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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 November 30, 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 0-16899
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 - 30,179,118 outstanding shares as of January 5, 1998
Class B Common - 44,126,115 outstanding shares as of January 5, 1998
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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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<CAPTION>
November 30,
1997 May 31,
(Unaudited) 1997
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ASSETS
Current assets:
Cash and short-term investments $ 133,882 $ 151,947
Accounts receivable, less allowance for doubtful
accounts of $4,790 and $3,592, respectively 63,505 48,958
Prepaid expenses and other current assets 15,176 14,649
--------- ---------
Total current assets 212,563 215,554
Property, plant and equipment - net 787,424 715,418
Investment in marketable equity securities 47,841 45,118
Equity investments in cable television and wireless
telephone systems - net 106,369 102,097
Debt issuance costs, less accumulated amortization
of $17,394 and $13,270, respectively 39,396 31,735
Cable television franchises, less accumulated
amortization of $356,838 and $322,309, respectively 358,236 401,775
Wireless telephone licenses, less accumulated amortization
of $240,225 and $214,494, respectively 321,474 347,206
Excess of purchase price over value of net assets
acquired, less accumulated amortization of
$63,206 and $58,920, respectively 287,634 280,643
Other assets 14,164 14,685
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$ 2,175,101 $2,154,231
=========== ==========
</TABLE>
See notes to consolidated financial statements
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CENTURY COMMUNICATIONS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(CONTINUED)
(Amounts in thousands, except share data)
<TABLE>
<CAPTION>
November 30,
1997 May 31,
(Unaudited) 1997
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LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
Current maturities of long-term debt $ 31,526 $ 15,011
Accounts payable 31,868 26,711
Accrued expenses and other current liabilities 166,453 150,407
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Total current liabilities 229,847 192,129
Long-term debt 2,284,405 2,186,981
Deferred income taxes 44,103 53,959
Minority interest in subsidiaries 107,227 133,518
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 63,895,242 and 62,695,127 shares, respectively,
and outstanding 30,219,623 and
30,968,289 shares, respectively 639 627
Class B, authorized 300,000,000 shares, issued
and outstanding 44,126,115 and 45,126,115 shares,
respectively 441 451
Additional paid-in capital 174,904 176,871
Other, including 33,675,619 and 31,726,838 treasury shares,
respectively (135,528) (127,549)
Accumulated deficit (717,224) (649,043)
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Total common stockholders' deficiency (676,768) (598,643)
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$2,175,101 $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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<CAPTION>
Three Months Ended November 30, Six Months Ended November 30,
------------------------------- -----------------------------
1997 1996 1997 1996
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<S> <C> <C> <C> <C>
Revenues:
Cable service income $ 121,193 $ 115,123 $ 240,629 $ 227,808
Wireless telephone service income 59,134 35,359 111,987 67,724
Australian operations 11,041 8,514 19,501 16,468
----------- ---------- ----------- -----------
191,368 158,996 372,117 312,000
----------- ---------- ----------- -----------
Costs and expenses:
Cost of services - Cable 26,372 25,343 52,588 49,688
Cost of services - Wireless telephone 15,069 8,893 27,024 16,362
Selling, general and administrative 53,697 39,059 102,027 74,953
Australian expenses 10,559 7,604 18,689 14,564
Depreciation and amortization - domestic 66,419 59,280 129,795 115,416
Depreciation and amortization - Australia 5,081 3,702 8,759 10,216
Write-down of Australian assets, net 12,814 -- 12,814 40,000
----------- ---------- ----------- -----------
190,011 143,881 351,696 321,199
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Operating income (loss) 1,357 15,115 20,421 (9,199)
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Gain (loss) on sale of assets (41) -- 1,963 48
Interest expense 54,620 49,103 106,916 97,527
Other income 2,605 2,673 5,766 4,041
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Loss before income tax (benefit) and
minority interest (50,699) (31,315) (78,766) (102,637)
Income tax (benefit) (3,818) (10,976) (5,829) (17,574)
----------- ---------- ----------- -----------
Loss before minority interest (46,881) (20,339) (72,937) (85,063)
Minority interest in loss of subsidiaries 3,268 3,082 4,756 6,594
----------- ---------- ----------- -----------
Net loss $ (43,613) $ (17,257) $ (68,181) $ (78,469)
=========== =========== =========== ===========
Dividend on subsidiary convertible
redeemable preferred stock $ 1,259 $ 1,251 $ 2,518 $ 2,349
=========== =========== =========== ===========
Loss applicable to common shares $ (44,872) $ (18,508) $ (70,699) $ (80,818)
=========== =========== =========== ===========
Loss per common share $ (.60) $ (.25) $ (.94) $ (1.09)
=========== =========== =========== ===========
Weighted average number of common shares
outstanding during the period 74,612,000 74,141,000 75,130,000 74,105,000
=========== =========== =========== ===========
</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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Six Months Ended November 30,
-----------------------------
1997 1996
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OPERATING ACTIVITIES:
Cash received from subscribers and others $ 426,332 $ 365,278
Cash paid to suppliers, employees and
governmental agencies (249,897) (217,464)
Interest paid (85,487) (82,139)
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NET CASH PROVIDED BY OPERATING ACTIVITIES 90,948 65,675
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INVESTING ACTIVITIES:
Capital expenditures (132,542) (73,947)
Cable television franchise expenditures (121) (540)
Acquisition of other assets (1,494) (16,774)
Acquisition of cable television and wireless
telephone systems (33,548) (38,909)
Distributions received from equity investments 8,693 3,738
Capital contributed to equity investments (65) (236)
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NET CASH USED IN INVESTING ACTIVITIES (159,077) (126,668)
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FINANCING ACTIVITIES:
Proceeds from long-term borrowings 466,500 579,116
Principal payments on long-term debt (363,410) (567,050)
Debt issuance costs (11,781) (2,364)
Payment of subsidiary preferred stock dividends (8,128) --
Issuance of common stock 553 2,713
Capital contributed by minorities 86 --
Purchase of treasury stock, (including Centennial) (33,756) (1,590)
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NET CASH PROVIDED BY
FINANCING ACTIVITIES 50,064 10,825
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NET DECREASE IN CASH AND
SHORT-TERM INVESTMENTS (18,065) (50,168)
CASH AND SHORT-TERM INVESTMENTS -
BEGINNING OF PERIOD 151,947 164,592
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CASH AND SHORT-TERM INVESTMENTS -
END OF PERIOD $ 133,882 $ 114,424
========= =========
</TABLE>
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CENTURY COMMUNICATIONS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)
(Unaudited)
(Amounts in thousands)
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<CAPTION>
Six Months Ended November 30,
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1997 1996
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RECONCILIATION OF NET LOSS TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
NET LOSS $ (68,181) $ (78,469)
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Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 138,555 125,632
Write-down of Australian assets, net 17,074 40,000
Deferred income taxes - decrease (9,856) (21,112)
Minority interest in loss of subsidiaries (4,756) (6,594)
Non-cash interest charges 14,883 10,962
Other (6,985) (3,499)
Change in assets and liabilities, net of effects of
acquired, exchanged and disposed cable television
and wireless telephone systems
Accounts receivable - (increase) (18,353) (12,752)
Prepaid expenses and other current assets -
(increase) (514) (8,162)
Accounts payable, accrued expenses,
and other current liabilities -increase 29,081 19,669
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Total adjustments 159,129 144,144
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NET CASH PROVIDED BY OPERATING ACTIVITIES $ 90,948 $ 65,675
========= =========
</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 only normal
recurring accruals) necessary to present fairly the consolidated financial
position of Century Communications Corp. and subsidiaries (the "Company") as of
November 30, 1997 and the results of its consolidated operations and cash flows
for the periods ended November 30, 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, which
includes a summary of significant accounting policies and other disclosures.
Certain reclassifications have been made to prior period balances to conform
with the current period's presentation. The consolidated balance sheet at May
31, 1997 is audited. The November 30, 1997 and 1996 financial statements do not
include all disclosures required by generally accepted accounting principles.
NOTE 2. WRITEDOWN OF AUSTRALIAN ASSETS
The Company's Australian pay television subsidiary, East Coast Television
("ECT"), has certain distribution, infrastructure utilization and franchise
agreements with Australis Media Limited ("Australis"), another pay television
company in Australia. ECT, in light of recent announcements by Australis
relating to Australis' deteriorating financial condition and aborted business
combination with Foxtel (a competitive cable television provider in Australia),
wrote down the remaining net book values of certain of its intangible assets
during the three months ended November 30, 1997. As a result, the Company's
consolidated financial statements reflect a writedown of approximately $17,100
relating to these intangible assets, net of a gain of approximately $4,300
related to the sale of certain of ECT's assets during the quarter ended November
30, 1997. Prior to June 1, 1997, the Company had written down $50,000 of its
Australian investments.
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NOTE 3. ACCOUNT ANALYSIS
Accrued expenses and other current liabilities consists of the following:
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November 30, May 31,
1997 1997
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Accrued interest $ 38,955 $ 32,409
Accrued capital purchases - 11,317
Accrued unpaid invoices - 9,620
Accrued property taxes 12,418 9,313
Australian accrued expenses 17,967 17,070
Accrued other 74,025 49,508
Customer deposits and prepaids 23,088 21,170
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$166,453 $150,407
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</TABLE>
NOTE 4. 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 six months ended November
30, 1997, the Company recorded an increase in the unrealized appreciation of
marketable securities of $2,723 as a result of an increase in the market value
of these securities.
NOTE 5. REVENUE RECOGNITION
Cable service income includes earned subscriber service revenue and charges for
installation and connections, net of programmers' share of pay television
revenue. Such programmers' share netted against service income amounted to
$62,406 and $55,986 for the six months ended November 30, 1997 and 1996,
respectively.
Wireless telephone service income includes earned subscriber service revenue and
charges for installation and connections, net of land line charges of $18,026
and $14,414 for the six months ended November 30, 1997 and 1996, respectively.
NOTE 6. SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES
During the six months ended November 30, 1996, the Company reclassified $14,966
of cable television franchises to goodwill in relation to the acquisition of
certain cable television systems.
NOTE 7. ACQUISITIONS
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
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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. On October 15, 1997 the Century/Citizens Joint Venture
completed the transaction relating to the system located in Diamond Bar for a
purchase price of approximately $33,600. The purchase price for the Diamond Bar
acquisition was allocated (approximately) $11,000 to cable television franchise,
$11,000 to excess of purchase price over value of net assets acquired and
$12,000 to fixed assets. The Diamond Bar system serves approximately 20,000
primary basic subscribers. The Company funded its share of the purchase price
for the Diamond Bar system, and currently expects to fund its share of the
purchase price for the Yorba Linda acquisition, using available credit
facilities. The purchase of the Yorba Linda system 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
acquisition 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 November 30,
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.
<TABLE>
<CAPTION>
Six Months Ended November 30,
-----------------------------
1997 1996
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(Unaudited)
<S> <C> <C>
Revenue $379,267 $ 321,069
Net loss (68,623) (79,311)
Net loss per common share (.95) (1.10)
</TABLE>
Pro forma net loss per common share for the six months ended November 30, 1997
and 1996 is calculated on a fully diluted basis using the pro forma average
number of common shares outstanding during the period.
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NOTE 8. 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 Securities and Exchange Commission (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, the 8 3/8% Notes and
the Senior Notes due 2007 (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. 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 $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 CCC-II Credit Agreement 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 CCC-II Credit
Agreement 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 November 30, 1997, $100,000 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 CCC-I Credit
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Agreement 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 CCC-I Credit
Agreement 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 CCC-I Credit Agreement 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.
At November 30, 1997 $85,000 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 November 30, 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 which converts into a five-year term loan in the principal amount of
$200,000 with Bank of America and Societe Generale. 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 prepayment 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.
At November 30, 1997, $35,000 was outstanding under the facility.
(f) On April 25, 1997, Centennial Puerto Rico Wireless Corporation ("CPRW")
entered into a four-year $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
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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 November
30, 1997, $125,500 was outstanding under the Puerto Rico Credit Facility. CPRW
is currently in negotiations to increase the credit availability under the
Puerto Rico Credit Facility. There is no assurance that CPRW will be successful
in this regard.
(g) 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 shelf registration of the
Company's securities which was filed with the SEC on April 4, 1997 and became
effective on July 15, 1997 (the "1997 Shelf Registration"). 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 8 3/8% Notes and the Senior
Notes due 2007 (as defined below), 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 repay temporarily a portion of the long-term
debt outstanding under the CCC-I Credit Agreement.
(h) On November 13, 1997, the Company issued 8 3/8% Senior Notes due 2017 (the
"8 3/8% Notes") in the principal amount of $100,000, which mature on November
15, 2017, pursuant to the 1997 Shelf Registration. The 8 3/8% Notes bear
interest at 8 3/8% payable semiannually on May 15 and November 15 of each year
commencing May 15, 1998. The 8 3/8% Notes may not be redeemed prior to maturity.
The 8 3/8% Notes rank pari passu with all existing and future Senior
Indebtedness (as that term is defined in the Indenture under which the 8 3/8%
Notes were issued) of the Company, including the Senior Notes due 2007 (as
defined below), the 8 3/4% Senior Notes due 2007, 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 existing and future subordinated indebtedness of the
Company.
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The net proceeds received by the Company from the sale of the 8 3/8% Notes of
approximately $92,300 were used to temporarily repay a portion of the long-term
debt outstanding under both the CCC-I Credit Agreement and the CCC-II Credit
Agreement.
(i) On December 10, 1997, the Company issued 8 3/8% Senior Notes due 2007 (the
"Senior Notes due 2007") in the principal amount of $100,000, which mature on
December 15, 2007, pursuant to the 1997 Shelf Registration. The Senior Notes due
2007 bear interest at 8 3/8% payable semiannually on June 15 and December 15 of
each year commencing June 15, 1998. The Senior Notes due 2007 may not be
redeemed prior to maturity.
The Senior Notes due 2007 will rank pari passu with all existing and future
Senior Indebtedness (as that term is defined in the Indenture under which the
Senior Notes due 2007 were issued) of the Company, including the 8 3/4% Senior
Notes due 2007, 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, the 8 7/8%
Senior Notes due 2007 and the 8 3/8% Notes and will be senior in right of
payment to existing and future subordinated indebtedness of the Company.
The net proceeds received by the Company from the sale of the Senior Notes due
2007 of approximately $97,234 were used to temporarily repay a portion of the
long-term debt outstanding under both the CCC-I Credit Agreement and the CCC-II
Credit Agreement.
Further borrowings may be made under the CCC-I and CCC-II Credit Agreements
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 January 8, 1998, $77,000 remained
available for issuance under the 1997 Shelf Registration.
The Company entered into a three year interest rate hedge agreement during
October 1997 in relation to certain of its fixed rate bank debt. The hedge
agreement is structured such that the Company pays a variable rate of interest
based on the higher of the U.S.D. six (6) month LIBOR or the U.S.D. six (6)
month LIBOR Set in Arrears and receives a fixed rate of interest of 6.695% based
on a notional amount of $35,000. Subject to the terms of the hedge agreement, if
the six month LIBOR is set at or below 4.75% at the beginning of any period, the
hedge agreement would terminate for that period alone and the Company would
receive a 50 basis points subsidy for that period alone.
On January 7, 1998 the Company filed a registration statement with the SEC
relating to the shelf registration of $500,000 of the Company's debt securities.
This registration statement has not been declared effective.
At November 30, 1997, the Company and its subsidiaries were in compliance with
all covenants of their respective debt agreements.
12
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<PAGE>
NOTE 9. 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 supersedes
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 10. STOCK PURCHASE
During 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 purchase 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 six months ended
November 30, 1997, the Company purchased 1,929,500 additional shares of Class A
Common Stock in the open market for an aggregate purchase price of $11,913.
Subsequent to November 30, 1997, the Company purchased 30,000 of such shares in
the open market for an aggregate purchase price of $238. These shares have been
accounted for as treasury shares during the respective periods. As of January 8,
1998, the Company is authorized to purchase 4,869,000 additional shares of Class
A Common Stock after giving effect to the shares purchased to date.
On December 21, 1994, Centennial announced that its Board of Directors
authorized the purchase 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 August, 1997,
Centennial announced that its Board of Directors had authorized the purchase 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 six months ended November 30, 1997, Centennial purchased 1,181,200
shares of its Class A Common Stock in the open market for an aggregate purchase
price of $21,717. Subsequent to November 30, 1997, Centennial purchased 89,000
additional shares of such common stock in the open market for an aggregate
purchase price of $1,806. These shares have
13
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<PAGE>
been accounted for as Treasury Shares. As of January 8, 1998, Centennial is
authorized to purchase 2,729,800 additional shares of Class A Common Stock after
giving effect to the shares purchased to date.
NOTE 11. LETTER OF INTENT - STRATEGIC PARTNERSHIP
On December 10, 1997, the Company and TCI Communications, Inc. ("TCI") signed a
letter of intent to form a strategic partnership that would combine multiple
cable systems in Southern California. TCI would contribute to the partnership
cable systems serving approximately 245,000 subscribers and the Company would
contribute cable systems serving approximately 500,000 subscribers. The Company
would manage the newly combined markets and own approximately 75% of the
partnership while TCI would own approximately 25% of the partnership. The
Company and TCI have also agreed to the exchange of certain of the Company's
cable systems serving approximately 90,000 subscribers in Northern California
for certain of TCI's cable systems serving approximately 90,000 subscribers in
Southern California (which subscribers are included in the 500,000 subscribers
described above). These transactions are subject to the approval of the
Company's and TCI's Boards of Directors, the signing of definitive agreements
and to all appropriate regulatory approvals and other consents.
14
<PAGE>
<PAGE>
NOTE 12. SEGMENT INFORMATION - (UNAUDITED)
Information about the Company's operations in its three business segments for
the six months ended November 30, 1997 and 1996 is as follows (amounts in
thousands):
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Revenue:
Cable television $ 240,886 $ 227,900
Wireless telephone 111,987 67,724
Australian operations 19,501 16,468
Eliminations (257) (92)
---------- ---------
$ 372,117 $ 312,000
---------- ----------
---------- ----------
Operating (loss) income:
Cable television $ 48,782 $ 47,316
Wireless telephone (7,502) (8,111)
Australian operations (20,761) (48,312)
Eliminations (98) (92)
---------- ----------
$ 20,421 $ (9,199)
---------- ----------
---------- ----------
Net loss:
Cable television $ (35,160) $ (18,702)
Wireless telephone (16,412) (12,228)
Australian operations (27,704) (55,811)
Eliminations 11,095 8,272
---------- ----------
$ (68,181) $ (78,469)
---------- ----------
---------- ----------
Assets, at end of period
Cable television $1,578,749 $1,557,355
Wireless telephone 841,613 805,348
Australian operations 30,237 83,023
Eliminations (275,498) (272,605)
---------- ----------
$2,175,101 $2,173,121
---------- ----------
---------- ----------
Depreciation and amortization:
Cable television $ 77,015 $ 77,625
Wireless telephone 52,780 37,791
Australian operations 8,759 10,216
---------- ----------
$ 138,554 $ 125,632
---------- ----------
---------- ----------
Capital expenditures:
Cable television $ 59,794 $ 31,197
Wireless telephone 71,963 40,903
Australian operations 785 1,847
---------- ----------
$ 132,542 $ 73,947
---------- ----------
---------- ----------
</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 33% 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.
15
<PAGE>
<PAGE>
NOTE 12 - CONTINUED
CENTURY COMMUNICATIONS CORP. AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEET FINANCIAL DATA
November 30, 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 $ 111,937 $ 16,538 $ 5,407 $ -- $ 133,882
Accounts receivable - net 27,462 32,995 3,358 (310) 63,505
Prepaid expenses and other
current assets 6,183 7,806 1,187 -- 15,176
------------ ----------- ---------- ---------- ------------
Total current assets 145,582 57,339 9,952 (310) 212,563
Property, plant & equipment - net 546,712 227,252 13,460 -- 787,424
Investment in marketable equity
securities 47,841 -- -- -- 47,841
Investment in Centennial Cellular
Corp., at cost 139,685 -- -- (139,685) --
Equity investment in cable television
and wireless telephone systems -
net 147,387 91,007 393 (132,418) 106,369
Debt issuance costs - net 30,616 8,780 -- -- 39,396
Cable television franchises - net 352,372 -- 5,864 -- 358,236
Wireless telephone licenses - net -- 321,474 -- -- 321,474
Excess of purchase price over value
of net assets acquired - net 159,485 128,149 -- -- 287,634
Other assets 9,069 7,612 568 (3,085) 14,164
------------ ---------- ----------- ----------- ----------
$ 1,578,749 $ 841,613 $ 30,237 $ (275,498) $2,175,101
------------ ---------- ----------- ----------- ----------
------------ ---------- ----------- ----------- ----------
</TABLE>
16
<PAGE>
<PAGE>
NOTE 12. CONTINUED
CENTURY COMMUNICATIONS CORP. AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEET FINANCIAL DATA
(CONTINUED)
November 30, 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 $ 20,050 $ -- $ 11,476 $ -- $ 31,526
Accounts payable 12,493 17,920 1,455 -- 31,868
Accrued expenses and other
current liabilities 105,286 49,280 17,967 (6,080) 166,453
---------- ------------ --------- -------------- -----------
Total current liabilities 137,829 67,200 30,898 (6,080) 229,847
Long-term debt 1,808,905 475,500 -- -- 2,284,405
Deferred liability 5,000 2,200 -- (7,200) --
Deferred income taxes 7,582 36,521 -- -- 44,103
Minority interest in subsidiaries 63,178 -- -- 44,049 107,227
Due to parent -- -- 147,387 (147,387) --
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 639 165 -- (165) 639
Class B 441 105 -- (105) 441
Additional paid-in capital 88,699 361,604 -- (275,399) 174,904
Other (136,574) (26,518) 1,046 26,518 (135,528)
Accumulated deficit (396,950) (268,703) (149,094) 97,523 (717,224)
----------- ------------ ----------- --------- -----------
Total common stockholders'
equity (deficiency) (443,745) 66,653 (148,048) (151,628) (676,768)
----------- ------------ ----------- --------- -----------
$ 1,578,749 $ 841,613 $ 30,237 $ (275,498) $ 2,175,101
----------- ------------ ----------- --------- -----------
----------- ------------ ----------- --------- -----------
</TABLE>
17
<PAGE>
<PAGE>
NOTE 12. CONTINUED
CENTURY COMMUNICATIONS CORP. AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF OPERATIONS FINANCIAL DATA
SIX MONTH PERIOD ENDED NOVEMBER 30, 1997
(Unaudited)
(Amounts in thousands)
<TABLE>
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 $ 240,886 $ 111,987 $ 19,501 $ (257) $ 372,117
------------- ------------ ----------- ---------------- ------------
Costs and expenses:
Costs of services 52,588 27,024 -- -- 79,612
Selling, general & administrative 62,501 39,685 -- (159) 102,027
Depreciation and amortization 77,015 52,780 8,759 -- 138,554
Australian operations -- -- 18,689 -- 18,689
Writedown of Australian Assets -- -- 12,814 -- 12,814
------------- ----------- ----------- ----------- ----------
192,104 119,489 40,262 (159) 351,696
------------- ----------- ----------- ----------- ----------
Operating income/(loss) 48,782 (7,502) (20,761) (98) 20,421
------------- ----------- ----------- ---------- ----------
Income (loss) from equity investments -- 7,452 -- (7,452) --
Interest 79,815 21,801 5,300 -- 106,916
Gain on sale of assets 1,951 12 -- -- 1,963
Other income/(loss) (43) -- (1,643) 7,452 5,766
------------- ----------- ----------- --------- ----------
Loss before income tax
benefit and minority interest (29,125) (21,839) (27,704) (98) (78,766)
Income tax benefit (146) (5,683) -- -- (5,829)
--------------- ----------- ----------- ----------- ----------
Loss before minority interest (28,979) (16,156) (27,704) (98) (72,937)
Minority interest in (income) loss
of subsidiaries (6,181) (256) -- 11,193 4,756
--------------- ----------- ----------- ----------- ----------
Net loss $ (35,160) $ (16,412) $ (27,704) $11,095 $ (68,181)
--------------- ----------- ----------- ---------- ----------
--------------- ----------- ----------- ---------- ----------
</TABLE>
18
<PAGE>
<PAGE>
NOTE 13. 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 200,115 2 --
Class A shares purchased by the Company
Class B shares converted to Class A shares 1,000,000 10 (1,000,000) (10)
Subsidiary preferred stock dividends
Foreign currency translation adjustment
Change in unrealized appreciation of
marketable securities
Net loss
---------- ------------ ----------- -----------
Balance at November 30, 1997 - Unaudited 63,895,242 $ 639 44,126,115 $ 441
---------- ------------ ----------- -----------
---------- ------------ ----------- -----------
</TABLE>
19
<PAGE>
<PAGE>
NOTE 13. 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 551 553
Class A shares purchased by the Company (12,039) (12,039)
Class B shares converted to Class A shares --
Subsidiary preferred stock dividends (2,518) (2,518)
Foreign currency translation adjustment 1,337 1,337
Change in unrealized appreciation of
marketable securities 2,723 2,723
Net loss (68,181) (68,181)
----------- ------------ ------- --------
Balance at November 30, 1997 - Unaudited $ 174,904 $ (717,224) $ (135,528) $(676,768)
----------- ------------ ----------- ----------
----------- ------------ ----------- ----------
OTHER STOCKHOLDERS' DEFICIENCY ITEMS: November 30, 1997
- ------------------------------------ (Unaudited) May 31, 1997
------------------ ------------
Treasury stock, at cost $ (152,160) $ (140,121)
Unrealized appreciation of marketable securities 15,586 12,863
Foreign currency translation adjustment 1,046 (291)
------------------ -------------
$ (135,528) $ (127,549)
------------------ -------------
------------------ -------------
</TABLE>
20
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<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 Part I, 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 November 30, 1997, the Company owned and operated 71 cable
television systems in 25 states and Puerto Rico. At that date, the Company's
cable systems passed approximately 2,310,000 homes and served a total of
approximately 1,306,000 primary basic subscribers. Certain of the Company's
cable systems are owned 50% by the Company and 50% by unaffiliated entities. At
November 30, 1997, these 50% owned systems passed approximately 606,900 homes
and served approximately 305,000 primary basic subscribers in the aggregate.
The Company has a common stock interest of approximately 33% 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
$163,745 on November 30, 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
21
<PAGE>
<PAGE>
being promulgated. The effect that the Act will have on the Company's cable
television business cannot be determined at this time.
SIX MONTHS ENDED NOVEMBER 30, 1997 AND NOVEMBER 30, 1996
The following discussion describes the Company's three business segments: cable
television, wireless telephone investment and Australian investments.
Cable Television
Consolidated revenue for the six months ended November 30, 1997 increased by
$60,117 or 19.3%, over the six months ended November 30, 1996. Revenue from
cable television operations increased by $12,821 or 5.6%, over the corresponding
six months ended November 30, 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 November 30, 1997 were approximately 1,269,000, as compared
to approximately 1,158,000 Basic Subscribers for the twelve-month period ended
November 30, 1996, an increase of 9.6%. Acquisitions accounted for approximately
81% of the increase. Average monthly revenue per Basic Subscriber, including
programmers' share of such revenue, was approximately $38.64 during the twelve
months ended November 30, 1997, as compared to approximately $36.92 during the
comparable prior twelve month period, an increase of 4.7%.
Cost of services of the Company's cable television operations increased by
$2,900, or 5.8%, while selling, general and administrative expenses of the
Company's cable television operations increased by $9,071, or 17.0%. 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 six months ended November 30, 1997 increased by $14,379, or 12.5% over the
six months ended November 30, 1996. Depreciation and amortization of the cable
television operations decreased by $610 or 1%.
Consolidated operating income for the six months ended November 30, 1997
increased to $20,421 or $29,620 above the operating loss of $9,199 for the six
months ended November 30, 1996, principally as a result of the Company's $40,000
write-down of Australian assets during the six months ended November 30, 1996,
offset by the current quarter's writedown of $12,814 (See Liquidity and Capital
Resources - Investments - Australian Pay Television). The wireless telephone
operations contributed $7,502 of operating losses. The Company's operating
income related to its cable television operations was $48,684, an increase of
$1,460, or 3.1% above the six months ended November 30, 1996.
22
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<PAGE>
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 $1,643
and $2,797 of expense for the six months ended November 30, 1997 and 1996,
respectively, for its minority investments in Australia, offset, in part, by
$7,452 and $8,084 of income for the six months ended November 30, 1997 and
November 30, 1996, respectively, related to minority wireless telephone
investments held by Centennial.
Consolidated interest expense for six months ended November 30, 1997 increased
by $9,389, or 9.6% as compared with the six months ended November 30, 1996,
principally as a result of increased borrowings of Centennial. Interest expense
of the Company's cable segment increased by $1,749. For the six months ended
November 30, 1997, the average debt outstanding of the cable segment was
approximately $1,807,696 or $90,482 above the average outstanding debt balance
of $1,717,214 during the six months ended November 30, 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 8.9% in the six months ended November 30, 1997, as compared to
approximately 9.2% in the six months ended November 30, 1996.
After losses attributable to minority interests in subsidiaries for the six
months ended November 30, 1997, a consolidated pretax loss of $74,010 was
incurred, as compared to a pretax loss of $96,043 for the six months ended
November 30, 1996. The income tax benefit of $5,829 for the six months ended
November 30, 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 six months ended November 30, 1997 of $68,181
represents a decrease of $10,288 from the loss of $78,469 for the six months
ended November 30, 1996, principally as a result of the Company's $40,000
write-down of Australian assets during the six months ended November 30, 1996
offset by the current year's writedown of $12,814 and the reduction of income
tax benefit of $11,745 (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 73.6% of the total increase in the
revenue of the Company. Revenue from wireless telephone operations for the six
months ended November 30, 1997 increased by $44,263, or 65.4%, over the six
months ended November 30, 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 PCS business (the
23
<PAGE>
<PAGE>
"Puerto Rico Wireless Telephone System") contributed $20,260 or 45.8% of
Centennial's increase in revenue.
Cost of services related to Centennial's wireless telephone operations, which
accounted for 33.9% of the total cost of services for the Company, during the
six months ended November 30, 1997 was $27,024, an increase of $10,662 or 65.2%
as compared to the six months ended November 30, 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 $6,254 and $1,081 for the six
months ended November 30, 1997 and 1996, respectively.
Selling, general and administrative expenses related to Centennial's wireless
telephone operations, representing 38.9% of the total amount for the Company,
rose to $39,685, an increase of $18,003 or 83.0% above the $21,682 recorded
during the six months ended November 30, 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 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 $12,485 and $1,939 for
the six months ended November 30, 1997 and 1996, respectively.
The wireless telephone operations accounted for $14,989, or 104.2% of the
increase in the Company's domestic depreciation and amortization during the six
months ended November 30, 1997.
Centennial's wireless telephone operating loss for the six months ended November
30, 1997 of $7,502 declined by $609, or 7.5% from the loss of $8,111 for the six
months ended November 30, 1996. The operating loss for the Puerto Rico Wireless
Telephone System was $11,298 for the six months ended November 30, 1997.
Centennial's interest expense for the six months ended November 30, 1997
increased by $7,042 or 47.7% as compared to the six months ended November 30,
1996. Interest expense for the six months ended November 30, 1996 was reduced by
$2,598 of capitalized interest charges 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 six months ended November 30,
1997 and November 30, 1996 were $21,801 and $17,357, respectively. The increase
is the result of additional borrowings for acquisitions, working capital and
debt service. Centennial's average debt outstanding during the six months ended
November 30, 1997 was $451,557, an increase of $86,557 as compared to the
average debt level of $365,000 during the six months ended November 30, 1996.
The increase in average debt outstanding is principally related to borrowings
for the Puerto Rico Wireless Telephone System. Centennial's weighted average
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interest rate increased to 9.7% for the six months ended November 30, 1997 from
9.5% for the six months ended November 30, 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.
THREE MONTHS ENDED NOVEMBER 30, 1997 AND NOVEMBER 30, 1996
Cable Television
Consolidated revenue for the three months ended November 30, 1997 increased by
$32,372 or 20.4%, over the three months ended November 30, 1996. Revenue from
cable television operations increased by $6,070 or 5.3%, over the corresponding
three months ended November 30, 1996, principally as a result of increasing
subscription fees and increases in the number of cable television subscriptions.
Cost of services of the Company's cable television operations increased by
$1,029, or 4.1%, while selling, general and administrative expenses of the
Company's cable television operations increased by $4,785, or 17.6%. 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 continue.
Depreciation and amortization of the Company's cable and wireless operations for
the three months ended November 30, 1997 increased by $7,139, or 12.0% over the
three months ended November 30, 1996. Depreciation and amortization of the cable
television operations decreased by $1,269, or 3.2%.
Consolidated operating income for the three months ended November 30, 1997
decreased to $1,357 or $13,758 below the operating income of $15,115 for the
three months ended November 30, 1996, principally as a result of the Company's
$12,814 write-down of Australian assets during the three months ended November
30, 1997. (See Liquidity and Capital Resources - Investments - Australian Pay
Television). The wireless telephone operations contributed $5,374 of operating
losses. The Company's operating income related to its cable television
operations was $24,144, an increase of $1,525, or 6.7% above the three months
ended November 30, 1996.
The Company has recorded $2,605 and $2,673 of other income for the three months
ended November 30, 1997 and 1996, respectively, primarily representing certain
minority investments in Australia and Centennial accounted for by the Company
using the equity method of accounting. The Company has recorded $619 and $1,329
of expense for the three months ended November 30, 1997 and 1996, respectively,
for its minority investments in Australia, offset, in part, by $3,246 and $4,422
of income for the three months ended November 30, 1997 and
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November 30, 1996, respectively, related to minority wireless telephone
investments held by Centennial.
Consolidated interest expense for three months ended November 30, 1997 increased
by $5,517, or 11.2% as compared with the three months ended November 30, 1996,
principally as a result of increased borrowings. The Company's weighted average
interest rate excluding borrowings of Centennial and the Company's 50% owned
joint ventures was approximately 9.04% in the three months ended November 30,
1997, as compared to approximately 9.08% in the three months ended November 30,
1996.
After losses attributable to minority interests in subsidiaries for the three
months ended November 30, 1997, a consolidated pretax loss of $47,431 was
incurred, as compared to a pretax loss of $28,233 for the three months ended
November 30, 1996. The income tax benefit of $3,818 for the three months ended
November 30, 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 November 30, 1997 of
$43,613 represents an increase of $26,356 from the loss of $17,257 for the three
months ended November 30, 1996, principally as a result of the Company's $12,814
write-down of Australian assets during the three months ended November 30, 1997
(See Liquidity and Capital Resources - Investments - Australian Pay Television)
and the reduction in income tax benefits of $7,158. 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 for the three months ended November 30, 1997
accounted for 73.4% of the total increase in the revenue of the Company. Revenue
from wireless telephone operations for the three months ended November 30, 1997
increased by $23,775, or 67.2%, over the three months ended November 30, 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 $12,540 or 52.7%
of Centennial's increase in revenue.
Cost of services related to Centennial's wireless telephone operations, which
accounted for 36.4% of the total cost of services for the Company, during the
three months ended November 30, 1997 was $15,069, an increase of $6,176 or 69.4%
as compared to the three months ended November 30, 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
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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 $4,201 and $577 for
the three months ended November 30, 1997 and 1996, respectively.
Selling, general and administrative expenses related to Centennial's wireless
telephone operations, representing 40.5% of the total amount for the Company,
rose to $21,721, an increase of $9,853 or 83.0% above the expenses of $11,868
recorded during the three months ended November 30, 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 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 $6,701 and $1,490 for the three months ended November 30, 1997 and 1996,
respectively.
The wireless telephone operations accounted for $8,408, or 117.8% of the
increase in the Company's domestic depreciation and amortization during the
three months ended November 30, 1997.
Centennial's wireless telephone operating loss for the three months ended
November 30, 1997 of $5,374 increased by $662, or 14.0% from the loss of $4,712
for the three months ended November 30, 1996. The operating loss for the Puerto
Rico Wireless Telephone System was $5,831 for the three months ended November
30, 1997.
Centennial's interest expense for the three months ended November 30, 1997
increased by $3,378 or 43.8% as compared to the three months ended November 30,
1996. Interest expense for the quarter ended November 30, 1996 was reduced by
$1,299 of capitalized interest charges 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 November 30,
1997 and November 30, 1996 were $11,096 and $9,017. 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 November 30,
1997 was $461,313, an increase of $81,313 as compared to the average debt level
of $380,000 during the three months ended November 30, 1996. Centennial's
weighted average interest rate increased to 9.6% for the three months ended
November 30, 1997 from 9.5% for the three months ended November 30, 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.
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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 November 30, 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.
During the six months ended November 30, 1997, the Company made capital
expenditures of $132,542 of which 54.3% 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 six months ended November 30, 1997, consolidated earnings were less than
fixed charges by $81,284. However, such amount reflects non-cash charges
totaling $141,072, consisting of depreciation and amortization and subsidiary
preferred stock dividends. Historically, cash
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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 the six months ended November 30, 1997 Centennial made capital
expenditures of $53,676 related to its Puerto Rico Wireless Telephone System.
These capital expenditures included $33,663 to continue the buildout of
Centennial's Puerto Rico PCS network infrastructure and $20,013 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 its Puerto Rico network infrastructure through fiscal 1998 will be
approximately $50,000, an increase of approximately $15,000 above prior
estimates. This increase primarily relates to an acceleration of expenditures
that would otherwise take place in future years. This acceleration is related to
the growth the Company has experienced in its Puerto Rico Wireless Telephone
System. 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 the Company and Centennial to meet required cash
commitments through the next twelve month period.
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.
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
"CCC-II Credit Agreement"). The interest rates payable on borrowings under (the
CCC-II Credit Agreement 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 CCC-II Credit Agreement
restricts the incurrence of certain additional debt by CCC-II, limits the
ability of CCC-II to pay dividends to the Company and
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requires that certain operating tests be met. CCC-II was in compliance with the
terms of the credit facility at November 30, 1997. At November 30, 1997,
$250,000 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
"CCC-I Credit Agreement"). The proceeds of the CCC-I Credit Agreement 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 CCC-I Credit Agreement 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 CCC-I Credit
Agreement 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 November 30, 1997. At November 30, 1997, $440,000 was available for
borrowing under this facility.
The Company entered into a three year interest rate hedge agreement during
October 1997 in relation to certain of its fixed rate bank debt. The hedge
agreement is structured such that the Company pays a variable rate of interest
based on the higher of the U.S.D. six (6) month LIBOR or the U.S.D. six (6)
month LIBOR Set in Arrears and receives a fixed rate of interest of 6.695% based
on a notional amount of $35,000. Subject to the terms of the hedge agreement, if
the six month LIBOR is set at or below 4.75% at the beginning of any period, the
hedge agreement would terminate for that period alone and the Company would
receive a 50 basis points subsidy for that period alone.
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 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, the 8 3/8% Notes and
the Senior Notes due 2007 (as defined below), 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
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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.
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 "1997 Shelf Registration"). 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 the 1997 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 8 3/8% Notes and the Senior Notes due
2007 (as defined below), 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.
On November 13, 1997, the Company issued 8 3/8% Senior Notes due 2017 (the "8
3/8% Notes") in the principal amount of $100,000, which mature on November 15,
2017, pursuant to the 1997 Shelf Registration. The 8 3/8% Notes bear interest at
8 3/8% payable semiannually on May 15 and November 15 of each year commencing
May 15, 1998. The 8 3/8% Notes may not be redeemed prior to maturity.
The 8 3/8% Notes rank pari passu with all existing and future Senior
Indebtedness (as that term is defined in the Indenture under which the 8 3/8%
Notes were issued) of the Company, including the Senior Notes due 2007 (as
defined below), the 8 3/4% Senior Notes due 2007, 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 existing and future subordinated indebtedness of the
Company.
The net proceeds received by the Company from the sale of the 8 3/8% Notes of
approximately $92,300 were used to temporarily repay a portion of the long-term
debt outstanding under both the CCC-I Credit Agreement and the CCC-II Credit
Agreement.
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On December 10, 1997, the Company issued 8 3/8% Senior Notes due 2007 (the
"Senior Notes due 2007") in the principal amount of $100,000, which mature on
December 15, 2007, pursuant to the 1997 Shelf Registration. The Senior Notes due
2007 bear interest at 8 3/8% payable semiannually on June 15 and December 15 of
each year commencing June 15, 1998. The Senior Notes due 2007 may not be
redeemed prior to maturity.
The Senior Notes due 2007 will rank pari passu with all existing and future
Senior Indebtedness (as that term is defined in the Indenture under which the
Senior Notes due 2007 were issued) of the Company, including the 8 3/4% Senior
Notes due 2007, 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, the 8 7/8%
Senior Notes due 2007 and the 8 3/8% Notes and will be senior in right of
payment to existing and future subordinated indebtedness of the Company.
The net proceeds received by the Company from the sale of the Senior Notes due
2007 of approximately $97,234 were used to temporarily repay a portion of the
long-term debt outstanding under both the CCC-I Credit Agreement and the CCC-II
Credit Agreement.
Further borrowings may be made under the CCC-I and CCC-II Credit Agreements
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 January 8, 1998, $77,000 remained
available for issuance pursuant to the shelf registration.
On January 7, 1998 the Company filed a registration statement with the SEC
relating to the shelf registration of $500,000 of the Company's debt securities.
This registration statement has not been declared effective.
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 November 30, 1997, $23,500 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
which converts into a five-year term loan in the principal amount of $200,000
with Bank of America and Societe General. 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
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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. At November
30, 1997, $165,000 was available for borrowing under the facility.
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 30, 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 30, 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.
As of November 30, 1997, Centennial has paid four quarterly 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 January 8, 1998,
4,239,231 shares were available for issuance under this registration statement.
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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 January 8, 1998, $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 "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 November 30, 1997, no amounts were outstanding under the Credit
Facility.
On April 25, 1997, Centennial Puerto Rico Wireless Corporation ("CPRW") entered
into a four-year $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 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
incurrence of certain additional debt and requires that certain operating tests
be met. At November 30, 1997, $4,500 was available for borrowing under the
Puerto Rico Credit Facility. CPRW is currently in negotiations to increase the
credit availability under the Puerto Rico Credit Facility. There is no assurance
that CPRW will be successful in this regard.
Centennial and its subsidiaries were in compliance with all covenants of their
respective debt agreements at November 30, 1997.
In order to meet its obligations with respect to its operating needs, capital
expenditures, debt service and preferred stock obligations, it is important that
Centennial continue to improve
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<PAGE>
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 continued 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 $50,000 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 Centennial's 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
prior 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.
ACQUISITIONS - CABLE TELEVISION
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. On October 15, 1997 the
Century/Citizens Joint Venture completed the transaction relating to the system
located in Diamond Bar for a purchase price of approximately $33,600. The
Diamond Bar system serves approximately 20,000 primary basic subscribers. The
Company funded its share of the purchase price for the Diamond Bar system, and
currently expects to fund its share of the purchase price for the Yorba Linda
acquisition, using available credit facilities. The purchase of the Yorba Linda
system 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 acquisition 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 non-wireline
cellular telephone system serving the Benton Harbor, Michigan MSA. The Benton
Harbor market represents approximately
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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 $151,000 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 joint venture with United
International Holdings, Inc. ("UIH"), a leading international provider of pay
television services.
ECT has certain distribution, infrastructure utilization and franchise
agreements with Australis Media Limited ("Australis"), another pay television
company in Australia. ECT, in light of recent announcements by Australis
relating to Australis' deteriorating financial condition and aborted business
combination with Foxtel (a competitive cable television provider in Australia),
wrote down the remaining net book value of certain of its intangible assets
during the three months ended November 30, 1997. As a result, the Company's
consolidated financial statements reflect a writedown of approximately $17,100
relating to these intangible assets, net of a gain of approximately $4,300
related to the sale of certain of ECT's assets during the quarter ended November
30, 1997. Prior to June 1, 1997, the Company had written down $50,000 of its
Australian investments.
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.
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<PAGE>
The Company is currently unable to predict the ultimate resolution of these
matters. At November 30, 1997, the Company's investments in the various aspects
of the Australian pay television industry have been fully written-down as a
result of the aforementioned write-downs of Australian assets and the Company's
percentage of cumulative losses of ECT and XYZ.
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 purchase 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 six
months ended November 30, 1997, the Company purchased 1,929,500 additional
shares of such common stock in the open market for an aggregate purchase price
of $11,913. Subsequent to November 30, 1997, the Company purchased 30,000 of
such shares in the open market for an aggregate purchase price of $238. These
shares have been accounted for as Treasury Shares during the respective periods.
As of January 8, 1998, the Company is authorized to repurchase 4,869,000
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 purchase 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. During August, 1997,
Centennial announced that its Board of Directors had authorized the purchase 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 six months ended November 30, 1997, Centennial purchased
1,181,200 shares of its own Class A Common Stock in the open market for an
aggregate purchase price of $21,717. Subsequent to November 30, 1997, Centennial
purchased 89,000 additional shares of such common stock in the open market for
an aggregate purchase price of $1,806. These shares have been accounted for as
Treasury Shares. As of January 8, 1998, Centennial is authorized to purchase
2,729,800 additional shares of Class A Common Stock after giving effect to the
shares purchased to date.
* * * * *
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
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<PAGE>
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.
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<PAGE>
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.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
a) Registrant's annual meeting of shareholders was held on October 31,
1997.
b) The following persons were elected as directors at said meeting
pursuant to the following votes:
<TABLE>
<CAPTION>
Directors Number of Votes
--------- ---------------------------------------------
For Withheld
----------- -----------
<S> <C> <C>
Bernard P. Gallagher 442,287,247 467,331
William M. Kraus 26,846,274 468,874
David Z. Rosensweig 442,286,108 468,470
Scott N. Schneider 442,287,671 466,907
John P. Cole, Jr. 442,288,714 465,864
David Ross Miller 442,288,014 466,564
Daniel E. Gold 442,286,559 468,019
Michael G. Harris 442,286,714 467,864
Claire Tow 442,281,941 472,637
Leonard Tow 442,283,449 471,129
</TABLE>
c) The following matters were voted upon at said meeting:
1. The shareholders approved a proposal to ratify the approval and
adoption by the Board of Directors of an amendment to the
Registrant's 1992 Management Equity Incentive Plan. The following
sets forth the number of votes on this proposal.
For Against Abstain
--- ------- -------
441,001,988 1,180,824 429,571
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<PAGE>
2. The shareholders approved a proposal to ratify the selection by
the Board of Directors of Deloitte & Touche LLP as independent
accountants for the Registrant for the fiscal year ending May 31,
1998. The following sets forth the number of votes on this
proposal.
For Against Abstain
--- ------- -------
442,622,207 123,657 8,714
ITEM 5. OTHER INFORMATION -
ISSUANCE OF 8 3/4% SENIOR NOTES DUE 2007, 8 3/8% SENIOR NOTES DUE 2017 AND
8 3/8% 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 "1997 Shelf Registration"). 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 the 1997 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 8 3/8% Notes and the Senior
Notes due 2007 (as defined below), 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.
On November 13, 1997, the Company issued 8 3/8% Senior Notes due 2017 (the "8
3/8% Notes") in the principal amount of $100,000, which mature on November 15,
2017, pursuant to the 1997 Shelf Registration. The 8 3/8% Notes bear interest at
8 3/8% payable semiannually on May 15 and November 15 of each year commencing
May 15, 1998. The 8 3/8% Notes may not be redeemed prior to maturity.
The 8 3/8% Notes will rank pari passu with all existing and future Senior
Indebtedness (as that term is defined in the Indenture under which the 8 3/8%
Notes were issued) of the Company, including the Senior Notes due 2007 (as
defined below), the 8 3/4% Senior Notes due 2007, 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 existing and future subordinated indebtedness of the
Company.
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<PAGE>
The net proceeds received by the Company from the sale of the 8 3/8%
Notes of approximately $92,300 were used to temporarily repay a portion of the
long-term debt outstanding under both the CCC-I Credit Agreement and the CCC-II
Credit Agreement.
On December 10, 1997, the Company issued 8 3/8% Senior Notes due 2007 (the
"Senior Notes due 2007") in the principal amount of $100,000, which mature on
December 15, 2007, pursuant to the 1997 Shelf Registration. The Senior Notes due
2007 bear interest at 8 3/8% payable semiannually on June 15, and December 15 of
each year commencing June 15, 1998. The Senior Notes due 2007 may not be
redeemed prior to maturity.
The Senior Notes due 2007 will rank pari passu with all existing and future
Senior Indebtedness (as that term is defined in the Indenture under which the
Senior Notes due 2007 were issued) of the Company, including the 8 3/4% Senior
Notes due 2007, 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, the 8 7/8%
Senior Notes due 2007 and the 8 3/8% Notes and will be senior in right of
payment to existing and future subordinated indebtedness of the Company.
The net proceeds received by the Company from the sale of the Senior Notes due
2007 of approximately $97,234 were used to temporarily repay a portion of the
long-term debt outstanding under both the CCC-I Credit Agreement and the CCC-II
Credit Agreement.
Further borrowings may be made under the agreements 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 January 8, 1998, $77,000 aggregate amount of the Company's
debt securities remained available for issuance pursuant to the shelf
registration statement.
SHELF REGISTRATION
On January 7, 1998 the Company filed a registration statement with the SEC
relating to the shelf registration of $500,000 of the Company's debt securities.
This registration statement has not been declared effective.
LETTER OF INTENT - STRATEGIC PARTNERSHIP
On December 10, 1997 the Company and TCI Communications, Inc. ("TCI") signed a
letter of intent to form a strategic partnership that would combine multiple
cable systems in Southern California. TCI would contribute to the partnership
cable systems serving approximately 245,000 subscribers and the Company would
contribute cable systems serving approximately 500,000 subscribers. The Company
would manage the newly combined markets and own approximately 75% of the
partnership while TCI would own approximately 25% of the partnership. The
Company and TCI have also agreed to the exchange of certain of the Company's
cable systems serving approximately 90,000 subscribers in Northern California
for certain of TCI's cable systems serving approximately 90,000 subscribers in
Southern California (which subscribers are included in the 500,000 subscribers
described above). These transactions
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are subject to the approval of the Company's and TCI's Boards of Directors, the
signing of definitive agreements and to all appropriate regulatory approvals and
other consents.
STOCK PURCHASE
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 purchase 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 six
months ended November 30, 1997, the Company purchased 1,929,500 additional
shares of such common stock in the open market for an aggregate purchase price
of $11,913. Subsequent to November 30, 1997, the Company purchased 30,000 of
such shares in the open market for an aggregate purchase price of $238. These
shares have been accounted for as Treasury Shares during the respective periods.
As of January 8, 1998, the Company is authorized to purchase 4,869,000
additional shares of Class A Common Stock after giving effect to the shares
purchased to date.
On December 21, 1994, Centennial announced that its Board of Directors
authorized the purchase 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. During August, 1997,
Centennial announced that its Board of Directors had authorized the purchase 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 six months ended November 30, 1997, Centennial purchased
1,181,200 shares of its Class A Common Stock in the open market for an aggregate
purchase price of $21,717. Subsequent to November 30, 1997, Centennial purchased
89,000 additional shares of such common stock in the open market for an
aggregate purchase price of $1,806. These shares have been accounted for as
Treasury Shares. As of January 8, 1998, Centennial is authorized to purchase
2,729,800 additional shares of Class A Common Stock after giving effect to the
shares purchased to date.
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<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Each exhibit identified below is filed as part of this report.
a) Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description
---------- -----------
<S> <C>
Exhibit 4.1 Seventh Supplemental Indenture dated as of
November 13, 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 10.1 Extension Agreement to Employment Agreement
dated September 10, 1997 between the Company
and Daniel E. Gold.
Exhibit 11 Statement re: computation of per share earnings
Exhibit 27 Financial Data Schedule (EDGAR filing only)
</TABLE>
b) Reports on Form 8-K
There were no reports on Form 8-K filed by the Company
during the fiscal quarter ended November 30, 1997.
43
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CENTURY COMMUNICATIONS CORP.
Date: January 13, 1998
/s/ Scott N. Schneider
-----------------------------------
Scott N. Schneider
Chief Financial Officer,
Senior Vice President and Treasurer
(Principal Accounting Officer)
44
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<PAGE>
Exhibit 4.1
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
------------------------------
Seventh Supplemental Indenture
Dated as of November 13, 1997
------------------------------
8 3/8% Senior Notes Due 2017
================================================================================
<PAGE>
<PAGE>
SEVENTH SUPPLEMENTAL INDENTURE, dated as of November 13, 1997
(the "Seventh 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 Seventh Supplemental Indenture in
order to establish and provide for the issuance by the Company of a series of
Securities designated as its 8 3/8% Senior Notes Due 2017 in the aggregate
principal amount of $100,000,000, a form of which is attached hereto as Exhibit
A (the "8 3/8% 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 Seventh Supplemental Indenture have been complied
with; and
WHEREAS, all things necessary to make this Seventh
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 3/8% 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 3/8% Notes, that the Indenture is supplemented and
-2-
<PAGE>
<PAGE>
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 Seventh Supplemental Indenture in Paragraphs B, C and D hereof
shall only be applicable with respect to, and govern the terms of, the 8 3/8%
Notes issued by the Company, which shall be limited in aggregate principal
amount to $100,000,000, 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 Seventh 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
-3-
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<PAGE>
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
Investor 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
Investor 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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<PAGE>
"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:
Period Ratio
------ -----
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
"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 duplication) 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 3/8% 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 3/8% 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 3/8% Notes" shall mean the Company's 8 3/8% Senior Notes
Due 2017 originally issued in the aggregate principal amount of $100,000,000
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 November
15, 2017 and the date upon which the 8 3/8% 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 3/8% 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 3/8% 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 3/8% 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 3/8% 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 3/8% Notes shall have such terms as are set forth in the
8 3/8% 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 3/8% 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 3/8% Notes and
which has an average life to maturity longer than that of the 8 3/8% 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 November 7, 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 November 7, 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 3/8% Notes.
(a) In the event of the occurrence of a Triggering Event, each
holder of 8 3/8% 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 3/8% 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
3/8% Notes, within 30 days after a
-17-
<PAGE>
<PAGE>
Triggering Event Date, a notice of the occurrence of such Triggering Event,
specifying the date by which a holder of 8 3/8% 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 3/8% 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 3/8% Notes its
"Repurchase Notice") to the Trustee of the holder's exercise of such right,
together with the 8 3/8% Note or 8 3/8% 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 3/8% 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 3/8% 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 3/8% Notes or portions thereof. The Company shall not
be required pursuant to Section 3.05 to exchange or register the transfer of any
8 3/8% 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 3/8% 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
-18-
<PAGE>
<PAGE>
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 3/8%
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 3/8%
Notes shall be in substantially the following form:
This is one of the 8 3/8% Senior Notes Due 2017 referred to in
the Indenture dated as of February 15, 1992, as supplemented by the Seventh
Supplemental Indenture, dated as of November 13, 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 3/8%
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 3/8% 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 3/8%
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 3/8% Notes on the date such payment of principal is due in
accordance with the terms of the 8 3/8% Notes;
(2) if the 8 3/8% 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 3/8% 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 3/8% 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 3/8% 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 3/8% Notes and to have satisfied
all the obligations under this Indenture relating to the 8 3/8% 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 3/8% 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 afore- said, 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 3/8% Notes, the Reporting Date shall
be May 15, with the first such Reporting Date being May 15, 1998.
-24-
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Seventh 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/ Cliff Bail
- -------------------------------
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:
- -------------------------------
-25-
<PAGE>
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 13th day of November, 1997, before me personally came
Scott N. Schneider, to me known, who, being by me duly sworn, did depose and
say that he is Chief Financial Officer, 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]
------------------------
Notary Public
<PAGE>
<PAGE>
STATE OF CALIFORNIA )
: ss.:
COUNTY OF LOS ANGELES )
On the 13th day of November, 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 3/8% NOTE
<PAGE>
<PAGE>
Exhibit 10.1
EXTENSION AGREEMENT
September 10, 1997
Mr. Daniel E. Gold
229 Orchard Way
Merion Station, Pennsylvania 19066
Dear Mr. Gold:
Reference is made to that certain employment agreement dated
as of January 1, 1995 between the undersigned Century Communications Corp. as
"Company" and yourself, Daniel E. Gold as "Employee" (the "Employment
Agreement") pursuant to which you are currently employed by the Company as
therein set forth. Such designations are also utilized herein.
The Term of the Employment Agreement (as defined) presently
expires on December 31, 1997.
We are now mutually desirous of extending the Term of the
Employment Agreement so that same expires on December 31, 1999 rather than
December 31, 1997, such extension to be under the same terms and provisions as
set forth in the Employment Agreement, except as expressly provided for below.
Accordingly for good and valuable consideration the receipt
and adequacy of which is mutually acknowledged it is agreed as follows:
1. The Employment Agreement is hereby amended to provide that
same is extended for an additional two year period so that same expires on
December 31, 1999 rather than December 31, 1997 and the Term of the Employment
Agreement shall be and is deemed to be the period January 23, 1995 to December
31, 1999.
2. In all other respects the Employment Agreement, and the
terms and provisions thereof, as above amended, are ratified, adopted and
confirmed as an agreement between Company and Employee, except that:
a) no payment of $25,000 or any other sum shall be due or payable
to Employee upon execution of this Extension Agreement;
b) no options to acquire shares of the Company's Class A Common
Stock under the Company's 1994 Stock Option Plan and no
grant of Restricted Shares under the Company's 1992
<PAGE>
<PAGE>
Management Equity Incentive Plan shall be
awarded or granted to Employee upon or by
virtue of execution and delivery of this
Extension Agreement.
c) The date "December 31, 1997" in Section 8.1
of the Employment Agreement is hereby
deleted in its entirety and replaced by the
date "December 31, 1999".
d) Employee's address is corrected to:
229 Orchard Way
Merion Station, PA 19066
If you find the foregoing to be in order and agree to same,
please so indicate your acceptance and agreement at the place provided for
below.
Very truly yours,
CENTURY COMMUNICATIONS CORP.
By:/s/ Bernard P. Gallagher
------------------------------
Its President
AGREED TO AND ACCEPTED:
/s/ Daniel E. Gold
- ----------------------------------
Daniel E. Gold
-2-
<PAGE>
<PAGE>
Exhibit 11
CENTURY COMMUNICATIONS CORP. AND SUBSIDIARIES
EXHIBIT TO FORM 10-Q
FOR THE SIX MONTHS ENDED
NOVEMBER 30, 1997 AND 1996
COMPUTATION OF LOSS PER COMMON SHARE
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
Six Months Ended
----------------------------------
November 30, November 30,
1997 1996
------------ ----------
<S> <C> <C>
Primary fully diluted:
Net Loss $ (68,181) $ (78,469)
Subsidiary preferred stock dividend (2,518) (2,349)
------------ ----------
Loss applicable to common shares $ (70,699) $ (80,818)
------------ ----------
------------ ----------
Average number of common shares and
common share equivalents outstanding
Average number of common shares
outstanding during the period 75,130,000 74,105,000
Add common share equivalents -
Options to purchase common shares -
net 451,000 232,000
------------ ----------
Average number of common shares and
common share equivalents 75,581,000 (A) 74,337,000 (A)
------------ ----------
------------ ----------
Loss per common share $ (.94)(A) $ (1.09)(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.
45
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1998
<PERIOD-END> NOV-30-1997
<CASH> 133,882
<SECURITIES> 0
<RECEIVABLES> 63,505
<ALLOWANCES> 4,790
<INVENTORY> 0
<CURRENT-ASSETS> 212,563
<PP&E> 787,424
<DEPRECIATION> 494,622
<TOTAL-ASSETS> 2,175,101
<CURRENT-LIABILITIES> 229,847
<BONDS> 2,284,405
<COMMON> 1,080
186,287
0
<OTHER-SE> (677,848)
<TOTAL-LIABILITY-AND-EQUITY> 2,175,101
<SALES> 372,117
<TOTAL-REVENUES> 372,117
<CGS> 79,612
<TOTAL-COSTS> 351,696
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 106,916
<INCOME-PRETAX> (78,766)
<INCOME-TAX> (5,829)
<INCOME-CONTINUING> (72,937)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (68,181)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
