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 November 30, 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 - 28,396,761 outstanding shares as of January 11, 1996
Class B Common - 45,406,115 outstanding shares as of January 11, 1996
<TABLE>
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CENTURY COMMUNICATIONS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
<CAPTION>
November 30, May 31,
1995 1995
<S> <C> <C>
ASSETS
Current assets:
Cash and short-term investments $ 155,285 $ 228,764
Accounts receivable, less allowance for doubtful
accounts of $2,297 and $2,144, respectively 49,344 24,516
Prepaid expenses and other current assets 9,864 4,919
Total current assets 214,493 258,199
Property, plant and equipment - net 527,702 508,043
Investment in marketable equity securities 55,786 46,671
Equity investments in cable television and cellular
telephone systems - net 127,174 220,563
Debt issuance costs, less accumulated amortization
of $9,003 and $7,695, respectively 30,999 31,020
Cable television franchises, less accumulated
amortization of $254,176 and $236,409. respectively 341,274 246,455
Wireless telephone licenses, less accumulated
amortization of $142,049 and $146,305, respectively 381,730 394,184
Excess of purchase price over value of net
assets acquired, less accumulated amortization
of $47,489 and $46,629, respectively 267,698 277,616
Other assets 23,636 21,666
$ 1,970,492 $ 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>
November 30, May 31,
1995 1995
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
Current maturities of long-term debt $ 7,297 $ 7,450
Accounts payable 44,968 68,937
Accrued interest payable 24,903 29,068
Other accrued expenses 48,111 42,668
Customers' deposits and prepayments 12,776 13,203
Total current liabilities 138,055 161,326
Long-term debt 1,768,623 1,741,143
Deferred income taxes 110,181 126,235
Minority interest in subsidiaries 163,021 157,625
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) 176,170 169,733
Common stockholders' deficiency:
Common stock, par value $.01 per share:
Class A, authorized 400,000,000 shares,
issued and outstanding 59,725,687 and
59,484,685 shares, respectively 597 595
Class B, authorized 300,000,000 shares, issued
and outstanding 45,406,115 shares 454 454
Additional paid-in capital 175,676 175,545
Unrealized appreciation of marketable securities 23,531 14,416
Accumulated deficit (448,116) (405,051)
(247,858) (214,041)
Less: Cost of 31,347,256 and 31,337,530 shares respectively,
of Class A common stock in treasury (137,700) (137,604)
Total common stockholders' deficiency (385,558) (351,645)
$ 1,970,492 $ 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 November 30, Six Months Ended November 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenues:
Cable service income $ 91,156 $ 82,816 $ 180,861 $ 162,695
Cellular service income 27,713 21,455 54,635 38,997
Australian operations 2,170 - 2,170 -
121,039 104,271 237,666 201,692
Costs and expenses:
Cost of services - Cable 19,612 20,355 39,583 40,030
Cost of services - Cellular 6,824 5,844 12,537 10,494
Selling, general and administrative 29,190 27,179 58,619 50,873
Depreciation and amortization 47,175 41,454 94,900 80,550
Australian operations 8,943 - 8,943 -
111,744 94,832 214,582 181,947
Operating income 9,295 9,439 23,084 19,745
Gain on sale of assets 27 - 4,203 -
Interest expense 44,551 33,346 90,333 65,667
Other expense 2,900 - 5,000 -
Loss before income tax (benefit) and
minority interest (38,129) (23,907) (68,046) (45,922)
Income tax (benefit) (7,251) (1,043) (12,057) (2,728)
Loss before minority interest (30,878) (22,864) (55,989) (43,194)
Minority interest in loss of
subsidiaries 9,730 6,247 12,924 11,620
Net loss $ (21,148) $ (16,617) $ (43,065) $ (31,574)
Dividend requirement on subsidiary convertible
redeemable preferred stock $ 1,068 $ 1,047 $ 2,103 $ 2,324
Loss applicable to common shares $ (22,216) $ (17,664) $ (45,168) $ (33,898)
Loss per common share $ (.30) $ (.20) $ (.61) $ (.38)
Weighted average number of common shares
outstanding during the period 73,679,000 89,564,000 73,631,000 89,555,000
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 Additional Unrealized
Class A Class B Paid-In Gain on Equi (Accumulated 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 241,002 2 994 996
Class A shares purchased
by the Company (96) (96)
Accretion in liquidation
value of subsidiary
preferred stock (2,103) (2,103)
Net paid in capital
contributed by minority
interests 1,240 1,240
Unrealized appreciation of
marketable securities 9,115 9,115
Net loss (43,065) (43,065)
Balance at November 30,
1995 59,725,687 $ 597 45,406,115 $ 454 $ 175,676 $ 23,531 $ (448,116)$ (137,700) $ (385,558)
See notes to consolidated financial statements
</TABLE>
<TABLE>
CENTURY COMMUNICATIONS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
<CAPTION>
Six Months Ended November 30,
1995 1994
<S> <C> <C>
OPERATING ACTIVITIES:
Cash received from subscribers and others $ 273,548 $ 229,940
Cash paid to suppliers, employees
and governmental agencies (173,473) (140,833)
Debt issuance costs (5,023) (4,326)
Interest paid (79,504) (55,642)
NET CASH PROVIDED BY OPERATING ACTIVITIES 15,548 29,139
INVESTING ACTIVITIES:
Capital expenditures (51,609) (46,312)
Cable television franchise expenditures (2,211) (358)
Acquisition of other assets (3,552) (9,215)
(Acquisition) disposition of cable television and
wireless telephone systems (45,761) (82,298)
Capital contributed to equity investments (421) (357)
Capital returned from equity investments 3,584 2,641
NET CASH USED IN INVESTING ACTIVITIES (99,970) (135,899)
FINANCING ACTIVITIES:
Proceeds from long-term borrowings 268,500 184,672
Principal payments on long-term debt (258,456) (55,195)
Issuance of common stock 995 154
Purchase of treasury stock (96) -
Subsidiary common stock rights offering - 49,490
NET CASH PROVIDED BY
FINANCING ACTIVITIES 10,943 179,121
NET (DECREASE) INCREASE IN CASH AND SHORT-TERM
INVESTMENTS (73,479) 72,361
CASH AND SHORT-TERM INVESTMENTS - BEGINNING
OF PERIOD 228,764 67,779
CASH AND SHORT-TERM INVESTMENTS - END $ 155,285 $ 140,140
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>
Six Months Ended November 30,
1995 1994
<S> <C> <C>
RECONCILIATION OF NET LOSS TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Net loss $ (43,065) $ (31,574)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 94,900 80,550
Gain on sale of assets (4,176) -
Deferred income taxes - decrease (13,000) (4,543)
Minority interest in income of subsidiaries (12,924) (11,620)
Non cash interest charges 14,994 9,188
Debt issuance costs paid (5,023) (4,326)
Other (266) 800
Change in assets and liabilities, net
of effects of acquired, exchanged and disposed
cable television and cellular telephone systems
Accounts receivable - (increase) (13,510) (9,141)
Prepaid expenses and other current assets -
(increase) (5,035) (4,318)
Accounts payable and accrued expenses -
increase 2,302 2,377
Customer deposits and prepayments -
increase 351 1,746
Total adjustments 58,613 60,713
Net cash provided by operating activities $ 15,548 $ 29,139
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 November 30, 1995 and the results of its consolidated
operations and cash flows for the six months ended November 30, 1995 and
November 30, 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 six month period ended November 30, 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 $9,115,000 and
$21,558,000 during the six months ended November 30, 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 $44,549,000 and $31,142,000 for the six months ended November
30, 1995 and November 30, 1994, respectively.
Cellular telephone service income includes service revenues and charges
for installation and connections, net of land line charges of $8,937,000
and $7,079,000 for the six months ended November 30, 1995 and November
30, 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 January 10, 1996, 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 January 10, 1996, 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 January 10, 1996, $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 six months ended November 30, 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: (in thousands)
Six Months Ended November 30,
1995 1994
Current assets $ 11,635 $ --
Property, plant and equipment 11,042 --
Equity investments (92,549) --
Cable television franchises 111,054 --
Wireless telephone licenses 5,875 --
Goodwill (4,060) 34,384
Other assets (987) --
$ 42,010 $34,384
Current liabilities $ 26,209 $ --
Deferred taxes (1,454) 34,384
Minority interest 16,015 --
Additional paid in capital 1,240 --
$ 42,010 $34,384
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 44,000
primary basic subscribers. The aggregate purchase price for the cable
television systems is $92,900,000 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. On December 1, 1995, the second acquisition serving
approximately 20,000 primary basic subscribers was completed. The
purchase price of approximately $51,900,000 at September 30, 1994 and
$41,000,000 at December 1, 1995 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 $286,000,000, 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 calendar quarter of 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
("PCS") 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 and paid by Centennial was $54,672,000.
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 placements 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.
On October 31, 1995, Centennial acquired (i) a 94% interest in the non-
wireline cellular telephone system serving the Lafayette, Louisiana MSA,
representing approximately 205,700 Net Pops, in exchange for Centennial's
non-wireline cellular telephone system serving the Jonesboro, Arkansas
RSA (comprising approximately 205,000 Net Pops), the license rights and
assets located in and covering Desoto and Red River Parishes of Louisiana
3 RSA (comprising approximately 34,700 Net Pops), the license rights and
assets located in and covering a section of Morehouse Parish of Louisiana
2 RSA (comprising approximately 24,100 Net Pops) and a cash payment by
Centennial of approximately $5,580,000, subject to adjustment, and (ii)
an additional 14% minority interest in the Elkhart, Indiana RSA and
additional 13% minority interest in the Lake Charles, Louisiana MSA for a
cash payment of approximately $2,951,000.
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).
Six Months Ended November 30,
1995 1994
Revenues $268,588 $248,443
Net loss (58,970) (46,704)
Loss per common share (.83) (.52)
Pro forma loss per common share for the six months ended November 30,
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 Company incurred a non cash
charge of $2,647,000 reflecting the write off of debt issuance costs
associated with the replaced credit agreement. 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 incurrence 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 three business segments
for the six months ended November 30, 1995 and November 30, 1994
is as follows (amounts in thousands):
<CAPTION>
Six Months Ended November 30, 1995 1994
<S> <C> <C>
Gross revenues:
Cable television $ 180,947 $ 162,785
Cellular telephone 54,635 38,997
Australian operations 2,170 -
Eliminations (86) (90)
$ 237,666 $ 201,692
Operating income (loss):
Cable television $ 39,700 $ 32,916
Cellular telephone (9,526) (13,081)
Australian operations (7,004) -
Eliminations (86) (90)
$ 23,084 $ 19,745
Net loss:
Cable television $ (29,321) $ (25,492)
Cellular telephone (10,767) (15,408)
Australian operations (10,140) -
Eliminations 7,163 9,326
$ (43,065) $ (31,574)
Assets, at end of period:
Cable television $ 1,289,916 $ 1,018,370
Cellular telephone 782,799 711,340
Australian operations 154,099 90,722
Eliminations (256,322) (131,809)
$ 1,970,492 $ 1,688,623
Depreciation and amortization:
Cable television $ 59,359 $ 50,525
Cellular telephone 35,541 30,025
Australian operations - -
$ 94,900 $ 80,550
Capital expenditures:
Cable television $ 30,018 $ 38,546
Cellular telephone 21,591 7,766
Australian operations - -
$ 51,609 $ 46,312
The Company's consolidated financial statements include three distinct
business segments. Century Communications owns, operates and
develops domestic cable television systems. Centennial Cellular Corp., a 32.7%
owned subsidiary, owns, operates and invests in wireless telephone systems.
The Company's Australian operations are currently in the development stage
and not yet fully operational. The Australian operations will operate and invest
in pay television services in Australia, including the development and
distribution of programming. The information provided below is that of Century
Communications before the consolidation of Centennial Cellular Corp. and Australia.
Centennial Cellular Corp, the Australian operations, as well as consolidated
information.
</TABLE>
<TABLE>
NOTE 8. SEGMENT INFORMATION (continued)
CENTURY COMMUNICATIONS CORP. AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEET FINANCIAL DATA
November 30, 1995
(Amounts in thousands)
<CAPTION>
Century
Communications
Corp. before
consolidation of Centennial Reclassifications
Centennial Cellular Australian and
and Australia Corp. Operations Eliminations Consolidated
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and short-term
investments $ 90,146 $ 63,766 $ 1,373 $ - $ 155,285
Accounts receivable - net 18,299 18,869 12,176 - 49,344
Prepaid expenses and
other current assets 5,172 4,692 - - 9,864
Total current assets 113,617 87,327 13,549 - 214,493
Property, plant and equipment -
net 435,694 74,138 17,870 - 527,702
Investment in marketable
equity securities 55,786 - - - 55,786
Investment in Centennial Cellular
Corp, at cost 139,291 - - (139,291) -
Equity investment in cable television
and cellular telephone systems
- net 126,949 102,487 16,940 (119,202) 127,174
Debt issuance costs - net 22,725 8,274 - 30,999
Cable television franchises -
net 235,534 - 105,740 341,274
Wireless telephone licenses -
net - 381,730 - 381,730
Excess of purchase price over
value of net assets
acquired - net 142,461 125,237 - 267,698
Other assets 17,859 3,606 - 2,171 23,636
$ 1,289,916 $ 782,799 $ 154,099 $ (256,322) $ 1,970,492
</TABLE>
<TABLE>
NOTE 8. SEGMENT INFORMATION (continued)
CENTURY COMMUNICATIONS CORP. AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEET FINANCIAL DATA
(CONTINUED)
November 30, 1995
(Amounts in thousands)
<CAPTION>
Century
Communications
Corp. before
consolidation of Centennial Reclassifications
Centennial Cellular Australian and
and Australia Corp. Operations Eliminations Consolidated
<S> <C> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIENCY)
Current liabilities:
Current maturities of
long-term debt $ 50 $ - $ 7,247 $ - $ 7,297
Accounts payable and
accrued expenses 80,163 18,154 19,665 - 117,982
Customers' deposits
and prepayments 8,579 4,197 - - 12,776
Total current liabilities 88,792 22,351 26,912 - 138,055
Long-term debt 1,418,623 350,000 - - 1,768,623
Deferred liability 5,000 3,140 - (8,140) -
Deferred income taxes 57,313 52,868 - - 110,181
Minority interest
in subsidiaries 32,964 - 12,778 117,279 163,021
Due to parent - - 126,949 (126,949) -
Convertible redeemable
preferred stock - 176,170 - - 176,170
Second series convertible
redeemable preferred stock - 6,858 - (6,858) -
Common stockholders'
equity (deficiency)
Common stock, par
value $.01 per share:
Class A 597 158 - (158) 597
Class B 454 105 - (105) 454
Additional paid-in capital 82,823 389,082 - (296,229) 175,676
Unrealized gain on investment
in equity securities 23,531 - - - 23,531
Accumulated deficit (282,481) (213,132) (12,540) 60,037 (448,116)
(175,076) 176,213 (12,540) (236,455) (247,858)
Less: Cost of Class A common
shares in treasury (137,700) (1,801) - 1,801 (137,700)
Note receivable - (3,000) - 3,000 -
Total common stockholders'
equity (deficiency) (312,776) 171,412 (12,540) (231,654) (385,558)
$ 1,289,916 $ 782,799 $ 154,099 $ (256,322) $ 1,970,492
</TABLE>
<TABLE>
NOTE 8. SEGMENT INFORMATION (continued)
CENTURY COMMUNICATIONS CORP. AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF OPERATIONS FINANCIAL DATA
SIX MONTH PERIOD ENDED NOVEMBER 30, 1995
(Amounts in thousands)
<CAPTION> Century
Communications
Corp. before
consolidation of Centennial Reclassification
Centennial Cellular Australian and
and Australia Corp. Operations Eliminations Consolidated
<S> <C> <C> <C> <C> <C>
Revenues: $ 180,947 $ 54,635 $ 2,170 $ (86) $ 237,666
Costs and expenses
Costs of services 39,583 12,537 - - 52,120
Selling, general and
administrative 42,305 16,083 231 - 58,619
Depreciation and
amortization 59,359 35,541 - - 94,900
Australian operations - - 8,943 - 8,943
141,247 64,161 9,174 - 214,582
Operating income (loss) 39,700 (9,526) (7,004) (86) 23,084
Income from equity investment - 5,466 - (5,466) -
Interest 73,408 16,551 374 - 90,333
Gain on sale of assets - 4,203 - - 4,203
Other expense - - 5,000 - 5,000
Loss before income tax
provision (benefit)
and minority interest (33,708) (16,408) (12,378) (5,552) (68,046)
Income tax (benefit) (6,505) (5,552) - - (12,057)
Loss before minority
interest (27,203) (10,856) (12,378) (5,552) (55,989)
Minority interest in (income)
loss of subsidiaries (2,118) 89 2,238 12,715 12,924
Net Loss $ (29,321) $ (10,767) $ (10,140) $ 7,163 $ (43,065)
</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. During the six month period ended November 30, 1995, the
Company for accounting and reporting purposes consolidated the operations
of East Coast Pay Television Pty. Limited, an Australian Company ("ECT").
ECT is pursuing opportunities to own, operate and invest in pay
television services in Australia.
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.
Six Months Ended November 30, 1995 and November 30, 1994
Revenue for the six months ended November 30, 1995 increased by $35,974
or 17.8%, over the six months ended November 30, 1994. Revenue from
cable television operations increased by $18,166 or 11.2%, over the
corresponding six months ended November 30, 1994 as a result of increases
in the number of cable television subscriptions. Acquisitions of cable
television systems accounted for $10,059 of the increase or 55.4%. 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 November 30, 1995, were
approximately 1,046,000 as compared to approximately 955,000 during the
twelve-month period ended November 30, 1994, an increase of 9.5%.
Average monthly revenue per Basic Subscriber, including programmer's
share of such revenue, was approximately $34.01 during the twelve months
ended November 30, 1995, as compared to approximately $33.28 during the
comparable prior twelve month period, an increase of 2.2%. The Australian
operations accounted for $2,170 of the total increase in revenue.
Revenue from cellular telephone operations for the six months ended
November 30, 1995 increased by $15,638 or 40%, over the six months ended
November 30, 1994. The increase in revenue was the result of growth in
subscriptions to and increased usage of cellular telephone service.
Acquisitions of 11 cellular telephone markets accounted for approximately
$10,106 of the increase in cellular telephone revenue. The increase more
than offset the revenue which was associated with cellular telephone
markets sold or exchanged during the current six month period.
Costs and expenses excluding depreciation and amortization for the six
months ended November 30, 1995 increased by $9,342 or 9.2% over the six
months ended November 30, 1994. Cost of services for the six months
ended November 30, 1995 increased by $1,596 or 3.2% over the
corresponding period in the prior year, while selling, general and
administrative expense increased by $7,746 or 15.2%. Cost of services of
the Company's cable television operations declined by $447 or 1.1%, while
selling, general and administrative expenses of the Company's cable
television operations for the six months ended November 30, 1995
increased to $42,305 an increase of $2,991 or 7.6% over the $39,314 in
the six months ended November 30, 1994. The Company's recent cable
television acquisitions accounted for $2,019 or 67.5% of the $2,991
increase in selling, general and administrative expense.
Cost of services related to the cellular telephone operations during the
six months ended November 30, 1995 was $12,537, an increase of $2,043 or
19.5% as compared to the six months ended November 30, 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 and the six months ended November 30,
1995.
Selling, general and administrative expenses related to the cellular
telephone operations rose to $16,083, an increase of $4,524 or 39% above
the $11,559 recorded during the six months ended November 30, 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 the Company 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 six months ended November 30, 1995
increased by $14,350 or 17.8% over the six months ended November 30,
1994. The cellular telephone operations and acquisitions accounted for
$5,516 of this increase, the cable television operations accounted for
$8,834.
ECT incurred expenses of $8,943, including $5,870 of depreciation and
amortization.
Operating income for the six months ended November 30, 1995 increased by
$3,339 or 16.9% above the six months ended November 30, 1994. The
cellular operating loss for the six months ended November 30, 1995 of
$9,526 decreased by $3,555 or 27% from the loss of $13,081 for the six
months ended November 30, 1994. The Australian operating loss for the
six months ended November 30, 1995 was $6,773.
The Company has recorded $5,000 of other expense which represents certain
minority investments in Australia accounted for by the Company using the
equity method of accounting.
Interest expense for the six months ended November 30, 1995 increased by
$24,666 or 37.6% as compared with the six months ended November 30, 1994
reflecting higher average debt levels and secondarily, higher interest
rates in effect during the six months ended November 30, 1995. In
addition, the Company incurred a non cash charge of $2,647 reflecting the
write off of debt issuance costs associated with the CCC-I bank credit
agreement refinanced during the six months ended November 30, 1995. For
the six months ended November 30, 1995, the average debt outstanding was
approximately $1,739,000 or $368,000 above the average outstanding debt
balance of $1,371,000 during the six months ended November 30, 1994. The
cellular operations accounted for $100,000 or 27.2% of the increase. The
Company's weighted average interest rate excluding borrowings of
Centennial and the Company's 50% owned joint ventures was approximately
10.5% in the six months ended November 30, 1995 as compared to
approximately 9.8% in the six months ended November 30, 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 November 30, 1994 to 6.7% at November 30, 1995. Additionally, as
described below interest expense related to the Company's interest rate
hedge agreements declined during the six months ended November 30, 1995.
During the six months ended November 30, 1995, the Company incurred
interest expense of $553 in respect of the interest rate hedge
transactions compared to interest expense of $1,846 in respect of the
interest rate hedge transactions in the six months ended November 30,
1994. See "Liquidity and Capital Resources". Centennial's weighted
average interest rate increased to 9.5% for the six months ended November
30, 1995 from 9.1% for the six months ended November 30, 1994.
After losses attributable to minority interests in subsidiaries for the
six months ended November 30, 1995, a pretax loss of $55,122 was
incurred, as compared to a pretax loss of $34,302 for the six months
ended November 30, 1994. The income tax benefit of $12,057 for the six
months ended November 30, 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 six months ended November 30, 1995 and 1994.
The net loss for the six months ended November 30, 1995 of $43,065
represents an increase of $11,491 or 36.4% over the loss for the six
months ended November 30, 1994. The Company expects net losses to
continue until such time as the operations of the cellular telephone
systems, Australian operations, 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.
Three Months Ended November 30, 1995 and November 30, 1994
Revenue for the three months ended November 30, 1995 increased by $16,768
or 16.1% over the three months ended November 30, 1994. Revenue from
cable television operations increased by $8,340 or 10% over the
corresponding prior three month period as a result of increases in the
number of cable television subscriptions and the acquisition of cable
television systems (see Acquisitions - Cable Television). The Australian
operations accounted for $2,170 of the increase.
Revenue from cellular telephone operations for the three month period
ended November 30, 1995 increased by $6,258 or 29% over the three months
ended November 30, 1994, primarily as a result of acquisitions and growth
in subscriptions to cellular telephone services. The increase more than
offset revenue which was associated with cellular telephone markets sold
or exchanged during the current six month period.
Costs and expenses excluding depreciation and amortization for the three
month period ended November 30, 1995 increased by $2,248 or 4.2% over the
three months ended November 30, 1994. The cellular telephone operations
accounted for $2,589 or 115.1% of this increase. Costs of services for
the three months ended November 30, 1995 in the Company's cable
operations declined by $743, while expenses increased by $980 in the
cellular telephone operations. As a result, cost of services increased
by $237 over the corresponding period in the prior year. Selling,
general and administrative expenses increased by $2,011 over the three
months ended November 30, 1994. The cellular telephone operations
accounted for $1,609 or 80.0% of the increase. Depreciation and
amortization expense for the three months ended November 30, 1995
increased by $5,721 or 13.8% over the comparable period in the prior
year. The cellular telephone operations accounted for $1,655 of this
increase.
ECT incurred expenses of $8,943. Such expenses include $5,870 of
depreciation and amortization.
Operating income for the three months ended November 30, 1995 decreased
by $144 or 1.5% over the corresponding three months ended November 30,
1994. The cellular operating loss for the three months ended November
30, 1995 of $4,822 decreased by $2,014 or 29% below the corresponding
1994 three month period.
The Company has recorded $2,900 of other expense which represents certain
minority investments in Australia accounted for by the Company using the
equity method of accounting.
Interest expense for the three months ended November 30, 1995 increased
by $11,205 or 33.6% as compared with the three months ended November 30,
1994 reflecting higher debt levels. The Company's weighted average
interest rate excluding borrowings of Centennial and the Company's 50%
owned joint ventures, increased to 10.1% for the three months ended
November 30, 1995 from 9.6% for the three months ended November 30, 1994.
Centennial's weighted average interest rate was 9.5% for the three months
ended November 30, 1995 and 9.1% for the three months ended November 30,
1994.
After losses attributable to minority interests in subsidiaries for the
three months ended November 30, 1995, a pretax loss of $28,399 was
incurred, as compared to a pretax loss of $17,660 in the three months
ended November 30, 1994. The income tax benefit of $7,251 for the three
months ended November 30, 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 November 30, 1995. The tax
benefit of $1,043 for the three months ended November 30, 1994 was
calculated in accordance with Financial Accounting Standards Board
Statement No. 109.
The net loss of $21,148 for the three months ended November 30, 1995
represents an increase of $4,531 or 27.3% over the loss for the
corresponding three month period in the prior fiscal year. The Company
expects net losses to continue until such time as operations of cellular
telephone systems, Australian operations, cable telephone 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 the 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 January 10, 1996.
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 six months ended November 30, 1995, the
Company made capital expenditures of $51,609 as compared to $46,312 for
the corresponding prior six month period ended November 30, 1994. During
the six months ended November 30, 1995, Centennial made capital
expenditures of $21,591 or 41.8% 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 from the prior fiscal year 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 began 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 six months ended November 30, 1995, earnings were less than fixed
charges by $70,149 . However, such amount reflects non-cash charges
totaling $97,003, consisting of depreciation and amortization of $94,900
and non-cash subsidiary preferred stock dividends of $2,103.
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 cash on hand, 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.
Six Months Ended November 30,
1995 1994
Amount % Amount %
Net cash provided by
operating activities $15,548 15.5 % $ 29,139 32.7%
Interest paid (including debt
issuance costs) 84,527 84.5 59,968 67.3
Net cash provided $100,075 100.0 % $ 89,107 100.0%
Principal uses of
net cash provided:
Interest paid (including debt
issuance costs) $ 84,527 84.5 % $ 59,968 67.3%
Property, plant and equipment
(excluding acquisitions) 51,609 51.6 46,312 52.0
Total $136,136 136.1 $106,280 119.3
Cash (required) $(36,061) (36.1)% $(17,173) (19.3)%
Net cash provided by operating activities of $100,075 for the six months
ended November 30, 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:
Six Months Ended November
30,
1995 1994
Proceeds from long-term borrowings $ 268,500 $ 184,672
Principal payments on long-term debt (258,456) (55,195)
Subsidiary common stock rights offering -- 49,490
Issuance and purchase of common stock 899 154
Cash provided by financing activities 10,943 179,121
Net capital returned from equity
investments 3,163 2,284
Acquisition of and investments in cable
television, cellular telephone systems,
marketable securities and other assets (51,524) (91,871)
Cash (required from) available for
operating activities $ (37,418) $ 89,534
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 November 30, 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 January 10, 1996, 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 January 10, 1996, 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 January 10, 1996, $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 44,000
primary basic subscribers. The aggregate purchase price for the cable
television systems is $92,900 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. On
December 1, 1995, the second acquisition serving approximately 20,000
primary basic subscribers was completed. The purchase price of
approximately $51,900 at September 30, 1994 and $41,000 at December 1,
1995 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 calendar quarter of 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.
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.
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.
On October 31, 1995, Centennial acquired (I) a 94% interest in the non-
wireline cellular telephone system serving the Lafayette, Louisiana MSA,
representing approximately 205,700 Net Pops, in exchange for Centennial's
non-wireline cellular telephone system serving the Jonesboro, Arkansas
RSA (comprising approximately 205,000 Net Pops), the license rights and
assets located in and covering Desoto and Red River Parishes of Louisiana
3 RSA (comprising approximately 34,700 Net Pops), the license rights and
assets located in and covering a section of Morehouse Parish of Louisiana
2 RSA (comprising approximately 24,100 Net Pops) and a cash payment by
Centennial of approximately $5,580, subject to adjustment, and (ii) an
additional 14% minority interest in the Elkhart, Indiana RSA and
additional 13% minority interest in the Lake Charles, Louisiana MSA for a
cash payment of approximately $2,951.
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 Company's arrangements with Australis contemplate that
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 (one of which is
ECT) to substantially all of the remaining population of Australia.
The distribution arrangements are subject to an agreement with Australis,
pursuant to which ECT has the right to receive 25% of Australis' adjusted
net cash flow from broadcasting services and operations. Subject to
certain rights of approval in ECT with respect to expenditures and
budgets, such percentage may be adjusted downward depending upon whether
ECT elects to fund a specified portion of any funds raised and expended
by Australis to establish transmission, subscriber management, customer
service and certain other facilities as provided for in the agreement.
The parties are presently in discussion with respect to whether funding
is currently required by ECT under the agreement.
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 the 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 ("Telstra"), the government-owned Australian national
telecommunications carrier, and The News Corporation Limited ("News"), a
major international media and entertainment company, owns the remaining
50% of XYZ.
Australis has advised the Company that it has entered into a merger and
other agreements with Telstra and News and certain of their subsidiary
companies pursuant to which, if consummated, among other things (i) News
and Telstra, together, will own a 60.5% economic interest in Australis,
(ii) the preferred method of distribution by Australis of its services
will be by means of cable (utilizing the cable television infrastructure
of Telstra) rather than DTH or MDS, and (iii) Australis will merchandise
its programming services through FOXTEL brand rather than through the
Galaxy name. The effect on ECT and XYZ of the merger and other
arrangements among Telstra, News and Australis, if consummated, cannot
now be fully ascertained.
The Australian operations described above are expected to be capital
intensive requiring funds for the buildout of the franchise
infrastructure, maintenance of the satellite distribution business, and
the development of 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.
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. Upon acquisition, the Class B shares
were converted automatically to Class A shares. For the present, the
acquired shares will be held in the Company's treasury. 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. Centennial has made no such purchases to date.
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. The settlement became fully effective on October 24, 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 December 1, 1995, the Company and Citizens Utilities acquired the
cable television systems serving the cities of Chino and Chino Hills,
California and certain unincorporated areas of Orange, Riverside and San
Bernardino Counties in California for approximately $40,500,000, subject
to adjustment. At December 31, 1995, such cable systems served
approximately 20,000 primary basic subscribers.
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 Six Months Ended
November 30, 1995 and November 30, 1994
COMPUTATION OF LOSS PER COMMON SHARE
(Amounts in thousands, except per share data)
<CAPTION>
Six Months Ended
November 30, November 30,
1995 1994
<S> <C> <C>
Primary fully diluted:
Net Loss $ (43,065) $ (31,574)
Accretion in liquidation value of subsidiary
preferred stock (2,103) (2,324)
Loss applicable to common shares $ (45,168) $ (33,898)
Average number of common shares and common
share equivalents outstanding
Average number of common shares
outstanding during the period 74,635,000 89,555,000
Add common share equivalents - Options
to purchase common shares - net 733,000 637,000
Average number of common shares and common
share equivalents outstanding 75,368,000 (A) 90,192,000 (A)
Loss per common share $ (.61) (A) $ (.38) (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: January 16, 1996
________________________________
Bernard P. Gallagher
President and Chief Operating Officer
(On behalf of Registrant)
Date: January 16, 1996
_______________________________
Scott N. Schneider
Senior Vice President and Treasurer
(Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> May-31-1996
<PERIOD-END> Nov-30-1995
<CASH> 155,285
<SECURITIES> 55,786
<RECEIVABLES> 49,344
<ALLOWANCES> 2,297
<INVENTORY> 0
<CURRENT-ASSETS> 214,493
<PP&E> 527,702
<DEPRECIATION> 401,843
<TOTAL-ASSETS> 1,970,492
<CURRENT-LIABILITIES> 138,055
<BONDS> 0
<COMMON> 1,051
0
176,170
<OTHER-SE> (386,609)
<TOTAL-LIABILITY-AND-EQUITY> 1,970,492
<SALES> 237,666
<TOTAL-REVENUES> 237,666
<CGS> 52,120
<TOTAL-COSTS> 214,582
<OTHER-EXPENSES> 5,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 90,333
<INCOME-PRETAX> (68,046)
<INCOME-TAX> 12,057
<INCOME-CONTINUING> (55,989)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (43,065)
<EPS-PRIMARY> (.61)
<EPS-DILUTED> 0
</TABLE>
