be included in a proxy statement pursuant to
the proxy rules of the Securities and Exchange Commission, and (iv) the
consent of each nominee to serve as director of the Company if elected and
an affidavit that such nominee meets all applicable qualifications to serve
as a director. In the case of other proposed business, the shareholder's
notice must set forth a description of the business, the reasons for
conducting such business at the meeting and any material interest of the
shareholder therein. The chairman of the meeting will have the power to
disregard any nomination or other matter that fails to comply with these
procedures.
With respect to proposals by shareholders to propose matters other than
the nomination of directors, the Advance Notice Bylaw permits the Company
to disregard proposals that (i) are substantially duplicative of a prior-
received proposal to be voted upon at the upcoming meeting, (ii) deal with
substantially the same subject matter as a prior proposal that was voted
upon within the preceding five years and which failed to receive
affirmative votes in excess of certain specified levels, or (iii) in the
judgment of the Board of Directors are not proper subjects for action by
shareholders under Louisiana law.
Nothing in the Advance Notice Bylaw will affect the rights of
shareholders under the proxy rules of the Securities and Exchange
Commission to request that their proposals be included in the Company's
proxy statement or to solicit their own proxies. Shareholders who desire
to pursue these rights at future shareholders' meetings will be required to
comply with both the Advance Notice Bylaw and the federal proxy rules.
Under the terms of the Advance Notice Bylaw, shareholders of record who
wish to nominate directors or submit other matters for consideration at the
Company's 1996 annual meeting of shareholders must submit their notice to
Harvey P. Perry, Secretary of the Company. To be timely, this notice must
be received by the Company between October 13, 1995 and March 4, 1996
(assuming, as expected, that the 1996 annual meeting of shareholders will
be held not more than 30 days earlier or later than May 11, 1996). In
order to be considered for inclusion in the Company's 1996 proxy materials
relating to this meeting pursuant to the federal proxy rules, shareholder
proposals must be received by the Company on or before November 25, 1995.
At its May 23, 1995 meeting, the Board of Directors also adopted a
bylaw to opt-out of the Louisiana Control Share Statute. This statute,
which was enacted in 1987, generally disenfranchises any person who
acquires or proposes to acquire more than 20% of Century's voting power
unless Century's shareholders re-enfranchise his shares at a shareholder
meeting called for this purpose. Given the protections against unfavorable
takeovers afforded under the Company's rights agreement, articles of
incorporation and bylaws, the Board of Directors believes the potential
protections of the Louisiana Control Share Statute are no longer necessary.
Moreover, unlike the Company's rights agreement and other similar
provisions, which are intended to encourage any person desiring to acquire
a controlling interest in the Company to do so through a transaction
negotiated with the Board, the Louisiana Control Share Statute may give
such person a right to convene promptly a shareholder meeting. The
convening of such a meeting may frustrate the ability of the Board to
control the timing and scope of the proposed transaction, which may reduce
the Board's ability, among other things, to represent the interests of all
the Company's shareholders, to consider the impact of the proposed
transaction on the Company's long-term plans and to negotiate the best
possible terms for the shareholders. For these reasons, the Board of
Directors determined that it is in the best interests of the Company and
its shareholders to opt-out of the Louisiana Control Share Statute.
Although not currently anticipated, the Board could, if warranted by a
change in circumstances, opt back into the statute by rescinding its May 23
bylaw, subject to any required regulatory approvals.
The full text of the Company's bylaws, as amended through May 23, 1995,
has been filed as Exhibit 4.2 to Century's Form S-8 which was filed with
the Securities and Exchange Commission on June 7, 1995.
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits
3(i) Amended and Restated Articles of Incorporation of
Registrant (incorporated by reference to Exhibit 4.1 to
Registration No. 33-60061).
3(ii) Bylaws of Registrant as amended through May 23, 1995
(incorporated by reference to Exhibit 4.2 to Registration
No. 33-60061).
10.1 Form of Severance Agreement, as amended and restated as
of May 23, 1995, by and between Registrant and each of
its executive officers other than Clarke M. Williams.
10.2 Form of Severance Agreement dated May 23, 1995, by and
between Registrant and seven of its officers who are not
executive officers.
10.3 Deferred Compensation Plan for Outside Directors.
10.4 Amendment to the Century Telephone Enterprises, Inc.
Stock Bonus Plan, PAYSOP and Trust.
10.5 Form of Stock Option Agreement, pursuant to 1995
Incentive Compensation Plan and dated as of May 22, 1995,
entered into by Registrant and its officers.
10.6 Form of Stock Option Agreement, pursuant to 1995
Incentive Compensation Plan and dated as of June 23,
1995, entered into by Registrant and certain key
employees.
10.7 Registrant's 1995 Incentive Compensation Plan
(incorporated by reference to Exhibit 4.4 to Registration
No. 33-60061).
11 Computations of Earnings Per Share.
27 Financial Data Schedule.
B. Reports on Form 8-K
There were no reports on Form 8-K filed during the quarter
ended June 30, 1995.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
CENTURY TELEPHONE ENTERPRISES, INC.
Date: August 7, 1995 /s/ Murray H. Greer
---------------
Murray H. Greer
Controller
(Principal Accounting Officer)
CENTURY TELEPHONE ENTERPRISES, INC.
INDEX TO EXHIBITS
Exhibit
Number
-------
3(i) Amended and Restated Articles of Incorporation of Registrant
(incorporated by reference to Exhibit 4.1 to Registration No. 33-
60061).
3(ii) Bylaws of Registrant as amended through May 23, 1995 (incorporated
by reference to Exhibit 4.2 to Registration No. 33-60061).
10.1 Form of Severance Agreement, as amended and restated as of May 23,
1995, by and between Registrant and each of its executive officers
other than Clarke M. Williams, included herein.
10.2 Form of Severance Agreement dated May 23, 1995, by and between
Registrant and seven of its officers who are not executive
officers, included herein.
10.3 Deferred Compensation Plan for Outside Directors, included herein.
10.4 Amendment to the Century Telephone Enterprises, Inc. Stock Bonus
Plan, PAYSOP and Trust, included herein.
10.5 Form of Stock Option Agreement, pursuant to 1995 Incentive
Compensation Plan and dated as of May 22, 1995, entered into by
Registrant and its officers, included herein.
10.6 Form of Stock Option Agreement, pursuant to 1995 Incentive
Compensation Plan and dated as of June 23, 1995, entered into by
Registrant and certain key employees, included herein.
10.7 Registrant's 1995 Incentive Compensation Plan (incorporated by
reference to Exhibit 4.4 to Registration No. 33-60061).
11 Computations of Earnings Per Share, included herein.
27 Financial Data Schedule, included herein.
Exhibit 10.1
SEVERANCE AGREEMENT
SEVERANCE AGREEMENT dated as of [May 24, 1990] [January 1,
1995], as amended and restated as of May 23, 1995, by and between Century
Telephone Enterprises, Inc., a Louisiana corporation (the "Company"), and
______________________ ("Executive").
W I T N E S S E T H:
WHEREAS, as of [May 24, 1990] [January 1, 1995] the Company and
Executive entered into an agreement providing for severance benefits on terms
and conditions substantially similar to those set forth herein (the "Original
Agreement"); and
WHEREAS, the Company and Executive wish to amend and restate the
Original Agreement to (i) obligate the Company to make the Gross-up
Payment specified in Section 3.1(b) below, (ii) clarify the definition of
"Change of Control," (iii) revise Section 3.3 in its entirety, (iv) acknowledge
the lapse of all prior employment agreements as specified in Section 5.3
below, (v) obligate Executive to refrain from disclosing certain confidential
information as specified in Section 5.9 below, (vi) clarify the procedures for
payment as specified in Section 5.10 and (vii) effect certain other
miscellaneous changes, all of which were approved by the Compensation
Committee of the Company's Board of Directors on May 22, 1995 and ratified
by the full Board on May 23, 1995;
NOW, THEREFORE, in consideration of the premises and the re-
spective covenants and agreements of the parties contained in the Original
Agreement and herein, and intending to be legally bound hereby, the parties
agree that the Original Agreement is hereby amended and restated in its
entirety to read as follows:
SECTION 1
DEFINITIONS
As used herein, the following terms shall have the meanings specified.
1.1 The "Act" - the Securities Exchange Act of 1934, as amended.
1.2 "Announcement Date" - the earlier of (i) the day of the public
announcement of a Change in Control (as hereinafter defined) or a proposal
that results in a Change in Control or (ii) the date that the Board enters into
negotiations with any person or entity, which negotiations result in a Change
in Control.
1.3 "Auditors" - the Company's regular independent auditors as of
the Announcement Date.
1.4 "Board" - the Board of Directors of the Company.
1.5 "Cause" - conviction of a felony, habitual intoxication, abuse of
or addiction to a controlled dangerous substance, excessive absenteeism, the
willful and continued failure by Executive to substantially perform his duties
hereunder (other than any such failure resulting from Executive's incapacity
due to physical or mental illness) after demand for substantial performance is
delivered by the Company that specifically identifies the manner in which the
Company believes Executive has not substantially performed his duties, or the
willful engaging by Executive in misconduct which is materially injurious to
the Company, monetarily or otherwise. For purposes of this paragraph, no act
or failure to act on Executive's part shall be considered "willful" unless done,
or omitted to be done, by him not in good faith and without reasonable belief
that his action or omission was in the best interest of the Company.
Notwithstanding the foregoing, Executive shall not be deemed to have been
terminated for Cause without (i) reasonable notice to Executive setting forth
the reasons for the Company's intention to terminate for Cause, (ii) an
opportunity for Executive, together with his counsel, to be heard before the
Board, and (iii) delivery to Executive of notice from the Board finding that,
in the good faith opinion of the Board, Executive has been guilty of conduct
set forth above in the preceding sentence, and specifying the particulars
thereof in detail.
1.6 "Change in Control" - (i) the occurrence of an event with
respect to the Company of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under
the Act; (ii) any "person" (as such term in used in Section 13(d) and 14(d) of
the Act), other than the Company or any "person" who on the date hereof is
a director, officer, an employee benefit plan or related trust or affiliate of
the Company, becoming the "beneficial owner" (as defined in Rule 13d-3 under
the Act), directly or indirectly, of securities of the Company representing 30%
or more of the combined voting power of the Company's then outstanding
securities entitled to vote generally in the election of directors; (iii) the
Company, its capital stock, or all or substantially all of its assets are
acquired by or combined with (either through a merger, consolidation,
reorganization, share exchange or otherwise) with another entity and less than
a majority of the outstanding voting power of the parent or surviving
corporation are owned, immediately after consummation of such transaction,
by Century's shareholders immediately prior to such time; or (iv) during any
period of two consecutive years, individuals who at the beginning of such
period constitute the Board ceasing for any reason to constitute at least a
majority thereof, unless the election of each director who was not a director
at the beginning of such period shall have been approved in advance by
directors representing at least two-thirds of the directors then in office
who were directors at the beginning of the period.
1.7 "Code" - Internal Revenue Code of 1986, as amended.
1.8 "Company" - Century Telephone Enterprises, Inc. or any
successor thereto.
1.9 "Compensation Amount" - the sum of (i) Executive's annual
salary as of the Announcement Date plus (ii) all cash and stock bonuses
(valued on the date of grant) earned by Executive for the most recent twelve-
month period ending before the effective date of a Change in Control.
1.10 "Effective Termination" - following an Announcement Date, any
action taken by the Company or any controlling entity of the Company in
relation to Executive's salary, duties or position as an executive officer of
the Company, other than an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Company (or any controlling
entity of the Company) within three days after receipt of notice thereof given
by Executive, that, in Executive's reasonable judgment, results in any of the
following: (a) a reduction in Executive's salary as of the Announcement Date
or a reduction in the value of the benefits received by Executive under any
pension or welfare employee benefit plan maintained by the Company as of
the Announcement Date; (b) a diminution in Executive's duties, responsibilities
and position in the management of the Company and its subsidiaries including,
without limitation, (i) the permanent assignment to Executive of duties not
consistent with Executive's position as an executive officer of the Company,
(ii) the demotion of Executive or (iii) the failure to provide Executive with
secretarial assistance and all support, staff, office, equipment and other
facilities necessary to carry out his functions as an executive officer of the
Company; (c) the relocation of Executive to an office outside of the city in
which he performed his services for the Company immediately prior to the
Announcement Date; or (d) the refusal to allow Executive to attend to matters
or engage in activities not directly related to the business of the Company
which are of the type which he attended to or engaged in prior to the
Announcement Date or was permitted to attend to or engage in by the Chief
Executive Officer or the Board prior to the Announcement Date.
SECTION 2
TERM
This Agreement shall terminate on the earlier of (i) May 24, 2000 or
(ii) the date that Executive ceases to be an employee of the Company at any
time prior to an Announcement Date.
SECTION 3
COMPENSATION UPON TERMINATION
3.1 Compensation and Severance Benefits. (a) If, during the period
beginning on the Announcement Date and ending three years following the
effective date of a Change in Control, the Company (or any controlling entity
of the Company) shall terminate Executive's employment with the Company,
other than for Cause, or if Executive resigns because an event constituting an
Effective Termination has occurred, Executive shall receive, in addition to all
amounts to which he is entitled pursuant to the Company's termination policies
and plans then in effect, as severance pay, an amount equal to the
Compensation Amount multiplied by the number three. Such severance
payment shall be made in a lump sum within five business days of the date
that Executive's employment is terminated or the date that Executive notifies
the Company that an event constituting an Effective Termination has occurred.
(b) Contemporaneously with any payments due under
paragraph (a) and in addition to any other amounts due, the Company shall
pay in cash to Executive an additional amount (the "Gross-up Payment") such
that the sum of all such payments will enable Executive to receive on a net
basis, after deducting any excise tax imposed on Executive by Section 4999
of the Code in connection with his receipt of all such payments and any
federal, state and local income taxes imposed on Executive in connection with
his receipt of all such payments, the same dollar amount as Executive would
receive on a net basis (after deducting any applicable federal, state and local
income taxes) if no such excise tax were payable under Section 4999 of the
Code. In connection with making the Gross-up Payment, the Company shall
cause the Auditors to furnish written calculations of (a) Executive's "base
amount" within the meaning of Section 280G of the Code and the regulations
promulgated thereunder (the "Base Amount"), (b) the amount of any
"parachute payment" deemed to have been received by Executive with respect
to the Change in Control within the meaning of Section 280G of the Code and
the regulations promulgated thereunder (the "Parachute Payment") and (c) the
aggregate marginal income tax rate applicable to Executive, after taking into
account all applicable federal, state and local income taxes (the "Applicable
Rate"). Upon receipt of these calculations from the Auditors, the parties
shall, unless they mutually agree in writing to the contrary, determine the
amount of the Gross-up Payment in accordance with the following formula:
G = (.2P - .2B) / (.8 - R)
where G is the amount of the Gross-up Payment, P is the amount of the
Parachute Payment, B is the Base Amount and R is the Applicable Rate. If
the Auditors fail to timely complete and deliver the calculations referred to
above, the Company may defer making the Gross-up Payment (but no other
payments contemplated hereunder) until such calculations are received,
provided that no deferral shall be permitted if the Auditor's untimeliness is
caused directly or indirectly by the Company's failure to cooperate in good
faith with the Auditors and further provided that in no event whatsoever shall
this payment be deferred by more than 10 business days.
3.2 Election of Benefits. In lieu of receiving the full amount of
payments provided under Subsection 3.1 hereof, Executive may, by written
notice to the Company, elect to receive, at the Company's expense, for a
period of up to ten years following the date that his employment is terminated,
medical or life insurance benefits substantially similar to those benefits
provided to him by the Company on the Announcement Date. The present
value of such benefits shall be determined by the Auditors and deducted from
the amounts to be paid by the Company to Executive pursuant to Subsection
3.1 hereof.
3.3 Additional Obligations of the Company. Nothing herein shall
relieve the Company of its obligations to Executive under any qualified or
non-qualified retirement plan, deferred compensation plan, incentive
compensation plan, stock purchase plan, stock option plan, stock ownership
plan, bonus plan, supplemental plan, insurance program or plan, or any other
compensation, benefit or welfare plan or arrangement, or any agreement
entered into thereunder.
SECTION 4
SUCCESSORS; ASSIGNMENT
4.1 Successors to Executive. This Agreement and all rights of
Executive hereunder shall inure to the benefit of and be enforceable by the
Executive's personal or legal representative, executors, administrators,
successors, heirs, distributes, devises and legatees. If Executive should die
while any amounts would still be payable to him hereunder, had he continued
to live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to Executive's devise, legatee, or
other designee or, if there be no such designee, to Executive's estate.
4.2 Successors to Company. This Agreement and all obligations of
the Company hereunder shall be binding on the Company and on any
successor to the Company. The Company hereby agrees that it will not enter
into any agreement to consolidate, amalgamate or merge with another entity
or to convey all or substantially all of its assets to another entity unless
such agreement provides for the rights set forth in this Agreement.
4.3 Assignment by Executive. Neither this agreement nor any of
its benefits may be assigned by Executive.
SECTION 5
MISCELLANEOUS
5.1 Notice. Any notice provided for in this Agreement shall be
actual notice and shall be deemed to have been duly given when actually
received by Executive.
5.2 Waiver. The failure by any party to enforce any of its rights
hereunder shall not be deemed to be a waiver of such rights, unless such
waiver is an express written waiver. Waiver of any one breach shall not be
deemed to be a waiver of any other breach of the same or any other provision
hereof.
5.3 Whole Agreement. This Agreement constitutes the entire
understanding and agreement among the parties hereto with respect to the
subject matter hereof, and there are no agreements or understandings among
the parties other than those set forth herein or provided hereby. Without
limiting the generality of the foregoing, Executive acknowledges that any and
all prior employment agreements between the Company and Executive lapsed
on or prior to the date of the Original Agreement, and Executive has no rights
thereunder.
5.4 Choice of Law. The validity of this Agreement, the
construction of its terms and the determination of the rights and duties of the
parties hereto shall be governed by and construed in accordance with the laws
of the State of Louisiana applicable to contracts made and to be performed
wholly within such state.
5.5 Amendment. The parties may amend this Agreement by an
instrument in writing signed by both parties.
5.6 Severability. The invalidity or unenforceability of any provision
or provisions of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement, which shall remain in full force and
effect.
5.7 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
5.8 Expenses. The Company shall reimburse Executive all
expenses, including attorneys' fees, actually and reasonably incurred by
Executive in any proceeding to enforce any of his rights under this Agreement.
5.9 Confidentiality. Upon receipt of the payments or benefits
contemplated by Section 3 hereof, Executive agrees to refrain for a period of
three years from divulging any non-public, confidential or proprietary
information concerning the Company or its subsidiaries to any person or entity
other than the Company, its subsidiaries or their respective officers, directors
or advisors, provided that this obligation shall lapse prior to the end of such
three-year period with respect to any information that (i) is or becomes
generally available to the public other than as a result of a breach of this
Section, (ii) is or becomes available to Executive on a non-confidential basis
from a source other than the Company or its representatives, provided that
such source is not known by Executive to have violated any confidentiality
agreement with the Company in connection with such disclosure, or (iii) is
acquired or developed independently by Executive without violating this
Section.
5.10 Demand for Benefits. Unless otherwise provided herein, the
payment or payments due hereunder shall be paid to Executive without the
need for demand, and to a beneficiary upon the receipt of the beneficiary's
address and Social Security number. Nevertheless, Executive or a person
claiming to be a beneficiary who claims entitlement to a benefit can file a
claim for benefits hereunder with the Company. Unless otherwise provided
herein, the Company shall accept or reject the claim within five business days
of its receipt. If the claim is denied, the Company shall give the reason for
denial in a written notice that refers to the provision of this Agreement that
forms the basis of the denial. If any additional information or material is
necessary to perfect the claim, the Company will identify these items in
writing and explain why such additional information is necessary.
IN WITNESS WHEREOF, the parties have executed this
instrument as of the date and year first above written.
CENTURY TELEPHONE ENTERPRISES, INC.
By: _______________________________
Glen F. Post, III
Vice Chairman, President and
Chief Executive Officer
_______________________________
EXECUTIVE
Exhibit 10.2
SEVERANCE AGREEMENT
SEVERANCE AGREEMENT dated as of May 23, 1995, by and
between Century Telephone Enterprises, Inc., a Louisiana corporation (the
"Company"), and ______________________ ("Officer").
In consideration of the respective covenants and agreements of the
parties contained herein, and intending to be legally bound hereby, the parties
agree as follows:
SECTION 1
DEFINITIONS
As used herein, the following terms shall have the meanings specified.
1.1 The "Act" - the Securities Exchange Act of 1934, as amended.
1.2 "Announcement Date" - the earlier of (i) the day of the public
announcement of a Change in Control (as hereinafter defined) or a proposal
that results in a Change in Control or (ii) the date that the Board enters into
negotiations with any person or entity, which negotiations result in a Change
in Control.
1.3 "Auditors" - the Company's regular independent auditors as of
the Announcement Date.
1.4 "Board" - the Board of Directors of the Company.
1.5 "Cause" - conviction of a felony, habitual intoxication, abuse of
or addiction to a controlled dangerous substance, excessive absenteeism, the
willful and continued failure by Officer to substantially perform his duties
hereunder (other than any such failure resulting from Officer's incapacity due
to physical or mental illness) after demand for substantial performance is
delivered by the Company that specifically identifies the manner in which the
Company believes Officer has not substantially performed his duties, or the
willful engaging by Officer in misconduct which is materially injurious to the
Company, monetarily or otherwise. For purposes of this paragraph, no act or
failure to act on Officer's part shall be considered "willful" unless done, or
omitted to be done, by him not in good faith and without reasonable belief that
his action or omission was in the best interest of the Company.
Notwithstanding the foregoing, Officer shall not be deemed to have been
terminated for Cause without (i) reasonable notice to Officer setting forth the
reasons for the Company's intention to terminate for Cause, (ii) an opportunity
for Officer, together with his counsel, to be heard before the Board, and (iii)
delivery to Officer of notice from the Board finding that, in the good faith
opinion of the Board, Officer has been guilty of conduct set forth above in the
preceding sentence, and specifying the particulars thereof in detail.
1.6 "Change in Control" - (i) the occurrence of an event with
respect to the Company of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under
the Act; (ii) any "person" (as such term in used in Section 13(d) and 14(d) of
the Act), other than the Company or any "person" who on the date hereof is
a director, officer, an employee benefit plan or related trust or affiliate of
the Company, becoming the "beneficial owner" (as defined in Rule 13d-3 under
the Act), directly or indirectly, of securities of the Company representing 30%
or more of the combined voting power of the Company's then outstanding
securities entitled to vote generally in the election of directors; (iii) the
Company, its capital stock, or all or substantially all of its assets are
acquired by or combined with (either through a merger, consolidation, reorgan-
ization, share exchange or otherwise) with another entity and less than a
majority of the outstanding voting power of the parent or surviving corporation
are owned, immediately after consummation of such transaction, by Century's
shareholders immediately prior to such time; or (iv) during any period of two
consecutive years, individuals who at the beginning of such period constitute
the Board ceasing for any reason to constitute at least a majority thereof,
unless the election of each director who was not a director at the beginning
of such period shall have been approved in advance by directors representing
at least two-thirds of the directors then in office who were directors at the
beginning of the period.
1.7 "Code" - Internal Revenue Code of 1986, as amended.
1.8 "Company" - Century Telephone Enterprises, Inc. or any
successor thereto.
1.9 "Compensation Amount" - the sum of (i) Officer's annual salary
as of the Announcement Date plus (ii) all cash and stock bonuses (valued on
the date of grant) earned by Officer for the most recent twelve-month period
ending before the effective date of a Change in Control.
1.10 "Effective Termination" - following an Announcement Date, any
action taken by the Company or any controlling entity of the Company in
relation to Officer's salary, duties or position as an officer of the Company,
other than an isolated, insubstantial and inadvertent action not taken in bad
faith and which is remedied by the Company (or any controlling entity of the
Company) within three days after receipt of notice thereof given by Officer,
that, in Officer's reasonable judgment, results in any of the following: (a) a
reduction in Officer's salary as of the Announcement Date or a reduction in
the value of the benefits received by Officer under any pension or welfare
employee benefit plan maintained by the Company as of the Announcement
Date; (b) a diminution in Officer's duties, responsibilities and position in
the management of the Company and its subsidiaries including, without
limitation, (i) the permanent assignment to Officer of duties not consistent
with Officer's position as an officer of the Company, (ii) the demotion of
Officer or (iii) the failure to provide Officer with secretarial assistance
and all support, staff, office, equipment and other facilities necessary to
carry out his functions as an officer of the Company; (c) the relocation of
Officer to an office outside of the city in which he performed his services
for the Company immediately prior to the Announcement Date; or (d) the refusal
to allow Officer to attend to matters or engage in activities not directly
related to the business of the Company which are of the type which he attended
to or engaged in prior to the Announcement Date or was permitted to attend to
or engage in by the Chief Executive Officer or the Board prior to the
Announcement Date.
SECTION 2
TERM
This Agreement shall terminate on the earlier of (i) May 24, 2000 or
(ii) the date that Officer ceases to be an employee of the Company at any time
prior to an Announcement Date.
SECTION 3
COMPENSATION UPON TERMINATION
3.1 Compensation and Severance Benefits. (a) If, during the period
beginning on the Announcement Date and ending 18 months following the
effective date of a Change in Control, the Company (or any controlling entity
of the Company) shall terminate Officer's employment with the Company,
other than for Cause, or if Officer resigns because an event constituting an
Effective Termination has occurred, Officer shall receive, in addition to all
amounts to which he is entitled pursuant to the Company's termination policies
and plans then in effect, as severance pay, an amount equal to 150% of the
Compensation Amount. Such severance payment shall be made in a lump sum
within five business days of the date that Officer's employment is terminated
or the date that Officer notifies the Company that an event constituting an
Effective Termination has occurred.
(b) Contemporaneously with any payments due under
paragraph (a) and in addition to any other amounts due, the Company shall
pay in cash to Officer an additional amount (the "Gross-up Payment") such
that the sum of all such payments will enable Officer to receive on a net basis,
after deducting any excise tax imposed on Officer by Section 4999 of the Code
in connection with his receipt of all such payments and any federal, state and
local income taxes imposed on Officer in connection with his receipt of all
such payments, the same dollar amount as Officer would receive on a net basis
(after deducting any applicable federal, state and local income taxes) if no
such excise tax were payable under Section 4999 of the Code. In connection with
making the Gross-up Payment, the Company shall cause the Auditors to
furnish written calculations of (a) Officer's "base amount" within the meaning
of Section 280G of the Code and the regulations promulgated thereunder (the
"Base Amount"), (b) the amount of any "parachute payment" deemed to have
been received by Officer with respect to the Change in Control within the
meaning of Section 280G of the Code and the regulations promulgated
thereunder (the "Parachute Payment") and (c) the aggregate marginal income
tax rate applicable to Officer, after taking into account all applicable
federal, state and local income taxes (the "Applicable Rate"). Upon receipt
of these calculations from the Auditors, the parties shall, unless they
mutually agree in writing to the contrary, determine the amount of the
Gross-up Payment in accordance with the following formula:
G = (.2P - .2B) / (.8 - R)
where G is the amount of the Gross-up Payment, P is the amount of the
Parachute Payment, B is the Base Amount and R is the Applicable Rate. If
the Auditors fail to timely complete and deliver the calculations referred to
above, the Company may defer making the Gross-up Payment (but no other
payments contemplated hereunder) until such calculations are received,
provided that no deferral shall be permitted if the Auditor's untimeliness is
caused directly or indirectly by the Company's failure to cooperate in good
faith with the Auditors and further provided that in no event whatsoever shall
this payment be deferred by more than 10 business days.
3.2 Election of Benefits. In lieu of receiving the full amount of
payments provided under Subsection 3.1 hereof, Officer may, by written notice
to the Company, elect to receive, at the Company's expense, for a period of
up to five years following the date that his employment is terminated, medical
or life insurance benefits substantially similar to those benefits provided to
him by the Company on the Announcement Date. The present value of such
benefits shall be determined by the Auditors and deducted from the amounts
to be paid by the Company to Officer pursuant to Subsection 3.1 hereof.
3.3 Additional Obligations of the Company. Nothing herein shall
relieve the Company of its obligations to Officer under any qualified or non-
qualified retirement plan, deferred compensation plan, incentive compensation
plan, stock purchase plan, stock option plan, stock ownership plan, bonus plan,
supplemental plan, insurance program or plan, or any other compensation,
benefit or welfare plan or arrangement, or any agreement entered into
thereunder.
SECTION 4
SUCCESSORS; ASSIGNMENT
4.1 Successors to Officer. This Agreement and all rights of Officer
hereunder shall inure to the benefit of and be enforceable by the Officer's
personal or legal representative, executors, administrators, successors, heirs,
distributes, devises and legatees. If Officer should die while any amounts
would still be payable to him hereunder, had he continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to Officer's devise, legatee, or other designee or,
if there be no such designee, to Officer's estate.
4.2 Successors to Company. This Agreement and all obligations of
the Company hereunder shall be binding on the Company and on any
successor to the Company. The Company hereby agrees that it will not enter
into any agreement to consolidate, amalgamate or merge with another entity
or to convey all or substantially all of its assets to another entity unless
such agreement provides for the rights set forth in this Agreement.
4.3 Assignment by Officer. Neither this agreement nor any of its
benefits may be assigned by Officer.
SECTION 5
MISCELLANEOUS
5.1 Notice. Any notice provided for in this Agreement shall be
actual notice and shall be deemed to have been duly given when actually
received by Officer.
5.2 Waiver. The failure by any party to enforce any of its rights
hereunder shall not be deemed to be a waiver of such rights, unless such
waiver is an express written waiver. Waiver of any one breach shall not be
deemed to be a waiver of any other breach of the same or any other provision
hereof.
5.3 Whole Agreement. This Agreement constitutes the entire
understanding and agreement among the parties hereto with respect to the
subject matter hereof, and there are no agreements or understandings among
the parties other than those set forth herein or provided hereby.
5.4 Choice of Law. The validity of this Agreement, the
construction of its terms and the determination of the rights and duties of the
parties hereto shall be governed by and construed in accordance with the laws
of the State of Louisiana applicable to contracts made and to be performed
wholly within such state.
5.5 Amendment. The parties may amend this Agreement by an
instrument in writing signed by both parties.
5.6 Severability. The invalidity or unenforceability of any provision
or provisions of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement, which shall remain in full force and
effect.
5.7 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
5.8 Expenses. The Company shall reimburse Officer all expenses,
including attorneys' fees, actually and reasonably incurred by Officer in any
proceeding to enforce any of his rights under this Agreement.
5.9 Confidentiality. Upon receipt of the payments or benefits
contemplated by Section 3 hereof, Officer agrees to refrain for a period of 18
months from divulging any non-public, confidential or proprietary information
concerning the Company or its subsidiaries to any person or entity other than
the Company, its subsidiaries or their respective officers, directors or
advisors, provided that this obligation shall lapse prior to the end of such
18-month period with respect to any information that (i) is or becomes generally
available to the public other than as a result of a breach of this Section,
(ii) is or becomes available to Officer on a non-confidential basis from a
source other than the Company or its representatives, provided that such
source is not known by Officer to have violated any confidentiality agreement
with the Company in connection with such disclosure, or (iii) is acquired or
developed independently by Officer without violating this Section.
5.10 Demand for Benefits. Unless otherwise provided herein, the
payment or payments due hereunder shall be paid to Officer without the need
for demand, and to a beneficiary upon the receipt of the beneficiary's address
and Social Security number. Nevertheless, Officer or a person claiming to be
a beneficiary who claims entitlement to a benefit can file a claim for benefits
hereunder with the Company. Unless otherwise provided herein, the Company
shall accept or reject the claim within five business days of its receipt. If
the claim is denied, the Company shall give the reason for denial in a written
notice that refers to the provision of this Agreement that forms the basis of
the denial. If any additional information or material is necessary to perfect
the claim, the Company will identify these items in writing and explain why such
additional information is necessary.
IN WITNESS WHEREOF, the parties have executed this
instrument as of the date and year first above written.
CENTURY TELEPHONE ENTERPRISES, INC.
By: ______________________________
Glen F. Post, III
Vice Chairman, President and
Chief Executive Officer
------------------------------
OFFICER
Exhibit 10.3
CENTURY TELEPHONE ENTERPRISES, INC.
DEFERRED COMPENSATION PLAN
FOR OUTSIDE DIRECTORS
I.
PURPOSE OF THE PLAN
1.01 This Deferred Compensation Plan for Outside Directors is intended to
provide a mechanism whereby non-employee directors of Century Telephone
Enterprises, Inc. can elect to defer all or a portion of their fees earned as
directors or as members of committees of the Board of Directors.
II.
DEFINITIONS
2.01 As used in this Plan, the following terms shall have the meanings
indicated, unless the context otherwise specifies or requires:
(a) "ACCOUNT" shall mean the account established under this
Plan in accordance with Article IV hereof.
(b) "ACCOUNT BALANCE", as of a given date, shall mean the
fair market value of a Participant's Account, as determined by the Committee.
(c) "BOARD OF DIRECTORS" shall mean not less than a
quorum of the whole Board of Directors of Century Telephone Enterprises,
Inc.
(d) "COMMITTEE" shall mean the persons appointed to
administer this Plan pursuant to Article XI hereof.
(e) "COMPANY" shall mean Century Telephone Enterprises, Inc.
(f) "COMPENSATION" shall mean all monies payable to a
Participant designated as director's fees, whether paid or accrued to the
Participant as an annual retainer or paid or accrued for attendance of the
Participant at Board of Directors or committee meetings. The determination
of a Participant's Compensation for purposes of this Plan shall be made by the
Committee, in its sole discretion.
(g) "DISABILITY" shall mean a condition which makes a
Participant unable to perform each of the material duties of a director where
he is likely to remain thus incapacitated continuously and permanently.
(h) "EFFECTIVE DATE" of this Plan shall mean the date on
which this Plan is executed.
(i) "PARTICIPANT" shall mean any director of the Company
who is not an employee of the Company.
(j) "PLAN" shall mean the Century Telephone Enterprises, Inc.
Deferred Compensation Plan for Outside Directors.
(k) "UNFORESEEABLE EMERGENCY" shall mean an
unanticipated emergency that is caused by an event beyond the control of a
Participant and that will result in severe financial hardship to the Participant
unless a payment to the Participant is made pursuant to Article VI.
III.
DEFERRAL ARRANGEMENT
3.01 Each Participant may elect, in the manner hereinafter described, to
have an amount or percentage of his Compensation to be received by him
during each year from and after the effective date of this Plan deferred in
accordance with the terms and conditions of this Plan. A Participant desiring
to exercise such election shall, prior to the beginning of each calendar year
(or prior to the beginning of the Participant's initial period of service, if
such period of service is to commence other than at the beginning of a year, or
simultaneous with the adoption of this Plan for the initial year), notify the
Company, in writing, on a Director's Deferred Compensation Agreement in
the form attached hereto (hereinafter referred to as a "Director's Deferral
Agreement") of the amount or percentage of such Compensation for the year
that the Participant elects to defer. If a Participant has exercised an
election to defer Compensation hereunder and does not complete a new Director's
Deferral Agreement for a subsequent year, his previous election shall remain
in effect until superseded by a new Director's Deferral Agreement.
IV.
ACCOUNTS AND CREDIT
4.01 The deferred Compensation of a Participant will not be paid by the
Company as it is earned by the Participant. The Company shall create and
credit to a special memorandum account on its books (hereinafter referred to
as "Account") the deferred compensation referred to in this Plan and the
Director's Deferral Agreement. The Company shall provide an annual
statement of his Account to each Participant for whom an Account is created.
V.
VALUATION OF ACCOUNT
5.01 The Company shall adjust each Account to reflect a value which would
have been earned as if the amount of such Account had been invested at a rate
of return equal to the fifty-two (52) week Treasury bill rate as of January 1
of each year. The Company may, with the consent of all Participants with
Account balances, agree to substitute a different measure for valuation of the
Accounts of Participants, effective as of the date agreed to between the
Company and the Participants.
VI.
PAYMENT OF ACCOUNTS
6.01 (a) A Participant's Account Balance under the Plan shall be
distributable to him in a manner elected by such Participant in his Director's
Deferral Agreement, subject to the following:
(1) In no event shall payments under this Article commence
prior to the earliest of the following:
(a) Death of the Participant;
(b) Permanent disability of the Participant;
(c) Termination of the Participant's director's status
with Company;
(d) Occurrence of an Unforeseeable Emergency; or
(e) A date designated on the Participant's Director's
Deferral Agreement.
(b) In the case of an Unforeseeable Emergency, payment will be
made to a Participant only after the Committee has been notified of the facts
of the emergency in writing and has judged the facts to indeed represent an
Unforeseeable Emergency. A payment to a Participant on account of an
Unforeseeable Emergency shall be limited to the amount necessary to meet the
emergency involved.
(c) In the event of the death of a Participant before complete
payment to him of all amounts credited to his Account, the balance to the
credit of the Participant shall be paid to such beneficiary or beneficiaries as
may be designated by the Participant in writing prior to his death, or if no
beneficiary is so designated then to his surviving spouse, or if he has none
then to his executor or administrator. A Participant's initial designation of
beneficiary shall be made on a Beneficiary Designation Form in the form
attached hereto. After the initial designation, the beneficiary designation
may be amended or revoked by the Participant at any time. Such amendment or
revocation of a beneficiary designation shall be by written notice to the
Company on a revised Beneficiary Designation Form.
VII.
NONALIENATION OF RIGHTS
7.01 No Participant shall have the right to assign, pledge, or otherwise
dispose of his deferred Compensation, his Account, or any other benefits
under this Plan; nor shall the Participant's interest therein be subject to
garnishment, attachment, transfer by operation of law, or legal process.
VIII.
NATURE OF THE PLAN
8.01 Benefits under the Plan shall generally be payable by the Company
from its own funds, and such benefits shall not (i) impose any obligation upon
the trust(s) of the other employee benefit programs of the Company; (ii) be
paid from such trust(s); nor (iii) have any effect whatsoever upon the amount
or payment of benefits under the other employee benefit programs of the
Company. Participants have only an unsecured right to receive benefits under
the Plan from the Company as general creditors of the Company. The
Company may deposit amounts in a trust established by the Company for the
purpose of funding the Company's obligations under this Plan. Participants
and their beneficiaries, however, have no secured interest or special claim to
the assets of such trust, and the assets of the trust shall be subject to the
payment of claims of general creditors of the Company upon the insolvency
or bankruptcy of the Company, as provided in the trust.
IX.
BINDING EFFECT
9.01 In the event that the Company shall at any time be merged or
consolidated with any other corporation or corporations, or shall sell or
otherwise transfer a substantial portion of its assets to another corporation
or entity, the provisions of this Deferred Compensation Plan shall be binding
upon and become the obligation of the Company or other entity surviving or
resulting from such merger or consolidation, or to which such assets shall be
sold or transferred.
X.
LIMITATION OF RIGHTS
10.01 Nothing in this Agreement shall be construed to:
(1) Limit in any way the right of the Board of Directors to
terminate a Participant's director status with the Company; or
(2) Be evidence of any agreement or understanding, expressed or
implied, that the Board of Directors will elect an outside
director to any particular position or compensate an outside
director at any particular rate of remuneration; or
(3) Imply that compensation deferral agreements for subsequent
time periods will be offered to or entered into with the
Participant.
XI.
ADMINISTRATION OF THE ACCOUNT
11.01 This Plan shall be administered by a Committee of not less than three
persons appointed from time to time by the Board of Directors of the
Company to serve at the pleasure of the Board of Directors. The Committee
shall be deemed to have all of the powers of the Board of Directors of the
Company in the performance of any of the powers and duties delegated to it
under this Plan. The Committee shall from time to time establish eligibility
requirements for participation in this Plan and rules for the administration of
this Plan that are not inconsistent with the provisions of this Plan. The
Board may from time to time appoint additional members of the Committee or
remove members and appoint new members in substitution for those
previously appointed and to fill vacancies however caused.
11.02 The decision of the Committee relating to any question concerning or
involving the interpretation or administration of the Plan shall be final and
conclusive, and nothing in the Plan shall be deemed to give any director any
right to participate in the Plan, except to such extent, if any, as the
Committee may have determined or approved pursuant to the provisions of the
Plan.
XII.
AMENDMENT OR TERMINATION OF PLAN
12.01 Notwithstanding anything herein contained to the contrary, the Board
of Directors of the Company may, in its absolute discretion and without
notice, modify, amend, or terminate in whole or in part, any or all of the
provisions of this Plan, or suspend or terminate it entirely. In the event of
such termination or suspension, the amount credited to the Account of each
Participant shall become payable in the manner indicated in the Director's
Deferral Agreement for such Participant.
XIII.
EXPENSES OF ADMINISTRATION
13.01 All expenses of administration of this Plan shall be borne by the
Company.
XIV.
MISCELLANEOUS
14.01 The masculine gender, where appearing in the Plan, shall be deemed
to include the feminine gender, and the singular may indicate the plural,
unless the context clearly indicates the contrary.
IN WITNESS WHEREOF, the Company has caused this Plan to be
executed as of May 23, 1995, effective as of the date
hereof.
CENTURY TELEPHONE ENTERPRISES, INC.
By: /s/ R. Stewart Ewing, Jr.
________________________________
R. Stewart Ewing, Jr.
Senior Vice President and
Chief Financial Officer
DIRECTOR'S DEFERRED COMPENSATION AGREEMENT
Between CENTURY TELEPHONE ENTERPRISES, INC.
and
________________________, Participant
Dated _______________, 19____
THE COMPANY and the Participant agree as follows:
Section I. With respect to any portion of the Compensation as defined
in Section 2.01(f) of said Plan which may be payable to said Participant for
the next fiscal year commencing on January 1, 19___, and ending December
31, 19___, it is agreed that ____% (a percentage) or $_______________ (a
flat dollar amount) be withheld and treated as a deferred payment pursuant to
Article III of the Plan. If this Agreement is for the first year this Plan is
in effect, it shall apply to Compensation payable on or after the effective
date of the Plan. If a Participant who has elected to have Compensation
deferred does not provide the Company with a new agreement for a subsequent
year(s), the Agreement previously executed by the Participant shall remain in
effect until superseded by a new agreement.
Section II. Payments under Article VI of the Plan shall be made upon
retirement, disability, death, termination of director status, occurrence of an
Unforeseeable Emergency of the Participant, or, if earlier,____________, 19__.
Such payment shall be paid to the
Participant in the following manner:
(a) In ____ successive equal annual installments commencing as
soon as administratively feasible following such event.
(b) In a lump sum payable as soon as administratively feasible
following such event.
(c) In the event of an Unforeseeable Emergency, in such amounts
and on such date(s) as determined by the Committee.
AGREED TO at _____________, ___________________ on _____________,
19___, by the Company and the Participant.
CENTURY TELEPHONE ENTERPRISES, INC.
By:__________________________
__________________________
______________, Participant
BENEFICIARY DESIGNATION FORM
_____________________________
____________________, Participant
Dated __________, 19____
PURSUANT to Article VI of the Plan, the undersigned Participant:
Section I. Hereby directs that his remaining Account Balance at his
death shall be paid as hereinafter provided to such of the following
beneficiary(ies):
Name Relationship Address
---- ------------ -------
______________________ ______________ _____________________________
______________________ ______________ _____________________________
______________________ ______________ _____________________________
as shall survive the undersigned Participant. Unless otherwise stated herein,
if more than one beneficiary is designated above, payments shall be made in
equal shares to and among such of the beneficiaries as are surviving at the
time hereinafter set forth for the making of each such payment.
Section II. If the above designated beneficiary or beneficiaries all
predecease the Participant or all die prior to complete payment of the entire
Account Balance, then the remaining balance shall be paid as hereinafter
provided in equal shares to and among such of the following beneficiary(ies):
Name Relationship Address
---- ------------ -------
_______________________ _______________ _________________________
_______________________ _______________ _________________________
_______________________ _______________ _________________________
as shall be surviving at the time hereinafter set forth for the making of each
such payment.
Section III. Payment to said beneficiary(ies) after the death of the
undersigned Participant shall be made as follows (initial the desired form of
payment):
______ (a) In a lump sum payable as soon as administratively
feasible following the Participant's death.
______ (b) In ____ successive equal annual installments,
commencing as soon as administratively feasible
following the death of the undersigned.
Section IV. The undersigned hereby reserves the right to amend or
revoke this Beneficiary Designation Form as provided in Article VI of the
Plan.
Dated:_________________, 19____
__________________________________
______________________, Participant
Exhibit 10.4
AMENDMENT TO THE
CENTURY TELEPHONE ENTERPRISES, INC.
STOCK BONUS PLAN, PAYSOP AND TRUST
STATE OF LOUISIANA
PARISH OF OUACHITA
BE IT KNOWN, that on this 11th day of July, 1995,
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.
WHEREAS, Sections 12.2 and 12.3 were inadvertently omitted from
the 1994 Amendment and Restatement of the Century Telephone Enterprises,
Inc. Stock Bonus Plan, PAYSOP and Trust;
NOW, THEREFORE, the following amendment is hereby made to
the Century Telephone Enterprises, Inc. Stock Bonus Plan, PAYSOP and
Trust, effective as if included in the 1994 Amendment and Restatement of the
Century Telephone Enterprises, Inc. Stock Bonus Plan, PAYSOP and Trust:
Insert Sections 12.2 and 12.3 in the Table of Contents, as follows:
"12.2 Voting Rights
12.3 Rights on Tender or Exchange Offer"
Insert Sections 12.2 and 12.3 in the Plan as follows:
"12.2 Voting Rights.
Each Participant in the Plan (or, in the event of the
Participant's death, the Participant's beneficiary) is, for
purposes of this Section 12.2, hereby designated a "named
fiduciary" within the meaning of Section 403(a)(1) of ERISA
and shall be entitled to direct the Plan and Trustee as to the
manner in which Company Stock allocated to the Account or
Accounts of such Participant (but excluding any PAYSOP Tax
Credit Account of the Participant which is treated under
Section 17.5(e)) is to be voted on each matter brought before
an annual or special stockholders' meeting of the Employer.
Before each such meeting of stockholders, the Trustee shall
cause to be furnished to each Participant (or beneficiary) a
copy of the proxy solicitation material, together with a form
requesting confidential directions on how such shares of stock
allocated to such Participant's Account or Accounts shall be
voted on each such matter. Upon timely receipt of such
directions the Trustee shall on each such matter vote as
directed the number of votes attributable, as provided below,
to such Participant.
The instructions received by the Trustee from
Participants shall be held by the Trustee in strict confidence
and shall not be divulged or released to any person, including
officers or employees of the Employer or any affiliate;
provided, however, that to the extent necessary for the
operation of the Plan, such instructions may be relayed by the
trustee to a recordkeeper, auditor or other person providing
services to the Plan if such person (i) is not the Employer, an
affiliate or any employee, officer or director thereof, and (ii)
agrees not to divulge such directions to any other person,
including employees, officers and directors of the Employer
and its affiliates.
The number of votes attributable to each Participant
shall be determined as follows:
(i) first, the total number of votes attributable to
Company Stock owned by the Plan (excluding
the PAYSOP portion thereof), shall be
determined;
(ii) second the number of votes determined under
(i), above, shall be attributed to each
Participant, in the ratio which the number of
shares allocated to such Participant's Account or
Accounts (excluding the PAYSOP Tax Credit
Account of the Participant) as of the
immediately preceding Valuation Date bears to
the total number of shares owned by the Plan
(excluding the PAYSOP portion thereof) as of
such date.
Each Participant, as a named fiduciary, shall also be
entitled to separately direct the vote (excluding any votes
attributable to PAYSOP Tax Credit Accounts of Participants)
of a portion of the number of votes with respect to which a
signed voting-direction instrument is not timely received from
the Participants and a portion of the number of votes with
respect to any shares of stock not then allocated to Accounts of
Participants ("Undirected Votes"). Such direction with respect
to each Participant who timely elects to direct the vote of
Undirected Votes as a named fiduciary shall be with respect to
a number of Undirected Votes equal to the total number of
Undirected Votes multiplied by a fraction, the numerator of
which is the total number of votes attributable to such
Participant and the denominator of which is the total number
of votes attributable to all Participants who timely elect to vote
Undirected Votes as a named fiduciary.
12.3 Rights on Tender or Exchange Offer.
Each Participant (or, in the event of the Participant's
death, the Participant's beneficiary) is, for purposes of this
Section 12.3, hereby designated a "named fiduciary" within the
meaning of Section 403(a)(1) of ERISA and shall have the
right, to the extent of the number of shares of Company Stock
allocated to such Participant's Account or Accounts (including
a PAYSOP Tax Credit Account of the Participant), to direct
the Trustee in writing as to the manner in which to respond to
a tender or exchange offer with respect to shares of Company
Stock. The Trustee shall use its best efforts to timely
distribute or cause to be distributed to each Participant (or
beneficiary) such information as will be distributed to
stockholders of the Employer in connection with any such
tender or exchange offer. Upon timely receipt of such
instructions, the Trustee shall respond as instructed with
respect to shares of Company Stock allocated to such
Participant's Account or Accounts. The instructions received
by the Trustee from Participants shall be held by the Trustee
in strict confidence and shall not be divulged or released to any
person, including officers or employees of the Employer or any
affiliate; provided, however, that to the extent necessary for
the operation of the Plan, such instructions may be relayed by
the Trustee to a recordkeeper, auditor or other person
providing services to the Plan if such person (i) is not the
Employer, an affiliate or any employee, officer or director
thereof, and (ii) agrees not to divulge such directions to any
other person including employees, officers and directors of the
Employer and its affiliates. If the Trustee shall not receive
timely instruction from a Participant (or beneficiary) as to the
manner in which to respond to such a tender or exchange
offer, the Trustee shall not tender or exchange any shares of
Company Stock with respect to which such Participant has the
right of direction. Each Participant, as a named fiduciary,
shall also be entitled to separately direct the tender of a portion
of the shares of Company Stock not allocated to Accounts of
Participants. Such direction shall be with respect to the
number of such unallocated shares of Company Stock
multiplied by a fraction, the numerator of which is the total
shares of Company Stock allocated to the Participant's Account
or Accounts and the denominator of which is the total number
of shares of Company Stock which are allocated to the
Accounts of all Participants. In effecting the foregoing, to the
extent possible, the Trustee shall tender or exchange shares of
Company Stock entitled to one vote per share prior to shares
of Company Stock having greater than one vote per share.
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.,
/s/ Marta L. Cole Senior Vice President and
_____________________ Chief Financial Officer
/s/ Kathy Tettleton
___________________________________
Notary Public
ACCEPTANCE OF AMENDMENT BY TRUSTEE
STATE OF LOUISIANA
PARISH OF OUACHITA
On this 11th day of July, 1995,
BEFORE ME, a Notary Public, and in the presence of the
undersigned competent witnesses, personally came and appeared:
REGIONS BANK 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
July 11, 1995.
THUS DONE AND SIGNED at Monroe, Louisiana, on the date first
above written.
WITNESSES: REGIONS BANK OF LOUISIANA
/s/ Joyce Barnes /s/ William W. Keith
______________________ By:______________________________
William W. Keith, Executive Vice
President and Trust Officer
/s/ Michelle L. Allen
______________________
Cathy M. Yelverton
_______________________________
Notary Public
Exhibit 10.5
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES
THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
NON-QUALIFIED STOCK OPTION AGREEMENT
UNDER THE
CENTURY TELEPHONE ENTERPRISES, INC.
1995 INCENTIVE COMPENSATION PLAN
THIS AGREEMENT is entered into as of May 22, 1995, by and between
Century Telephone Enterprises, Inc., a Louisiana corporation
("Century"), and _______________ ("Optionee").
WHEREAS Optionee is a key employee of Century or one of its
subsidiaries (collectively, the "Company") and Century considers it
desirable and in its best interest that Optionee be given an inducement
to acquire a proprietary interest in Century and an incentive to
advance the interests of Century by possessing an option to purchase
shares of the common stock, $1.00 par value per share, of Century (the
"Common Stock") under the Century Telephone Enterprises, Inc. 1995
Incentive Compensation Plan (the "Plan"), which was adopted by the
Compensation Committee of the Board of Directors of Century (the
"Committee") on February 19, 1995, ratified by the Board of Directors
of Century on February 21, 1995, and approved by the shareholders at
Century's 1995 Annual Meeting of Shareholders;
NOW, THEREFORE, in consideration of the premises, it is agreed as
follows:
1.
Grant of Option
1.01 Century hereby grants to Optionee the right, privilege and
option to purchase ________ shares of Common Stock (the "Option") at
the following exercise prices:
The exercise price of _______ of the shares
covered by the Option is $32.86;
The exercise price of _______ of the shares
covered by the Option is $36.12;
The exercise price of _______ of the shares
covered by the Option is $39.69.
1.02 The Option is a non-qualified stock option and shall not be
treated as an incentive stock option under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").
2.
Time of Exercise
2.01 Subject to the provisions of the Plan and Section 2.02
hereof, the Optionee shall be entitled to exercise the Option beginning
six months after May 22, 1995 (the "Date of Grant") and ending 10 years
after the Date of Grant.
2.02 Notwithstanding the foregoing, the Option shall become
accelerated and immediately exercisable in full if (a.) Optionee dies
while he is employed by the Company, (b.) Optionee becomes disabled
within the meaning of Section 22(e)(3) of the Code ("Disability") while
he is employed by the Company, (c.) Optionee retires from employment
with the Company on or after attaining the age of 65 or is granted
early retirement by a vote of the Board of Directors ("Retirement") or
(d.) pursuant to the provisions of the Plan.
3.
Conditions for Exercise of Option
During Optionee's lifetime, the Option may be exercised only by
him or by his guardian or legal representative. The Option must be
exercised while Optionee is employed by the Company, or, to the extent
exercisable at the time of termination of employment, within 190 days
of the date on which he ceases to be an employee, except that (a.) if
he ceases to be an employee because of Retirement or Disability, the
Option may be exercised, to the extent exercisable at the time of
termination of employment, during the remaining term of the Option,
(b.) if an Optionee's employment is terminated for cause, the
unexercised portion of the Option is immediately terminated, and (c.)
in the event of Optionee's death, the Option may be exercised, to the
extent exercisable at the time of termination of employment, by his
estate, or by the person to whom such right evolves from him by reason
of his death during the remaining term of the Option; provided,
however, that no Option may be exercised later than 10 years after the
Date of Grant.
4.
Preferred Stock Purchase Rights
If during the period that all or a portion of the Option remains
outstanding, rights to purchase shares of Series AA Junior
Participating Preferred Stock or other securities or property of the
Company (the "Rights" and each a "Right") pursuant to that certain
Amended and Restated Rights Agreement dated as of November 17, 1986
between the Company and the Rights Agent named therein, as amended (the
"Rights Agreement") or any successor rights agreement, become
exercisable and may be traded separately from the Common Stock, then
the Option shall automatically be converted into the right to receive,
upon payment of the exercise price, one Right for each share of Common
Stock received upon exercise of the Option.
5.
Additional Conditions
Anything in this Agreement to the contrary notwithstanding, if at
any time Century further determines, in its sole discretion, that the
listing, registration or qualification (or any updating of any such
document) of the shares of Common Stock issuable pursuant to the
exercise of an Option is necessary on any securities exchange or under
any federal or state securities or blue sky law, or that the consent or
approval of any governmental regulatory body is necessary or desirable
as a condition of, or in connection with the issuance of shares of
Common Stock pursuant thereto, or the removal of any restrictions
imposed on such shares, such shares of Common Stock shall not be
issued, in whole or in part, unless such listing, registration,
qualification, consent or approval shall have been effected or obtained
free of any conditions not acceptable to Century. Century agrees to
promptly take any and all actions necessary or desirable in order that
all shares of Common Stock issuable hereunder shall be issued as
provided herein.
6.
No Contract of Employment Intended
Nothing in this Agreement shall confer upon Optionee any right to
continue in the employment of the Company or to interfere in any way
with the right of Century to terminate Optionee's employment
relationship with the Company at any time.
7.
Taxes
The Company may make such provisions as it may deem appropriate
for the withholding of any federal, state and local taxes that it
determines are required to be withheld on the exercise of the Option.
8.
Binding Effect
This Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective heirs, executors,
administrators and successors.
9.
Inconsistent Provisions
The Option granted hereby is subject to the provisions of the
Plan. If any provision of this Agreement conflicts with a provision of
the Plan, the Plan provision shall control.
10.
Adjustments to Options
Appropriate adjustments shall be made to the number and class of
shares of Common Stock subject to the Option and to the exercise price
in certain situations described in Section 10.6 of the Plan.
11.
Termination of Option
The Committee, in its sole discretion, may terminate the Option.
However, no termination may adversely affect the rights of Optionee to
the extent that the Option is currently exercisable on the date of such
termination.
IN WITNESS WHEREOF the parties hereto have caused this Agreement
to be executed as of the day and year first above written.
CENTURY TELEPHONE ENTERPRISES, INC.
By: ______________________________
Ernest Butler, Jr., Chairman,
Compensation Committee
_____________________________
Optionee
Exhibit 10.6
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES
THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
NON-QUALIFIED STOCK OPTION AGREEMENT
UNDER THE
CENTURY TELEPHONE ENTERPRISES, INC.
1995 INCENTIVE COMPENSATION PLAN
THIS AGREEMENT is entered into as of June 23, 1995, by and
between Century Telephone Enterprises, Inc., a Louisiana corporation
("Century"), and _______________ ("Optionee").
WHEREAS Optionee is a key employee of Century or one of its
subsidiaries (collectively, the "Company") and Century considers it
desirable and in its best interest that Optionee be given an inducement
to acquire a proprietary interest in Century and an incentive to
advance the interests of Century by possessing an option to purchase
shares of the common stock, $1.00 par value per share, of Century (the
"Common Stock") under the Century Telephone Enterprises, Inc. 1995
Incentive Compensation Plan (the "Plan"), which was adopted by the
Compensation Committee of the Board of Directors of Century (the
"Committee") on February 19, 1995, ratified by the Board of Directors
of Century on February 21, 1995, and approved by the shareholders at
Century's 1995 Annual Meeting of Shareholders;
NOW, THEREFORE, in consideration of the premises, it is agreed as
follows:
1.
Grant of Option
1.01 Century hereby grants to Optionee the right, privilege and
option to purchase ________ shares of Common Stock (the "Option") at
the following exercise prices:
The exercise price of _______ of the shares
covered by the Option is $31.63;
The exercise price of _______ of the shares
covered by the Option is $34.76;
The exercise price of _______ of the shares
covered by the Option is $38.20.
1.02 The Option is a non-qualified stock option and shall not be
treated as an incentive stock option under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").
2.
Time of Exercise
2.01 Subject to the provisions of the Plan and Section 2.02
hereof, the Optionee shall be entitled to exercise the Option beginning
six months after June 23, 1995 (the "Date of Grant") and ending 10
years after the Date of Grant.
2.02 Notwithstanding the foregoing, the Option shall become
accelerated and immediately exercisable in full if (a.) Optionee dies
while he is employed by the Company, (b.) Optionee becomes disabled
within the meaning of Section 22(e)(3) of the Code ("Disability") while
he is employed by the Company, (c.) Optionee retires from employment
with the Company on or after attaining the age of 65 or is granted
early retirement by a vote of the Board of Directors ("Retirement") or
(d.) pursuant to the provisions of the Plan.
3.
Conditions for Exercise of Option
During Optionee's lifetime, the Option may be exercised only by
him or by his guardian or legal representative. The Option must be
exercised while Optionee is employed by the Company, or, to the extent
exercisable at the time of termination of employment, within 190 days
of the date on which he ceases to be an employee, except that (a.) if
he ceases to be an employee because of Retirement or Disability, the
Option may be exercised, to the extent exercisable at the time of
termination of employment, during the remaining term of the Option,
(b.) if an Optionee's employment is terminated for cause, the
unexercised portion of the Option is immediately terminated, and (c.)
in the event of Optionee's death, the Option may be exercised, to the
extent exercisable at the time of termination of employment, by his
estate, or by the person to whom such right evolves from him by reason
of his death during the remaining term of the Option; provided,
however, that no Option may be exercised later than 10 years after the
Date of Grant.
4.
Preferred Stock Purchase Rights
If during the period that all or a portion of the Option remains
outstanding, rights to purchase shares of Series AA Junior
Participating Preferred Stock or other securities or property of the
Company (the "Rights" and each a "Right") pursuant to that certain
Amended and Restated Rights Agreement dated as of November 17, 1986
between the Company and the Rights Agent named therein, as amended (the
"Rights Agreement") or any successor rights agreement, become
exercisable and may be traded separately from the Common Stock, then
the Option shall automatically be converted into the right to receive,
upon payment of the exercise price, one Right for each share of Common
Stock received upon exercise of the Option.
5.
Additional Conditions
Anything in this Agreement to the contrary notwithstanding, if at
any time Century further determines, in its sole discretion, that the
listing, registration or qualification (or any updating of any such
document) of the shares of Common Stock issuable pursuant to the
exercise of an Option is necessary on any securities exchange or under
any federal or state securities or blue sky law, or that the consent or
approval of any governmental regulatory body is necessary or desirable
as a condition of, or in connection with the issuance of shares of
Common Stock pursuant thereto, or the removal of any restrictions
imposed on such shares, such shares of Common Stock shall not be
issued, in whole or in part, unless such listing, registration,
qualification, consent or approval shall have been effected or obtained
free of any conditions not acceptable to Century. Century agrees to
promptly take any and all actions necessary or desirable in order that
all shares of Common Stock issuable hereunder shall be issued as
provided herein.
6.
No Contract of Employment Intended
Nothing in this Agreement shall confer upon Optionee any right to
continue in the employment of the Company or to interfere in any way
with the right of Century to terminate Optionee's employment
relationship with the Company at any time.
7.
Taxes
The Company may make such provisions as it may deem appropriate
for the withholding of any federal, state and local taxes that it
determines are required to be withheld on the exercise of the Option.
8.
Binding Effect
This Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective heirs, executors,
administrators and successors.
9.
Inconsistent Provisions
The Option granted hereby is subject to the provisions of the
Plan. If any provision of this Agreement conflicts with a provision of
the Plan, the Plan provision shall control.
10.
Adjustments to Options
Appropriate adjustments shall be made to the number and class of
shares of Common Stock subject to the Option and to the exercise price
in certain situations described in Section 10.6 of the Plan.
11.
Termination of Option
The Committee, in its sole discretion, may terminate the Option.
However, no termination may adversely affect the rights of Optionee to
the extent that the Option is currently exercisable on the date of such
termination.
IN WITNESS WHEREOF the parties hereto have caused this Agreement
to be executed as of the day and year first above written.
CENTURY TELEPHONE ENTERPRISES, INC.
By: ___________________________
Glen F. Post, III, President
and Chief Executive Officer
___________________________
Optionee
EXHIBIT 11
CENTURY TELEPHONE ENTERPRISES, INC.
COMPUTATIONS OF EARNINGS PER SHARE
(UNAUDITED)
Three months Six months
ended June 30 ended June 30
------------------ -----------------
1995 1994 1995 1994
-------- -------- ------- -------
(Dollars, except per share
amounts, and shares
expressed in thousands)
Net income $26,167 21,485 53,167 40,686
Dividends applicable to
preferred stock (28) (30) (57) (43)
------- ------- ------- -------
Net income applicable to common
stock 26,139 21,455 53,110 40,643
Dividends applicable to preferred
stock 28 30 57 43
Interest on 6% convertible debentures,
net of taxes - 1,146 526 2,292
------- ------- ------- -------
Net income as adjusted for purposes
of computing fully diluted earnings
per share $26,167 22,631 53,693 42,978
======= ======= ======= =======
Weighted average number of shares:
Outstanding during period 58,338 53,365 57,125 52,825
Common stock equivalent shares 490 519 577 525
Employee Stock Ownership Plan
shares not committed to be
released (375) (338) (384) (193)
------- ------- ------- -------
Number of shares for computing
primary earnings per share 58,453 53,546 57,318 53,157
Incremental common shares
attributable to additional
dilutive effect of convertible
securities 206 4,742 1,341 4,702
------- ------- ------- -------
Number of shares as
adjusted for purposes of
computing fully diluted
earnings per share 58,659 58,288 58,659 57,859
======= ======= ======= =======
Earnings per average common share $ .45 .40 .93 .77
======= ======= ======= =======
Primary earnings per share $ .45 .40 .93 .76
======= ======= ======= =======
Fully diluted earnings per share $ .45 .39 .92 .74
======= ======= ======= =======
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE UNAUDIT-
ED CONSOLIDATED BALANCE SHEET OF CENTURY TELEPHONE ENTERPRISES, INC. & SUBSID-
IARIES AS OF JUNE 30, 1995 & THE RELATED UNAUDITED CONSOLIDATED STATEMENTS
OF INCOME, STOCKHOLDERS' EQUITY & CASH FLOWS FOR THE SIX-MONTH PERIOD THEN
ENDED & IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 6,150
<SECURITIES> 0
<RECEIVABLES> 45,873
<ALLOWANCES> 2,371
<INVENTORY> 5,972
<CURRENT-ASSETS> 81,411
<PP&E> 1,416,246
<DEPRECIATION> 411,997
<TOTAL-ASSETS> 1,718,685
<CURRENT-LIABILITIES> 316,231
<BONDS> 393,994
<COMMON> 58,368
0
2,268
<OTHER-SE> 751,902
<TOTAL-LIABILITY-AND-EQUITY> 1,718,685
<SALES> 0
<TOTAL-REVENUES> 292,159
<CGS> 0
<TOTAL-COSTS> 195,791
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21,847
<INCOME-PRETAX> 87,662
<INCOME-TAX> 34,495
<INCOME-CONTINUING> 53,167
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 53,167
<EPS-PRIMARY> 0.93
<EPS-DILUTED> 0.92
</TABLE>
