UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 30, 1999
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File Number: 1-7784
CENTURYTEL, INC.
(Exact name of registrant as specified in its charter)
Louisiana 72-0651161
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 Century Park Drive, Monroe, Louisiana 71203
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (318) 388-9000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
[X] Yes [ ] No
As of October 31, 1999, there were 139,679,442 shares of common stock
outstanding.
CENTURYTEL, INC.
TABLE OF CONTENTS
Page No.
--------
Part I. Financial Information:
Item 1. Financial Statements
Consolidated Statements of Income--Three Months and Nine
Months Ended September 30, 1999 and 1998 3
Consolidated Statements of Comprehensive Income--
Three Months and Nine Months Ended September 30, 1999 and 1998 4
Consolidated Balance Sheets--September 30, 1999 and
December 31, 1998 5
Consolidated Statements of Stockholders' Equity--
Nine Months Ended September 30, 1999 and 1998 6
Consolidated Statements of Cash Flows--
Nine Months Ended September 30, 1999 and 1998 7
Notes to Consolidated Financial Statements 8-10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11-26
Item 3. Quantitative and Qualitative Disclosures About Market Risk 26
Part II. Other Information:
Item 6. Exhibits and Reports on Form 8-K 27
Signature 28
PART I. FINANCIAL INFORMATION
CenturyTel, Inc.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three months Nine months
ended September 30, ended September 30,
- -------------------------------------------------------------------------------------------
1999 1998 1999 1998
- -------------------------------------------------------------------------------------------
(Dollars, except per share amounts,
and shares expressed in thousands)
<S> <C> <C> <C> <C>
OPERATING REVENUES
Telephone $ 277,352 275,397 849,426 800,532
Wireless 111,652 106,664 320,245 305,704
Other 30,201 19,888 80,540 55,811
- -----------------------------------------------------------------------------------------
Total operating revenues 419,205 401,949 1,250,211 1,162,047
- -----------------------------------------------------------------------------------------
OPERATING EXPENSES
Cost of sales and operating expenses 204,846 192,155 598,611 559,955
Depreciation and amortization 84,300 81,610 260,293 242,288
- -----------------------------------------------------------------------------------------
Total operating expenses 289,146 273,765 858,904 802,243
- -----------------------------------------------------------------------------------------
OPERATING INCOME 130,059 128,184 391,307 359,804
- -----------------------------------------------------------------------------------------
OTHER INCOME (EXPENSE)
Interest expense (34,997) (41,904) (114,725) (126,785)
Income from unconsolidated
cellular entities 10,801 9,162 26,913 25,105
Minority interest (3,460) (3,619) (25,560) (10,264)
Gain on sale or exchange of assets, net 1,201 - 51,160 49,859
Other income and expense 1,108 1,159 6,722 2,454
- -----------------------------------------------------------------------------------------
Total other income (expense) (25,347) (35,202) (55,490) (59,631)
- ------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAX EXPENSE 104,712 92,982 335,817 300,173
Income tax expense 40,183 38,304 156,721 123,610
- -----------------------------------------------------------------------------------------
NET INCOME $ 64,529 54,678 179,096 176,563
=========================================================================================
BASIC EARNINGS PER SHARE* $ .46 .40 1.29 1.29
=========================================================================================
DILUTED EARNINGS PER SHARE* $ .46 .39 1.27 1.26
=========================================================================================
DIVIDENTS PER COMMON SHARE* $ .045 .043 .135 .130
=========================================================================================
AVERAGE BASIC SHARES OUTSTANDING* 139,085 137,207 138,668 136,857
=========================================================================================
AVERAGE DILUTED SHARES OUTSTANDING* 141,504 140,322 141,331 139,908
=========================================================================================
*Reflects March 1999 stock split. See Note 4.
See accompanying notes to consolidated financial statements.
</TABLE>
CENTURYTEL, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three months Nine months
ended September 30, ended September 30,
- -------------------------------------------------------------------------------------------
1999 1998 1999 1998
- -------------------------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Net income $ 64,529 54,678 179,096 176,563
- ------------------------------------------------------------------------------------------
Other comprehensive income, net of tax:
Unrealized holding gains (losses) arising
during period, net of $1,230, ($340),
$3,659 and $5,552 tax 2,284 (631) 6,796 10,310
Reclassification adjustment for gains
included in net income, net of $3,625
and $11,027 tax - - (6,733) (20,478)
- ------------------------------------------------------------------------------------------
Other comprehensive income, net of $1,230,
($340), $34, and ($5,475) tax 2,284 (631) 63 (10,168)
- ------------------------------------------------------------------------------------------
Comprehensive income $ 66,813 54,047 179,159 166,395
==========================================================================================
See accompanying notes to consolidated financial statements.
</TABLE>
CENTURYTEL, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
- --------------------------------------------------------------------------------------------
(Dollars in thousands)
<S> <C><C> <C>
ASSETS
- ------
CURRENT ASSETS
Cash and cash equivalents $ 37,233 5,742
Accounts receivable, less allowance of $3,539 and $4,155 215,015 185,398
Materials and supplies, at average cost 27,858 23,709
Other 5,206 11,389
- --------------------------------------------------------------------------------------------
285,312 226,238
- --------------------------------------------------------------------------------------------
NET PROPERTY, PLANT AND EQUIPMENT 2,194,944 2,351,453
- --------------------------------------------------------------------------------------------
INVESTMENTS AND OTHER ASSETS
Excess cost of net assets acquired, less accumulated
amortization of $151,257 and $133,135 1,629,636 1,956,701
Other 431,264 401,063
- --------------------------------------------------------------------------------------------
2,060,900 2,357,764
- --------------------------------------------------------------------------------------------
$ 4,541,156 4,935,455
============================================================================================
LIABILITIES AND EQUITY
- ----------------------
CURRENT LIABILITIES
Current maturities of long-term debt $ 53,306 53,010
Accounts payable 107,594 87,627
Accrued expenses and other liabilities
Salaries and benefits 40,597 36,900
Taxes 36,881 33,411
Interest 23,235 36,926
Other 22,889 24,249
Advance billings and customer deposits 31,938 32,721
- --------------------------------------------------------------------------------------------
316,440 304,844
- --------------------------------------------------------------------------------------------
LONG-TERM DEBT 2,042,235 2,558,000
- --------------------------------------------------------------------------------------------
DEFERRED CREDITS AND OTHER LIABILITIES 468,241 541,129
- --------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Common stock, $1.00 par value, 350,000,000 shares authorized,
139,672,352 and 138,082,926 shares issued and outstanding 139,672 138,083
Paid-in capital 471,583 451,535
Accumulated other comprehensive income-unrealized
holding gain on investments, net of taxes 7,280 7,217
Retained earnings 1,092,670 932,611
Unearned ESOP shares (4,940) (6,070)
Preferred stock - non-redeemable 7,975 8,106
- --------------------------------------------------------------------------------------------
1,714,240 1,531,482
- --------------------------------------------------------------------------------------------
$ 4,541,156 4,935,455
============================================================================================
See accompanying notes to consolidated financial statements.
</TABLE>
CENTURYTEL, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
Nine months
ended September 30,
- -------------------------------------------------------------------------------------------
1999 1998
- -------------------------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C>
COMMON STOCK
Balance at beginning of period $ 138,083 91,104
Issuance of common stock for acquisitions - 28
Conversion of convertible securities into common stock 330 169
Issuance of common stock through dividend
reinvestment, incentive and benefit plans 1,259 623
- ------------------------------------------------------------------------------------------
Balance at end of period 139,672 91,924
- ------------------------------------------------------------------------------------------
PAID-IN CAPITAL
Balance at beginning of period 451,535 469,586
Issuance of common stock for acquisitions - 1,059
Conversion of convertible securities into common stock 2,918 3,131
Issuance of common stock through dividend
reinvestment, incentive and benefit plans 16,192 11,410
Amortization of unearned compensation and other 938 2,035
- ------------------------------------------------------------------------------------------
Balance at end of period 471,583 487,221
- ------------------------------------------------------------------------------------------
ACCUMULATED OTHER COMPREHENSIVE INCOME
Balance at beginning of period 7,217 11,893
Change in unrealized holding gain on investments, net of
reclassification adjustment 63 (10,168)
- ------------------------------------------------------------------------------------------
Balance at end of period 7,280 1,725
- ------------------------------------------------------------------------------------------
RETAINED EARNINGS
Balance at beginning of period 932,611 728,033
Net income 179,096 176,563
Cash dividends declared
Common stock - $.135 and $.130 per share, respectively* (18,733) (17,811)
Preferred stock (304) (306)
- ------------------------------------------------------------------------------------------
Balance at end of period 1,092,670 886,479
- ------------------------------------------------------------------------------------------
UNEARNED ESOP SHARES
Balance at beginning of period (6,070) (8,450)
Release of ESOP shares 1,130 1,630
- ------------------------------------------------------------------------------------------
Balance at end of period (4,940) (6,820)
- -------------------------------------------------------------------------------------------
PREFERRED STOCK - NON-REDEEMABLE
Balance at beginning of period 8,106 8,106
Conversion of preferred stock into common stock (131) -
- ------------------------------------------------------------------------------------------
Balance at end of period 7,975 8,106
- ------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY $1,714,240 1,468,635
==========================================================================================
*Reflects March 1999 stock split. See Note 4.
See accompanying notes to consolidated financial statements.
</TABLE>
CENTURYTEL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine months
ended September 30,
- -------------------------------------------------------------------------------------------
1999 1998
- -------------------------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 179,096 176,563
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 260,293 242,288
Deferred income taxes 6,557 19,041
Income from unconsolidated cellular entities (26,913) (25,105)
Minority interest 25,560 10,264
Gain on sales of assets (51,160) (49,859)
Changes in current assets and current liabilities:
Accounts receivable (37,145) (15,370)
Accounts payable 17,460 (6,184)
Accrued taxes (60,659) (43,952)
Other current assets and other current liabilities, net (6,953) 9,364
Changes in other noncurrent assets (26,922) (11,171)
Changes in other noncurrent liabilities (5,941) 3,535
Other, net 17,229 7,763
- -----------------------------------------------------------------------------------------
Net cash provided by operating activities 290,502 317,177
- -----------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Payments for property, plant and equipment (236,998) (204,627)
Acquisitions, net of cash acquired (16,771) (5,028)
Proceeds from sales of assets 453,916 132,307
Distributions from unconsolidated cellular entities 16,315 17,715
Purchase of life insurance investment, net (2,545) (2,557)
Other, net (2,221) 2,337
- -----------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities 211,696 (59,853)
- -----------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from issuance of long-term debt 64,551 772,894
Payments of long-term debt (532,535) (999,877)
Payment upon settlement of hedge contracts - (40,237)
Payment of deferred debt issuance costs - (6,625)
Proceeds from issuance of common stock 15,055 12,110
Cash dividends (19,037) (18,117)
Other, net 1,259 451
- -----------------------------------------------------------------------------------------
Net cash used in financing activities (470,707) (279,401)
- -----------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 31,491 (22,077)
Cash and cash equivalents at beginning of period 5,742 26,017
- -----------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 37,233 3,940
=========================================================================================
Supplemental cash flow information:
Income taxes paid $ 223,659 158,365
Interest paid $ 128,416 124,190
- -----------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
</TABLE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
(UNAUDITED)
(1) Basis of Financial Reporting
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to rules and regulations of
the Securities and Exchange Commission; however, the Company believes the
disclosures which are made are adequate to make the information presented not
misleading. The consolidated financial statements and footnotes included in this
Form 10-Q should be read in conjunction with the consolidated financial
statements and notes thereto included in the Company's Annual Report on Form
10-K for the year ended December 31, 1998. Certain 1998 amounts have been
reclassified to be consistent with the Company's 1999 presentation, including
the reclassification of the Company's personal communication services operations
from other operations to the wireless segment.
The unaudited financial information for the three months and nine months
ended September 30, 1999 and 1998 has not been audited by independent public
accountants; however, in the opinion of management, all adjustments (which
include only normal recurring adjustments) necessary to present fairly the
financial position as of September 30, 1999 and the results of operations for
the applicable three-month and nine-month periods have been included therein.
The results of operations for the first nine months of the year are not
necessarily indicative of the results of operations which might be expected for
the entire year.
(2) Net Property, Plant and Equipment
Net property, plant and equipment is composed of the following:
<TABLE>
<CAPTION>
September 30, December 31,
- -------------------------------------------------------------------------
1999 1998
- -------------------------------------------------------------------------
(Dollars in thousands)
<S> <C><C> <C>
Telephone, at original cost $ 3,366,882 3,660,252
Accumulated depreciation (1,558,418) (1,661,315)
- -------------------------------------------------------------------------
1,808,464 1,998,937
- -------------------------------------------------------------------------
Wireless, at cost 458,197 436,897
Accumulated depreciation (203,469) (178,969)
- -------------------------------------------------------------------------
254,728 257,928
- -------------------------------------------------------------------------
Other operations, at cost 238,418 192,509
Accumulated depreciation (106,666) (97,921)
- -------------------------------------------------------------------------
131,752 94,588
- -------------------------------------------------------------------------
$ 2,194,944 2,351,453
=========================================================================
</TABLE>
(3) Earnings from Unconsolidated Cellular Entities
The following summarizes the unaudited combined results of operations of
the cellular entities in which the Company's investments (as of September 30,
1999 and 1998) were accounted for by the equity method:
<TABLE>
<CAPTION>
Nine months
ended September 30,
- --------------------------------------------------------------------------
1999 1998
- --------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C>
Results of operations
Revenues $ 995,973 937,670
Operating income $ 310,332 334,405
Net income $ 309,141 336,393
- --------------------------------------------------------------------------
</TABLE>
(4) Stock Split
On February 23, 1999, the Company's Board of Directors declared a
three-for-two common stock split effected as a 50% stock dividend distributed on
March 31, 1999. Shares outstanding and per share data for 1998 have been
restated to reflect this stock split.
(5) Sales of Assets
In the first quarter of 1999 the Company recorded a pre-tax gain
aggregating $10.4 million ($6.7 million after-tax; $.04 per diluted share) due
to the sale of its remaining common shares of MCIWorldCom, Inc.
In May 1999, the Company sold the stock of substantially all of its
Alaska-based operations to Alaska Communications Systems Holdings, Inc. The
Company received approximately $300 million in after-tax cash as a result of the
transaction. No gain or loss was recorded upon the disposition of these
properties.
In June 1999, the Company sold the assets of its cellular operations in
Brownsville and McAllen, Texas to Western Wireless Corporation for approximately
$96 million cash. In connection therewith, the Company recorded a pre-tax gain
of approximately $39.6 million, and an after-tax loss of approximately $7.8
million ($.05 per diluted share.)
(6) Pending Acquisitions
In June 1999, the Company signed a definitive asset purchase agreement
with affiliates of GTE Corporation ("GTE") to purchase GTE's telephone access
lines (which numbered approximately 214,269 at December 31, 1998) and related
local exchange assets in Arkansas for approximately $845.8 million, subject to
certain adjustments. In July 1999, the Company acquired a 61.5% (56.9%
fully-diluted) interest in a newly-organized joint venture company which has
entered into a definitive asset purchase agreement with affiliates of GTE to
purchase telephone access lines (which numbered approximately 116,000 at
December 31, 1998) and related local exchange assets in Missouri for
approximately $290 million, subject to certain adjustments. The Company has
agreed to make a preferred equity investment in the newly organized company of
approximately $55 million and to finance substantially all of the remainder of
the purchase price.
In August 1999, the Company acquired an 89% interest in a newly-organized
joint venture company which has entered into a definitive asset purchase
agreement with a GTE affiliate to purchase telephone access lines (which
numbered approximately 61,600 as of December 31, 1998) and related local
exchange assets in Wisconsin for approximately $170 million cash, subject to
certain adjustments. The Company has agreed to make an equity investment in the
newly organized company of approximately $37.8 million and currently expects to
finance substantially all of the remainder of the purchase price. In October
1999, the Company also entered into a definitive asset purchase agreement to
purchase additional telephone access lines (which numbered approximately 64,800
as of December 31, 1998) and related local exchange assets in Wisconsin from a
GTE affiliate for approximately $195 million cash, subject to certain
adjustments.
All of these GTE transactions are expected to close mid-year 2000,
pending regulatory approvals and certain other closing conditions.
(7) Business Segments
The Company has two separately reportable business segments: telephone
and wireless. The operating income of these segments is reviewed by the chief
operating decision maker to assess performance and make business decisions.
Other operations include, but are not limited to, the Company's non-regulated
long distance operations, call center operations and security monitoring
operations.
<TABLE>
<CAPTION>
Three months Nine months
ended September 30, ended September 30,
- -----------------------------------------------------------------------------------------
1999 1998 1999 1998
- -----------------------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Operating revenues
Telephone segment $ 277,352 275,397 849,426 800,532
Wireless segment 111,652 106,664 320,245 305,704
Other operations 30,201 19,888 80,540 55,811
- -----------------------------------------------------------------------------------------
$ 419,205 401,949 1,250,211 1,162,047
=========================================================================================
Operating income
Telephone segment $ 81,852 88,210 260,916 245,007
Wireless segment 40,705 36,263 111,797 103,131
Other operations 7,502 3,711 18,594 11,666
- -----------------------------------------------------------------------------------------
$ 130,059 128,184 391,307 359,804
=========================================================================================
Operating income $ 130,059 128,184 391,307 359,804
Interest expense (34,997) (41,904) (114,725) (126,785)
Income from unconsolidated
cellular entities 10,801 9,162 26,913 25,105
Minority interest (3,460) (3,619) (25,560) (10,264)
Gain on sale or exchange
of assets, net 1,201 - 51,160 49,859
Other income and expense 1,108 1,159 6,722 2,454
- -----------------------------------------------------------------------------------------
Income before income tax expense $ 104,712 92,982 335,817 300,173
=========================================================================================
</TABLE>
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
- ---------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C>
Total assets
Telephone segment $ 3,215,593 3,674,148
Wireless segment 1,175,864 1,114,955
Other operations 149,699 146,352
- ---------------------------------------------------------------------------
Total assets $ 4,541,156 4,935,455
===========================================================================
</TABLE>
CENTURYTEL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results
of Operations ("MD&A") included herein should be read in conjunction with MD&A
and the other information included in the Company's Annual Report on Form 10-K
for the year ended December 31, 1998. The results of operations for the three
months and nine months ended September 30, 1999 are not necessarily indicative
of the results of operations which might be expected for the entire year.
CenturyTel, Inc. (the "Company"), is a regional diversified
communications company that is primarily engaged in providing local telephone
services and cellular telephone communications services. At September 30, 1999,
the Company's local exchange telephone subsidiaries operated over 1.26 million
telephone access lines primarily in rural, suburban and small urban areas in 20
states, and the Company's majority-owned and operated cellular entities had more
than 650,000 cellular subscribers. On December 1, 1998, the Company acquired
from affiliates of Ameritech Corporation ("Ameritech") telephone operations
serving 86,000 access lines in northern and central Wisconsin and the related
telephone directories for approximately $221 million cash. The operations of the
former Ameritech properties are included in the Company's results of operations
beginning December 1, 1998. On May 14, 1999, the Company sold substantially all
of its Alaska-based operations serving approximately 134,900 telephone access
lines and 3,000 cellular subscribers. On June 1, 1999, the Company sold the
assets of its Brownsville and McAllen, Texas cellular operations serving
approximately 7,500 cellular subscribers. The operations of these disposed
properties are included in the Company's results of operations up to the
respective dates of disposition.
In addition to historical information, management's discussion and
analysis includes 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 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 offerings on a timely and cost-effective basis; the
risks inherent in rapid technological change; the Company's ability to timely
consummate its pending acquisitions and effectively manage its growth, including
integrating newly acquired properties into the Company's operations, hiring
adequate numbers of qualified staff and successfully upgrading its billing and
other information systems; the success and expense of the remediation efforts of
the Company and its vendors in achieving year 2000 compliance; 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 business are described in greater detail in Item 1 to the
Company's Annual Report on Form 10-K for the year ended December 31, 1998. You
are cautioned not to place undue reliance on these forward-looking statements,
which speak only as of the date hereof. The Company undertakes no obligation to
update any of its forward-looking statements for any reason.
RESULTS OF OPERATIONS
Three Months Ended September 30, 1999 Compared
to Three Months Ended September 30, 1998
Net income for the third quarter of 1999 was $64.5 million compared to
$54.7 million during the third quarter of 1998. Diluted earnings per share
increased to $.46 during the three months ended September 30, 1999 from $.39
during the three months ended September 30, 1998, a 17.9% increase.
<TABLE>
<CAPTION>
Three months
ended September 30,
- ----------------------------------------------------------------------------
1999 1998
- ----------------------------------------------------------------------------
(Dollars, except per
share amounts, and
shares in thousands)
<S> <C><C> <C>
Operating income
Telephone $ 81,852 88,210
Wireless 40,705 36,263
Other 7,502 3,711
- ----------------------------------------------------------------------------
130,059 128,184
Interest expense (34,997) (41,904)
Income from unconsolidated cellular entities 10,801 9,162
Minority interest (3,460) (3,619)
Gain on sale or exchange of assets, net 1,201 -
Other income and expense 1,108 1,159
Income tax expense (40,183) (38,304)
- ----------------------------------------------------------------------------
Net income $ 64,529 54,678
============================================================================
Basic earnings per share $ .46 .40
============================================================================
Diluted earnings per share $ .46 .39
============================================================================
Average basic shares outstanding 139,085 137,207
============================================================================
Average diluted shares outstanding 141,504 140,322
============================================================================
</TABLE>
Contributions to operating revenues and operating income by the Company's
telephone, wireless, and other operations for the three months ended September
30, 1999 and 1998 were as follows:
<TABLE>
<CAPTION>
Three months
ended September 30,
- -------------------------------------------------------------------------
1999 1998
- -------------------------------------------------------------------------
<S> <C> <C>
Operating revenues
Telephone operations 66.2% 68.5
Wireless operations 26.6% 26.5
Other operations 7.2% 5.0
Operating income
Telephone operations 62.9% 68.8
Wireless operations 31.3% 28.3
Other operations 5.8% 2.9
- -------------------------------------------------------------------------
</TABLE>
Telephone Operations
<TABLE>
<CAPTION>
Three months
ended September 30,
- -----------------------------------------------------------------------------
1999 1998
- -----------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C>
Operating revenues
Local service $ 86,010 84,082
Network access 159,682 159,422
Other 31,660 31,893
- -----------------------------------------------------------------------------
277,352 275,397
- -----------------------------------------------------------------------------
Operating expenses
Plant operations 66,446 62,402
Customer operations 22,073 22,107
Corporate and other 40,584 37,436
Depreciation and amortization 66,397 65,242
- -----------------------------------------------------------------------------
195,500 187,187
- -----------------------------------------------------------------------------
Operating income $ 81,852 88,210
=============================================================================
</TABLE>
Telephone operating income decreased $6.4 million (7.2%) due to an
increase in operating expenses of $8.3 million (4.4%) which was partially offset
by an increase in operating revenues of $2.0 million (.7%).
Of the $2.0 million increase in operating revenues, $11.5 million was
attributable to the properties acquired from Ameritech, which was more than
offset by a $31.7 million decrease attributable to the sale of the Alaska based
operations. The remaining $22.2 million increase in revenues was partially due
to a $5.3 million increase in local network service revenues primarily due to an
increase in the number of customer access lines; a $4.4 million increase in the
partial recovery of increased operating expenses through revenue sharing
arrangements in which the Company participates with other telephone companies; a
$3.0 million increase related to the Company's sales, leases, installations,
maintenance and repair of customer premise telecommunications equipment and
wiring ("CPE services"); a $3.7 million increase in revenues due to increased
minutes of use; and a $2.6 million increase in amounts received from the federal
Universal Service Fund.
Plant operations expenses increased $4.0 million (6.5%) of which $3.4
million was attributable to the properties acquired from Ameritech, which was
more than offset by a $9.5 million decrease due to the sale of the Alaska
properties. The remaining $10.1 million increase was primarily due to a $4.0
million increase in access expenses primarily due to changes in revenue
settlement methods of certain telephone subsidiaries in a limited number of
states; a $3.1 million increase in salaries and benefits; and a $1.3 million
increase in repair and maintenance expenses.
Customer operations expenses decreased $34,000 of which $3.3 million was
due to the sale of the Alaska properties. Such decrease was substantially offset
by a $1.1 million increase in expenses attributable to the properties acquired
from Ameritech and a $1.0 million increase in marketing expenses.
Corporate and other expenses increased $3.1 million (8.4%) primarily due
to a $3.1 million increase in contract labor expenses attributable to readying
the Company's systems to be year 2000 compliant; a $1.5 million increase in
salaries and benefits; a $1.2 million increase attributable to the properties
acquired from Ameritech; a $1.0 million increase in expenses associated with the
provision of CPE services; and a $957,000 increase in the provision for doubtful
accounts. Such increases were partially offset by a $4.9 million decrease due to
the sale of the Alaska properties.
Depreciation and amortization increased $1.2 million (1.8%), of which
$3.8 million was attributable to the properties acquired from Ameritech, which
was more than offset by a $7.1 million decrease due to the sale of the Alaska
properties. The remainder of the increase was primarily due to higher levels of
plant in service.
Wireless Operations and Income From Unconsolidated Cellular Entities
<TABLE>
<CAPTION>
Three months
ended September 30,
- --------------------------------------------------------------------------------
1999 1998
- --------------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C>
Operating income - wireless operations $ 40,705 36,263
Minority interest (3,449) (3,619)
Income from unconsolidated cellular entities 10,801 9,162
- --------------------------------------------------------------------------------
$ 48,057 41,806
================================================================================
</TABLE>
The Company's wireless operations (discussed below) reflect 100% of the
results of operations of the cellular entities in which the Company has a
majority ownership interest. The minority interest owners' share of the income
of such entities is reflected in the Company's Consolidated Statements of Income
as an expense in "Minority interest." The Company's share of earnings from the
cellular entities in which it has less than a majority interest is accounted for
using the equity method and is reflected in the Company's Consolidated
Statements of Income as "Income from unconsolidated cellular entities." See
Income from Unconsolidated Cellular Entities for additional information.
Wireless Operations
<TABLE>
<CAPTION>
Three months
ended September 30,
- --------------------------------------------------------------------------------
1999 1998
- --------------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C>
Operating revenues
Service revenues $ 109,318 104,529
Equipment sales 2,334 2,135
- -------------------------------------------------------------------------------
111,652 106,664
- -------------------------------------------------------------------------------
Operating expenses
Cost of equipment sold 4,200 3,784
System operations 13,864 15,359
General, administrative and customer service 22,128 22,115
Sales and marketing 13,588 13,585
Depreciation and amortization 17,167 15,558
- -------------------------------------------------------------------------------
70,947 70,401
- -------------------------------------------------------------------------------
Operating income $ 40,705 36,263
===============================================================================
</TABLE>
Wireless operating income increased $4.4 million (12.2%) to $40.7 million
in the third quarter of 1999 from $36.3 million in the third quarter of 1998.
Wireless operating revenues increased $5.0 million (4.7%) while operating
expenses increased $546,000 (.8%).
The $4.8 million increase in service revenues was primarily due to a $4.9
million increase in local service revenues and a $3.5 million increase in
roaming usage, both of which are primarily attributable to a growth in the
number of customers and increased minutes of use, partially offset by reduced
rates. Such increases were partially offset by a $3.6 million decrease due to
the Company's sale of its Texas and Alaska cellular properties.
The following table illustrates the growth in the Company's wireless
customer base in its majority-owned markets:
<TABLE>
<CAPTION>
Three months
ended September 30,
- ---------------------------------------------------------------------------
1999 1998
- ---------------------------------------------------------------------------
<S> <C> <C>
Customers at beginning of period 641,440 583,929
Gross units added internally 47,309 48,718
Disconnects 37,850 41,002
Net units added 9,459 7,716
Customers at end of period 650,899 591,645
- ---------------------------------------------------------------------------
</TABLE>
The average monthly service revenue per customer declined to $57 during
the third quarter of 1999 from $59 during the third quarter of 1998 due to
pricing rate reductions and the continued trend that a higher percentage of new
subscribers tend to be lower usage customers. A majority of the Company's net
unit additions for third quarter 1999 were prepaid customers. The average
monthly service revenue per prepaid customer has been and is expected to
continue to be less than the average monthly service revenue per contract
customer. The average monthly service revenue per customer may further decline
(i) as market penetration increases and additional lower usage customers
(including prepaid customers) are activated and (ii) as competitive pressures
from current and future wireless communications providers intensify. The Company
is responding to such competitive pressures by, among other things, modifying
certain of its price plans and implementing certain other plans and promotions,
most all of which are likely to result in lower average revenue per customer.
The Company will continue to focus on customer service and attempt to stimulate
usage by promoting the availability of certain enhanced services and by
improving the quality of its service through the construction of additional cell
sites and other enhancements to its system.
System operations expenses decreased $1.5 million (9.7%) in the third
quarter of 1999 primarily due to a $1.2 million decrease in toll expenses; a
$943,000 decrease due to the sale of the Alaska and Texas properties; and an
$853,000 decrease in the amounts paid to other carriers for service provided to
the Company's customers who roam in the other carriers' service areas. Such
decreases were partially offset by a $1.4 million increase associated with
operating a greater number of cell sites.
General, administrative and customer service expenses increased $13,000.
A $3.7 million decrease in the provision for doubtful accounts was offset by a
$1.0 million increase in contract labor expense attributable to readying the
Company's system to be year 2000 compliant and a $2.5 million increase in
general office expenses.
The Company's average monthly churn rate (the percentage of customers
that terminate service) was 1.9% for the third quarter of 1999 and 2.3% for the
third quarter of 1998.
Depreciation and amortization increased $1.6 million (10.3%) primarily
due to an increase in amortization of intangibles.
Other Operations
<TABLE>
<CAPTION>
Three months
ended September 30,
- ------------------------------------------------------------------------------
1999 1998
- ------------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C>
Operating revenues
Long distance $ 22,602 13,263
Call center 3,352 2,754
Other 4,247 3,871
- ------------------------------------------------------------------------------
30,201 19,888
- ------------------------------------------------------------------------------
Operating expenses
Cost of sales and operating expenses 21,963 15,367
Depreciation and amortization 736 810
- ------------------------------------------------------------------------------
22,699 16,177
- ------------------------------------------------------------------------------
Operating income $ 7,502 3,711
==============================================================================
</TABLE>
Other operations include the results of operations of subsidiaries of the
Company which are not included in the telephone or wireless segments, including,
but not limited to, the Company's non-regulated long distance and call center
operations. The $9.3 million increase in long distance revenues was primarily
attributable to the growth in the number of customers. The average number of
long distance customers during the third quarter of 1999 and 1998 was 270,700
and 207,900, respectively.
Operating expenses increased $6.5 million primarily due to a $5.4 million
increase in expenses of the Company's long distance operations primarily due to
increased minutes of use due to an increase in the number of customers.
The Company anticipates that the growth of operating income for its other
operations will slow in future periods as it incurs increasingly larger expenses
in connection with expanding its security monitoring, fiber network and
competitive local exchange businesses.
Interest Expense
Interest expense decreased $6.9 million in the third quarter of 1999
compared to the third quarter of 1998 primarily due to a reduction in
outstanding indebtedness.
Income from Unconsolidated Cellular Entities
Earnings from unconsolidated cellular entities, net of the amortization
of associated goodwill, increased $1.6 million (17.9%) due to increased earnings
from unconsolidated entities.
Income Tax Expense
Income tax expense increased $1.9 million in the third quarter of 1999
compared to the third quarter of 1998. The effective income tax rate was 38.4%
and 41.2% in the three months ended September 30, 1999 and 1998, respectively.
Such decrease in the effective income tax rate was primarily due to two factors.
First, the Company's 1999 sale of its Alaska and Texas operations resulted in a
decrease in the amount of amortization of excess cost of net assets acquired
(goodwill) that is non-deductible for tax purposes. Second, in the third quarter
of 1999 the Company recorded a $2.5 million state tax benefit relating to a loss
carryback that will be utilized to recoup taxes paid in a previous year.
Nine Months Ended September 30, 1999 Compared
to Nine Months Ended September 30, 1998
Net income (and diluted earnings per share) for the first nine months of
1999 and 1998 was $179.1 million ($1.27) and $176.6 million ($1.26),
respectively. Net income (excluding the after-tax effect of asset sales) for the
first nine months of 1999 was $179.4 million compared to $146.0 million during
the first nine months of 1998. Diluted earnings per share (excluding the
after-tax effect of asset sales) increased to $1.27 during the nine months ended
September 30, 1999 from $1.05 during the nine months ended September 30, 1998, a
21.0% increase.
<TABLE>
<CAPTION>
Nine months
ended September 30,
- ----------------------------------------------------------------------------
1999 1998
- ----------------------------------------------------------------------------
(Dollars, except per
share amounts, and
shares in thousands)
<S> <C> <C>
Operating income
Telephone $ 260,916 245,007
Wireless 111,797 103,131
Other 18,594 11,666
- ----------------------------------------------------------------------------
391,307 359,804
Interest expense (114,725) (126,785)
Income from unconsolidated cellular entities 26,913 25,105
Minority interest (25,560) (10,264)
Gain on sale or exchange of assets, net 51,160 49,859
Other income and expense 6,722 2,454
Income tax expense (156,721) (123,610)
- ----------------------------------------------------------------------------
Net income $ 179,096 176,563
============================================================================
Basic earnings per share $ 1.29 1.29
============================================================================
Diluted earnings per share $ 1.27 1.26
============================================================================
Average basic shares outstanding 138,668 136,857
============================================================================
Average diluted shares outstanding 141,331 139,908
============================================================================
</TABLE>
Contributions to operating revenues and operating income by the Company's
telephone, wireless, and other operations for the nine months ended September
30, 1999 and 1998 were as follows:
<TABLE>
<CAPTION>
Nine months
ended September 30,
- -------------------------------------------------------------------------
1999 1998
- -------------------------------------------------------------------------
<S> <C> <C>
Operating revenues
Telephone operations 67.9% 68.9
Wireless operations 25.6% 26.3
Other operations 6.5% 4.8
Operating income
Telephone operations 66.7% 68.1
Wireless operations 28.6% 28.7
Other operations 4.7% 3.2
- -------------------------------------------------------------------------
</TABLE>
Telephone Operations
<TABLE>
<CAPTION>
Nine months
ended September 30,
- -------------------------------------------------------------------------
1999 1998
- -------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C>
Operating revenues
Local service $ 266,119 243,664
Network access 482,626 462,576
Other 100,681 94,292
- -------------------------------------------------------------------------
849,426 800,532
- -------------------------------------------------------------------------
Operating expenses
Plant operations 196,960 176,609
Customer operations 67,968 67,956
Corporate and other 116,419 116,444
Depreciation and amortization 207,163 194,516
- -------------------------------------------------------------------------
588,510 555,525
- -------------------------------------------------------------------------
Operating income $ 260,916 245,007
=========================================================================
</TABLE>
Telephone operating income increased $15.9 million (6.5%) due to an
increase in operating revenues of $48.9 million (6.1%) which more than offset an
increase in operating expenses of $33.0 million (5.9%).
Of the $48.9 million increase in operating revenues, $35.3 million was
attributable to the properties acquired from Ameritech, which was more than
offset by a $42.7 million decrease due to the sale of the Alaska properties. The
remaining $56.3 million increase in revenues was partially due to a $14.9
million increase in local network service revenues primarily due to an increase
in the number of customer access lines; a $7.4 million increase in the partial
recovery of increased operating expenses through revenue sharing arrangements in
which the Company participates with other telephone companies; a $6.3 million
increase in amounts received from the federal Universal Service Fund; a $5.9
million increase in revenues due to increased minutes of use; a $5.1 million
increase in revenues associated with the Company's provision of CPE services; a
$6.7 million increase in revenues resulting from revisions of revenue settlement
agreements; and a $3.9 million increase in revenues from the provision of
Internet access.
Plant operations expenses increased $20.4 million (11.5%) of which $8.6
million was attributable to the properties acquired from Ameritech, which was
more than offset by a $13.1 million decrease due to the sale of the Company's
Alaska properties. The remaining $24.9 million increase was partially due to a
$6.0 million increase in repair and maintenance expenses; a $4.9 million
increase in access expenses primarily due to changes in revenue settlement
methods of certain telephone subsidiaries in a limited number of states; a $4.7
million increase in network operations expenses; and a $2.5 million increase in
salaries and benefits.
Customer operations expenses increased $12,000 of which $3.0 million was
attributable to the properties acquired from Ameritech, which was more than
offset by a $5.1 million decrease due to the sale of the Alaska properties. The
remaining $2.1 million increase was primarily due to a $2.5 million increase in
marketing expenses.
Corporate and other expenses decreased $25,000 of which $7.6 million was
due to the sale of the Alaska properties, partially offset by a $3.5 million
increase attributable to the properties acquired from Ameritech. The remaining
$4.1 million increase was primarily due to a $6.8 million increase in contract
labor expenses associated with readying the Company's systems to be year 2000
compliant which was partially offset by a $2.7 million decrease in salaries and
benefits.
Depreciation and amortization increased $12.6 million (6.5%), of which
$11.6 million was attributable to the properties acquired from Ameritech and
$11.4 million was due to higher levels of plant in service and nonrecurring
depreciation charges which have been approved for certain subsidiaries. Such
increases were partially offset by a $10.5 million reduction in depreciation and
amortization expenses resulting from the sale of the Company's Alaska
properties.
Wireless Operations and Income From Unconsolidated Cellular Entities
<TABLE>
<CAPTION>
Nine months
ended September 30,
- -------------------------------------------------------------------------------
1999 1998
- -------------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C>
Operating income - wireless operations $ 111,797 103,131
Minority interest, exclusive of the
effect of asset sales (10,611) (10,264)
Income from unconsolidated cellular entities 26,913 25,105
- -------------------------------------------------------------------------------
$ 128,099 117,972
===============================================================================
</TABLE>
The Company's wireless operations (discussed below) reflect 100% of the
results of operations of the cellular entities in which the Company has a
majority ownership interest. The minority interest owners' share of the income
of such entities is reflected in the Company's Consolidated Statements of Income
as an expense in "Minority interest." See Minority Interest for additional
information. The Company's share of earnings from the cellular entities in which
it has less than a majority interest is accounted for using the equity method
and is reflected in the Company's Consolidated Statements of Income as "Income
from unconsolidated cellular entities." See Income from Unconsolidated Cellular
Entities for additional information.
Wireless Operations
<TABLE>
<CAPTION>
Nine months
ended September 30,
- ----------------------------------------------------------------------------
1999 1998
- ----------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C>
Operating revenues
Service revenues $ 312,873 299,396
Equipment sales 7,372 6,308
- ----------------------------------------------------------------------------
320,245 305,704
- ----------------------------------------------------------------------------
Operating expenses
Cost of equipment sold 13,848 11,211
System operations 42,394 44,285
General, administrative and
customer service 60,113 60,785
Sales and marketing 41,130 41,018
Depreciation and amortization 50,963 45,274
- ----------------------------------------------------------------------------
208,448 202,573
- ----------------------------------------------------------------------------
Operating income $ 111,797 103,131
============================================================================
</TABLE>
Wireless operating income increased $8.7 million (8.4%) to $111.8 million
in the first nine months of 1999 from $103.1 million in the first nine months of
1998. Wireless operating revenues increased $14.5 million (4.8%) while operating
expenses increased $5.9 million (2.9%).
The $13.5 million increase in service revenues was primarily due to an
$11.3 million increase in roaming usage and a $2.2 million increase in local
service revenues, both of which are primarily attributable to a growth in the
number of customers and increased minutes of use, partially offset by reduced
rates.
The following table illustrates the growth in the Company's wireless
customer base in its majority owned markets:
<TABLE>
<CAPTION>
Nine months
ended September 30,
- -------------------------------------------------------------------------
1999 1998
- -------------------------------------------------------------------------
<S> <C> <C>
Customers at beginning of period 624,290 569,983
Gross units added internally 146,754 140,407
Disconnects 109,582 118,745
Net units added 37,172 21,662
Effect of dispositions (10,563) -
Customers at end of period 650,899 591,645
- -------------------------------------------------------------------------
</TABLE>
The average monthly service revenue per customer declined to $54 during
the first nine months of 1999 from $57 during the first nine months of 1998 due
to pricing rate reductions and the continued trend that a higher percentage of
new subscribers tend to be lower usage customers. A majority of the Company's
net unit additions for 1999 were prepaid customers. The average monthly service
revenue per prepaid customer has been and is expected to continue to be less
than the average monthly service revenue per contract customer. The average
monthly service revenue per customer may further decline (i) as market
penetration increases and additional lower usage customers (including prepaid
customers) are activated and (ii) as competitive pressures from current and
future wireless communications providers intensify. The Company is responding to
such competitive pressures by, among other things, modifying certain of its
price plans and implementing certain other plans and promotions, most all of
which are likely to result in lower average revenue per customer. The Company
will continue to focus on customer service and attempt to stimulate usage by
promoting the availability of certain enhanced services and by improving the
quality of its service through the construction of additional cell sites and
other enhancements to its system.
Cost of equipment sold increased $2.6 million (23.5%) primarily due to an
increase in the number of phones sold.
System operations expenses decreased $1.9 million (4.3%) in the first
nine months of 1999 primarily due to a $2.8 million decrease in the amounts paid
to other carriers for service provided to the Company's customers who roam in
the other carriers' service areas; a $1.4 million decrease in toll costs; and a
$1.3 million decrease in expenses attributable to operations sold in 1999. Such
decreases were partially offset by a $3.9 million increase in expenses
associated with operating a greater number of cell sites.
General, administrative and customer service expenses decreased $672,000
(1.1%), of which $8.3 million was attributable to a decrease in the provision
for doubtful accounts. Such decrease was substantially offset by a $3.5 million
increase in customer service expenses; a $1.9 million increase in contract labor
expenses attributable to readying the Company's systems to be year 2000
compliant; and a $3.3 million increase in general office expenses.
The Company's average monthly churn rate (the percentage of customers
that terminate service) was 1.9% for the first nine months of 1999 and 2.3% for
the first nine months of 1998.
Depreciation and amortization increased $5.7 million (12.6%), of which
$4.0 million was due to an increase in amortization of intangibles and $1.8
million was attributable to a higher level of plant in service.
Other Operations
<TABLE>
<CAPTION>
Nine months
ended September 30,
- ------------------------------------------------------------------------------
1999 1998
- ------------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C>
Operating revenues
Long distance $ 59,043 36,865
Call center 8,899 7,702
Other 12,598 11,244
- ------------------------------------------------------------------------------
80,540 55,811
- ------------------------------------------------------------------------------
Operating expenses
Cost of sales and operating expenses 59,779 41,647
Depreciation and amortization 2,167 2,498
- ------------------------------------------------------------------------------
61,946 44,145
- ------------------------------------------------------------------------------
Operating income $ 18,594 11,666
==============================================================================
</TABLE>
Other operations include the results of operations of subsidiaries of the
Company which are not included in the telephone or wireless segments, including,
but not limited to, the Company's non-regulated long distance and call center
operations. The $22.2 million increase in long distance revenues was
attributable to the growth in the number of customers. The average number of
long distance customers during the first nine months of 1999 and 1998 was
252,700 and 192,700, respectively.
Operating expenses increased $17.8 million (40.3%) primarily due to (i)
an increase of $12.2 million in expenses of the Company's long distance
operations primarily due to increased minutes of use due to an increase in the
number of customers, (ii) a $3.0 million increase associated with the Company's
call center operations and (iii) a $2.7 million increase in expenses due to
expansion of the Company's security monitoring and fiber network businesses.
The Company anticipates that the growth of operating income for its other
operations will slow in future periods as it incurs increasingly larger expenses
in connection with expanding its security monitoring, fiber network and
competitive local exchange businesses.
Interest Expense
Interest expense decreased $12.1 million in the first nine months of 1999
compared to the first nine months of 1998 primarily due to a reduction in
outstanding indebtedness.
Income from Unconsolidated Cellular Entities
Earnings from unconsolidated cellular entities, net of the amortization
of associated goodwill, increased $1.8 million (7.2%) due to increased earnings
from unconsolidated entities.
Minority Interest
Minority interest is the expense recorded by the Company to reflect the
minority interest owners' share of the earnings or loss of the Company's
majority-owned and operated cellular entities and majority-owned subsidiaries.
Minority interest increased $15.3 million during the first nine months of 1999
compared to the same period in 1998 primarily due to the minority partners'
share of the gain on sale of assets of the Brownsville and McAllen, Texas
cellular properties.
Gain on Sale or Exchange of Assets, Net
In the first nine months of 1999, the Company recorded pre-tax gains
aggregating $51.2 million. Approximately $10.4 million of the pre-tax gains
($6.7 million after-tax; $.04 per diluted share) was due to the sale of the
Company's remaining common shares of MCIWorldCom, Inc. Of the remaining $40.8
million, $39.6 million of the pre-tax gains ($7.8 million loss after-tax; ($.05)
per diluted share) was due to the sale of the Company's Brownsville and McAllen,
Texas cellular properties. For additional information, see Note 5 of Notes to
Consolidated Financial Statements and Minority Interest.
In the first nine months of 1998, the Company recorded pre-tax gains
aggregating $49.9 million ($30.5 million after-tax; $.21 per diluted share)
primarily due to the conversion of its investment in the common stock of Brooks
Fiber Networks, Inc. into common stock of WorldCom, Inc., the subsequent sale of
750,000 shares of WorldCom, Inc. common stock, and the sale of minority
interests in two non-strategic cellular entities.
Other Income and Expense
Other income and expense increased $4.3 million in the first nine months
of 1999 compared to the first nine months of 1998, substantially all of which
relates to favorable non-recurring items recorded in 1999.
Income Tax Expense
Income tax expense increased $33.1 million in the first nine months of
1999 compared to the first nine months of 1998. Exclusive of the effects of
income tax expense on asset sales, the effective income tax rate was 40.1% and
41.7% for the nine months ended September 30, 1999 and 1998, respectively. Such
decrease in the effective income tax rate was primarily due to two factors.
First, the Company's 1999 sale of its Alaska and Texas operations resulted in a
decrease in the amount of amortization of excess cost of net assets acquired
(goodwill) that is non-deductible for tax purposes. Second, in the third quarter
of 1999 the Company recorded a $2.5 million state tax benefit relating to a loss
carryback that will be utilized to recoup taxes paid in a previous year.
LIQUIDITY AND CAPITAL RESOURCES
Excluding cash used for acquisitions, the Company relies on cash provided
by operations to provide a substantial portion of its cash needs. The Company's
operations have historically provided a stable source of cash flow which has
helped the Company continue its long-term program of capital improvements.
Net cash provided by operating activities was $290.5 million during the
first nine months of 1999 compared to $317.2 million during the first nine
months of 1998. The Company's accompanying consolidated statements of cash flows
identify major differences between net income and net cash provided by operating
activities for each of these periods. For additional information relating to the
telephone operations, wireless operations, and other operations of the Company,
see Results of Operations.
Net cash provided by (used in) investing activities was $211.7 million
and ($59.9) million for the nine months ended September 30, 1999 and 1998,
respectively. Proceeds from the sale of assets were $453.9 million in the first
nine months of 1999 compared to $132.3 million in the first nine months of 1998.
Payments for property, plant and equipment were $32.4 million more in the first
nine months of 1999 than in the comparable period during 1998. Capital
expenditures for the nine months ended September 30, 1999 were $145.2 million
for telephone, $44.3 million for wireless and $47.5 million for other
operations.
Net cash used in financing activities was $470.7 million during the first
nine months of 1999 compared to $279.4 million during the first nine months of
1998. Net payments of long-term debt were $241.0 million more during the first
nine months of 1999 compared to the first nine months of 1998 primarily due to
utilization of proceeds received from the sales of assets. During the first nine
months of 1998, the Company issued an aggregate of $765 million of senior notes
and debentures. The net proceeds of approximately $758 million were used to
reduce the bank indebtedness incurred in connection with the acquisition of
Pacific Telecom, Inc. In addition, the Company paid approximately $40 million in
1998 to settle numerous interest rate hedge contracts that had been entered into
in anticipation of these debt issuances.
Revised budgeted capital expenditures for 1999 total $215 million for
telephone operations, $70 million for wireless operations and $60 million for
corporate and other operations. Anticipated capital expenditures for 2000,
excluding properties to be acquired, are expected to be between $400-$425
million.
As of September 30, 1999, Century's telephone subsidiaries had available
for use $131.5 million of commitments for long-term financing from the Rural
Utilities Service and the Company had $568.1 million of undrawn committed bank
lines of credit.
In June 1999, the Company signed a definitive asset purchase agreement to
purchase from affiliates of GTE Corporation ("GTE") telephone access lines
(which numbered approximately 214,269 at December 31, 1998) and related local
exchange assets in Arkansas for approximately $845.8 million in cash. In July
1999, the Company acquired a 61.5% (56.9% fully diluted) interest in a joint
venture company which has entered into a definitive asset purchase agreement
with affiliates of GTE to purchase telephone access lines (which numbered
approximately 116,000 at December 31, 1998) and related local exchange assets in
Missouri for approximately $290 million in cash. At closing, the Company has
agreed to make approximately a $55 million preferred equity investment in the
new entity and it is anticipated that the Company will loan the new entity
approximately $220 million.
In August 1999, the Company acquired an 89% interest in a newly-organized
joint venture company which has entered into a definitive asset purchase
agreement to purchase telephone access lines (which numbered approximately
61,600 as of December 31, 1998) and related local exchange assets in Wisconsin
from a GTE affiliate for approximately $170 million cash. At closing the Company
has agreed to make an equity investment in the newly organized company of
approximately $37.8 million and it is anticipated that the Company will loan the
new entity approximately $130 million. In October 1999, the Company also entered
into a definitive asset purchase agreement to purchase additional telephone
access lines (which numbered approximately 64,800 as of December 31, 1998) and
related local exchange assets in Wisconsin from a GTE affiliate for
approximately $195 million cash.
The purchase price under each of these GTE agreements is subject to
adjustments which are not expected to be material in the aggregate. These
transactions are anticipated to close by mid-year 2000, subject to regulatory
approvals and certain other closing conditions. Although financing plans are not
yet complete and will be dependent upon the Company's review of its alternatives
and market conditions, the Company currently anticipates selling a mix of
securities that will include debt securities and may include equity or
equity-linked securities. As a result of the Company's announcement of these
acquisitions, Moody's placed its ratings of the Company's debt under review for
possible downgrade and Standard & Poor's placed its ratings of the Company's
debt on CreditWatch with negative implications.
OTHER MATTERS
Accounting for the Effects of Regulation
The Company currently accounts for its regulated telephone operations in
accordance with the provisions of Statement of Financial Accounting Standards
No. 71 ("SFAS 71"), "Accounting for the Effects of Certain Types of Regulation."
While the ongoing applicability of SFAS 71 to the Company's telephone operations
is being monitored due to the changing regulatory, competitive and legislative
environments, the Company believes that SFAS 71 still applies. However, it is
possible that changes in regulation or legislation or anticipated changes in
competition or in the demand for regulated services or products could result in
the Company's telephone operations not being subject to SFAS 71 in the near
future. In that event, implementation of Statement of Financial Accounting
Standards No. 101 ("SFAS 101"), "Regulated Enterprises - Accounting for the
Discontinuance of Application of FASB Statement No. 71," would require the
write-off of previously established regulatory assets and liabilities, along
with an adjustment of certain accumulated depreciation accounts to reflect the
difference between recorded depreciation and the amount of depreciation that
would have been recorded had the Company's telephone operations not been subject
to rate regulation. Such discontinuance of the application of SFAS 71 would
result in a material, noncash charge against earnings which would be reported as
an extraordinary item. While the effect of implementing SFAS 101 cannot be
precisely estimated at this time, management believes that the noncash,
after-tax, extraordinary charge would be between $320 million and $370 million.
Regulatory Issues
On October 21, 1999, the Federal Communications Commission ("FCC")
adopted an order implementing a new universal service support mechanism for
non-rural carriers for high cost and rural markets. This order will shift
non-rural telephone companies to a forward-looking cost model in determining
their future universal support.
Because all of the Company's local exchange carriers ("LECs") have been
designated as a rural carrier, this order will not directly impact the Company.
However, this order may establish the benchmark for the treatment of universal
support funding for rural carriers. The Company's LECs will continue to receive
payments under the existing federal support mechanism for rural carriers until
the FCC adopts funding support mechanisms based on forward-looking costs, which
it is required to do, but no earlier than January 2001.
Year 2000 Readiness Disclosure
The Year 2000 issue concerns the inability of computer systems and
certain other equipment to properly recognize and process data that uses two
digits rather than four to designate particular years. The Company has
implemented a Year 2000 Project Plan ("the Plan") to assess whether its systems
that process date sensitive information will perform satisfactorily leading up
to and beyond January 1, 2000. The goal of the Plan is to correct, prior to
January 1, 2000, Year 2000-related problems with critical systems, the failure
of which could reasonably be expected to have a material adverse effect on the
Company's operations. The Plan was designed to (i) identify critical system
elements that require date code remediation, (ii) remediate all such systems,
and (iii) selectively test the remediated systems.
All phases of the Plan have been materially completed as of early fourth
quarter 1999. As discussed further below, the Company believes the Plan has
sufficiently identified, remediated and selectively tested critical
Company-owned systems. However, because the Company relies upon third parties
for the delivery of critical services and because not all Company-owned
remediated systems have been or will be tested under the Plan, there can be no
assurance that all critical systems will properly function subsequent to
December 31, 1999. The Company will continue its Year 2000 monitoring efforts
throughout the remainder of 1999.
The identification phase of the Plan identified Year 2000 issues in the
following critical Company-owned systems: (i) switching and transmission
hardware and software used by the Company to route and deliver telephone calls;
(ii) network support systems, including customer service systems; and (iii)
billing and collection systems used by the Company to invoice and process most
of its customer payments. In addition, the Company (i) receives critical
services from providers of utilities and other services to facilities that house
employees and switching, transmission and other equipment and (ii) is dependent
upon outside vendors for, among other things, the provision of critical network
components and cellular billing services. The Company is also critically reliant
upon the systems of other telecommunication carriers with which the Company's
systems interconnect for the routing and delivery of telephone calls. The
Company has also identified potential Year 2000-related liability with respect
to telephone equipment manufactured by unaffiliated parties that the Company has
sold or leased to its customers ("Customer Premises Equipment" or "CPE").
Based on the critical systems issues identified by the Plan, the Company
has undertaken the following steps with respect to Company-owned systems,
third-party vendors, other telecommunications carriers, and CPE customers:
o The Company has remediated all identified Year 2000 deficiencies in
Company-owned switching, transmission, billing and collection and other
critical systems through the revision or replacement of current system
components. Selective testing and verification of remediated Company-owned
systems has been completed. Due to the large number of system components
requiring remediation, the Company has not and will not test every
remediated system, but will rely upon the results of selective testing to
determine the effectiveness of remediation efforts. Testing results were
not verified by third parties. The Company believes, however, that the
remediation and testing undertaken under the Plan has sufficiently
addressed Year 2000 deficiencies in Company-owned critical systems.
o With respect to critical services provided by utilities and other third
parties, the Company contacted all such suppliers during 1998. Thus far, a
majority of those suppliers contacted have responded that their systems and
service delivery mechanisms are Year 2000 compliant or can be made so
through currently available modifications. The Company plans to continue
monitoring all third-party remediation efforts and to make contingency
plans for the delivery of such services as necessary.
o The Company has received certain assurances from industry trade data and
governmental reports regarding the year 2000 readiness of major
telecommunications companies with which the Company's switching systems
interconnect. During 1999, the Company made specific inquiries with these
and other telecommunication carriers to determine their compliance status.
These carriers have informed the Company that they believe they will be
Year 2000 ready by year's-end, although there can be no assurance to this
effect.
o Finally, the Company has obtained Year 2000 compliance information from CPE
manufacturers and has provided and will continue to provide this
information to the Company's CPE customers through year-end 1999. The
Company continues to work with its customers to identify Year 2000 problems
in CPE. However, there can be no assurance that these efforts will be
successful in preventing or reducing Year 2000-related claims.
While the Company currently believes that it has remediated and
selectively tested Company-owned critical systems sufficiently to minimize any
detrimental effect on its operations as a result of Year 2000 problems, there
can be no assurance to this effect. Failure by the Company to effectively
remediate its systems, or the failure of critical vendors and suppliers and
other telecommunications carriers to remediate affected systems, could have a
material adverse impact on the Company's business, financial condition, results
of operations and prospects. Because the impact of Year 2000 issues on the
Company is materially dependent on the mitigation efforts of parties outside the
Company's control, the Company cannot assess with certainty the magnitude of any
such potential adverse impact. However, the Company believes that the most
reasonably likely worst case scenario of the failure by the Company, its
suppliers or other telecommunications carriers with which the Company
interconnects to resolve Year 2000 issues would be an inability by the Company
(i) to provide telecommunications services to the Company's customers, (ii) to
route and deliver telephone calls originating from or terminating with other
telecommunications carriers, (iii) to timely and accurately process service
requests and (iv) to timely and accurately bill its customers. In addition to
lost earnings, these failures could also result in loss of customers due to
service interruptions and billing errors, substantial claims by customers and
increased expenses associated with stabilizing operations and executing
mitigation plans.
Contingency planning to maintain and restore service in the event of
natural disasters, power failures and systems-related problems is a routine part
of the Company's operations. The Company believes that such contingency plans
will assist the Company in responding to the failure by outside service
providers to successfully address Year 2000 issues. In addition, in connection
with implementation of the Plan the Company has identified alternate vendors and
service providers and manual alternatives to system operations. These Year
2000-specific contingency plans are materially complete, but their review and
development will continue throughout 1999.
In connection with implementing the Plan, the Company incurred costs of
$4.2 million during 1998 (none of which was related to hardware costs or other
capital items) and $23.8 million during the first nine months of 1999 ($16.6
million of which was related to hardware costs and other capital items). The
Company has approximately $6.9 million remaining in its Plan budget (of which
$4.5 million relates to hardware costs) which will be used to fund any
additional Year 2000 projects identified during the remainder of 1999. Some
portion of the remaining Plan budget may be used to pay for hardware costs and
other capital items incurred under the Plan, but the Company believes that
substantially all such costs have been identified and incurred. All costs will
be expensed as incurred, except for hardware and other items that should be
capitalized in accordance with generally accepted accounting principles. Some of
the costs represent ongoing investment in systems upgrades, the timing of which
has been accelerated in order to facilitate Year 2000 compliance. In some
instances, such upgrades will position the Company to provide more and
better-quality services to its customers than they currently receive. The
Company expects to fund these costs with cash provided by operations.
Cost estimates and statements of the Company's plans and expectations
discussed above are forward-looking statements that are derived using numerous
assumptions of future events, many of which are outside the Company's control,
including the availability and future cost of trained personnel and various
other resources. Given the complexity of these issues and possible unidentified
risks, actual results may vary materially from those anticipated and discussed
above. Specific factors that might cause such differences include the failure of
the Company's selective testing or other initiatives to identify and remediate
all Year 2000-related problems, the success of Year 2000 remedial efforts of
third parties, and similar uncertainties.
CENTURYTEL, INC.
QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
Market Risk
The Company is not exposed to material future earnings or cash flow
exposures from changes in interest rates on long-term debt obligations since the
majority of the Company's long-term debt obligations are fixed rate. At
September 30, 1999, the fair value of the Company's long-term debt was estimated
to be $2.2 billion based on the overall weighted average rate of the Company's
long-term debt of 6.9% and an overall weighted maturity of 13 years compared to
terms and rates currently available in long-term financing markets. For purposes
hereof, market risk is estimated as the potential decrease in fair value of the
Company's long-term debt resulting from a hypothetical increase of 69 basis
points in interest rates (which represents ten percent of the Company's overall
weighted average borrowing rate). Such an increase in interest rates would
result in approximately a $108.0 million decrease in fair value of the Company's
long-term debt. The Company is currently evaluating utilization of certain
derivative financial instruments as it has used such instruments in the past in
connection with its long-term financings and it is possible that such
instruments may be utilized again in connection with financing its acquisitions
of local exchange assets in Arkansas, Missouri and Wisconsin.
PART II. OTHER INFORMATION
CENTURYTEL, INC.
Item 6. Exhibits and Reports on Form 8-K
- ------- --------------------------------
A. Exhibits
--------
3(ii) Registrant's Bylaws, as amended through August 24, 1999.
11 Computations of Earnings Per Share.
27.1 Financial Data Schedule as of and for the nine months
ended September 30, 1999.
B. Reports on Form 8-K
--------------------
(i) The following item was reported in the Form 8-K filed
July 9, 1999:
Item 5. Other Events - News release announcing execution of
a definitive agreement to enter into a strategic
partnership with various co-investors to purchase telephone
access lines in Missouri from an affiliate of GTE
Corporation.
(ii) The following item was reported in the Form 8-K filed
July 9, 1999:
Item 5. Other Events - News release announcing execution of
a definitive agreement to purchase from as affiliate of GTE
Corporation assets comprising substantially all of GTE's
local telephone operations in Arkansas.
(iii) The following item was reported in the Form 8-K filed
July 29, 1999:
Item 5. Other Events - News release announcing second
quarter results of operations.
(iv) The following item was reported in the Form 8-K filed
August 25, 1999:
Item 5. Other Events - New release announcing (i) execution
of a definitive agreement to enter into a joint venture
with various co-investors to purchase telephone access
lines in Wisconsin from an affiliate of GTE and (ii)
execution of a preliminary letter of intent to purchase
additional telephone access lines in Wisconsin from GTE.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CenturyTel, Inc.
Date: November 12, 1999 /s/ Neil A. Sweasy
--------------------------
Neil A. Sweasy
Vice President and Controller
(Principal Accounting Officer)
EXHIBIT 3(ii)
BYLAWS
OF
CENTURYTEL, INC.
(as amended through August 24, 1999)
- -------------------------------------------------------------------------------
BYLAWS
CENTURYTEL, INC.
TABLE OF CONTENTS
ARTICLE I - Officers 1
Section 1. Required and Permitted Officers 1
Section 2. Election and Removal of Officers 4
ARTICLE II - Board of Directors 4
Section 1. Powers
Section 2. Organizational and Regular Meetings 4
Section 3. Special Meetings 4
Section 4. Waiver of Notice 5
Section 5. Quorum 5
Section 6. Notice of Adjournment 5
Section 7. Written Consents 5
Section 8. Voting 5
Section 9. Use of Communications Equipment 6
Section 10. Indemnification 6
Section 11. Certain Qualifications 10
ARTICLE III - Committees 10
Section 1. Committees 10
Section 2. Appointment and Removal of Committee Members 13
Section 3. Procedures for Committees 13
Section 4. Meetings 13
Section 5. Authority of Chairman to Appoint Committees 14
ARTICLE IV - Shareholders' Meetings 14
Section 1. Place of Meetings 14
Section 2. Annual Meeting 14
Section 3. Special Meetings 14
Section 4. Notice of Meetings 14
Section 5. Notice of Shareholder Nominations and
Shareholder Business 15
Section 6. Quorum 17
Section 7. Voting Power Present or Represented 17
Section 8. Voting Requirements 17
Section 9. Proxies 18
Section 10. Adjournments 18
Section 11. Written Consents 18
Section 12. List of Shareholders 18
Section 13. Procedure at Shareholders Meetings 18
ARTICLE V - Certificates of Stock 19
ARTICLE VI - Registered Shareholders 19
ARTICLE VII - Loss of Certificate 19
ARTICLE VIII - Checks 19
ARTICLE IX - Dividends 19
ARTICLE X - Inapplicability of Louisiana Control Share Statute 20
ARTICLE XI - Certain Definitions 20
ARTICLE XII - Amendments 20
<PAGE>
BYLAWS
(Amended entirely May 23, 1995)
(Amended Article I, Section I, Subsection 1.1(L), added new Subsection 1.1(O),
and amended Subsection 1.2 - October 7, 1996)
(Amended Article III, Section 1.1(B), Section 1 by adding new Subsection 1.3,
Sections 3 and 4 amended in their entirety - November 21, 1996)
(Amended Article I, Section I by adding, deleting, revising or renumbering
various paragraphs of Subsection 1.1 and by revising
Subsection 1.2 - October 7, 1998)
(Amended Article I, Section I by adding or renumbering various
paragraphs of Subsection 1.1, by revising Subsection 1.2,
Article IV, Section 5,
Subsections 5.2 and 5.7 amended in their entirety - November 19, 1998)
(Amended Article I, Section I by adding Subsection 1.1(G), amending
Subsection 1.2 and renumbering subsections - August 24, 1999)
ARTICLE I
---------
OFFICERS
Section 1. Required and Permitted Officers
- -------------------------------------------
1.1 Officers. The officers of the Corporation shall be a Chairman of the
Board; a Chief Executive Officer; a President; a Secretary; and a Treasurer. The
Board may elect such other officers as the Board may determine. An officer need
not be a Director and any two or more of the offices may be held by one person,
provided, however, that a person holding more than one office may not sign in
more than one capacity any certificate or any instrument required to be signed
by two officers. The required and permitted officers and duties thereof are as
follows:
A. Chairman of the Board (Chairman). The Chairman shall preside at all
meetings of the shareholders and Directors, ensure that all orders, policies and
resolutions of the Board are carried out and perform such other duties as may be
prescribed by the Board of Directors or these Bylaws.
B. Vice Chairman. The Board may from time to time elect one or more
Vice Chairmen. The Vice Chairman shall serve in the absence or inability of
the Chairman to serve. In the event of the death, resignation or permanent
inability of the Chairman to serve, the Vice Chairman shall automatically
succeed to the office of Chairman until such time as the Board of Directors duly
elects a new Chairman. In the event that there is more than one Vice Chairmen,
then the one who has served in that capacity for the longest period of time
shall serve in the absence of the Chairman or assume the office of Chairman, as
the case may be.
C. Chief Executive Officer (CEO). The CEO, subject to the powers of the
Chairman and the supervision of the Board of Directors, shall have general
supervision, direction and control of the business and affairs of the
Corporation. He may sign, execute and deliver in the name of the Corporation
powers of attorney, contracts, bonds and other obligations and shall perform
such other duties as may be prescribed from time to time by the Board of
Directors or these Bylaws. The CEO shall have general supervision and direction
of the officers of the Corporation and all such powers as may be reasonably
incident to such responsibilities except where the supervision and direction of
an officer is delegated expressly to another by the Board of Directors or these
Bylaws. Without limiting the generality of the foregoing the CEO shall establish
the annual salaries of each non-executive officer of the Corporation, unless
otherwise directed by the Board, and the annual salaries of each officer of the
Corporation's subsidiaries, unless otherwise directed by the respective boards
of directors of such subsidiaries.
D. President. The President may sign, execute and deliver in the name
of the Corporation powers of attorney, contracts, bonds, and other obligations
and shall perform such other duties as may be prescribed from time to time by
the Board of Directors, the Chairman, the CEO, or these Bylaws.
E. Chief Operating Officer (COO). The COO, subject to the powers of the
CEO and the supervision of the Board of Directors, shall manage the day-to-day
operations of the Corporation, shall perform such other duties as may be
prescribed by the Board of Directors or the CEO, and shall have the general
powers and duties usually vested in the chief operating officer of a
corporation. Without limiting the generality of the foregoing, the COO shall
supervise any other officer designated by the CEO and shall have all such powers
as may be reasonably incident to such responsibilities. Unless otherwise
provided by law or the Board of Directors, he may sign, execute and deliver in
the name of the Corporation powers of attorney, contracts, and bonds.
F. Chief Financial Officer. The Chief Financial Officer shall be the
principal financial officer of the Corporation. He shall manage the financial
affairs of the Corporation and direct the activities of the Treasurer,
Controller and other officers responsible for the Corporation's finances. He
shall be responsible for all internal and external financial reporting. Unless
otherwise provided by law or the Board of Directors, he may sign, execute and
deliver in the name of the Corporation powers of attorney, contracts, bonds, and
other obligations, and shall perform such other duties as may be prescribed from
time to time by the Board of Directors or by these Bylaws.
G. Chief Administrative Officer (CAO). The CAO, subject to the
supervision of the Board of Directors, shall be in general and active charge of
the administrative functions of the Corporation, shall perform such other duties
as may be prescribed by the Board of Directors and shall have the general powers
and duties usually vested in the chief administrative officer of a corporation.
Without limiting the generality of the foregoing, the CAO shall have the
authority to hire and discharge employees and agents of the Corporation under
his supervision, other than officers, and shall oversee the development and
implementation of the Corporation's administrative policies.
H. Chief Information Officer (CIO). The CIO, subject to the powers of
the CEO, shall be responsible for identifying and addressing the Corporation's
information systems needs. The CIO shall be responsible for identifying changes
and trends in computer and systems technology that affect the Corporation and
its operations, determining long-term corporate-wide information needs and
developing overall strategy for information needs and systems development. The
CIO shall be responsible for assuring the integrity of corporate data,
proprietary information and related intellectual property stored in the
Corporation's information systems.
I. General Counsel. The General Counsel shall be directly responsible
for advising the Board of Directors, the Corporation, and its officers and
employees in matters affecting the legal affairs of the Corporation. He shall
determine the need for and, if necessary, select outside counsel to represent
the Corporation and approve all fees in connection with their representation. He
shall also have such other powers, duties and authority as may be prescribed to
him from time to time by the CEO, the Board of Directors, or these Bylaws.
J. Treasurer. As directed by the Chief Financial Officer, the Treasurer
shall have general custody of all the funds and securities of the Corporation.
He may sign, with the CEO, President, Chief Financial Officer or such other
person or persons as may be specifically designated by the Board of Directors,
all bills of exchange or promissory notes of the Corporation. He shall perform
such other duties as may be prescribed from time to time by the Chief Financial
Officer or these Bylaws.
K. Controller. As directed by the Chief Financial Officer, the
Controller shall be responsible for the development and maintenance of the
accounting systems used by the Corporation and its subsidiaries. The Controller
shall be authorized to implement policies and procedures to ensure that the
Corporation and its subsidiaries maintain internal accounting control systems
designed to provide reasonable assurance that the accounting records accurately
reflect business transactions and that such transactions are in accordance with
management's authorization. Additionally, as directed by the Chief Financial
Officer, the Controller shall be responsible for internal and external financial
reporting for the Corporation and its subsidiaries.
L. Assistant Treasurer. The Assistant Treasurer shall have such powers
and perform such duties as may be assigned by the Treasurer. In the absence or
disability of the Treasurer, the Assistant Treasurer shall perform the duties
and exercise the powers of the Treasurer.
M. Secretary. The Secretary shall keep the minutes of all meetings of
the shareholders, the Board of Directors and its committees or subcommittees. He
shall cause notice to be given of meetings of shareholders, of the Board of
Directors and of any committee or subcommittee of the Board. He shall have
custody of the corporate seal and general charge of the records, documents and
papers of the Corporation not pertaining to the duties vested in other officers,
which shall at all reasonable times be open to the examination of any Director.
He may sign or execute contracts with any other officer thereunto authorized in
the name of the Corporation and affix the seal of Corporation thereto. He shall
perform such other duties as may be prescribed from time to time by the Board of
Directors or these Bylaws.
N. Assistant Secretary. The Assistant Secretary shall have powers and
perform such duties as may be assigned by the Secretary. In the absence or
disability of the Secretary, the Assistant Secretary shall perform the duties
and exercise the powers of the Secretary.
O. Executive Vice President(s). The Executive Vice President(s) shall,
in addition to exercising such powers and performing such duties associated with
any other office held thereby, assist the CEO in discharging the duties of that
office in any manner requested, and shall perform any other duties as may be
prescribed by the Board of Directors, by the CEO or by these Bylaws.
P. Senior Vice President(s). The Senior Vice President(s) shall, in
addition to exercising such powers and performing such duties associated with
any other office held thereby, perform such duties as may be prescribed from
time to time by the Board of Directors, by the CEO or by these Bylaws (or, with
respect to any Senior Vice President(s) who reports to the COO, by the COO).
Q. Vice President(s). The Vice President(s) shall have such powers and
perform such duties as may be assigned to them by the Board of Directors, the
CEO, the President, or any Executive Vice President, Senior Vice President or
other officer to whom they report. A Vice President may sign and execute
contracts and other obligations pertaining to the regular course of his duties.
R. Assistant Vice President(s). The Assistant Vice President(s) shall
have such powers and perform such duties as may be assigned to them by the Board
of Directors, the CEO, the President or the officer to whom they report. An
Assistant Vice President may sign and execute contracts and other obligations
pertaining to the regular course of his duties.
1.2 Executive Officer Group. The Executive Officer Group shall be
comprised of the Chairman of the Board, the Chief Executive Officer, the
President, the Chief Operating Officer, the Chief Financial Officer, the Chief
Administrative Officer, the Chief Information Officer and each Executive or
Senior Vice President.
Section 2. Election and Removal of Officers
- --------------------------------------------
2.1 Election. The officers shall be elected annually by the Board of
Directors at its first meeting following the annual meeting of the shareholders
and, at any time, the Board may remove any officer (with or without cause, and
regardless of any contractual obligation to such officer) and fill a vacancy in
any office, but any election to, removal from or appointment to fill a vacancy
in any office, and the determination of the terms of employment thereof, shall
require the affirmative votes of (a) a majority of the Directors then in office
and (b) a majority of the Continuing Directors, voting as a separate group.
2.2 Removal. In addition, the Chief Executive Officer is empowered in
his sole discretion to remove or suspend any officer or other employee of the
Corporation who (a) fails to respond satisfactorily to the Corporation
respecting any inquiry by the Corporation for information to enable it to make
any certification required by the Federal Communications Commission under the
Anti-Drug Abuse Act of 1988, (b) is arrested or convicted of any offense
concerning the distribution or possession of, or trafficking in, drugs or other
controlled substances, or (c) the Chief Executive Officer believes to have been
engaged in actions that could lead to such an arrest or conviction.
ARTICLE II
----------
BOARD OF DIRECTORS
------------------
Section 1. Powers
- ------------------
In addition to the powers and authorities by these Bylaws expressly
conferred upon it, the Board of Directors may exercise all such powers of the
Corporation and do all such lawful acts and things as are not by statute or by
the Articles of Incorporation or by these Bylaws required to be exercised or
done by the shareholders.
Section 2. Organizational and Regular Meetings
- -----------------------------------------------
The Board of Directors shall hold an annual organizational meeting,
without notice, immediately following the adjournment of the annual meeting of
the shareholders and shall hold a regular meeting on the first Tuesday after the
twentieth day in the months of February, May, August and November of each year.
The Secretary shall give not less than five days' written notice to each
Director of all regular meetings, which notice shall state the time and place of
the meeting.
Section 3. Special Meetings
- ----------------------------
3.1 Call of Special Meetings. Special meetings of the Board of Directors
may be called by the Chairman of the Board or, if he is absent or unable or
unwilling to act, by the President. Upon the written request of any two
Directors delivered to the Chairman of the Board, the President or the Secretary
of the Corporation, a special meeting shall be called.
3.2 Notice. Written notice of the time and place of special meetings
shall be delivered personally to the Directors or sent to each Director by
letter or by telegram, charges prepaid, addressed to him at his address shown in
the Corporation's records. In case such notice is mailed or telegraphed, it
shall be deposited in the United States mail at least 72 hours prior to the
meeting or delivered to an overnight mail delivery service or to the telegraph
company in the place in which the principal office of the corporation is located
at least 48 hours prior to the meeting. In case such notice is personally
delivered as above provided, it shall be so delivered at least 24 hours prior to
the meeting. The foregoing notwithstanding, if the Chairman or the President
shall determine, in his sole discretion, that the subject of the special meeting
is urgent and must be considered by the Board without delay, notice may be given
by personal delivery or by telephone not less than 12 hours prior to the time
set for the meeting, provided a confirming telegram or overnight letter is sent
to the Director contemporaneously. Such mailing, telegraphing, telephoning or
personal delivery as above provided shall be due, legal and personal notice to
such Director.
Section 4. Waiver of Notice
- ----------------------------
Any Director may waive notice of a meeting by written waiver executed
either before or after the meeting. Directors present at any regular or special
meeting shall be deemed to have received due, or to have waived, notice thereof,
provided that a director who participates in a meeting by telephone shall not be
deemed to have received or waived due notice if, at the beginning of the
meeting, he objects to the transaction of any business because the meeting is
not lawfully called.
Section 5. Quorum
- ------------------
A majority of the authorized number of Directors as fixed by or pursuant
to the Articles of Incorporation shall be necessary to constitute a quorum for
the transaction of business, provided, however, that a minority of the
Directors, in the absence of a quorum, may adjourn from time to time, but may
not transact any business. If a quorum is present when the meeting convened, the
directors present may continue to do business, taking action by vote of a
majority of a quorum, until adjournment, notwithstanding the withdrawal of
enough directors to leave less than a quorum or the refusal of any director
present to vote.
Section 6. Notice of Adjournment
- ---------------------------------
Notice of the time and place of holding an adjourned meeting need not be
given to absent Directors if the time and place is fixed at the meeting
adjourned.
Section 7. Written Consents
- ----------------------------
Anything to the contrary contained in these Bylaws notwithstanding, any
action required or permitted to be taken by the Board of Directors may be taken
without a meeting, if all members of the Board of Directors shall individually
or collectively consent in writing to such action. Such written consent or
consents shall be filed with the minutes of the proceedings of the Board. Such
action by written consent shall have the same force and effect as a unanimous
vote of such Directors at a meeting.
Section 8. Voting
- ------------------
At all meetings of the Board, each Director present shall have one vote.
At all meetings of the Board, all questions, the manner of deciding which is not
otherwise specifically regulated by law, the Articles of Incorporation or these
Bylaws, shall be determined by a majority of the Directors present at the
meeting, provided, however, that any shares of other corporations owned by the
Corporation shall be voted only pursuant to resolutions duly adopted upon the
affirmative votes of (a) 80% of the Directors then in office and (b) a majority
of the Continuing Directors, voting as a separate group.
Section 9. Use of Communications Equipment
- -------------------------------------------
Meetings of the Board of Directors may be held by means of telephone
conference calls or similar communications equipment provided that all persons
participating in the meeting can hear and communicate with each other.
Section 10. Indemnification
- ---------------------------
10.1 Definitions. As used in this Section:
------------------
(a) The term "Expenses" shall mean any expenses or costs
(including, without limitation, attorney's fees, judgments, punitive or
exemplary damages, fines and amounts paid in settlement). If any of the
foregoing amounts paid on behalf of Indemnitee are not deductible by Indemnitee
for federal or state income tax purposes, the Corporation will reimburse
Indemnitee for tax liability with respect thereto by paying to Indemnitee an
amount which, after taking into account taxes on such amount, equals
Indemnitee's incremental tax liability.
(b) The term "Claim" shall mean any threatened, pending or
completed claim, action, suit, or proceeding, whether civil, criminal,
administrative or investigative and whether made judicially or extra-judicially,
or any separate issue or matter therein, as the context requires.
(c) The term "Determining Body" shall mean (i) those members of
the Board of Directors who are not named as parties to the Claim for which
indemnification is being sought ("Impartial Directors"), if there are at least
three Impartial Directors, or (ii) a committee of at least three directors
appointed by the Board of Directors (regardless of whether the members of the
Board of Directors voting on such appointment are Impartial Directors) and
composed of Impartial Directors or (iii) if there are fewer than three Impartial
Directors or if the Board of Directors or a committee appointed thereby so
directs (regardless of whether the members thereof are Impartial Directors),
independent legal counsel, which may be the regular outside counsel of the
Corporation.
(d) The term "Indemnitee" shall mean each director and officer and
each former director and officer of the Corporation.
10.2 Indemnity. (a) To the extent any Expenses incurred by Indemnitee
---------------
are in excess of the amounts reimbursed or indemnified pursuant to policies of
liability insurance maintained by the Corporation, the Corporation shall
indemnify and hold harmless Indemnitee against any such Expenses actually and
reasonably incurred in connection with any Claim against Indemnitee (whether as
a subject of or party to, or a proposed or threatened subject of or party to,
the Claim) or in which Indemnitee is involved solely as a witness or person
required to give evidence, by reason of his position (i) as a director or
officer of the Corporation, (ii) as a director or officer of any subsidiary of
the Corporation or as a fiduciary with respect to any employee benefit plan of
the Corporation, or (iii) as a director, officer, employee or agent of another
corporation, partnership, limited liability company, joint venture, trust or
other for-profit or not-for-profit entity or enterprise, if such position is or
was held at the request of the Corporation, whether relating to service in such
position before or after the effective date of this Section 10, if (i) the
Indemnitee is successful in his defense of the Claim on the merits or otherwise
or (ii) the Indemnitee has been found by the Determining Body (acting in good
faith) to have met the Standard of Conduct; provided that (a) the amount of
Expenses for which the Corporation shall indemnify Indemnitee may be reduced by
the Determining Body to such amount as it deems proper if it determines in good
faith that the Claim involved the receipt of a personal benefit by Indemnitee
and (b) no indemnification shall be made in respect of any Claim as to which
Indemnitee shall have been adjudged by a court of competent jurisdiction, after
exhaustion of all appeals therefrom, to be liable for willful or intentional
misconduct in the performance of his duty to the Corporation or to have obtained
an improper benefit, unless, and only to the extent that, a court shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, the Indemnitee is fairly and
reasonably entitled to indemnity for such Expenses as the court shall deem
proper; and provided further that, if the Claim involves Indemnitee by reason of
his position with an entity or enterprise described in clause (ii) or (iii) of
this Section 10.2(a) and if Indemnitee may be entitled to indemnification with
respect to such Claim from such entity or enterprise, Indemnitee shall be
entitled to indemnification hereunder only (x) if he has applied to such entity
or enterprise for indemnification with respect to the Claim and (y) to the
extent that indemnification to which he would be entitled hereunder but for this
proviso exceeds the indemnification paid by such other entity or enterprise.
(b) For purposes of this Section, the Standard of Conduct is met
when conduct by an Indemnitee with respect to which a Claim is asserted was
conduct that he reasonably believed to be in, or not opposed to, the best
interest of the Corporation, and, in the case of a Claim which is a criminal
action or proceeding, conduct that the Indemnitee had no reasonable cause to
believe was unlawful. The termination of any Claim by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that Indemnitee did not meet the
Standard of Conduct.
(c) Promptly upon becoming aware of the existence of any Claim,
Indemnitee shall notify the Chief Executive Officer of the existence of the
Claim, who shall promptly advise the members of the Board of Directors thereof
and that establishing the Determining Body will be a matter presented at the
next regularly scheduled meeting of the Board of Directors. After the
Determining Body has been established the Chief Executive Officer shall inform
Indemnitee thereof and Indemnitee shall immediately notify the Determining Body
of all facts relevant to the Claim known to such Indemnitee. Within 60 days of
the receipt of such notice and information, together with such additional
information as the Determining Body may request of Indemnitee, the Determining
Body shall report to Indemnitee of its determination whether Indemnitee has met
the Standard of Conduct. The Determining Body may extend the period of time for
determining whether the Standard of Conduct has been met, but in no event shall
such period of time be extended beyond an additional 60 days.
(d) If, after determining that the Standard of Conduct has been
met, the Determining Body obtains facts of which it was not aware at the time it
made such determination, the Determining Body on its own motion, after notifying
the Indemnitee and providing him an opportunity to be heard, may, on the basis
of such facts, revoke such determination, provided that, in the absence of
actual fraud by Indemnitee, no such revocation may be made later than 30 days
after final disposition of the Claim.
(e) Indemnitee shall promptly inform the Determining Body upon
his becoming aware of any relevant facts not theretofore provided by him to the
Determining Body, unless the Determining Body has obtained such facts by other
means.
(f) In the case of any Claim not involving a proposed,
threatened or pending criminal proceeding (i) if Indemnitee has, in the good
faith judgment of the Determining Body, met the Standard of Conduct, the
Corporation may, in its sole discretion, assume all responsibility for the
defense of the Claim, and, in any event, the Corporation and Indemnitee each
shall keep the other informed as to the progress of the defense of the Claim,
including prompt disclosure of any proposals for settlement; provided that if
the Corporation is a party to the Claim and Indemnitee reasonably determines
that there is a conflict between the positions of the Corporation and Indemnitee
with respect to the Claim, then Indemnitee shall be entitled to conduct his
defense with counsel of his choice; and provided further that Indemnitee shall
in any event be entitled at his expense to employ counsel chosen by him to
participate in the defense of the Claim; and (ii) the Corporation shall fairly
consider any proposals by Indemnitee for settlement of the Claim. If the
Corporation proposes a settlement of the Claim and such settlement is acceptable
to the person asserting the Claim or the Corporation believes a settlement
proposed by the person asserting the Claim should be accepted, it shall inform
Indemnitee of the terms of such proposed settlement and shall fix a reasonable
date by which Indemnitee shall respond. If Indemnitee agrees to such terms, he
shall execute such documents as shall be necessary to make final the settlement.
If Indemnitee does not agree with such terms, Indemnitee may proceed with the
defense of the Claim in any manner he chooses, provided that if Indemnitee is
not successful on the merits or otherwise, the Corporation's obligation to
indemnify such Indemnitee as to any Expenses incurred by following his
disagreement shall be limited to the lesser of (A) the total Expenses incurred
by Indemnitee following his decision not to agree to such proposed settlement or
(B) the amount that the Corporation would have paid pursuant to the terms of the
proposed settlement. If, however, the proposed settlement would impose upon
Indemnitee any requirement to act or refrain from acting that would materially
interfere with the conduct of Indemnitee's affairs, Indemnitee shall be
permitted to refuse such settlement and proceed with the defense of the Claim,
if he so desires, at the Corporation's expense in accordance with the terms and
conditions of these Bylaws without regard to the limitations imposed by the
immediately preceding sentence. In any event, the Corporation shall not be
obligated to indemnify Indemnitee for an amount paid in settlement that the
Corporation has not approved.
(g) In the case of a Claim involving a proposed, threatened or
pending criminal proceeding, Indemnitee shall be entitled to conduct the defense
of the Claim and to make all decisions with respect thereto, with counsel of his
choice; provided that the Corporation shall not be obligated to indemnify
Indemnitee for an amount paid in settlement that the Corporation has not
approved.
(h) After notification to the Corporation of the existence of a
Claim, Indemnitee may from time to time request of the Chief Executive Officer
or, if the Chief Executive Officer is a party to the Claim as to which
indemnification is being sought, any officer who is not a party to the Claim and
who is designated by the Chief Executive Officer (the "Disbursing Officer"),
which designation shall be made promptly after receipt of the initial request,
that the Corporation advance to Indemnitee the Expenses (other than fines,
penalties, judgments or amounts paid in settlement) that he incurs in pursuing a
defense of the Claim prior to the time that the Determining Body determines
whether the Standard of Conduct has been met. The Disbursing Officer shall pay
to Indemnitee the amount requested (regardless of Indemnitee's apparent ability
to repay the funds) upon receipt of an undertaking by or on behalf of Indemnitee
to repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the Corporation under the circumstances, provided
that if the Disbursing Officer does not believe such amount to be reasonable, he
shall advance the amount deemed by him to be reasonable and Indemnitee may apply
directly to the Determining Body for the remainder of the amount requested.
(i) After a determination that the Standard of Conduct has been
met, for so long as and to the extent that the Corporation is required to
indemnify Indemnitee under these Bylaws, the provisions of Paragraph (h) shall
continue to apply with respect to Expenses incurred after such time except that
(i) no undertaking shall be required of Indemnitee and (ii) the Disbursing
Officer shall pay to Indemnitee the amount of any fines, penalties or judgments
against him which have become final for which the Corporation is obligated to
indemnify him or any amount of indemnification ordered to be paid to him by a
court.
(j) Any determination by the Corporation with respect to settlement
of a Claim shall be made by the Determining Body.
(k) The Corporation and Indemnitee shall keep confidential to
the extent permitted by law and their fiduciary obligations all facts and
determinations provided pursuant to or arising out of the operation of these
Bylaws and the Corporation and Indemnitee shall instruct its or his agents and
employees to do likewise.
10.3 Enforcement. (a) The rights provided by this Section shall be
------------------
enforceable by Indemnitee in any court of competent jurisdiction.
(b) If Indemnitee seeks a judicial adjudication of his rights
under this Section, Indemnitee shall be entitled to recover from the
Corporation, and shall be indemnified by the Corporation against, any and all
Expenses actually and reasonably incurred by him in connection with such
proceeding, but only if he prevails therein. If it shall be determined that
Indemnitee is entitled to receive part but not all of the relief sought, then
Indemnitee shall be entitled to be reimbursed for all Expenses incurred by him
in connection with such proceeding if the indemnification amount to which he is
determined to be entitled exceeds 50% of the amount of his claim. Otherwise, the
Expenses sought incurred by Indemnitee in connection with such judicial
adjudication shall be appropriately prorated.
(c) In any judicial proceeding described in this subsection, the
Corporation shall bear the burden of proving that Indemnitee is not entitled to
Expenses sought with respect to any Claim.
10.4 Saving Clause. If any provision of this Section is determined by a
--------------------
court having jurisdiction over the matter to require the Corporation to do or
refrain from doing any act that is in violation of applicable law, the court
shall be empowered to modify or reform such provision so that, as modified or
reformed, such provision provides the maximum indemnification permitted by law
and such provision, as so modified or reformed, and the balance of this Section,
shall be applied in accordance with their terms. Without limiting the generality
of the foregoing, if any portion of this Section shall be invalidated on any
ground, the Corporation shall nevertheless indemnify and Indemnitee to the full
extent permitted by any applicable portion of this Section that shall not have
been invalidated and to the full extent permitted by law with respect to that
portion that has been invalidated.
10.5 Non-Exclusivity. (a) The indemnification and payment of Expenses
----------------------
provided by or granted pursuant to this Section shall not be deemed exclusive of
any other rights to which Indemnitee is or may become entitled under any
statute, article of incorporation, bylaw, authorization of shareholders or
directors, agreement or otherwise.
(b) It is the intent of the Corporation by this Section to
indemnify and hold harmless Indemnitee to the fullest extent permitted by law,
so that if applicable law would permit the Corporation to provide broader
indemnification rights than are currently permitted, the Corporation shall
indemnify and hold harmless Indemnitee to the fullest extent permitted by
applicable law notwithstanding that the other terms of this Section would
provide for lesser indemnification.
10.6 Successors and Assigns. This Section shall be binding upon the
----------------------------
Corporation, its successors and assigns, and shall inure to the benefit of
Indemnitee's heirs, personal representatives, and assigns and to the benefit of
the Corporation, its successors and assigns.
10.7 Indemnification of Other Persons. The Corporation may indemnify any
---------------------------------------
person not a director or officer of the Corporation to the extent authorized by
the Board of Directors or a committee of the Board expressly authorized by the
Board of Directors.
Section 11 Certain Qualifications
- ---------- ----------------------
No person shall be eligible for nomination, election or service as a
director of the Corporation who shall (i) in the opinion of the Board of
Directors fail to respond satisfactorily to the Corporation respecting any
inquiry of the Corporation for information to enable the Corporation to make any
certification required by the Federal Communications Commission under the
Anti-Drug Abuse Act of 1988 or to determine the eligibility of such persons
under this section; (ii) have been arrested or convicted of any offense
concerning the distribution or possession of, or trafficking in, drugs or other
controlled substances, provided that in the case of an arrest the Board of
Directors may in its discretion determine that notwithstanding such arrest such
persons shall remain eligible under this Section; or (iii) have engaged in
actions that could lead to such an arrest or conviction and that the Board of
Directors determines would make it unwise for such person to serve as a director
of the Corporation. Any person serving as a director of the Corporation shall
automatically cease to be a director on such date as he ceases to have the
qualifications set forth in this Section, and his position shall be considered
vacant within the meaning of the Articles of Incorporation of the Corporation.
ARTICLE III
-----------
COMMITTEES
Section 1. Committees
- -----------------------
1.1 Standing Committees. The Board of Directors shall have six standing
committees, the names, functions and powers of each of which shall be as
follows:
A. The Executive Committee shall consist of not less than three
Directors, one of whom shall be the Chairman of the Board, who shall also serve
as chairman of the Executive Committee. To the full extent permitted by law and
the Articles of Incorporation, the Executive Committee shall have and may
exercise all of the powers of the Board in the management of the business and
affairs of the Corporation when the Board is not in session.
B. The Compensation Committee shall consist of two or more Directors
(the exact number of which shall be set from time to time by the Board), none of
whom shall be a current or former officer or employee of the Corporation or any
of its subsidiaries. The Compensation Committee is empowered to:
1. after receiving and considering the recommendations of the Chief
Executive Officer, determine from time to time the salary of the
Corporation's executive officers (as defined in Section 1.2 of
Article I of these Bylaws) and the fees of the Corporation's
directors;
2. administer each of the Corporation's incentive compensation
plans and stock-based plans (including its 1983 Restricted Stock
Plan, Key Employee Incentive Compensation Plan, 1988 Incentive
Compensation Program, 1990 Incentive Compensation Program, 1995
Incentive Compensation Plan and any successor plans), and
exercise all powers provided for in such plans;
3. approve any (i) proposed plan or arrangement offering or
providing any benefits to one or more of the Corporation's
executive officers or directors (other than any plan or
arrangement offering benefits that do not discriminate in scope,
terms or operation in favor of executive officers or directors
and that are generally available to all salaried employees) and
(ii) proposed amendment or change to any such plan or
arrangement;
4. approve any (i) proposed employment or severance contract
between the Corporation and an executive officer or proposed
executive officer thereof and (ii) proposed extension or
material amendment thereto;
5. issue executive compensation reports to the Corporation's share-
holders in the manner required under the rules and regulations of
the U.S. Securities and Exchange Commission;
6. retain independent consultants and legal advisors who will report
directly to the Compensation Committee and be paid with funds of
the Corporation; and
7. if requested by the Board,(i) review, determine or approve the
compensation of any non-executive officer of the Corporation or any
officer of the Corporation's subsidiaries, (ii) review, determine
or approve any proposed amendments, contributions or changes to any
of the Corporation's employee benefit plans, welfare plans,
insurance or other benefit arrangements that are not directly
administered or monitored by the Compensation Committee pursuant
to the powers granted in paragraphs 2 and 3 above, and (iii)
perform such other services as may be delegated to it by the Board.
No action of the type described in paragraphs 1 - 6 shall be valid
unless it has been approved by the Compensation Committee or a duly-authorized
subcommittee thereof. All actions o the Compensation Committee or any
subcommittee thereof shall be subject to ratification by the full Board of
Directors unless the Compensation Committee or the subcommittee reasonably
determines that submitting a matter to the full Board of Directors for
ratification would be prohibited by, or contrary to the intents and purposes of,
any laws, rules, or regulations that require or contemplate that such matter be
authorized by independent directors.
C. The Nominating Committee shall consist of two or more Directors and
shall perform the following functions:
1. To consider and recommend to the Board nominees for election by
shareholders or for appointment by the remaining Directors to fill
vacancies on the Board;
2. To review and consider the performance of and to recommend the
appointment or reappointment of officers of the Corporation.
D. The Audit Committee shall consist of two or more Directors, none of
whom shall otherwise be employed by the Corporation, and shall have the
following responsibilities:
1. To recommend to the Board the engagement or discharge of the
Corporation's independent auditor of its financial statements;
2. To direct and supervise all investigations into matters relating
to or rising from the performance and results of each independent
audit;
3. To review with the Corporation's independent auditor the plan
and results of each independent audit engagement;
4. To review the scope, adequacy and results of the Corporation's
internal auditing procedures;
5. To review and to approve or disapprove each service to be
performed for the Corporation by the independent auditor before
such service is performed; except that the Committee is
authorized to permit the President or the Chief Financial
Officer to engage the independent auditor or perform any
category of service specified by the Committee under
circumstances deemed appropriate by the Audit Committee;
6. To review the degree of independence of the independent auditor;
7. To consider the range of audit and non-audit fees; and
8. To review the adequacy of the Corporation's system of internal
accounting controls.
E. The Insurance Evaluation Committee shall consist of two or more
----------------------------------
Directors, and shall have the following responsibilities:
1. To review periodically the Corporation's insurance programs and to
advise and recommend any action deemed appropriate with respect
thereto; and
2. To review periodically the Corporation's insurance needs and to
advise and recommend any action deemed appropriate with respect
thereto.
F. The Shareholder Relations Committee shall consist of three or more
-----------------------------------
non-officer directors and shall have the authority of the Board of Directors
with respect to investigating, inquiring into and considering issues related to
certain shareholders' interest and rights and considering and acting upon
shareholder matters as assigned, from time to time, by the Chairman of the
Board.
1.2 Special Purpose Committees. The Board may authorize on an ad hoc
--------------------------------
basis special pricing committees in connection with the issuance of securities
or such other special purpose committees as may be necessary or appropriate in
connection with the Board's management of the business and affairs of the
Corporation.
1.3 Subcommittees. As necessary or appropriate, each of the standing
-------------------
committees listed in Section 1.1 may organize a standing or ad hoc subcommittee
for such purposes within the scope of its powers as it sees fit, and may
delegate to such subcommittee any of its powers as may be necessary or
appropriate to enable such subcommittee to discharge its duties and
responsibilities. Any such subcommittee shall be composed of two or more members
of the standing committee. Each subcommittee member shall hold office during the
term designated by the standing committee, provided that such term shall
automatically lapse if such member ceases to be a member of the standing
committee or fails to meet any other qualifications that may be imposed by the
standing committee.
Section 2. Appointment and Removal of Committee Members
- --------------------------------------------------------
Subject to Section 5 below, Directors shall be appointed to or removed
from a committee only upon the affirmative votes of:
1. A majority of the Directors then in office; and
2. A majority of the Continuing Directors, voting as a separate group.
Each member of a committee shall hold office during the term designated
by the Board.
Section 3. Procedures for Committees
- -------------------------------------
Each Committee and subcommittee shall keep written minutes of its
meetings. All action taken by a committee or any of its subcommittees shall be
reported to the Board of Directors at its next meeting, whether regular or
special. Failure to keep written minutes or to make such a report shall not
affect the validity of action taken by a committee or subcommittee. Each
committee or subcommittee may adopt such regulations (not inconsistent with the
Articles of Incorporation, these Bylaws or any regulations specified for such
committee by the Board of Directors or for such subcommittee by the standing
committee that authorized its organization under Section 1.3) as it shall deem
necessary for the proper conduct of its functions and the performance of its
responsibilities.
Section 4. Meetings
- --------------------
A majority of the members of any committee or subcommittee shall
constitute a quorum and action by a majority (or by any super-majority required
by law, the Articles of Incorporation, these Bylaws or any applicable resolution
adopted by the Board of Directors) of a quorum at any meeting of a committee or
subcommittee shall be deemed action by the committee or subcommittee. The
Committee or subcommittee may also take action without meeting if all members
thereof consent in writing thereto. Meetings of a committee or subcommittee may
be held by telephone conference calls or other communications equipment provided
each person participating may hear and be heard by all other meeting
participants.
Section 5. Authority of Chairman to Appoint Committees
- -------------------------------------------------------
Whenever the Board of Directors is not in session, the Chairman may fill
vacancies in any committees and may create such new committees as he deems
necessary or useful and appoint Directors as members thereof. Any such action by
the Chairman, and any action taken by such new committee, shall be subject to
ratification or disapproval by the Board at its next meeting.
ARTICLE IV
----------
SHAREHOLDERS' MEETINGS
Section 1. Place of Meetings
- -----------------------------
Unless otherwise required by law or these By-laws, all meetings of the
shareholders shall be held at the principal office of the Corporation or at such
other place, within or without the State of Louisiana, as may be designated by
the Board of Directors.
Section 2. Annual Meeting
- --------------------------
An annual meeting of the shareholders shall be held on the date and at
the time as the Board of Directors shall designate for the purpose of electing
directors and for the transaction of such other business as may be properly
brought before the meeting. If no annual shareholders' meeting is held for a
period of 18 months, any shareholder may call such meeting to be held at the
registered office of the Corporation as shown on the records of the Secretary of
State of the State of Louisiana.
Section 3. Special Meetings
- ----------------------------
Special meetings of the shareholders, for any purpose or purposes, may
be called by the Chairman of the Board, the President or the Board of Directors.
Subject to the terms of any outstanding class or series of Preferred Stock that
entitles the holders thereof to call special meetings, the holders of a majority
of the Total Voting Power shall be required to cause the Secretary of the
Corporation to call a special meeting of shareholders pursuant to La. R.S.
12:73B (or any successor provision). Such requests of shareholders must state
the specific purpose or purposes of the proposed special meeting, and the
business to be brought before such meeting by the shareholders shall be limited
to such purpose or purposes.
Section 4. Notice of Meetings
- ------------------------------
Except as otherwise provided by law, the authorized person or persons
calling a shareholders' meeting shall cause written notice of the time and place
of the meeting to be given to all shareholders of record entitled to vote at
such meeting at least 10 days and not more than 60 days prior to the day fixed
for the meeting. Notice of the annual meeting need not state the purpose or
purposes thereof, unless action is to be taken at the meeting as to which notice
is required by law, the Articles of Incorporation or the Bylaws. Notice of a
special meeting shall state the purpose or purposes thereof. Any previously
scheduled meeting of the shareholders may be postponed, and (unless provided
otherwise by law or the Articles of Incorporation) any special meeting of the
shareholders may be canceled, by resolution of the Board of Directors upon
public notice given prior to the date previously scheduled for such meeting of
shareholders.
Section 5. Notice of Shareholder Nominations and Shareholder Business
- ----------------------------------------------------------------------
5.1 Business Brought Before Meetings. At any meeting of the share-
--------------------------------------
holders, only such business shall be conducted as shall have been properly
brought before the meeting. Nominations for the election of directors at a
meeting at which directors are to be elected may be made by or at the direction
of the Board of Directors, or a committee duly appointed thereby, or by any
shareholder of record entitled to vote generally for the election of directors
who complies with the procedures set forth below. Other matters to be properly
brought before a meeting of the shareholders must be (a) specified in the notice
of meeting (or any supplement thereto) given by or at the direction of the Board
of Directors, including matters covered by Rule 14a-8 of the Securities and
Exchange Commission, (b) otherwise properly brought before the meeting by or at
the direction of the Board of Directors, or (c) otherwise properly brought
before the meeting by any shareholder of record entitled to vote at such meeting
who complies with the procedures set forth below.
5.2 Required Notice. A notice of the intent of a shareholder to make a
---------------------
nomination or to bring any other matter before the meeting shall be made in
writing and received by the Secretary of the Corporation not more than 180 days
and not less than 90 days in advance of the first anniversary of the preceding
year's annual meeting of shareholders or, in the event of a special meeting of
shareholders or annual meeting scheduled to be held either 30 days earlier or
later than such anniversary date, such notice shall be received by the Secretary
of the Corporation within 15 days of the earlier of the date on which notice of
such meeting is first mailed to shareholders or public disclosure of the meeting
date is made. In no event shall the public announcement of an adjournment of a
shareholders' meeting commence a new time period for the giving of a
shareholder's notice as described above.
5.3 Contents of Notice. Every such notice by a shareholder shall set
------------------------
forth:
(a) the name, age, business address and residential address of the
shareholder of record who intends to make a nomination or bring up any other
matter, and any beneficial owner or other person acting in concert with such
shareholder;
(b) a representation that the shareholder is a holder of record
of shares of the Corporation's capital stock that accord such shareholder the
voting rights specified in paragraph 5.1 above and that the shareholder intends
to appear in person at the meeting to make the nomination or bring up the matter
specified in the notice;
(c) with respect to notice of an intent to make a nomination, a
description of all agreements, arrangements or understandings among the
shareholder, any person acting in concert with the shareholder, each proposed
nominee and any other person or persons (naming such person or persons) pursuant
to which the nomination or nominations are to be made by the shareholder;
(d) with respect to notice of an intent to make a nomination,
(i) the name, age, business address and residential address of each person
proposed for nomination, (ii) the principal occupation or employment of such
person, (iii) the class and number of shares of capital stock of the Corporation
of which such person is the beneficial owner, and (iv) any other information
relating to such person that would be required to be disclosed in a proxy
statement filed pursuant to the proxy rules of the Securities and Exchange
Commission had such nominee been nominated by the Board of Directors; and
(e) with respect to notice of an intent to bring up any other
matter, a complete and accurate description of the matter, the reasons for
conducting such business at the meeting, and any material interest in the matter
of the shareholder and the beneficial owner, if any, on whose behalf the
proposal is made.
5.4 Other Required Information. Notice of an intent to make a nomination
--------------------------------
shall be accompanied by the written consent of each nominee to serve as a
director of the Corporation if so elected and an affidavit of each such nominee
certifying that he meets the qualifications specified in Section 11 of Article
II of these Bylaws. The Corporation may require any proposed nominee to furnish
such other information or certifications as may be reasonably required by the
Corporation to determine the eligibility and qualifications of such person to
serve as a director.
5.5 Disqualification of Certain Proposals. With respect to any proposal
-------------------------------------------
by a shareholder to bring before a meeting any matter other than the nomination
of directors, the following shall govern:
(a) If the Secretary of the Corporation has received sufficient
notice of a proposal that may properly be brought before the meeting, a proposal
sufficient notice of which is subsequently received by the Secretary and that is
substantially duplicative of the first proposal shall not be properly brought
before the meeting. If in the judgment of the Board of Directors a proposal
deals with substantially the same subject matter as a prior proposal submitted
to shareholders at a meeting held within the preceding five years, it shall not
be properly brought before any meeting held within three years after the latest
such previous submission if (i) the proposal was submitted at only one meeting
during such preceding period and it received affirmative votes representing less
than 3% of the total number of votes cast in regard thereto, (ii) the proposal
was submitted at only two meetings during such preceding period and it received
at the time of its second submission affirmative votes representing less than 6%
of the total number of votes cast in regard thereto, or (iii) the proposal was
submitted at three or more meetings during such preceding period and it received
at the time of its latest submission affirmative votes representing less than
10% of the total number of votes cast in regard thereto.
(b) Notwithstanding compliance with all of the procedures set
forth above in this Section, no proposal shall be deemed to be properly brought
before a meeting of shareholders if, in the judgment of the Board, it is not a
proper subject for action by shareholders under Louisiana law.
5.6 Power to Disregard Proposals. At the meeting of shareholders, the
----------------------------------
chairman shall declare out of order and disregard any nomination or other matter
not presented in accordance with the foregoing procedures or which is otherwise
contrary to the foregoing terms and conditions.
5.7 Rights and Obligations of Shareholders Under Federal Proxy Rules.
----------------------------------------------------------------------
Nothing in this Section shall be deemed to modify (i) any obligations of a
shareholder to comply with all applicable requirements of the Securities
Exchange Act of 1934 and the regulations promulgated thereunder with respect to
the matters set forth in this Section of the Bylaws or (ii) any rights or
obligations of shareholders with respect to requesting inclusion of proposals in
the Corporation's proxy statement or soliciting their own proxies pursuant to
the proxy rules of the Securities and Exchange Commission.
5.8 Rights of Preferred Shareholders. Nothing in this Section shall be
--------------------------------------
deemed to modify any rights of holders of any outstanding class or series of
Preferred Stock to elect directors or bring other matters before a shareholders'
meeting in the manner specified by the terms and conditions governing such
stock.
Section 6. Quorum
- ------------------
6.1 Establishment of Quorum. At all meetings of shareholders, the
-----------------------------
holders of a majority of the Total Voting Power shall constitute a quorum to
organize the meeting, provided, however, that at any meeting the notice of which
sets forth any matter that, by law or the Articles of Incorporation, must be
approved by the affirmative vote of the holders of a specified percentage in
excess of a majority of the Total Voting Power present or represented at the
shareholders' meeting, the holders of that specified percentage shall constitute
a quorum, and further provided that when specified business is to be voted on by
a class or series of stock voting as a class, the holders of a majority of the
voting power of such class or series shall constitute a quorum of such class or
series for the transaction of such business. Shares of Voting Stock as to which
the holders have voted or abstained from voting with respect to any matter
considered at a meeting, or which are subject to Non-Votes (as defined in
Section 6.3 below), shall be counted as present for purposes of constituting a
quorum to organize a meeting.
6.2 Withdrawal. If a quorum is present or represented at a duly
----------------
organized meeting, such meeting may continue to do business until adjournment,
notwithstanding the withdrawal of enough shareholders to leave less than a
quorum, or the refusal of any shareholders present to vote.
6.3 Non-Votes. As used in these Bylaws, "Non-Votes" shall mean the
---------------
number of votes as to which the record holder or proxy holder of shares of
Capital Stock has been precluded from voting thereon (whether by law,
regulations of the Securities and Exchange Commission, rules or bylaws of any
national securities exchange or other self-regulatory organization, or
otherwise), including without limitation votes as to which brokers may not or do
not exercise discretionary voting power under the rules of the New York Stock
Exchange with respect to any matter for which the broker has not received voting
instructions from the beneficial owner of the voting shares.
Section 7. Voting Power Present or Represented
- -----------------------------------------------
For purposes of determining the amount of Total Voting Power present or
represented at any annual or special meeting of shareholders with respect to
voting on any particular matter, shares as to which the holders have abstained
from voting, and shares which are subject to Non-Votes (as defined in Section
6.3), will be treated as not present and not cast.
Section 8. Voting Requirements
- -------------------------------
When a quorum is present at any meeting, the vote of the holders of a
majority of the Total Voting Power present in person or represented by proxy
shall decide any question brought before such meeting, unless the question is
one upon which, by express provision of law or the Articles of Incorporation, a
different vote is required, in which case such express provision shall govern
and control the decision of such question. Directors shall be elected by
plurality vote.
Section 9. Proxies
- -------------------
At any meeting of the shareholders, every shareholder having the right
to vote shall be entitled to vote in person or by proxy appointed by an
instrument in writing subscribed by such shareholder and bearing a date not more
than 11 months prior to the meeting, unless the instrument provides for a longer
period, but in no case will an outstanding proxy be valid for longer than three
years from the date of its execution. The person appointed as proxy need not be
a shareholder of the Corporation.
Section 10. Adjournments
- -------------------------
10.1 Adjournments of Meetings. Adjournments of any annual or special
-------------------------------
meeting of shareholders may be taken without new notice being given unless a new
record date is fixed for the adjourned meeting, but any meeting at which
directors are to be elected shall be adjourned only from day to day until such
directors shall have been elected.
10.2 Lack of Quorum. If a meeting cannot be organized because a quorum
---------------------
has not attended, those present may adjourn the meeting to such time and place
as they may determine, subject, however, to the provisions of Section 10.1
hereof. In the case of any meeting called for the election of directors, those
who attend the second of such adjourned meetings, although less that a quorum as
fixed in Section 6.1 hereof, shall nevertheless constitute a quorum for the
purpose of electing directors.
Section 11. Written Consents
- -----------------------------
Any action required or permitted to be taken at any annual or special
meeting of shareholders may be taken only upon the vote of the shareholders,
present in person or represented by duly authorized proxy, at an annual or
special meeting duly noticed and called, as provided in these Bylaws, and may
not be taken by a written consent of the shareholders pursuant to the Business
Corporation Law of the State of Louisiana.
Section 12. List of Shareholders
- ---------------------------------
At every meeting of shareholders, a list of shareholders entitled to
vote, arranged alphabetically and certified by the Secretary or by the agent of
the Corporation having charge of transfers of shares, showing the number and
class of shares held by each shareholder on the record date for the meeting,
shall be produced on the request of any shareholder.
Section 12. Procedure at Shareholders' Meetings
- ------------------------------------------------
The Chairman of the Board, or in his absence, the Vice Chairman, shall
preside as chairman at all shareholders' meetings. The organization of each
shareholders' meeting and all matters relating to the manner of conducting the
meeting shall be determined by the chairman, including the order of business,
the conduct of discussion and the manner of voting. Meetings shall be conducted
in a manner designed to accomplish the business of the meeting in a prompt and
orderly fashion and to be fair and equitable to all shareholders, but it shall
not be necessary to follow Roberts' Rules of Order or any other manual of
parliamentary procedure.
ARTICLE V
---------
CERTIFICATES OF STOCK
Certificates of stock issued by the Corporation shall be numbered and
shall be entered into the books of the Corporation as they are issued. They
shall exhibit the holder's name and number of shares and shall be signed by the
President or any Vice President and by the Treasurer, Secretary or any Assistant
Secretary, all in the manner required by law.
ARTICLE VI
----------
REGISTERED SHAREHOLDERS
The Corporation shall be entitled to treat the holder of record of any
share or shares of stock as the holder in fact thereof and accordingly shall not
be bound to recognize any beneficial, equitable or other claim to or interest in
such share on the part of any other person, whether or not it shall have express
or other notice thereof, except as expressly provided by the laws of Louisiana.
ARTICLE VII
-----------
LOSS OF CERTIFICATE
Any person claiming a certificate of stock to be lost or destroyed shall
make an affidavit or affirmation of that fact, and the Board of Directors, the
General Counsel or the Secretary may, in his or its discretion, require the
owner of the lost of destroyed certificate or his legal representative, to give
the Corporation a bond, in such sum as the Board of Directors, the General
Counsel or the Secretary may require, to indemnify the Corporation against any
claim that may be made against the Corporation on account of the alleged loss or
destruction of any such certificate; a new certificate of the same tenor and for
the same number of shares as the one alleged to be lost or destroyed, may be
issued without requiring any bond when, in the judgment of the Board of
Directors, the General Counsel or the Secretary, it is proper to do so.
ARTICLE VIII
------------
CHECKS
All checks, drafts and notes of the Corporation shall be signed by such
officer or officers or such other person or persons as the Board of Directors
may from time to time designate.
ARTICLE IX
----------
DIVIDENDS
Dividends upon the capital stock of the Corporation, subject to the
provisions of the Articles of Incorporation, if any, may be declared by the
Board of Directors at any regular or special meetings, pursuant to law.
ARTICLE X
---------
INAPPLICABILITY OF LOUISIANA CONTROL SHARE STATUTE
Effective May 23, 1995, the provisions of La. R.S. 12:135 through
12:140.2 shall not apply to control share acquisitions of shares of the
Corporation's Capital Stock.
ARTICLE XI
----------
CERTAIN DEFINITIONS
The terms Capital Stock, Continuing Directors, Total Voting Power and
Voting Stock shall have the meanings ascribed to them in the Articles of
Incorporation, provided, however, that for purposes of Sections 3 and 6 of
Article IV of these Bylaws, Total Voting Power shall mean the total number of
votes that holders of Capital Stock are entitled to cast generally in the
election of directors.
ARTICLE XII
-----------
AMENDMENTS
These Bylaws may only be altered, amended or repealed in the manner
specified in the Articles of Incorporation.
EXHIBIT 11
CenturyTel, Inc.
COMPUTATIONS OF EARNINGS PER SHARE
(UNAUDITED)
<TABLE>
<CAPTION>
Three months Nine months
ended September 30, ended September 30,
- -----------------------------------------------------------------------------------------------
1999 1998 1999 1998
- -----------------------------------------------------------------------------------------------
(Dollars, cept per share amounts,
and sharesxpressed in thousands)
Income (Numerator):
<S> <C> <C> <C> <C>
Net income $ 64,529 54,678 179,096 176,563
Dividends applicable to preferred stock (100) (102) (304) (306)
- -----------------------------------------------------------------------------------------------
Net income applicable to common stock 64,429 54,576 178,792 176,257
Dividends applicable to preferred stock 100 102 304 306
Interest on convertible securities,
net of taxes 63 93 189 279
- -----------------------------------------------------------------------------------------------
Net income as adjusted for purposes of
computing diluted earnings per share $ 64,592 54,771 179,285 176,842
===============================================================================================
Shares (Denominator): *
Weighted average number of shares:
Outstanding during period 139,546 137,762 139,148 137,430
Employee Stock Ownership Plan shares
not committed to be released (461) (555) (480) (573)
- -----------------------------------------------------------------------------------------------
Number of shares for computing basic
earnings per share 139,085 137,207 138,668 136,857
Incremental common shares attributable
to additional dilutive effect of
convertible securities 2,419 3,115 2,663 3,051
- -----------------------------------------------------------------------------------------------
Number of shares as adjusted for purposes
of computing diluted earnings per share 141,504 140,322 141,331 139,908
===============================================================================================
Basic earnings per share * $ .46 .40 1.29 1.29
===============================================================================================
Diluted earnings per share * $ .46 .39 1.27 1.26
===============================================================================================
* Reflects March 1999 stock split. See Note 4.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED CONSOLIDATED BALANCE SHEET OF CENTURYTEL, INC. AND SUBSIDIARIES AS OF
SEPTEMBER 30, 1999 AND THE RELATED UNAUDITED CONSOLIDATED STATEMENT OF INCOME
FOR THE NINE MONTH PERIOD THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 37,233
<SECURITIES> 0
<RECEIVABLES> 218,554
<ALLOWANCES> 3,539
<INVENTORY> 27,858
<CURRENT-ASSETS> 285,312
<PP&E> 4,063,497
<DEPRECIATION> 1,868,553
<TOTAL-ASSETS> 4,541,156
<CURRENT-LIABILITIES> 316,440
<BONDS> 2,042,235
0
7,975
<COMMON> 139,672
<OTHER-SE> 1,566,593
<TOTAL-LIABILITY-AND-EQUITY> 4,541,156
<SALES> 0
<TOTAL-REVENUES> 1,250,211
<CGS> 0
<TOTAL-COSTS> 858,904
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 114,725
<INCOME-PRETAX> 335,817
<INCOME-TAX> 156,721
<INCOME-CONTINUING> 179,096
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 179,096
<EPS-BASIC> 1.29 <F1>
<EPS-DILUTED> 1.27 <F1>
<FN>
<F1> REFLECTS MARCH 1999 STOCK SPLIT. FINANCIAL DATA SCHEDULES FOR
PRIOR PERIODS HAVE NOT BEEN RESTATED TO REFLECT SUCH STOCK SPLIT.
</FN>
</TABLE>
