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 August 31, 1995
OR
[ ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
for the transition period from to
Commission file number 1-9676
Century Communications Corp.
(Exact name of registrant as specified in its charter)
New Jersey 06-1158179
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
50 Locust Avenue
New Canaan, CT 06840
(Address of principal executive offices, including zip code)
(203) 972-2000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practical date.
Class A Common - 28,253,151 outstanding shares as of October 11, 1995
Class B Common - 45,406,115 outstanding shares as of October 11, 1995
<TABLE>
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CENTURY COMMUNICATIONS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
<CAPTION>
August 31, May 31,
1995 1995
<S> <C> <C>
ASSETS
Current assets:
Cash and short-term investments $ 168,024 $ 228,764
Accounts receivable, less allowance for doubtful
accounts of $2,274 and $2,144, respectively 37,659 24,516
Prepaid expenses and other current assets 5,865 4,919
Total current assets 211,548 258,199
Property, plant and equipment - net 500,056 508,043
Investment in marketable equity securities 48,447 46,671
Equity investments in cable television and cellular
telephone systems - net 125,675 220,563
Debt issuance costs, less accumulated amortization
of $7,654 and $7,695, respectively 32,451 31,020
Cable television franchises, less accumulated
amortization of $239,160 and $236,409. respectively 363,919 246,455
Wireless telephone licenses, less accumulated
amortization of $133,782 and $146,305, respectively 386,255 394,184
Excess of purchase price over value of net
assets acquired, less accumulated amortization
of $45,784 and $46,629, respectively 269,404 277,616
Other assets 21,459 21,666
$ 1,959,214 $ 2,004,417
See notes to consolidated financial statements
</TABLE>
<TABLE>
CENTURY COMMUNICATIONS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(CONTINUED)
(Amounts in thousands, except share data)
<CAPTION>
August 31, May 31,
1995 1995
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
Current maturities of long-term debt $ 50 $ 7,450
Accounts payable 29,473 68,937
Accrued interest payable 36,588 29,068
Other accrued expenses 36,038 42,668
Customers' deposits and prepayments 12,648 13,203
Total current liabilities 114,797 161,326
Long-term debt 1,751,080 1,741,143
Deferred income taxes 117,931 126,235
Minority interest in subsidiaries 173,786 157,625
Preferred stock, par value $.01 per share
authorized 100,000,000 shares, none issued - -
Subsidiary convertible redeemable preferred stock (at
aggregate liquidation value), par value $.01 per share,
authorized, issued and outstanding 102,187 shares
(redemption value of $1,823.00 per share) 172,900 169,733
Common stockholders' deficiency:
Common stock, par value $.01 per share:
Class A, authorized 400,000,000 shares,
issued and outstanding 59,568,977 and
59,484,685 shares, respectively 596 595
Class B, authorized 300,000,000 shares, issued
and outstanding 45,406,115 shares 454 454
Additional paid-in capital 176,050 175,545
Unrealized appreciation of marketable securities 16,192 14,416
Accumulated deficit (426,968) (405,051)
(233,676) (214,041)
Less: Cost of 31,337,530 Class A common shares
in treasury (137,604) (137,604)
Total common stockholders' deficiency (371,280) (351,645)
$ 1,959,214 $ 2,004,417
See notes to consolidated financial statements
</TABLE>
<TABLE>
CENTURY COMMUNICATIONS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except share data)
<CAPTION>
Three Months Ended
August 31, August 31,
1995 1994
<S> <C> <C>
Revenues:
Cable service income $ 89,705 $ 79,879
Cellular service income 26,922 17,542
116,627 97,421
Costs and expenses:
Cost of services - Cable 19,971 19,675
Cost of services - Cellular 5,713 4,650
Selling, general and administrative 29,429 23,694
Depreciation and amortization 47,725 39,096
102,838 87,115
Operating income 13,789 10,306
Gain on sale of assets 4,176 -
Interest 45,782 32,321
Other expense 2,100 -
Loss before income tax (benefit) and
minority interest (29,917) (22,015)
Income tax (benefit) (4,806) (1,685)
Loss before minority interest (25,111) (20,330)
Minority interest in loss of
subsidiaries 3,194 5,373
Net loss $ (21,917) $ (14,957)
Dividend requirement on subsidiary convertible
redeemable preferred stock $ 1,035 $ 1,277
Loss applicable to common shares $ (22,952) $ (16,234)
Loss per common share $ (.31) $ (.18)
Weighted average number of common shares
outstanding during the period 73,583,000 89,546,000
See notes to consolidated financial statements
</TABLE>
<TABLE>
CENTURY COMMUNICATIONS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDERS' DEFICIENCY
(Amounts in thousands, except share data)
<CAPTION>
Common Stock AdditionalUnrealized
Class A Class B Paid-In Gain on Equi(Accumulate Treasury
Shares Dollars Shares Dollars Capital Securities Deficit) Stock Total
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at June 1, 1994 34,687,013 $ 347 66,177,130 $ 662 $ 105,301 $ - $ (322,426)$ (27,512) $ (243,628)
Shares issued in connection
with employee
incentive plans 445,025 4 1,219 - 1,223
Class A shares purchased
by the Company (110,092) (110,092)
Unrealized appreciation of
marketable securities 14,416 14,416
Class A shares issued in
conjunction with
acquisitions 3,581,632 36 43,839 43,875
Class B shares converted
to Class A shares 20,771,015 208 (20,771,015) (208) -
Net Paid in Capital
contributed by minority
interests 29,263 29,263
Accretion in liquidation
value of subsidiary (4,419) (4,419)
preferred stock
Vesting of subsidary
stock options 342 342
Net loss (82,625) (82,625)
Balance at May 31, 1995 59,484,685 595 45,406,115 454 175,545 14,416 (405,051) (137,604) (351,645)
Shares issued in
connection with employee
incentive plans 84,292 1 299 300
Accretion in liquidation
value of subsidiary
preferred stock (1,035) (1,035)
Net paid in capital
contributed by minority
interests 1,241 1,241
Unrealized appreciation of
marketable securities 1,776 1,776
Net loss (21,917) (21,917)
Balance at August 31, 1995 59,568,977 $ 596 45,406,115 $ 454 $ 176,050 $ 16,192 $ (426,968)$ (137,604) $ (371,280)
See notes to consolidated financial statements
</TABLE>
<TABLE>
CENTURY COMMUNICATIONS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
<CAPTION>
Three Months Ended
August 31, August 31,
1995 1994
<S> <C> <C>
OPERATING ACTVITIES:
Cash received from subscribers and others $ 126,871 $ 110,998
Cash paid to suppliers, employees (82,775) (67,859)
and governmental agencies
Debt issuance costs (5,126) (4,424)
Interest paid (29,666) (23,288)
NET CASH PROVIDED BY OPERATING ACTIVITIES 9,304 15,427
INVESTING ACTIVITIES:
Capital expenditures (22,065) (17,302)
Cable television franchise expenditures (117) (167)
Acquisition of other assets (1,023) (462)
(Acquisition) disposition of cable television and
wireless telephone systems (46,756) (56,015)
Capital contributed to equity investments (91) -
Capital returned from equity investments 2,114 1,264
NET CASH USED IN INVESTING ACTIVITIES (67,938) (72,682)
FINANCING ACTIVITIES:
Proceeds from long-term borrowings 235,500 159,000
Principal payments on long-term debt (237,906) (51,222)
Issuance of common stock 300 44
Subsidiary common stock rights offering - 49,490
NET CASH PROVIDED BY
FINANCING ACTIVITIES (2,106) 157,312
NET (DECREASE) INCREASE IN CASH AND SHORT-TERM
INVESTMENTS (60,740) 100,057
CASH AND SHORT-TERM INVESTMENTS - BEGINNING
OF PERIOD 228,764 67,779
CASH AND SHORT-TERM INVESTMENTS - END $ 168,024 $ 167,836
OF PERIOD
See notes to consolidated financial statements
</TABLE>
<TABLE>
CENTURY COMMUNICATIONS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)
(Amounts in thousands)
<CAPTION>
Three Months Ended
August 31, August 31,
1995 1994
<S> <C> <C>
RECONCILIATION OF NET LOSS TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Net loss $ (21,917) $ (14,957)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 47,725 39,096
Gain on sale of assets (4,176) -
Other expense 2,100 -
Deferred income taxes - decrease (5,250) (2,748)
Minority interest in income of subsidiaries (3,194) (5,373)
Non cash interest charges 8,596 4,526
Debt issuance costs paid (5,126) (4,424)
Other (83) 88
Change in assets and liabilities, net
of effects of acquired, exchanged and disposed
cable television and cellular telephone systems
Accounts receivable - (increase) (14,784) (4,069)
Prepaid expenses and other current assets -
(increase) (1,043) (2,258)
Accounts payable and accrued expenses -
increase 6,280 4,897
Customer deposits and prepayments -
increase 176 649
Total adjustments 31,221 30,384
Net cash provided by operating activities $ 9,304 $ 15,427
See notes to consolidated financial statements
</TABLE>
CENTURY COMMUNICATIONS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. INTERIM FINANCIAL STATEMENTS
In the opinion of management, the accompanying interim unaudited
consolidated financial statements contain all adjustments (consisting of
normal recurring accruals) necessary to present fairly the consolidated
financial position of Century Communications Corp. and subsidiaries (the
"Company") as of August 31, 1995 and the results of its consolidated
operations and cash flows for the three months ended August 31, 1995 and
August 31, 1994. It is suggested that the statements be read in
conjunction with the consolidated financial statements and notes thereto
included in the Company's May 31, 1995 Annual Report on Form 10-K.
During the three month period ended August 31, 1995, certain subsidiaries
which were previously accounted for by the equity method were
consolidated. There was no significant impact on the consolidated
statement of operations as a result of this change.
NOTE 2. INVESTMENT IN MARKETABLE EQUITY SECURITIES
The Company adopted the provisions of SFAS No. 115, "Accounting for
Certain Investments in Debt and Equity Securities" effective June 1,
1994. Under SFAS 115, the Company must classify its debt and marketable
equity securities in one of three categories: trading, available-for-
sale, or held-to-maturity. The Company has classified equity securities
as "Available-for-Sale".
Unrealized holding gains and losses, net of the related income tax effect
on the available-for-sale securities are excluded from earnings and are
reported as a separate component of stockholders' deficiency until
realized. The Company recorded an unrealized gain of $1,776,000 and
$25,076,000 during the three months ended August 31, 1995 and 1994,
respectively.
A decline in the market value of any available-for-sale or held-to-
maturity security below cost that is deemed other than temporary is
charged to earnings resulting in the establishment of a new cost basis
for the security. The Company recorded such a writedown during the
fiscal year ended May 31, 1991 of $21,702,000.
NOTE 3. REVENUE RECOGNITION
Cable service income includes earned subscriber service revenues and
charges for installation and connections, net of programmers' share of
service revenues. Such programmers' shares netted against service income
amounted to $22,302,000 and $14,886,000 for the three months ended August
31, 1995 and August 31, 1994, respectively.
Cellular telephone service income includes service revenues and charges
for installation and connections, net of land line charges of $4,681,000
and $3,353,000 for the three months ended August 31, 1995 and August 31,
1994, respectively.
NOTE 4. REGISTRATION STATEMENTS
On October 26, 1993, the Company filed a registration statement with the
Securities and Exchange Commission relating to the shelf registration of
$500,000,000 of the Company's debt securities, augmenting the remaining
$2,000,000 under a prior shelf registration. The registration statement
became effective July 14, 1994. The debt securities may be issued from
time to time in series on terms to be specified in one or more prospectus
supplements at the time of the offering. If so specified with respect to
any particular series, the debt securities may be convertible into shares
of the Company's Class A Common Stock. As of October 10, 1995, there was
$252,000,000 available for issuance under this registration.
The Company on March 6, 1995, filed a registration statement on Form S-3
with the Securities and Exchange Commission (the "SEC"). The statement
was filed to permit the issuance of 3,581,632 shares of the Company's
Class A Common Stock, such shares to be issued in connection with the
acquisition of certain cable systems.
During fiscal 1994, Centennial filed a shelf registration statement with
the SEC for up to 8,000,000 shares of Centennial's Class A Common Stock
that may be offered from time to time in connection with acquisitions.
At October 10, 1995, there were 4,465,896 shares available for issuance
under this registration statement.
Centennial on April 5, 1995, filed a shelf registration statement with
the SEC for the issuance of $500,000,000 of Centennial's debt securities.
The debt securities may be issued from time to time in series on terms to
be specified in one or more prospectus supplements at the time of the
offering. If so specified with respect to any particular series, the
debt securities may be convertible into shares of Centennial's Class A
Common Stock. As of October 10, 1995, $400,000,000 remained available
for issuance.
NOTE 5. SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES
The table below summarizes non-cash reclassifications that occurred
during the three months ended August 31, 1995 and 1994. The
reclassifications result from the Company's acquisitions and exchanges
and consolidation of entities previously accounted for by the equity
method of accounting.
Three Months Ended August 31,
1995 1994
Current assets $(14,049) $ --
Property, plant and equipment (8,072) --
Equity investments (91,356) --
Cable television franchises 126,314 --
Wireless telephone licenses 8,063 --
Goodwill (4,324) 13,096
Other assets (983) --
$ 15,593 $13,096
Current liabilities $ (853) $ --
Deferred taxes (1,454) 13,096
Minority interest 17,900 --
$ 15,593 $13,096
NOTE 6. ACQUISITIONS, EXCHANGES, DISPOSITIONS
On March 2, 1993, the Company and Citizens ("the Century/Citizens Joint
Venture") entered into an agreement to acquire the assets of two cable
television systems which serve in the aggregate approximately 45,000
primary basic subscribers. The aggregate purchase price for the cable
television systems is $89,500 subject to adjustment. Citizens and the
Company have agreed that they will own and operate the cable television
systems in a joint venture structure in which each company will have a
50% ownership interest. The obligations of the Century/Citizens Venture
and the seller under the agreement are subject to the satisfaction of
various closing conditions. On September 30, 1994, the Century/Citizens
Joint Venture completed the acquisition of one of these cable television
systems serving approximately 24,000 primary basic subscribers. The
purchase price of approximately $51,900 was funded by the Company and
Citizens equally.
On November 28, 1994, the Company entered into an agreement to acquire
the cable television systems serving Anaheim, Hermosa Beach/Manhattan
Beach, Fairfield and Rohnert Park/Yountville, California for an aggregate
purchase price of $286,000, subject to adjustment, payable in cash. At
September 30, 1994, such cable television systems served an aggregate of
approximately 135,000 primary basic subscribers. The obligation of the
Company to consummate this transaction is subject to certain closing
conditions, including the approval of the relevant franchise authorities
and other regulatory approvals. The Company anticipates completing this
acquisition during the first six months of fiscal 1996.
On June 30, 1995, Centennial acquired the non-wireline cellular telephone
systems serving (a) Newtown, LaPorte, Starke, Pulaski, Jasper and White,
Indiana, (b) Kosciusko, Noble, Steuben and Lagrange, Indiana (c)
Williams, Definance, Henry and Paulding, Ohio and (d) Copiah, Simpson,
Lawrence, Jefferson Davis, Walthall and Marion, Mississippi, representing
an aggregate of approximately 608,100 Net Pops. The above-described
systems were acquired by Centennial in exchange for Centennials' non-
wireline cellular telephone systems serving the Roanoke, Virginia MSA,
the Lynchburg, Virginia MSA, North Carolina RSA #3 and Iowa RSA #5,
representing an aggregate of approximately 644,000 Net Pops.
Simultaneously with the consummation of the transaction described above,
Centennial sold its 72.2% interest in the non-wireline cellular telephone
system serving the Charlottesville, Virginia MSA, representing an
aggregate of approximately 94,700 Net Pops, for a cash purchase price of
approximately $9,914,000 subject to adjustment. The Company recognized a
gain of approximately $4,176,000 as a result of the sale.
Centennial was the successful bidder for one of two Metropolitan Trading
Area (MTA) licenses to provide broadband personal communications services
in the Commonwealth of Puerto Rico and the U.S. Virgin Islands. The
licensed area represents approximately 3,623,000 Net Pops. The amount of
the final bid submitted by Centennial was $54,672,000. A non-refundable
deposit of $10,934,000, representing approximately 20% of the purchase
price, was made in connection with the bid, and the balance of
$43,738,000, was paid on June 29, 1995. Centennial currently estimates
that the cost to build out the infrastructure of the systems will be
approximately $75,000,000, in the aggregate over the next three years.
Centennial is exploring various sources of external financing including
but not limited to bank financing, joint ventures, partnerships and
placement of equity securities of Centennial. Centennial used a portion
of the net proceeds from the sale of the 10 1/8% Notes to pay the balance
of the purchase price for the license.
Centennial is negotiating definitive purchase and sale agreements based
upon a letter of intent which was executed on May 30, 1995 to (i) obtain
a controlling interest in the non-wireline cellular telephone system
serving the Lafayette, Louisiana MSA in exchange for the Company's non-
wireline cellular telephone system serving the Jonesboro, Arkansas RSA
and a cash payment by the Company of approximately $5,200,000, subject to
adjustment, and (ii) obtain minority interests in the Elkhart, Indiana
and Lake Charles, Louisiana MSAs for a cash payment of approximately
$2,950,000. Centennial's obligation to consummate these transactions is
subject to the execution of the definitive purchase and sale agreements
which will contain various closing conditions, including FCC and other
regulatory approvals. There can be no assurance that the definitive
purchase agreements will be executed or, if executed, that the closing
conditions set forth therein will be satisfied.
The summary pro forma information includes the accounts and operations of
the Company and all acquisitions and pending acquisitions described
above, in each case as if such acquisitions had been consummated as of
the beginning of each of the respective periods for the combined
statements of operations (amounts in thousands, except per share data and
unaudited).
Three Months Ended August 31,
1995 1994
Revenues $131,682 $124,569
Net loss (27,937) (19,213)
Loss per common share (.39) (.22)
Pro forma loss per common share for the three months ended August 31,
1995 and 1994 is calculated on a fully diluted basis using the pro forma
average number of common shares outstanding during the period, including
common stock equivalents.
NOTE 7. LONG-TERM DEBT
(a) On August 7, 1995, CCC-I, Inc. ("CCC-I"), a subsidiary of the
Company, entered into a three year, $525,000,000 unsecured revolving
credit facility which converts to a five year term loan. The proceeds of
the facility were used by CCC-I to repay existing indebtedness of CCC-I
and will be used for working capital and general corporate purposes. The
repayment by CCC-I of its existing indebtedness discharged all of CCC-
I's obligations under its then-existing credit agreement and, as a
result, such agreement was terminated. The interest rates payable on
borrowings under the new credit facility are based on, at the election of
CCC-I, (a) the base rate of interest announced by Citibank, N.A. plus
1/8% to 7/8% per annum based upon certain conditions, (b) the London
Interbank Offering Rate plus 1 1/8% to 1 7/8% per annum based upon
certain conditions, or (c) the average consensus bid rates of certificate
of deposit dealers for the purchase at face value of certificates of
deposit of Citibank, N.A. plus 1 1/4% to 2% per annum based on certain
conditions.
The agreement expires on August 31, 2003. The credit facility restricts
the incurrence of certain additional debt of CCC-I, limits the ability of
CCC-1 to pay dividends to the Company and requires that certain operating
tests be met.
(b) On July 31, 1995, a subsidiary of the Company, Century Venture Corp.
("CVC") entered into a three year, $80,000,000 revolving credit facility
which converts to a five year term loan. The proceeds of the facility
were used by CVC to repay existing indebtedness of CVC and will be used
for working capital and general corporate purposes. The repayment by
CVC of its existing indebtedness discharged all of CVC's obligations
under its then-existing credit agreement and, as a result, such agreement
was terminated. The interest rates payable on borrowings under the new
credit facility are based on, at the election of CVC, (a) "C/D Base Rate"
plus an applicable margin, as defined or (b)"Eurodollar Base Rate" plus
an applicable margin as defined or (c) "ABR" rate as defined.
The agreement expires on February 28, 2004. The credit facility
restricts the incurence of certain additional debt of CVC, limits the
ability of CVC to pay dividends to the Company and requires that certain
operating tests be met.
<TABLE>
NOTE 8. SEGMENT INFORMATION
Information about the Company's operations in its two business segments
for the three months ended August 31, 1995 and August 31, 1994
is as follows (amounts in thousands):
<CAPTION>
Three Months Ended August 31, 1995 1994
<S> <C> <C>
Gross revenues:
Cable television $ 89,745 $ 79,929
Cellular telephone 26,922 17,542
Eliminations (40) (50)
$ 116,627 $ 97,421
Operating income (loss):
Cable television $ 18,533 $ 16,601
Cellular telephone (4,704) (6,245)
Eliminations (40) (50)
$ 13,789 $ 10,306
Net loss:
Cable television $ (20,626) $ (11,905)
Cellular telephone (3,418) (6,942)
Eliminations 2,127 3,890
$ (21,917) $ (14,957)
Assets, at end of period:
Cable television $ 1,287,300 $ 1,066,270
Cellular telephone 801,173 665,497
Eliminations (129,259) (131,640)
$ 1,959,214 $ 1,600,127
Depreciation and amortization:
Cable television $ 29,695 $ 24,927
Cellular telephone 18,030 14,169
$ 47,725 $ 39,096
Capital expenditures:
Cable television $ 15,715 $ 14,885
Cellular telephone 6,350 2,417
$ 22,065 $ 17,302
The Company's consolidated financial statements include two distinct
business segments. Century Communications owns, operates and
develops cable television systems. Centennial Cellular Corp., a 32.7%
owned subsidiary, owns, operates and invests in cellular telephone
systems and an SMR and paging business. The information provided
below is that of Century Communications before the consolidation of
Centennial Cellular Corp; and Centennial Cellular Corp., which comprises
the Company's cellular telephone business segment, as well as
consolidated information.
</TABLE>
<TABLE>
NOTE 8. SEGMENT INFORMATION (continued)
CENTURY COMMUNICATIONS CORP. AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEET FINANCIAL DATA
August 31, 1995
(Amounts in thousands)
<CAPTION>
Century
Communications
Corp. before
consolidation of Centennial Reclassifications
Centennial Cellular and
Cellular Corp. Corp. Eliminations Consolidated
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and short-term investments $ 72,653 $ 95,371 $ - $ 168,024
Accounts receivable - net 20,110 17,549 - 37,659
Prepaid expenses and other current assets 3,965 1,900 - 5,865
Total current assets 96,728 114,820 - 211,548
Property, plant and equipment - net 440,144 59,912 - 500,056
Investment in marketable equity securities 48,447 - 48,447
Investment in Centennial Cellular Corp., at cost 139,163 - (139,163) -
Equity investment in cable television and cellular
telephone systems - net 14,490 103,524 7,661 125,675
Debt issuance costs - net 23,923 8,528 - 32,451
Cable television franchises - net 363,919 - - 363,919
Wireless telephone licenses - net - 386,255 - 386,255
Excess of purchase price over value of net
assets acquired - net 143,551 125,853 - 269,404
Other assets 16,935 2,281 2,243 21,459
$ 1,287,300 $ 801,173 $ (129,259) $ 1,959,214
</TABLE>
<TABLE>
NOTE 8. SEGMENT INFORMATION (continued)
CENTURY COMMUNICATIONS CORP. AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEET FINANCIAL DATA
(CONTINUED)
August 31, 1995
(Amounts in thousands)
<CAPTION>
Century
Communications
Corp. before
consolidation of Centennial Reclassifications
Centennial Cellular and
Cellular Corp. Corp. Eliminations Consolidated
<S> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIENCY)
Current liabilities:
Current maturities of long-term debt $ 50 $ - $ - $ 50
Accounts payable and accrued expenses 74,788 27,311 - 102,099
Customers' deposits and prepayments 9,298 3,350 - 12,648
Total current liabilities 84,136 30,661 - 114,797
Long-term debt 1,401,080 350,000 - 1,751,080
Deferred liability 5,000 3,140 (8,140) -
Deferred income taxes 62,313 55,618 - 117,931
Minority interest in subsidiaries 49,153 - 124,633 173,786
Convertible redeemable preferred stock - 172,900 - 172,900
Second series convertible redeemable
preferred stock - 6,731 (6,731) -
Common stockholders' equity (deficiency):
Common stock, par value $.01 per share:
Class A 596 158 (158) 596
Class B 454 105 (105) 454
Additional paid-in capital 82,166 392,444 (298,560) 176,050
Unrealized gain on investment in
equity securities 16,192 - - 16,192
Accumulated deficit (276,186) (205,783) 55,001 (426,968)
(176,778) 186,924 (243,822) (233,676)
Less: Cost of Class A common shares
in treasury (137,604) (1,801) 1,801 (137,604)
Note receivable - (3,000) 3,000 -
Total common stockholders' equity
(deficiency) (314,382) 182,123 (239,021) (371,280)
$ 1,287,300 $ 801,173 $ (129,259) $ 1,959,214
</TABLE>
<TABLE>
NOTE 8. SEGMENT INFORMATION (continued)
CENTURY COMMUNICATIONS CORP. AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF OPERATIONS FINANCIAL DATA
THREE MONTH PERIOD ENDED AUGUST 31, 1995
(Amounts in thousands)
<CAPTION> Century
Communications
Corp. before
consolidation of Centennial Reclassification
Centennial Cellular and
Cellular Corp. Corp. Eliminations Consolidated
<S> <C> <C> <C> <C>
Revenues: $ 89,745 $ 26,922 $ (40) $ 116,627
Costs and expenses
Costs of services 19,971 5,713 - 25,684
Selling, general and administrative 21,546 7,883 - 29,429
Depreciation and amortization 29,695 18,030 - 47,725
71,212 31,626 - 102,838
Operating income (loss) 18,533 (4,704) (40) 13,789
Income from equity investments - 2,315 (2,315) -
Interest 37,480 8,302 - 45,782
Gain on sale of assets - 4,176 - 4,176
Other expense 2,100 - - 2,100
Loss before income tax provision
(benefit) and minority interest (21,047) (6,515) (2,355) (29,917)
Income tax (benefit) (1,726) (3,080) - (4,806)
Loss before minority interest (19,321) (3,435) (2,355) (25,111)
Minority interest in (income)
loss of subsidiaries (1,305) 17 4,482 3,194
Net Loss $ (20,626) $ (3,418) $ 2,127 $ (21,917)
</TABLE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations (Dollar Amounts in Thousands except subscriber and
share data)
Historically, the Company has earned its revenues primarily from
subscriber fees for services provided by its cable television systems and
from the operations of four radio stations. In addition, the Company's
32.7% owned subsidiary, Centennial Cellular Corp. ("Centennial"),
provides cellular telephone service to subscribers in three geographic
areas. Centennial also has minority investments in six cellular
telephone systems accounted for by Centennial under the equity method of
accounting. In accordance with Financial Accounting Standards Board
Statement No. 94, the accounts of Centennial are consolidated with those
of the Company for financial reporting purposes for all periods
presented.
Due to actions by the Federal Communications Commission (the "FCC"),
relating to the reinstitution of rate regulation, as hereinafter
described, the rate structure of the cable television industry, including
the Company's business, has been negatively affected. In view of the
continuing changes and recently published revisions to the FCC rate
regulations, the Company is currently unable to assess the full impact of
the 1992 Cable Act upon its future financial results. The Company
implemented new rate and service offerings whereby subscribers are given
the choice of buying certain programming services individually on a per
channel basis or as part of a package of premium services at a discounted
price ("A La Carte Service Offerings"). Several of the Company's
systems, along with numerous other cable operators, received specific
inquiries from the FCC regarding their implementation of this method of
offering cable services. In its decisions on the inquiry letters, the FCC
admitted that previous guidelines which cable operators, including the
Company, relied upon may have been confusing. During December 1994, the
FCC responded to certain of the letters of inquiry related to A La Carte
Service Offerings. The FCC has, through such responses, effectively
determined that A La Carte Service Offerings limited to six channels or
less will be considered New Product Tiers under the FCC rules (see
Regulation). A La Carte Service Offerings in systems serving
approximately 84% of the Company's subscribers qualify as New Product
Tiers. A La Carte Service Offerings in excess of six channels have not
been given New Product Tier status and it is the intent of the FCC to
treat such offerings as regulated tiers of cable programming service,
retroactively to the date of initial regulation. Such treatment,
affecting approximately 16% of the Company's primary basic subscribers,
would result in further reductions in the Company's rates for such
services as well as refunds for previously provided services. The Company
has appealed this determination to the FCC. The outcome of such appeal
cannot be determined at this time.
During July and August 1994, further adjustments to the Company's rates
were made in certain of the Company's cable television systems pursuant
to the FCC's second revision to its rate formula. As a result, the
Company experienced a further decrease in the regulated portion of its
services for the fiscal year ended May 31, 1995. Under the regulatory
price cap mechanism established by the FCC, a portion of the decline was
offset in part, by allowable rate increases during fiscal 1995. Such
increases relate to adjustments for the annual change in the Gross
National Producers Price Index as well as certain increases in
programming fees, the addition of new channel service and so called
"external costs" as delineated in the rules. The bulk of such price
adjustments became effective during the first fiscal quarter of the year
ending May 31, 1996.
Three Months Ended August 31, 1995 and August 31, 1994
Revenue for the three months ended August 31, 1995 increased by $19,206,
or 19.7%, over the three months ended August 31, 1994. Revenue from
cable television operations increased by $9,826, or 12.3%, over the three
months ended August 31 1994 as a result of increases in the number of
cable television subscriptions. Acquisitions of cable television systems
accounted for 57.7% of the increase, or $5,667. The increase was
partially offset by a decline in revenues related to the implementation
of rate regulations established by the FCC pursuant to the 1992 Cable
Act. Average primary basic cable television subscribers ("Basic
Subscribers") for the twelve months ended August 31, 1995 were
approximately 1,069,000 as compared to approximately 939,000 during the
twelve months ended August 31, 1994, an increase of 13.8%. Average
monthly revenue per Basic Subscriber, including programmer's share of
such revenue, was approximately $33.75 during the twelve months ended
August 31, 1995, as compared to approximately $33.54 during the prior
twelve months ended August 31, 1994, an increase of 0.6%.
Revenue from cellular telephone operations for the three months ended
August 31, 1995 increased by $9,380 or 53.5%, over the three months ended
August 31, 1994, primarily as a result of growth in subscriptions to
cellular telephone service. In addition, acquisitions of 10 cellular
telephone markets accounted for approximately $5,379 or 57.3% of the
increase in cellular telephone revenue.
Costs and expenses excluding depreciation and amortization for the three
months ended August 31, 1995 increased by $7,094 or 14.8% over the three
months ended August 31, 1994. Cost of services for the three months
ended August 31, 1995 increased by $1,359 or 5.6% over the corresponding
period in the prior year, while selling, general and administrative
expenses increased by $5,735 or 24.2%. Cost of services of the Company's
cable television operations increased by $296 an increase of 1.5%, while
selling, general and administrative expenses of the Company's cable
television operations for the three months ended August 31, 1995
increased to $21,546 , an increase of $2,820 or 15.1% over the $18,726 in
the three months ended August 31, 1994. The principal reason for these
increases was expenditures associated with the implementation of the 1992
Cable Act. In addition, the Company expanded its managerial, customer
service and marketing efforts to accommodate the increased customer
service and technical standards imposed by the 1992 Cable Act. The
Company expects that during fiscal 1996 it will continue to incur
incremental costs associated with implementation of, and compliance with,
the 1992 Cable Act.
Cost of services related to the cellular telephone operations during the
three months ended August 31, 1995 was $5,713, an increase of $1,063 or
22.9% as compared to the three months ended August 31, 1994. The reason
for the increase was the larger number of retail sales of telephones and
the variable costs associated with a larger revenue and subscription base
as well as increased cellular coverage areas resulting from the continued
expansion of Centennial's network and acquisitions completed during the
fiscal year ended May 31, 1995.
Selling, general and administrative expenses related to the cellular
telephone operations rose to $7,883, an increase of $2,915 or 58.7% above
the $4,968 recorded during the three months ended August 31, 1994.
Primarily, the variable costs associated with a larger revenue base and
acquisitions made during fiscal 1995 contributed to the increase.
Secondarily, the increase was the result of Centennial increasing its
managerial, customer service and sales staff to accommodate the current
and anticipated growth of its wireless telephone business.
The Company anticipates continued increases in the cost of services and
selling, general and administrative expenses as the growth of its
cellular telephone business continues. In addition, the Company expects
that the start-up and development of its recently acquired wireless
telephone markets will contribute to an increase in these costs and
expenses.
Depreciation and amortization for the three months ended August 31, 1995
increased by $8,629 or 22.1% over the three months ended August 31, 1994.
The cellular telephone operations and acquisitions accounted for $3,861
of this increase; the cable television operations accounted for $4,768.
Operating income for the three months ended August 31, 1995 increased by
$3,483 or 33.8% above the three months ended August 31, 1994. The
cellular operating loss for the three months ended August 31, 1995 of
$4,704 declined by $1,541 or 24.7% over the three months ended August 31,
1994.
Interest expense for the three months ended August 31, 1995 increased by
$13,461 or 41.6% as compared with the three months ended August 31, 1994
reflecting higher average debt levels and secondarily, higher interest
rates in effect during the three months ended August 31, 1995. In
addition, the Company incurred a non cash charge of $2,647 reflecting the
write off of debt issuance costs associated with a bank credit agreement
refinanced during the three months ended August 31, 1995. For the three
months ended August 31, 1995, the average debt outstanding was
approximately $1,732,000 or $390,000 above the average outstanding debt
balance of $1,342,000 during the three months ended August 31, 1994. The
cellular operations accounted for $100,000 or 25.6% of the increase. The
Company's weighted average interest rate excluding borrowings of
Centennial and the Company's 50% owned joint ventures was approximately
11.0% in the three months ended August 31, 1995 as compared to
approximately 9.96% in the three months ended August 31, 1994. The
increase in such rates is primarily the result of a one time non cash
charge of $2,647 of deferred debt issuance costs as a result of the
Company's refinancing of the CCC-I credit facility (see Financing and
Capital Formation - The Company). Secondarily, short-term interest rates
of the Company's variable rate bank credit agreements increased from 6.2%
at August 31, 1994 to 7.5% at August 31, 1995. Additionally, as
described below interest expense related to the Company's interest rate
hedge agreements declined during the three months ended August 31, 1995.
During the three months ended August 31, 1995, the Company incurred
interest expense of $259 in respect of the interest rate hedge
transactions compared to interest expense of $989 in respect of the
interest rate hedge transactions in the three months ended August 31,
1994. See "Liquidity and Capital Resources". Centennial's weighted
average interest rate increased to 9.5% for the three months ended August
31, 1995 from 9.1% for the three months ended August 31, 1994.
After losses attributable to minority interests in subsidiaries for the
three months ended August 31, 1995, a pretax loss of $26,723 was
incurred, as compared to a pretax loss of $16,642 for the three months
ended August 31, 1994 The income tax benefit of $4,806 for the three
months ended August 31, 1995 represents an adjustment to the deferred tax
liability of the Company offset by current state and local taxes for the
period. These tax benefits are non-cash in nature and are attributable
to the Company's acquisitions and results of operations, calculated in
accordance with the Financial Accounting Standards Board Statement No.
109 for the three months ended August 31, 1995 and 1994.
The net loss for the three months ended August 31, 1995 of $21,917
represents an increase of $6,960 or 46.5% over the loss for the three
months ended August 31, 1994. The Company expects net losses to continue
until such time as the operations of the cellular telephone systems,
cable television systems and investments in plant associated with
rebuilds and extensions of its cable television systems and expansion of
the cellular telephone system infrastructure generate sufficient earnings
to offset the associated costs of acquisitions and operations described
above.
Liquidity and Capital Resources (Dollar Amounts in Thousands except Share
Data)
The Company has grown through acquisitions as well as upgrading,
extending and rebuilding its existing cable television systems. In
addition, Centennial, since August of 1988, has acquired 28 cellular
telephone markets which it owns and manages, all of which are considered
to be in the start-up or early development phase of operations, and
equity investment interests in certain other cellular telephone systems.
On March 13, 1995, Centennial successfully bid for one of two
Metropolitan Trading Area (MTA) licenses to provide broadband personal
communications services ("PCS") in the Commonwealth of Puerto Rico and
the U.S. Virgin Islands. Since both the cable television and wireless
telephone activities are capital intensive, the Company continues to seek
various sources of financing to meet its needs, including growth in
internally generated cash, bank financing, joint ventures and
partnerships and public and private placements of debt and equity
securities of the Company and its subsidiaries. Subsidiaries of the
Company have entered into credit agreements with various bank groups and
private lending institutions providing for an aggregate of approximately
$955,000 of potential borrowing capacity as of October 10, 1995.
The Company's internally-generated cash along with third party financing,
primarily bank borrowings and the issuance of public debentures, has
enabled it to fund its working capital requirements, capital expenditures
for property, plant and equipment, acquisitions, investments and debt
service. In addition, Centennial has funded certain of its obligations
through the sale of equity securities to third parties. The Company has
funded the principal obligations on its long-term borrowings by
refinancing the principal with expanded bank lines of credit, through the
issuance of debt securities in the public market and through private
institutions as well as internally generated cash flow. Although to date
the Company has been able to obtain financing on satisfactory terms,
there can be no assurance that this will continue to be the case in the
future. Certain of the debt instruments to which the Company and its
subsidiaries are a party impose restrictions on the incurrence of
indebtedness.
The Company's future commitments for property, plant and equipment
consist of usual upgrades, extensions, betterments and replacements of
cable plant and equipment and start-up expenditures for the wireless
telephone systems. During the three months ended August 31, 1995 the
Company made capital expenditures of $22,065 as compared to $17,302 for
the corresponding prior three month period ended August 31, 1994. During
the three months ended August 31, 1995, Centennial made capital
expenditures of $6,350 or 28.8% of the Company's total capital
expenditures. As the Company completes capital projects started in prior
fiscal years, it is anticipated that the level of capital expenditures
for its cable television systems exclusive of those related to
acquisitions described herein will decline to an annualized rate of
approximately $70,000. Various construction projects have been
undertaken to expand the operations of certain cable television systems
into adjacent and previously unbuilt areas and to rebuild and upgrade its
existing cable system plant. The Company is currently considering the
further upgrade of its cable television distribution systems in certain
of its cable television markets to expand its capability for the delivery
of video, voice and data transmission. Should the Company undertake such
an upgrade plan, it would result in an acceleration of capital
expenditures which would otherwise be incurred in future years. The
Company has not yet determined the feasibility, timing or cost of such
projects. Cellular telephone capital projects include the addition of
cell sites for greater coverage areas as well as enhancements to the
existing infrastructure of the cellular system. Centennial expects
capital expenditures for its cellular telephone markets of $20,000 over
the next fiscal year. Centennial during fiscal 1996 will begin
construction of its PCS network in Puerto Rico. Centennial currently
estimates that the cost to build out the infrastructure of its PCS
network will be approximately $75,000 in the aggregate over the next
three years, approximately $55,000 of which are expected to be incurred
during fiscal 1996. Funds for cable television capital projects and
related equipment are available from internally generated cash and other
financing resources. Funds for Centennial's capital expenditure
requirements may be provided by other bank borrowings, debt or equity
issuances or other financing resources.
For the three months ended August 31, 1995, earnings were less than fixed
charges by $30,952. However, such amount reflects non-cash charges
totaling $48,760, consisting of depreciation and amortization of $47,725
and non-cash subsidiary preferred stock dividends of $1,035.
Historically, cash generated from operating activities has exceeded fixed
charges. The Company believes that its cable television operations will
continue to generate sufficient cash to meet the debt service obligations
under the debt instruments applicable to its cable television businesses.
It is anticipated that in the next fiscal year, cash generated from
cellular telephone operations will not fully cover required capital
expenditures and the debt service under its credit agreements and
preferred capital stock dividends. It is currently anticipated that any
shortfall will be made up either through equity issuances or additional
borrowing. In that regard, Centennial, during July of 1994 completed a
rights offering to holders of its Class A and Class B common shares with
net proceeds of $86,500.
The following table sets forth, for the periods indicated, the Company's
net cash provided by operating activities before interest payments ("net
cash provided") and the Company's principal uses of such cash.
Three Months Ended August 31,
1995 1994
Amount % Amount %
Net cash provided by
operating activities $ 9,304 21.1 % $ 15,427 35.8%
Interest paid (including debt
issuance costs) 34,792 78.9 27,712 64.2
Net cash provided $44,096 100.0 % $ 43,139 100.0%
Principal uses of
net cash provided:
Interest paid (including debt
issuance costs) $34,792 78.9 % $ 27,712 64.2%
Property, plant and equipment
(excluding acquisitions) 22,065 50.0 17,302 40.1
Total $ 56,857 128.9 $ 45,014 104.3%
Cash (required) $(12,761) (28.9)% $ (1,875) (4.3)%
Net cash provided by operating activities of $44,096 for the three months
ended August 31, 1995 and cash on hand were sufficient to fund the
Company's expenditures for property, plant and equipment and debt
service. The Company will continue to rely on internally generated cash
as well as various financing activities to fund these requirements.
The following table sets forth the primary sources and uses of funds from
financing and investing activities for the periods indicated:
Three Months Ended August
31,
1995 1994
Proceeds from long-term borrowings $ 235,500 $ 159,000
Principal payments on long-term debt (237,906) (51,222)
Subsidiary common stock rights offering -- 49,490
Issuance of common stock 300 44
Cash provided by (used in)
financing activities (2,106) 157,312
Net capital returned from
equity investments 2,023 1,264
Acquisition of and investments in cable
television, cellular telephone systems,
marketable securities and other assets (47,896) (56,644)
Cash available for (required from)
operating activities $ (47,979) $ 101,932
Financing and Capital Formation; The Company
On June 30, 1994, CCC-II, Inc. ("CCC-II"), a subsidiary of the Company
that owns the Company's interest in certain cable television systems that
accounted for approximately 45% of the Company's consolidated operating
cash flows in the year ended May 31, 1994, entered into a three year
$350,000 unsecured revolving credit facility which converts to a five
year term loan with a syndicate of banks led by Citibank, N.A. as agent
for the syndicate. The proceeds of the facility may be used for
acquisitions, working capital and general corporate purposes. The
interest rates payable on borrowings under the credit facility are based
on, at the election of CCC-II, (a) the base rate of interest announced by
Citibank, N.A. plus 1/8% to 3/4% per annum based upon certain conditions,
(b) the London Interbank Offering Rate plus 1 1/8% to 1 3/4% per annum
based upon certain conditions, or (c) the average consensus bid rates of
certificate of deposit dealers for the purchase at face value of
certificates of deposit of Citibank, N.A. plus 1 1/4% to 1 7/8% per
annum based upon certain conditions. The credit facility restricts the
incurrence of certain additional debt by CCC-II, limits the ability of
CCC-II to pay dividends to the Company and requires that certain
operating tests be met. The Company is in compliance with the terms of
the credit facility.
On August 7, 1995, CCC-I paid in full the balance due on its existing
$300,000 credit facility with proceeds from a three year $525,000
unsecured revolving credit facility. The new credit agreement converts
to a five year term loan on August 7, 1998. The repayment by CCC-I of
its existing indebtedness discharged all of CCC-I's obligations under its
then-existing credit agreement and, as a result, such agreement was
terminated. The interest rates payable on borrowings under the new
credit facility are based on, at the election of CCC-I, (a) the base rate
of interest announced by Citibank, N.A. plus 1/8% to 7/8% per annum based
upon certain conditions, (b) the London Interbank Offering Rate plus 1
1/8% to 1 7/8% per annum based upon certain conditions, (c) the average
of consensus bid rates of certificate of deposit dealers for the purchase
at face value of certificates of deposit of Citibank, N.A. plus 1 1/4% to
2% per annum based upon certain conditions. The credit facility
restricts the incurrence of certain additional debt of CCC-I, limits the
ability of CCC-I to pay dividends to the Company and requires that
certain operating tests be met.
In connection with the terms and covenants of certain of the Company's
bank credit facilities, certain of the Company's subsidiaries were
required to enter into various interest rate hedge agreements (the "Hedge
Agreements"). The credit facilities required that at least 50% of
outstanding debt under such facilities be hedged with agreements with an
average life of three years. The Hedge Agreements are designed to limit
the Company's exposure to the variable interest rate structure of the
bank credit facilities. The Hedge Agreements are structured such that
the Company pays a fixed rate of interest based upon a notional amount
and in return receives a variable rate of interest based on either three
(3) month or six (6) month LIBOR. At August 31, 1995, the aggregate
notional amount of the Hedge Agreements was $50,000 with a weighted
average interest rate of 8.36%. Based upon current market conditions and
the current mix of fixed and floating rate debt securities of the Company
and the elimination of any future hedge requirements in its current bank
credit facilities, the Company currently has no plans to renew, extend or
replace the Hedge Agreements upon expiration.
On October 26, 1993, the Company filed a registration statement with the
Securities and Exchange Commission relating to the shelf registration of
$500,000 of the Company's debt securities, augmenting the remaining
$2,000 under a prior shelf registration. The registration statement
became effective July 14, 1994. The debt securities may be issued from
time to time in series on terms to be specified in one or more prospectus
supplements at the time of the offering. If so specified with respect to
any particular series, the debt securities may be convertible into shares
of the Company's Class A Common Stock. As of October 10, 1995, there was
$252,000 available for issuance under this registration.
The Company on March 6, 1995, filed a registration statement on Form S-3
with the Securities and Exchange Commission (the "SEC"). The statement
was filed to permit the issuance of 3,581,632 shares of the Company's
Class A Common Stock, such shares to be issued in connection with the
acquisition of certain cable systems. The registration statement is
effective.
Financing and Capital Formation; Centennial
On August 30, 1991, Citizens Cellular Company merged with and into
Centennial, and in connection with the merger, Centennial issued to
Citizens Utilities Company ("Citizens"), Convertible Redeemable Preferred
Stock valued at $128,450 and Class B Common Stock representing 18.8% of
the then common equity of Centennial. In connection with an amendment to
the Services Agreement with the Company, Centennial issued its Second
Series Convertible Redeemable Preferred Stock valued at $5,000 to the
Company. Although the Convertible Redeemable Preferred Stock and the
Second Series Convertible Redeemable Preferred Stock carry no cash
dividend requirement during the first five years, the shares accrete
liquidation preference and redemption value at the rate of 7.5% per
annum, compounded quarterly, in each of years one through five. Assuming
no change in the number of shares of such classes outstanding, the fully
accreted liquidation preference and redemption value of the Convertible
Redeemable Preferred Stock and the Second Series Convertible Redeemable
Preferred Stock, in years six through fifteen, will be $186,287 and
$7,252, respectively. Beginning in year six through year fifteen, the
holders of the Convertible Redeemable Preferred Stock and the Second
Series Convertible Redeemable Preferred Stock will be entitled to receive
cash dividends at the rate of 8.5% per annum. Assuming no change in the
number of shares of such classes outstanding, the annual dividend
payments, commencing in 1997, to be made in respect of the Convertible
Redeemable Preferred Stock and the Second Series Convertible Redeemable
Preferred Stock will be $15,834 and $616, respectively. The Convertible
Redeemable Preferred Stock and the Second Series Convertible Redeemable
Preferred Stock have mandatory redemption provisions at the end of
fifteen years.
It is anticipated that cash generated from Centennial's cellular
telephone operations will not be sufficient in the next several years to
cover interest, the preferred stock dividend requirements that commence
in fiscal 1997 and required capital expenditures and that any shortfall
will be made up either through debt and equity issuances or additional
financing arrangements that may be entered into by Centennial.
Centennial continues to seek various sources of external financing to
meet its current and future needs, including bank financing, joint
ventures and partnerships, and public and private placements of debt and
equity securities of Centennial. Although to date, Centennial has been
able to obtain financing on satisfactory terms, there is no assurance
that this will be the case in the future. In that regard, Centennial on
July 22, 1994, successfully completed its rights offering involving the
distribution to holders of record of Centennial's Class A Common Stock
("Centennial Stock") outstanding on July 7, 1994 (the "Record Date")
transferable subscription rights (the "Rights") to subscribe for and
purchase an aggregate of 3,098,379 additional shares of Centennial Stock
based on 6,887,287 shares of Centennial Stock outstanding on the Record
Date for a subscription price of $14.00 per share. Record date
stockholders received 0.45 Right for each share of Centennial Stock owned
by them and were entitled to purchase one share of Centennial Stock for
each full Right held. Holders of Rights purchased an aggregate of
2,988,478 of the 3,098,379 shares of Class A Common Stock. The remaining
shares were sold pursuant to the oversubscription privilege and were
distributed pro rata among the holders of Rights who requested an
aggregate of 235,746 additional shares pursuant to the oversubscription
privilege.
Centennial also distributed to the Company and Citizens, the holders of
record of all of the shares of Centennial Class B Common Stock
outstanding as of the Record Date, nontransferable subscription rights
(the "Class B Rights") to subscribe for and purchase an aggregate of
approximately 3,272,311 additional shares of Centennial Class B Common
Stock. The Company and Citizens each exercised all of the Class B Rights
distributed to them. The Company's obligation with respect to the
exercise was $37,200. Such amount was paid by the Company on July 22,
1994. The net proceeds of approximately $86,500 from the rights offering
(after deducting soliciting fees and expenses of approximately $2.7
million) were used by Centennial for general corporate purposes including
the financing of working capital, capital expenditures and acquisitions.
During fiscal 1994, Centennial filed a shelf registration statement with
the SEC for up to 8,000,000 shares of Centennial's Class A Common Stock
that may be offered from time to time in connection with acquisitions.
At October 10, 1995, there were 4,465,896 shares available for issuance
under this registration statement.
Centennial on April 5, 1995, filed a shelf registration statement with
the SEC for the issuance of $500,000 of Centennial's debt securities.
The debt securities may be issued from time to time in series on terms to
be specified in one or more prospectus supplements at the time of the
offering. If so specified with respect to any particular series, the
debt securities may be convertible into shares of Centennial's Class A
Common Stock. As of October 10, 1995, $400,000 remained available for
issuance.
On November 15, 1993, Centennial issued $250,000 eight year unsecured
senior notes at an interest rate of 8 7/8% (the "8 7/8% Notes").
Centennial used $182,700 of the net proceeds to retire in full all
principal amounts outstanding under the bank credit facility then in
effect. The remaining amount of approximately $62,600 (after debt
issuance costs) was used for general corporate purposes, including those
described above. On May 11, 1995, Centennial issued $100,000 of ten year
unsecured Senior Notes at an interest rate of 10 1/8% (the "10 1/8%
Notes"). At May 31, 1995, the net proceeds of approximately $95,600 were
available for general corporate purposes. Both debt instruments contain
similar limitations on certain "restricted payments" included, but not
limited to, dividends and investments in unrestricted subsidiaries and
other persons. Further, the debt securities contain restrictions on the
incurrence of certain additional debt and limitations on Centennial's
ability to incur liens with respect to additional indebtedness.
In order to meet its obligations with respect to its debt and preferred
stock obligations, it is important that Centennial continue to improve
operating cash flow. In order to do so, Centennial's revenues must
increase at a faster rate than operating expenses. Increases in revenues
will be dependent upon continuing growth in the number of subscribers and
maximizing revenue per subscriber. Centennial has substantially completed
the development of its managerial, administrative and marketing
functions, and is continuing the construction of cellular systems in its
existing and recently acquired markets in order to achieve these
objectives. There is no assurance that growth in subscribers or revenue
will occur. In addition, Centennial's participation in the PCS business
is expected to be capital intensive, requiring network buildout costs of
approximately $75,000 over the next three years. Further, due to the
start-up nature of the PCS business, Centennial expects the PCS business
to require additional cash investment to fund its operations over the
next several years. The PCS business is expected to be highly
competitive with the two existing cellular telephone providers as well as
the other MTA PCS license holder. There is no assurance that the PCS
business will generate cash flow or reach profitability. Even if
operating cash flow does increase, it is anticipated that cash generated
from Centennial's cellular telephone operations and PCS business will not
be sufficient in the next several years to cover interest, the preferred
stock dividend requirements that commence in fiscal 1997 and required
capital expenditures. Centennial anticipates that shortfalls may be made
up either through debt and equity issuances or additional financing
agreements that may be entered into by Centennial.
Acquisitions - Cable Television
On March 2, 1993, the Company and Citizens ("the Century/Citizens Joint
Venture") entered into an agreement to acquire the assets of two cable
television systems which serve in the aggregate approximately 45,000
primary basic subscribers. The aggregate purchase price for the cable
television systems is $89,500 subject to adjustment. Citizens and the
Company have agreed that they will own and operate the cable television
systems in a joint venture structure in which each company will have a
50% ownership interest. The obligations of the Century/Citizens Venture
and the seller under the agreement are subject to the satisfaction of
various closing conditions. On September 30, 1994, the Century/Citizens
Joint Venture completed the acquisition of one of these cable television
systems serving approximately 24,000 primary basic subscribers. The
purchase price of approximately $51,900 was funded by the Company and
Citizens equally.
On March 1, 1995, the Company acquired cable television systems located
in California, Colorado, Idaho, Montana and Washington for a purchase
price consisting of approximately $56,000 (subject to adjustment) in cash
($18,000 of which was paid to the sellers and $38,000 of which was used
to satisfy certain liabilities related to the acquired cable television
systems) and the issuance of 3,581,632 shares of Class A Common Stock of
the Company (valued at $12.25 per share, subject to post-closing
adjustment based on the price performance of the Class A Common Stock).
The cash portion of the purchase price was funded by available bank lines
of credit. At February 28, 1995, these cable television systems served
an aggregate of approximately 45,000 basic subscribers.
On November 28, 1994, the Company entered into an agreement to acquire
the cable television systems serving Anaheim, Hermosa Beach/Manhattan
Beach, Fairfield and Rohnert Park/Yountville, California for an aggregate
purchase price of $286,000, subject to adjustment, payable in cash. At
September 30, 1994, such cable television systems served an aggregate of
approximately 135,000 primary basic subscribers. The obligation of the
Company to consummate this transaction is subject to certain closing
conditions, including the approval of the relevant franchise authorities
and other regulatory approvals. The Company anticipates completing this
acquisition during the first six months of fiscal 1996.
Acquisitions, Exchanges, Dispositions - Centennial
On June 29, 1994, Centennial acquired the non-wireline cellular telephone
system serving Jonesboro, Arkansas, representing approximately 201,000
Net Pops. The purchase price for this acquisition was $18,500 subject to
adjustment, consisting of approximately $4,500 in cash and 700,670
registered shares of Centennial Class A Common Stock valued at
approximately $14,000.
On June 30, 1994, Centennial acquired the non-wireline cellular telephone
system serving Iberville, Louisiana, representing approximately 131,000
Net Pops. The purchase price for this acquisition was $12,100 consisting
of approximately $750 in cash and 639,055 registered shares of Centennial
Class A Common Stock valued at approximately $11,350.
On August 23, 1994, Centennial acquired the cellular telephone systems
serving Louisiana RSA #3, Louisiana RSA #4 and Mississippi RSA #8,
representing an aggregate of approximately 381,500 Net Pops. The
purchase price for the acquisition was $45,500, subject to adjustment,
consisting of approximately $8,000 in cash and 2,345,953 registered
shares of Centennial's Class A Common Stock valued at $37,500.
On September 21, 1994, Centennial acquired the non-wireline cellular
telephone system serving Jackson, Iowa, representing approximately
107,800 Net Pops. The purchase price for this acquisition was $15,500
consisting of approximately $5,000 in cash and 611,354 shares of
Centennial Class A Common Stock valued at approximately $10,500.
On September 30, 1994, Centennial acquired the non-wireline cellular
telephone license serving the Huntington-Marion, Indiana market
representing approximately 145,200 Net Pops. The purchase price for this
acquisition was approximately $18,400 consisting of approximately $4,500
in cash and 844,863 registered shares of Centennial Class A Common Stock
valued at approximately $13,900.
On October 24, 1994, Centennial acquired the non-wireline cellular
telephone system serving Louisiana RSA #7, representing approximately
170,900 Net Pops. The purchase price for the acquisition was $17,000,
consisting of approximately 998,167 registered shares of Centennial Class
A Common Stock valued at $17,000.
On April 18, 1995, Centennial acquired the non-wireline cellular
telephone systems serving Michigan RSA #6 and Michigan RSA #7
representing an aggregate of approximately 352,600 Net Pops. The
aggregate purchase price for these markets was $42,960, subject to
adjustment, consisting of 898,000 registered shares of Centennial Class A
Common Stock (valued at $20 per share, subject to post-closing adjustment
based on the price performance of the Centennial Class A Common Stock)
and approximately $25,000 in cash.
On June 30, 1995, Centennial acquired the non-wireline cellular telephone
systems serving (a) Newtown, LaPorte, Starke, Pulaski, Jasper and White,
Indiana, (b) Kosciusko, Noble, Steuben and Lagrange, Indiana, (c)
Williams, Defiance, Henry and Paulding, Ohio and (d) Copiah, Simpson,
Lawrence, Jefferson Davis, Walthall and Marion, Mississippi, representing
an aggregate of approximately 608,100 Net Pops. The above-described
systems were acquired by Centennial in exchange for Centennial's non-
wireline cellular telephone systems serving the Roanoke, Virginia MSA,
the Lynchburg, Virginia MSA, North Carolina RSA #3 and Iowa RSA #5,
representing an aggregate of approximately 644,000 Net Pops.
Simultaneously with the consummation of the transaction described above,
Centennial sold its 72.2% interest in the non-wireline cellular telephone
system serving the Charlottesville, Virginia MSA, representing an
aggregate of approximately 94,700 Net Pops, for a cash purchase price of
approximately $9,914 subject to adjustment. The Company recognized a
gain of approximately $4,176 as a result of the sale.
In summary, during fiscal 1995, Centennial acquired 10 markets covering
1,489,900 Net Pops. The aggregate purchase price for these acquisitions
was $173,860. The purchases were funded with cash in the amount of
$51,761 and 7,023,383 shares of Centennial Class A Common shares valued
at $122,099
Centennial is negotiating definitive purchase and sale agreements based
upon a letter of intent which was executed on May 30, 1995 to (i) obtain
a controlling interest in the non-wireline cellular telephone system
serving the Lafayette, Louisiana MSA in exchange for Centennial's non-
wireline cellular telephone system serving the Jonesboro, Arkansas RSA
and a cash payment by Centennial of approximately $5,200, subject to
adjustment, and (ii) obtain minority interests in Elkhart, Indiana, a
market in which Centennial currently has a 77.24% interest and Lake
Charles, Louisiana MSA, a market in which Centennial currently has a
12.37% interest for a cash payment of approximately $2,950. Centennial's
obligation to consummate these transactions is subject to the execution
of the definitive purchase and sale agreements which will contain various
closing conditions, including FCC and other regulatory approvals. There
can be no assurance that the definitive purchase agreements will be
executed, or if executed, that the closing conditions set forth therein
will be satisfied.
Centennial Personal Communications Services ("PCS")
Centennial was the successful bidder for one of two Metropolitan Trading
Area (MTA) licenses to provide broadband personal communications services
in the Commonwealth of Puerto Rico and the U.S. Virgin Islands. The
licensed area represents approximately 3,623,000 Net Pops. The amount of
the final bid submitted by Centennial was $54,672. A non-refundable
deposit of $10,934, representing approximately 20% of the purchase price,
was made in connection with the bid, and the balance of $43,738, was paid
on June 29, 1995. Centennial currently estimates that the cost to build
out the infrastructure of the systems will be approximately $75,000, in
the aggregate over the next three years. Centennial is exploring various
sources of external financing including but not limited to bank
financing, joint ventures, partnerships and placement of equity
securities of Centennial. Centennial used a portion of the net proceeds
from the sale of the 10 1/8% Notes to pay the balance of the purchase
price for the license.
Centennial also plans to participate in the alternative access business
in Puerto Rico pursuant to FCC requirements for interstate service and
pursuant to an authorization issued to Centennial in December 1994 by the
Public Service Commission of the Commonwealth of Puerto Rico for
intrastate service. The issuance of the authorization is being
challenged by the local telephone service provider based on a claim to a
statutory monopoly in the provision of intrastate telecommunications
services. Centennial is actively defending the authorization against the
challenge. There is no assurance that the matter will be decided in
Centennial's favor.
Centennial's participation in the PCS business is expected to be capital
intensive, requiring network buildout costs of approximately $75,000 over
the next three years. In addition, due to the start-up nature of the PCS
business, the Company expects the PCS business to require additional cash
investment to fund its operations over the next several years. The PCS
business is expected to be highly competitive with the two existing
cellular telephone providers as well as the other MTA PCS license holder.
There is no assurance that the PCS business will generate cash flow or
reach profitability.
Investments
Australian Pay Television
Since fiscal 1994, the Company has invested through a wholly-owned
subsidiary approximately $92,206 in East Coast Pay Television Pty.
Limited, an Australian company ("ECT"), which is pursuing opportunities
to own, operate and invest in pay television services in Australia (which
is an emerging pay television market). Such investment was effected
through the acquisition by the Company of convertible debentures and
ordinary shares of ECT representing a 76.2% economic interest in ECT. In
conjunction with such interest, the Company has the right to designate
five of the seven directors of ECT and to approve certain corporate
transactions. The Company has also entered into management agreements
with ECT and has agreed to fund up to an aggregate of $20,000 for certain
costs and working capital requirements.
ECT, through a wholly owned subsidiary, owns Satellite Subscription
Broadcast License A ("Satellite License A"), one of only three licenses
which may be granted by Australian authorities prior to July 1997 for
direct-to-home ("DTH") satellite television broadcasting and which allows
ECT to offer four channels of programming via DTH satellite. Australis
Media Limited ("Australis"), another pay television company in Australia,
owns Satellite Subscription Broadcast License B, the second of the three
licenses currently available in Australia for DTH satellite television
broadcasting, which allows it to offer four channels of programming via
DTH satellite. ECT and Australis have entered into agreements pursuant
to which ECT will offer its four channels of programming (the "License A
Package") for distribution individually as a single four channel package
or as part of Australis' multi-channel basic programming package known as
the GALAXY Package. The programming is distributed via DTH satellite,
microwave multi-point distribution system ("MDS") and other transmission
technologies. The GALAXY Package will be distributed by Australis
through its distribution facilities in the six largest capital cities in
Australia and in regional Western Australia and by its Franchisees to
substantially all of the remaining population of Australia.
The distribution arrangements are subject to an agreement with Australis,
which is subject to regulatory review and approval, pursuant to which ECT
has the right to receive 25% of Australis' adjusted net cash flow from
broadcasting services and operations. Such percentage may be adjusted
downward depending upon whether ECT elects to fund a specified portion of
any funds expended by Australis to establish transmission, subscriber
management, customer service and certain other facilities as provided for
in the agreement. Notification has been received from one of the
regulatory authorities that certain aspects of this agreement raise
concerns. Discussions regarding such concerns are continuing and no
assurance can be given as to the ultimate outcome.
ECT, Australis and its other two Franchisees have acquired control of
substantially all of the currently issued licenses which can be used for
transmission of pay television programming via MDS in Australia. ECT
owns or controls all of the currently issued licenses which entitle it to
transmit pay television programming via MDS in most of coastal New South
Wales and all of Tasmania (including Wollongong, Hobart and Newcastle,
Australia and surrounding areas) (the "ECT Franchise Areas") and has
entered into a franchise agreement with Australis pursuant to which it
has the exclusive right (and is obligated) for at least a ten year period
(with an option to renew for an additional ten years) to deliver in each
of the ECT Franchise Areas any subscription broadcast service supplied by
Australis, including the GALAXY Package. As of December 1994, the ECT
Franchise Areas contained approximately 717,000 households or
approximately 13% of all Australian households.
Programming for the License A Package is provided by XYZ Entertainment
Pty. Limited ("XYZ"), a joint venture in which the Company holds a 25%
interest. The Company's 25% interest in XYZ is derived through the
Company's joint venture with United International Holdings, Inc., a
leading international provider of pay television services which holds
interests in two other Franchisees of Australis. Programming provided
by XYZ includes Discovery Australia, a documentary, adventure, history,
and lifestyle channel; Red, a music video channel; Max/Classic Max, a
children and family channel; and Arena, a general entertainment channel.
The Company has also acquired an approximate 2% economic interest in
Australis for approximately $10,000.
ECT has entered into a long-term agreement with FOXTEL pursuant to which
FOXTEL has agreed to distribute the License A Package as well as two
additional channels throughout Australia over FOXTEL's proposed cable
television network. FOXTEL, a joint venture between Telstra Corporation
Limited, the government-owned Australian national telecommunications
carrier, and The News Corporation Limited, a major international media
and entertainment company, owns the remaining 50% of XYZ.
The Australian operations described above are expected to be capital
intensive requiring funds for the buildout of the franchise
infrastructure, maintenance of its satellite distribution business, and
the development of its programming. In order to meet such requirements,
ECT is currently evaluating various financing alternatives including bank
borrowings, debt or equity issuances in the public and private markets
and other financing resources, including funding from the Company. There
is no assurance ECT will be successful in obtaining such funding on
favorable terms.
The assets associated with the investments in Australia are in the
development stage and not yet operational. As of May 31, 1995 and August
31, 1995, the Company's aggregate investment in the Australian pay
subscription television business was approximately $107,945 and $120,589,
respectively.
Stock Repurchase
On March 10, 1995, the Company purchased 20,000,000 shares of its Class B
Common Stock from Sentry Insurance a Mutual Company, of Stevens Point,
Wisconsin ("Sentry Insurance") at an aggregate price of $110,000
utilizing existing credit lines. For the present, the acquired shares
will be held in the Company's treasury. Upon acquisition the Class B
shares were converted automatically to Class A shares. Prior to this
acquisition 65,406,115 shares of the Company's Class B Common Stock were
outstanding of which 23,134,056 were held by Sentry Insurance.
On December 21, 1994, Centennial announced that its Board of Directors
authorized the repurchase, from time to time, of up to 1,000,000 shares
of Centennial's Class A Common Stock, depending on prevailing market
conditions.
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
On January 13, 1988, five residents of Colorado Springs, Colorado brought
a class action lawsuit against Colorado Springs Cablevision, Inc.
("CSCI"), an indirect 50% subsidiary of the Company, and other parties in
the Colorado District Court of El Paso County, Colorado. The complaint
alleged that the defendants violated provisions of the Colorado Springs
Municipal Code prohibiting service discrimination and unreasonable rate
differences, and of the Colorado Unfair Practices Act prohibiting
predatory pricing and the imposition of different rates for the purpose
of destroying competition, by charging lower rates for its services in
one portion of Colorado Springs than it charged in the remainder of the
City. The named plaintiffs requested certification to represent a class
of CSCI subscribers charged the higher rates and sought recovery of three
times the difference between those rates and the lower rates charged
other subscribers with interest and costs from approximately April 1,
1986 to the date of judgment. On August 12, 1988, the District Court for
El Paso County, Colorado granted CSCI's motion and dismissed the
plaintiffs' complaint in its entirety with prejudice. The Court held
that there is no private right of action under the Colorado Springs
Municipal Code and that the plaintiffs lacked standing to pursue their
claims under the Colorado Unfair Practices Act. On May 3, 1990, the
Colorado Court of Appeals affirmed the lower court's ruling dismissing
the complaint in its entirety. The Colorado Supreme Court agreed to
review the decision of the Court of Appeals and subsequently on April 13,
1992 reversed the dismissal of the complaint and remanded the case back
to the Court of Appeals for further proceedings to determine whether the
complaint is subject to dismissal on other grounds.
On November 5, 1992, the Court of Appeals issued a decision denying
dismissal of the complaint and denied rehearing on January 7, 1993. CSCI
sought review of this and related issues in the Colorado Supreme Court by
petition for writ of certiorari, which was denied by order dated July 12,
1993. The Court of Appeals entered its Amended Mandate on July 16, 1993,
by which this case was returned to the El Paso County District Court for
further proceedings. Plaintiffs filed an Amended Complaint seeking to
alter their theories of recovery in certain respects and CSCI responded
to that complaint. In March 1994, plaintiffs filed an amended motion for
class certification. In June 1994, venue of the case was transferred
from the El Paso County District Court to the District Court for the City
and County of Denver.
By order dated December 2, 1994, the District Court denied plaintiffs'
amended motion for class certification in its entirety. This ruling had
the effect of limiting the case to the claims of the four remaining
individual plaintiffs. The parties notified the Court on April 19, 1995,
that they were engaged in serious settlement negotiations.
On August 25, 1995, the parties filed a joint stipulation for dismissal
of this case with prejudice and informed the Court that they had entered
into a settlement agreement resolving all claims in this litigation. By
order dated September 6, 1995, the Court dismissed this case with
prejudice; it is anticipated that the settlement will become fully
effective on or about October 26, 1995, in accordance with the terms of
the settlement agreement. The terms of the settlement will not have a
material effect on the consolidated financial statements of the Company.
ITEM 5. Other Information
On July 31, 1995, the Registrant exchanged 50% of its interest in the
cable television systems serving Brunswick, Georgia; Owensboro, Kentucky
and Wauwatosa, Wisconsin, which serve approximately 100,000 primary basic
subscribers, for a 50% interest in the Colorado Springs, Colorado cable
television system, which also serves approximately 100,000 primary basic
subscribers. As a result of this transaction, the Registrant now owns
100% of the Colorado Springs cable television system and a 50% interest
in the cable television systems serving Brunswick, Georgia; Owensboro,
Kentucky and Wauwatosa, Wisconsin.
ITEM 6. Exhibits and Reports on Form 8-K
a) Exhibits
i) Exhibit 11 - Statement re computation of per
share earnings
b) Reports on Form 8-K
None.
<TABLE>
CENTURY COMMUNICATIONS CORP. AND SUBSIDIARIES
EXHIBIT TO FORM 10-Q
For the Three Months Ended
August 31, 1995 and August 31, 1994
COMPUTATION OF LOSS PER COMMON SHARE
(Amounts in thousands, except per share data)
<CAPTION>
Three Months Ended
August 31, August 31,
1995 1994
<S> <C> <C>
Primary fully diluted:
Net Loss $ (21,917) $ (14,957)
Accretion in liquidation value of subsidiary
preferred stock (1,035) (1,277)
Loss applicable to common shares $ (22,952) $ (16,234)
Average number of common shares and common
share equivalents outstanding
Average number of common shares
outstanding during the period 73,583,000 89,546,000
Add common share equivalents - Options
to purchase common shares - net 814,000 622,000
Average number of common shares and common
share equivalents outstanding 74,397,000 (A) 90,168,000 (A)
Loss per common share $ (.31) (A) $ (.18) (A)
(A) In accordance with Accounting Principles Board Opinion No. 15, the inclusion of
common share equivalents in the computation of earnings per share need not
be considered if the reduction of earnings per share is less than 3% or the effect is
anti-dilutive. Therefore, loss per common share and common share equivalents as
shown on the Consolidated Statements of Operations for the periods presented do
not include the common share equivalents as their effect is anti-dilutive.
</TABLE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CENTURY COMMUNICATIONS CORP.
Date: October 13, 1995
________________________________
Bernard P. Gallagher
President and Chief Operating Officer
(On behalf of Registrant)
Date: October 13, 1995
_______________________________
Scott N. Schneider
Senior Vice President and Treasurer
(Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> May-31-1996
<PERIOD-END> Aug-31-1995
<CASH> 168,024
<SECURITIES> 48,447
<RECEIVABLES> 37,659
<ALLOWANCES> 2,274
<INVENTORY> 0
<CURRENT-ASSETS> 211,548
<PP&E> 500,056
<DEPRECIATION> 381,121
<TOTAL-ASSETS> 1,959,214
<CURRENT-LIABILITIES> 125,672
<BONDS> 0
<COMMON> 1,050
0
172,900
<OTHER-SE> (372,230)
<TOTAL-LIABILITY-AND-EQUITY> 1,959,214
<SALES> 116,627
<TOTAL-REVENUES> 116,627
<CGS> 25,684
<TOTAL-COSTS> 102,838
<OTHER-EXPENSES> 2,100
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 45,782
<INCOME-PRETAX> (29,917)
<INCOME-TAX> 4,806
<INCOME-CONTINUING> (25,111)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (21,917)
<EPS-PRIMARY> (.31)
<EPS-DILUTED> 0
</TABLE>
