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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, 1997
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 - 29,933,906 outstanding shares as of October 8, 1997
Class B Common - 44,357,308 outstanding shares as of October 8, 1997
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CENTURY COMMUNICATIONS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
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August 31,
1997 May 31,
(Unaudited) 1997
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ASSETS
Current Assets:
Cash and cash equivalents $ 158,653 $ 151,947
Accounts receivable, less allowance for doubtful
accounts of $4,484 and $3,592, respectively 61,625 48,958
Prepaid expenses and other current assets 12,137 14,649
---------- ----------
Total current assets 232,415 215,554
Property, plant and equipment - net 733,169 715,418
Investment in marketable equity securities 40,950 45,118
Equity investments in cable television and wireless
telephone systems - net 102,680 102,097
Debt issuance costs, less accumulated amortization
of $15,283 and $13,270, respectively 29,970 31,735
Cable television franchises, less accumulated
amortization of $338,914 and $322,309, respectively 382,964 401,775
Wireless telephone licenses, less accumulated amortization
of $227,360 and $214,494, respectively 334,339 347,206
Excess of purchase price over value of net assets acquired,
less accumulated amortization of $61,042 and $58,920,
respectively 278,521 280,643
Other assets 15,037 14,685
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$2,150,045 $2,154,231
========== ==========
</TABLE>
See notes to consolidated financial statements
1
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CENTURY COMMUNICATIONS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(CONTINUED)
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
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August 31,
1997 May 31,
(Unaudited) 1997
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LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
Current maturities of long-term debt $ 14,371 $ 15,011
Accounts payable 33,419 26,711
Accrued expenses and other current liabilities 138,322 150,407
----------- -----------
Total current liabilities 186,112 192,129
Long-term debt 2,232,380 2,186,981
Deferred income taxes 49,597 53,959
Minority interest in subsidiaries 125,767 133,518
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) 186,287 186,287
Common stockholders' deficiency:
Common stock, par value $.01 per share:
Class A, authorized 400,000,000 shares,
issued 63,466,434 and 62,695,127
shares, respectively, and outstanding
30,984,315 and 30,968,289 shares, respectively 635 627
Class B, authorized 300,000,000 shares, issued
and outstanding 44,357,308 and 45,126,115 shares,
respectively 444 451
Additional paid-in capital 176,063 176,871
Other, including 32,482,119 and 31,726,838 treasury shares,
respectively (133,629) (127,549)
Accumulated deficit (673,611) (649,043)
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Total common stockholders' deficiency (630,098) (598,643)
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$ 2,150,045 $ 2,154,231
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</TABLE>
See notes to consolidated financial statements
2
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CENTURY COMMUNICATIONS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
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Three Months Ended August 31,
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1997 1996
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Revenues:
Cable service income $ 119,436 $ 112,685
Wireless telephone service income 52,853 32,365
Australian operations 8,460 7,954
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180,749 153,004
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Costs and expenses:
Cost of services - Cable 26,216 24,345
Cost of services - Wireless telephone 11,955 7,469
Selling, general and administrative 48,330 35,894
Australian expenses 8,130 6,960
Depreciation and amortization - domestic 63,376 56,136
Depreciation and amortization - Australia 3,678 6,514
Write-down of Australian assets -- 40,000
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161,685 177,318
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Operating income (loss) 19,064 (24,314)
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Gain on sale of assets 2,004 48
Interest expense 52,296 48,424
Other income 3,161 1,368
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Loss before income tax (benefit) and minority interest (28,067) (71,322)
Income tax (benefit) (2,011) (6,598)
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Loss before minority interest (26,056) (64,724)
Minority interest in loss of subsidiaries 1,488 3,512
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Net loss $ (24,568) $ (61,212)
============ ============
Dividend on subsidiary convertible
redeemable preferred stock $ 1,259 $ 1,098
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Loss applicable to common shares $ (25,827) $ (62,310)
============ ============
Loss per common share $ (.34) $ (.84)
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Weighted average number of common shares
outstanding during the period 75,782,000 74,069,000
============ ============
</TABLE>
See notes to consolidated financial statements
3
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CENTURY COMMUNICATIONS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(AMOUNTS IN THOUSANDS)
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Three Months Ended August 31,
---------------------------------------
1997 1996
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OPERATING ACTIVITIES:
Cash received from subscribers and others $ 205,537 $ 171,122
Cash paid to suppliers, employees and
governmental agencies (123,914) (101,961)
Interest paid (41,539) (28,325)
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NET CASH PROVIDED BY OPERATING ACTIVITIES 40,084 40,836
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INVESTING ACTIVITIES:
Capital expenditures (64,526) (36,611)
Cable television franchise expenditures (60) --
Acquisition of other assets (723) (15,381)
Acquisition of cable television and wireless
telephone systems -- (5,095)
Distributions received from equity investments 5,447 1,385
Capital contributed to equity investments (812) (213)
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NET CASH USED IN INVESTING ACTIVITIES (60,674) (55,915)
--------- ---------
FINANCING ACTIVITIES:
Proceeds from long-term borrowings 70,500 523,087
Principal payments on long-term debt (31,037) (544,000)
Debt issuance costs (248) (1,802)
Payment of subsidiary preferred stock dividends (4,064) --
Issuance of common stock 452 2,716
Purchase of treasury stock, (including Centennial) (8,307) (1,588)
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NET CASH PROVIDED BY(USED IN)
FINANCING ACTIVITIES 27,296 (21,587)
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NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 6,706 (36,666)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 151,947 164,592
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CASH AND CASH EQUIVALENTS - END OF PERIOD $ 158,653 $ 127,926
========= =========
</TABLE>
See notes to consolidated financial statements
4
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CENTURY COMMUNICATIONS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)
(UNAUDITED)
(AMOUNTS IN THOUSANDS)
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Three Months Ended August 31,
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1997 1996
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RECONCILIATION OF NET LOSS TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
NET LOSS $ (24,568) $ (61,212)
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Adjustments to reconcile net loss to net cash provided
by operating activities:
Depreciation and amortization 67,054 62,650
Write-down of Australian assets -- 40,000
Deferred income taxes - decrease (4,362) (8,576)
Minority interest in loss of subsidiaries (1,488) (3,512)
Non-cash interest charges 7,266 5,400
Other 1,181 (2,243)
Change in assets and liabilities, net of effects of
acquired, exchanged and disposed cable television
and wireless telephone systems
Accounts receivable - (increase) (16,251) (15,272)
Prepaid expenses and other current assets -
decrease (increase) 2,512 (1,035)
Accounts payable, accrued expenses,
and other current liabilities -increase 8,740 24,636
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Total adjustments 64,652 102,048
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NET CASH PROVIDED BY OPERATING ACTIVITIES $ 40,084 $ 40,836
========= =========
</TABLE>
See notes to consolidated financial statements
5
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CENTURY COMMUNICATIONS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(AMOUNTS IN THOUSANDS, EXCEPT SUBSCRIBER, POP AND SHARE DATA)
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,
1997 and the results of its consolidated operations and cash flows for the three
months ended August 31, 1997 and 1996. The statements should be read in
conjunction with the consolidated financial statements and notes thereto
included in the Company's May 31, 1997 Annual Report on Form 10-K. Certain
reclassifications have been made to prior period balances to conform with the
current period's presentation. The 1997 Annual Report on Form 10-K for the
Company includes a summary of significant accounting policies and other
disclosures and should be read in conjunction with this Form 10-Q. The
consolidated balance sheet at May 31, 1997 is audited. The August 31, 1997 and
1996 financial statements do not include all disclosures required by generally
accepted accounting principles.
NOTE 2. ACCOUNT ANALYSIS
Accrued expenses and other current liabilities consist of the following:
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August 31, May 31,
1997 1997
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Accrued interest $ 35,900 $ 32,409
Accrued capital purchases -- 11,317
Accrued unpaid invoices -- 9,620
Australian accrued expenses 17,502 17,070
Accrued other 69,736 58,821
Customer deposits and prepaids 15,184 21,170
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$138,322 $150,407
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</TABLE>
NOTE 3. INVESTMENT IN MARKETABLE EQUITY SECURITIES
The Company classifies its investments in marketable equity securities as
available for sale in accordance with SFAS No. 115 "Accounting for Certain
Investments in Debt and Equity Securities". For the three months ended August
31, 1997, the Company recorded a decrease in the unrealized appreciation of
marketable securities of $4,168 as a result of a decline in the market value of
these securities.
NOTE 4. REVENUE RECOGNITION
Cable service income includes earned subscriber service revenues and charges for
installation and connections, net of programmers' share of pay television
revenue. Such programmers' shares netted against service income amounted to
$30,878 and $27,434 for the three months ended August 31, 1997 and 1996,
respectively.
6
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Wireless telephone service income includes service revenues and charges for
installation and connections, net of land line charges of $8,850 and $7,212 for
the three months ended August 31, 1997 and 1996, respectively.
NOTE 5. SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
During the three months ended August 31, 1996, the Company reclassified $14,828
of cable television franchises to goodwill in relation to the acquisition of
certain cable television systems.
NOTE 6. ACQUISITIONS
On May 31, 1996, the Company acquired the cable television systems serving
Anaheim, Hermosa Beach/Manhattan Beach, Fairfield and Rohnert Park/Yountville,
California for an aggregate purchase price of approximately $287,600, subject to
adjustment. Funds for this acquisition were provided by an existing bank credit
facility. At May 31, 1996, such cable television systems served an aggregate of
approximately 135,000 primary basic subscribers. Approximately $103,695 and
$183,148 of the purchase price was allocated to property, plant and equipment
and cable television franchise, respectively.
On August 16, 1996, the Company entered into agreements to acquire two cable
television systems which serve an aggregate of approximately 35,000 primary
basic subscribers, which agreements were subsequently assigned to a joint
venture in which each of the Company and Citizens Utilities Company ("Citizens
Utilities" or "Citizens") have a 50% interest (the "Century/Citizens Joint
Venture"). These systems are primarily located in Yorba Linda, Orange County and
Diamond Bar, California. Pursuant to the agreements, the aggregate purchase
price for these systems was approximately $69,500. The Company currently expects
to fund its share of the purchase price for the acquisitions using available
credit facilities. The purchase of these systems by the Century/Citizens Joint
Venture is subject to regulatory approvals. There is no assurance that the
Century/Citizens Joint Venture will obtain such approvals or that such
acquisitions will be completed.
ACQUISITIONS, EXCHANGES, DISPOSITIONS - CENTENNIAL
On September 12, 1996, Centennial acquired for approximately $35,000 in cash,
100% of the ownership interests in the partnership owning the wireless telephone
system serving the Benton Harbor, Michigan MSA. The Benton Harbor market
represents approximately 161,400 Net Pops. Approximately, $33,429 of the
purchase price was allocated to wireless telephone licenses.
Centennial has determined to pursue a strategy to sell or otherwise dispose of
its minority equity investments in wireless telephone systems representing
approximately 1,100,000 net pops. Centennial has not yet made a final
determination as to the estimated sale proceeds or the timing of such
disposition and believes the fair market value of its minority equity
investments exceeds the net book value of the recorded assets at August 31,
1997.
The summary pro forma information includes the results of the Company and all
acquisitions and pending acquisitions, in each case as if such acquisitions had
been completed as of June 1, 1996.
Three Months Ended August 31,
-----------------------------
1997 1996
-------- ----------
(Unaudited)
Revenue $184,908 $ 158,173
Net loss (25,377) (61,901)
Net loss per common share (.35) (.85)
7
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Pro forma net loss per common share for the three months ended August 31, 1997
and 1996 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 January 17, 1997, the Company issued Senior Notes due 2007 ("8 7/8%
Notes") in the principal amount of $250,000 which mature on January 15, 2007.
The 8 7/8% Notes were issued pursuant to a $500,000 shelf registration of the
Company's securities filed with the SEC on October 26, 1993. The 8 7/8% Notes
bear interest at 8 7/8% payable semiannually on January 15 and July 15 of each
year commencing July 15, 1997. The 8 7/8% Notes may not be redeemed prior to
maturity.
The 8 7/8% Notes rank pari passu with all existing and future Senior
Indebtedness (as that term is used in the Indenture under which the 8 7/8% Notes
were issued) of the Company, including the 8 3/4% Notes (as defined below), 9
3/4% Senior Notes due 2002, the 9 1/2% Senior Notes due 2000, the Senior
Discount Notes due 2003 and the 9 1/2% Senior Notes due 2005, and will be senior
in right of payment to all existing and future subordinated indebtedness of the
Company.
The net proceeds received by the Company from the sale of the 8 7/8% Notes, of
approximately $244,607, were used to temporarily repay a portion of the
long-term debt outstanding under two credit agreements executed by subsidiaries
of the Company. The net proceeds were used to retire $204,000 aggregate
principal amount of 11 7/8% Senior Subordinated Debentures due 2003 issued by
the Company in October 1991 (the "11 7/8% Debentures). The 11 7/8% Debentures
were called by the Company on April 15, 1997 at a redemption price of 105% of
the principal amount thereof. Accordingly, the amount required to retire the
11 7/8% Debentures at such time was $214,200 plus accrued interest of $12,113.
The effect of the redemption resulted in an extraordinary loss during the fourth
quarter of fiscal 1997 of approximately $7,582, net of income taxes, reflecting
the call premium and write-off of deferred financing costs. The balance of the
proceeds were used by the Company for working capital and general corporate
purposes.
(b) CCC-II, Inc. ("CCC-II"), a subsidiary of the Company, entered into a credit
agreement, as amended August 12, 1996, that provides CCC-II 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 "CCC-II Credit Agreement"). 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 0% to 0.5% per annum based upon
certain conditions, or (b) the London Interbank Offering Rate plus 0.75 to
1.375% 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. At August 31, 1997, $151,000 was outstanding under the CCC-II Credit
Agreement.
(c) CCC-I, Inc. ("CCC-I"), a subsidiary of the Company, entered into a credit
agreement, as amended August 12, 1996, that provides CCC-I a three year $525,000
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
"CCC-I Credit Agreement"). 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 $300,000 credit
agreement and, as a result, such agreement was terminated. The interest rates
payable on borrowings under the credit facility are based on, at the election of
CCC-I, (a) the base rate of interest announced by Citibank, N.A. plus 0% to
0.625% per annum based upon certain conditions, or (b) the London Interbank
Offering Rate plus 0.75% to 1.625% per annum based upon certain conditions. The
credit facility restricts the incurrence of certain additional debt of
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CCC-I, limits the ability of CCC-I to pay dividends to the Company and requires
that certain operating tests be met. At August 31, 1997 $359,000 was outstanding
under the CCC-I Credit Agreement.
(d) On September 12, 1996, Centennial entered into a $75,000 revolving credit
facility with Citibank, N.A., which was amended April 22, 1997 and further
amended on July 28, 1997, (the "Credit Facility"). The Credit Facility
terminates on January 31, 2001. The Credit Facility may be used for working
capital and general corporate purposes. The interest rate payable on borrowings
under the Credit Facility is based on, at the election of Centennial, (a) the
"Base Rate," as defined, plus a margin of 2% or (b) the "Eurodollar Base Rate",
as defined, plus a margin of 3%. The Credit Facility is secured by the pledge of
stock of certain of Centennial's subsidiaries not otherwise subject to
restrictions under its Senior Note Indentures, including the subsidiary which
operates the Benton Harbor system. The Credit Facility is further guaranteed by
certain of Centennial's subsidiaries holding Investment Interests (as defined).
The Credit Facility restricts the incurrence of certain additional debt by
Centennial, limits Centennial's ability to pay dividends and requires that
certain operating tests be met. At August 31, 1997, no amounts were outstanding
under the Credit Facility.
(e) On April 15, 1997, Citizens Century Cable Television Venture ("CCCTV")
entered into an agreement for the provision of a three-year revolving credit
facility in the principal amount of $200,000 with Bank of America and Societe
General, which converts into a five-year term loan. The facility is secured by
the assets of CCCTV. The loan is non-recourse to both Citizens and the Company.
Borrowings under the facility are to be repaid in semi-annual installments
commencing June 30, 2000 and expiring on March 31, 2005. The facility requires
mandatory prepayments of principal refinancing to the extent that the loan
balance exceeds the refinancing on the working capital commitment (as defined in
the facility). Borrowings under the facility bear interest, at the option of
CCCTV, at either the base rate, certificate of deposit rate, or the Eurodollar
rate, plus the applicable margin (as defined in the facility). The principal use
of proceeds will be to fund acquisitions as well as general corporate purposes.
No amounts were outstanding under the facility at August 31, 1997.
(f) On April 25, 1997, Centennial Puerto Rico Wireless Corporation ("CPRW")
entered into a $130,000 revolving credit Facility with Citibank, N.A. as agent
which converts to a four-year term loan on April 25, 2001 (the "Puerto Rico
Credit Facility"). The proceeds from the Puerto Rico Credit Facility will be
used primarily to finance the construction and operation of PCS, competitive
access and telecommunications networks in Puerto Rico and the United States
Virgin Islands. The proceeds will also be used for working capital and general
corporate purposes and were used to pay certain cash dividends to Centennial as
permitted by the Puerto Rico Credit Facility. The interest rate payable on
borrowings under the Puerto Rico Credit Facility is based on, at the election of
CPRW, (a) the "Base Rate," as defined, plus a margin of 1.50% or (b) the
"Eurodollar Rate", as defined, plus a margin of 2.50%, adjusted for the
maintenance of certain specified leverage ratios, as applicable. The Puerto Rico
Credit Facility is non-recourse to Centennial and the Company. The Puerto Rico
Credit Facility is secured by substantially all of the assets of CPRW and its
direct and indirect subsidiaries. The Puerto Rico Credit Facility restricts the
use of borrowing, limits the incurrence of certain additional indebtedness by
CPRW, limits CPRW's ability to declare and pay dividends to Centennial and
management fees to affiliates and requires that certain operating tests be met.
At August 31, 1997, $99,500 was outstanding under the Puerto Rico Credit
Facility.
At August 31, 1997, the Company and its subsidiaries were in compliance with all
covenants of their respective debt agreements.
9
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NOTE 8. NEW ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 128, "Earnings Per Share", which is effective for
financial statements ending after December 15, 1997. This statement supercedes
Accounting Principles Board Opinion No. 15 ("APB 15") and replaces the
presentation of primary Earnings Per Share ("EPS") on the face of the statement
of operations. Adoption of SFAS 128 will not result in a change of EPS
previously reported by the company using APB 15. Disclosure of Diluted EPS is
not currently required due to the anti-dilutive effect of the Company's equity
instruments.
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 129, "Disclosure of Information about Capital
Structures", Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income", and Statement of Financial Accounting Standards No. 131,
"Disclosures about Segments of an Enterprise and Related Information" in 1997.
The Company believes these Statements will not have a material impact on the
consolidated financial statements of the Company when adopted.
NOTE 9. STOCK REPURCHASE
In October 1992, the Company's Board of Directors authorized the purchase of up
to 2,000,000 shares of its Class A Common Stock in the open market and in
privately negotiated transactions, depending on prevailing market conditions.
During August, 1997, the Company announced that its Board of Directors
authorized the repurchase in the open market and in privately negotiated
transactions, from time to time, of up to 5,000,000 additional shares of Class A
Common Stock, depending on prevailing market conditions. The Company purchased
171,500 shares of Class A Common Stock in the open market for an aggregate
purchase price of $660 during the fourth quarter of fiscal 1997. During the
three months ended August 31, 1997, the Company purchased 736,000 additional
shares of Class A Common Stock in the open market for an aggregate purchase
price of $3,990. Subsequent to August 31, 1997, the Company purchased 1,071,000
of such shares in the open market for an aggregate purchase price of $6,962.
These shares have been accounted for as treasury shares during the respective
fiscal years. As of October 8, 1997, the Company is authorized to repurchase
5,021,500 additional shares of Class A Common Stock after giving effect to the
shares repurchased to date.
On December 21, 1994, Centennial announced that its Board of Directors
authorized the repurchase in the open market and in privately negotiated
transactions from time to time, of up to 1,000,000, shares of Class A Common
Stock, depending on prevailing market conditions. Also, during the three months
ended August 31, 1997, Centennial announced that its Board of Directors had
authorized the repurchase in the open market and in privately negotiated
transactions of up to an additional 3,000,000 shares of its Class A Common
Stock, depending on prevailing market conditions. During the three months ended
August 31, 1997, Centennial purchased 262,000 shares of its Class A Common Stock
in the open market for an aggregate purchase price of $4,192. Subsequent to
August 31, 1997, Centennial purchased 280,000 additional shares of such common
stock in the open market for an aggregate purchase price of $4,938. These shares
have been accounted for as Treasury Shares. As of October 8, 1997, Centennial is
authorized to repurchase 3,458,000 additional shares of Class A Common Stock
after giving effect to the shares repurchased to date.
NOTE 10. SUBSEQUENT EVENT
On September 29, 1997, the Company issued 8 3/4% Senior Notes due 2007 (the
"8 3/4% Notes") in the principal amount of $225,000, which mature on October 1,
2007. The 8 3/4% Notes were issued pursuant to a prior $500,000 shelf
registration of the Company's securities filed with the Securities and Exchange
commission on April 4, 1997 (which became effective on July 15, 1997). As of
October 8, 1997, $277,000 remained
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available for issuance under the shelf registration statement. The 8 3/4% Notes
bear interest at 8 3/4% payable semi-annually on April 1 and October 1 of each
year commencing April 1, 1998. The 8 3/4% Notes may not be redeemed prior to
maturity.
The 8 3/4% Notes rank pari passu with all existing and future Senior
Indebtedness (as that term is defined in the Indenture under which the 8 3/4%
Notes were issued) of the Company, including the 9 3/4% Senior Notes due 2002,
the 9 1/2% Senior Notes due 2000, the Senior discount Notes due 2003, the 9 1/2%
Senior Notes due 2005 and the 8 7/8% Senior Notes due 2007, and will be senior
in right of payment to all existing and future subordinated indebtedness of the
Company.
The net proceeds received by the Company from the sale of the Notes of
approximately $220,915 were used to repay temporarily a portion of the long-term
debt outstanding under the CCC-I Credit Agreement. Further borrowings may be
made under the CCC-I Credit Agreement until August 31, 1999 for general
corporate purposes, including, but not limited to, the financing of capital
expenditures, investments, purchases of the Company's securities, and
acquisitions.
11
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NOTE 11. SEGMENT INFORMATION - (UNAUDITED)
Information about the Company's operations in its three business segments for
the three months ended August 31, 1997 and 1996 is as follows (amounts in
thousands):
<TABLE>
<CAPTION>
1997 1996
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Revenue:
Cable television $ 119,564 $ 112,728
Wireless telephone 52,853 32,365
Australian operations 8,460 7,954
Eliminations (128) (43)
----------- -----------
$ 180,749 $ 153,004
=========== ===========
Operating (loss) income:
Cable television $ 24,589 $ 24,648
Wireless telephone (2,128) (3,399)
Australian operations (3,348) (45,520)
Eliminations (49) (43)
----------- -----------
$ 19,064 $ (24,314)
=========== ===========
Net loss:
Cable television $ (15,376) $ (10,004)
Wireless telephone (6,786) (6,107)
Australian operations (6,986) (49,235)
Eliminations 4,580 4,134
----------- -----------
$ (24,568) $ (61,212)
=========== ===========
Assets, at end of period
Cable television $ 1,535,066 $ 1,573,102
Wireless telephone 846,369 783,038
Australian operations 55,024 87,875
Eliminations (286,414) (271,309)
----------- -----------
$ 2,150,045 $ 2,172,706
=========== ===========
Depreciation and amortization:
Cable television $ 38,314 $ 37,655
Wireless telephone 25,062 18,481
Australian operations 3,678 6,514
----------- -----------
$ 67,054 $ 62,650
=========== ===========
Capital expenditures:
Cable television $ 29,181 $ 11,472
Wireless telephone 34,759 23,481
Australian operations 586 1,658
----------- -----------
$ 64,526 $ 36,611
=========== ===========
</TABLE>
The Company's consolidated financial statements include three distinct business
segments. Century Communications owns, operates and develops domestic cable
television systems. Centennial Cellular Corp., an approximately 32% owned
subsidiary, owns, operates and invests in wireless telephone systems. The
Company has determined to pursue a strategy to sell its investments in the
Australian operations. The information provided below is that of Century
Communications (before the consolidation of Centennial Cellular Corp. and the
Australian operations), Centennial Cellular Corp., which comprises the Company's
wireless telephone business segment, the Company's Australian operations, as
well as consolidated information.
12
<PAGE>
<PAGE>
NOTE 11 - CONTINUED
CENTURY COMMUNICATIONS CORP. AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEET FINANCIAL DATA
AUGUST 31, 1997
(UNAUDITED)
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
Century
Communications
Corp. before
consolidation Centennial Reclassification
of Centennial Cellular Australian and
and Australia Corp. Operations Eliminations Consolidated
------------- ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and short-term investments $ 106,855 $ 46,510 $ 5,288 $ -- $ 158,653
Accounts receivable - net 32,770 30,490 4,475 (6,110) 61,625
Prepaid expenses and other
current assets 4,512 6,015 1,610 -- 12,137
----------- ----------- ----------- ----------- -----------
Total current assets 144,137 83,015 11,373 (6,110) 232,415
Property, plant & equipment - net 528,520 189,295 15,354 -- 733,169
Investment in marketable equity
securities 40,950 -- -- -- 40,950
Investment in Centennial Cellular
Corp., at cost 139,685 -- -- (139,685) --
Equity investment in cable television
and wireless telephone systems -
net 146,748 93,421 (137) (137,352) 102,680
Debt issuance costs - net 20,587 9,383 -- -- 29,970
Cable television franchises - net 354,530 -- 28,434 -- 382,964
Wireless telephone licenses - net -- 334,339 -- -- 334,339
Excess of purchase price over value
of net assets acquired - net 149,414 129,107 -- -- 278,521
Other assets 10,495 7,809 -- (3,267) 15,037
----------- ----------- ----------- ----------- -----------
$ 1,535,066 $ 846,369 $ 55,024 $ (286,414) $ 2,150,045
=========== =========== =========== =========== ===========
</TABLE>
13
<PAGE>
<PAGE>
NOTE 11. CONTINUED
CENTURY COMMUNICATIONS CORP. AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEET FINANCIAL DATA
(CONTINUED)
AUGUST 31, 1997
(UNAUDITED)
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
Century Communications
Corp. before
consolidation Centennial Reclassification
of 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 $ -- $ 14,321 $ -- $ 14,371
Accounts payable 26,756 3,747 2,916 -- 33,419
Accrued expenses and other
current liabilities 74,363 58,397 17,502 (11,940) 138,322
----------- ----------- ----------- ----------- -----------
Total current liabilities 101,169 62,144 34,739 (11,940) 186,112
Long-term debt 1,782,880 449,500 -- -- 2,232,380
Deferred liability 5,000 2,200 -- (7,200) --
Deferred income taxes 8,482 41,115 -- -- 49,597
Minority interest in subsidiaries 60,605 -- -- 65,162 125,767
Due to parent -- -- 146,748 (146,748) --
Convertible redeemable preferred stock -- 186,287 -- -- 186,287
Second series convertible
redeemable preferred stock -- 7,252 -- (7,252) --
Common stockholders' equity (deficiency):
Common stock, par value $.01 per share:
Class A 635 165 -- (165) 635
Class B 444 105 -- (105) 444
Additional paid-in capital 88,558 365,671 -- (278,166) 176,063
Other (135,542) (8,993) 1,913 8,993 (133,629)
Accumulated deficit (377,165) (259,077) (128,376) 91,007 (673,611)
----------- ----------- ----------- ----------- -----------
Total common stockholders'
equity (deficiency) (423,070) 97,871 (126,463) (178,436) (630,098)
----------- ----------- ----------- ----------- -----------
$ 1,535,066 $ 846,369 $ 55,024 $ (286,414) $ 2,150,045
=========== =========== =========== =========== ===========
</TABLE>
14
<PAGE>
<PAGE>
NOTE 11. CONTINUED
CENTURY COMMUNICATIONS CORP. AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF OPERATIONS FINANCIAL DATA
THREE MONTH PERIOD ENDED AUGUST 31, 1997
(UNAUDITED)
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
Century
Communications
Corp. before
consolidation Centennial Reclassification
of Centennial Cellular Australian and
and Australia Corp. Operations Eliminations Consolidated
------------- ----- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Revenue $ 119,564 $ 52,853 $ 8,460 $ (128) $ 180,749
--------- --------- --------- --------- ---------
Costs and expenses:
Costs of services 26,216 11,955 -- -- 38,171
Selling, general & administrative 30,445 17,964 -- (79) 48,330
Depreciation and amortization 38,314 25,062 3,678 -- 67,054
Australian operations -- -- 8,130 -- 8,130
--------- --------- --------- --------- ---------
94,975 54,981 11,808 (79) 161,685
--------- --------- --------- --------- ---------
Operating income/(loss) 24,589 (2,128) (3,348) (49) 19,064
--------- --------- --------- --------- ---------
Income (loss) from equity investments -- 4,206 -- (4,206) --
Interest 38,977 10,705 2,614 -- 52,296
Gain on sale of assets 1,999 5 -- -- 2,004
Other (income)/loss 21 -- 1,024 (4,206) (3,161)
--------- --------- --------- --------- ---------
Loss before income tax
benefit and minority interest (12,410) (8,622) (6,986) (49) (28,067)
Income tax benefit (40) (1,971) -- -- (2,011)
--------- --------- --------- --------- ---------
Loss before minority interest (12,370) (6,651) (6,986) (49) (26,056)
Minority interest in (income) loss
of subsidiaries (3,006) (135) -- 4,629 1,488
--------- --------- --------- --------- ---------
Net loss $ (15,376) $ (6,786) $ (6,986) $ 4,580 $ (24,568)
========= ========= ========= ========= =========
</TABLE>
15
<PAGE>
<PAGE>
NOTE 12. CHANGES IN STOCKHOLDERS' DEFICIENCY
<TABLE>
<CAPTION>
Common Stock
------------------------------------------------------------------------
Class A Class B
------------------------------- --------------------------------
Shares Dollars Shares Dollars
---------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Balance at June 1, 1996 59,946,280 $ 599 45,406,115 $ 454
Shares issued in connection with
employee incentive plans 711,490 7 25,000
Class A shares purchased by
the Company
Class B shares converted to
Class A shares 305,000 3 (305,000) (3)
Class A shares issued in connection
with acquisitions 1,732,357 18
Subsidiary preferred stock dividends
Foreign currency translation adjustment
Change in unrealized appreciation of
marketable securities
Income tax benefit - subsidiary stock
options exercised
Net loss
---------- ----------- ---------- -----------
Balance at May 31, 1997 62,695,127 627 45,126,115 451
Shares issued in connection with
employee incentive plans 2,500 --
Class A shares purchased by the Company
Class B shares converted to Class A shares 768,807 8 (768,807) (7)
Subsidiary preferred stock dividends
Foreign currency translation adjustment
Change in unrealized appreciation of
marketable securities
Net loss
---------- ----------- ---------- -----------
Balance at August 31, 1997 - Unaudited 63,466,434 $ 635 44,357,308 $ 444
========== =========== =========== ===========
</TABLE>
16
<PAGE>
<PAGE>
NOTE 12. CHANGES IN STOCKHOLDERS' DEFICIENCY (CONTINUED)
<TABLE>
<CAPTION>
Additional Paid-In (Accumulated
Capital Deficit) Other Total
----------------- ------------ ------------ -------
<S> <C> <C> <C> <C>
Balance at June 1, 1996 $ 175,804 $ (507,168) $ (117,702) $(448,013)
Shares issued in connection with
employee incentive plans 3,948 3,955
Class A shares purchased by the Company (2,359) (2,359)
Class B shares converted to Class A shares --
Class A shares issued in connection with acquisition (18) --
Subsidiary preferred stock dividends (4,850) (4,850)
Foreign currency translation adjustment 462 462
Change in unrealized appreciation of
marketable securities (7,950) (7,950)
Income tax benefit - subsidiary stock
options exercised 1,987 1,987
Net loss (141,875) (141,875)
--------- ----------- ----------- ---------
Balance at May 31, 1997 176,871 (649,043) (127,549) (598,643)
Shares issued in connection with
employee incentive plans 451 451
Class A shares purchased by the Company (4,116) (4,116)
Class B shares converted to Class A shares 1
Subsidiary preferred stock dividends (1,259) (1,259)
Foreign currency translation adjustment 2,204 2,204
Change in unrealized appreciation of
marketable securities (4,168) (4,168)
Net loss (24,568) (24,568)
--------- ----------- ----------- ---------
Balance at August 31, 1997 - Unaudited $ 176,063 $ (673,611) $ (133,629) $(630,098)
========= =========== =========== =========
<CAPTION>
OTHER STOCKHOLDERS' DEFICIENCY ITEMS: August 31, 1997
- ------------------------------------ (Unaudited) May 31, 1997
-------------- -------------
Treasury stock, at cost $(144,237) $(140,121)
Unrealized appreciation of marketable securities 8,695 12,863
Foreign currency translation adjustment 1,913 (291)
--------- ---------
$(133,629) $(127,549)
========= =========
</TABLE>
17
<PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information contained in this Part I, Item 2 updates, and should be read in
conjunction with, information set forth in Part II, Items 7 and 8, in the
Company's Annual Report on form 10-K for the fiscal year ended May 31, 1997, in
addition to the interim consolidated financial statements and accompanying notes
presented in Item 1 of this Form 10-Q.
RESULTS OF OPERATIONS (dollar amounts in thousands except subscriber, pop and
share data)
The Company is primarily engaged in the ownership and operation of cable
television systems in the United States and earns its revenues primarily from
subscriber fees. At August 31, 1997, the Company owned and operated 70 cable
television systems in 25 states and Puerto Rico. At that date, the Company's
cable systems passed approximately 2,252,000 homes and served a total of
approximately 1,268,000 primary basic subscribers. Certain of the Company's
cable systems are owned 50% by the Company and 50% by unaffiliated entities. At
August 31, 1997, these 50% owned systems passed approximately 552,000 homes and
served approximately 280,000 primary basic subscribers in the aggregate.
The Company has a common stock interest of approximately 32% and, through
ownership of a class of common stock which has disproportionate votes per share
(15 votes per share), a voting interest of approximately 74% in Centennial
Cellular Corp. ("Centennial"). The Company also provides management services to
Centennial. Centennial is engaged in the ownership and operation of wireless
telephone systems, primarily in four geographic areas in the United States and
Puerto Rico. The market value of this interest, based solely on the equivalent
number of publicly-traded shares of Class A Common Stock of Centennial, was
$137,756 on August 31, 1997. In accordance with Financial Accounting Standards
Board Statement No. 94, the accounts of Centennial are consolidated with those
of the Company for reporting purposes for all periods presented.
Certain of the Company's cable television systems are subject to rate regulation
which has negatively affected the Company's business. The Company has
implemented new rate and service offerings which give subscribers 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. Several of the
Company's systems, along with numerous other cable operators, received specific
inquiries from the Federal Communications Commission (the "FCC") regarding their
implementation of this method of offering cable services. A proposed resolution
of the inquiry which is based, in part, upon pending basic and cable programming
service tier rate complaints in several Los Angeles area cable systems served by
the Company, requires the Company to adjust its rates for its basic and cable
programming services tiers and make subscriber refunds.
The Telecommunications Act of 1996 (the "Act") which was enacted in February
1996, alters federal, state and local laws and regulations regarding
telecommunications providers and services, including the cable television
industry. The Act deregulates (except for basic service) cable service rates
over a three year period. Implementing regulations of the Act are currently
being promulgated. The effect that the Act will have on the Company's cable
television business cannot be determined at this time.
18
<PAGE>
<PAGE>
THREE MONTHS ENDED AUGUST 31, 1997 AND AUGUST 31, 1996
The following discussion describes the Company's three business segments: cable
television, wireless telephone investment and Australian investments.
Cable Television
Consolidated revenues for the three months ended August 31, 1997 increased by
$27,745 or 18.1%, over the three months ended August 31, 1996. Revenue from
cable television operations increased by $6,751 or 6.0%, over the corresponding
three months ended August 31, 1996, principally as a result of increasing
subscription fees and increases in the number of cable television subscriptions.
Average primary basic cable television subscribers "Basic Subscribers" for the
twelve months ended August 31, 1997 were approximately 1,258,000, as compared to
approximately 1,121,000 Basic Subscribers for the twelve-month period ended
August 31, 1996, an increase of 12.2%. Acquisitions accounted for approximately
84% of the increase. Average monthly revenue per Basic Subscriber, including
programmers' share of such revenue, was approximately $38.30 during the twelve
months ended August 31, 1997, as compared to approximately $35.90 during the
comparable prior twelve month period, an increase of 6.7%.
Cost of services of the Company's cable television operations increased by
$1,871, or 7.7%, while selling, general and administrative expenses of the
Company's cable television operations increased by $4,286, or 16.4%. The
principal reason for the increase in these costs was the increase in the
variable component of the Company's cost structure which increases in relation
to increased revenue. The Company anticipates continued increases in the cost of
services and selling, general and administrative expenses as the growth of its
businesses continues.
Depreciation and amortization of the Company's cable and wireless operations for
the three months ended August 31, 1997 increased by $7,240, or 12.9% over the
three months ended August 31, 1996. The cable television operations accounted
for $659 of this increase.
Consolidated operating income for the three months ended August 31, 1997
increased to $19,064 or $43,378 above the operating loss of $24,314 for the
three months ended August 31, 1996, principally as a result of the Company's
$40,000 write-down of Australian assets during the three months ended August 31,
1996. (See Liquidity and Capital Resources - Investments - Australian Pay
Television). The wireless telephone operations contributed $2,128 of operating
losses. The Company's operating income related to its cable television
operations was $24,540, a decrease of $65, or 0.3% below the three months ended
August 31, 1996.
Consolidated other income represents primarily the Company's proportionate share
of the net income or loss of minority investment interests accounted for by the
Company using the equity method of accounting. The Company has recorded $1,024
and $1,468 of expense for the three months ended August 31, 1997 and 1996,
respectively, for its minority investments in Australia, offset, in part, by
$4,206 and $3,662 of income for the three months ended August 31, 1997 and
August 31, 1996, respectively, related to minority wireless telephone
investments held by Centennial.
Consolidated interest expense for three months ended August 31, 1997 increased
by $3,872, or 8.0% as compared with the three months ended August 31, 1996,
principally as a result of increased borrowings of
19
<PAGE>
<PAGE>
Centennial. Interest expense of the Company's cable segment declined by $160.
For the three months ended August 31, 1997, the average debt outstanding of the
cable segment was approximately $1,755,406 or $42,000 above the average
outstanding debt balance of $1,712,971 during the three months ended August 31,
1996. The increase in borrowings was partially offset by a decline in interest
rates. The Company's weighted average interest rate excluding borrowings of
Centennial, the Australian investments and the Company's 50% owned joint
ventures was approximately 8.8% in the three months ended August 31, 1997, as
compared to approximately 9.2% in the three months ended August 31, 1996.
After losses attributable to minority interests in subsidiaries for the three
months ended August 31, 1997, a consolidated pretax loss of $26,579 was
incurred, as compared to a pretax loss of $67,810 for the three months ended
August 31, 1996. The income tax benefit of $2,011 for the three months ended
August 31, 1997 represents a reduction of the deferred tax liability by the tax
effect of the current period losses of the Company, offset by current state and
local taxes for the period. These tax benefits are non-cash in nature. The
Company anticipates that beginning in the current fiscal year it will record
limited tax benefits resulting from operating losses. As a result, the Company
expects that net losses and loss per share will increase.
The consolidated net loss for the three months ended August 31, 1997 of $24,568
represents a decrease of $36,644 from the loss of $61,212 for the three months
ended August 31, 1996, principally as a result of the Company's $40,000
write-down of Australian assets during the three months ended August 31, 1996.
(See Liquidity and Capital Resources - Investments - Australian Pay Television).
The Company expects net losses to continue until such time as the cable
television systems and investments in plant associated with rebuilds and
extensions of its cable television systems and expansion of Centennial's
wireless telephone system infrastructure generate sufficient earnings to offset
the associated costs of acquisitions and operations.
Wireless Telephone Investment
Centennial's revenue increase accounted for 73.8% of the total increase in the
revenue of the Company. Revenue from wireless telephone operations for the three
months ended August 31, 1997 increased by $20,488, or 63.3%, over the three
months ended August 31, 1996. The increase in revenue was principally the result
of growth in subscriptions to, and the resulting increased usage of, wireless
telephone service. Centennial's Puerto Rico Wireless Telephone System
contributed $7,720 or 37.7% of Centennial's increase in revenue.
Cost of services related to Centennial's wireless telephone operations, which
accounted for 31.3% of the total cost of services for the Company, during the
three months ended August 31, 1997 was $11,955, an increase of $4,486 or 60.1%
as compared to the three months ended August 31, 1996. The increase was due in
part to a larger number of telephone units sold, the variable costs associated
with a larger revenue and subscription base and increased wireless telephone
coverage areas resulting from the continued expansion of Centennial's network,
and the commencement of PCS telephone service in Puerto Rico. Cost of services
for the Puerto Rico Wireless Telephone System were $2,314 and $592 for the three
months ended August 31, 1997 and 1996, respectively.
Selling, general and administrative expenses related to Centennial's wireless
telephone operations, representing 37.2% of the total amount for the Company,
rose to $17,964, an increase of $8,150 or 83.0% above the $9,814 recorded during
the three months ended August 31, 1996. The increase resulted primarily from the
variable costs associated with a larger subscription and revenue base and an
increase in Centennial's managerial, customer service and sales staff to
accommodate the larger subscription and revenue base and
20
<PAGE>
<PAGE>
the anticipated growth of its wireless telephone business as well as the
commencement of PCS telephone service in Puerto Rico. Selling, general and
administrative expenses for Centennial's Puerto Rico Wireless Telephone System
were $5,784 and $786 for the three months ended August 31, 1997 and 1996,
respectively.
The wireless telephone operations and acquisitions accounted for $6,581, or
90.9% of the increase in the Company's domestic depreciation and amortization
during the quarter ended August 31, 1997.
Centennial's wireless telephone operating loss for the three months ended August
31, 1997 of $2,128 declined by $1,271, or 37.4% from the loss of $3,399 for the
three months ended August 31, 1996. The operating loss for the Puerto Rico
Wireless Telephone System was $5,467 for the three months ended August 31, 1997.
Gross interest costs for the quarter ended August 31, 1996 include capitalized
interest charges of $1,299 related to the acquisition cost of Centennial's PCS
license during the pre-operational stage of the business . Gross interest costs
of the wireless segment for the three months ended August 31, 1997 and August
31, 1996 were $10,705 and $8,340. The increase is the result of additional
borrowings for acquisitions, working capital and debt service. Centennial's
average debt outstanding during the three months ended August 31, 1997 was
$441,103, an increase of $91,103 as compared to the average debt level of
$350,000 during the three months ended August 31, 1996. Centennial's weighted
average interest rate increased to 9.7% for the three months ended August 31,
1997 from 9.5% for the three months ended August 31, 1996.
The Company expects net losses in Centennial's wireless operations to continue
for the foreseeable future until such time as the operations of the wireless
telephone systems and expansion of the wireless telephone system infrastructure
generate sufficient earnings to offset the associated costs of acquisitions and
operations.
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. Since both the cable
television and wireless telephone activities are capital intensive, the Company
and Centennial must continue to seek various sources of financing to meet their
respective needs, including growth in internally generated cash, bank financing,
joint ventures and partnerships and public and private placements of debt and
equity securities. Certain subsidiaries of the Company (other than Centennial)
have entered into credit agreements with various bank groups and private lending
institutions providing for an aggregate of approximately $1,255,000 of potential
borrowing capacity for cable operations. Centennial and subsidiaries of
Centennial have entered into credit agreements with various bank groups which
furnish approximately $205,000 of potential borrowing capacity for wireless
telephone operations at August 31, 1997, which indebtedness is non-recourse to
the Company.
The Company's internally-generated cash, along with third party financing,
primarily bank borrowings and the issuance of debt securities to the public,
have enabled it to fund its working capital requirements, capital expenditures
for property, plant and equipment, acquisitions, investments and debt service.
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.
21
<PAGE>
<PAGE>
During the three months ended August 31, 1997, the Company made capital
expenditures of $64,526 of which 53.9% were made by Centennial. The Company's
future commitments for property, plant and equipment in its cable television
business consist of usual upgrades, extensions, betterments and replacements of
cable plant and equipment. As the Company completes capital projects started in
prior fiscal years, it anticipates an annualized rate of approximately $100,000
for cable television capital expenditures in fiscal 1998. 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. Funds for cable television capital projects and
related equipment are currently available from internally generated cash and
other financing resources.
For the three months ended August 31, 1997, consolidated earnings were less than
fixed charges by $29,326. However, such amount reflects non-cash charges
totaling $68,313, consisting of depreciation and amortization and subsidiary
preferred stock dividends. Historically, cash generated from operating
activities has exceeded fixed charges. The Company believes that, in fiscal
1998, 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.
Centennial's wireless telephone capital projects include the addition of cell
sites for greater coverage areas, as well as enhancements to the existing
infrastructure of the wireless system. Centennial expects capital expenditures
for its domestic wireless telephone markets of $30,000 during fiscal 1998.
During fiscal 1996, Centennial began construction of its PCS network in Puerto
Rico and spent approximately $29,141 during the three months ended August 31,
1997. These capital expenditures included $19,408 to continue the buildout of
Centennial's PCS network infrastructure and $9,733 to purchase telephone units
which remain the property of Centennial while in use by subscribers. Centennial
currently estimates that the cost to continue the build-out of the
infrastructure of its PCS network will be approximately $35,000 to be expended
during fiscal 1998. Funds for Centennial's capital expenditure requirements may
be provided by other bank borrowings, debt or equity issuances or other
financing resources.
It is anticipated that in fiscal 1998, cash generated from Centennial's wireless
telephone operations will not fully cover required capital expenditures, the
debt service under its credit agreements and preferred stock dividends. Although
to date, Centennial has been able to obtain financing on satisfactory terms,
there is no assurance that this will continue to be the case in the future. It
is currently anticipated that any shortfall will be made up either through
equity issuances or additional borrowing. Based upon current market conditions,
the Company expects that cash flows from operations and funds from currently
available credit facilities will be sufficient to enable Centennial to meet
required cash commitments through fiscal 1998.
Cash on hand was sufficient to fund the Company's expenditures for property,
plant and equipment and financing and investing activities. The Company will
continue to rely on internally generated cash as well as various financing
activities to fund these requirements.
22
<PAGE>
<PAGE>
FINANCING AND CAPITAL FORMATION - THE COMPANY
CCC-II, Inc. ("CCC-II"), a subsidiary of the Company, entered into a credit
agreement as amended August 12, 1996, that provides CCC-II 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
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 0% to 0.5% per annum based upon certain conditions, or (b) the London
Interbank Offering Rate plus 0.75% to 1.375% 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. CCC-II was in compliance with the
terms of the credit facility at August 31, 1997. At August 31, 1997, $199,000
was available for borrowing under this facility.
CCC-I, Inc. ("CCC-I"), a subsidiary of the Company, entered into a credit
agreement as amended August 12, 1996, that provides CCC-I a three year $525,000
unsecured revolving credit facility that 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 were used by the Company to repay existing indebtedness
and will be used for working capital and general corporate purposes. The
interest rates payable on borrowings under the credit facility are based on, at
the election of CCC-I, (a) the base rate of interest announced by Citibank, N.A.
plus 0% to 0.625% per annum based upon certain conditions, or (b) the London
Interbank Offering Rate plus 0.75% to 1.625% 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. CCC-I was in compliance with the
terms of the credit facility at August 31, 1997. At August 31, 1997, $165,900
was available for borrowing under this facility.
On January 17, 1997, the Company issued Senior Notes due 2007 ("8 7/8% Notes")
in the principal amount of $250,000 which mature on January 15, 2007. The 8 7/8%
Notes were issued pursuant to a prior $500,000 shelf registration of the
Company's securities filed with the Securities and Exchange Commission ("SEC")
on October 26, 1993. The 8 7/8% Notes bear interest at 8 7/8% payable
semiannually on January 15 and July 15 of each year commencing July 15, 1997.
The 8 7/8% Notes may not be redeemed prior to maturity.
The 8 7/8% Notes will rank pari passu with all existing and future Senior
Indebtedness (as that term is used in the Indenture under which the 8 7/8% Notes
were issued) of the Company, including the 9 3/4% Senior Notes due 2002, the
9 1/2% Senior Notes due 2000, the Senior Discount Notes due 2003 and the 9 1/2%
Senior Notes due 2005, and will be senior in right of payment to all existing
and future subordinated indebtedness of the Company.
The net proceeds received by the Company from the sale of the 8 7/8% Notes, of
approximately $244,607, were used to temporarily repay a portion of the
long-term debt outstanding under two credit agreements executed by subsidiaries
of the Company. Subsequently, bank borrowings were used to retire $204,000
aggregate principal amount of 11 7/8% Senior Subordinated Debentures due 2003
issued by the Company in October 1991 (the "11 7/8% Debentures). The 11 7/8%
Debentures were called by the Company on April 15, 1997 at a redemption price of
105% of the principal amount thereof. Accordingly, the amount required to retire
the 11 7/8% Debentures at such time was $214,200 plus accrued interest of
$12,113. The effect of the redemption resulted in an extraordinary loss during
the fourth quarter of fiscal 1997 of approximately
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$7,582, net of income taxes, reflecting the call premium and write-off of
deferred financing costs. The balance of the proceeds were used by the Company
for working capital and general corporate purposes
On April 4, 1997, the Company filed a registration statement with the SEC
relating to the shelf registration of $500,000 of the Company's debt securities
augmenting the remaining $2,000 available under a prior registration statement.
The registration statement became effective on July 15, 1997. On September 29,
1997, the Company issued 8 3/4% Senior Notes due 2007 (the "8 3/4% Notes") in
the principal amount of $225,000, which mature on October 1, 2007, pursuant to
this shelf registration. The 8 3/4% Notes bear interest at 8 3/4% payable
semiannually on April 1 and October 1 of each year commencing April 1, 1998. The
8 3/4% Notes may not be redeemed prior to maturity.
The 8 3/4% Notes rank pari passu with all existing and future Senior
Indebtedness of the Company, including the 9 3/4% Senior Notes due 2002, the
9 1/2% Senior Notes due 2000, the Senior Discount Notes due 2003, the 9 1/2%
Senior Notes due 2005 and the 8 7/8% Senior Notes due 2007, and will be senior
in right of payment to all existing and future subordinated indebtedness of the
Company.
The net proceeds received by the Company from the sale of the Notes of
approximately $220,915 were used to repay temporarily a portion of the long-term
debt outstanding under the CCC-I Credit Agreement. Further borrowings may be
made under the CCC-I Credit Agreement until August 31, 1999 for general
corporate purposes, including, but not limited to, the financing of capital
expenditures, investments, purchases of the Company's securities, and
acquisitions. As of October 8, 1997, $277,000 remained available for issuance
pursuant to the shelf registration.
On July 31, 1995, a subsidiary of the Company, Century Venture Corp. ("CVC"),
entered into a three year, $80,000 revolving credit facility that 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 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 and provides for a reduction in the aggregate commitment,
among other possible reductions beginning on November 30, 1998. 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. CVC is in compliance with the terms of the credit
facility. At August 31,1997, $28,500 was available for borrowing under this
facility.
On April 15, 1997, Citizens Century Cable Television Venture ("CCCTV") entered
into an agreement for the provision of a three-year revolving credit facility in
the principal amount of $200,000 with Bank of America and Societe General, which
converts into a five-year term loan. The facility is secured by the assets of
CCCTV. The loan is non-recourse to both Citizens and the Company. Borrowings
under the facility are to be repaid in semi-annual installments commencing June
30, 2000 and expiring on March 31, 2005. The facility requires mandatory
prepayments of principal refinancing to the extent that the loan balance exceeds
the refinancing on the working capital commitment (as defined in the facility).
Borrowings under the facility bear interest, at the option of CCCTV, at either
the base rate, certificate of deposit rate, or the Eurodollar rate, plus the
applicable margin (as defined in the facility). The principal use of proceeds
will be to fund acquisitions as well as general corporate purposes. No amounts
were outstanding under the facility at August 31, 1997.
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FINANCING AND CAPITAL FORMATION - CENTENNIAL
Centennial, since August 1988, has acquired licenses for 29 wireless telephone
markets in the United States that it owns and manages, some of which are
considered to be in the early development phase of operations. Centennial also
owns minority equity investment interests in certain other wireless telephone
systems. Centennial successfully bid on March 13, 1995 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 Puerto Rico Wireless Telephone System is in the start-up and
construction stage.
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 outstanding common
equity of Centennial. In connection with an amendment to a services agreement
with the Company, Centennial issued its Second Series Convertible Redeemable
Preferred Stock valued at $5,000 to the Company. The preferred stock carried no
cash dividend requirements through August 31, 1996, but the shares accreted
liquidation preference and redemption value at the rate of 7.5% per annum,
compounded quarterly until then. The fully accreted liquidation preference and
redemption value of the Convertible Redeemable Preferred Stock and the Second
Series Convertible Redeemable Preferred Stock held by Citizens and Century at
August 31, 1996 was $186,287 and $7,252, respectively. Beginning September 1,
1996, the holders of the Convertible Redeemable Preferred Stock and the Second
Series Convertible Redeemable Preferred Stock shall receive cash dividends at
the rate of 8.5% per annum when, and as declared by the Board of Directors of
Centennial, at its discretion. Assuming no change in the number of shares of
such classes outstanding, the annual dividend that may be declared and made
payable, which commenced in fiscal 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. Both classes
of Preferred Stock are subject to mandatory redemption in fiscal 2007. Any
unpaid dividends continue to accumulate without additional cost to Centennial.
On December 19, 1996, May 8, 1997 and August 1, 1997, Centennial paid cash
dividends to Citizens and Century of $3,959 and $154, respectively. Centennial
will determine the timing, amount, or distribution (if any) of additional
preferred stock dividends.
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 8, 1997,
4,239,231 shares were 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. At October 8, 1997, $400,000
aggregate amount of debt securities remained available for issuance.
On September 12, 1996, Centennial entered into a $75,000 revolving credit
facility with Citibank, N.A., which was amended on April 22, 1997 and further
amended on July 28, 1997 (the "Amended Credit Facility"). The Credit Facility
terminates on January 31, 2001. The Credit Facility may be used for working
capital and general corporate purposes. The interest rate payable on borrowings
under the Credit Facility is based on, at the election of Centennial, (a) the
"Base Rate," as defined, plus a margin of 2% or (b) the
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"Eurodollar Rate", as defined, plus a margin of 3%. The Credit Facility is
secured by the pledge of stock of certain of Centennial's subsidiaries not
otherwise subject to restrictions under its Senior Note Indentures, including
the subsidiary which operates the Benton Harbor system. The Credit Facility is
further guaranteed by certain of Centennial's subsidiaries holding Investment
Interests. The Credit Facility restricts the incurrence of certain additional
debt by Centennial, limits Centennial's ability to pay dividends and requires
that certain operating tests be met. At August 31, 1997, no amounts were
outstanding under the Credit Facility.
On April 25, 1997, Centennial Puerto Rico Wireless Corporation ("CPRW") entered
into a $130,000 revolving credit facility with Citibank, N.A. as agent which
converts to a four-year term loan on April 25, 2001 (the "Puerto Rico Credit
Facility"). The proceeds of the Puerto Rico Credit Facility will be used
primarily to finance the construction and operation of PCS, competitive access
and telecommunications networks in Puerto Rico and the United States Virgin
Islands. The proceeds will also be used for working capital and general
corporate purposes and were used to pay certain cash dividends to Centennial as
permitted by the Puerto Rico Credit Facility. The interest rate payable on
borrowings under the Puerto Rico Credit Facility are based on, at the election
of CPRW, (a) the "Base Rate," as defined, plus a margin of 1.50% or (b) the
"Eurodollar Rate", as defined, plus a margin of 2.50%, adjusted for the
maintenance of certain specified leverage ratios, as applicable. The Puerto Rico
Credit Facility is non-recourse to Centennial and the Company. The Puerto Rico
Credit Facility is secured by substantially all of the assets of CPRW and its
direct and indirect subsidiaries. The Puerto Rico Credit Facility restricts the
incurrence of certain additional debt and requires that certain operating tests
be met. At August 31, 1997, $99,500 was outstanding under the Puerto Rico Credit
Facility.
Centennial and its subsidiaries were in compliance with all covenants of their
respective debt agreements at August 31, 1997.
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
wireless 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
in Puerto Rico is expected to be capital intensive, requiring additional network
infrastructure buildout costs of approximately $35,000 for fiscal 1998. 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 wireless telephone providers as well as other MTA PCS license
holders. 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 wireless telephone operations
and PCS business will not be sufficient in the next several years to cover
interest, the preferred stock dividend requirements that commenced in the
current fiscal year, and required capital expenditures. 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.
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ACQUISITIONS - CABLE TELEVISION
On May 31, 1996, the Company acquired the cable television systems serving
Anaheim, Hermosa Beach/Manhattan Beach, Fairfield and Rohnert Park/Yountville,
California for an aggregate purchase price of approximately $287,600, subject to
adjustment. Funds for this acquisition were provided by an existing bank credit
facility. At May 31, 1996, such cable television systems served an aggregate of
approximately 135,000 primary basic subscribers.
On August 16, 1996, the Company entered into agreements to acquire two cable
television systems which serve an aggregate of approximately 35,000 primary
basic subscribers, which agreements were subsequently assigned to CCCTV, in
which each of the Company and Citizens have a 50% interest. These systems are
primarily located in Yorba Linda, Orange County and Diamond Bar, California.
Pursuant to the agreements, the aggregate purchase price for these systems was
approximately $69,500. CCCTV currently expects to fund the acquisitions using
available credit facilities. The purchase of these systems by CCCTV is subject
to regulatory approvals. There is no assurance that CCCTV will obtain such
approvals or that such acquisitions will be consummated.
ACQUISITIONS, EXCHANGES, DISPOSITIONS - CENTENNIAL
On September 12, 1996, Centennial acquired for approximately $35,000 in cash,
100% of the ownership interests in the partnership owning the non-wireline
cellular telephone system serving the Benton Harbor, Michigan MSA. The Benton
Harbor market represents approximately 161,400 Net Pops. "Net Pops" means a
market's Pops multiplied by the percentage interest that Centennial owns in an
entity licensed by the FCC to construct or operate a cellular telephone system
(or to provide personal communications services) in that market and "Pops" means
the population of a market based upon the final 1990 Census Report of the Bureau
of the Census, United States Department of Commerce.
Centennial has determined to pursue a strategy to sell or otherwise dispose of
substantially all of its minority interests in wireless telephone systems
representing approximately 1,100,000 Net Pops and has retained an investment
banker to assist in such disposition. Centennial has not yet made a final
determination as to the estimated sale proceeds or timing of such disposition.
INVESTMENTS
Australian Pay Television
Since fiscal 1994, the Company has invested, through a wholly-owned subsidiary,
approximately $149,000 in the Australian Pay TV industry, including
approximately $126,000 in ECT. The Company's investment in ECT was effected
through the acquisition by the Company of convertible debentures and ordinary
shares of ECT representing a 76.2% economic interest in ECT. 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 long-term management
agreements with ECT.
The Company also holds a 25% interest in a joint venture which provides
programming to ECT and other pay television services in Australia. The Company's
25% interest in XYZ is derived through the Company's
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joint venture with United International Holdings, Inc. ("UIH"), a leading
international provider of pay television services.
Since the fourth fiscal quarter of fiscal 1996, the Company has written down
$50,000 of its Australian investment. The Company is pursuing a strategy to sell
its investments in its Australian operations and has retained an investment
banker to assist in the separate sale of ECT and XYZ. It has also determined to
make no further investments in ECT. Once the Company has developed its formal
plan for disposition, including the means to complete that plan and the period
expected to be required for completion of the disposition, the Company
anticipates accounting for its Australian operations as discontinued operations.
The Company is currently unable to predict the ultimate resolution of these
matters. At August 31, 1997, the remaining net book value of its investments in
the various aspects of the Australian pay television industry, after giving
effect to the aforementioned write-down of Australian assets and the Company's
percentage of cumulative losses of ECT and XYZ, aggregated approximately
$18,000. The Company currently believes that the remaining net book value is
realizable.
STOCK REPURCHASE
In October 1992, the Company's Board of Directors authorized the purchase of up
to 2,000,000 shares of its Class A Common Stock in the open market and in
privately negotiated transactions, depending on prevailing market conditions.
During August 1997, the Company announced that its Board of Directors had
authorized the repurchase in the open market and in privately negotiated
transactions, from time to time, of up to 5,000,000 additional shares of Class A
Common Stock, depending on prevailing market conditions. The Company purchased
171,500 shares of Class A Common Stock in the open market for an aggregate
purchase price of $660 during the fourth quarter of fiscal 1997. During the
three months ended August 31, 1997, the Company purchased 736,000 additional
shares of such common stock in the open market for an aggregate purchase price
of $3,990. Subsequent to August 31, 1997, the Company purchased 1,071,000 of
such shares in the open market for an aggregate purchase price of $6,962. These
shares have been accounted for as Treasury Shares during the respective fiscal
years. As of October 8, 1997, the Company is authorized to repurchase 5,021,500
additional shares of Class A Common Stock after giving effect to the shares
repurchased to date.
On December 21, 1994, Centennial announced that its Board of Directors
authorized the repurchase in the open market and in privately negotiated
transactions from time to time, of up to 1,000,000, shares of Class A Common
Stock, depending on prevailing market conditions. Also, during the three months
ended August 31, 1997, Centennial announced that its Board of Directors had
authorized the repurchase in the open market and in privately negotiated
transactions of up to an additional 3,000,000 shares of its Class A Common
Stock, depending on prevailing market conditions. During the three months ended
August 31, 1997, Centennial purchased 262,000 shares of its own Class A Common
Stock in the open market for an aggregate purchase price of $4,192. Subsequent
to August 31, 1997, Centennial purchased 280,000 additional shares of such
common stock in the open market for an aggregate purchase price of $4,938. These
shares have been accounted for as Treasury Shares. As of October 8, 1997,
Centennial is authorized to repurchase 3,458,000 additional shares of Class A
Common Stock after giving effect to the shares repurchased to date.
* * * * *
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CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR"
PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This report contains or incorporates by reference forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
Where any such forward-looking statement includes a statement of the assumptions
or bases underlying such forward-looking statement, the Company cautions that
assumed facts or bases almost always vary from actual results, and the
differences between assumed facts or bases and actual results can be material,
depending upon the circumstances. Where, in any forward-looking statement, the
Company or its management expresses an expectation or belief as to future
results, there can be no assurance that the statement of expectation or belief
will result or be achieved or accomplished. The words "believe", "expect",
"estimate", "anticipate", "project" and similar expressions may identify
forward-looking statements.
Taking into account the foregoing, the following are identified as important
factors that could cause actual results to differ materially from those
expressed in any forward-looking statement made by, or on behalf of, the
Company: the Company's net losses and stockholders' deficiency; the Company's
debt structure: the competitive nature of the cable television and wireless
telephone industries; regulation; restrictive covenants and consequences of
default contained in the Company's financing arrangements; control by certain of
the Company's stockholders; the recovery of the Company's Australian investment;
operating hazards and uninsured risks; refinancing and interest rate exposure
risks; and potential for changes in accounting standards. A more detailed
discussion of each of the foregoing factors can be found in the Company's Annual
Report on Form 10-K for the Fiscal Year ended May 31, 1997 under the heading
"CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995" in Item 7 of such Form 10-K.
Other factors may be detailed from time to time in the Company's filings with
the SEC. The Company assumes no obligation to update its forward looking
statements or to advise of changes in the assumptions and factors on which they
are based.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no material pending legal proceedings, other than routine litigation
incidental to the business, to which the Company or any of its subsidiaries is a
party to or which any of their property is subject.
ITEM 2. CHANGES IN SECURITIES
None.
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ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of the Company's shareholders during
the fiscal quarter ended August 31, 1997.
ITEM 5. OTHER INFORMATION -
Issuance of 8 3/4% Senior Notes due 2007
On April 4, 1997, the Company filed a registration statement with the SEC
relating to the shelf registration of $500,000 of the Company's debt securities
augmenting the remaining $2,000 available under a prior registration statement.
The registration statement became effective on July 15, 1997. On September 29,
1997, the Company issued 8 3/4% Senior Notes due 2007 (the "8 3/4% Notes") in
the principal amount of $225,000, which mature on October 1, 2007, pursuant to
this shelf registration. The 8 3/4% Notes bear interest at 8 3/4% payable
semiannually on April 1 and October 1 of each year commencing April 1, 1998. The
8 3/4% Notes may not be redeemed prior to maturity.
The 8 3/4% Notes will rank pari passu with all existing and future Senior
Indebtedness (as that term is defined in the Indenture under which the 8 3/4%
Notes were issued) of the Company, including the 9 3/4% Senior Notes due 2002,
the 9 1/2% Senior Notes due 2000, the Senior Discount Notes due 2003, the 9 1/2%
Senior Notes due 2005 and the 8 7/8% Senior Notes due 2007 and will be senior in
right of payment to all existing and future subordinated indebtedness of the
Company.
The net proceeds received by the Company from the sale of the 8 3/4% Notes of
approximately $220,915 were used to temporarily repay a portion of the long-term
debt outstanding under the CCC-I Credit Agreement. Further borrowings may be
made under the CCC-I Credit Agreement until August 31, 1999 for general
corporate purposes, including, but not limited to, the financing of capital
expenditures, investments, purchases of the Company's securities, and
acquisitions. As of October 8, 1997, $277,000 aggregate amount of the Company's
debt securities remained available for issuance pursuant to the shelf
registration statement.
STOCK REPURCHASE
In October 1992, the Company's Board of Directors authorized the purchase of up
to 2,000,000 shares of its Class A Common Stock in the open market and in
privately negotiated transactions, depending on prevailing market conditions.
During August 1997, the Company announced that its Board of Directors had
authorized the repurchase in the open market and in privately negotiated
transactions, from time to time, of up to 5,000,000 additional shares of Class A
Common Stock, depending on prevailing market conditions. The Company purchased
171,500 shares of Class A Common Stock in the open market for an aggregate
purchase price of $660 during the fourth quarter of fiscal 1997. During the
three months ended August 31, 1997, the Company purchased 736,000 additional
shares of such common stock in the open market for an aggregate purchase price
of $3,990. Subsequent to August 31, 1997, the Company purchased 1,071,000 of
such shares in the open market for an aggregate purchase price of $6,962. These
shares have been accounted for as
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Treasury Shares during the respective fiscal years. As of October 8, 1997, the
Company is authorized to repurchase 5,021,500 additional shares of Class A
Common Stock after giving effect to the shares repurchased to date.
On December 21, 1994, Centennial announced that its Board of Directors
authorized the repurchase in the open market and in privately negotiated
transactions from time to time, of up to 1,000,000, shares of Class A Common
Stock, depending on prevailing market conditions. Also, during the three months
ended August 31, 1997, Centennial announced that its Board of Directors had
authorized the repurchase in the open market and in privately negotiated
transactions of up to an additional 3,000,000 shares of its Class A Common
Stock, depending on prevailing market conditions. During the three months ended
August 31, 1997, Centennial purchased 262,000 shares of its Class A Common Stock
in the open market for an aggregate purchase price of $4,192. Subsequent to
August 31, 1997, Centennial purchased 280,000 additional shares of such common
stock in the open market for an aggregate purchase price of $4,938. These shares
have been accounted for as Treasury Shares. As of October 8, 1997, Centennial is
authorized to repurchase 3,458,000 additional shares of Class A Common Stock
after giving effect to the shares repurchased to date.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Each exhibit identified below is filed as part of this report.
a) Exhibits
Exhibit No. Description
----------- -----------
Exhibit 10.1 Employment Agreement, dated as
of January 1, 1997, between the
Company and Bernard P.
Gallagher.
Exhibit 10.2 Sixth Supplemental Indenture,
dated as of September 29, 1997,
between the Company and First
Trust of California, National
Association, successor trustee
to Bank of America National
Trust and Savings Association,
as trustee.
Exhibit 11 Statement re: computation of per
share earnings
Exhibit 27 Financial Data Schedule (EDGAR
filing only)
b) Reports on Form 8-K
There were no reports on Form 8-K filed by the Company
during the fiscal quarter ended August 31, 1997.
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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 10, 1997
/s/ Scott N. Schneider
-------------------------------
Scott N. Schneider
Chief Financial Officer,
Senior Vice President and Treasurer
(Principal Accounting Officer)
33
STATEMENT OF DIFFERENCES
The section symbol shall be expressed as ........................'SS'
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Exhibit 10.1
EMPLOYMENT AGREEMENT
AGREEMENT made as of this lst day of January, 1997 by and between
CENTURY COMMUNICATIONS CORP., a corporation organized and subsisting under the
laws of New Jersey, and whose address for the purposes of this Agreement is 50
Locust Avenue, New Canaan, CT 06840 (the "Company"), and BERNARD P. GALLAGHER,
an individual, residing at 115 Lone Tree Farm Road, New Canaan, CT 06840
("Employee").
W I T N E S S E T H:
WHEREAS:
A. The Employee is presently employed by the Company as its
chief operating officer.
B. The Company desires that it continue to employ the Employee
in such capacity or such other capacities as may be permitted by this Agreement,
and under all of the terms, provisions and conditions set forth herein.
C. Employee is willing to accept such continued employment,
and such other employment as may be provided for herein, all under the terms,
provisions and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein set forth and other good and
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valuable consideration, the receipt and adequacy of which is mutually
acknowledged, it is agreed by and between the parties as follows:
1. Representations and Warranties
1.1 Employee represents and warrants that he is not subject to
any restrictive covenants or other agreements or legal restrictions in favor of
any person which would in any way preclude, inhibit, impair or limit his
employment by the Company or the performance of his duties, all as contemplated
herein.
2. Employment
2.1 The Company hereby employs Employee and Employee accepts
such employment as chief operating officer of the Company. As its chief
operating officer, Employee shall supervise and be responsible for the
operations and administration of the business activities of the Company, subject
to the direction and control of the chief executive officer of the Company
and/or the Board of Directors of the Company. At the direction of the chief
executive officer or Board of Directors of the Company, Employee shall also
serve in such other senior executive and/or administrative capacities with any
subsidiaries of the Company ("Subsidiaries" or individually a "Subsidiary", as
hereafter defined), as the Board of Directors or the chief executive officer of
the Company may determine. Without
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limitation of the foregoing, Employee agrees to act as chief executive officer
of Centennial Cellular Corp.
2.2 Subject to Employee's election as such by the Board of
Directors and/or the Board of Directors of one or more Subsidiaries, Employee
agrees to act and serve as President of the Company and as Chairman or President
of all applicable Subsidiaries and, if duly elected, agrees further to serve and
act as a director of the Company and all applicable Subsidiaries. Without
limitation of the foregoing, Employee agrees to act as a Director and as
Chairman of Centennial Cellular Corp. Employee also agrees to adhere to all
fiduciary duties and responsibilities inherent in the office of President of the
Company and as an officer of any of the Subsidiaries and, if elected, as a
director of the Company and of any Subsidiaries, and to comply with all
applicable laws relating to same.
3. Place of Employment
3.1 Employee shall render his services where and as required
by the Company, it being understood and agreed, however, that Employee's base of
operations shall be the greater Fairfield County, Connecticut and/or Westchester
County, N.Y. areas and that Employee shall not be required to render his
services on a permanent basis outside of said areas. In conformance with the
foregoing and not in limitation thereof, Employee agrees to take such trips
outside said areas from time to time as shall be consistent with or reasonably
necessary in connection with his duties.
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4. Term
4.1 The term of this Agreement (the "Term") shall be three
consecutive years commencing January 1, 1997 and expiring on December 31, 1997.
4.2 In the event this Employment Agreement has not then been
terminated, the parties hereto agree that within the last six months of the
Term, they shall meet to negotiate the terms and provisions relating to a
renewal or extension of this Agreement, it being understood and agreed that
nothing herein shall obligate either of the parties to come to agreement with
respect to any such renewal or extension.
5. Compensation
5.1 Subject to prior termination, as compensation for all
services rendered and to be rendered by Employee hereunder and the fulfillment
by Employee of all of his obligations herein, the Company shall pay Employee a
base salary (the "Base Salary") at the rate of $400,000 per year for each year
of the Term on such days as the Company normally pays its employees and subject
to such withholdings as may be required by law. The Base Salary for each of the
second and third years of the Term (an "Applicable Year"), as the case may be,
shall be increased by the percentage increase in the Consumer Price Index
prepared by the United States Labor Department for the United States as a whole,
or equivalent measure of increase in the cost of living if such Consumer Price
Index is not then being issued (hereafter
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sometimes referred to as the "Consumer Price Index"), for the last
calendar month in the year immediately preceding such Applicable Year (the
"Preceding Year") over and above such Consumer Price Index for the corresponding
month of the year immediately preceding the "Preceding Years".
5.2 Nothing herein shall prevent or preclude the Board of
Directors of the Company or the applicable committee of the Board of Directors,
in its sole discretion, and from time to time, to award a bonus or bonuses to
Employee for his services as an Employee and/or from awarding or granting
Employee (i) options to acquire shares of stock in the Company or (ii) shares of
stock in the Company or (iii) any other incentive or stock related awards in
addition to Base Salary. In exercising its discretion with respect to whether a
bonus should be awarded and the amount thereof, the Board or the applicable
Committee may consider among other factors, the contribution of Employee (i) to
the growth in revenues, cash flow and subscribers of the Company and those
subsidiaries to or for which Employee renders service, (ii) in connection with
acquisitions, offering of securities and various financings, and (iii) to the
operations of the Company and its various subsidiaries.
6. Reimbursement for Business Expenses Fringe Benefits
6.1 The Company agrees that all reasonable expenses incurred
by Employee in the discharge and fulfillment of his duties for the Company, as
set forth in
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<PAGE>
Section 2, will be reimbursed or paid by the Company upon written substantiation
therefor signed by Employee, itemizing said expenses and containing all
applicable vouchers. Without limitation of the foregoing the Company shall
provide Employee with an automobile for use by Employee in the performance of
his duties, and for the maintenance thereof. The automobile shall be of the type
presently being provided to Employee by the Company and shall be no more than
three years old.
6.2 The Company agrees that it will cause Employee to be
insured under such group life, medical, major medical and disability insurance
that the Company may maintain and keep in force from time to time during the
Term for the benefit of all of the Company employees, subject to the terms,
provisions and conditions of such insurance and the agreements with underwriters
relating to same. It is understood and agreed that in its discretion the
Company, from time to time may terminate or modify any or all of such insurance
without obligation or liability to Employee.
7. Exclusivity
7.1 During the Term, employee agrees to devote his services
and his best energies and abilities, exclusively, to the business and activities
of the Company, including any Subsidiaries, and not engage or have an interest
in or perform services for any other business or entity of any kind or nature;
provided, however, that
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<PAGE>
nothing herein shall prevent Employee from investing in (but not rendering
services to) other businesses (other than for charitable organizations, provided
same does not interfere with Employee's performance of his duties hereunder)
which are not competitive in any manner with the business then being conducted
by the Company or any of its Subsidiaries, or in investing in (but not rendering
services to) other businesses which are competitive in any manner with the
business then being constructed by the Company, provided in the latter instance,
that (i) the shares of such business are listed and traded over either a
national securities exchange or in the over-the-counter market, and (ii)
employee's stock interest or potential stock interest (based on grants, options,
warrants, or other arrangements or agreements then in existence) in any such
business which is so traded (together with any and all interest, actual and
potential, of all members of Employee's immediate family) is not a controlling
or substantial interest and specifically does not exceed one percent of the
issued and outstanding shares or a one percentage interest of or in such
business.
8. Uniqueness
8.1 Employee agrees that his services hereunder are special,
unique and extraordinary and that in the event of any material breach or
attempted material breach of this Agreement by Employee including, without
limitation, the provisions of Section 9 and 10, the Company will sustain
substantial injury and damage, and Employee hereby consents
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and agrees that, in the event of breach hereof, the Company shall be entitled to
injunctive relief against Employee or any third party to prevent or in respect
of any such breach, in addition to such other rights or remedies available to
it. Employee's said consent and agreement shall not survive the expiration date
set forth in Section 4.1 (December 31, 1999) except as same relates to any of
Employee's obligations pursuant to Section 9.1 and 10.1 hereof.
9. Trade Secrets
9.1 Employee acknowledges that his employment hereunder will
necessarily involve his understanding of and access to certain trade secrets and
confidential information pertaining to the businesses and activities of the
Company and its Subsidiaries. Accordingly, Employee agrees that during the
period of employment and at all times thereafter, he will not disclose to any
unauthorized third party any such trade secrets or confidential information and
will not (other than in connection with carrying out his duties) for any reason
remove or retain without the express consent of the Company any figures or
calculations, letters, papers, records or other information of a type likely to
be regarded as confidential. The provisions of this Section shall survive the
termination, for any reason, of this Agreement or the Employee's employment.
10. Inventions, Creations
10.1 All right, title and interest of every kind and nature
whatsoever in and to inventions, patents,
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trademarks, copyrights, films, scripts, ideas, creations, intellectual property
and literary, intellectual and other properties furnished to the Company or any
of its Subsidiaries and/or used in connection with any of the activities of the
Company or any of its Subsidiaries, or with which Employee is connected or
associated in connection with the performance of his services, shall as between
the parties hereto be, become and remain the sole and exclusive property of the
Company or any of its Subsidiaries, as the case may be, for any and all purposes
and uses whatsoever, regardless of whether the same were invented, created,
written, developed, furnished, produced or disclosed by Employee or by any other
party, and Employee shall have no right, title or interest of any kind or nature
therein or thereto, or in any results and proceeds therefrom. Employee agrees
during and after the term hereof to execute any and all documents which the
Company may deem necessary or appropriate to effectuate the provisions of this
Section 10.1 and, further, that the provisions of this Section shall survive the
termination, for any reason, of this Agreement or Employee's employment.
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11. Death - Permanent Incapacity
11.1 The death of Employee shall work an immediate termination
of this Agreement, in which event no additional Base Salary shall be paid to
Employee except that the payments of Base Salary, to which Employee would have
been entitled to receive were he not deceased and were he fully performing his
obligations hereunder, shall continue to be paid to his estate or legal
representatives during the balance of the Term.
11.2 In the event Employee suffers a disability which prevents
him from performing his services hereunder (herein called "Disability"), and in
the event such Disability continues for longer than 90 consecutive days or 120
days in any 12-month period, Employee shall be deemed to have suffered a
Permanent Incapacity, in which event the Company shall have the right to
terminate this Agreement upon not less than fifteen days' notice to Employee,
and this Agreement shall terminate on the date set forth therefor in said
notice.
Upon termination of this Agreement by reason of such Permanent
Incapacity, Employee's Base Salary shall continue to be paid to Employee or his
legal representatives during the greater of (i) the balance of the Term, and
(ii) a period of not less than 12 months.
11.3 In the event there is a dispute between the parties as to
whether or not Employee has suffered a Permanent Incapacity, same shall be
determined by an
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impartial physician located in the City of New York and agreed upon by the
parties or, failing agreement within 10 days of a written request therefor by
either of the parties to the other, then such a physician as may be designated
by the then acting President of the New York Academy of Medicine or if he fails
or is unable to designate such impartial physician, then one designated by the
Chief of Medicine at one of the following hospitals or medical centers located
in New York City and selected by the Company: (i) New York Hospital, (ii)
Columbia Presbyterian Hospital, (ii) New York University (or Tisch) Hospital,
(iv) Mt. Sinai Hospital, and if no such hospital shall designate such physician,
as designated by the American Arbitration Association. The determination of any
such physician shall be final and binding upon the parties hereto. In the event
any of said hospitals is merged or consolidated with or into, or is acquired by
another of said hospitals, the surviving hospital in such merger, consolidation
or acquisition shall be deemed to be one of the designated hospitals.
12. Termination
12.1 In addition to termination pursuant to Section 11,
Employee's employment hereunder may be terminated for "cause". "Cause" for
purposes of this Agreement shall mean the following:
(i) alcoholism or drug addiction materially affecting
Employee's performance, (ii) conviction for a
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<PAGE>
felony involving moral turpitude, (iii) failure to comply within a
period of ten business days with a reasonable directive of the chief
executive officer, or the Board of Directors of the Company relating to
Employee's duties or Employee's performance and consistent with
Employee's position, after written notice that such failure will be
deemed to be "cause", to the extent such failure can be cured within
such ten business days and if not so curable, fails to commence curing
during said ten day period and diligently pursue the curing of same
until cured, (iv) gross neglect or gross misconduct of Employee in
carrying out his duties under this Agreement, resulting, in either
case, in material economic harm to the Company, unless Employee
believed in good faith that such act or nonact was in the best
interests of the Company and, (v) misappropriation of corporate assets
or corporate opportunity or other act of dishonesty or breach of
fiduciary obligation to the Company.
12.2 In the event the Company terminates this Agreement and
Employee's employment other than for "cause", and other than for death or
disability, Employee shall be entitled, in addition to whatever other rights and
remedies which may be available to him, to the following, subject to the
applicable provisions of the Company's 1985 and 1994 Employee Stock Option
Plans, the Company's 1992 Management Equity Incentive Plan and other applicable
Plans: (i) the
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right to exercise any stock option in full, whether or not then fully
exercisable, for the remainder of the original term of such option, (ii) the
balance of payments of Base Salary, to be paid at the times they would otherwise
have become payable to Employee pursuant to the terms of this Agreement and
(iii) a cash bonus payable for each remaining year of the term (or fraction of
year if termination occurs during a particular year of the term and a bonus has
not previously been paid to Employee for such year) in an amount equal to the
most recently paid cash bonus paid to Employee. Additionally any restrictions on
shares of stock previously issued to Employee shall be deemed inoperative and of
no further force and effect.
12.3 Employee shall be deemed to have been terminated without
cause if, without Employee's written consent, (i) Employee is not elected
President of the Company during the term, and is not designated chief operating
officer of the Company, (ii) his Base Salary is reduced, (iii) he is relocated
in violation of Section 3.1 or (iv) there has been a material diminution in the
Employee's duties or the assignment to Employee of duties which are materially
inconsistent with his duties or which materially impair the Employee's ability
to function as Chief Operating Officer of the Company.
13. Vacation
13.1 Employee shall be entitled to a vacation of four weeks
duration in the aggregate during each year of the
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Term at times reasonably agreeable to both Employee and the Company, it being
understood that any portion of such vacation not taken in such year shall not be
available to be taken during any other year.
14. Insurance
14.1 In addition to insurance referenced in Section 6.2,
Employee agrees that the Company or any Subsidiary may apply for and secure
and/or own and/or be the beneficiary of insurance on the Employee's life or
disability insurance (in each instance in amounts determined by the Company),
and Employee agrees to cooperate fully in the applying and securing of same,
including, without limitation, the submission to various physical and other
examinations and the answering of questions and furnishing of information as may
be required by various insurance carriers. However, nothing contained herein
shall require the Company to obtain any such life or disability insurance.
15. Miscellaneous
15.1 The Company shall have the right to assign this Agreement
and to delegate all duties and obligations hereunder to any successor,
affiliated or parent company or to any person, firm or corporation which
acquires the Company or substantially all of its assets, or with or into which
the Company may consolidate or merge. This Agreement shall be binding upon and
inure to the benefit of the permitted successors and assigns of the
Company. Employee
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agrees that this Agreement is personal to him and may not be assigned by him.
15.2 This Agreement is being delivered in the State of
Connecticut and shall be construed and enforced in accordance with the laws of
such State applicable to contracts made and fully to be performed therein, and
without any reference to any rules of conflicts of laws.
15.3 Except as may herein otherwise be provided, all notices,
requests, demands and other communications hereunder shall be in writing and
shall be deemed to have been duly given if delivered personally or if mailed,
first class postage prepaid, registered or certified mail, return receipt
requested, or if sent by telecopier or overnight express delivery service, (a)
to Employee at his address set forth on the facing page hereof or at such other
address as Employee may have notified the Company, sent by registered or
certified mail, return receipt requested, or by telecopier or overnight express
delivery service, or (b) if to the Company, at its address set forth on the
facing page hereof, attention: Chairman of the Board, or at such other address
as the Company may have notified Employee in writing sent by registered or
certified mail, return receipt requested or by telecopier or overnight express
delivery service, and with a copy to Leavy, Rosensweig & Hyman, 11 East 44th
Street, New York, NY 10017 10036 (Attention: David Z. Rosensweig, Esq.). Notice
shall be deemed given (i) upon personal delivery, or (ii) on the second business
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day immediately succeeding the posting of same, prepaid, in the U.S. mail, (iii)
on the date sent by telecopy if the addressee has compatible receiving equipment
and provided the transmittal is made on a business day during the hours of 9:00
A.M. to 6:00 P.M. of the receiving party and if sent on other times, on the
immediately succeeding business day, or (iv) on the first business day
immediately succeeding delivery to the express overnight carrier for the next
business day delivery.
15.4 This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Each party shall deliver
such further instruments and take such further action as may be reasonably
requested by the other in order to carry out the provisions and purposes of this
Agreement. This Agreement represents the entire understanding of the parties
with reference to the transaction set forth herein and neither this Agreement
nor any provision thereof may be modified, discharged or terminated except by an
agreement in writing signed by the party against whom the enforcement of any
waiver, change, discharge or termination is sought. Any waiver by either party
of a breach of any provision of this Agreement must be in writing and no waiver
of a particular breach shall operate as or be construed as a waiver of any
subsequent breach thereof.
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15.5 "Subsidiaries" or "Subsidiary" shall include and mean any
corporation, partnership or other entity 50% or more of the then issued and
outstanding voting stock is owned directly or indirectly by the Company in the
instance of a Corporation, and 50% or more of the interest in capital or in
profits is owned directly or indirectly by the Company in the instance of a
partnership and/or other entity, or any corporation, partnership, venture or
other entity, the business of which is managed by the Company or any of its
Subsidiaries.
IN WITNESS WHEREOF, the parties hereto have executed and have caused
this Agreement to be executed as of the day and year first above written.
CENTURY COMMUNICATIONS CORP.
By: /s/ Leonard Tow
-------------------------
Its Chairman of the Board
/s/ Bernard P. Gallagher
-------------------------
Bernard P. Gallagher
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<PAGE>
EXHIBIT 10.2
EXECUTION COPY
CENTURY COMMUNICATIONS CORP.
and
FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION,
successor trustee to
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Trustee
Sixth Supplemental Indenture
Dated as of September 29, 1997
8 3/4% Senior Notes Due 2007
<PAGE>
<PAGE>
SIXTH SUPPLEMENTAL INDENTURE, dated as of September 29, 1997
(the "Sixth Supplemental Indenture"), to the Indenture, dated as of February 15,
1992 (the "Indenture"), between CENTURY COMMUNICATIONS CORP., a corporation duly
organized and existing under the laws of the State of New Jersey (the
"Company"), having its principal office at 50 Locust Avenue, New Canaan,
Connecticut 06840, and FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION,
successor trustee to BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a
national banking association organized and existing under the laws of the United
States, as Trustee (the "Trustee").
RECITALS OF THE COMPANY
WHEREAS, the Company has duly authorized the execution and
delivery of the Indenture to provide for the issuance from time to time of one
or more series of its senior debt securities (the "Securities") to be issued in
one or more series as in the Indenture provided;
WHEREAS, the Company desires and has requested the Trustee to
join it in the execution and delivery of this Sixth Supplemental Indenture in
order to establish and provide for the issuance by the Company of a series of
Securities designated as its 8 3/4% Senior Notes Due 2007 in the aggregate
principal amount of $225,000,000, a form of which is attached hereto as Exhibit
A (the "8 3/4% Notes"), on the terms set forth herein;
WHEREAS, Section 10.01 of the Indenture provides that a
supplemental indenture may be entered into by the Company and the Trustee
without the consent of any holder of any Securities for such purpose provided
certain conditions are met;
WHEREAS, the conditions set forth in the Indenture for the
execution and delivery of this Sixth Supplemental Indenture have been complied
with; and
WHEREAS, all things necessary to make this Sixth Supplemental
Indenture a valid agreement of the Company and the Trustee, in accordance with
its terms, and a valid amendment of, and supplement to, the Indenture have been
done;
NOW THEREFORE:
In consideration of the premises and the purchase and
acceptance of the 8 3/4% Notes by the holders thereof the Company mutually
covenants and agrees with the Trustee, for the equal and proportionate benefit
of all holders of the 8 3/4% Notes, that the Indenture is supplemented and
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amended, to the extent and for the purposes expressed herein, as follows:
PARAGRAPH A. SCOPE OF THIS SIXTH
SUPPLEMENTAL INDENTURE
The changes, modifications and supplements to the Indenture
effected by this Sixth Supplemental Indenture in Paragraphs B, C and D hereof
shall only be applicable with respect to, and govern the terms of, the 8 3/4%
Notes issued by the Company, which shall be limited in aggregate principal
amount to $225,000,000, except as provided in Section 3.01(2) of the Indenture,
and shall not apply to any other Securities which may be issued under the
Indenture unless a supplemental indenture with respect to such other Securities
specifically incorporates such changes, modifications and supplements.
PARAGRAPH B. ADDITIONAL PROVISIONS
B1. ADDITIONAL DEFINITIONS - Each of the following
definitions, which constitute part of this Sixth Supplemental Indenture, shall
be inserted in proper alphabetical order in Article 1:
"Advance" shall mean any direct or indirect advance, loan,
guarantee, transfer (pursuant to contract or otherwise) or other extension of
credit or capital contribution (in cash or other property) by the Company or any
Subsidiary, as the case may be, to, or any purchase or other acquisition by such
Person of any Capital Stock, equity or other ownership interests, bonds, notes,
debentures or other securities of, any Subsidiary or any other Affiliate of the
Company, as the case may be, but not including: (i) any Advance from the Company
or any Subsidiary to any Affiliate for use by such Affiliate in the ordinary
course of its business on terms that are no less favorable to the Company or
such Subsidiary than those that could have been obtained in a comparable
transaction by the Company or such Subsidiary from a Person who is not an
Affiliate, or (ii) any Advance from the Company or any directly or indirectly
90%-owned Subsidiary to any other directly or indirectly 90%-owned Subsidiary or
the Company. For purposes of subclause (i) of this definition, expenditures in
the ordinary course of business shall mean and include expenditures for working
capital, capital improvements and acquisitions in the communications and media
fields whether by purchase of assets, capital stock or partnership or other
equity interests or by the formation of joint ventures, partnerships or other
entities.
"Asset Sale" shall mean the sale, transfer or other
disposition (other than to the Company or any of its
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Subsidiaries) in any single transaction or series of related transactions of
(a) any Capital Stock of any Subsidiary, (b) all or substantially all of the
assets of the Company or any Subsidiary or (c) all or substantially all of the
assets of a division, line of business, or comparable business segment of the
Company or any Subsidiary.
"Base Date", with respect to any Triggering Event, shall mean
the date which is 60 days prior to the occurrence of such Triggering Event.
"B Minus" shall mean, with respect to ratings by Standard &
Poor's Corporation, a rating of B- and, with respect to ratings by Moody's
Investors Service, Inc., a rating of B3, or the equivalent thereof by any
substitute agency, as provided in Section 12.10.
"B Plus" shall mean, with respect to ratings by Standard &
Poor's Corporation, a rating of B+ and, with respect to ratings by Moody's
Investors Service, Inc., a rating of B1, or the equivalent thereof by any
substitute agency, as provided in Section 12.10.
"Capitalized Lease Obligation" shall mean, as applied to any
Person, any lease of any property (whether real, personal or mixed) by that
Person or lessee which, in conformity with GAAP, is required to be accounted for
as a capital lease on the balance sheet of that Person.
"Cash Flow Available for Interest Expense" shall mean, for any
Person, for any period, (A) the sum of the amount for such period of (i) Net
Income, (ii) Interest Expense, (iii) provisions for taxes based on income
(excluding taxes related to gains and losses excluded from the definition of Net
Income), (iv) depreciation expense, (v) amortization expense, and (vi) any other
non-cash items reducing the Net Income of such Person for such period, minus (B)
all non-cash items increasing Net Income of such Person; all as determined in
accordance with GAAP; provided that if, during such period, such Person shall
have made any Asset Sale, Cash Flow Available for Interest Expense of such
Person for such period shall be reduced by an amount equal to the Cash Flow
Available for Interest Expense (if positive) directly attributable to the assets
which are the subject of such Asset Sale for the period subsequent to such sale
or increased by an amount equal to the Cash Flow Available for Interest Expense
(if negative) directly attributable thereto for such period.
"Century/Texas" shall mean Century Communications Corp., a
Texas corporation, a wholly-owned subsidiary of the Company.
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"Class A Common Stock" shall mean the Class A Common Stock,
par value $.01 per share, of the Company.
"Consolidated Cash Flow Available for Interest Expense" shall
mean, for any Person, for any period, (A) the sum of the amount for such period
of (i) Consolidated Net Income, (ii) Consolidated Interest Expense, (iii)
provisions for taxes based on income (excluding taxes related to gains and
losses excluded from the definition of Consolidated Net Income or Net Income),
(iv) depreciation expense, (v) amortization expense, and (vi) any other non-cash
items reducing the Consolidated Net Income of such Person for such period, minus
(B) all non-cash items increasing Consolidated Net Income of such Person for
such period; all as determined on a consolidated basis for such Person and its
Subsidiaries in accordance with GAAP; provided that if, during such period, the
Company or any of its Subsidiaries shall have made any Asset Sale, Consolidated
Cash Flow Available for Interest Expense of the Company for such period shall be
reduced by an amount equal to the Consolidated Cash Flow Available for Interest
Expense (if positive) directly attributable to the assets which are the subject
of such Asset Sale for the period subsequent to such sale or increased by an
amount equal to the Consolidated Cash Flow Available for Interest Expense (if
negative) directly attributable thereto for such period.
"Consolidated Interest Expense" of any Person shall mean, with
respect to any period, the aggregate Interest Expense of such Person and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP;
provided, however, that Consolidated Interest Expense of the Company shall only
include the Interest Expense of any Subsidiary of the Company which, at the date
of determination of the Interest Expense Ratio of the Company, has an Interest
Expense Ratio of less than the ratios set forth below:
<TABLE>
<CAPTION>
Period Ratio
------ ------
<S> <C>
November 15, 1988 - November 14, 1990 1.25 to 1.0
November 15, 1990 - November 14, 1991 1.35 to 1.0
Thereafter 1.50 to 1.0
</TABLE>
"Consolidated Net Income" with respect to any specified Person
shall mean, for any period, the aggregate of the Net Income of such specified
Person and its Subsidiaries for such period, on a consolidated basis, determined
in accordance with GAAP; provided that (i) the Net Income of any other Person
which is not a Subsidiary or is accounted for by such specified Person by the
equity method of accounting shall be included only to the extent of the amount
of dividends or distributions paid to such
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specified Person or a Subsidiary, and (ii) the Net Income of any other Person
acquired by such specified Person or a Subsidiary of such Person in a pooling of
interests transaction for any period prior to the date of such acquisition shall
be excluded and (iii) the Net Income (if positive) of any Subsidiary that is
subject to restrictions, direct or indirect, on the payment of dividends or the
making of distributions to such specified Person shall be excluded to the extent
of such restrictions.
"Currency Agreement" shall mean any foreign exchange contract,
currency swap agreement or other similar agreement or arrangement designed to
protect against fluctuations in currency values.
"Debt" of any Person shall mean (without duplica- tion) any
indebtedness, contingent or otherwise, in respect of borrowed money (whether or
not the recourse of the lender is to the whole of the assets of such Person or
only to a portion thereof), or evidenced by bonds, notes, debentures or similar
instruments or representing the balance deferred and unpaid of the purchase
price of any property (except any such balance that constitutes a trade payable
or an accrued liability arising in the ordinary course of business that is not
overdue by more than 120 days or that is being contested in good faith), if and
to the extent any of the foregoing indebtedness would appear as a liability upon
a balance sheet of the Company in accordance with GAAP.
"Depository" means The Depository Trust Company, its nominees
and their respective successors.
"Designated Downgrading" shall mean (i) in the event that the
rating of the 8 3/4% Notes by both Rating Agencies on any Base Date is equal to
or higher than B Plus, the reduction of such rating by either or both Rating
Agencies on the date of the relevant event or transaction resulting in the Class
A Common Stock of the Company being held of record by less than 300 holders (or,
if the rating on such date does not reflect the effect of such event or
transaction, then on the earliest date on which such rating shall reflect the
effect of such event or transaction) (as applicable, the "Triggering Event
Date") to a rating equal to or lower than B Minus; and (ii) in the event that on
any Base Date the rating of the 8 3/4% Notes by either or both Rating Agencies
is lower than B Plus, the reduction of such rating by either or both Rating
Agencies to a lower rating. In determining whether a rating has been reduced, a
reduction of a gradation (+ and - for S&P and 1, 2 and 3 for Moody's or the
equivalent thereof by any substitute rating agency as provided in Section 12.10)
shall be taken into account.
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"Discharged" shall have the meaning assigned to such term in
Section 5.02 hereof.
"8 3/4% Notes" shall mean the Company's 8 3/4% Senior Notes
Due 2007 originally issued in the aggregate principal amount of $225,000,000
pursuant to this Indenture.
"Global Note" has the meaning set forth in Section 2.03.
"Incurrence" shall have the meaning assigned to such term in
Section 11.13 hereof.
"Indebtedness" of any Person shall mean the Debt of such
Person and shall also include, to the extent not otherwise included, any
Capitalized Lease Obligation, the maximum fixed repurchase price of any
Redeemable Stock, Indebtedness secured by a Lien to which the property or assets
owned or held by the Company are subject (whether or not the obligations secured
thereby shall have been assumed), guarantees of items that would constitute
Indebtedness under this definition (whether or not such items would appear upon
the balance sheet of such Person), letters of credit and letter of credit
reimbursement obligations (whether or not such items would appear on such
balance sheet), and obligations in respect of Currency Agreements and Interest
Swap Obligations, and any renewal, extension, refunding or amendment of any of
the foregoing. For purposes of the preceding sentence, the maximum fixed
repurchase price shall be calculated in accordance with the terms of such
Redeemable Stock as if such Redeemable Stock were repurchased on any date on
which Indebtedness shall be required to be determined pursuant to the Indenture,
and if such price is based upon or measured by the fair market value of such
Redeemable Stock (or any equity security for which it may be exchanged or
converted), such fair market value shall be determined in good faith by the
Board of Directors. The amount of Indebtedness of any Person at any date shall
be the outstanding balance at such date of all unconditional obligations as
described above and the maximum liability of any such contingent obligations at
such date.
"Interest Expense" of any Person shall mean, for any period,
the aggregate amount of (i) interest in respect of Indebtedness of such Person
(including amortization of original issue discount on any such Indebtedness and
the interest portion of any deferred payment obligation, calculated in
accordance with the effective interest method of accounting, all commissions,
discounts and other fees and charges owed with respect to letters of credit and
bankers' acceptance financing and the net costs associated with Interest Swap
Obligations and Currency Agreements), (ii) all but the principal component of
rentals in respect of
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Capitalized Lease Obligations, paid, accrued or scheduled to be paid or accrued
by such Person during such period, and (iii) any dividends or distributions
paid on any Redeemable Stock of such Person, all as determined in accordance
with GAAP.
"Interest Expense Ratio" shall mean, for the Company, the
ratio of (i) the aggregate amount of Consolidated Cash Flow Available for
Interest Expense of the Company for the four fiscal quarters for which financial
information in respect thereof is available immediately prior to the date of the
transaction giving rise to the need to calculate the Interest Expense Ratio (the
"Transaction Date") to (ii) the aggregate Consolidated Interest Expense which
the Company will accrue during the fiscal quarter in which the Transaction Date
occurs and the three fiscal quarters immediately subsequent to such fiscal
quarter, assuming the Consolidated Interest Expense accruing on the amount of
the Company's Indebtedness on the Transaction Date and reasonably anticipated by
the Company in good faith to be outstanding from time to time during such period
(assuming the continuation of market interest rate levels prevailing on the
Transaction Date in any calculation of Interest Expense relating to Indebtedness
the interest on which is a function of such market interest rate levels).
"Interest Expense Ratio" shall mean, for any other Person, the ratio of (i) the
aggregate amount of Cash Flow Available for Interest Expense of such other
Person for the four fiscal quarters for which financial information in respect
thereof is available immediately prior to the relevant Transaction Date to (ii)
the aggregate Interest Expense which such other Person will accrue during the
fiscal quarter in which the Transaction Date occurs and the three fiscal
quarters immediately subsequent to such fiscal quarter, assuming the Interest
Expense accruing on the amount of such other Person's Indebtedness on the
Transaction Date and reasonably anticipated by such other Person in good faith
to be outstanding from time to time during such period (assuming the
continuation of market interest rate levels prevailing on the Transaction Date
in any calculation of Interest Expense relating to Indebtedness the interest on
which is a function of such market interest rate levels).
"Interest Swap Obligations" shall mean the obligations of
any Person pursuant to any arrangement with any other Person whereby, directly
or indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest
on a stated notional amount in exchange for periodic payments made by such
Person calculated by applying a fixed or a floating rate of interest on the same
notional amount.
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"Lien" shall mean any lien, security interest, charge or
encumbrance of any kind (including any conditional sale or other title retention
agreement, any lease in the nature thereof, and any agreement to give any
security interest).
"Maturity Date" shall mean the earlier to occur of October 1,
2007 and the date upon which the 8 3/4% Notes shall be declared due and payable
pursuant to the terms of Section 6.01.
"Net Income" of any Person shall mean the net income (loss) of
such Person, determined in accordance with GAAP, excluding, however, any gain
(but not loss) realized upon the sale or other disposition (including, without
limitation, dispositions pursuant to sale and leaseback transactions) of any
real property or equipment of such Person which is not sold or otherwise
disposed of in the ordinary course of business and any gain (but not loss)
realized upon the sale or other disposition of any Capital Stock of such Person
or a Subsidiary of such Person.
"Permitted Investment" shall mean any investment after
November 10, 1988 (a) which when aggregated with all other outstanding Permitted
Investments does not exceed the aggregate of $50 million (excluding amounts
which may be used to acquire the remaining interests in the non-wireline
cellular telephone systems in Elkhart, Indiana, Lincoln, Nebraska and
Charlottesville and Lynchburg, Virginia) plus (i) the amount of Proceeds from
the issuance or sale of Capital Stock of the Company after November 15, 1988,
(ii) the amount of Proceeds from the issuance of indebtedness which is converted
or exchanged for Capital Stock of the Company after November 15, 1988, and (iii)
amounts from dividends or distributions made to the Company or any Restricted
Subsidiary from an Unrestricted Subsidiary after November 15, 1988, and (b)
which is (i) loaned or contributed to any Affiliate controlled, directly or
indirectly, by the Company in the ordinary course of business on terms that are
no less favorable to the Company or the Restricted Subsidiary than those that
could have been obtained in a comparable transaction by the Company or such
Restricted Subsidiary from a Person who is not an Affiliate, or (ii) (A) loaned
or contributed to any Unrestricted Subsidiary or (B) made by way of a guarantee
by the Company, or a Restricted Subsidiary of Indebtedness of an Unrestricted
Subsidiary. A Permitted Investment in an Unrestricted Subsidiary will be deemed
to be no longer outstanding if such Unrestricted Subsidiary has been classified
a Restricted Subsidiary.
"Physical Note" has the meaning set forth in Section 2.04.
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"Preferred Stock" shall mean the $3.50 Preferred Shares and
the Special Preferred Shares of the Company.
"Proceeds" shall mean, with respect to any issuance or sale of
securities, cash or the fair market value of property other than cash (as
determined by the Board of Directors whose determination shall be evidenced by a
resolution of the Board of Directors filed with the Trustee) received in
connection therewith.
"Pro Forma Operating Cash Flow" shall mean, for any period,
(A) the sum of the amount for such period of (i) Net Income, (ii) Interest
Expense, (iii) provisions for taxes based on income (excluding taxes related to
gains and losses excluded from the definition of Consolidated Net Income or Net
Income), (iv) depreciation expense, (v) amortization expense, and (vi) any other
non-cash items reducing the Net Income of such Person for such period, minus (B)
all non-cash items increasing Net Income of such Person for such period; all as
determined on a consolidated basis for the Company and its Restricted
Subsidiaries in accordance with GAAP after giving effect to the following: (i)
if, during such period, the Company or any of its Restricted Subsidiaries shall
have made any Asset Sale, Pro Forma Operating Cash Flow of the Company for such
period shall be reduced by an amount equal to the Pro Forma Operating Cash Flow
(if positive) directly attributable to the assets which are the subject of such
Asset Sale for the period subsequent to such sale or increased by an amount
equal to the Pro Forma Operating Cash Flow (if negative) directly attributable
thereto for such period and (ii) if, during such period, Indebtedness is
incurred by the Company or any of its Restricted Subsidiaries for or in
connection with the acquisition of any Person or business which immediately
after acquisition is a Subsidiary or whose assets are held directly by the
Company or a Subsidiary, Pro Forma Operating Cash Flow shall be computed so as
to give pro forma effect to the acquisition of such Person or business.
"Rating Agency" shall mean either Standard & Poor's
Corporation or its successor ("S&P") or Moody's Investors Service, Inc. or its
successor ("Moody's").
"Redeemable Stock" shall mean any Capital Stock which, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
redeemable at the option of the holder thereof, in whole or in part, on or prior
to the Maturity Date.
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"Repurchase Date" shall have the meaning assigned to such term
in Section 12.10 hereof.
"Repurchase Notice" shall have the meaning assigned to such
term in Section 12.10 hereof.
"Restricted Payments" shall have the meaning assigned to such
term in Section 11.11.
"Restricted Subsidiary" shall mean (a) any Subsidiary of the
Company, whether existing on or after the date of the Indenture, unless such
Subsidiary is an Unrestricted Subsidiary or shall have been classified as an
Unrestricted Subsidiary by a resolution adopted by the Board of Directors of the
Company and (b) an Unrestricted Subsidiary which is reclassified as a Restricted
Subsidiary by a resolution adopted by the Board of Directors of the Company,
provided that on and after the date of such reclassification such Unrestricted
Subsidiary shall not incur Indebtedness other than that permitted to be incurred
by a Restricted Subsidiary under the provisions of the Indenture.
Notwithstanding the foregoing, Century-ML Cable Venture and its Subsidiaries and
Century Venture Corp. and its Subsidiaries shall be Restricted Subsidiaries
unless any of the foregoing shall be reclassified as an Unrestricted Subsidiary
pursuant to clause (d) of the definition of an Unrestricted Subsidiary.
"Transaction Date" shall have the meaning assigned to such
term in the definition of "Interest Expense Ratio" herein.
"Triggering Event" shall mean the occurrence of any
transaction or event or series of transactions or events which results in (a)
the Class A Common Stock of the Company being held of record by less than three
hundred holders and (b) a Designated Downgrading. For purposes of clause (a)
above, "held of record" shall have the meaning set forth in Rule 12g5-1
promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended.
"Triggering Event Date" shall have the meaning assigned to
such term in the definition of "Designated Downgrading" herein.
"Unrestricted Subsidiary" shall mean (a) Century Cellular
Holding Corp.; provided that Century Cellular Holding Corp. may be reclassified
as a Restricted Subsidiary pursuant to clause (b) of the definition of
Restricted Subsidiary, (b) any Subsidiary as of the date of the Indenture which
is not a Restricted Subsidiary, (c) any Subsidiary of an Unrestricted Subsidiary
and (d) any
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Subsidiary organized or acquired after the date of the Indenture which is
classified as an Unrestricted Subsidiary by a resolution adopted by the Board of
Directors of the Company; provided that a Subsidiary may be so classified as an
Unrestricted Subsidiary only if immediately after the date of such
classification, the Company and its Restricted Subsidiaries would have
investments in such Subsidiary which would be Permitted Investments; and
provided further, that, notwithstanding the foregoing, no Subsidiary which is a
Restricted Subsidiary as of the date of the Indenture shall be reclassified as
an Unrestricted Subsidiary or be a Subsidiary of an Unrestricted Subsidiary. The
Trustee shall be given prompt notice by the Company of each resolution adopted
by the Board of Directors under this provision, together with a copy of each
such resolution adopted.
B2. ADDITIONAL SECTIONS - Each of the following provisions,
which constitutes part of this Sixth Supplemental Indenture, is numbered to
conform with the format of the Indenture:
SECTION 2.03. Securities in Global Form.
The 8 3/4% Notes shall be issued initially in the form of one
or more permanent global Notes, representing and denominated in an amount equal
to the aggregate principal amount of all of the Securities of such series, each
such Note containing the legend relating to global securities set forth in
Section 2.05 hereto (a "Global Note"), deposited with, or on behalf of the
Depository or with the Trustee, as custodian for the Depository.
Any Holder of the Global Note(s) shall, by acceptance of such
Global Note(s), agree that transfers of beneficial interests in such Global
Note(s) may be effected only through a book-entry system maintained by the
Holder of such Global Note(s) (or its agent), and that ownership of a beneficial
interest in the 8 3/4% Notes shall be required to be reflected in a book entry.
SECTION 2.04. Book-Entry Provisions for Global Note(s).
(a) Each Global Note initially shall (i) be registered in the
name of the Depository for such Global Notes or the nominee of such Depository,
(ii) be deposited with, or on behalf of, the Depository or with the Trustee, as
custodian for such Depository, and (iii) bear the legends set forth in Section
2.05. Members of, or participants in, the Depository ("Agent Members") shall
have no rights under this Indenture with respect to any Global Note(s) held on
their behalf by the Depository, or the Trustee as its custodian, or under the
Global Note(s), and the Depository may be treated by the Company, the Trustee
and any agent of the
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Company or the Trustee as the absolute owner of such Global Note(s) for all
purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent
the Company, the Trustee or any agent of the Company or the Trustee from giving
any effect to any written certification, proxy or other authorization furnished
by the Depository or shall impair, as between the Depository and its Agent
Members, the operation of customary practices governing the exercise of the
rights of a Holder of any 8 3/4% Notes.
(b) Transfers of each Global Note shall be limited to
transfers of such Global Note in whole, but not in part, to the Depository, its
successors or their respective nominees. Interests of beneficial owners in each
Global Note may be transferred in accordance with the rules and procedures of
the Depository. In addition, permanent certificate Notes in registered form
("Physical Notes") shall be issued to all beneficial owners in exchange for
their beneficial interests in a Global Note if (i) the Company notifies the
Trustee in writing that the Depository is at any time unwilling or unable to
continue as a depository for such Global Note and a successor depository is not
appointed by the Company within 90 days, (ii) the Company, at its option,
notifies the Trustee in writing that it elects to cause the issuance of Notes in
definitive form under the Indenture, or (iii) there is continuing an Event of
Default as set forth in the Indenture and a Holder so requests.
(c) In connection with any transfer of a portion of the
beneficial interest in a Global Note pursuant to Section 2.04(b) to beneficial
owners who are required to hold Physical Notes, the Security Registrar shall
reflect on its books and records the date and a decrease in the principal amount
of such Global Note in an amount equal to the principal amount of the beneficial
interest in such Global Note to be transferred, and the Company shall execute,
and the Trustee shall authenticate and deliver, one or more Physical Notes of
like tenor and amount.
(d) In connection with the transfer in its entirety of a
Global Note to beneficial owners pursuant to Section 2.04(b), such Global Note
shall be surrendered to the Trustee for cancellation, and the Company shall
execute, and the Trustee shall authenticate and deliver, to each beneficial
owner identified by the Depository in exchange for its beneficial interest in
such Global Note an equal principal amount of Physical Notes of authorized
denominations.
(e) The Holder of the Global Note(s) may grant proxies and
otherwise authorize any person, including Agent Members and persons that may
hold interests through Agent
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Members, to take any action which a Holder is entitled to take under this
Indenture or the 8 3/4% Notes.
SECTION 2.05. Legends.
Each Global Note shall bear a legend substantially to the following
effect on the face thereof:
UNLESS THIS GLOBAL NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY GLOBAL NOTE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE
TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN
PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE
AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE
IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE HEREINAFTER
REFERRED TO.
SECTION 3.11 Establishment of Terms.
The 8 3/4% Notes shall have such terms as are set forth in the
8 3/4% Note, a copy of which is attached hereto as Exhibit A.
SECTION 11.10. Restrictions on Mergers, Sales and
Consolidations.
The Company will not consolidate or merge with or
into, or sell, lease, convey or otherwise dispose of all or
substantially all of its property to another corporation,
Person or entity except as permitted in Article Nine.
SECTION 11.11. Restrictions on Dividends and Other
Payments.
Except as set forth below the Company shall not,
directly or indirectly:
(1) declare or pay any dividend on, or make any distribution
to the holders (as such) of, any shares of its Capital Stock (other than
dividends or distributions payable in Capital Stock (other than Redeemable
Stock) of the Company);
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(2) purchase, redeem or otherwise acquire or retire for value
any Capital Stock of the Company, any Subsidiary or other Affiliate of the
Company (other than any such Capital Stock owned by the Company or any directly
or indirectly wholly-owned Subsidiary of the Company);
(3) permit any Subsidiary to declare or pay any dividend on,
or make any distribution to the holders (as such) of, any shares of its Capital
Stock except to the Company or a directly or indirectly wholly-owned Subsidiary
of the Company (other than dividends or distributions payable in Capital Stock
(other than Redeemable Stock) of such Subsidiary or the Company);
(4) permit any Subsidiary to purchase, redeem or otherwise
acquire or retire for value any Capital Stock of such Subsidiary, the Company or
any Affiliate of either of them (other than any such Capital Stock owned by the
Company or any directly or indirectly wholly-owned Subsidiary of the Company);
or
(5) make an Advance or permit any Subsidiary to make an
Advance (such dividends, distributions, purchases, redemptions, other
acquisitions, retirements or Advances referred to in (1) through (5) above being
collectively referred to as "Restricted Payments;" provided, however, that
Restricted Payments shall not include any amounts paid for the acquisition from
a Person not an Affiliate of the Company of any Capital Stock of a Subsidiary or
other Affiliate of the Company);
if at the time of such Restricted Payment:
(i) an Event of Default shall have occurred and be continuing,
or shall occur as a consequence thereof, or
(ii) if upon giving effect to such payment the aggregate
amount expended for all such Restricted Payments subsequent to November 21, 1988
shall exceed the sum of (a) the excess of (x) the aggregate of Consolidated Cash
Flow Available for Interest Expense of the Company accrued during all fiscal
quarters ended subsequent to May 31, 1988 over (Y) the product of (1) 1.2 and
(2) the aggregate of Consolidated Interest Expense of the Company accrued during
all fiscal quarters ended subsequent to May 31, 1988, (b) the aggregate net
proceeds, including cash and the fair market value of property other than cash,
received by the Company from the issue or sale, after November 21, 1988, of
Capital Stock of the Company (other than Redeemable Stock), including upon the
exercise of any warrant, other than in connection with the conversion or
exchange of any Indebtedness or Capital Stock, and (c) the aggregate net
proceeds received by the Company, subsequent to November 21,
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1988, from the issue or sale of any debt securities or Redeemable Stock of the
Company, if, at the time the determination is made, such debt securities or
Redeemable Stock, as the case may be, has been converted into or exchanged for
Capital Stock of the Company (other than Redeemable Stock).
For purposes of any calculation pursuant to the preceding
sentence which is required to be made within 60 days after the declaration of a
dividend by the Company or any Subsidiary, such dividend shall be deemed to be
paid at the date of declaration, and the subsequent payment of such dividend
during such 60-day period shall not be treated as an additional Restricted
Payment. For purposes of determining under clause (ii) above the amount expended
for Restricted Payments, property other than cash shall be valued at its fair
market value.
Notwithstanding the foregoing, the provisions of this Section
11.11 will not prevent (i) the payment of an amount not to exceed $150,000,000
in the aggregate to repurchase shares of the common stock of the Company, (ii)
the payment of any dividend within 60 days after the date of declaration when
the payment would have complied with the foregoing provisions on the date of
declaration or (iii) the purchase, redemption, acquisition or other retirement
of any shares of the Company's Capital Stock by exchange for, or out of the
proceeds of the substantially concurrent sale of, other shares of its Capital
Stock (other than Redeemable Stock).
SECTION 11.12. Limitation on Transactions with Affiliates.
Neither the Company nor any Subsidiary may engage in any
transaction with an Affiliate of the Company (other than a Restricted
Subsidiary), or any director, officer or employee of the Company or any
Subsidiary, on terms less favorable to the Company or such Subsidiary than would
be obtainable at the time in comparable transactions of the Company or such
Subsidiary with Persons which are not Affiliates; provided, however, that
nothing in this Section 11.12 shall prevent (i) the Company from making any
payments permitted pursuant to the terms of Section 11.11 or (ii) the Company or
any Subsidiary from entering into any transaction permitted pursuant to the
terms of Sections 9.01, 11.10 and 11.14.
SECTION 11.13. Limitation on Indebtedness.
The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, create, incur, issue, assume or become
liable for, contingently or otherwise (collectively an "incurrence"), any
Indebtedness
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(other than the 8 3/4% Notes) unless, after giving effect to such incurrence on
a pro forma basis, Indebtedness of the Company and its Restricted Subsidiaries,
on a consolidated basis, shall not be more than nine times Pro Forma Operating
Cash Flow for the four fiscal quarters immediately preceding such incurrence.
For purposes of this Section 11.13, an incurrence will not be deemed to occur
when any Person becomes a Subsidiary by merger, consolidation, acquisition or
otherwise. Notwithstanding the above, neither the Company nor any Restricted
Subsidiary shall be prohibited from incurring (i) Indebtedness incurred in
connection with Currency Agreements or Interest Swap Obligations, (ii)
Indebtedness which is subordinated in right of payment to the 8 3/4% Notes and
which has an average life to maturity longer than that of the 8 3/4% Notes and
(iii) Indebtedness resulting in the extension, refunding or renewal of any
Indebtedness existing prior to such extension, renewal or refunding which does
not result in an increase in the principal amount of such existing Indebtedness
then outstanding.
SECTION 11.14. Investments in Affiliates and
Subsidiaries.
(a) After September 23, 1997, the Company shall not, nor shall
the Company allow any Restricted Subsidiary to, invest in any Affiliate (other
than the Company or a Restricted Subsidiary) or in any Unrestricted Subsidiary
other than by way of Permitted Investments.
(b) After September 23, 1997, neither the Company nor any
Restricted Subsidiary shall guarantee or secure, pledge, encumber or otherwise
become directly or indirectly liable for investments in or borrowings by
Unrestricted Subsidiaries, except for Permitted Investments and except that the
Capital Stock of an Unrestricted Subsidiary may be pledged to secure borrowings
by such Unrestricted Subsidiary or other Unrestricted Subsidiaries.
SECTION 12.10. Right to Require Repurchase of
8 3/4% Notes.
(a) In the event of the occurrence of a Triggering Event, each
holder of 8 3/4% Notes shall have the right, at such holder's option, to sell to
the Company, and the Company hereby agrees to purchase, all or any part of such
holder's 8 3/4% Notes on the date (the "Repurchase Date") that is 115 days after
a Triggering Event Date, for an amount equal to 101% of their principal amount
plus accrued interest to the Repurchase Date.
(b) The Company shall mail to all holders of record of the 8
3/4% Notes, within 30 days after a
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Triggering Event Date, a notice of the occurrence of such Triggering Event,
specifying the date by which a holder of 8 3/4% Notes must notify the Trustee of
such holder's intention to exercise the repurchase right and describing the
procedure which such holder must follow to exercise such right. The Company
shall deliver a copy of such notice to the Trustee on the same such date and
shall cause a copy of such notice to be published in an Authorized Newspaper. To
exercise the repurchase right, the holder of a 8 3/4% Note must deliver, on or
before the ninetieth day after a Triggering Event Date, written notice (which
shall be irrevocable) (such notice, as to any holder of 8 3/4% Notes its
"Repurchase Notice") to the Trustee of the holder's exercise of such right,
together with the 8 3/4% Note or 8 3/4% Notes with respect to which the right is
being exercised, duly endorsed for transfer. Not later than the ninety-fifth day
after such Triggering Event Date, the Trustee shall notify the Company of the
aggregate principal amount of 8 3/4% Notes or portions thereof with respect to
which it has received Repurchase Notices and the certificate numbers and the
names of the holders of the 8 3/4% Notes tendered for repurchase. No later than
the date that is 110 days after a Triggering Event Date, the Company shall
deposit with the Trustee money in an amount sufficient to repurchase on the
Repurchase Date all such 8 3/4% Notes or portions thereof. The Company shall not
be required pursuant to Section 3.05 to exchange or register the transfer of any
8 3/4% Note or portion thereof with respect to which the holder thereof has
delivered a Repurchase Notice.
(c) The Company shall take all reasonable action necessary to
enable each of the Rating Agencies to provide a rating for the 8 3/4% Notes. If,
however, either or both of the Rating Agencies shall not make such a rating
available, a nationally recognized investment banking firm selected by the
Company shall select a nationally recognized securities rating agency or two
nationally recognized securities rating agencies to act as substitute rating
agency or substitute rating agencies, as the case may be.
PARAGRAPH C. CHANGED PROVISIONS.
C1. CHANGED DEFINITIONS. The definitions of "Capital Stock",
"GAAP" and "Subsidiary" set forth in Article 1 of the Indenture shall be amended
and restated in their entirety to read as follows:
"Capital Stock" shall mean, (i) in respect of any Person, any
and all shares, interests, rights to purchase, warrants, options, participations
or other equivalents of or interests in (however designated) corporate stock and
any and all equity, beneficial or ownership interests in, or
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participations or other equivalents in, any partnership, association, joint
venture or other business entity and (ii) when used to refer to "Capital Stock"
into which Securities of a particular series are convertible, stock of any class
of the Company into which Securities of such series are convertible in
accordance with their terms (as contemplated by Section 3.01).
"GAAP" shall mean generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession as in effect on the date of the Indenture.
"Subsidiary" of any specified Person shall mean (i) a
corporation a majority of whose Capital Stock with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly, owned
by such Person or by such Person and a Subsidiary or Subsidiaries of such Person
or by a Subsidiary or Subsidiaries of such Person or (ii) any other Person
(other than a corporation) in which such Person or such Person and a Subsidiary
or Subsidiaries of such Person or a Subsidiary or Subsidiaries of such Person,
directly or indirectly, at the date of determination thereof has at least
majority ownership interest.
C2. CHANGED SECTIONS.
SECTION 2.02. Certificate of Authentication.
Section 2.02 of the Indenture, which shall apply to the 8 3/4%
Notes, is amended and restated in its entirety to read as follows:
SECTION 2.02. Form of Trustee's Certificate
of Authentication.
The Trustee's certificate of authentication on the 8 3/4%
Notes shall be in substantially the following form:
This is one of the 8 3/4% Senior Notes Due 2007 referred to in
the Indenture dated as of February 15, 1992, as supplemented by the Sixth
Supplemental Indenture, dated as of September 29, 1997, between Century
Communications Corp. and First Trust of California, National Association,
successor trustee to Bank of America National Trust and Savings Association, as
Trustee.
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<PAGE>
<PAGE>
FIRST TRUST OF CALIFORNIA,
NATIONAL ASSOCIATION,
successor trustee to BANK OF
AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as
Trustee
By:
-------------------------
Authentication Date: Authorized Officer
SECTION 5.02. Defeasance.
Section 5.02 of the Indenture, which shall apply to the 8 3/4%
Notes, is amended and restated in its entirety to read as follows:
SECTION 5.02. Defeasance Upon Deposit of Moneys or U.S.
Government Obligations.
At the Company's option indicated by notice to the Trustee,
either (a) the Company shall be deemed to have been Discharged (as defined
below) from its obligations with respect to the 8 3/4% Notes or (b) the Company
shall cease to be under any obligation to comply with any term, provision or
condition set forth in Sections 11.10 through 11.12 at any time after the
applicable conditions set forth below have been satisfied:
(1) the Company shall have deposited or caused to be deposited
irrevocably with the Trustee as trust funds in trust, specifically pledged as
security for, and dedicated solely to, the benefit of the holders of the 8 3/4%
Notes (A) money in an amount, or (B) U.S. Government Obligations which through
the payment of interest thereon and principal in respect thereof in accordance
with their terms will provide, not later than one day before the due date of any
payment, money in an amount, or (C) a combination of (A) and (B), sufficient, in
the opinion (with respect to (B) and (C)) of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, to pay and discharge all of the principal of the
outstanding 8 3/4% Notes on the date such payment of principal is due in
accordance with the terms of the 8 3/4% Notes;
(2) if the 8 3/4% Notes are then listed on the American Stock
Exchange or any other stock exchange, and if the Company has elected to be
deemed Discharged from its obligations with respect to the 8 3/4% Notes pursuant
to option (a) above, the Company shall have delivered to the Trustee an Opinion
of Counsel to the effect that the
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<PAGE>
<PAGE>
Company's exercise of its option (a) would not cause the 8 3/4% Notes to be
delisted; and
(3) the Company shall have delivered to the Trustee an Opinion
of Counsel to the effect that holders of the 8 3/4% Notes will not recognize
income, gain or loss for Federal income tax purposes as a result of the
Company's exercise of its option under this Section 5.02 and will be subject to
Federal income tax on the same amount and in the same manner and at the same
times as would have been the case if such option had not been exercised or
deliver a ruling to that effect received from or published by the Internal
Revenue Service.
"Discharged" means, for purposes of this Section 5.02, that
the Company shall be deemed to have paid and discharged the entire indebtedness
represented by, and obligations under, the 8 3/4% Notes and to have satisfied
all the obligations under this Indenture relating to the 8 3/4% Notes and the
Trustee, at the expense of the Company, shall execute proper instruments
acknowledging the same.
"U.S. Government Obligations" means securities that are (i)
direct obligations of the United States of America for payment of which its full
faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the timely payment of which is unconditionally guaranteed as a full
faith and credit obligation of the United States of America, which, in either
case under clauses (i) or (ii), are not callable or redeemable at the option of
the issuer thereof, and will also include a depository receipt issued by a bank
or trust company as custodian with respect to any such U.S. Government
Obligation or a specified payment of interest on or principal of any such U.S.
Government Obligation held by such custodian for the account of the holder of a
depository receipt, provided that (except as required by law) such custodian is
not authorized to make any deduction from the amount payable to the holder of
such depository receipt from any amount received by the custodian in respect of
the U.S. Government Obligation or the specific payment of interest on or
principal of the U.S. Government Obligation evidenced by such depository
receipt.
Notwithstanding the satisfaction and discharge of this
Indenture under this Section 5.02, the Company's obligations in Sections 3.05,
3.06, 7.07 and 11.02, however, shall survive until the 8 3/4% Notes are no
longer outstanding.
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<PAGE>
<PAGE>
SECTION 9.01. Company May Consolidate, etc.
Only On Certain Terms.
Section 9.01 is amended by (i) deleting the word "and" at the
end of subclause 1, (ii) deleting the period at the end of subclause 2 and
substituting in lieu thereof a semicolon and (iii) adding the following two
subclauses at the end thereto, to read in their entirety as follows:
(3) immediately after the transaction, no Event of Default
exists; and
(4) immediately after giving effect to such transaction on a
pro forma basis, the Interest Expense Ratio of the surviving or successor entity
on a pro forma basis is at least 1:1; provided that, if the Interest Expense
Ratio of the Company immediately prior to any such transaction is within the
range set forth in Column A below, then the pro forma Interest Expense Ratio of
the surviving or successor entity shall be at least equal to the percentage of
the Interest Expense Ratio of the Company set forth in Column B below:
(A) (B)
1.1111:1 to 1.4999:1 90%
1.5:1 and higher 75%
and provided further, that, if the pro forma Interest Expense Ratio of the
surviving or successor entity is 2.0:1 or more, the calculation in the preceding
proviso shall be inapplicable and such transaction shall be deemed to have
complied with the requirements of such provision.
ARTICLE TWELVE - REDEMPTION OF SECURITIES
Sections 12.01, 12.06, 12.07 and 12.08 are amended and
restated in their entirety to read as follows:
SECTION 12.01. Applicability of Article.
Securities of any series which are subject to repurchase
before their Stated Maturity shall be repurchased in accordance with their terms
and (except as otherwise specified as contemplated by Section 3.01 for
Securities of any series) in accordance with this Article.
SECTION 12.06. Securities Payable on Repurchase Date.
Notice of repurchase having been given as aforesaid, the
Securities so to be repurchased shall, on the
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<PAGE>
<PAGE>
Repurchase Date, become due and payable at the applicable repurchase price
therein specified, and from and after such date (unless the Company shall
default in the payment of the applicable repurchase price and accrued interest)
such Securities shall cease to bear interest. Upon surrender of any such
Security for repurchase in accordance with said notice, such Security shall be
paid by the Company at the applicable repurchase price, together with accrued
interest to the applicable Repurchase Date; provided, however, that, subject to
Section 16.04, installments of interest whose Stated Maturity is on or prior to
the applicable Repurchase Date shall be payable to the Holders of such
Securities, or one or more Predecessor Securities, registered as such at the
close of business on the relevant Record Dates according to their terms and the
provisions of Section 3.07.
If any Security called for repurchase shall not be so paid
upon surrender thereof for repurchase, the principal (and premium, if any)
shall, until paid, bear interest from the applicable Repurchase Date at the rate
prescribed therefor in the Security.
SECTION 12.07. Securities Repurchased in Part.
Any Security which is to be repurchased only in part shall be
surrendered at a Place of Payment therefor (with, if the Company or the Trustee
so requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder thereof
or his attorney duly authorized in writing), and the Company shall execute, and
the Trustee shall authenticate and deliver to the Holder of such Security
without service charge, a new Security or Securities of the same series, of any
authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the portion not repurchased of the principal
of the security so surrendered. Securities in denominations larger than $1,000
may be repurchased in part, but only in whole multiples of $1,000.
SECTION 12.08. Securities No Longer Outstanding
After Notice to Trustee and
Deposit of Cash.
If the Company, having given notice to the Trustee as provided
in Section 12.02 or 12.10, shall have deposited with the Trustee or a Paying
Agent, for the benefit of the Holders of any Securities of any series or
portions thereof tendered for repurchase in whole or in part, cash or other form
of payment if permitted by the terms of such Securities (which amount shall be
immediately due and payable to the Holders of such Securities or portions
thereof) in the
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<PAGE>
<PAGE>
amount necessary so to repurchase all such Securities or portions thereof on the
applicable Repurchase Date and provision satisfactory to the Trustee shall have
been made for the giving of notice of such repurchase, such Securities or
portions thereof shall thereupon, for all purposes of this Indenture, be deemed
to be no longer Outstanding, and the Holders thereof shall be entitled to no
rights thereunder or hereunder, except the right to receive payment of the
applicable repurchase price, together with interest accrued to the applicable
Repurchase Date, on or after the applicable Repurchase Date of such Securities
or portions thereof.
PARAGRAPH D. REPORTING DATE
For the purposes of the 8 3/4% Notes, the Reporting Date shall
be May 15, with the first such Reporting Date being May 15, 1998.
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<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Sixth
Supplemental Indenture to be duly executed and their respective corporate seals
to be hereunto affixed and attested, all as of the day and year first above
written.
CENTURY COMMUNICATIONS CORP.
By: /s/ SCOTT N. SCHNEIDER
------------------------------
Chief Financial Officer,
Senior Vice President and
Treasurer
[CORPORATE SEAL]
ATTEST:
/s/ DAVID ROSENSWEIG
- -------------------------------
FIRST TRUST OF CALIFORNIA,
NATIONAL ASSOCIATION,
successor trustee to BANK OF
AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as
Trustee
By: /s/ ROBERT SCHNEIDER
------------------------------
Title: Assistant Vice
President
[CORPORATE SEAL]
ATTEST:
- -------------------------------
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<PAGE>
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 29th day of September, 1997, before me personally came
Scott N. Schneider, to me known, who, being by me duly sworn, did depose and
say that he is CFO, Senior Vice President and Treasurer of CENTURY
COMMUNICATIONS CORP., one of the corporations described in and which
executed the foregoing instrument; that he knows the seal of said corporation;
that the seal affixed to said instrument is such corporate seal; that it was so
affixed by authority of the Board of Directors of said corporation; and that he
signed his name thereto by like authority.
[NOTARIAL SEAL]
/s/ A.J. KESS
---------------------------
Notary Public
<PAGE>
<PAGE>
STATE OF CALIFORNIA )
: ss.:
COUNTY OF LOS ANGELES )
On the 29th day of September, 1997, before me personally came
Robert Schneider, to me known, who, being by me duly sworn, did depose and say
that he is Assistant Vice President of FIRST TRUST OF CALIFORNIA, NATIONAL
ASSOCIATION, successor trustee to BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as Trustee, one of the corporations described in and which executed
the foregoing instrument; that he knows the seal of said corporation; that the
seal affixed to said instrument is such corporate seal; that it was so affixed
by authority of the Board of Directors of said corporation; and that he signed
his name thereto by like authority.
[NOTARIAL SEAL]
--------------------------
Notary Public
<PAGE>
<PAGE>
EXHIBIT A
FORM OF 8 3/4% NOTE
<PAGE>
<PAGE>
Exhibit A
UNLESS THIS GLOBAL NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS
AGENT FOR REGISTRATION FOR TRANSFER, EXCHANGE, OR PAYMENT, AND ANY GLOBAL NOTE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND PAYMENT IS MADE TO CEDE &
CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL, INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST THEREIN.
TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN
PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE
AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE
IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE HEREINAFTER
REFERRED TO.
(Face of Senior Debt Security)
No. 1 CUSIP NO. 156503 AJ3
CENTURY COMMUNICATIONS CORP.,
a corporation duly organized and existing under the laws of the State of New
Jersey (together with any successor corporation under the Indenture hereinafter
referred to, the "Company") hereby promises to pay to CEDE & CO. or registered
assigns, the principal sum of TWO HUNDRED MILLION DOLLARS on October 1, 2007
8 3/4% SENIOR NOTE due 2007
Interest Payment Dates: April 1 and October 1 commencing April 1, 1998
Record Dates: March 15 and September 15
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET
FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES
HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.
This Note shall not be entitled to any benefit under the Indenture
referred to on the reverse hereof or any indenture supplemental thereto, or
become valid or obligatory for any purpose, until the Trustee under said
Indenture, or a successor trustee thereunder, shall have executed the
certificate of authentication appearing herein.
IN WITNESS WHEREOF, CENTURY COMMUNICATIONS CORP. has caused this Note
to be signed manually or by facsimile by its duly authorized officers and a
facsimile of its corporate seal to be affixed hereto or imprinted hereon.
CENTURY COMMUNICATIONS CORP.
By:
-------------------------------
By:
-------------------------------
(SEAL)
Dated: September 29, 1997
Certificate of Authentication:
<TABLE>
<S> <C>
This is one of the 8 3/4% Senior Notes Due 2007
referred to in the Indenture dated as of February 15, (Authenticating Agent's name)
1992, as supplemented by the Sixth Supplemental
Indenture, dated as of September 29, 1997, between By
Century Communications Corp. and First Trust of ---------------------------
California, National Association, successor trustee to Authorized Signature
Bank of America National Trust and Savings Association,
as Trustee.
FIRST TRUST OF CALIFORNIA, NATIONAL
ASSOCIATION, SUCCESSOR TRUSTEE TO BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION,
</TABLE>
By: as Trustee
Authentication Date: Authorized Officer
<PAGE>
<PAGE>
(BACK OF SENIOR DEBT SECURITY)
CENTURY COMMUNICATIONS CORP.
8 3/4% SENIOR NOTE DUE OCTOBER 1, 2007
1. Interest and Principal Payments. CENTURY COMMUNICATIONS CORP.
(together with any successor corporation hereinafter referred to, the "Company")
promises to pay interest on the principal amount of this 8 3/4% Senior Note due
2007 (this "Note"), at a rate equal to 8 3/4% per annum. The Company will pay
interest semiannually in arrears on each April 1 and October 1 of each year (an
"Interest Payment Date"), commencing April 1, 1998, to the holder of record of
this Note at the close of business on the March 15 or September 15 next
preceding the Interest Payment Date. Interest on this Note will accrue from the
most recent date as to which interest has been paid or, if no interest has been
paid, from September 29, 1997. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
Subject to Sections 6 and 7 hereof, the Company will pay the principal
amount of this Note on October 1, 2007. The Company shall pay interest on
overdue principal at the rate of 8 3/4% per annum and interest on overdue
installments of interest, to the extent lawful, at the same rate.
2. Method of Payment. The Company will pay the interest on this Note
provided for in paragraph 1 above (except defaulted interest) to the person who
is the registered holder of this Note (also referred to as a "Noteholder") at
the close of business on the March 15 or September 15, as the case may be, next
preceding the Interest Payment Date. The holder must surrender this Note to the
office of the Trustee in St. Paul, Minnesota to collect principal payments. The
Company will pay principal and interest in money of the United States that at
the time of payment is legal tender for payment of public and private debts.
However, the Company may pay such principal and interest by its check payable in
such money. It may mail an interest check to the holder's registered address. If
a payment date is a not a Business Day, payment may be made on the next
succeeding Business Day, and no interest shall accrue for the intervening
period.
3. Office or Agency of Company. The office of the Trustee in St. Paul,
Minnesota shall be the office or agency of the Company where Notes may be
presented for registration of transfer, where notices and demands with respect
to the Notes and the Indenture may be served and where the Notes may be
presented for payment, unless the Company shall maintain some other office or
agency for such purposes and shall give the Trustee written notice thereof. In
case the Company shall fail to maintain such other office or agency,
presentations may be made and notices and demands may be served at the principal
office of the Trustee.
<PAGE>
<PAGE>
4. Indenture. The Company issued the Notes under an Indenture dated as
of February 15, 1992, as supplemented by the Sixth Supplemental Indenture dated
as of September 29, 1997 (as so supplemented, the "Indenture") between the
Company and the Trustee. The terms of the Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S.C. 'SS''SS' 77aaa-77bbbb) as in effect on the
date of the Indenture. The Notes are subject to all such terms, and holders of
Notes are referred to the Indenture and such Act for a statement of such terms.
The Notes are general obligations of the Company limited to $225,000,000 in
aggregate principal amount, except for Notes issued in substitution for
exchanged, destroyed, lost or stolen Notes. Capitalized terms used in this Note
and not defined in this Note shall have the respective meanings set forth in the
Indenture.
5. Redemption. The Notes will mature on October 1, 2007 and may not be
redeemed prior to maturity.
6. Defeasance. Subject to certain conditions set out in the Indenture,
the Company may, by the irrevocable deposit of money or U.S. Government
Obligations or both, discharge its obligations with respect to the Notes and/or
cease to be under any further obligation to comply with or be subject to certain
covenants and provisions of the Indenture.
7. Right to Require Repurchase of Notes. In the event of a Triggering
Event, each Noteholder shall have the right, at such holder's option but subject
to the provisions of Section 12.10 of the Indenture, to sell to the Company, and
to require the Company to purchase, all or any part of such holder's Notes on
the date (the "Repurchase Date") which is 115 days after the Triggering Event
Date for an amount equal to 101% of the principal amount of such Notes plus
accrued interest to the Repurchase Date.
8. Notice of Repurchases. The Company shall mail by first-class mail,
postage prepaid, to all holders of record of the Notes, within 30 days after a
Triggering Event Date, a notice of the occurrence of such Triggering Event,
specifying the date by which a holder of Notes must notify the Trustee of such
holder's intention to exercise the repurchase right and setting forth the
procedure which such holder must follow to exercise such right. The Company
shall deliver a copy of such notice to the Trustee and shall cause a copy of
such notice to be published in an Authorized Newspaper. Notes in denominations
larger than $1,000 may be repurchased in part but only in whole multiples of
$1,000. On and after the Repurchase Date with respect to any Notes or portions
thereof tendered for repurchase, interest shall cease to accrue on the Notes or
portions thereof tendered for repurchase.
9. Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. The officer or agent of the Company referred to in Section 3
hereof may require a holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture.
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<PAGE>
<PAGE>
The officer or agent of the Company referred to in Section 3 hereof need not
exchange or register the transfer of any Note or portion of a Note with respect
to which the holder has delivered notice of exercise of its repurchase right.
10. Persons Deemed Owners. The Company, the Trustee and any agent of
the Company or the Trustee may treat the Person in whose name the Note is
registered upon the books maintained at the office or agency of the Company for
the registration of the Notes as the owner for all purposes.
11. Amendments and Waivers. Subject to certain exceptions and to the
extent permitted by, and as provided in, the Indenture, modifications or
alterations of the Indenture, or of any indenture supplemental thereto, and of
the rights and obligations of the Company and of the holders of the Notes, may
be made by the Company with the consent of the holders of not less than a
majority in aggregate principal amount of the Notes then Outstanding; provided,
however, that no such modification or alteration shall (i) extend the time or
times of payment of the principal of or interest on any Note, or reduce the
principal amount of any Note or the rate of interest thereon or reduce any
amount payable on repurchase thereof or that would be due and payable upon
acceleration thereof, without the consent of the holder of each Note so
affected, or (ii) reduce the percentage of Notes the vote or consent of the
holders of which is required for such modifications and alterations, without the
consent of the holders of all Notes then Outstanding under the Indenture.
Without the consent of any Noteholder, the Indenture or the Notes may be amended
to cure any ambiguity, defect or inconsistency or to make any change which does
not adversely affect the rights of any Noteholder. It is also provided in the
Indenture that the holders of a majority in aggregate principal amount of the
Notes then Outstanding on behalf of the holders of all the Notes, under
circumstances specified in the Indenture, may waive a past Event of Default
under the Indenture and its consequences, except a default in the payment of the
principal of or interest on the Notes. Any such consent or waiver by the holder
of this Note shall be conclusive and binding upon such holder and upon all
future holders of this Note and of any Note or Notes issued in exchange or
substitution herefor, irrespective of whether or not any notation of such
consent or waiver is made upon this Note.
12. Defaults and Remedies. Events of Default under the Indenture
include the following: default for 30 days in payment of interest on the Notes;
default in payment of principal when due on the Notes (upon maturity,
repurchase, acceleration or otherwise); failure by the Company for 90 days after
notice to it as provided in the Indenture to comply with any of its other
covenants, conditions or agreements in the Indenture or the Notes; and certain
events of bankruptcy, insolvency or reorganization. Subject to certain
limitations in the Indenture, if an Event of Default occurs and is continuing,
the Trustee or the holders of at least 25% of the aggregate principal amount of
the Notes then Outstanding may declare the principal amount of the Notes to be
due and payable immediately. The Indenture provides that such declaration in
certain events may be annulled by the holders of a majority in aggregate
principal amount of the Notes then Outstanding. Noteholders may not enforce the
Indenture or the Notes except as provided in the Indenture. The Trustee may
require indemnity satisfactory to it before
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<PAGE>
<PAGE>
it enforces the Indenture or the Notes. Subject to certain limitations, holders
of a majority in principal amount of the Notes then Outstanding may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Noteholders notice of any continuing default (except a default in payment of
principal or interest) if it determines that withholding notice is in their
interests. The Company must furnish annual compliance certificates to the
Trustee. The above description of Events of Default and remedies is qualified by
reference and subject in its entirety to the more complete description thereof
contained in the Indenture.
13. Trustee Dealings with Company. The Trustee under the Indenture, in
its individual or any other capacity, may engage or be interested in any
financial or other transaction with the Company or any Subsidiary or Affiliate,
and may buy, own, hold and sell any Notes or other securities of the Company or
its Subsidiaries and Affiliates, make loans to, maintain any and all other
general banking and business relations with the Company or its Subsidiaries and
Affiliates, and may otherwise deal with the Company or its Subsidiaries and
Affiliates, as if it were not the Trustee.
14. No Recourse Against Others. No recourse shall be had for the
payment of the principal of or the interest on this Note or for any claim based
thereon or otherwise in any manner in respect thereof, or in respect of the
Indenture, to or against any subsidiary, incorporator, stockholder, officer,
director or employee, as such, past, present or future, of the Company or any
subsidiary, incorporator, stockholder, officer, director or employee, as such,
past, present or future, of any predecessor or successor corporation, either
directly or through the Company or such predecessor or successor corporation,
whether by virtue of any constitutional provision or statute or rule of law, or
by the enforcement of any assessment or penalty, or in any other manner, all
such liability being expressly waived and released by the acceptance of this
Note and as part of the consideration for the issue thereof.
15. Authentication. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
16. Unclaimed Money. If money for the payment of principal of or
interest on the Notes remains unclaimed for one year and eleven months, the
Trustee or any paying agent will pay the money back to the Company at its
request. After such payment, holders entitled to any portion of such money must
look solely to the Company for payment thereof.
17. Definitions and Abbreviations. All terms used in this Note which
are defined in the Indenture shall have the meanings assigned to them in the
Indenture. Customary abbreviations may be used in the name of a Noteholder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian) and U/G/M/A (= Uniform Gifts to Minors
Act).
-4-
<PAGE>
<PAGE>
The Company will furnish to any Noteholder upon written request and
without charge a copy of the Indenture. Request may be made to: Century
Communications Corp., 50 Locust Avenue, New Canaan, Connecticut 06840,
Attention: Treasurer.
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<PAGE>
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 12.10 of the Indenture, check the box: [ ]
If you want to elect to have only part of this Note purchased by the Company
pursuant to Section 12.10 of the Indenture, state the amount: $________________
Date:
------------------------------------
Your Signature:
--------------------------------------------------------------
(Sign exactly as your name appears on the other side of this Note)
Signature Guarantee:
--------------------------
<PAGE>
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below:
(I) or (we) assign and transfer this Senior Debt Security to
- -------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
--------------------------------------------------------
- -------------------------------------------------------------------------------
agent to transfer this Note on the books of the Company. The agent may
substitute another to act for him.
- -------------------------------------------------------------------------------
Date: Your Signature:
---------------------- ---------------------------------
(Sign exactly as your name appears on the other side of this Senior Debt
Security)
Signature Guarantee:
-----------------------------------
<PAGE>
<PAGE>
EXHIBIT 11
CENTURY COMMUNICATIONS CORP. AND SUBSIDIARIES
EXHIBIT TO FORM 10-Q
FOR THE THREE MONTHS ENDED
AUGUST 31, 1997 AND 1996
COMPUTATION OF LOSS PER COMMON SHARE
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
Three Months Ended
---------------------------------------------
August 31, August 31,
1997 1996
------------- -------------
<S> <C> <C>
Primary fully diluted:
Net Loss $ (24,568) $ (61,212)
Subsidiary preferred stock dividend (1,259) (1,098)
------------ ------------
Loss applicable to common shares $ (25,827) $ (62,310)
============ ============
Average number of common shares and
common share equivalents outstanding
Average number of common shares
outstanding during the period 75,782,000 74,069,000
Add common share equivalents -
Options to purchase common shares - net 8,000 379,000
------------ ------------
Average number of common shares and
common share equivalents 75,790,000(A) 74,448,000(A)
============ ============
Loss per common share $ (.34)(A) $ (.84)(A)
============ ============
</TABLE>
(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.
34
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1998
<PERIOD-END> AUG-31-1997
<CASH> 158,653
<SECURITIES> 0
<RECEIVABLES> 61,625
<ALLOWANCES> 4,484
<INVENTORY> 0
<CURRENT-ASSETS> 232,415
<PP&E> 733,169
<DEPRECIATION> 460,953
<TOTAL-ASSETS> 2,150,045
<CURRENT-LIABILITIES> 186,112
<BONDS> 2,232,380
<COMMON> 1,079
186,287
0
<OTHER-SE> (631,177)
<TOTAL-LIABILITY-AND-EQUITY> 2,150,045
<SALES> 180,749
<TOTAL-REVENUES> 180,749
<CGS> 38,171
<TOTAL-COSTS> 161,685
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 52,296
<INCOME-PRETAX> (28,067)
<INCOME-TAX> (2,011)
<INCOME-CONTINUING> (26,056)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (24,568)
<EPS-PRIMARY> (.34)
<EPS-DILUTED> 0
</TABLE>
