<PAGE>
Filed Pursuant to Rule 424(b)(5)
Registration No. 333-42013
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN DECLARED +
+EFFECTIVE BY THE SECURITIES AND EXCHANGE COMMISSION. A FINAL PROSPECTUS +
+SUPPLEMENT AND ACCOMPANYING PROSPECTUS WILL BE DELIVERED TO PURCHASERS. THIS +
+PRELIMINARY PROSPECTUS SUPPLEMENT AND ACCOMPANYING PROSPECTUS SHALL NOT +
+CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL +
+THERE BE ANY SALE OF THESE SECURITIES IN ANY JURISDICTION IN WHICH SUCH +
+OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR +
+QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH JURISDICTION. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED DECEMBER 30, 1997
PROSPECTUS SUPPLEMENT
(To Prospectus Dated December 29, 1997)
$1,000,000,000
[LOGO OF CENTURY TELEPHONE ENTERPRISES, INC. APPEARS HERE]
$ ,000,000 % SENIOR NOTES, SERIES E, DUE
$ ,000,000 % DEBENTURES, SERIES F, DUE
$ ,000,000 % DEBENTURES, SERIES G, DUE
--------
The % Senior Notes, Series E, due (the "Series E Notes") will
mature on , the % Debentures, Series F, due (the "Series F
Debentures") will mature on and the % Debentures, Series G, due
(the "Series G Debentures" and, together with the Series E Notes and
the Series F Debentures, the "Offered Securities") will mature on .
Interest on the Offered Securities will be payable semi-annually in arrears on
and of each year, commencing , 1998. The Offered
Securities are being offered by Century Telephone Enterprises, Inc.
("Century").
Each series of the Offered Securities will be redeemable, as a whole or in
part, at the option of Century at any time, at a redemption price equal to the
greater of (a) 100% of the principal amount of such series and (b) the sum of
the present values of the Remaining Scheduled Payments (as defined herein)
thereon, discounted to the redemption date on a semi-annual basis at the
Treasury Rate (as defined herein) plus basis points for the Series E
Notes, basis points for the Series F Debentures and basis points for
the Series G Debentures, together in all cases with accrued interest to the
redemption date. See "Supplemental Description of Offered Securities--Optional
Redemption of the Offered Securities." Upon the occurrence of a Tax Event (as
defined herein), Century will have the right (a) to shorten the maturity of the
Series G Debentures to the extent required so that the interest paid on the
Series G Debentures will be deductible for United States federal income tax
purposes or (b) under certain circumstances to redeem the Series G Debentures
in whole (but not in part) at a redemption price equal to the greater of (i)
100% of the principal amount of the Series G Debentures and (ii) the sum of the
present values of the Remaining Scheduled Payments thereon, discounted to the
redemption date on a semi-annual basis at the Treasury Rate plus basis
points, together with accrued interest to the redemption date. See
"Supplemental Description of Offered Securities--Conditional Right to Shorten
Maturity of the Series G Debentures" and "--Optional Redemption of the Offered
Securities."
Each series of the Offered Securities will be represented by global
securities ("Global Securities") registered in the name of the nominee of The
Depository Trust Company ("DTC"). Beneficial interests in such certificates
will be shown on, and transfers thereof will be effected only through, records
maintained by DTC and its participants. Owners of beneficial interests in the
certificates representing the Offered Securities will be entitled to physical
delivery of Offered Securities in certificated form in the amount of their
respective beneficial interests only under the limited circumstances described
herein. See "Supplemental Description of Offered Securities--Book-Entry,
Delivery and Form."
--------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR
THE ACCOMPANYING PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) CENTURY(1)(3)
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Series E Note % % %
- -----------------------------------------------------------------------------------------------
Total (3) $ $ $
- -----------------------------------------------------------------------------------------------
Per Series F Debenture % % %
- -----------------------------------------------------------------------------------------------
Total (3) $ $ $
- -----------------------------------------------------------------------------------------------
Per Series G Debenture % % %
- -----------------------------------------------------------------------------------------------
Total (3) $ $ $
- -----------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
(1) Plus accrued interest, if any, from January , 1998 to date of delivery.
(2) For information regarding indemnification of the Underwriters, see
"Underwriting."
(3) Before deducting expenses estimated at $680,000, which are payable by
Century.
--------
The Offered Securities are being offered subject to receipt and acceptance by
the Underwriters, to prior sale and to the Underwriters' right to reject any
order in whole or in part and to withdraw, cancel or modify the offer without
notice. It is expected that delivery of Global Securities representing the
Offered Securities will be made at the offices of Salomon Brothers Inc at Seven
World Trade Center, New York, New York, or through the facilities of DTC on or
about January , 1998 against payment therefor in immediately available funds.
--------
SALOMON SMITH BARNEY
MERRILL LYNCH & CO. STEPHENS INC. NATIONSBANC MONTGOMERY
CHASE SECURITIES INC. J.P. MORGAN & CO.
CREDIT SUISSE FIRST BOSTON GOLDMAN, SACHS & CO.
FURMAN SELZ LAZARD FRERES & CO. LLC RBC DOMINION SECURITIES
CORPORATION
January , 1998
<PAGE>
[MAP OF OPERATING AREAS FOR CENTURY AND PACIFIC TELECOM, INC. APPEARS HERE]
----------------
CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE OFFERED SECURITIES,
INCLUDING PURCHASES OF THE OFFERED SECURITIES TO STABILIZE THEIR MARKET PRICES
AND PURCHASES TO COVER SOME OR ALL OF A SHORT POSITION IN THE OFFERED
SECURITIES MAINTAINED BY THE UNDERWRITERS. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "UNDERWRITING."
S-2
<PAGE>
FORWARD-LOOKING STATEMENTS
In addition to historical information, this Prospectus Supplement, the
accompanying Prospectus and the documents incorporated therein by reference
include certain forward-looking statements regarding events and financial
trends that may affect the Company's future operating results and financial
position. Such forward-looking statements are subject to uncertainties that
could cause the Company's actual results to differ materially from such
statements. Such uncertainties include but are not limited to: the effects of
ongoing deregulation in the telecommunications industry; the potential effects
of greater than anticipated competition in the Company's markets; possible
changes in the demand for the Company's products and services; the Company's
ability to successfully introduce new product offerings on a timely and cost-
effective basis; the risks inherent in rapid technological change; the
Company's ability to effectively manage its growth, including integrating the
newly-acquired operations of Pacific Telecom, Inc. into the Company's
operations; and the effects of more general factors such as changes in general
market or economic conditions or in legislation, regulation or public policy.
These and other uncertainties related to the Company's business are described
in detail in Century's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1997, which is incorporated by reference into the accompanying
Prospectus. You are cautioned not to place undue reliance on these forward-
looking statements, which speak only as of the date on which they were made.
Century undertakes no obligation to update any of its forward-looking
statements for any reason.
----------------
When used herein, (i) the term "MSA" means a Metropolitan Statistical Area
for which the Federal Communications Commission (the "FCC") has granted a
cellular operating license, (ii) the term "RSA" means a Rural Service Area for
which the FCC has granted a cellular operating license, (iii) the term "PCS"
means Personal Communications Services, a new digital mobile communications
service, (iv) the term "LEC" means a local exchange carrier that provides
local telephone service, (v) the term "Century" means Century Telephone
Enterprises, Inc., (vi) the term "PTI" means Pacific Telecom, Inc., which
Century acquired on December 1, 1997, (vii) the term "Company" means Century
and its subsidiaries (including PTI on and after December 1, 1997), (viii) the
term "pops," whenever used herein with respect to the operations of Century,
PTI or the Company, means the population of licensed markets (based on
independent third-party population estimates) multiplied by the proportionate
equity interests of Century, PTI or the Company in one of the entities
licensed to operate in such markets, and (ix) the term "Offering" means the
offering of the Offered Securities hereunder.
S-3
<PAGE>
THE COMPANY
The Company is a regional diversified telecommunications company that is
primarily engaged in providing local telephone and mobile communications
services in 21 states. As described further below under "Recent Developments,"
on December 1, 1997, Century acquired Pacific Telecom, Inc. ("PTI"), which
substantially expanded the Company's local telephone and mobile communications
operations. As a result of this acquisition, the Company's telephone
subsidiaries currently serve nearly 1.2 million telephone access lines,
primarily in rural, suburban and small urban communities in 21 states, with
its largest customer bases located in Wisconsin, Washington, Louisiana,
Michigan and Alaska. In addition, through its cellular operations, the Company
currently has access to over 10.0 million pops in 31 MSAs and 44 RSAs,
primarily concentrated in Michigan, Mississippi, Wisconsin, Louisiana and
Arkansas. The Company also provides long distance, operator, Internet and
business information services.
Century is incorporated in Louisiana. Its principal executive offices are
located at 100 Century Park Drive, Monroe, Louisiana 71203, and its telephone
number is (318) 388-9500. The Company currently employs approximately 5,700
persons.
TELEPHONE OPERATIONS
According to published sources, the Company is currently the 10th largest
local exchange telephone company in the United States, based on the number of
telephone access lines served. At September 30, 1997, the telephone
subsidiaries of Century and PTI served approximately 531,000 and 613,000
access lines, respectively (not including approximately 47,000 access lines
acquired by PTI in October 1997). The Company currently operates over 440
central office and remote switching centers in its telephone operating areas.
Substantially all of the Company's access lines are served by digital
switching technology, which, in conjunction with other technologies, allows
the Company to offer additional premium services to its customers, including
call forwarding, conference calling, caller identification, selective call
ringing and call waiting. At September 30, 1997, Century's telephone
subsidiaries also provided Internet services to approximately 18,800
customers.
The table below sets forth (i) the number of access lines operated by the
telephone subsidiaries of Century and PTI as of September 30, 1997 and (ii)
pro forma consolidated totals, which give effect to the acquisition of PTI as
if it had occurred on September 30, 1997:
<TABLE>
<CAPTION>
NUMBER OF ACCESS LINES AT
SEPTEMBER 30, 1997 PRO FORMA
------------------------- --------------------
STATE CENTURY PTI TOTAL % OF TOTAL
----- ------------------------- --------- ----------
<S> <C> <C> <C> <C>
Wisconsin........................ 117,565 126,383 243,948 21.32%
Washington....................... 0 164,315 164,315 14.36%
Louisiana........................ 94,222 0 94,222 8.23%
Michigan......................... 92,659 0 92,659 8.10%
Alaska........................... 0 86,797 86,797 7.58%
Colorado......................... 8,005 71,908 79,913 6.98%
Ohio............................. 77,347 0 77,347 6.76%
Oregon........................... 0 71,123 71,123 6.22%
Montana.......................... 0 57,001 57,001 4.98%
Arkansas......................... 41,950 0 41,950 3.67%
Texas............................ 40,820 0 40,820 3.57%
Minnesota........................ 0 27,829 27,829 2.43%
Tennessee........................ 24,432 0 24,432 2.13%
Mississippi...................... 17,419 0 17,419 1.52%
Idaho............................ 4,298 1,499 5,797 0.51%
New Mexico....................... 5,478 0 5,478 0.48%
Indiana.......................... 4,948 0 4,948 0.43%
Wyoming.......................... 0 4,548 4,548 0.40%
Iowa............................. 189 1,591 1,780 0.16%
Arizona.......................... 1,604 0 1,604 0.14%
Nevada........................... 0 428 428 0.03%
------------ ------------ --------- ------
Total........................... 530,936 613,422 1,144,358 100.00%
============ ============ ========= ======
</TABLE>
S-4
<PAGE>
A substantial portion of the growth in Century's telephone operations over
the past several years has been attributable to acquisitions of other
telephone companies and to the expansion of services. Future growth in
telephone operations is expected to be derived from (i) acquiring additional
telephone companies, (ii) providing service to new customers, (iii) increasing
network usage and (iv) providing additional services made possible by advances
in technology and changes in regulation.
The installation of digital switches and related software has been an
important component of the Company's growth strategy because it allows the
Company to offer enhanced services (such as call forwarding, conference
calling, caller identification, selective call ringing and call waiting) and
to thereby increase utilization of existing access lines. In 1997, the Company
continued to expand its list of premium services (such as voice mail and
Internet access) offered in certain service areas and aggressively marketed
these services.
The Company's telephone subsidiaries are installing fiber optic cable in
high traffic routes in certain areas in which the subsidiaries operate and
have provided alternative routing of telephone service over fiber optic cable
networks in several strategic operating areas. At September 30, 1997, the
telephone subsidiaries of Century and PTI had installed approximately 2,896
and 2,052 miles, respectively, of fiber optic cable.
MOBILE COMMUNICATIONS OPERATIONS
According to published sources, the Company is currently the 10th largest
cellular telephone company in the United States, based on the Company's pops.
At September 30, 1997, (i) Century and PTI had access to approximately 8.1
million and 1.9 million cellular pops, respectively, and (ii) the majority-
owned cellular systems of Century and PTI served approximately 430,000 and
87,000 cellular subscribers, respectively.
The Company's business development strategy for its cellular telephone
operations is to secure operating control of service areas that are
geographically clustered. Clustered cellular service areas aid the Company's
marketing efforts and provide various operating and service advantages.
Approximately 45% of the Company's pops in markets currently served by the
Company are in a single, contiguous cluster of eight MSAs and nine RSAs in
Michigan; another 18% are in a cluster of five MSAs and seven RSAs in northern
and central Louisiana, southern Arkansas and eastern Texas.
During the last few years the Company has upgraded certain portions of its
cellular systems to provide for digital service. The Company began
implementing digital service in certain markets in late 1996 using the TDMA
digital standard, and plans to install digital voice transmission facilities
in additional markets in 1998.
OTHER OPERATIONS
The Company also provides long distance, operator and interactive services
in certain local and regional markets, as well as certain printing and related
business information services. At September 30, 1997, the Company's long
distance business served approximately 165,000 customers in certain of the
Company's markets. In addition, the Company has access to approximately 8.1
million PCS pops, over half of which were acquired in conjunction with the PTI
acquisition. The Company is currently evaluating its options with respect to
future PCS product offerings.
RECENT DEVELOPMENTS
ACQUISITION OF PACIFIC TELECOM, INC.
On December 1, 1997, Century and its cellular holding company subsidiary,
Century Cellunet, Inc. ("Cellunet"), acquired PTI in exchange for $1.503
billion in cash in a two-step transaction. In the first step, Cellunet
purchased substantially all of PTI's cellular operations in exchange for $240
million, and in the second step Century purchased all of PTI's capital stock
for $1.263 billion. To finance the acquisition, Century borrowed $1.288
billion under its $1.6 billion senior unsecured credit facility with
NationsBank of Texas, Inc. and a
S-5
<PAGE>
syndicate of other lenders (the "Senior Credit Facility"). This debt matures
in five years and bears interest at floating rates based upon London InterBank
Offered Rates for short-term periods. Century financed the remainder of the
PTI acquisition price with available cash, most of which consisted of the
proceeds of Century's sale of approximately 3.8 million shares of common stock
of Brooks Fiber Properties, Inc. ("Brooks") in November 1997 for net proceeds
of approximately $203 million.
PTI was organized in 1955 to provide local exchange telephone services to
suburban and rural communities primarily in the Pacific Northwest. In
subsequent years, PTI diversified its operations to provide cellular and other
telecommunications services. As a result of Century's acquisition of PTI on
December 1, 1997, the Company acquired approximately 660,000 telephone access
lines located in four midwestern states, seven western states and Alaska, and
approximately 100,000 cellular subscribers in markets served by PTI in two
midwestern states and Alaska. Cellunet intends to integrate the cellular
operations that it purchased from PTI into its existing cellular operations.
Century will operate the remainder of PTI as a wholly-owned subsidiary, with
its headquarters remaining in Vancouver, Washington. In connection with the
acquisition, Century has reorganized its telephone operations into three
operating regions, including a new western telephone operating region,
substantially all of which is comprised of PTI's LECs in seven western states
and Alaska. As soon as practicable, the Company plans to offer long distance,
Internet and certain other services in most of PTI's local exchange markets on
substantially the same terms on which Century recently began to offer such
services to its telephone customers.
For additional information regarding PTI, investors should refer to PTI's
recent annual, quarterly and current reports filed under the Exchange Act,
copies of which are filed as exhibits to the Registration Statement of which
the accompanying Prospectus forms a part and which are incorporated by
reference into the accompanying Prospectus.
OTHER ACQUISITIONS
In October 1997, Century acquired a security alarm business that provides
services to nearly 4,000 customers in north central Louisiana, southern
Arkansas and northwestern Mississippi. In early December 1997, Century
acquired approximately 177,000 additional cellular pops through its purchase
of additional partnership interests in a limited partnership that operates
Wisconsin RSA 8. In conjunction with this purchase, Century was named the
operator of this limited partnership.
As part of its growth strategy, the Company continually evaluates the
possibility of acquiring additional telecommunications operations, and at any
given time may be engaged in discussions or negotiations regarding additional
acquisitions.
SALE OF PTI'S UNDERSEA CABLE OPERATIONS
On December 18, 1997, PTI entered into definitive agreements to sell its
interests in Pacific Telecom Cable, Inc. ("PTC") and Pacific Telecom
Transmissions Services, Inc. ("PTTS") to an affiliate of Neptune
Communications Corporation in exchange for cash estimated at approximately $57
million, subject to certain purchase price adjustments to be made in
conjunction with the closing of the transactions. PTC is the U.S. founder and
operator of the North Pacific Cable, a submarine fiber optic cable that links
the Pacific Northwest to Japan and Alaska. PTTS provides restoration services
to the North Pacific Cable via a satellite earth station. Consummation of the
transactions is subject to the receipt of governmental approvals and other
customary closing conditions. Century anticipates that the transactions will
be completed in the first or second quarter of 1998.
S-6
<PAGE>
USE OF PROCEEDS
The net proceeds to Century from the sale of the Offered Securities, after
deduction of estimated underwriting discounts and commissions and offering
expenses, are estimated to be approximately $991.2 million. All of the net
proceeds will be used to reduce Century's outstanding indebtedness under the
Senior Credit Facility associated with its recent acquisition of PTI. See
"Recent Developments--Acquisition of Pacific Telecom, Inc." This debt matures
in five years and bears interest at floating rates based upon London InterBank
Offered Rates for short-term periods. The weighted average interest rate of
this debt as of December 22, 1997 was 6.168%.
CAPITALIZATION
The following table sets forth at September 30, 1997 (i) the actual
consolidated capitalization of the Company, (ii) the pro forma consolidated
capitalization of the Company assuming that the Company acquired PTI and sold
approximately 3.8 million shares of Brooks' common stock on September 30, 1997
(See "Recent Developments--Acquisition of Pacific Telecom, Inc.") and (iii)
the pro forma consolidated capitalization after giving effect to the events
described in (ii) above, the Offering and the application of the net proceeds
therefrom. This table should be read in conjunction with the Company's
Consolidated Financial Statements and Pro Forma Consolidated Condensed
Financial Information, and the Notes thereto, incorporated into the
accompanying prospectus by reference.
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1997
---------------------------------------
PRO FORMA
PRO FORMA FOR PTI
FOR PTI ACQUISITION,
ACQUISITION BROOKS STOCK
AND BROOKS SALE
ACTUAL STOCK SALE AND OFFERING
---------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C>
Current maturities and short-term
debt................................. $ 19,013 $ 148,058 $ 148,058
---------- ---------- ----------
Long-term debt, excluding current ma-
turities:
Century............................. 325,996 1,644,828 1,653,633
Subsidiaries........................ 239,637 718,479 718,479
---------- ---------- ----------
Total long-term debt, excluding
current maturities............... 565,633 2,363,307(1) 2,372,112(1)
---------- ---------- ----------
Stockholders' equity:
Common Stock, $1.00 par value,
175,000,000 shares authorized,
60,519,391 shares issued and
outstanding........................ 60,519 60,519 60,519
Paid-in capital..................... 490,661 490,661 490,661
Unrealized holding gain on
investments, net of taxes.......... 62,038 8,689(2) 8,689(2)
Retained earnings................... 635,491 701,705(2) 701,705(2)
Unearned ESOP Shares................ (9,200) (9,200) (9,200)
Preferred Stock--non-redeemable..... 8,106 8,106 8,106
---------- ---------- ----------
Total stockholders' equity.......... 1,247,615 1,260,480 1,260,480
---------- ---------- ----------
Total capitalization.............. $1,832,261 $3,771,845 $3,780,650
========== ========== ==========
</TABLE>
- --------
(1) The $1.8 billion pro forma increase in long-term debt is attributable to
(i) Century's borrowing of $1.288 billion to finance its acquisition of
PTI and certain related costs and (ii) the Company's assumption of long-
term debt of PTI of $479 million at September 30, 1997. For additional
information, see the Pro Forma Consolidated Condensed Financial
Information and Notes thereto incorporated into the accompanying
prospectus by reference.
(2) Reflects the gain on the sale of Brooks common stock that will be recorded
in Century's 1997 fourth quarter results of operations and the reduction
of the associated unrealized holding gain on investments, net of taxes.
For additional information, see the Pro Forma Consolidated Condensed
Financial Information and Notes thereto incorporated into the accompanying
prospectus by reference. Century continues to hold approximately 550,000
shares of Brooks common stock, in addition to other marketable securities.
S-7
<PAGE>
SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA
(DOLLARS IN THOUSANDS)
INFORMATION REGARDING CENTURY
The following tables set forth selected historical financial and operating
data for the Company as of the dates and for the periods indicated. The
historical financial data for each year in the three-year period ended
December 31, 1996 are derived from the audited financial statements of the
Company. The selected financial data for the nine-month periods ended
September 30, 1996 and 1997 are derived from unaudited financial statements.
The unaudited financial statements have not been audited by independent public
accountants; however, in the opinion of the Company's management, all
adjustments (which include only normal recurring adjustments) necessary to
present fairly the results of operations for these periods have been included
herein. The operating results for the nine months ended September 30, 1997 are
not necessarily indicative of the results to be expected for any future
periods. The tables also set forth unaudited consolidated condensed pro forma
financial information for the year ended December 31, 1996 and as of and for
the nine months ended September 30, 1997 that gives effect to the acquisition
of PTI and, with respect to the Balance Sheet Data only, also gives effect to
the sale of Brooks common stock and the consummation of the Offering. See
"Recent Developments." The pro forma consolidated condensed financial
information has been prepared for comparative purposes only and does not
purport to be indicative of the results of operations or financial condition
of the Company had such transactions actually occurred on the dates indicated
below. The following information should be read in conjunction with the
Company's Consolidated Financial Statements and Pro Forma Consolidated
Condensed Financial Information, and the Notes thereto, incorporated into the
accompanying prospectus by reference.
<TABLE>
<CAPTION>
PRO FORMA FOR
PTI ACQUISITION(1)
--------------------------
NINE MONTHS
ENDED NINE MONTHS
YEAR ENDED DECEMBER 31, SEPTEMBER 30, YEAR ENDED ENDED
---------------------------- ------------------ DECEMBER 31, SEPTEMBER 30,
1994 1995 1996 1996 1997 1996 1997
-------- -------- -------- -------- -------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Operating revenues:
Telephone.............. $391,265 $419,242 $451,538 $335,819 $359,454 $ 899,411 $ 706,959
Mobile communications.. 150,802 197,494 250,243 185,286 220,472 294,286 259,104
Other.................. 22,534 28,104 47,896 34,343 47,986 51,339 51,593
-------- -------- -------- -------- -------- --------- ---------
Total operating
revenues............. 564,601 644,840 749,677 555,448 627,912 1,245,036 1,017,656
-------- -------- -------- -------- -------- --------- ---------
Operating expenses:
Cost of sales and
operating expenses.... 296,082 328,151 394,360 286,764 329,254 633,807 511,785
Depreciation and
amortization.......... 95,713 113,770 132,021 96,456 108,740 253,484 203,473
-------- -------- -------- -------- -------- --------- ---------
Total operating
expenses............. 391,795 441,921 526,381 383,220 437,994 887,291 715,258
-------- -------- -------- -------- -------- --------- ---------
Operating income....... 172,806 202,919 223,296 172,228 189,918 357,745 302,398
-------- -------- -------- -------- -------- --------- ---------
Other income (expense)
Interest expense....... (42,577) (43,615) (44,662) (33,972) (33,539) (179,269) (134,491)
Income from
unconsolidated
cellular entities..... 15,698 20,084 26,952 21,584 21,750 32,099 28,386
Gain on sales of
assets................ 15,877 6,782 815 815 70,121 4,520 71,438
Minority interest...... (3,377) (8,084) (6,675) (5,947) (3,722) (8,225) (5,529)
Other income and
expense............... 3,111 4,982 3,916 2,601 3,467 936 1,434
-------- -------- -------- -------- -------- --------- ---------
Total other income
(expense)............ (11,268) (19,851) (19,654) (14,919) 58,077 (149,939) (38,762)
-------- -------- -------- -------- -------- --------- ---------
Income before income
tax expense........... 161,538 183,068 203,642 157,309 247,995 207,806 263,636
Income tax expense..... 61,300 68,292 74,565 58,353 90,251 87,174 104,988
-------- -------- -------- -------- -------- --------- ---------
Net income............. $100,238 $114,776 $129,077 $ 98,956 $157,744 $ 120,632 $ 158,648
======== ======== ======== ======== ======== ========= =========
OTHER FINANCIAL DATA:
Capital expenditures... $200,776 $196,592 $222,885 $153,892 $123,344 $ 345,272 $ 208,246
Common stockholders'
equity as a percentage
of total
capitalization (at
period end)........... 48.4% 57.5% 60.8% 61.4% 67.6% N/A 33.2%(2)
Ratio of earnings to
fixed charges(3)...... 4.50 4.74 5.10 5.06 7.69(4) 2.01 2.72(5)
</TABLE>
S-8
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA FOR
PTI ACQUISITION
--------------------------
DECEMBER 31,
----------------------------- DECEMBER 31, SEPTEMBER 30,
1994 1995 1996 1996(6) 1997(2)
--------- --------- --------- ------------ -------------
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Local exchange access
lines in service...... 454,963 480,757 503,562 1,063,023 1,144,358
Cellular POPs.......... 7,087,512 7,558,322 7,998,727 9,967,949 9,962,666
Cellular subscribers... 211,710 290,075 368,233 439,191 516,404
Long distance
customers............. 27,632 46,608 110,560 110,560 164,793
Employees
(approximate)......... 3,000 3,100 3,400 5,600 5,700
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
-----------------------------------------
PRO FORMA
PRO FORMA FOR PTI
FOR PTI ACQUISITION,
DECEMBER 31, ACQUISITION BROOKS STOCK
------------------- AND BROOKS SALE AND
1995 1996 ACTUAL STOCK SALE(7)(8) OFFERING(7)(8)
--------- --------- --------- ---------------- --------------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash
equivalents........... $ 8,540 $ 8,402 $ 11,283 $ 9,162 $ 9,162
Net property, plant and
equipment............. 1,047,808 1,149,012 1,145,557 2,113,946 2,113,946
Excess cost of net
assets acquired, less
accumulated
amortization.......... 493,655 532,410 545,683 1,786,712 1,786,712
Total assets........... 1,862,421 2,028,505 2,273,704 4,518,886 4,527,691
Total debt (including
current maturities of
long-term debt and
short-term debt)...... 652,428 645,849 584,646 2,511,365 2,520,170
Stockholders' equity... 888,424 1,028,153 1,247,615 1,260,480 1,260,480
</TABLE>
- --------
(1) Assumes the PTI acquisition was consummated January 1, 1996, unless
otherwise indicated.
(2) Assumes the PTI acquisition was consummated September 30, 1997.
(3) Calculated in the manner described in the accompanying prospectus.
(4) 5.67 excluding the gain on the sale of Metro Access Networks, Inc.
("MAN"), Century's competitive access subsidiary, in the second quarter of
1997.
(5) 2.22 excluding the gain on the sale of MAN in the second quarter of 1997.
(6) Assumes the PTI acquisition was consummated December 31, 1996.
(7) Assumes these transactions were consummated September 30, 1997.
(8) Based on Century's preliminary allocations of the PTI purchase price to
PTI's assets and liabilities; Century's preliminary estimates of the fair
value of PTI's assets and liabilities may change as fair value information
is obtained and Century's purchase price allocations are finalized.
S-9
<PAGE>
INFORMATION REGARDING PTI
The following table sets forth selected historical financial data for PTI as
of the dates and for the periods indicated. The historical financial data for
each year in the three-year period ended December 31, 1996 are derived from
the audited financial statements of PTI. The selected financial data for the
nine-month periods ended September 30, 1996 and 1997 are derived from
unaudited financial statements. The unaudited financial statements have not
been audited by independent public accountants; however, in the opinion of the
Company's management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the results of operations for these
periods have been included herein. The summary historical financial data below
should be read in conjunction with PTI's financial statements and notes
thereto incorporated into the accompanying prospectus by reference.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
-------------------------- -----------------
1994 1995 1996 1996 1997
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Operating revenues:
Local network service........... $ 96,944 $120,512 $140,870 $101,970 $112,719
Network access service.......... 168,530 223,723 259,110 190,372 198,706
Long distance network
service(1)..................... 271,977 150,064 1,606 1,203 1,295
Private line service(1)......... 58,193 34,270 -- -- --
Sales of cable capacity(2)...... 4,567 3,419 8,353 8,279 12,412
Cellular........................ 23,642 33,884 44,043 32,367 38,632
Other(1)(2)..................... 72,533 74,263 67,148 52,001 52,401
-------- -------- -------- -------- --------
Total operating revenues...... 696,386 640,135 521,130 386,192 416,165
-------- -------- -------- -------- --------
Operating income................. $164,641 $165,311 $158,732 $114,824 $133,204
-------- -------- -------- -------- --------
OTHER FINANCIAL DATA:
Depreciation and amortization.... $100,879 $105,828 $102,292 $ 76,532 $ 80,420
Capital expenditures............. 148,248 121,753 122,387 79,585 84,902
</TABLE>
- --------
(1) In August 1995, PTI sold Alascom, Inc., a provider of long distance
services in Alaska. Alascom, Inc. contributed revenues of $343.5 million
and $193.1 million in 1994 and 1995, respectively.
(2) Includes revenues from PTI's undersea cable operations, which PTI agreed
to sell on December 18, 1997. See "Recent Developments--Sale of PTI's
Undersea Cable Operations." For the years ended December 31, 1994, 1995
and 1996 and the nine months ended September 30, 1996 and 1997, these
operations contributed revenues of $19.0 million, $22.1 million, $25.8
million, $21.5 million and $26.7 million, respectively.
S-10
<PAGE>
SUPPLEMENTAL DESCRIPTION OF OFFERED SECURITIES
The Series E Notes, Series F Debentures and Series G Debentures offered
hereby each constitute a single series of Senior Debt Securities described in
the accompanying Prospectus and will be issued under the Indenture referred to
therein. The following description of the specific terms of the Offered
Securities supplements and should be read in conjunction with the description
of the general terms and provisions of the Senior Debt Securities set forth in
the accompanying Prospectus under the caption "Description of Senior Debt
Securities." The following description does not purport to be complete and is
qualified in its entirety by reference to the accompanying Prospectus and the
Indenture. Unless otherwise indicated, each capitalized term not otherwise
defined herein has the meaning ascribed to it in the accompanying Prospectus
or in the Indenture.
PRINCIPAL AMOUNT, MATURITY AND INTEREST
The Series E Notes, Series F Debentures and Series G Debentures will be
limited to aggregate principal amounts of $ , $ and $ ,
respectively. The Series E Notes will mature on , the Series F Debentures
will mature on and the Series G Debentures will mature on . Interest
on the Offered Securities will accrue at the respective rates set forth on the
cover page hereof and will be payable semi-annually on and of each
year, commencing , 1998, to the persons in whose names the Offered
Securities are registered at the close of business on the preceding and
, respectively, subject to certain exceptions provided for in the
Indenture.
CONDITIONAL RIGHT TO SHORTEN MATURITY OF THE SERIES G DEBENTURES
Century intends to deduct interest paid on the Series G Debentures for
United States federal income tax purposes. However, there have been proposed
tax law changes that, among other things, would prohibit an issuer from
deducting interest payments on debt instruments with a maturity of more than
40 years. While none of these proposals have become law, there can be no
assurance that similar legislation affecting Century's ability to deduct
interest paid on the Series G Debentures will not be enacted in the future or
that any such legislation would not have a retroactive effective date.
Upon the occurrence of a Tax Event (as defined below), Century, without the
consent of the holders of the Series G Debentures, will have the right to
shorten the maturity of the Series G Debentures to the minimum extent
required, in the opinion of nationally recognized independent tax counsel,
such that, after the shortening of the maturity, interest paid on the Series G
Debentures will be deductible for United States federal income tax purposes.
There can be no assurance that Century would not exercise its right to shorten
the maturity of the Series G Debentures upon the occurrence of a Tax Event or
as to the period by which such maturity would be shortened.
In the event that Century elects to exercise its right to shorten the
maturity of the Series G Debentures on the occurrence of a Tax Event, Century
will mail a notice of shortened maturity to each holder of the Series G
Debentures by first-class mail not more than 60 days after the occurrence of
such Tax Event, stating the new maturity date of the Series G Debentures. Such
notice shall be effective immediately upon mailing.
Century believes that the Series G Debentures should constitute indebtedness
for United States federal income tax purposes under current law, and, in that
case, an exercise of its right to shorten the maturity of the Series G
Debentures would not be a taxable event to holders. Prospective investors
should be aware, however, that Century's exercise of its right to shorten the
maturity of the Series G Debentures would be a taxable event to holders if the
Series G Debentures are treated as equity for purposes of United States
federal income taxation before the maturity is shortened, assuming that the
Series G Debentures of shortened maturity are treated as indebtedness for such
purposes.
"Tax Event" means that Century shall have received an opinion of nationally
recognized independent tax counsel to the effect that at any time on or after
the date of the issuance of the Series G Debentures, as a result of (a) any
amendment to, clarification of, or change (including any announced prospective
amendment,
S-11
<PAGE>
clarification or change) in any law, or any regulation thereunder, of the
United States, (b) any judicial decision, official administrative
pronouncement, ruling, regulatory procedure, regulation, notice or
announcement, including any notice or announcement of intent to adopt or
promulgate any ruling, regulatory procedure or regulation (any of the
foregoing, an "Administrative or Judicial Action"), or (c) any amendment to,
clarification of or change in any official position or the interpretation of
any Administrative or Judicial Action or any law or regulation of the United
States that differs from the theretofore generally accepted position or
interpretation, in each case, occurring on or after the date of the issuance
of the Series G Debentures, there is a more than insubstantial risk that
interest paid by Century on the Series G Debentures is not, or will not be,
deductible, in whole or in part, by Century for purposes of United States
federal income tax.
OPTIONAL REDEMPTION OF THE OFFERED SECURITIES
The Series E Notes, Series F Debentures and Series G Debentures will be
redeemable, as a whole or in part, at the option of Century at any time, at a
redemption price equal to the greater of (a) 100% of the principal amount of
such series to be redeemed and (b) the sum of the present values of the
Remaining Scheduled Payments (as hereinafter defined) thereon discounted to
the redemption date on a semi-annual basis (assuming a 360-day year consisting
of twelve 30-day months) at the Treasury Rate plus basis points for the
Series E Notes, basis points for the Series F Debentures and basis
points for the Series G Debentures, together in all cases with accrued
interest on the principal amount being redeemed to the redemption date.
In addition, if a Tax Event occurs and in the opinion of nationally
recognized independent tax counsel there would, notwithstanding any shortening
of the maturity of the Series G Debentures, be more than an insubstantial risk
that interest paid by Century on the Series G Debentures is not, or will not
be, deductible, in whole or in part, by Century for United States federal
income tax purposes, Century will have the right, within 90 days following the
occurrence of such Tax Event, to redeem the Series G Debentures in whole (but
not in part), on not less than 30 or more than 60 days notice mailed to
holders thereof, at a redemption price equal to the greater of (i) 100% of the
principal amount of the Series G Debentures and (ii) the sum of the present
values of the Remaining Scheduled Payments thereon discounted to the
redemption date on a semi-annual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Treasury Rate plus basis points, together with
accrued interest on the principal amount being redeemed to the redemption
date.
"Treasury Rate" means, with respect to any redemption date, the rate per
annum equal to the semi-annual equivalent yield to maturity (computed as of
the second business day immediately preceding such redemption date) of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker that would be utilized, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of such Series E Notes, Series F Debentures or Series G
Debentures. "Independent Investment Banker" means one of the Reference
Treasury Dealers appointed by the Trustee after consultation with Century.
"Comparable Treasury Price" means, with respect to any redemption date, (a)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
business day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal
Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for
U.S. Government Securities" or (b) if such release (or any successor release)
is not published or does not contain such prices on such business day, (i) the
average of the Reference Treasury Dealer Quotations for such redemption date,
after excluding the highest and lowest such Reference Treasury Dealer
Quotations, or (ii) if the Trustee obtains fewer than four such Reference
Treasury Dealer Quotations, the average of all such Quotations. "Reference
Treasury Dealer Quotations" means, with respect to each Reference Treasury
Dealer and any redemption date, the average, as determined by the Trustee, of
the bid and asked prices for the Comparable Treasury Issue (expressed in each
case as a percentage of its principal amount) quoted in writing to
S-12
<PAGE>
the Trustee by such Reference Treasury Dealer at 3:30 p.m. New York time on
the third business day preceding such redemption date.
"Reference Treasury Dealer" means each of Salomon Brothers Inc, Merrill
Lynch, Pierce, Fenner & Smith Incorporated, Chase Securities Inc., NationsBanc
Montgomery Securities, Inc., J.P. Morgan Securities Inc., Credit Suisse First
Boston Corporation and Goldman, Sachs & Co., and their respective successors;
provided, however, that if any of the foregoing shall cease to be a primary
U.S. Government securities dealer in New York City (a "Primary Treasury
Dealer"), Century shall substitute therefor another Primary Treasury Dealer.
"Remaining Scheduled Payments" means the remaining scheduled payments of the
principal of the Series E Notes, Series F Debentures or Series G Debentures to
be redeemed and interest thereon that would be due after the related
redemption date but for such redemption; provided, however, that if such
redemption date is not an interest payment date with respect to such Series E
Notes, Series F Debentures or Series G Debentures, the amount of the next
succeeding scheduled interest payment thereon will be reduced by the amount of
interest accrued thereon to such redemption date.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of Series E Notes, Series F
Debentures or Series G Debentures to be redeemed.
Unless Century defaults in payment of the redemption price, on and after the
applicable redemption date, interest will cease to accrue on the Series E
Notes, Series F Debentures or Series G Debentures, as applicable, or portions
thereof called for redemption.
There will be no mandatory sinking fund payments for the Offered Securities.
BOOK-ENTRY, DELIVERY AND FORM
The Offered Securities will be issued in the form of fully registered global
securities (the "Global Securities"). The Global Securities will be deposited
with, or on behalf of, The Depository Trust Company, New York, New York
("DTC"), and registered in the name of DTC's nominee.
Except as set forth below, the Global Securities may be transferred, in
whole and not in part, only to another nominee of DTC or to a successor of DTC
or its nominee.
DTC has advised Century and the Underwriters as follows: It is a limited-
purpose trust company which was created to hold securities for its
participating organizations (the "Participants") and to facilitate the
clearance and settlement of transactions in such securities between
Participants through electronic book-entry changes in accounts of its
Participants. Participants include securities brokers and dealers (including
the Underwriters), banks, trust companies, clearing corporations and certain
other organizations. Access to DTC's book-entry system is also available to
others, such as banks, brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a Participant, either directly or
indirectly ("indirect participants"). Persons who are not Participants may
beneficially own securities held by DTC only through Participants or indirect
participants.
DTC has also advised that pursuant to procedures established by it (i) upon
the issuance by Century of the Offered Securities, DTC will credit the
accounts of Participants designated by the Underwriters with the principal
amount of the Offered Securities purchased by the Underwriters and (ii)
ownership of beneficial interests in the Global Securities will be shown on,
and the transfer of that ownership will be effected only through, records
maintained by DTC (with respect to Participants' interests), the Participants
and the indirect participants. The laws of some states require that certain
persons take physical delivery in definitive form of securities which they
own. Consequently, the ability to transfer beneficial interests in the Global
Securities is limited to such extent.
So long as a nominee of DTC is the registered owner of the Global
Securities, such nominee will be considered the sole owner or holder of the
Offered Securities for all purposes under the Indenture. Except as
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<PAGE>
provided below, owners of beneficial interests in the Global Securities will
not be entitled to have Offered Securities registered in their names, will not
receive or be entitled to receive physical delivery of Offered Securities in
definitive form and will not be considered the owners or holders thereof under
the Indenture.
Neither Century, the Trustee, any Paying Agent nor the Registrar will have
any responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the Global
Securities, or for maintaining, supervising or reviewing any records relating
to such beneficial ownership interests.
Principal and interest payments on the Global Securities registered in the
name of DTC's nominee will be made by Century through the Paying Agent to
DTC's nominee as the registered owner of the Global Securities. Under the
terms of the Indenture, Century and the Trustee will treat the persons in
whose names the Offered Securities are registered as the owners of such
Offered Securities for the purpose of receiving payments of principal and
interest on such Offered Securities, receiving redemption and other notices
with respect to such Offered Securities and for all other purposes whatsoever.
Therefore, neither Century, the Trustee nor any Paying Agent has any direct
responsibility or liability for the payment of principal or interest on the
Offered Securities to owners of beneficial interests in the Global Securities.
DTC has advised Century and the Trustee that its present practice is, upon
receipt of any payment of principal or interest, to credit immediately the
accounts of the Participants with payment in amounts proportionate to their
respective holdings in principal amount of beneficial interests in the Global
Securities as shown on the records of DTC. Payments by Participants and
indirect participants to owners of beneficial interests in the Global
Securities will be governed by standing instructions and customary practices,
and will be the responsibility of such Participants or indirect participants.
If DTC is at any time unwilling or unable to continue as depositary and a
successor depositary is not appointed by Century within 90 days, Century will
issue Offered Securities in definitive form in exchange for the Global
Securities. In addition, Century may at any time determine not to have the
Offered Securities represented by Global Securities and, in such event, will
issue Offered Securities in definitive form in exchange for the Global
Securities. In either instance, an owner of a beneficial interest in the
Global Securities will be entitled to have Offered Securities equal in
principal amount to such beneficial interest registered in its name and will
be entitled to physical delivery of such Offered Securities in definitive
form. Offered Securities so issued in definitive form will be issued in
denominations of $1,000 and integral multiples thereof and will be issued in
registered form only, without coupons. If at any time Offered Securities are
issued in definitive form, interest will be paid by check mailed on or before
the payment date, by first class mail, to the holders thereof, unless
otherwise determined by Century.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Offered Securities will be made by the Underwriters in
immediately available funds. All payments of principal and interest will be
made in immediately available funds, except as otherwise indicated above under
"--Book-Entry, Delivery and Form".
S-14
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement
dated as of January , 1998, Century has agreed to sell to each of the
Underwriters named below, and each of the Underwriters has severally agreed to
purchase, the principal amount of Series E Notes, Series F Debentures and
Series G Debentures set forth opposite its name below:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF PRINCIPAL AMOUNT OF PRINCIPAL AMOUNT OF
UNDERWRITER SERIES E NOTES SERIES F DEBENTURES SERIES G DEBENTURES
----------- ------------------- ------------------- -------------------
<S> <C> <C> <C>
Salomon Brothers Inc ... $ $ $
Merrill Lynch, Pierce,
Fenner & Smith
Incorporated...
Stephens Inc............
NationsBanc Montgomery
Securities, Inc........
Chase Securities Inc....
J.P. Morgan Securities
Inc....................
Credit Suisse First Bos-
ton Corporation........
Goldman, Sachs & Co.....
Furman Selz LLC.........
Lazard Freres & Co. LLC.
RBC Dominion Securities
Corporation............
------------ ------------ ------------
Total................. $ ,000,000 $ ,000,000 $ ,000,000
============ ============ ============
</TABLE>
Century has been advised by the Underwriters that they propose initially to
offer each series of the Offered Securities to the public at the respective
public offering prices set forth on the cover page of this Prospectus
Supplement, and to certain dealers at such prices less a concession not in
excess of % of the principal amount of the Series E Notes, % of the
principal amount of the Series F Debentures and % of the principal amount
of the Series G Debentures. The Underwriters may allow, and such dealers may
reallow, a concession not in excess of % of the principal amount of each
series of the Offered Securities to certain other dealers. After the initial
public offering, the public offering prices and such concessions may be
changed.
In connection with this Offering, certain Underwriters and their affiliates
may engage in transactions that stabilize, maintain or otherwise affect the
market price of the Offered Securities. Such transactions may include
stabilization transactions effected in accordance with Rule 104 of Regulation
M, pursuant to which such persons may bid for or purchase the Offered
Securities for the purpose of stabilizing their market price. The Underwriters
also may create a short position for the account of the Underwriters by
selling more of the Offered Securities in connection with the Offering than
they are committed to purchase from Century, and in such case may purchase the
Offered Securities in the open market following completion of the Offering to
cover such short position. Any of the transactions described in this paragraph
may result in the maintenance of the price of the Offered Securities at a
level above that which might otherwise prevail in the open market. None of the
transactions described in this paragraph is required, and, if they are
undertaken, they may be discontinued at any time.
Century does not presently intend to list the Offered Securities on any
exchange. Century has been advised by the Underwriters that they intend to
make a market in the Offered Securities but that they are not obligated to do
so and may discontinue market making at any time without notice. No assurance
can be given as to the liquidity of the trading market for the Offered
Securities.
The Underwriting Agreement provides that Century will indemnify the several
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended, or contribute to payments the Underwriters
may be required to make in respect thereof.
S-15
<PAGE>
Affiliates of certain of the Underwriters are lenders to Century under the
Senior Credit Facility and will receive a portion of the amounts repaid under
such credit facility from the proceeds of the Offering. See "Use of Proceeds."
Because more than 10% of the net proceeds of the Offering will be paid to
affiliates of members of the National Association of Securities Dealers, Inc.
(the "NASD") who are participating in the Offering, the Offering is being made
pursuant to Rule 2710(c)(8) of the Conduct Rules of the NASD.
Ernest Butler, Jr., a Senior Executive Vice President of Stephens Inc., is a
director of Century.
LEGAL MATTERS
The validity of the Offered Securities will be passed upon for Century by
Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P., 201 St. Charles
Avenue, New Orleans, Louisiana 70170-5100. Certain legal matters will be
passed upon for the Underwriters by Winthrop, Stimson, Putnam & Roberts, One
Battery Park Plaza, New York, New York 10004.
S-16
<PAGE>
$1,600,000,000
[LOGO OF CENTURY TELEPHONE ENTERPRISES, INC. APPEARS HERE]
SENIOR DEBT SECURITIES
PREFERRED STOCK
COMMON STOCK
WARRANTS
----------------
Century Telephone Enterprises, Inc. ("Century") may from time to time offer
hereunder (i) senior unsecured debt securities (the "Senior Debt Securities"),
(ii) shares of preferred stock (the "Preferred Stock"), (iii) shares of common
stock and accompanying preference share purchase rights (the "Common Stock"),
and (iv) warrants to purchase Senior Debt Securities, Preferred Stock or
Common Stock (the "Warrants"), with an aggregate initial offering price of up
to $1,600,000,000. The Senior Debt Securities, Preferred Stock, Common Stock
and Warrants (collectively, the "Securities") may be offered, separately or
together, in one or more separate series or classes, in amounts, at prices and
on terms to be determined at the time of sale and set forth in one or more
supplements to this Prospectus (a "Prospectus Supplement").
The specific terms of the Securities in respect to which this Prospectus is
being delivered will be set forth in the applicable Prospectus Supplement and
will include, where applicable, among other things (i) in the case of Senior
Debt Securities, the specific designation, aggregate principal amount, net
proceeds, offering price, maturity, interest rate, interest payment dates and
terms of any conversion, redemption or sinking fund provisions thereof; (ii)
in the case of Preferred Stock, the designation and stated value, any
dividend, liquidation, redemption, conversion, voting or other rights, and the
initial public offering price thereof; (iii) in the case of Common Stock, the
initial public offering price thereof; and (iv) in the case of Warrants, the
duration, offering price, exercise price and exercise provisions. The Senior
Debt Securities will rank equally with all other unsubordinated and unsecured
indebtedness of Century.
The Securities may be offered directly or through agents, underwriters or
dealers designated from time to time by Century. If any agents, underwriters
or dealers are involved in the sale of any of the Securities, their names, and
any applicable purchase price, fee, commission or discount arrangement between
or among them, will be set forth in the applicable Prospectus Supplement. See
"Plan of Distribution."
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF SECURITIES UNLESS
ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
----------------
The date of this Prospectus is December 29, 1997.
<PAGE>
AVAILABLE INFORMATION
Century is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith Century files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed can be inspected and copied at the
Commission's Public Reference Section, 450 Fifth Street, N.W., Washington,
D.C., 20549, and at the following regional offices of the Commission: Seven
World Trade Center, 13th Floor, New York, New York 10048 and 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such material can
be obtained from the Public Reference Section of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. The Commission also
maintains a World Wide Web site that contains reports, proxy and information
statements and other information regarding registrants, such as Century,
subsequent to the date when such registrants began filing documents
electronically with the Commission. The address of the Commission's site is
http//www.sec.gov. In addition, Century's Common Stock is listed on the New
York Stock Exchange and similar information concerning Century can be
inspected and copied at the offices of the New York Stock Exchange, Inc., 20
Broad Street, New York, New York 10005.
Pacific Telecom, Inc. ("PTI"), which Century acquired on December 1, 1997,
also filed reports, proxy statements, and other information with the
Commission through November 10, 1997. Reports filed by PTI pursuant to the
Exchange Act can be inspected and copied at each of the locations referenced
above and are otherwise available through the Commission's website.
This Prospectus forms a part of Century's Registration Statement (the
"Registration Statement") filed with the Commission on Form S-3 (Registration
No. 333-42013), pursuant to which Century registered $1.5 billion of
Securities. This Prospectus does not contain all of the information set forth
in the Registration Statement, certain portions of which have been omitted as
permitted by the rules and regulations of the Commission. The Registration
Statement may be inspected and copied at the Commission's offices listed
above. Century has filed a similar Registration Statement on Form S-3
(Registration No. 33-52915), pursuant to which Century registered $400,000,000
of Senior Debt Securities, of which $100,000,000 remain unsold on the date of
this Prospectus. This Prospectus also relates to the $100,000,000 of unsold
Senior Debt Securities registered pursuant to Registration Statement No. 33-
52915.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The documents listed below have been filed by Century under the Exchange Act
with the Commission and are incorporated herein by reference:
a. Century's Annual Report on Form 10-K for the year ended December 31,
1996;
b. Century's Quarterly Reports on Form 10-Q for the quarters ended March
31, June 30, and September 30, 1997;
c. Century's Current Reports on Form 8-K dated April 15, May 5 and June
11, and both of its Current Reports on Form 8-K dated December 1, 1997; and
d. Century's Registration Statement filed under the Exchange Act, as
amended and restated on Form 8-A/A filed December 2, 1996, which includes a
description of Century's Common Stock and Preference Share Purchase Rights.
All reports filed by Century with the Commission pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering made hereby shall be
deemed to be incorporated by reference herein and to be made a part hereof
from their respective dates of filing. Information appearing herein or in any
particular document incorporated herein by reference is not necessarily
complete and is qualified in its entirety by the information and financial
statements appearing in all
2
<PAGE>
of the documents incorporated herein by reference and should be read together
therewith. Any statements contained in a document incorporated or deemed to be
incorporated by reference shall be deemed to be modified or superseded to the
extent that a statement contained herein or in any other document subsequently
filed or incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus.
Century will provide without charge to each person to whom a copy of this
Prospectus has been delivered, including any beneficial owner, upon the
written or oral request of any such person, a copy of any of the documents
incorporated herein by reference, other than certain exhibits to such
documents. Requests for such copies should be directed to Harvey P. Perry,
Senior Vice President, General Counsel and Secretary, Century Telephone
Enterprises, Inc., 100 Century Park Drive, Monroe, Louisiana 71203, telephone
(318) 388-9500.
FORWARD-LOOKING STATEMENTS
In addition to historical information, this Prospectus and the documents
incorporated herein by reference include certain forward-looking statements
regarding events and financial trends that may affect the Company's future
operating results and financial position. Such forward-looking statements are
subject to uncertainties that could cause the Company's actual results to
differ materially from such statements. Such uncertainties include but are not
limited to: the effects of ongoing deregulation in the telecommunications
industry; the potential effects of greater than anticipated competition in the
Company's markets; possible changes in the demand for the Company's products
and services; the Company's ability to successfully introduce new product
offerings on a timely and cost-effective basis; the risks inherent in rapid
technological change; the Company's ability to effectively manage its growth,
including integrating the newly-acquired operations of PTI into the Company's
operations; and the effects of more general factors such as changes in general
market or economic conditions or in legislation, regulation or public policy.
These and other uncertainties related to the Company's business are described
in detail in Century's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1997, which is incorporated herein by reference. You are cautioned
not to place undue reliance on these forward-looking statements, which speak
only as of the date on which they were made. Century undertakes no obligation
to update any of its forward-looking statements for any reason.
----------------
When used herein, (i) the term "MSA" means a Metropolitan Statistical Area
for which the Federal Communications Commission (the "FCC") has granted a
cellular operating license, (ii) the term "RSA" means a Rural Service Area for
which the FCC has granted a cellular operating license, (iii) the term "PCS"
means Personal Communications Services, a new digital mobile communications
service, (iv) the term "LEC" means a local exchange carrier that provides
local telephone service, (v) the term "Series" means any particular series of
Senior Debt Securities, (vi) the term "Century" means Century Telephone
Enterprises, Inc., (vii) the term "PTI" means Pacific Telecom, Inc., (viii)
the term "Company" means Century and its subsidiaries (including PTI on and
after December 1, 1997), and (ix) the term "pops," whenever used herein with
respect to the operations of Century, PTI or the Company, means the population
of licensed markets (based on independent third-party population estimates)
multiplied by the proportionate equity interests of Century, PTI or the
Company in one of the entities licensed to operate in such markets.
3
<PAGE>
THE COMPANY
The Company is a regional diversified telecommunications company that is
primarily engaged in providing local telephone and mobile communications
services in 21 states. As described further below under "--Recent Acquisitions
and Dispositions," on December 1, 1997, Century acquired Pacific Telecom, Inc.
("PTI"), which substantially expanded the Company's local telephone and mobile
communications operations. As a result of this acquisition, the Company's
telephone subsidiaries currently serve nearly 1.2 million telephone access
lines, primarily in rural, suburban and small urban communities in 21 states,
with its largest customer bases located in Wisconsin, Washington, Louisiana,
Michigan and Alaska. In addition, through its cellular operations, the Company
currently has access to over 10.0 million pops in 31 MSAs and 44 RSAs,
primarily concentrated in Michigan, Mississippi, Wisconsin, Louisiana and
Arkansas. The Company also provides long distance, operator, Internet and
business information services.
Century is incorporated in Louisiana. Its principal executive offices are
located at 100 Century Park Drive, Monroe, Louisiana 71203, and its telephone
number is (318) 388-9500. The Company currently employs approximately 5,700
persons.
TELEPHONE OPERATIONS
According to published sources, the Company is currently the 10th largest
local exchange telephone company in the United States, based on the number of
telephone access lines served. At September 30, 1997, the telephone
subsidiaries of Century and PTI served approximately 531,000 and 613,000
access lines, respectively (not including approximately 47,000 access lines
acquired by PTI in October 1997). The Company currently operates over 440
central office and remote switching centers in its telephone operating areas.
Substantially all of the Company's access lines are served by digital
switching technology, which, in conjunction with other technologies, allows
the Company to offer additional premium services to its customers, including
call forwarding, conference calling, caller identification, selective call
ringing and call waiting. At September 30, 1997, Century's telephone
subsidiaries also provided Internet services to approximately 18,800
customers.
The table below sets forth (i) the number of access lines operated by the
telephone subsidiaries of Century and PTI as of September 30, 1997 and (ii)
pro forma consolidated totals, which give effect to the acquisition of PTI as
if it had occurred on September 30, 1997:
<TABLE>
<CAPTION>
NUMBER OF ACCESS LINES AT
SEPTEMBER 30, 1997 PRO FORMA
------------------------- --------------------
STATE CENTURY PTI TOTAL % OF TOTAL
- ----- ------------------------- --------- ----------
<S> <C> <C> <C> <C>
Wisconsin........................ 117,565 126,383 243,948 21.32%
Washington....................... 0 164,315 164,315 14.36%
Louisiana........................ 94,222 0 94,222 8.23%
Michigan......................... 92,659 0 92,659 8.10%
Alaska........................... 0 86,797 86,797 7.58%
Colorado......................... 8,005 71,908 79,913 6.98%
Ohio............................. 77,347 0 77,347 6.76%
Oregon........................... 0 71,123 71,123 6.22%
Montana.......................... 0 57,001 57,001 4.98%
Arkansas......................... 41,950 0 41,950 3.67%
Texas............................ 40,820 0 40,820 3.57%
Minnesota........................ 0 27,829 27,829 2.43%
Tennessee........................ 24,432 0 24,432 2.13%
Mississippi...................... 17,419 0 17,419 1.52%
Idaho............................ 4,298 1,499 5,797 0.51%
New Mexico....................... 5,478 0 5,478 0.48%
Indiana.......................... 4,948 0 4,948 0.43%
Wyoming.......................... 0 4,548 4,548 0.40%
Iowa............................. 189 1,591 1,780 0.16%
Arizona.......................... 1,604 0 1,604 0.14%
Nevada........................... 0 428 428 0.03%
------------ ------------ --------- ------
Total........................... 530,936 613,422 1,144,358 100.00%
============ ============ ========= ======
</TABLE>
4
<PAGE>
A substantial portion of the growth in Century's telephone operations over
the past several years has been attributable to acquisitions of other
telephone companies and to the expansion of services. Future growth in
telephone operations is expected to be derived from (i) acquiring additional
telephone companies, (ii) providing service to new customers, (iii) increasing
network usage and (iv) providing additional services made possible by advances
in technology and changes in regulation.
The installation of digital switches and related software has been an
important component of the Company's growth strategy because it allows the
Company to offer enhanced services (such as call forwarding, conference
calling, caller identification, selective call ringing and call waiting) and
to thereby increase utilization of existing access lines. In 1997, the Company
continued to expand its list of premium services (such as voice mail and
Internet access) offered in certain service areas and aggressively marketed
these services.
The Company's telephone subsidiaries are installing fiber optic cable in
high traffic routes in certain areas in which the subsidiaries operate and
have provided alternative routing of telephone service over fiber optic cable
networks in several strategic operating areas. At September 30, 1997, the
telephone subsidiaries of Century and PTI had installed approximately 2,896
and 2,052 miles, respectively, of fiber optic cable.
MOBILE COMMUNICATIONS OPERATIONS
According to published sources, the Company is currently the 10th largest
cellular telephone company in the United States, based on the Company's pops.
At September 30, 1997, (i) Century and PTI had access to approximately 8.1
million and 1.9 million cellular pops, respectively, and (ii) the majority-
owned cellular systems of Century and PTI served approximately 430,000 and
87,000 cellular subscribers, respectively.
The Company's business development strategy for its cellular telephone
operations is to secure operating control of service areas that are
geographically clustered. Clustered cellular service areas aid the Company's
marketing efforts and provide various operating and service advantages.
Approximately 45% of the Company's pops in markets currently served by the
Company are in a single, contiguous cluster of eight MSAs and nine RSAs in
Michigan; another 18% are in a cluster of five MSAs and seven RSAs in northern
and central Louisiana, southern Arkansas and eastern Texas.
During the last few years the Company has upgraded certain portions of its
cellular systems to provide for digital service. The Company began
implementing digital service in certain markets in late 1996 using the TDMA
digital standard, and plans to install digital voice transmission facilities
in additional markets in 1998.
OTHER OPERATIONS
The Company also provides long distance, operator and interactive services
in certain local and regional markets, as well as certain printing and related
business information services. At September 30, 1997, the Company's long
distance business served approximately 165,000 customers in certain of the
Company's markets. In addition, the Company has access to approximately 8.1
million PCS pops, over half of which were acquired in conjunction with the PTI
acquisition. The Company is currently evaluating its options with respect to
future PCS product offerings.
RECENT ACQUISITIONS AND DISPOSITIONS
Acquisition of Pacific Telecom, Inc. On December 1, 1997, Century and its
cellular holding company subsidiary, Century Cellunet, Inc. ("Cellunet"),
acquired PTI in exchange for $1.503 billion in cash in a two-step transaction.
In the first step, Cellunet purchased substantially all of PTI's cellular
operations in exchange for $240 million, and in the second step Century
purchased all of PTI's capital stock for $1.263 billion. To finance the
acquisition, Century borrowed $1.288 billion under its $1.6 billion senior
unsecured credit facility with NationsBank of Texas, Inc. and a syndicate of
other lenders. This debt matures in five years and bears interest at floating
rates based upon London InterBank Offered Rates for short-term periods.
Century financed the remainder of the PTI acquisition price with available
cash, most of which consisted of the proceeds of Century's sale of
approximately 3.8 million shares of common stock of Brooks Fiber Properties,
Inc. ("Brooks") in November 1997 for net proceeds of approximately $203
million.
5
<PAGE>
PTI was organized in 1955 to provide local exchange telephone services to
suburban and rural communities primarily in the Pacific Northwest. In
subsequent years, PTI diversified its operations to provide cellular and other
telecommunications services. As a result of Century's acquisition of PTI on
December 1, 1997, the Company acquired approximately 660,000 telephone access
lines located in four midwestern states, seven western states and Alaska, and
approximately 100,000 cellular subscribers in markets served by PTI in two
midwestern states and Alaska. Cellunet intends to integrate the cellular
operations that it purchased from PTI into its existing cellular operations.
Century will operate the remainder of PTI as a wholly-owned subsidiary, with
its headquarters remaining in Vancouver, Washington. In connection with the
acquisition, Century has reorganized its telephone operations into three
operating regions, including a new western telephone operating region,
substantially all of which is comprised of PTI's LECs in seven western states
and Alaska. As soon as practicable, the Company plans to offer long distance,
Internet and certain other services in most of PTI's local exchange markets on
substantially the same terms on which Century recently began to offer such
services to its telephone customers.
For additional information regarding PTI, investors should refer to PTI's
recent annual, quarterly and current reports filed under the Exchange Act,
copies of which are filed as exhibits to the Registration Statement of which
this Prospectus forms a part and which are incorporated by reference herein.
Other Acquisitions. In October 1997, Century acquired a security alarm
business that provides services to nearly 4,000 customers in north central
Louisiana, southern Arkansas and northwestern Mississippi. In early December
1997, Century acquired approximately 177,000 additional cellular pops through
its purchase of additional partnership interests in a limited partnership that
operates Wisconsin RSA 8. In conjunction with this purchase, Century was named
the operator of this limited partnership.
As part of its growth strategy, the Company continually evaluates the
possibility of acquiring additional telecommunications operations, and at any
given time may be engaged in discussions or negotiations regarding additional
acquisitions.
Sale of PTI's Undersea Cable Operations. On December 18, 1997, PTI entered
into definitive agreements to sell its interests in Pacific Telecom Cable,
Inc. ("PTC") and Pacific Telecom Transmissions Services, Inc. ("PTTS") to an
affiliate of Neptune Communications Corporation in exchange for cash estimated
at approximately $57 million, subject to certain purchase price adjustments to
be made in conjunction with the closing of the transactions. PTC is the U.S.
founder and operator of the North Pacific Cable, a submarine fiber optic cable
that links the Pacific Northwest to Japan and Alaska. PTTS provides
restoration services to the North Pacific Cable via a satellite earth station.
Consummation of the transactions is subject to the receipt of governmental
approvals and other customary closing conditions. Century anticipates that the
transactions will be completed in the first or second quarter of 1998.
RECENT EVENTS AFFECTING THE TELECOMMUNICATIONS INDUSTRY
The telecommunications industry continues to undergo various fundamental
regulatory, competitive and technological changes that make it difficult to
determine the form or degree of future regulation and competition affecting
the Company's telephone and mobile communications operations. These changes
may have a significant impact on the future financial performance of all
telecommunications companies.
In February 1996 the United States Congress enacted the Telecommunications
Act of 1996 (the "1996 Act"), which obligates LECs to permit competitors to
interconnect their facilities to the LEC's network and to take various other
steps that are designed to promote competition. Although the 1996 Act provides
certain waiver opportunities for rural LECs such as those operated by the
Company, the FCC's August 1996 order implementing most of the 1996 Act's
interconnection provisions placed the burden of proving the continuing
availability of the rural telephone company exemption on rural LECs. In July
1997 the U.S. Court of Appeals for the Eighth Circuit overturned several
provisions of the FCC's August 1996 interconnection order, including the rules
placing the burden of proof on rural LECs to retain their rural exemption.
This decision is being appealed.
6
<PAGE>
Coincident with the recent movement toward increased competition has been
the gradual reduction of regulatory oversight of LECs. These cumulative
changes have led to the continued growth of various companies providing
competitive access and other services that compete with LECs' services.
Wireless telephone services are also expected to increasingly compete with
LECs.
In recent years, the FCC has allocated additional frequency spectrum for
mobile communications technologies that are expected to be competitive with
cellular, including PCS and mobile satellite services. In 1996 several major
PCS companies began providing services competitive with cellular in selected
larger markets, although thus far the Company has experienced competition from
PCS companies in only a limited number of its markets. The FCC has also
authorized certain specialized mobile radio service licensees to configure
their systems so as to operate in a manner similar to cellular systems.
USE OF PROCEEDS
Unless otherwise indicated in any Prospectus Supplement, the net proceeds
from Century's sale of Securities will be used for refinancing outstanding
indebtedness and for other general corporate purposes, including the financing
of acquisitions or capital expenditures. Century currently anticipates that it
may sell Senior Debt Securities in early 1998 to refinance a substantial
portion of the bank indebtedness that it incurred in December 1997 in
connection with acquiring PTI. See "The Company--Recent Acquisitions and
Dispositions." Any specific allocation of the net proceeds from the sale of a
particular offering of Securities will be determined at the time of the
offering thereof and will be described in the Prospectus Supplement relating
to that offering.
Century expects that it will from time to time engage in additional private
or public financings as market conditions warrant and as the need arises.
7
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for
each of the years in the five year period ended December 31, 1996 and for the
nine months ended September 30, 1997, which ratios are based on the historical
consolidated financial statements of the Company without giving effect to the
PTI acquisition. The table also sets forth the pro forma combined data for the
year ended December 31, 1996 and for the nine months ended September 30, 1997,
which data give effect to the acquisition of PTI as if it had occurred on
January 1, 1996. The pro forma combined data are presented for comparative
purposes only and are not intended to be indicative of actual results had the
PTI acquisition occurred as of such date, nor do they purport to indicate
results which may be attained in the future.
<TABLE>
<CAPTION>
HISTORICAL
--------------------------------------
NINE MONTHS
YEAR ENDED DECEMBER 31, ENDED
------------------------ SEPTEMBER 30,
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- -------------
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed
charges(1)...................... 4.25 4.32 4.50 4.74 5.10 7.69(2)
</TABLE>
<TABLE>
<CAPTION>
PRO FORMA COMBINED
----------------------
YEAR NINE MONTHS
ENDED ENDED
DECEMBER SEPTEMBER 30,
31, 1996 1997
-------- -------------
<S> <C> <C>
Ratio of earnings to fixed charges(1).............. 2.01 2.72(3)
</TABLE>
- --------
(1) For purposes of computing these ratios, (i) earnings consist of income
before income taxes and fixed charges, with adjustments primarily for
earnings of unconsolidated subsidiaries and (ii) fixed charges consist of
interest expense (including amortized debt issuance costs) and preferred
stock dividends of subsidiaries.
(2) 5.67 excluding the gain on the sale of Metro Access Networks, Inc.
("MAN"), Century's competitive access subsidiary, in the second quarter of
1997.
(3) 2.22 excluding the gain on the sale of MAN in the second quarter of 1997.
8
<PAGE>
DESCRIPTION OF SENIOR DEBT SECURITIES
Set forth below are certain general terms and provisions of the Senior Debt
Securities, which may be issued from time to time in one or more Series. The
particular terms of each Series will be described in a Prospectus Supplement
relating thereto. The Senior Debt Securities will be issued under an
Indenture, dated as of March 31, 1994 (the "Indenture"), between Century and
Regions Bank (successor-in-interest, effective January 1, 1998, to Regions
Bank of Louisiana), as Trustee (the "Trustee"). The particular terms of each
Series will be set forth in a resolution of a committee of Century's Board of
Directors specifically authorizing such Series or in one or more supplemental
indentures. The following summary does not purport to be complete and is
subject in all respects to the provisions of, and is qualified in its entirety
by express reference to, the Indenture, which is filed as an exhibit to the
Registration Statement. Unless otherwise indicated, each reference italicized
in parentheses below or in any Prospectus Supplement applies to section
numbers in the Indenture and each capitalized term not otherwise defined
herein has the meaning ascribed to it in the Indenture.
GENERAL
The Senior Debt Securities will be general unsecured obligations of Century
and will rank prior to all subordinated indebtedness of Century and pari passu
with all other unsecured indebtedness of Century. Century is a holding company
and derives substantially all of its income and operating cash flow from its
subsidiaries. As a result, Century relies upon its subsidiaries to generate
the funds necessary to meet its obligations, including the payment of
principal and interest on any Senior Debt Securities to be issued hereunder.
Certain of the subsidiaries' loan agreements contain various restrictions on
the transfer of funds to Century, including certain provisions that restrict
the amount of dividends that may be paid to Century. At September 30, 1997,
after giving effect to the acquisition of PTI, the amount of pro-forma
retained earnings of Century's subsidiaries not subject to dividend
restrictions was $510 million. Moreover, Century's rights to receive assets of
any subsidiary upon its liquidation or reorganization (and the ability of
holders of Senior Debt Securities to benefit indirectly therefrom) are subject
to the prior claims of creditors of that subsidiary.
Except to the extent otherwise provided below or in any Prospectus
Supplement, neither the Indenture nor the Senior Debt Securities to be offered
thereby (i) limit the amount of secured or unsecured indebtedness that may be
issued or incurred by Century or any of its subsidiaries, (ii) restrict the
payment of dividends by Century or the sale or transfer of Century's assets or
(iii) contain provisions that would afford holders of Senior Debt Securities
protection in the event of a change in control, highly leveraged transaction,
recapitalization or similar transaction involving Century, any of which could
adversely affect the holders of Senior Debt Securities.
The Prospectus Supplement relating to any particular Series being offered
thereby will set forth a description of such Series, including (i) the title
and aggregate principal amount of such Series; (ii) Century's net proceeds
from the sale thereof; (iii) the price or prices at which such Series will be
issued; (iv) the date or dates of maturity; (v) the rate or rates per annum,
if any, at which such Series will bear interest or the method of determining
such rate or rates; (vi) the date or dates from which any such interest will
accrue and the date or dates at which any such interest will be payable; (vii)
the terms of any conversion or exchange rights; (viii) the terms for
redemption or early payment, if any, including any mandatory or optional
sinking fund or similar provisions; (ix) any special United States federal
income tax considerations applicable to such Series; (x) any special
provisions relating to the defeasance of such Series; or (xi) any other
special considerations or specific provisions applicable to such Series.
Reference is also made to such Prospectus Supplement for information regarding
any additional covenants that may relate to such Series.
The Senior Debt Securities may bear interest at a fixed or floating rate.
Senior Debt Securities bearing no interest or interest at a rate that at the
time of issuance is below the prevailing market rate may be sold at a discount
below their stated principal amount.
9
<PAGE>
The Indenture is, and the Senior Debt Securities will be, governed by
Louisiana law. The Indenture is subject to and governed by the Trust Indenture
Act of 1939, as amended.
DENOMINATIONS, REGISTRATION AND TRANSFER
Unless otherwise provided in any Board Resolution and described in the
related Prospectus Supplement, the Senior Debt Securities will be issued only
in fully registered form and in denominations of $1,000 or any multiples
thereof (Section 2.03). The Trustee will act as the registrar of each Series
(Section 2.05). No service charge will be made for any registration of
transfer or exchange of Senior Debt Securities, or issue of new Senior Debt
Securities in the event of a partial redemption of any Series, but Century may
generally require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith (Section 2.05). The
Trustee may appoint an authenticating agent for any Series to act on the
Trustee's behalf in connection with authenticating Senior Debt Securities of
such Series issued upon the exchange, transfer or partial redemption thereof
(Section 2.10). The Trustee may at any time rescind the designation of any
such agent (Section 2.10).
Century shall not be required (i) to issue, register the transfer of or
exchange the Senior Debt Securities of any Series during a period beginning 15
days before any selection of Senior Debt Securities of that Series to be
redeemed and ending at the close of business on the day of mailing of the
relevant redemption notice or (ii) to register the transfer of or exchange any
Senior Debt Securities of any Series, or portions thereof, called for
redemption (Section 2.05).
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in any Prospectus Supplement, payment of
principal of (and premium, if any) and interest on Senior Debt Securities of
any Series will be made in U.S. dollars at the principal office of Century's
Paying Agent or, at the option of Century, by check in U.S. dollars mailed or
delivered to the person in whose name such Senior Debt Security is registered.
Unless otherwise indicated in any Prospectus Supplement and subject to certain
exceptions provided for in the Indenture, payment of any installment of
interest on any Series will be made to the person in whose name such Senior
Debt Security is registered at the close of business on the record date
established under the Indenture for the payment of interest (Section 2.03).
Unless otherwise indicated in any Prospectus Supplement, the Trustee will
act as Century's sole Paying Agent and the principal office of the Trustee,
417 North 20th Street, Birmingham, Alabama, will be designated as such agent's
office for purposes of payments with respect to Senior Debt Securities. Any
other Paying Agents initially designated by Century with respect to any Series
will be named in the related Prospectus Supplement. Century may at any time
designate additional Paying Agents or rescind the designation of any Paying
Agents or approve a change in the office through which any Paying Agent acts,
except that Century will be required to maintain a Paying Agent in the Borough
of Manhattan, City and State of New York, or Monroe, Louisiana. (Sections 4.02
and 4.03).
Any money set aside by Century for the payment of principal of (and premium,
if any) or interest on any Senior Debt Securities that remains unclaimed two
years after such payment has become due and payable will be repaid to Century
on May 31 following the expiration of such two-year period and the holder of
such Senior Debt Security may thereafter look only to Century for payment
thereof (Section 11.05).
CONVERSION OR EXCHANGE RIGHTS
The terms and conditions, if any, upon which any series of Senior Debt
Securities are convertible or exchangeable into Common Stock, Preferred Stock
or other securities of Century or any other issuer will be set forth in the
applicable Prospectus Supplement relating thereto. Such terms will include the
type of security into which such Senior Debt Securities are convertible or
exchangeable, the conversion or exchange price (or manner of calculation
thereof), the conversion or exchange period, the provisions as to whether such
conversion or exchange rights will be at the option of the holders of such
Senior Debt Securities or Century, the events requiring an adjustment of the
conversion or exchange price and any restrictions on conversion or exchange.
10
<PAGE>
REDEMPTION AND SINKING FUND PROVISIONS
Each Series may be redeemed, in whole or in part, upon not less than 30
days' and not more than 60 days' notice at the redemption prices and subject
to the terms and conditions (including those relating to any sinking fund
established with respect to such Series) that will be set forth in a Board
Resolution or supplemental indenture and in the Prospectus Supplement relating
to such Series (Sections 3.01 and 3.02). If less than all of the Senior Debt
Securities of the Series are to be redeemed, the Trustee shall select the
Senior Debt Securities of such Series, or portions thereof, to be redeemed pro
rata, by lot or by any other method the Trustee shall deem fair and reasonable
(Section 3.02).
REPLACEMENT OF SECURITIES
Any Senior Debt Security that becomes mutilated, destroyed, lost or stolen
will be replaced by Century at the expense of the holder upon delivery to
Century and the Trustee of the Senior Debt Security or evidence of the
destruction, loss or theft thereof satisfactory to Century and the Trustee. An
indemnity satisfactory to the Trustee and Century may be required before a
replacement security will be issued (Section 2.07).
EVENTS OF DEFAULT AND NOTICE THEREOF
Unless otherwise specified in any Prospectus Supplement, the terms and
conditions set forth under this heading will govern defaults under the
Indenture.
The Indenture provides that the following described events constitute Events
of Default with respect to each Series: (a) failure for 30 Business Days to
pay interest on the Senior Debt Securities of that Series when due; (b)
failure to pay principal of (or premium, if any, on) the Senior Debt
Securities of that Series when due (whether at maturity, upon redemption, by
declaration or otherwise) or to make any sinking or analogous fund payment
with respect to that Series unless caused solely by a wire transfer
malfunction or similar problem outside Century's control; (c) failure to
observe or perform any other covenant of that Series for 60 days after written
notice with respect thereto or (d) certain events relating to bankruptcy,
insolvency or reorganization (Section 6.01).
If an Event of Default shall occur and be continuing (the default not having
been cured or waived) with respect to any Series and if it is known to the
Trustee, the Trustee is required to mail to each holder of such Series a
notice of the Event of Default within 90 days of such default, subject to
certain limited exceptions (Section 6.07).
Upon an Event of Default, the Trustee or the holders of not less than 25% in
aggregate outstanding principal amount of any Series, by notice in writing to
Century (and to the Trustee if given by such holders), may declare the
principal of all Senior Debt Securities of that Series due and payable
immediately, but the holders of a majority in aggregate outstanding principal
amount of such Series may rescind such declaration and waive the default if
the default has been cured and a sum sufficient to pay all matured
installments of interest and principal (and premium, if any) has been
deposited with the Trustee before any judgment or decree for such payment has
been obtained or entered (Section 6.01).
Holders of Senior Debt Securities may not enforce the Indenture except as
provided therein. Subject to the provisions of the Indenture relating to the
duties of the Trustee, if an Event of Default occurs and is continuing the
Trustee will be under no obligation to exercise any of the rights or powers
under the Indenture at the request or direction of any holders of the affected
Series, unless, among other things, the holders shall have offered the Trustee
indemnity reasonably satisfactory to it. Subject to the indemnification
provisions and certain limitations contained in the Indenture, the holders of
a majority in aggregate principal amount of the Senior Debt Securities of such
Series then outstanding will have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee. The holders of a
majority in aggregate principal amount of the then outstanding Senior Debt
Securities of any Series affected by a default may, in certain cases, waive
such default except a default in payment of principal of,
11
<PAGE>
or any premium, if any, or interest on, the Senior Debt Securities of that
Series or a call for redemption of the Senior Debt Securities of that Series
(Sections 6.04 and 6.06).
Century will be required to furnish to the Trustee annually a statement as
to the performance by it of certain of its obligations under the Indenture and
as to any default in such performance (Section 5.03).
DISCHARGE AND DEFEASANCE
The Indenture provides that Century may discharge the Indenture with respect
to any Series, subject to certain exceptions, if at any time (i) Century
delivers to the Trustee for cancellation all outstanding Senior Debt
Securities of such Series previously authenticated and for whose payment money
or U.S. Government Obligations have been deposited in trust by Century or (ii)
all outstanding Senior Debt Securities of such Series not previously delivered
to the Trustee for cancellation by Century shall have become due and payable
or are to become due and payable or called for redemption within one year and
Century has deposited or caused to be deposited with the Trustee the entire
amount in moneys or U.S. Government Obligations sufficient, without
reinvestment, to pay at maturity or upon redemption such outstanding Senior
Debt Securities, including principal (and premium, if any) and interest due or
to become due to such date of maturity or redemption, and if Century shall
also pay or cause to be paid all other sums payable thereunder with respect to
such Series (Section 11.01).
Additionally, the Indenture provides that Century may discharge all of its
obligations under the Indenture with respect to any Series, subject to certain
exceptions, if at any time all outstanding Senior Debt Securities of such
Series not previously delivered to the Trustee for cancellation by Century or
which have not become due and payable as described above shall have been paid
by Century by depositing irrevocably with the Trustee moneys or U.S.
Government Obligations sufficient to pay at maturity or upon redemption such
outstanding Senior Debt Securities, including principal (and premium, if any)
and interest due or to become due to such date of maturity or redemption, and
if Century shall also pay or cause to be paid all other sums payable
thereunder with respect to such Series (Section 11.02).
MERGER AND CONSOLIDATION
Nothing in the Indenture or any of the Senior Debt Securities prevents
Century from consolidating or merging with or into, or selling or otherwise
disposing of all or substantially all of its assets to, another corporation,
subject to Century's agreement (i) to obtain in connection therewith a
supplemental indenture pursuant to which the surviving entity or transferee
agrees to assume Century's obligations under all outstanding Senior Debt
Securities, including the due and punctual payment of the principal of (and
premium, if any, on) and interest on such outstanding Senior Debt Securities,
and (ii) that such surviving entity or transferee is organized under the laws
of the United States, any state thereof or the District of Columbia (Section
10.01).
MODIFICATION OF INDENTURE
The Indenture contains provisions permitting Century, when authorized by a
Board Resolution, and the Trustee, with the consent of the holders of not less
than a majority in aggregate principal amount of the Senior Debt Securities of
any Series at the time outstanding and affected by such modification, to
modify the Indenture or any supplemental indenture affecting that Series or
the rights of the holders thereof. However, no such modification shall (i)
extend the fixed maturity of any Senior Debt Securities of any Series, reduce
the principal amount thereof, reduce the rate or extend the time of payment of
interest thereon or reduce any premium payable upon the redemption thereof,
without the consent of the holder of each Senior Debt Security so affected, or
(ii) reduce the aforesaid percentage of Senior Debt Securities, the holders of
which are required to consent to any such supplemental indenture, without the
consent of the holder of each Senior Debt Security then outstanding and
affected thereby (Section 9.02).
Century and the Trustee may execute, without the consent of any holder of
Senior Debt Securities, any supplemental indenture for certain other usual
purposes such as (i) creating a new Series; (ii) evidencing the
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assumption by any successor to Century of Century's obligations under the
Indenture; (iii) adding covenants to the Indenture for the protection of the
holders of Senior Debt Securities; (iv) curing any ambiguity or inconsistency
in the Indenture; and (v) changing or eliminating any provisions of the
Indenture provided that there is no outstanding Senior Debt Security of any
Series created prior to such change which would benefit therefrom (Sections
2.01, 9.01 and 10.01).
LIMITATIONS ON LIENS
The Indenture provides that Century will not, while any of the Senior Debt
Securities remain outstanding, create or suffer to exist any mortgage, lien,
pledge, security interest or other encumbrance (individually, a "Lien" and
collectively, "Liens") upon Century's property, whether now owned or hereafter
acquired, unless it shall secure the Senior Debt Securities then outstanding
by such Lien equally and ratably with all obligations and indebtedness thereby
secured so long as such obligations and indebtedness remain so secured.
Notwithstanding the foregoing, the Indenture will not restrict Century from
creating or suffering to exist:
(i)Liens upon property hereafter acquired by Century or Liens on such
property at the time of the acquisition thereof, or conditional sales
agreements or title retention agreements with respect to any such property;
(ii)Liens on the stock of a corporation which, when such Liens arise,
concurrently becomes a subsidiary of Century, or Liens on all or
substantially all of the assets of a corporation arising in connection with
Century's purchase thereof;
(iii)Liens for taxes and similar levies; deposits to secure performance
or obligations under certain specified circumstances and laws; mechanics'
Liens and similar Liens arising in the ordinary course of business; Liens
created by or resulting from legal proceedings being contested in good
faith; certain specified zoning restrictions and other restrictions on the
use of real property; interests of lessors in property subject to any
capitalized lease; and certain other similar Liens generally arising in the
ordinary course of business;
(iv)Liens existing on the date of the Indenture;
(v)Liens upon Century's property arising in connection with the merger or
consolidation of affiliates of Century with or into Century; and
(vi)Liens that replace, extend or renew any Lien otherwise permitted
under the Indenture (Sections 4.05 and 4.06).
The restriction in the Indenture described above would not afford the
holders of the Senior Debt Securities protection in the event of a highly
leveraged transaction in which unsecured indebtedness was incurred or in which
the Liens arising in connection therewith were freely permitted under the
Indenture, nor would it afford protection in the event of one or more highly
leveraged transactions in which secured indebtedness was incurred by Century's
subsidiaries. However, in the event of one or more highly leveraged
transactions in which secured indebtedness was incurred by Century, these
provisions would require the Senior Debt Securities to be secured equally and
ratably with such indebtedness, subject to the exceptions described above.
CONCERNING THE TRUSTEE
The Trustee, prior to the occurrence of an Event of Default, undertakes to
perform only such duties as are specifically set forth in the Indenture and,
after the occurrence of an Event of Default, shall exercise the same degree of
care as a prudent person would exercise in the conduct of such person's own
affairs (Section 7.01). Subject to such provision, the Trustee is under no
obligation to exercise any of the rights or powers vested in it by the
Indenture at the request, order or direction of any holders of Senior Debt
Securities, unless offered reasonable security or indemnity by such holders
against the costs, expenses and liabilities which might be incurred thereby
(Section 7.02). The Trustee is not required to expend or risk its own funds or
incur personal
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financial liability in the performance of its duties if the Trustee reasonably
believes that repayment of such funds or liability or adequate indemnity is
not reasonably assured to it (Section 7.01). Century shall pay the Trustee
reasonable compensation and reimburse it for all reasonable expenses incurred
in accordance with the Indenture (Section 7.06).
The Trustee may resign with respect to one or more Series and a successor
Trustee may be appointed to act with respect to such Series (Section 7.10).
The Trustee also serves as trustee for certain of Century's employee benefit
plans, and provides revolving credit and other traditional banking services to
Century. The following officers and directors of Century act as non-voting
advisory directors of a regional division of the Trustee: Clarke M. Williams,
Chairman of the Board, Glen F. Post, III, President, Chief Executive Officer
and Vice Chairman of the Board, and William R. Boles, Jr., Director.
DESCRIPTION OF PREFERRED STOCK
GENERAL
Century's Articles of Incorporation authorize the issuance of 2,000,000
shares of Preferred Stock, par value $25.00 per share. As of September 30,
1997, Century had outstanding an aggregate of 324,238 shares of its Series H
and Series L Preferred Stock. Subject to limitations prescribed by law, the
Board of Directors is authorized at any time to issue one or more series of
Preferred Stock, to determine the designation and size of any such series; and
to establish the rights and preferences of the shares of any such series. The
particular terms of any series of Preferred Stock offered hereunder will be
described in the applicable Prospectus Supplement. It is anticipated that any
series of Preferred Stock issued hereunder will rank pari passu with Century's
outstanding Series H and Series L Preferred Stock as to dividend payments and
liquidation distributions. However, if so indicated in a Prospectus
Supplement, the terms of any such series may differ from the terms set forth
herein.
The summary of terms of Century's Preferred Stock contained in this
Prospectus does not purport to be complete and is subject to, and qualified in
its entirety by, the provisions of Century's Articles of Incorporation and the
articles of amendment relating to each series of the Preferred Stock that will
be filed as an exhibit to or incorporated by reference in the Registration
Statement of which this Prospectus is a part at or prior to the time of
issuance of such series.
The Board of Directors is authorized to determine, for each series of
Preferred Stock, and the Prospectus Supplement shall set forth with respect to
such series: (i) whether the holders thereof shall be entitled to cumulative,
noncumulative, or partially cumulative dividends and, with respect to shares
entitled to dividends, the dividend rate or rates, including without
limitation the methods and procedures for determining such rate or rates, and
any other terms and conditions relating to such dividends; (ii) whether, and
if so to what extent and upon what terms and conditions, the holders thereof
shall be entitled to rights upon the liquidation of, or upon any distribution
of the assets of, the Company; (iii) whether, and if so upon what terms and
conditions, such shares shall be convertible into Common Stock, Senior Debt
Securities, any other series of Preferred Stock, or any other securities of
Century, or exchangeable for the securities of any other corporation; (iv)
whether, and if so upon what terms and conditions, such shares shall be
redeemable; (v) whether the shares shall be subject to any sinking fund
provided for the purchase or redemption of such shares and, if so, the terms
of such fund; (vi) whether the holders thereof shall be entitled to voting
rights and, if so, the terms and conditions for the exercise thereof; and
(vii) whether the holders thereof shall be entitled to other preferences or
rights, and, if so, the qualifications, limitations, or restrictions of such
preferences or rights.
OUTSTANDING PREFERRED STOCK
Series H Preferred Stock. As of September 30, 1997, Century had outstanding
5,238 shares of Preferred Stock, Series H (the "Series H Preferred Stock").
Each share of Series H Preferred Stock that has been beneficially owned by the
same person or entity continuously since May 30, 1987 generally entitles the
holder to
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ten votes on all matters duly submitted to a vote of stockholders until
transfer of such stock. Otherwise, each share entitles the holder thereof to
one vote per share. Holders of Series H Preferred Stock are entitled to
receive dividends at the rate of 7% per annum, payable in quarterly
installments. Dividends on Series H Preferred Stock are cumulative and
dividends cannot be paid with respect to Common Stock unless all cumulative
dividends on all shares of Series H Preferred Stock shall have been paid. The
Series H Preferred Stock ranks pari passu with the Series L Preferred Stock
(defined below) with respect to the payment of the dividends. In the event of
liquidation, dissolution or winding up of the Company, holders of Series H
Preferred Stock are entitled to receive, pro rata with all other holders of
Preferred Stock of whatever series, $25.00 per share plus accrued and unpaid
dividends, before any payment is made to holders of Common Stock. Shares of
Series H Preferred Stock are convertible, at the option of the holder, into
shares of Common Stock at the rate of one and twelve thirteenths (1-12/13ths)
shares of Common Stock for each share of Series H Preferred Stock converted,
subject to adjustment in case of certain corporate events which may have the
effect of diluting the shares of Common Stock received upon such conversion (a
"Diluting Event").
Series L Preferred Stock. As of September 30, 1997, Century had outstanding
319,000 shares of 5% Cumulative Convertible Series L Preferred Stock (the
"Series L Preferred Stock"). Each share of Series L Preferred Stock entitles
the holder thereof to one vote on all matters duly submitted to a vote of
stockholders. The holder of each share of Series L Preferred Stock is entitled
to receive an annual cash dividend of $1.25, payable in quarterly
installments. Dividends on Series L Preferred Stock are cumulative and
dividends cannot be paid with respect to Common Stock unless all cumulative
dividends on all shares of Series L Preferred Stock shall have been paid. The
Series L Preferred Stock ranks pari passu with the Series H Preferred Stock
with respect to the payment of dividends. In the event of liquidation,
dissolution or winding up of the Company, holders of Series L Preferred Stock
are entitled to receive, pro rata with all other holders of Preferred Stock of
equal rank, including the Series H Preferred Stock, $25.00 per share plus
accrued and unpaid dividends, before any payment is made to holders of Common
Stock. Each share of Series L Preferred Stock is convertible, at the option of
the holder, into the number of shares of Common Stock derived by dividing
$25.00 by the "Conversion Price" (defined in the Articles of Incorporation as
$41.25, subject to adjustment upon the occurrence of certain specified
Diluting Events).
DESCRIPTION OF COMMON STOCK
As of the date of this Prospectus, Century's Articles of Incorporation
authorizes the issuance of 175,000,000 shares of Common Stock, $1.00 par value
per share. As of September 30, 1997, 60,519,391 shares of Common Stock were
outstanding. The Common Stock is listed for trading on the New York Stock
Exchange.
VOTING RIGHTS
Under Century's Articles, each share of Common Stock that has been
beneficially owned by the same person or entity continuously since May 30,
1987 generally entitles the holder thereof to ten votes on all matters duly
submitted to a vote of stockholders. Otherwise, each share entitles the holder
thereof to one vote per share. Accordingly, each share issued in connection
with this Prospectus will entitle the holder to one vote, and, subject to the
possibility of Century issuing ten-vote shares in connection with business
combinations accounted for as poolings of interest, each other share of Common
Stock issued by Century in the future will entitle the holder to one vote.
Holders of Century Stock do not have cumulative voting rights. As a result,
the holders of more than 50% of the voting power may elect all of the
directors if they so desire. As of March 10, 1997, the trustee for two of
Century's employee benefit plans was the record holder of Common Stock having
approximately 36.1% of the total voting power of all classes of Century's
capital stock. The trustee votes these shares in accordance with the
instructions of Century's employees.
OTHER RIGHTS
Subject to the rights of the holders of any outstanding shares of Preferred
Stock, holders of Common Stock are entitled to receive such dividends, in
cash, securities, or property, as may from time to time be declared by
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the Board of Directors. In the event of any liquidation, dissolution, or
winding up of the Company, either voluntary or involuntary, after payment
shall have been made to the holders of preferred stock of the full amount to
which they shall be entitled, the holders of Common Stock shall be entitled to
share ratably, according to the number of shares held by them, in all
remaining assets of the Company available for distribution. Shares of Common
Stock are not redeemable and have no subscription, conversion or preemptive
rights.
PREFERRED SHARE PURCHASE RIGHTS
On August 27, 1996, the Board of Directors of Century declared a dividend of
one preference share purchase right (a "Right") for each outstanding share of
Common Stock. The dividend was payable on November 1, 1996 to stockholders of
record on September 30, 1996 (the "Record Date"). Each Right entitles the
registered holder to purchase from Century one one-hundredth of a share of
Series BB Participating Cumulative Preference Stock, par value $25 per share
(the "Preference Shares"), of Century at a price of $110 per one one-hundredth
of a Preference Share (the "Purchase Price"), subject to adjustment. The
description and terms of the Rights are set forth in a Rights Agreement dated
as of August 27, 1996 (the "Rights Agreement") between Century and Harris
Trust and Savings Bank (successor-in-interest to Society National Bank), as
Rights Agent (the "Rights Agent").
The Rights become exercisable upon the earlier to occur of (i) 10 days
following a public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") have acquired beneficial ownership
of 15% or more of the outstanding Common Stock or (ii) 10 business days (or
such later date as may be determined by action of the Board of Directors prior
to such time as any person or group of affiliated persons becomes an Acquiring
Person) following the commencement of, or announcement of an intention to
make, a tender offer or exchange offer the consummation of which would result
in the beneficial ownership by a person or group of 15% or more of the
outstanding Common Stock (the earlier of such dates being called the
"Distribution Date").
The Rights are not exercisable until the Distribution Date. The Rights will
expire on November 1, 2006 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed or
exchanged by Century, in each case as described below.
In the event that the Company is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power are sold after a person or group has become an Acquiring Person, proper
provision will be made so that each holder of a Right will thereafter have the
right to receive, upon the exercise thereof at the then current exercise price
of the Right, that number of shares of common stock of the acquiring company
which at the time of such transaction will have a market value of two times
the exercise price of the Right. In the event that any person or group of
affiliated or associated persons becomes an Acquiring Person, proper provision
shall be made so that each holder of a Right, other than Rights beneficially
owned by the Acquiring Person (which will thereafter be void), will thereafter
have the right to receive upon exercise that number of shares of Common Stock
having a market value at the time of such occurrence of two times the exercise
price of the Right.
At any time after any person or group becomes an Acquiring Person and prior
to the acquisition by such person or group of 50% or more of the outstanding
Common Stock, the Board of Directors of Century may exchange the Rights (other
than Rights owned by such person or group which will have become void), in
whole or in part, at an exchange ratio of one share of Common Stock, or one
one-hundredth of a Preference Share, per Right (subject to adjustment).
At any time prior to the acquisition by a person or group of affiliated or
associated persons of beneficial ownership of 15% or more of the outstanding
Common Stock, the Board of Directors of Century may redeem the Rights in
whole, but not in part, at a price of $.01 per Right (the "Redemption Price").
The redemption of the Rights may be made effective at such time, on such basis
and with such conditions as the Board of Directors in its sole discretion may
establish. Immediately upon any redemption of the Rights, the right to
exercise the Rights will terminate and the only right of the holders of Rights
will be to receive the Redemption Price.
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Until a Right is exercised, the holder thereof, as such, will have no rights
as a stockholder of Century, including, without limitation, the right to vote
or to receive dividends.
This summary description of the Rights does not purport to be complete and
is qualified in its entirety by reference to the Rights Agreement, which is an
exhibit to the Registration Statement of which this Prospectus forms a part.
DESCRIPTION OF WARRANTS
Century may issue Warrants for the purchase of Senior Debt Securities,
Preferred Stock or Common Stock. Warrants may be issued independently or
together with other Securities offered by any Prospectus Supplement and may be
attached to or separate from any such Securities. Each series of Warrants will
be issued under a separate warrant agreement (a "Warrant Agreement") to be
entered into between Century and a bank or trust company, as warrant agent
(the "Warrant Agent"). The Warrant Agent will act solely as an agent of
Century in connection with the Warrants and will not assume any obligation or
relationship of agency or trust for or with any holders or beneficial owners
of Warrants. The provisions of the Warrant Agreement that will be filed with
the Commission in connection with the offering of each series of Warrants will
contain the definitive terms of such Warrants. Such terms will be described in
the related Prospectus Supplement.
The Prospectus Supplement relating to any particular issue of Warrants to
issue Senior Debt Securities, Common Stock or Preferred Stock will describe
the terms of such Warrants, including the following: (a) the title of such
Warrants; (b) the offering price for such Warrants, if any; (c) the aggregate
number of such Warrants; (d) the designation and terms of the Senior Debt
Securities, Preferred Stock or Common Stock purchasable upon exercise of such
Warrants; (e) if applicable, the designation and terms of the Securities with
which such Warrants are issued and the number of such Warrants issued with
each such Security; (f) if applicable, the date from and after which such
Warrants and any Securities issued therewith will be separately transferable;
(g) the number of shares of Common Stock or Preferred Stock, or in the case of
Warrants to purchase Senior Debt Securities the principal amount of Senior
Debt Securities, purchasable upon exercise of a Warrant and the price at which
such Securities may be purchased upon exercise; (h) the date on which the
right to exercise such Warrants shall commence and the date on which such
right shall expire; (i) if applicable, the minimum or maximum amount of such
Warrants that may be exercised at any one time; (j) the currency or currency
units in which the offering price, if any, and the exercise price are payable;
(k) if applicable, a discussion of material United States federal income tax
considerations; (l) the antidilution provisions of such Warrants, if any; (m)
the redemption or call provisions, if any, applicable to such Warrants; and
(n) any additional terms of the Warrants, including terms, procedures, and
limitations relating to the exchange and exercise of such Warrants.
PLAN OF DISTRIBUTION
Century may sell Securities (i) through underwriters or dealers, (ii)
directly to one or more purchasers, (iii) through agents, or (iv) through a
combination of any such methods of sale. The applicable Prospectus Supplement
will set forth the terms of the offering of the Securities offered thereby,
including the initial public offering price, the name or names of any
underwriters, dealers or agents, any underwriting discounts and other items
constituting underwriters' compensation from Century, any agents' commissions
and any discounts, concessions or commissions allowed or reallowed or paid by
any underwriters to other dealers. Only underwriters so named in the
Prospectus Supplement shall be deemed to be underwriters in connection with
the Securities offered thereby.
Underwriters may offer and sell any series of Securities at a fixed price or
prices, which may be changed, or from time to time at market prices prevailing
at the time of sale, at prices related to such prevailing market prices or at
negotiated prices. Century also may directly offer and sell any Securities in
exchange for, among other things, one or more of its outstanding issues of
debt or convertible debt securities. Century also may from
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time to time authorize agents acting on a best efforts basis to solicit or
receive offers to purchase any Securities upon the terms and conditions set
forth in the related Prospectus Supplement. In connection with the sale of any
Securities, underwriters or agents may be deemed to have received compensation
from Century in the form of underwriting discounts or commissions and may also
receive commissions from purchasers of such Securities for whom they may act
as agents. Underwriters may sell any Securities to or through dealers, and
such dealers may receive compensation in the form of discounts, concessions or
commissions from the underwriters or commissions from the purchasers for whom
they may act as agent, or both.
Underwriters, dealers and agents may be entitled, under agreements entered
into with Century, to indemnification against and contributions toward certain
civil liabilities, including liabilities under the Securities Act. Century may
agree to reimburse underwriters or agents for certain expenses incurred in
connection with the distribution of any Securities. Certain of the
underwriters, dealers or agents and their respective associates may be
customers of, engage in transactions with, and perform services for, Century
in the ordinary course of business. The obligations of the underwriters to
purchase the Securities offered will be subject to certain conditions
precedent, and, unless otherwise indicated in the related Prospectus
Supplement, the underwriters will be obligated to purchase all such Securities
if any such securities are purchased.
If so indicated in the applicable Prospectus Supplement, Century will
authorize agents, underwriters, or dealers to solicit offers by certain
institutional investors to purchase Securities providing for payment and
delivery on a future date specified in the Prospectus Supplement. There may be
limitations on the minimum amount which may be purchased by any such
institutional investor or on the portion of the aggregate principal amount of
the particular Securities that may be sold pursuant to such arrangements.
Institutional investors to which such offers may be made, when authorized,
include commercial and savings banks, insurance companies, pension funds,
investment companies, educational and charitable institutions, and such other
institutions as may be approved by Century. The obligations of any such
purchasers pursuant to such delayed delivery and payment arrangements will not
be subject to any conditions except (i) the purchase by an institution of the
particular Securities shall not at the time of delivery be prohibited under
the laws of any jurisdiction in the United States to which such institution is
subject and (ii) if the particular Securities are being sold to underwriters,
Century shall have sold to such underwriters the total principal amount of
such Securities less the principal amount thereof covered by such delayed
payment and delivery arrangements. Underwriters will not have any
responsibility in respect of the validity of such arrangements or the
performance of Century or such institutional investors thereunder.
Except for the Common Stock, none of the Securities when first issued will
have an established trading market. Any underwriters or agents to or through
whom such Securities are sold by Century for public offering and sale may make
a market in such Securities, but such underwriters or agents will not be
obligated to do so and may discontinue any market making at any time without
notice. If the Securities are traded after their initial issuance, they may
trade at a discount from their initial public offering price, depending on
general market conditions, the market for similar securities, the Company's
performance and other factors. Other than with respect to the Common Stock,
which is currently traded on the New York Stock Exchange, there can be no
assurance that an active public market for the Securities will develop or be
maintained.
LEGAL MATTERS
Except as may be otherwise specified in the Prospectus Supplement
accompanying this Prospectus, the legality of the securities will be passed
upon for Century by Jones, Walker, Waechter, Poitevent, Carrere & Denegre,
L.L.P. Certain legal matters relating to offerings of Securities will be
passed upon on behalf of the applicable underwriters, dealers or agents by
counsel named in the Prospectus Supplement.
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EXPERTS
The consolidated financial statements and related financial statement
schedules of the Company as of December 31, 1995 and 1996, and for each of the
years in the three-year period ended December 31, 1996, included in Century's
Annual Report on Form 10-K for the fiscal year ended December 31, 1996,
incorporated by reference herein, have been incorporated by reference in
reliance upon the report of KPMG Peat Marwick LLP, independent certified
public accountants, which is also incorporated by reference herein, and upon
the authority of such firm as experts in accounting and auditing.
The consolidated financial statements of PTI as of December 31, 1995 and
1996, and for each of the years in the three-year period ended December 31,
1996, included in PTI's Annual Report on Form 10-K for the year ended December
31, 1996 included in this prospectus and elsewhere in the Registration
Statement and in Century's Current Report on Form 8-K dated December 1, 1997
incorporated by reference herein have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their reports appearing herein and
elsewhere in the Registration Statement or incorporated by reference herein,
and are included in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRE-
SENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED OR IN-
CORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION AND REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDER-
WRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANY-
ING PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS COR-
RECT AS OF ANY TIME SUBSEQUENT TO ITS DATE. NEITHER THIS PROSPECTUS SUPPLEMENT
NOR THE ACCOMPANYING PROSPECTUS CONSTITUTE AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO
WHICH THEY RELATE OR CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER
TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITA-
TION IS UNLAWFUL.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PROSPECTUS SUPPLEMENT
Forward-Looking Statements................................................. S-3
The Company................................................................ S-4
Recent Developments........................................................ S-5
Use of Proceeds............................................................ S-7
Capitalization............................................................. S-7
Selected Historical and Pro Forma Financial Data........................... S-8
Supplemental Description of Offered Securities............................. S-11
Underwriting............................................................... S-15
Legal Matters.............................................................. S-16
PROSPECTUS
Available Information...................................................... 2
Incorporation of Certain Documents by Reference............................ 2
Forward-Looking Statements................................................. 3
The Company................................................................ 4
Use of Proceeds............................................................ 7
Ratio of Earnings to Fixed Charges......................................... 8
Description of Senior Debt Securities...................................... 9
Description of Preferred Stock............................................. 14
Description of Common Stock................................................ 15
Description of Warrants.................................................... 17
Plan of Distribution....................................................... 17
Legal Matters.............................................................. 18
Experts.................................................................... 19
</TABLE>
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$1,000,000,000
[LOGO OF CENTURY TELEPHONE ENTERPRISES, INC. APPEARS HERE]
% SENIOR NOTES, SERIES E, DUE $ ,000,000
% DEBENTURES, SERIES F, DUE $ ,000,000
% DEBENTURES, SERIES G, DUE $ ,000,000
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PROSPECTUS SUPPLEMENT
JANUARY , 1998
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SALOMON SMITH BARNEY
MERRILL LYNCH & CO.
STEPHENS INC.
NATIONSBANC MONTGOMERY
CHASE SECURITIES INC.
J.P. MORGAN & CO.
CREDIT SUISSE FIRST BOSTON
GOLDMAN, SACHS & CO.
FURMAN SELZ
LAZARD FRERES & CO. LLC
RBC DOMINION SECURITIES
CORPORATION
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