UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

           [ X ] Annual Report Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

                   For the fiscal year ended December 31, 1998

                                       or

          [ ] Transition Report Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

                          Commission file number 1-7784

                       CENTURY TELEPHONE ENTERPRISES, INC.
             (Exact name of Registrant as specified in its charter)

              Louisiana                                72-0651161
   (State or other jurisdiction of                    (IRS Employer
   incorporation or organization)                  Identification No.)

100 Century Park Drive, Monroe, Louisiana                 71203
(Address of principal executive offices)               (Zip Code)

Registrant's telephone number, including area code - (318) 388-9000

Securities registered pursuant to Section 12(b) of the Act:

        Title of each class            Name of each exchange on which registered
        -------------------            -----------------------------------------
  Common Stock, par value $1.00                New York Stock Exchange
                                               Berlin Stock Exchange
  Preference Share Purchase Rights             New York Stock Exchange
                                               Berlin Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:   None

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 by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of Registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [  ]

As of February  28,  1999,  the  aggregate  market value of voting stock held by
non-affiliates  (affiliates  being for these purposes only directors,  executive
officers  and  holders of more than five  percent of the  Company's  outstanding
voting  securities)  was $3.7  billion.  As of  February  28,  1999,  there were
92,357,172 shares of common stock outstanding.

                    DOCUMENTS INCORPORATED BY REFERENCE:

Portions of the  Registrant's  Proxy  Statement  prepared in connection with the
1999 annual meeting of shareholders are incorporated in Part III of this Report.


                                     PART I

Item 1.  Business

    General.  Century Telephone  Enterprises,  Inc. ("Century"),  which operates
under the  tradename of  CenturyTel,  is a regional  diversified  communications
company  engaged  primarily in providing local exchange  telephone  services and
cellular  telephone  services.  For the year  ended  December  31,  1998,  local
exchange  telephone  operations  and cellular  operations  provided 69% and 26%,
respectively,  of the consolidated revenues of Century and its subsidiaries (the
"Company"). All of the Company's telephone and cellular operations are conducted
within the continental United States and Alaska.

    At December 31, 1998, the Company's  local exchange  telephone  subsidiaries
operated over 1.3 million telephone access lines,  primarily in rural,  suburban
and small urban areas in 21 states,  with the largest  customer bases located in
Wisconsin,  Washington,  Alaska, Michigan, Louisiana, Colorado, Ohio, Oregon and
Montana.  According to published sources, the Company is the ninth largest local
exchange  telephone  company in the United  States based on the number of access
lines served. For more information, see "Telephone Operations."

    At December 31, 1998,  the Company's  majority-owned  and operated  cellular
systems served  approximately  624,000 customers in 21 Metropolitan  Statistical
Areas  ("MSAs") in Michigan,  Louisiana,  Arkansas,  Mississippi,  Wisconsin and
Texas,  and 23 Rural  Service  Areas  ("RSAs"),  most of which are in  Michigan,
Mississippi, Wisconsin, Louisiana and Arkansas. The Company's ownership interest
in these  operated  markets  represented  approximately  8.1  million  pops (the
estimated  population of licensed cellular  telephone markets  multiplied by the
Company's  proportionate equity interest in the licensed operators thereof).  At
December 31, 1998, the Company also owned minority  equity  interests in 10 MSAs
and 17 RSAs, representing  approximately 1.9 million pops. Of the Company's 10.1
million aggregate pops,  approximately 67% are attributable to the Company's MSA
interests,  with  the  balance  attributable  to its RSA  interests.  All of the
cellular systems  operated by the Company are operated under wireline  licenses,
except  for five  MSAs and four  RSAs  which  are  operated  under  non-wireline
licenses.  According to data derived from published sources,  the Company is the
tenth  largest  cellular  telephone  company in the United  States  based on the
Company's 10.1 million pops. For more information , see "Cellular Operations."

    The Company also provides long distance,  call center,  security monitoring,
cable television and interactive services in certain local and regional markets,
as well as certain  printing and related  services.  For more  information,  see
"Other Operations."

    Recent acquisitions and dispositions.  On December  1, 1998,  the Company
acquired the assets of certain of Ameritech's  telephone  operations and related
telephone  directories  in 19 telephone  exchanges  covering 21  communities  in
northern  and  central  Wisconsin  for  approximately  $221  million  cash.  The
operations  acquired by the Company include the telephone property and equipment
that serves nearly 69,000  customers,  or approximately  86,000 access lines, as
well as the nine related telephone directories.

    On December 1, 1997, the Company acquired  Pacific Telecom,  Inc. ("PTI") in
exchange  for  $1.503  billion  cash.  As a result of the PTI  acquisition,  the
Company  acquired (i) over  660,000  telephone  access lines in four  midwestern
states,  seven western states and Alaska, (ii) over 88,000 cellular customers in
ten  markets  located in two  midwestern  states  and  Alaska and (iii)  various
wireless,  cable television and other  communications  assets.  In May 1998, the
Company sold PTI's undersea cable  operations  for  approximately  $61.8 million
cash.

    During late 1997 and early 1998,  the Company  acquired two  security  alarm
businesses  that  provide  services to  approximately  6,000  customers in north
central Louisiana, southern Arkansas and northwestern Mississippi.

    In  December  1997 the  Company  acquired  an  additional  76%  interest  in
Wisconsin RSA 8, which is adjacent to the Company's existing cellular operations
in southwestern Wisconsin.

    During 1997 the Company exchanged its 89% interest in its competitive access
subsidiary for approximately 4.3 million shares of publicly traded common stock.
Approximately  3.8 million  shares of such stock were sold in November  1997 for
$203 million and the remaining  shares were  converted  into  approximately  1.0
million shares of  MCIWorldCom,  Inc.  ("WorldCom") in early 1998. In the second
quarter of 1998,  the Company sold 750,000  shares of WorldCom  common stock for
$35.6  million.  In January  1999,  the  Company  sold its  remaining  shares of
WorldCom stock for $20.1 million.

    In January  1997 the  Company  acquired  Pecoco,  Inc.,  a provider of local
exchange  telephone  service in four counties in  Wisconsin.  As a result of the
acquisition,  the Company  acquired (i) more than 7,600 telephone  access lines,
(ii) a minority  interest  in two  cellular  partnerships  serving  Madison  and
Milwaukee,  Wisconsin,  representing approximately 35,000 pops and (iii) certain
cable television assets.

   In August 1998 the Company  entered into a  definitive  agreement to sell the
stock  of the  entities  conducting  the  Company's  Alaska  operations  to ALEC
Acquisition  Corporation for $415 million cash, subject to various  adjustments.
Proceeds  from  this  transaction  will be  used  to  reduce  debt.  The  Alaska
transaction is  anticipated  to close in the second quarter of 1999,  subject to
regulatory  approvals and various  closing  conditions.  The transaction is also
subject to the buyer's  receipt of financing  pursuant to its existing  debt and
equity financing commitments.

   In January 1999 the Company signed  definitive  asset purchase  agreements to
sell all of the  operations  of the  Brownsville  and McAllen,  Texas,  cellular
markets to Western Wireless Corporation for $95 million cash, subject to various
adjustments.  The Company,  which is the majority owner in these  markets,  will
receive a proportionate  share of the sale proceeds of approximately $39 million
after-tax.  The  transaction is expected to close in the second quarter of 1999,
subject to  regulatory  approvals,  the  satisfactory  completion of buyer's due
diligence and various other closing conditions.

    Over the past several years, the Company has expanded its operations through
an ongoing program of  acquisitions.  Substantial  acquisitions  during the last
five years also include the 1994 acquisition of Celutel,  Inc. (over 1.1 million
pops). The Company continually evaluates the possibility of acquiring additional
telecommunications  assets in exchange for cash,  securities or both, and at any
given time may be engaged in discussions or  negotiations  regarding  additional
acquisitions.  Over the past few years,  the  number and size of  communications
properties  on the  market  has  increased  substantially.  Recently,  two large
communications  companies  announced  their  intent  to sell  up to 1.6  million
primarily rural access lines. Although the Company's primary focus will continue
to be on acquiring  telephone and wireless  interests  that are proximate to its
properties or that serve a customer base large enough for the Company to operate
efficiently, other communications interests may also be acquired.

    Other.  As of  December  31,  1998,  the  Company  had  approximately  5,800
employees,   approximately  1,000  of  whom  were  members  of  seven  different
bargaining  units  represented  by the  International  Brotherhood of Electrical
Workers,  Communications  Workers of  America,  or the NTS  Employee  Committee.
Relations with employees continue to be generally good.

    In mid-1998,  the Company adopted the tradename  "CenturyTel" as part of its
branding  strategy to operate under a single name. The Company currently markets
its telephone,  cellular,  long distance,  Internet access and most of its other
services under the CenturyTel tradename. Century proposes to formally change its
corporate  name to  CenturyTel,  Inc.  at its 1999 annual  shareholders  meeting
scheduled for May 6, 1999.

    Century was  incorporated  under Louisiana law in 1968 to serve as a holding
company for several  telephone  companies  acquired  over the  previous 15 to 20
years.  Century's  principal  executive  offices are located at 100 Century Park
Drive, Monroe, Louisiana 71203 and its telephone number is (318) 388-9000.

                              TELEPHONE OPERATIONS

    According  to  published  sources,  the Company is the ninth  largest  local
exchange  telephone  company  in the United  States,  based on the more than 1.3
million access lines it served at December 31, 1998. All of the Company's access
lines are digitally switched. Through its operating telephone subsidiaries, the
Company  provides  services to  predominately  rural,  suburban  and small urban
markets  in 21 states.  The table  below sets  forth  certain  information  with
respect to the Company's access lines as of December 31, 1998 and 1997.

<TABLE>
<CAPTION>

                   December 31, 1998              December 31, 1997   
-------------------------------------------------------------------------
                Number of     Percent of       Number of      Percent of
  State       access lines   access lines     access lines   access lines
-------------------------------------------------------------------------
<S>            <C>              <C>            <C>             <C>   

Wisconsin        340,895         25%            245,091         20%
Washington       175,508         13             166,611         14
Alaska           131,858         10             124,869         10
Michigan         108,769          8             104,440          9
Louisiana         97,676          7              94,432          8
Colorado          86,249          7              81,206          7
Ohio              80,400          6              77,987          7
Oregon            75,392          6              71,544          6
Montana           60,657          5              57,390          5
Texas             44,822          3              41,852          4
Arkansas          43,778          3              42,193          4
Minnesota         29,708          2              29,029          2
Tennessee         25,609          2              24,578          2
Mississippi       19,648          2              17,839          2
Idaho              5,881          1               5,746          -
New Mexico         5,770          -               5,559          -
Indiana            5,136          -               4,975          -
Wyoming            4,663          -               4,447          -
Iowa               1,938          -               1,801          -
Arizona            1,780          -               1,624          -
Nevada               430          -                 437          -   
------------------------------------------------------------------------
               1,346,567        100%          1,203,650        100%  
========================================================================
</TABLE>

    As indicated in the following table, the Company has experienced  growth in
its telephone  operations over the past several years, a substantial portion of
which was attributable to the acquisition of PTI and other telephone properties
and to the expansion of services:

<TABLE>
<CAPTION>
                                 Year ended or as of December 31,      
------------------------------------------------------------------------
                          1998       1997      1996      1995      1994 
------------------------------------------------------------------------
                                      (Dollars in thousands)

<S>                  <C>         <C>         <C>       <C>       <C>  

Access lines          1,346,567  1,203,650   503,562   480,757   454,963
  % Residential              74%        74        77        78        79
  % Business                 26%        26        23        22        21
Operating revenues   $1,091,610    530,597   451,538   419,242   391,265
Capital expenditures $  233,190    115,854   110,147   136,006   152,336
------------------------------------------------------------------------
</TABLE>

    Future  growth in  telephone  operations  is expected to be derived from (i)
acquiring  additional  telephone  properties,  (ii)  providing  service  to  new
customers, (iii) increasing network usage and (iv) providing additional services
made  possible  by  advances  in  technology  and  changes  in  regulation.  For
information on developing competitive trends, see "-Regulation and Competition."

Services

    The Company's  local  exchange  telephone  subsidiaries  derive revenue from
providing (i) local telephone  services,  (ii) network access services and (iii)
other related services. The following table reflects the percentage of telephone
operating revenues derived from these respective services:

                                  1998        1997        1996  
----------------------------------------------------------------

Local service                     30.4%       27.8        26.9
Network access                    57.7        60.2        61.2
Other                             11.9        12.0        11.9  
----------------------------------------------------------------
                                 100.0%      100.0       100.0  
================================================================

    Local  service  revenues  are derived from the  provision of local  exchange
telephone  services in the Company's service areas.  Internal access line growth
during 1998,  1997 and 1996 was 4.7%, 4.4% and 4.3%,  respectively.  The Company
believes  that access line growth in the future should  benefit from  population
growth  in its  service  areas,  acquisitions  and  increases  in the  number of
households  maintaining  more than one access line.  The Company  markets  local
Internet access in 396 communities in 12 states,  which the Company believes has
led to an increase in orders for second lines.

    Network access revenues primarily relate to services provided by the Company
to long distance  carriers and other customers in connection with the use of the
Company's  facilities to originate and terminate  interstate and intrastate long
distance  telephone  calls.  Access charges to long distance  carriers and other
customers   are  based  on  tariffed   access   rates  filed  with  the  Federal
Communications   Commission  ("FCC")  for  interstate   services  and  with  the
respective  state  regulatory  agency for  intrastate  services.  Certain of the
Company's  interstate  network access revenues are based on access charges filed
directly  with the FCC; the remainder of such revenues are derived under revenue
sharing  arrangements  with other LECs  administered  by the  National  Exchange
Carrier Association ("NECA").

    Certain of the  Company's  intrastate  network  access  revenues are derived
through  access  charges  billed by the  Company  to  intrastate  long  distance
carriers and other LEC  customers.  Such  intrastate  network access charges are
based on  access  tariffs,  which are  subject  to state  regulatory  commission
approval.  Additionally,  certain of the  Company's  intrastate  network  access
revenues,  along with  intrastate  long distance  revenues,  are derived through
revenue sharing arrangements with other LECs.

    The  installation  of digital  switches  and  related  software  has been an
important  component  of the  Company's  growth  strategy  because it allows the
Company to offer enhanced services (such as call forwarding, conference calling,
caller  identification,  selective call ringing and call waiting) and to thereby
increase  utilization of existing access lines. In 1998 the Company continued to
expand its list of premium  services  (such as voice mail and  Internet  access)
offered in certain service areas and aggressively marketed these services.

    The Company is  installing  fiber optic cable in certain of its high traffic
routes and provides  alternative  routing of telephone  service over fiber optic
cable networks in several  strategic  operating areas. At December 31, 1998, the
Company's  telephone  subsidiaries  had over 8,350 miles of fiber optic cable in
use.

    Other revenues include revenues related to (i) leasing, selling, installing,
maintaining  and repairing  customer  premise  telecommunications  equipment and
wiring,  (ii)  providing  billing  and  collection  services  for long  distance
companies,  (iii) participating in the publication of local directories and (iv)
providing  Internet  access.  At the end of 1998, the Company  offered  Internet
access in telephone markets  representing 60% of its access lines. Certain large
communications  companies for which the Company  currently  provides billing and
collection  services  continue to indicate  their desire to reduce their billing
and collection expenses,  which may result in future reductions of the Company's
billing and collection revenues.

    For further information on the regulation of the Company's revenues,see
"-Regulation and Competition."

Federal Financing Programs

    Certain of the Company's telephone  subsidiaries receive long-term financing
from the Rural  Utilities  Service ("RUS") and the Rural Telephone Bank ("RTB").
The RUS has made  long-term  loans to  telephone  companies  since  1949 for the
purpose of improving telephone service in rural areas. The RUS continues to make
new  loans  at  interest  rates  that  range  from 5% to 7%  based  on  borrower
qualifications and the cost of funds to the United States  government.  The RTB,
established  in 1971,  makes  long-term  loans at  interest  rates  based on its
average cost of funds as determined by statutory formula (such rates ranged from
5.71% to 5.96% for the fiscal year ended September 30, 1998),  and in some cases
makes loans  concurrently with RUS loans. Most of the Company's  telephone plant
is  pledged  or  mortgaged  to secure  obligations  of the  Company's  telephone
subsidiaries to the RUS and RTB. The Company's telephone subsidiaries which have
borrowed from government agencies generally may not loan or advance any funds to
Century, but may pay dividends if certain financial covenants are met.

    For  additional  information  regarding  the  Company's  financing,  see the
Company's consolidated financial statements included in Item 8 herein.

Regulation and Competition

    Traditionally, LECs have operated as regulated monopolies. Consequently, the
majority of the Company's telephone operations have traditionally been regulated
extensively  by various  state  regulatory  agencies  (generally  called  public
service commissions or public utility  commissions) and by the FCC. As discussed
in greater  detail  below,  passage of the  Telecommunications  Act of 1996 (the
"1996 Act"),  coupled with state  legislative  and  regulatory  initiatives  and
technological  changes,  has  fundamentally  altered the  telephone  industry by
reducing the  regulation of LECs and  permitting  competition in each segment of
the telephone  industry.  Although Century anticipates that these trends towards
reduced regulation and increased  competition will continue,  it is difficult to
determine  the form or  degree  of  future  regulation  and  competition  in the
Company's service areas.

    State  regulation.  The local service rates and intrastate access charges of
substantially all of the Company's telephone subsidiaries are regulated by state
regulatory  commissions.  Most of such commissions have traditionally  regulated
pricing through "rate of return" regulation that focuses on authorized levels of
earnings by LECs. Most of these  commissions  also (i) regulate the purchase and
sale  of  LECs,  (ii)  prescribe   depreciation  rates  and  certain  accounting
procedures and (iii) regulate various other matters,  including  certain service
standards and operating procedures.

    In recent  years,  state  legislatures  and  regulatory  commissions  having
jurisdiction over the Company's telephone  subsidiaries in most of the states in
which the Company has  substantial  operations  have either  begun to reduce the
regulation  of  LECs or  have  announced  their  intention  to do so,  and it is
expected that this trend will continue.  Wisconsin,  Louisiana and several other
of these states have passed  legislation which permit LECs to opt out of rate of
return  regulation in exchange for agreeing to  alternative  forms of regulation
which  typically  permit the LEC greater  freedom to establish  service rates in
exchange  for agreeing  not to charge  rates in excess of  specified  caps.  The
Company  continues to explore its options in these states.  The Company believes
that  reduced  regulatory  oversight  of  certain  of  the  Company's  telephone
operations may allow the Company to offer new and  competitive  services  faster
than under the traditional  regulatory  process.  Coincident with these efforts,
legislative,  regulatory and technological  changes have introduced  competition
into the local exchange industry. See "-Developments Affecting Competition."

    Substantially  all  of  the  state  regulatory  commissions  have  statutory
authority,  the specific limits of which vary, to initiate and conduct  earnings
reviews  of the  LECs  that  they  regulate.  As  part of the  movement  towards
deregulation,  several  states are moving away from  traditional  rate of return
regulation  towards price cap  regulation  and incentive  regulation  (which are
similar to the FCC regulations  discussed below),  and are actively  encouraging
larger LECs to adopt these newer forms of price regulation.  The continuation of
this trend may lead to fewer earnings reviews in the future. Currently, however,
most of the  Company's  LECs  continue  to be  regulated  under  rate of  return
regulation.

    During 1995 the Louisiana Public Service  Commission  ("LPSC") adopted a new
regulatory   plan  for  independent   telephone   companies  in  Louisiana  that
incrementally  reduced the Company's  access revenues  between 1996 and 1998. In
1997 the LPSC adopted a Consumer Price  Protection Plan (the "Louisiana  Plan"),
effective  July 1997,  which  impacts all of the  Company's  LECs  operating  in
Louisiana.  The new  form of  regulation  will  focus on price  and  quality  of
service.  Under the Louisiana  Plan, the Company's  Louisiana  LECs' local rates
were  frozen  for a period of three  years and access  rates  were  frozen for a
period of two years. Although the Louisiana Plan has no specified term, the LPSC
is required to review it by  mid-2000.  The  Company's  Louisiana  LECs have the
option  to  propose  a new  plan at any  time if the  LPSC  determines  that (i)
effective competition exists or (ii) unforeseen events threaten the subsidiary's
ability to provide adequate service or impair its financial health.

    The Company's  telephone  operations in Wisconsin  that were acquired in the
December  1997  acquisition  of PTI have  been  regulated  under an  alternative
regulation plan (the "Wisconsin Plan") since June 1996. The Wisconsin Plan has a
five-year  term and includes a provision  that allows the  Company's  subsidiary
covered by such plan to freely  adjust  rates  within  specified  parameters  if
certain quality-of-service and  infrastructure-development  commitments are met.
The Wisconsin Plan also includes initiatives designed to promote competition. In
early 1999,  another of the  Company's  Wisconsin  LECs filed a request with the
Wisconsin  Public  Service  Commission  to be  regulated  under  an  alternative
regulation plan.

    The Michigan  Public  Service  Commission  regulates the Company's  Michigan
telephone  subsidiaries  pursuant to the parameters  established by the Michigan
Telecommunications Act of 1995 ("MTA"). The MTA restructured regulation to focus
on price and  quality  of  service  as  opposed  to  traditional  rate of return
regulation.  The MTA relies  more on existing  federal  and state law  regarding
antitrust  consumer   protection  and  fair  trade  to  provide  safeguards  for
competition and consumers.

    FCC regulation.  The FCC regulates the interstate  services  provided by the
Company's telephone  subsidiaries  primarily by regulating the interstate access
charges that are billed to long  distance  companies  and other LEC customers by
the Company for use of its local network in connection  with the origination and
termination of interstate telephone calls. Additionally,  the FCC has prescribed
certain rules and regulations  for telephone  companies,  including  regulations
regarding the use of radio frequencies;  a uniform system of accounts; and rules
regarding the separation of costs between jurisdictions and, ultimately, between
interstate services.

    Effective January 1, 1991, the FCC adopted price-cap  regulation relating to
interstate access rates for the Regional Bell Operating  Companies ("RBOCs") and
GTE Corporation. All other LECs may elect to be subject to price-cap regulation.
Under price-cap  regulation,  limits imposed on a company's interstate rates are
adjusted periodically to reflect inflation, productivity improvement and changes
in certain  non-controllable  costs.  In May 1993 the FCC  adopted  an  optional
incentive  regulatory plan for LECs not subject to price-cap  regulation.  A LEC
electing the optional incentive  regulatory plan would, among other things, file
tariffs based primarily on historical costs and not be allowed to participate in
the relevant NECA pooling  arrangements.  The Company has not elected  price-cap
regulation  or the optional  incentive  regulatory  plan,  but will  continue to
evaluate  its  options  on a periodic  basis.  Either  election,  if made by the
Company,  would  have  to be  applicable  to  all  of  the  Company's  telephone
subsidiaries.  The authorized interstate access rate of return for the Company's
telephone  subsidiaries  is  currently  11.25%,  which  is the  authorized  rate
established  by the FCC for LECs not  governed by  price-cap  regulation  or the
optional incentive regulatory plan.

    In  September  1998,  the FCC  initiated a  proceeding  to  represcribe  the
authorized rate of return for interstate  access services  provided by LECs. The
FCC  periodically  represcribes  this rate of return to ensure  that the service
rates filed by incumbent LECs subject to rate of return  regulation  continue to
be just and reasonable. It is uncertain whether or by how much the FCC may lower
the authorized rate of return.

    In an access charge  reform order  adopted in May 1997,  the FCC changed its
system  of  interstate   access  charges  to  make  them   compatible  with  the
deregulatory  framework  established by the 1996 Act. Such changes are primarily
applicable  to  price-cap  companies.   The  Company's  telephone   subsidiaries
determine   interstate  revenues  under  rate  of  return  regulation  and  are,
therefore,  only minimally  impacted by the access charge reform order.  In July
1998, the FCC issued a Notice of Proposed  Rulemaking to amend the access charge
rules for rate of return companies in a manner similar to that adopted for price
cap companies,  subject to reviewing whether differences exist between price cap
companies and rate of return  companies  that would require  different  rules in
order to achieve the goal of fostering an  efficient,  competitive  marketplace.
Comments  were filed with the FCC in August  1998;  the FCC has not yet issued a
final ruling on this matter.

    In 1998 the FCC created a federal-state joint board to review jurisdictional
separations  procedures through which the costs of regulated  telecommunications
services are allocated to the interstate and intrastate jurisdictions.

    High-cost support funds, revenue sharing arrangements and related matters. A
significant number of the Company's telephone  subsidiaries recover a portion of
their costs under federal and state cost recovery  mechanisms that traditionally
have  allowed  LECs  serving  small  communities  and  rural  areas  to  provide
communications  services reasonably comparable to those available in urban areas
and at reasonably comparable prices.

    The 1996 Act authorized the establishment of new federal and state universal
service  funds to  provide  continued  support  to  eligible  telecommunications
carriers. In May 1997 the FCC adopted an order on universal service, as mandated
by the 1996 Act.  In the order,  the FCC ruled that  rural  telephone  companies
which are  designated  eligible  telecommunications  carriers  will  continue to
receive  universal  service  funding.  Each of the  Company's  LECs  has been so
designated by its respective state regulatory agency. As a result, the Company's
LECs will  continue to receive  payments  under the federal  support  mechanisms
currently in effect until the FCC adopts  funding  support  mechanisms  based on
forward-looking  economic costs, which it is required to do, but no earlier than
January  2001.  Although  the  Company  anticipates  that  it may  experience  a
reduction  in its  federal  support  revenues  at  some  point  in  the  future,
management  believes it is premature  to assess or estimate the ultimate  impact
thereof.  There  can be no  assurance,  however,  that such  impact  will not be
material.  During 1998 and 1997 the Company's  telephone  subsidiaries  received
$127.6  million and $65.4  million,  respectively,  from the  federal  Universal
Service Fund.

    As part of its  universal  service  order,  the FCC also  established  a new
program to provide up to $2.25 billion of discounted telecommunications services
annually to schools and libraries, commencing January 1998. In addition, the FCC
established a $400 million annual fund to provide discounted  telecommunications
services for rural health care providers.  All communications carriers providing
interstate  telecommunications  services,  including the Company's  LECs and its
cellular  and long  distance  operations,  are required to  contribute  to these
programs.  The FCC has  stated  that local  exchange  telephone  companies  will
recover their funding contributions in their rates for interstate services.  The
Company's  contribution  by its cellular and long distance  operations for 1998,
which was passed on to its customers, was approximately $3.1 million.

    Some  of the  Company's  telephone  subsidiaries  operate  in  states  where
traditional  cost recovery  mechanisms,  including  rate  structures,  are under
evaluation  or have been  modified.  See  "-State  Regulation."  There can be no
assurance  that these  states  will  continue  to provide  for cost  recovery at
current levels.

    Substantially  all of the Company's LECs concur with the common line tariffs
and certain of the  Company's  LECs concur  with the traffic  sensitive  tariffs
filed  by the  NECA;  such  LECs  participate  in  the  access  revenue  sharing
arrangements  administered  by the  NECA  for  interstate  services.  All of the
intrastate  network  access  revenues of the Company's  LECs are based on access
charges, cost separation studies or special settlement arrangements.
See "-Services."

    Certain  long  distance  carriers  continue to request  that  certain of the
Company's LECs reduce  intrastate  access tariffed rates.  There is no assurance
that these requests will not result in decreased access revenues.

    Developments affecting competition. The communications industry is currently
undergoing fundamental changes which may have a significant impact on the future
operations and financial performance of all communications companies.  Primarily
as a result of legislative and regulatory initiatives and technological changes,
competition  has been  introduced and encouraged in each sector of the telephone
industry,  including, most recently, the local exchange sector. As a result, the
number of companies offering competitive services has increased substantially.

    As indicated  above,  in February 1996 Congress  enacted the 1996 Act, which
obligates LECs to permit  competitors to  interconnect  their  facilities to the
LEC's  network  and to take  various  other  steps that are  designed to promote
competition.  The 1996 Act  imposes  several  duties on a LEC if it  receives  a
specific  request  from  another  entity  which seeks to connect with or provide
services using the LEC's network.  In addition,  each incumbent LEC is obligated
to  (i)  negotiate  interconnection  agreements  in  good  faith,  (ii)  provide
"unbundled"  access to all aspects of the LEC's  network,  (iii) offer resale of
its  telecommunications  services at wholesale rates and (iv) permit competitors
to  collocate  its  physical  plant on the LEC's  property,  or provide  virtual
collocation if physical  collocation is not  practicable.  Although the 1996 Act
provides  certain  exemptions  for  rural  LECs  such as those  operated  by the
Company,  the  FCC's  August  1996  order  implementing  most of the 1996  Act's
interconnection   provisions   placed  the  burden  of  proving  the  continuing
availability  of these  exemptions on rural LECs.  States are permitted to adopt
laws or regulations that provide for greater  competition than is mandated under
the  1996  Act.  Although   substantial   portions  of  the  FCC's  August  1996
interconnection  order have  survived  judicial  challenge,  the FCC has neither
completed its  interconnection  rulemaking nor issued rules on universal service
or access reform.  Management believes that competition in its telephone service
areas will  ultimately  increase as a result of the 1996 Act,  although the form
and degree of competition cannot be ascertained until such time as the FCC (and,
in  certain   instances,   state  regulatory   commissions)   adopts  final  and
nonappealable implementing regulations.

    Substantially  all of the 21 states in which the Company provides  telephone
services  have  taken  legislative  or  regulatory  steps to  further  introduce
competition  into the LEC  business.  Largely as a result of these steps and the
1996 Act, several competitive access providers  originally  organized to provide
redundancy or access  services  have begun,  during the past several  years,  to
provide  competitive  local  exchange  services,  principally  in  urban  areas.
Moreover, several well-capitalized long distance, cable television, wireless and
electric utility  companies,  along with several start-up  companies,  have also
begun  to  provide  competitive  local  exchange  services  or  announced  their
intention  to do so, and this  trend is  expected  to  continue.  Currently  the
Company is subject to a limited number of agreements  permitting  competitors in
Wisconsin to purchase from the Company  unbundled  network elements or wholesale
services,  and the  Company  is aware of only a few  other  companies  that have
requested  authorization  to provide  local  exchange  service in the  Company's
service areas.  Over time,  however,  the Company  anticipates that several more
companies will request authorization to provide competitive services, especially
in its operating areas located near larger urban areas.

    In addition to receiving  services  directly from  companies  competing with
incumbent  LECs,  long  distance  companies  and other users of toll service are
expected to increasingly seek other means to bypass LECs' switching services and
local distribution  facilities.  Certain interexchange carriers provide services
which allow users to divert their traffic from LECs' usage-sensitive services to
their  flat-rate  services.  In addition,  users or long distance  companies may
construct,  modify or lease  facilities to transmit traffic directly from a user
to a long distance company.  Cable television companies,  in particular,  may be
able to modify their  networks to partially or  completely  bypass the Company's
local  network.  Moreover,  users may choose to use wireless  services to bypass
LECs'  switching   services.   Although  certain  of  the  Company's   telephone
subsidiaries  have  experienced  a loss of traffic to such  bypass,  the Company
believes that the impact of such loss on revenues has not been significant.

    Historically,  cellular telephone services have complemented traditional LEC
services.  However,  the Company anticipates that existing and emerging wireless
technologies  will  increasingly  compete with LEC services.  Technological  and
regulatory developments in cellular telephone, personal communications services,
digital microwave,  coaxial cable,  fiber optics,  local-multipoint-distribution
services  and other  wired and  wireless  technologies  are  expected to further
permit the  development of alternatives to traditional  landline  services.  For
further information on certain of these developments, see "Wireless Operations -
Regulation and Competition."

    To  the  extent  that  the  telephone  industry   increasingly   experiences
competition,   the  size  and  resources  of  each  respective   competitor  may
increasingly  influence its  prospects.  Many companies  currently  providing or
planning  to  provide  competitive  communication  services  have  substantially
greater financial and marketing resources than the Company,  and several are not
subject to the same regulatory constraints as the Company.

    The Company  anticipates  that the  traditional  operations  of LECs will be
increasingly  impacted  by  continued  technological  developments  as  well  as
legislative and regulatory  initiatives affecting the ability of LECs to provide
new services and the capability of long distance  companies,  competitive  local
exchange providers, wireless companies, cable television companies and others to
provide competitive LEC services. Competition relating to services traditionally
provided  solely by LECs is expected to initially  affect large urban areas to a
greater extent than rural, suburban and small urban areas such as those in which
the  Company   operates.   The  Company   intends  to  actively   monitor  these
developments,  to observe the effect of emerging  competitive  trends in initial
competitive markets and to continue to evaluate new business  opportunities that
may arise out of future technological, legislative and regulatory developments.

    The Company  anticipates that regulatory  changes and competitive  pressures
may result in future revenue  reductions in its telephone  operations.  However,
the Company  anticipates  that such  reductions may be minimized by increases in
revenues  attributable  to the  continued  demand for enhanced  services and new
product offerings.  While the Company expects its telephone revenues to continue
to grow, its internal  telephone  revenue  growth rate may slow during  upcoming
periods.

                               CELLULAR OPERATIONS

    At  December  31,  1998,  the  Company's   cellular   holdings   represented
approximately  10.1 million pops,  of which 67% were  applicable to MSAs and 33%
were RSA pops.  According to data derived from published sources, the Company is
the tenth largest cellular  telephone  company in the United States based on the
Company's 10.1 million pops.

Cellular Industry

    The cellular  telephone  industry has been in existence for approximately 15
years in the United  States.  The industry has grown  significantly  during this
period and cellular service is now available in  substantially  all areas of the
United   States.   According   to  the  Cellular   Telecommunications   Industry
Association,  at  September  1998  there  were  estimated  to be over 51 million
cellular customers across the United States.

    Until recently,  substantially  all radio  transmissions of cellular systems
were  conducted on an analog  basis.  Technological  developments  involving the
application of digital radio  technology  offer certain  advantages  over analog
technologies, including expanding the capacity of mobile communications systems,
improving voice clarity, permitting the introduction of new services, and making
such  systems  more  secure.  Providers  of certain  services  competitive  with
cellular have incorporated  digital technology into their operations.  In recent
years most  major  cellular  carriers  have  installed  digital  cellular  voice
transmission  facilities  in certain  of their  systems,  principally  in larger
markets.  Digital  service is now  available in 95% of the Company's MSA markets
and the Company plans to expand the marketing of such service  during 1999.  See
"-Regulation and Competition-Developments Affecting Wireless Competition."

Construction and Maintenance

    The construction  and maintenance of cellular systems is capital  intensive.
Although  all of the  Company's  MSA and RSA systems have been  operational  for
several years, the Company has continued to add cell sites to increase coverage,
provide additional  capacity,  and improve the quality of these systems. In 1998
the Company  completed  construction of 57 cell sites in markets operated by the
Company.  At  December  31,  1998,  the Company  operated  615 cell sites in its
majority-owned markets.

    During  the last few years the  Company  upgraded  certain  portions  of its
cellular systems to be capable of providing digital service. Such service became
operational  in certain  markets  during  1996 and 1997  using the TDMA  digital
standard  and the  Company  continued  to  install  digital  voice  transmission
facilities    in   other    markets    in    1998.    See    "-Regulation    and
Competition-Developments  Affecting Wireless  Competition." Capital expenditures
related to majority-owned  and operated  cellular systems totaled  approximately
$49.5 million in 1998. Such capital  expenditures for 1999 are anticipated to be
approximately $70 million.

Strategy

    The  Company's  business  development  strategy for its  cellular  telephone
operations   is  to  secure   operating   control  of  service  areas  that  are
geographically clustered. Clustered cellular systems aid the Company's marketing
efforts and provide various operating and service advantages.  Approximately 43%
of the  Company's  pops in  markets  operated  by the  Company  are in a single,
contiguous cluster of eight MSAs and nine RSAs in Michigan; another 17% are in a
cluster of five MSAs and seven RSAs in northern and central Louisiana,  southern
Arkansas and eastern Texas. See "-The Company's Cellular Interests."

    Another component of the Company's strategy for cellular operations includes
capturing  revenues from roaming  service.  Roaming service revenues are derived
from calls made in one cellular  service area by subscribers  from other service
areas.  Roaming service is made possible by technical  standards  requiring that
cellular telephones be functionally  compatible with the cellular systems in all
United  States  market  areas.  In exchange  for  providing  roaming  service to
customers of other cellular carriers,  the Company charges premium rates to most
of  these  other  carriers,  who  then  frequently  pass on some or all of these
premium rates to their own customers. The Company's Michigan cellular properties
include a significant portion of the interstate highway corridor between Chicago
and Detroit.  Its Louisiana  properties include an east-west  interstate highway
and a north-south  interstate  highway which intersect in its Louisiana cellular
service  area.  Its  Mississippi  properties  include two  east-west  interstate
highways and two north-south interstate highways. See "-Services,  Customers and
System Usage."

Marketing

    The Company  markets its  cellular  services  through  several  distribution
channels,  including its direct sales force, retail outlets owned by the Company
and  independent  agents.  All sales  employees and certain  independent  agents
solicit cellular customers exclusively for the Company.  Company sales employees
are compensated by salary and commission and  independent  sales agents are paid
commissions.   The  Company  advertises  its  services  through  various  means,
including  direct mail,  billboard,  magazine,  radio,  television and newspaper
advertisements.

    The  sales  and  marketing  costs  of  obtaining  new  subscribers   include
advertising and a direct expense  applicable to most new subscribers,  either in
the form of a commission payment to an agent or an incentive payment to a direct
sales  employee.  In  addition,  the  Company  discounts  the  cost of  cellular
telephone  equipment,  and periodically runs promotions which waive certain fees
or provide some amount of free service to new  subscribers.  The average cost of
acquiring each new customer ($268 in 1998) remains one of the larger expenses in
conducting the Company's cellular  operations.  In recent years, the Company has
sought to lower this  average cost by focusing  more on its direct  distribution
channels.  The Company  opened its first retail  outlet in 1994,  and  currently
operates  59  such  outlets.  During  1998,  approximately  58% of new  cellular
customers were added through direct  distribution  channels,  up from 37% during
1996.

Services, Customers and System Usage

    There are a number of different types of cellular  telephones,  all of which
are currently  compatible with cellular systems nationwide.  The Company sells a
full range of  vehicle-mounted,  transportable,  and hand-held portable cellular
telephones.

    The Company charges its  subscribers for access to its systems,  for minutes
of use and for enhanced services,  such as voice mail. A subscriber may purchase
certain of these  services  separately  or may purchase  rate plans which bundle
these  services in  different  ways and are  designed to fit  different  calling
patterns.  While the Company  historically  has typically  charged its customers
separately  for  custom-calling  features,  air time in excess  of the  packaged
amount, and toll calls, it currently offers plans which include features such as
unlimited  toll calls and unlimited  weekend  calling in certain  calling areas.
Custom-calling  features  provided  by  the  Company  include   call-forwarding,
call-waiting, three-way calling and no-answer transfer. The Company offers voice
message service in many of its markets.  In the Company's  markets where digital
service is  operational,  customers can subscribe to caller ID and other digital
enhancements.

    Cellular  customers  come from a wide  range of  occupations  and  typically
include a large  proportion of individuals who work outside of their office.  In
recent years,  the  individual  consumer  market has generated a majority of new
customer  additions.  The Company's average monthly cellular service revenue per
customer  declined to $57 in 1998 from $61 in 1997 and $63 in 1996. Such average
revenue per customer may further decline (i) as market penetration increases and
additional lower usage customers are activated and (ii) as competitive pressures
from  current  and  future  wireless  communications  providers  intensify.  See
"-Regulation and Competition."

    Most  cellular  systems  allow a  customer  to place or  receive a call in a
cellular service area away from the customer's home market area. The Company has
entered into  "roaming  agreements"  with  operators of other  cellular  systems
covering  virtually all markets in the United States;  such agreements offer the
Company's  customers the opportunity to roam in these markets.  Also, a customer
of a  participating  non-Company  system  traveling in a market  operated by the
Company where this arrangement is in effect is able to automatically  make calls
on the Company's system.  The charge to a non-Company  customer for this service
is typically at premium  rates,  and is billed by the Company to the  customer's
service  provider,  which then bills the customer.  In most instances,  based on
competitive factors and financial considerations,  the Company charges an amount
to its customers that is equal to or lower than the amount  actually  charged by
the cellular carrier providing the roaming service. The Company anticipates that
competitive  factors and industry  consolidation  may place further  pressure on
charging premium roaming rates.  For additional  information on roaming revenue,
see "-Strategy."

    Roamer fraud, a cellular  industry problem,  occurs when cellular  telephone
equipment is  programmed  to conceal the true identity and location of the user.
The Company and the industry have implemented  extensive fraud control processes
in an attempt to minimize roamer fraud.

    Churn rate (the average  percentage  of cellular  customers  that  terminate
service each month) is an industry-wide  concern.  A significant  portion of the
churn in the Company's  markets is due to the Company  disconnecting  service to
cellular customers for nonpayment of their bills. In addition, the Company faces
substantial  competition  from  the  other  wireless  providers,  including  PCS
providers.  The Company's average monthly churn rate in its  majority-owned  and
operated  markets was 2.23% in 1998 and 2.31% in 1997. The Company is attempting
to lower its churn rate by increasing its proactive customer service efforts and
through the implementation of additional customer retention programs.

    During recent years, the Company's cellular subsidiaries  experienced strong
subscriber growth in the fourth quarter, primarily due to holiday season sales.

    The following  table  summarizes,  among other things,  certain  information
about the Company's customers and market penetration:
<TABLE>
<CAPTION>

                         Year ended or at December 31, 
-------------------------------------------------------------------------------
                                               1998          1997         1996 
-------------------------------------------------------------------------------
<S>                                       <C>           <C>           <C>   

Majority-owned and operated MSA and 
 RSA systems (Note 1):
   Cellular systems operated                      44            44           34
   Cell sites                                    615           558          354
   Population of systems operated(Note 2)  9,026,150     9,008,219    7,097,568
   Customers (Note 3):
      At beginning of period                 569,983       368,233      290,075
      Gross units added internally           214,596       193,623      165,377
      Net effect of property  
       acquisitions/dispositions                   -       123,600        4,850
      Disconnects                            160,460       115,473       92,069
      At end of period                       624,119       569,983      368,233
   Market penetration at end of 
    period (Note 4)                              6.9%          6.3          5.2
   Churn rate (Note 5)                          2.23%         2.31         2.37

Average monthly cellular service 
 revenue per customer                    $        57            61           63
Construction expenditures (in thousands) $    49,538        39,102       83,679
All operated MSA and RSA systems (Note 6):
   Cellular systems operated                      51            50           38
   Cell sites                                    729           656          413
   Population of systems 
    operated (Note 2)                     10,312,145    10,124,759    7,946,442
   Customers at end of period (Note 7)       689,181       632,446      407,400
   Market penetration at end 
    of period (Note 8)                           6.7%          6.2          5.1
   Churn rate (Note 5)                          2.34%         2.33         2.32
-------------------------------------------------------------------------------
</TABLE>

Notes:

1.  Represents  the number of systems in which the Company  owned at least a 50%
    interest.  The revenues and expenses of these cellular markets, all of which
    are operated by the  Company,  are  included in the  Company's  consolidated
    operating revenues and operating expenses.
2.  Based on independent third-party population estimates for each respective
    year.
3.  Represents the approximate number of revenue-generating cellular telephones
    served by the cellular systems referred to in note 1.
4.  Computed by dividing the number of customers at the end of the period by the
    total population of systems referred to in note 1.
5.  Represents the average percentage of customers that are disconnected on a
    monthly  basis. 
6.  Represents the total number of systems that the Company operated, including
    systems in which it does not own a majority interest.
7.  Represents the approximate number of revenue-generating cellular telephones
    served by the cellular systems referred to in note 6.
8   Computed by dividing the number of customers at the end of the period by the
    total population of systems referred to in note 6.

The Company's Cellular Interests

   The Company  obtained the right to provide  cellular  service through (i) the
FCC's licensing  process described below,  under which it received  interests in
wireline licenses, and (ii) its acquisition program, under which it has acquired
interests in both wireline and non-wireline licenses. The table below sets forth
certain  information  with respect to the interests in cellular systems that the
Company owned as of December 31, 1998:

<TABLE>
<CAPTION>
                                                      The        Other
                            1998                   Company's    cellular
                         population    Ownership    pops at     operator
                          (Note 1)     percentage   12/31/98    (Note 2)         
--------------------------------------------------------------------------------
<S>                          <C>         <C>        <C>        <C>   

Majority-owned and 
operated MSAs
-------------------
Pine Bluff, AR                81,588     100.00%     81,588    SBC
Texarkana, AR/TX             137,764      89.00     122,610    AT&T
Alexandria, LA               143,311     100.00     143,311    Centennial
Monroe, LA                   147,570      87.00     128,386    AT&T
Shreveport, LA               379,370      87.00     330,052    AT&T
Battle Creek, MI             195,400      97.00     189,538    Centennial
Benton Harbor, MI            161,753      97.00     156,900    Centennial
Grand Rapids, MI             770,152      97.00     747,047    AirTouch
Jackson, MI                  156,316      97.00     151,627    Centennial
Kalamazoo, MI                308,144      97.00     298,900    Centennial
Lansing-E. Lansing, MI       512,390      97.00     497,018    AirTouch
Muskegon, MI                 191,712      97.00     185,961    AirTouch
Saginaw-Bay City-
  Midland, MI                404,426      91.70     370,859    AirTouch
Biloxi-Gulfport, MS (Note 4) 232,431      96.45     224,182    Cellular South
Jackson, MS  (Note 4)        426,583      89.58     382,130    MCTA
Pascagoula, MS   (Note 4)    130,979      89.22     116,862    Cellular South
Brownsville-
  Harlingen, TX  (Note 4)    329,824      78.74     259,700    SBC
McAllen-Edinburg-
  Mission, TX  (Note 4)      525,734      69.50     365,372    SBC
Appleton-Oshkosh-
  Neenah, WI                 500,164      98.85     494,401    U.S. Cellular
Eau Claire, WI               143,664      55.50      79,734    American Cellular
LaCrosse, WI                 102,768      95.00      97,630    U. S. Cellular
-----------------------------------------------------------
                           5,982,043              5,423,808
-----------------------------------------------------------

Minority-owned MSAs (Note 3)
---------------------------
Little Rock, AR              555,272      36.00%    199,898
Lafayette, LA                262,964      49.00     128,852
Detroit, MI                4,761,992       3.20     152,289
Flint, MI                    511,788       3.20      16,367
Rochester, MN                113,844       2.93       3,336
Austin, TX                 1,016,912      35.00     355,919
Dallas-Ft. Worth, TX       4,630,120       0.50      23,151
Sherman-Denison, TX          102,618       0.50         513
Madison, WI                  702,398       9.78      68,688
Milwaukee, WI              1,972,973      17.96     354,405
-----------------------------------------------------------
                          14,630,881              1,303,418
-----------------------------------------------------------
    Total MSAs            20,612,924              6,727,226
-----------------------------------------------------------

Operated RSAs  
-------------
Alaska 1 (Note 4)             85,056     100.00%     85,056    Mactel
Alaska 3                      74,712     100.00      74,712    Mercury
Arkansas 2                    87,646      82.00      71,870    SBC
Arkansas 3                   103,724      82.00      85,054    SBC
Arkansas 11                   66,228      89.00      58,943    SBC
Arkansas 12                  185,325      80.00     148,260    SBC
Louisiana 1                  112,083      87.00      97,512    AT&T
Louisiana 2                  115,624      87.00     100,593    AT&T
Louisiana 3 B2                96,231      87.00      83,721    Centennial
Louisiana 4                   72,615     100.00      72,615    Centennial
Michigan 1                   196,408     100.00     196,408    American Cellular
Michigan 2                   113,772     100.00     113,772    RFB
Michigan 3                   164,586      42.84      70,509    Unitel
Michigan 4                   135,657     100.00     135,657    RFB
Michigan 5                   161,584      42.84      69,223    Unitel
Michigan 6                   142,356      98.00     139,509    Centennial
Michigan 7                   244,148      56.07     136,895    Centennial
Michigan 8                   101,746      97.00      98,694    Allegan Cellular
Michigan 9                   301,227      43.38     130,672    Centennial
Mississippi 2  (Note 4)      249,231     100.00     249,231    Bell South 
                                                                Mobility
Mississippi 5                159,176          -           -
Mississippi 6  (Note 4)      183,177     100.00     183,177    Cellular South
Mississippi 7  (Note 4)      181,661     100.00     181,661    MCTA
Texas 7 B6                    58,013      89.00      51,632    AT&T
Wisconsin 1                  112,351      42.21      47,421    American Cellular
Wisconsin 2                   86,024      99.00      85,164    American Cellular
Wisconsin 5                   95,903          -           -    American Cellular
Wisconsin 6                  116,145      57.14      66,369    U.S. Cellular
Wisconsin 7                  291,168      22.70      66,100    U.S. Cellular
Wisconsin 8                  236,525      84.00     198,681    U.S. Cellular
-----------------------------------------------------------
                           4,330,102              3,099,111
-----------------------------------------------------------

Non-operated RSAs (Note 3)
--------------------------
Michigan 10                  137,398      26.00      35,723
Minnesota 7                  172,206       2.93       5,046
Minnesota 8                   67,467       2.93       1,977
Minnesota 9                  134,073       2.93       3,928
Minnesota 10                 230,077       2.93       6,741
Minnesota 11                 205,949       2.93       6,034
Texas 16                     334,056       9.60      32,069
Washington 5                  60,311       8.47       5,109
Washington 8                 137,237       7.36      10,095
Wisconsin 3                  142,332      42.86      61,000
Wisconsin 4                  119,763      25.00      29,941
Wisconsin 10                 129,404      22.50      29,116
-----------------------------------------------------------
                           1,870,273                226,779 
-----------------------------------------------------------
   Total RSAs              6,200,375              3,325,890
-----------------------------------------------------------
                          26,813,299             10,053,116
-----------------------------------------------------------
</TABLE>

Notes:

1. Based on 1998 independent third-party population estimates.
2. Information provided to the best of the Company's knowledge. There is also at
   least one PCS  competitor  in each of the  operated  MSAs and  certain of the
   operated RSAs.
3. Markets not operated by the Company. 
4. Represents a non-wireline interest.

   For information on certain cellular properties that the Company has agreed to
sell, see "-Recent acquisitions and dispositions" above.

Operations

    A substantial number of the cellular systems in MSAs operated by the Company
are owned by limited  partnerships  in which the  Company  is a general  partner
("MSA  Partnerships").  Most of these  partnerships  are governed by partnership
agreements  with  similar  terms,  including,   among  other  things,  customary
provisions concerning capital contributions,  sharing of profits and losses, and
dissolution  and  termination  of the  partnership.  Most of  these  partnership
agreements vest complete operational control of the partnership with the general
partner.  The general partner  typically has the power to manage,  supervise and
conduct  the  affairs of the  partnership,  make all  decisions  appropriate  in
connection with the business purposes of the partnership,  and incur obligations
and execute  agreements on behalf of the  partnership.  The general partner also
may make  decisions  regarding  the time and  amount of cash  contributions  and
distributions,  and the nature,  timing and extent of construction,  without the
consent of the other partners.  The Company owns more than 50% of all of the MSA
Partnerships.

    A substantial number of the cellular systems in RSAs operated by the Company
are also owned by limited or general partnerships in which the Company is either
the general or managing partner (the "RSA Partnerships"). These partnerships are
governed by partnership agreements with varying terms and provisions. In many of
these partnerships,  the noncontrolling partners have the right to vote on major
issues  such  as  the  annual  budget  and  system  design.  In a few  of  these
partnerships,  the Company's  management position is for a limited term (similar
to a management  contract) and the other  partners in the  partnership  have the
right to change managers,  with or without cause. The Company owns less than 50%
of some of the RSA Partnerships.

    The  partnership   agreements  for  both  the  MSA   Partnerships   and  RSA
Partnerships generally contain provisions granting all partners a right of first
refusal in the event a partner desires to transfer a partnership interest.  This
restriction on transfer can under certain  circumstances  make these partnership
interests more difficult to sell to a third party.

Revenue

    The following table reflects the major revenue  categories for the Company's
wireless operations as a percentage of wireless operating revenues in 1998, 1997
and 1996.

                                                1998        1997        1996
----------------------------------------------------------------------------

Cellular access fees and toll revenues          74.2%       78.2        79.7
Cellular roaming                                23.6        20.0        18.6
Equipment sales                                  2.2         1.8         1.7
----------------------------------------------------------------------------
                                               100.0%      100.0       100.0
============================================================================

    For further information on these revenue categories, see
"-Services, Customers and System Usage."

Regulation and Competition

    As discussed  below,  the FCC and various state public  utility  commissions
regulate,   among  other  things,   the  licensing,   construction,   operation,
interconnection  arrangements,   sale  and  acquisition  of  cellular  telephone
systems.

    Competition  between  providers of wireless  communications  service in each
market is conducted principally on the basis of price, services and enhancements
offered,  the technical quality and coverage of the system,  and the quality and
responsiveness  of  customer  service.  As  discussed  below,   competition  has
intensified  in recent years in a substantial  number of the Company's  markets.
Under  applicable  law,  the Company is required to permit the  reselling of its
services. In certain larger markets and in certain market segments,  competition
from resellers may be  significant.  There is also  substantial  competition for
sales agents.  Certain of the Company's  competitors have substantially  greater
assets and resources than the Company.

    Cellular licensing process. The term "MSA" means a Metropolitan  Statistical
Area for which the FCC has granted a cellular operating license.  The term "RSA"
means a Rural  Service  Area for which the FCC has granted a cellular  operating
license.  During  the 1980's  and early  1990's,  the FCC  awarded  two  10-year
licenses to provide cellular service in each MSA and RSA market.  Initially, one
license was reserved  for  companies  offering  local  telephone  service in the
market  (the  wireline   carrier)  and  one  license  was  available  for  firms
unaffiliated with the local telephone company (the non-wireline carrier).  Since
mid-1986,  the FCC has  permitted  telephone  companies or their  affiliates  to
acquire  control of  non-wireline  licenses in markets in which they do not hold
interests in the wireline  license.  The FCC has issued a decision that grants a
renewal expectancy during the license renewal period to incumbent licensees that
substantially   comply  with  the  terms  and   conditions  of  their   cellular
authorizations  and the FCC's  regulations.  The  licenses  for the MSA  markets
operated  by the Company  were  initially  granted  between  1984 and 1987,  and
licenses for operated RSAs were initially  granted  between 1989 and 1991.  Thus
far, the Company has received  10-year  extensions  of all of its licenses  that
have become subject to renewal since their original grant dates.

    The  completion  of an  acquisition  involving  the transfer of control of a
cellular  system  requires prior FCC approval and, in certain cases,  receipt of
other federal and state  regulatory  approvals.  The  acquisition  of a minority
interest  generally  does not require FCC  approval.  Whenever  FCC  approval is
required,  any  interested  party may file a  petition  to  dismiss  or deny the
application for approval of the proposed transfer.

    In  addition  to  regulation  by the FCC,  cellular  systems  are subject to
certain Federal Aviation  Administration tower height regulations concerning the
siting and construction of cellular transmitter towers and antennas.

    Cellular  operators  are also subject to state and local  regulation in some
instances.   Although  the  FCC  has  pre-empted  the  states  from   exercising
jurisdiction  in  the  areas  of  licensing,   technical  standards  and  market
structure,  certain  states  require  cellular  operators  to be  certified.  In
addition,  some  state  authorities  regulate  certain  aspects  of  a  cellular
operator's  business,  including certain aspects of pricing,  the resale of long
distance  service to its customers,  the technical  arrangements and charges for
interconnection  with the  landline  network,  and the  transfer of interests in
cellular  systems.  The siting and  construction of the cellular  facilities may
also be subject to state or local zoning, land use and other local regulations.

    Developments  affecting  wireless  competition.  Competition in the wireless
communications  industry has increased due to continued and rapid  technological
advances in the  communications  field,  coupled with legislative and regulatory
changes.

    Several recent FCC initiatives  over the past several years have resulted in
the  allocation  of  additional  radio  spectrum or the issuance of licenses for
emerging  mobile  communications  technologies  that  are  competitive  with the
Company's cellular and telephone  operations,  including personal  communication
services ("PCS"). Although there is no universally recognized definition of PCS,
the term is  generally  used to refer to  wireless  services  to be  provided by
licensees  operating  in the 1850 MHz to 1990 MHz  radio  frequency  band  using
microcells and high-capacity digital technology.  In 1996 and early 1997 the FCC
auctioned  up to six PCS licenses per market.  Two 30MHz  frequency  blocks were
awarded for each of the 51 Rand McNally Major Trading Areas ("MTAs"),  while one
30MHz and three 10MHz  frequency  blocks  were  awarded for each of the 493 Rand
McNally Basic Trading Areas ("BTAs").

    PCS technology  permits PCS operators to offer wireless voice,  data,  image
and multimedia services.  The largest PCS providers commenced initial operations
in late 1996 and since then have aggressively  expanded their operations.  These
providers have initially focused on larger markets,  and have generally marketed
PCS as being a competitive  service to cellular.  Many of these  companies  have
aggressively  competed  for  customers  on the basis of price,  which has placed
downward  pressure on cellular  prices.  There is at least one PCS competitor in
each of the Company's operated MSAs and certain of its operated RSAs.

    In addition to PCS, users and potential  users of cellular  systems may find
their   communication   needs   satisfied  by  other   current  and   developing
technologies.  Several  years ago the FCC  authorized  the  licensees of certain
specialized  mobile radio  service  ("SMR")  systems  (which  historically  have
generally  been used by taxicabs and tow truck  operators)  to  configure  their
systems  into  digital  networks  that  operate in a manner  similar to cellular
systems.  Such systems are commonly referred to as enhanced  specialized  mobile
radio  service  ("ESMR")  systems.  The Company  believes  that ESMR systems are
operating in a few of its cellular markets. One  well-established  ESMR provider
has  constructed a nationwide  digital mobile  communications  system to compete
with  cellular  systems.  Other  similar  communication  services  that have the
technical  capability to handle wireless telephone calls may provide competition
in certain  markets,  although  these  services  currently  lack the  subscriber
capacity  of cellular  systems.  Paging or beeper  services  that  feature  text
message  and  data  display  as well as  tones  may be  adequate  for  potential
subscribers  who do not  need to  converse  directly  with  the  caller.  Mobile
satellite  systems,   in  which  transmissions  are  between  mobile  units  and
satellites, may ultimately be successful in obtaining market share from cellular
systems that communicate directly to land-based stations.

    In recent years,  several large  cellular  providers  have merged with other
companies or formed joint ventures. Several of these joint ventures pooled their
resources  to  develop   extensive  PCS  systems.   Many  current  or  potential
competitors of the Company have  substantially  greater  financial and marketing
resources than the Company.

    Although it is uncertain how PCS, SMR,  ESMR,  mobile  satellites  and other
emerging   technologies  will  ultimately   affect  the  Company,   the  Company
anticipates that it will continue to face increased competition in its operating
markets.  However,  management  believes  that  providing  digital  services and
applying new  microcellular  technologies  will permit its  cellular  systems to
provide  services  comparable with the emerging  technologies  described  above,
although  no  assurances  can be given  that  this will  happen  or that  future
technological  advances or  legislative  or  regulatory  changes will not create
additional sources of competition.

                                OTHER OPERATIONS

    The Company provides long distance, call center, security monitoring,  cable
television and interactive  services in certain local and regional  markets,  as
well as certain printing and related services.  The results of these operations,
which accounted for 4.9% and 3.2%,  respectively,  of the Company's consolidated
revenues and operating income during 1998, are reflected for financial reporting
purposes in the "Other operations" section in operating income.

    Long distance.  In 1996 the Company began marketing long distance service in
all of its equal access  telephone  operating  areas.  At December 31, 1998, the
Company  provided long distance  services to  approximately  227,000  customers.
Approximately  65% of the  Company's  long  distance  revenues  are derived from
service  provided  to  residential  customers.  Although  the  Company  owns and
operates long distance switches in LaCrosse, Wisconsin and San Marcos, Texas, it
anticipates  that most of its future  long  distance  service  revenues  will be
provided  by  reselling  service  purchased  from  other  facilities-based  long
distance providers.  The Company intends to continue to expand its long distance
business, principally through reselling arrangements.

    Call center.  The Company provides certain operator  services for retail and
wholesale  markets.  The retail market consists primarily of the hospitality and
payphone  industries.   The  wholesale  market  consists  of  other  independent
telephone companies and interexchange carriers.

    PCS. In early 1997 the Company was awarded 12 PCS licenses,  11 of which are
in Michigan,  in connection  with the FCC's auctions of 10MHz PCS licenses.  The
licenses cover areas with a population of approximately 4.0 million. As a result
of the PTI acquisition,  the Company acquired PCS licenses that cover areas with
a population of approximately 4.1 million.  In 1998, the Company began marketing
PCS  service  in  select  Michigan  markets  as  a  fixed  wireless  local  loop
alternative to the LEC's service in these markets.  Approximately $15 million of
the  Company's  1999  capital  expenditure  budget  is  for  development  of the
Company's PCS networks.

    Security monitoring. The Company offers 24-hour burglary and fire monitoring
services  to  approximately  6,000  customers  in select  markets in  Louisiana,
Arkansas,  Mississippi,  Texas  and  Ohio.  The  Company  plans  to  expand  the
availability of this service to more of its markets in 1999.

    Other.  The  Company,  through  one or  more of its  subsidiaries,  provides
audiotext services;  printing, database management and direct mail services; and
cable  television  services.  In connection  with its  long-range  plans to sell
capacity to other carriers in or near certain of its select markets, the Company
is  currently  constructing  a $20  million  650-to  700-mile  fiber  optic ring
connecting  several  communities in southern and central  Michigan.  The Company
also holds minority equity investments in certain communications  companies, and
is in the  process  of  developing  deployment  plans  for 32  Local  Multipoint
Distribution System licenses acquired by the Company in 1998.

    Certain  service  subsidiaries  of  the  company  provide  installation  and
maintenance  services,  materials and supplies,  and  managerial,  technical and
accounting  services to the telephone and wireless  operating  subsidiaries.  In
addition,  Century provides and bills management services to subsidiaries and in
certain  instances makes  interest-bearing  advances to finance  construction of
plant and  purchases  of  equipment.  These  transactions  are  recorded  by the
Company's regulated telephone subsidiaries at their cost to the extent permitted
by regulatory  authorities.  Intercompany  profit on transactions with regulated
affiliates  is limited to a  reasonable  return on  investment  and has not been
eliminated in connection with consolidating the results of operations of Century
and its subsidiaries.  Such intercompany profit is reflected in operating income
in the "Other operations" segment.


                           FORWARD-LOOKING STATEMENTS

    This report on Form 10-K and other  documents filed by the Company under the
federal  securities laws include,  and future oral or written  statements of the
Company and its  management  may include,  certain  forward-looking  statements,
including   without   limitation   statements  with  respect  to  the  Company's
anticipated future operating and financial performance  (including the impact of
pending  acquisitions),  financial position and liquidity,  growth opportunities
and growth  rates,  business  prospects,  regulatory  and  competitive  outlook,
investment and expenditure plans,  financing sources,  pricing plans,  strategic
alternatives,  business strategies, and other similar statements of expectations
or objectives  that are  highlighted by words such as "expects,"  "anticipates,"
"intends," "plans," "believes,"  "projects," "seeks," "estimates," "should," and
"may," and  variations  thereof and similar  expressions.  Such  forward-looking
statements are  inherently  speculative  and are based upon several  assumptions
concerning  future events,  many of which are outside of the Company's  control.
The Company's  forward-looking  statements,  and the assumptions upon which such
statements  are  based,  are  subject  to  uncertainties  that  could  cause the
Company's  actual  results  to differ  materially  from such  statements.  These
uncertainties include but are not limited to those set forth below:

    o the effects of ongoing deregulation in the telecommunications  industry as
a result of the 1996 Act and other  similar  federal and state  legislation  and
federal and state regulations enacted  thereunder,  including without limitation
(i) greater than  anticipated  interconnection  requests or  competition  in the
Company's   predominately  rural  local  exchange  telephone  markets  resulting
therefrom,  (ii) greater than anticipated  reductions in revenues  received from
the Universal  Service Fund or other current or future federal and state support
funds designed to compensate  LECs that provide  services in high-cost  markets,
(iii) the final outcome of regulatory and judicial  proceedings  with respect to
interconnection  agreements and access charge reforms and (iv) future regulatory
actions taken in response to the 1996 Act.

    o the effects of greater than  anticipated  competition from PCS, SMR, ESMR,
satellite or other wireless companies,  including without limitation competition
requiring new pricing or marketing strategies or new product offerings,  and the
attendant  risk  that the  Company  will not be able to  respond  on a timely or
profitable basis.

    o possible  changes in the demand for the  Company's  products and services,
including without  limitation (i) lower than anticipated  demand for traditional
or premium telephone services or for additional access lines per household, (ii)
lower than anticipated demand for wireless telephone services, whether caused by
changes in economic  conditions,  technology,  competition,  health  concerns or
otherwise,  and (iii)  reduced  demand for the  Company's  access or billing and
collection services.

    o the Company's ability to successfully  introduce new offerings on a timely
and cost-effective basis,  including without limitation the Company's ability to
(i) expand  successfully its long distance and Internet offerings to new markets
(including  those  acquired in  December  1997 in the PTI  acquisition  or to be
acquired in connection  with future  acquisitions),  (ii) offer bundled  service
packages on terms  attractive to its  customers,  (iii) offer  digital  cellular
service and (iv)  successfully  initiate  PCS and data  services in its targeted
markets.

    o the  risks  inherent  in rapid  technological  change,  including  without
limitation (i) the lack of assurance that the Company's ongoing wireless network
improvements  will be sufficient to meet or exceed the  capabilities and quality
of  competing  networks,  (ii)  technological  developments  that could make the
Company's analog and digital wireless networks  uncompetitive or obsolete,  such
as the risk  that the  Time  Division  Multiple  Access  technology  used by the
Company  will be  uncompetitive  with  Code  Division  Multiple  Access or other
digital technologies, and (iii) the risk that technologies will not be developed
by the  Company  on a timely or  cost-effective  basis or perform  according  to
expectations.

    o the Company's ability to effectively manage its growth,  including without
limitation the Company's ability to (i) integrate newly-acquired operations into
the Company's  operations,  (ii) attract and retain  technological and other key
personnel to work at the Company's  Monroe,  Louisiana  headquarters or regional
offices,  (iii) achieve projected economies of scale and cost savings, (iv) meet
pro  forma  cash  flow   projections   developed   by   management   in  valuing
newly-acquired businesses and (v) implement necessary internal controls.

    o the success and expense of the remediation  efforts of the Company and its
vendors in achieving  year 2000  compliance  (as discussed in greater  detail in
Item 7 of this report).

    o  regulatory  limits on the  Company's  ability  to change  its  prices for
telephone services in response to competitive pressures.

    o any  difficulties  in the Company's  ability to expand through  additional
acquisitions, whether caused by financing constraints, a decrease in the pool of
attractive  target  companies,   or  competition  for  acquisitions  from  other
interested buyers.

    o  higher  than  anticipated  wireless  operating  costs  due to churn or to
fraudulent uses of the Company's networks.

    o the lack of  assurance  that the Company can compete  effectively  against
better-capitalized competitors.

    o  the  future   unavailability  of  SFAS  71  to  the  Company's  telephone
subsidiaries.

    o the effects of more general factors, including without limitation:

      .  changes in general industry and market conditions and growth rates
      .  changes in interest rates or other general national, regional or local
         economic conditions
      .  changes in legislation, regulation or public policy, including changes
         in federal rural financing programs
      .  unanticipated increases in capital, operating or administrative costs,
         or the impact of new business opportunities requiring significant 
         up-front investments
      .  the continued availability of financing in amounts, and on terms and 
         conditions,necessary to support the Company's operations
      .  changes in the Company's relationships with vendors
      .  changes in the Company's senior debt ratings
      .  unfavorable outcomes of regulatory or legal proceedings, including 
         rate proceedings
      .  changes in accounting policies or practices adopted voluntarily or as 
         required by generally accepted accounting principles.

    For additional  information,  see the description of the Company's  business
included  above, as well as Item 7 of this report.  Due to these  uncertainties,
you are cautioned not to place undue reliance upon the Company's forward-looking
statements,  which speak only as of the date hereof.  The Company  undertakes no
obligation  to update or revise any of its  forward-looking  statements  for any
reason.

                                  OTHER MATTERS

    The Company has certain  obligations based on federal,  state and local laws
relating to the protection of the environment.  Costs of compliance through 1998
have not been  material and the Company  currently has no reason to believe that
such costs will become material.

    For  additional  information  concerning  the business and properties of the
Company, see notes 2, 4, 6, and 18 of Notes to Consolidated Financial Statements
set forth in Item 8 elsewhere herein.

Item 2.  Properties.

    The Company's properties consist principally of (i) telephone lines, central
office  equipment,  telephone  instruments and related  equipment,  and land and
buildings  related to telephone  operations,  and (ii)  switching  and cell site
equipment related to cellular telephone operations.  As of December 31, 1998 and
1997, the Company's gross property,  plant and equipment of  approximately  $4.3
billion and $3.8 billion, respectively, consisted of the following:

<TABLE>
<CAPTION>

                                                December 31,  
--------------------------------------------------------------  
                                              1998        1997
--------------------------------------------------------------
<S>                                         <C>          <C>   

Telephone operations
     Cable and wire                           47.7%       47.9
     Central office equipment                 27.9        27.9
     General support                           6.3         6.7
     Information origination/termination
      equipment                                1.7         1.7
     Construction in progress                  1.5         1.4
     Other                                      .2          .2
--------------------------------------------------------------
                                              85.3        85.8
--------------------------------------------------------------

Cellular operations
     Cell site                                 7.4         7.4
     General support                           1.9         1.7
     Construction in progress                   .6          .6
     Other                                      .1          .1
--------------------------------------------------------------
                                              10.0         9.8
--------------------------------------------------------------
Other                                          4.7         4.4
--------------------------------------------------------------
                                             100.0%      100.0
==============================================================
</TABLE>

    "Cable and wire"  facilities  consist  primarily  of buried cable and aerial
cable,  poles,  wire,  conduit and drops.  "Central office  equipment"  consists
primarily of switching  equipment,  circuit  equipment  and related  facilities.
"General support" consists  primarily of land,  buildings,  tools,  furnishings,
fixtures,     motor     vehicles     and    work     equipment.     "Information
origination/termination  equipment"  consists  primarily  of  premise  equipment
(private branch  exchanges and telephones) for official company use. "Cell site"
consists primarily of radio frequency channel equipment, switching equipment and
towers. "Construction in progress" includes property of the foregoing categories
that has not been placed in service because it is still under construction.

    Most of the properties of the Company's  telephone  subsidiaries are subject
to mortgages securing the debt of such companies. The Company owns substantially
all of the central office buildings, local administrative buildings, warehouses,
and storage facilities used in its telephone operations. The Company leases most
of the offices used in its cellular operations; certain of its transmitter sites
are leased while others are owned by the Company. For further information on the
location  and type of the  Company's  properties,  see the  descriptions  of the
Company's telephone and cellular operations in Item 1.

Item 3.   Legal Proceedings.

    From time to time,  the Company is involved in litigation  incidental to its
business,  including administrative hearings of state public utility commissions
relating  primarily  to  rate  making,  actions  relating  to  employee  claims,
occasional grievance hearings before labor regulatory agencies and miscellaneous
third party tort actions. Currently, there are no material legal proceedings.

Item 4.  Submission of Matters to a Vote of Security Holders.

   Not applicable.

Executive Officers of the Registrant

    Information  concerning Executive Officers, set forth at Item 10 in Part III
hereof, is incorporated in Part I of this Report by reference.

                                     PART II

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters.

   Century's common stock is listed on the New York Stock Exchange and is traded
under the  symbol  CTL.  The  following  table  sets forth the high and low sale
prices, along with the quarterly  dividends,  for each of the quarters indicated
(adjusted to reflect the March 1999 three-for-two stock split):

<TABLE>
<CAPTION>
                                    Sale prices  
                                 ----------------      Dividend per
                                 High         Low      common share
                                 ----         ---      ------------
<S>                           <C>           <C>          <C>    

1998:
   First quarter              $ 27-3/8      21-9/16      .0433
   Second quarter             $ 33-5/16     27-1/16      .0433
   Third quarter              $ 35-1/8      29-15/16     .0433
   Fourth quarter             $ 45-3/16     30-1/16      .0433

1997:
   First quarter              $ 14-7/8      12-3/4       .0411
   Second quarter             $ 15-1/16     12-11/16     .0411
   Third quarter              $ 19-9/16     14-11/16     .0411
   Fourth quarter             $ 22-7/16     18-1/4       .0411

</TABLE>

   Common stock  dividends  during 1997 and 1998 were paid each  quarter.  As of
February 28, 1999,  there were  approximately  6,054  stockholders  of record of
Century's common stock.

Item 6.  Selected Financial Data.

   The following table presents certain selected consolidated  financial data as
of and for each of the years ended in the  five-year  period ended  December 31,
1998:

Selected Income Statement Data
<TABLE>
<CAPTION>

                                          Year ended December 31, 
                           --------------------------------------------------
                                1998      1997      1996      1995      1994
                           --------------------------------------------------
                                  (Dollars, except per share amounts,and 
                                      shares expressed in thousands)
<S>                       <C>           <C>       <C>       <C>       <C>  

Operating revenues
    Telephone             $ 1,091,610   530,597   451,538   419,242   391,265
    Cellular                  407,749   307,742   250,243   197,494   150,802
    Other                      77,726    63,182    47,896    28,104    22,534
                            -------------------------------------------------
Total operating revenues  $ 1,577,085   901,521   749,677   644,840   564,601
                            =================================================

Operating income
    Telephone             $   333,708   173,285   155,183   143,527   137,992
    Cellular                  130,580    88,081    67,914    57,009    31,443
    Other                      15,523     6,404       199     2,383     3,371
                            -------------------------------------------------
Total operating income    $   479,811   267,770   223,296   202,919   172,806 
                            =================================================

Gain on sale or exchange
 of assets (pre-tax)      $    49,859   169,640       815     6,782    15,877
                            =================================================

Net income                $   228,757   255,978   129,077   114,776  100,238
                            ================================================

Diluted earnings 
 per share *              $      1.64      1.87       .95       .87      .80
                            ================================================

Dividends per 
 common share *           $      .173      .164       .16      .147     .142
                            ================================================

Average diluted shares
 outstanding *                140,105   137,412   135,980   132,456  130,242
                            ================================================
*  Adjusted to reflect the March 1999 three-for-two stock split

</TABLE>

Selected Balance Sheet Data

<TABLE>
<CAPTION>
                                                 December 31,                 
                          ------------------------------------------------------
                               1998       1997       1996       1995       1994
                          ------------------------------------------------------
                                            (Dollars in thousands)
<S>                      <C>          <C>        <C>        <C>        <C> 

Net property, plant
 and equipment           $ 2,351,453  2,258,563  1,149,012  1,047,808    947,131
Excess cost of net 
 assets acquired, net    $ 1,956,701  1,767,352    532,410    493,655    441,436
Total assets             $ 4,935,455  4,709,401  2,028,505  1,862,421  1,643,253
Long-term debt           $ 2,558,000  2,609,541    625,930    622,904    518,603
Stockholders' equity     $ 1,531,482  1,300,272  1,028,153    888,424    650,236
                          ------------------------------------------------------
</TABLE>

    The following table presents certain selected consolidated operating data as
of the end of each of the years in the five-year period ended December 31, 1998:

<TABLE>
<CAPTION>
                                                 December 31,                 
                          ------------------------------------------------------
                               1998       1997       1996       1995       1994
                          ------------------------------------------------------
                           <S>        <C>          <C>        <C>        <C> 

Telephone access lines     1,346,567  1,203,650    503,562    480,757    454,963
Cellular units in service
 in majority-owned markets   624,119    569,983    368,233    290,075    211,710
Long distance customers      226,730    171,962    110,560     46,608     27,632
                          ------------------------------------------------------
</TABLE>

    See  Items 1 and 2 in Part I and  notes 1, 2 and 6 of Notes to  Consolidated
Financial  Statements  set  forth  in Item 8  elsewhere  herein  for  additional
information.

Item 7.  Management's Discussion and Analysis of Financial Condition 
         and Results of Operations


                              RESULTS OF OPERATIONS

OVERVIEW

   Century Telephone  Enterprises,  Inc., which operates under the trade name of
CenturyTel,  and its  subsidiaries  (the "Company"),  is a regional  diversified
communications  company engaged primarily in providing local exchange  telephone
services and cellular telephone  communications  services. At December 31, 1998,
the Company's local exchange  telephone  subsidiaries  operated over 1.3 million
telephone access lines primarily in rural,  suburban and small urban areas in 21
states, and the Company's majority-owned and operated cellular entities had more
than  624,000   cellular   subscribers.   On  December  1,  1997,   the  Company
significantly expanded its operations by acquiring Pacific Telecom, Inc. ("PTI")
for $1.503 billion cash. As a result of the  acquisition,  the Company  acquired
(i) over 660,000 telephone access lines,  (ii) over 88,000 cellular  subscribers
and (iii) various wireless, cable television and other communications assets. On
December 1, 1998, the Company acquired from affiliates of Ameritech  Corporation
("Ameritech")  telephone  operations serving 86,000 access lines in northern and
central Wisconsin and the related telephone  directories for approximately  $221
million cash.  The  operations  of PTI are included in the Company's  results of
operations beginning December 1, 1997 and the operations of the former Ameritech
properties  are  included  in the  Company's  results  of  operations  beginning
December 1, 1998. See Acquisitions and Note 2 of Notes to Consolidated Financial
Statements for additional information. During the three years ended December 31,
1998, the Company has acquired various other telephone and cellular  operations,
the impact of which has not been material to the financial  position and results
of operations of the Company.

   The net income of the Company for 1998 was $228.8 million, compared to $256.0
million during 1997 and $129.1 million during 1996.  Diluted  earnings per share
for 1998 were $1.64  compared to $1.87 in 1997 and $.95 in 1996.  Excluding gain
on sale or exchange of assets,  the Company's  net income (and diluted  earnings
per share) for 1998,  1997 and 1996 was $198.2 million  ($1.42),  $149.6 million
($1.09) and $128.6 million ($.95), respectively.

<TABLE>
<CAPTION>

Year ended December 31,                        1998         1997          1996 
--------------------------------------------------------------------------------
                                            (Dollars, except per share amounts,
                                                  and shares in thousands)
<S>                                     <C>               <C>           <C>  

Operating income      
   Telephone                            $    333,708      173,285       155,183
   Cellular                                  130,580       88,081        67,914 
   Other                                      15,523        6,404           199   
--------------------------------------------------------------------------------
                                             479,811      267,770       223,296
Gain on sale or exchange of 
 assets, net                                  49,859      169,640           815
Interest expense                            (167,552)     (56,474)      (44,662)
Income from unconsolidated 
 cellular entities                            32,869       27,794        26,952
Minority interest                            (12,797)      (5,498)       (6,675)
Other income and expense                       5,268        5,109         3,916
Income tax expense                          (158,701)    (152,363)      (74,565)
--------------------------------------------------------------------------------
Net income                              $    228,757      255,978       129,077
================================================================================
Diluted earnings per share*             $       1.64         1.87           .95
================================================================================
Average diluted shares 
 outstanding*                                140,105      137,412       135,980
================================================================================
*Adjusted to reflect stock split in early 1999. See Note 21 of 
 Notes to Consolidated Financial Statements.

</TABLE>

   The Company's  operating  income for 1998 was $479.8 million,  an increase of
$212.0 million (79.2%) over 1997 operating income of $267.8 million. During 1998
the operating income of the Company's  telephone and wireless segments increased
$160.4  million  (92.6%)  and $42.5  million  (48.2%),  respectively,  while the
operating  income of the  Company's  other  operations  increased  $9.1  million
(142.4%). The Company's operating income for 1996 was $223.3 million.

   Contributions  to operating  revenues and  operating  income by the Company's
telephone, wireless and other operations for each of the years in the three-year
period ended December 31, 1998 were as follows:

<TABLE>
<CAPTION>

Year ended December 31,                           1998       1997      1996
---------------------------------------------------------------------------
<S>                                               <C>        <C>       <C>  
Operating revenues
   Telephone operations                           69.2%      58.9      60.2 
   Wireless operations                            25.9%      34.1      33.4
   Other operations                                4.9%       7.0       6.4
Operating income
   Telephone operations                           69.6%      64.7      69.5
   Wireless operations                            27.2%      32.9      30.4                         
   Other operations                                3.2%       2.4        .1
---------------------------------------------------------------------------
</TABLE>

   As  indicated by the chart  above,  the  percentage  of the  Company's  total
operating revenues and operating income contributed by its telephone  operations
significantly  increased during 1998 as a result of the Company's acquisition of
PTI on December 1, 1997.

   In addition to historical  information,  management's discussion and analysis
includes  certain  forward-looking  statements  regarding  events and  financial
trends that may affect the  Company's  future  operating  results and  financial
position.  Such  forward-looking  statements are subject to  uncertainties  that
could  cause  the  Company's  actual  results  to  differ  materially  from such
statements.  Such  uncertainties  include but are not limited to: the effects of
ongoing deregulation in the telecommunications  industry; the effects of greater
than anticipated  competition in the Company's markets;  possible changes in the
demand  for the  Company's  products  and  services;  the  Company's  ability to
successfully  introduce new offerings on a timely and cost-effective  basis; the
risks  inherent  in  rapid  technological   change;  the  Company's  ability  to
effectively manage its growth, including integrating  newly-acquired  properties
into the  Company's  operations;  the  success  and  expense of the  remediation
efforts of the Company and its vendors in achieving  year 2000  compliance;  and
the  effects of more  general  factors  such as  changes  in  general  market or
economic  conditions or in legislation,  regulation or public policy.  These and
other  uncertainties  related to the business are described in greater detail in
Item 1 to the Company's  Annual Report on Form 10-K for the year ended  December
31, 1998. You are cautioned not to place undue reliance on these forward-looking
statements,  which speak only as of the date hereof.  The Company  undertakes no
obligation to update any of its forward-looking statements for any reason.


TELEPHONE OPERATIONS

   The Company  conducts its telephone  operations in rural,  suburban and small
urban  communities in 21 states.  As of December 31, 1998,  approximately 86% of
the Company's 1.3 million telephone access lines were in Wisconsin,  Washington,
Alaska, Michigan, Louisiana,  Colorado, Ohio, Oregon and Montana. In August 1998
the Company entered into a definitive agreement to sell all of its operations in
Alaska.  This transaction is expected to close in the second quarter of 1999. As
of December  31, 1998,  the Company had  approximately  132,000  access lines in
Alaska. The operating  revenues,  expenses and income of the Company's telephone
operations for 1998, 1997 and 1996 are summarized below.

<TABLE>
<CAPTION>

Year ended December 31,                 1998        1997       1996    
--------------------------------------------------------------------
                                           (Dollars in thousands)
<S>                               <C>             <C>        <C>   
Operating revenues
   Local service                  $   331,736     147,589    121,728
   Network access                     629,583     319,301    276,123
   Other                              130,291      63,707     53,687
--------------------------------------------------------------------
                                    1,091,610     530,597    451,538
--------------------------------------------------------------------

Operating expenses
   Plant operations                   245,164     110,220     90,083
   Customer operations                 92,552      50,819     43,413
   Corporate and other                157,293      80,551     67,066
   Depreciation and amortization      262,893     115,722     95,793
--------------------------------------------------------------------
                                      757,902     357,312    296,355
--------------------------------------------------------------------
Operating income                  $   333,708     173,285    155,183
====================================================================
</TABLE>

Local service revenues

   Local  service  revenues  are derived from the  provision  of local  exchange
telephone  services in the Company's  service areas. The $184.1 million (124.8%)
increase  in such  revenues  in  1998  included  $171.0  million  from  acquired
properties,  of which $169.2 million was from the PTI properties;  $10.7 million
due to the internal  increase in the number of customer  access lines;  and $3.0
million due to the increased  provision of custom  calling  features.  The $25.9
million  increase in revenues  in 1997  included  $17.4  million  from  acquired
properties, of which $15.0 million was from the PTI properties; $5.6 million due
to the  internal  increase  in the number of  customer  access  lines;  and $2.8
million due to the  increased  provision of custom  calling  features.  Internal
access  line  growth  during  1998,  1997  and  1996 was  4.7%,  4.4% and  4.3%,
respectively.

Network access revenues

   Network access  revenues are primarily  derived from charges to long distance
companies and other customers for access to the Company's local exchange carrier
("LEC")  networks in connection  with the completion of long distance  telephone
calls.  These access  charges are based on tariffed  access rates filed with the
Federal  Communications  Commission ("FCC") for interstate services and with the
respective  state  regulatory  agency for  intrastate  services.  Certain of the
Company's  interstate  network access revenues are based on access charges filed
directly  with the FCC; the remainder of such revenues are derived under revenue
sharing  arrangements  with other LECs  administered  by the  National  Exchange
Carrier  Association.  Intrastate  network  access  revenues are based on access
charges or are derived under revenue sharing arrangements with other LECs.

   Network access  revenues  increased  $310.3 million (97.2%) in 1998 and $43.2
million in 1997 due to the following factors:

<TABLE>
<CAPTION>
                                                          1998           1997
                                                        increase       increase
                                                       (decrease)     (decrease)
--------------------------------------------------------------------------------
                                                        (Dollars in thousands)
<S>                                                  <C>                <C>  

PTI acquisition                                      $  278,471         26,040
Increased recovery from the federal 
 Universal Service Fund ("USF")                           8,329         11,314
Increased minutes of use                                  8,846          5,033
Acquisitions, excluding PTI                               1,013          3,465
Partial recovery of increased operating
 costs through revenue sharing arrangements
 with other telephone companies and return
 on rate base                                            10,440          2,454
Other, net                                                3,183         (5,128)
--------------------------------------------------------------------------------
                                                     $  310,282         43,178
================================================================================
</TABLE>

   Included in "Other, net" for 1998 and 1997 were decreases of $1.8 million and
$3.8  million,  respectively,  in  access  revenues  due  to the  reductions  in
intrastate  switched  access  rates  mandated by the  Louisiana  Public  Service
Commission ("LPSC") which were phased in from July 1995 through July 1997.

Other revenues

   Other revenues include revenues related to (i) leasing, selling,  installing,
maintaining  and repairing  customer  premise  telecommunications  equipment and
wiring ("CPE services"), (ii) providing billing and collection services for long
distance carriers,  (iii)  participating in the publication of local directories
and (iv)  providing  Internet  access.  Acquisitions  contributed  $60.7 million
(which includes $60.3 million  related to PTI) to the $66.6 million  increase in
other revenues in 1998.  Exclusive of acquisitions,  revenues from the provision
of Internet  access and CPE services  increased  $3.9 million and $3.5  million,
respectively,  in 1998. Other revenues increased $10.0 million in 1997, of which
$4.6 million was attributable to the PTI acquisition. Revenues from CPE services
and the provision of Internet access  contributed $3.5 million and $2.5 million,
respectively, of the remainder of the increase in other revenues in 1997.

Operating expenses

   Plant  operations  expenses  during 1998 and 1997  increased  $134.9  million
(122.4%) and $20.1 million (22.4%),  respectively.  Expenses incurred by the PTI
and former Ameritech operations in 1998 accounted for $120.4 million of the 1998
increase. The remainder of the increase in 1998 was primarily due to an increase
in  salaries  and  benefits.  Expenses  incurred by the PTI  operations  in 1997
accounted for $12.0  million of the 1997  increase.  Exclusive of PTI,  expenses
incurred in  connection  with  providing  Internet  access to a larger number of
customers  contributed $3.5 million to the 1997 increase and other  acquisitions
accounted for $1.8 million of such increase.

   Customer  operations,  corporate and other expenses  increased $118.5 million
(90.2%) in 1998, of which $110.7 million was  applicable to the PTI  properties.
Exclusive of acquisitions,  the remainder of the 1998 increase was due to a $4.3
million  increase  in  salaries  and  benefits  and a $2.0  million  increase in
marketing  expenses.  Of the $20.9 million  increase in these  expenses in 1997,
$13.4  million was incurred by acquired  properties  (of which $11.2 million was
incurred by PTI).  Exclusive  of  acquisitions,  $1.7  million of the  remaining
increase in 1997  expenses  was due to an increase in marketing  expenses,  $1.6
million was due to higher  operating  taxes and $1.4 million was due to expenses
incurred in the increased provision of CPE services.

   Depreciation  and  amortization  increased  $147.2 million (127.2%) and $19.9
million (20.8%) in 1998 and 1997, respectively.  Approximately $136.6 million of
the 1998 increase was  applicable to acquiring and operating PTI (of which $27.9
million represented amortization of goodwill) and $1.3 million was applicable to
the  former  Ameritech  properties.  Approx-imately  $11.4  million  of the 1997
increase was  applicable  to acquiring  and operating PTI (of which $1.5 million
represented amortization of goodwill).  Exclusive of acquisitions,  depreciation
expense  included  nonrecurring  additional  depreciation  charges  approved  by
regulators in certain  jurisdictions  which  aggregated $6.2 million in 1998 and
$4.4 million in 1997. In addition,  the Company obtained increased  depreciation
rates in certain  jurisdictions  which  increased  depreciation  expense by $1.1
million  in  1998  and  $4.4  million  in  1997.  The  remaining   increases  in
depreciation  and  amortization  in 1998 and 1997 were due to  higher  levels of
plant in service.  The composite  depreciation rate for the Company's  regulated
telephone  properties,  including the additional  depreciation charges, was 6.9%
for 1998,  7.4% for 1997 and 7.5% for 1996. The  properties  acquired in the PTI
acquisition  historically have had a lower composite  depreciation rate than the
Company's incumbent properties.

Other

   For additional  information  regarding  certain matters that have impacted or
may impact the Company's telephone operations, see Regulation and Competition.

Cellular Operations and Income From Unconsolidated Cellular Entities
<TABLE>
<CAPTION>

Year ended December 31,                          1998        1997        1996
------------------------------------------------------------------------------
                                                    (Dollars in thousands)
<S>                                          <C>           <C>          <C> 
Operating income - cellular operations       $ 130,580      88,081      67,914
Minority interest                              (12,635)     (6,916)     (7,062)
Income from unconsolidated cellular entities    32,869      27,794      26,952
------------------------------------------------------------------------------
                                             $ 150,814     108,959      87,804
==============================================================================
</TABLE>

   The Company's  cellular  operations reflect 100% of the results of operations
of the cellular entities in which the Company has a majority ownership interest.
The minority  interest owners' share of the income of such entities is reflected
in the  Company's  Consolidated  Statements of Income as an expense in "Minority
interest." See Minority Interest for additional information. The Company's share
of  earnings  from the  cellular  entities  in which it has less than a majority
interest  is  accounted  for using the  equity  method and is  reflected  in the
Company's  Consolidated  Statements  of Income in  "Income  from  unconsolidated
cellular  entities."  See  Income  from  Unconsolidated  Cellular  Entities  for
additional information.

Cellular Operations

   All of the Company's cellular  customers are located in Michigan,  Louisiana,
Wisconsin,  Mississippi,  Texas,  Alaska and Arkansas.  The operating  revenues,
expenses and income of the Company's cellular operations for 1998, 1997 and 1996
are summarized below.
<TABLE>
<CAPTION>

Year ended December 31,                 1998        1997        1996 
---------------------------------------------------------------------
                                           (Dollars in thousands)
<S>                                 <C>           <C>         <C>   
Operating revenues
   Service revenues                 $ 398,661     302,156     246,037
   Equipment sales                      9,088       5,586       4,206
---------------------------------------------------------------------
                                      407,749     307,742     250,243
---------------------------------------------------------------------

Operating expenses
   Cost of equipment sold              16,954      14,576      12,771
   System operations                   59,920      47,572      36,301
   General, administrative 
    and customer service               80,827      62,258      52,891
   Sales and marketing                 57,466      54,128      46,793
   Depreciation and amortization       62,002      41,127      33,573
---------------------------------------------------------------------
                                      277,169     219,661     182,329
---------------------------------------------------------------------
Operating income                    $ 130,580      88,081      67,914
=====================================================================
</TABLE>

Operating revenues

   Service  revenues  include  monthly  service  fees for  providing  access and
airtime to  customers,  service fees for  providing  airtime to other  carriers'
customers roaming through the Company's service areas and toll revenue. Cellular
service  revenues during 1998 increased to $398.7 million from $302.2 million in
1997 and $246.0 million in 1996.

   Of the $96.5  million  increase  in  service  revenues  in 1998 and the $56.1
million  increase in 1997,  $76.1 million and $11.8 million,  respectively,  was
attributable  to  acquisitions  of  properties.   Excluding  acquisitions,   the
remainder  of  the  increases  in  cellular   service  revenues  were  primarily
attributable  to the  increases  in cellular  usage in the  Company's  incumbent
markets  due to  the  increased  demand  for  wireless  services.  Exclusive  of
acquisitions,  local and toll revenues increased $9.4 million (4.0%) in 1998 and
$34.9 million  (17.5%) in 1997 while roaming  revenues  increased  $10.9 million
(18.5%) in 1998 and $12.6 million (27.1%) in 1997.

   The following table further  illustrates the growth in the Company's cellular
customer base in its majority-owned markets:

<TABLE>
<CAPTION>

Year ended December 31,                    1998        1997        1996 
------------------------------------------------------------------------
<S>                                      <C>         <C>        <C>    
Customers at beginning of period         569,983     368,233    290,075
Gross units added internally             214,596     193,623    165,377
Disconnects                              160,460     115,473     92,069
Net units added                           54,136      78,150     73,308
Net effect of property acquisitions            -     123,600      4,850
Customers at end of period               624,119     569,983    368,233
-----------------------------------------------------------------------
</TABLE>

   The average  monthly service  revenue per customer  (including  acquisitions)
declined  to $57  during  1998  from  $61 in 1997  and  $63 in  1996  due to the
continued  trend that a higher  percentage of new  subscribers  tend to be lower
usage  customers  and to a  reduction  in rates.  In  addition,  the  properties
acquired in the PTI  acquisition  historically  have had a lower average monthly
service  revenue per  customer  than the  Company's  incumbent  properties.  The
average  monthly  service revenue per customer may further decline (i) as market
penetration  increases and  additional  lower usage  customers are activated and
(ii) as competitive  pressures from current and future  wireless  communications
providers intensify. The Company is responding to such competitive pressures by,
among  other  things,  modifying  certain  of its price  plans and  implementing
certain other plans and  promotions,  all of which are likely to result in lower
average  revenue per  customer.  The Company will  continue to focus on customer
service and attempt to stimulate cellular usage by promoting the availability of
certain  enhanced  services and by improving the quality of its service  through
the construction of additional cell sites and other enhancements to its system.

Operating expenses

   System operations  expenses increased $12.3 million (26.0%) in 1998 primarily
due to $15.6 million of expenses attributable to acquisitions. Such increase was
partially  offset by a $6.1  million  decrease in the net amounts  paid to other
carriers for cellular  service  provided to the Company's  customers who roam in
the other  carriers'  service areas  primarily  due to a decrease in rates.  The
$11.3 million (31.0%) increase in system operations  expenses in 1997 included a
$4.7  million  increase in the net amounts  paid to other  carriers for cellular
service  provided to the  Company's  customers  who roam in the other  carriers'
service areas and $2.8 million of expenses incurred by acquired properties.  The
remainder  of the  increase  in  system  operations  expenses  in 1997  resulted
primarily from the operation of more cell sites.

   The Company operated 615 cell sites at December 31, 1998 in entities in 
which it had a majority interest, compared to 558 at December 31, 1997 and 354
at December 31,1996. In 1997, 155 cell sites were added through acquisitions.

   General, administrative and customer service expenses increased $18.6 million
(29.8%) in 1998, of which $13.4 million was attributable to expenses of entities
acquired. The remainder of the 1998 increase was primarily due to a $2.1 million
increase in the provision for doubtful  accounts and a $1.8 million  increase in
customer  service  expenses.  Of the  $9.4  million  (17.7%)  increase  in  1997
expenses,  $3.0 million was applicable to acquired operations.  The remainder of
the increase in 1997 was  primarily  due to a $2.4 million  increase in customer
service and retention costs and a $2.4 million increase in billing costs.

   Churn rate (the percentage of cellular  customers that terminate  service) is
an industry-wide  concern. The Company faces substantial  competition from other
wireless  providers,   including  Personal  Communication  Services  ("PCS").  A
significant portion of the churn in the Company's cellular markets is due to the
Company disconnecting service to customers for nonpayment. The Company's average
monthly churn rate was 2.23% in 1998, 2.31% in 1997 and 2.37% in 1996.

   Sales and marketing  expenses increased $3.3 million (6.2%) in 1998 primarily
due to $9.7 million of expenses of acquired entities, a $2.9 million increase in
costs incurred in selling  products and services in retail  locations and a $2.4
million  increase in advertising  expenses.  Such  increases were  substantially
offset by a $10.6 million  reduction in  commissions  paid to agents for selling
services to new customers  primarily as a result of fewer  cellular  units being
added through this  distribution  channel  during 1998 as compared to 1997.  The
1997 increase in sales and marketing expenses of $7.3 million (15.7%) included a
$4.9  million  increase in costs  incurred in selling  products  and services in
retail locations and a $2.8 million increase applicable to operations acquired.

   Depreciation  and  amortization  increased  $20.9 million (50.8%) in 1998 and
$7.6 million in 1997, of which $14.5 million and $2.1 million, respectively, was
attributable to acquisitions.  The remainder of the 1998 and 1997 increases were
primarily due to higher levels of plant in service.

Other

   For additional  information  regarding  certain matters that have impacted or
may impact the Company's cellular operations, see Regulation and Competition.

Other Operations

   Other  operations  include the results of operations of  subsidiaries  of the
Company which are not included in the telephone or cellular segments  including,
but not limited to, the  Company's  non-regulated  long distance and call center
operations and the Company's  competitive  access  subsidiary (which was sold to
Brooks Fiber Properties,  Inc.  ("Brooks") in May 1997). The operating revenues,
expenses and income of the Company's  other  operations for 1998,  1997 and 1996
are summarized below.

<TABLE>
<CAPTION>

Year ended December 31,                          1998        1997        1996
------------------------------------------------------------------------------
                                                    (Dollars in thousands)
<S>                                           <C>          <C>          <C>   
Operating revenues
   Long distance                              $ 53,027      36,550      28,894
   Call center                                   9,701      14,285       8,832
   Competitive access                                -       2,499       2,730
   Other                                        14,998       9,848       7,440
------------------------------------------------------------------------------
                                                77,726      63,182      47,896
------------------------------------------------------------------------------

Operating expenses
   Cost of sales and operating expenses         58,544      54,132      45,042
   Depreciation and amortization                 3,659       2,646       2,655
------------------------------------------------------------------------------
                                                62,203      56,778      47,697
------------------------------------------------------------------------------
Operating income                              $ 15,523       6,404         199
==============================================================================
</TABLE>

   The 1998 and 1997 increases of $16.5 million and $7.7 million,  respectively,
in long  distance  revenues  were  attributable  to the  growth in the number of
customers.  The number of long distance  customers as of December 31, 1998, 1997
and 1996 was  226,700,  172,000  and  110,600,  respectively.  The $4.6  million
decrease in 1998 call center revenues was primarily due to the loss of two major
customers  in the fourth  quarter of 1997.  The $5.5  million  increase  in call
center  revenues in 1997 was primarily due to an increase in customers  prior to
the  loss of the two  major  customers  in late  1997.  The  increases  in other
revenues  of $5.2  million  in 1998  and  $2.4  million  in 1997  was  primarily
attributable  to the  acquisition  of  cable  television  properties  in the PTI
acquisition and the acquisition of two security businesses.

   Operating  expenses in 1998 increased due to (i) an increase of $13.6 million
in expenses of the  Company's  long  distance  operations  due  primarily  to an
increase in customers and (ii) $6.6 million of operating expenses  applicable to
acquisitions. Such increases were substantially offset by decreases in operating
expenses  because (i) 1997 included $9.2 million of costs applicable to entities
sold  during  1997 and (ii) the amount of  intercompany  profit  with  regulated
affiliates (the  recognition of which in accordance  with regulatory  accounting
principles acts to offset operating expenses) increased $5.8 million as a result
of the acquisition of PTI.

   In 1997 an increase in operating  expenses of $11.7  million  incurred by the
long distance and call center  operations was partially  offset by a decrease of
$4.1 million in operating expenses incurred by the Company's  competitive access
subsidiary.

   Certain  of  the   Company's   service   subsidiaries   provide   managerial,
operational,  technical  and  accounting  services,  along  with  materials  and
supplies, to the Company's telephone subsidiaries. In accordance with regulatory
accounting,  intercompany  profit on transactions with regulated  affiliates has
not been eliminated in connection with  consolidating  the results of operations
of the Company.  When the regulated  operations of the Company no longer qualify
for the application of Statement of Financial Accounting Standards No. 71 ("SFAS
71"),  "Accounting  for the  Effects  of  Certain  Types  of  Regulation,"  such
intercompany profit will be eliminated in subsequent financial  statements,  the
primary result of which will be a decrease in operating  expenses  applicable to
the  Company's  telephone  operations  and an  increase  in  operating  expenses
applicable to the Company's other operations segment. The amount of intercompany
profit with regulated  affiliates  which was not  eliminated  was  approximately
$14.4  million,   $8.9  million  and  $7.7  million  in  1998,  1997  and  1996,
respectively.  For additional  information applicable to SFAS 71, see Regulation
and Competition - Other Matters.

Gain on Sale or Exchange of Assets, Net

   In 1998 the Company  recorded net pre-tax  gains  aggregating  $49.9  million
($30.5  million  after-tax;  $.22  per  diluted  share)  primarily  due  to  the
conversion of its  investment in the common stock of Brooks into common stock of
MCIWorldCom,  Inc.  ("WorldCom"),  the  subsequent  sale of  750,000  shares  of
WorldCom stock, and the sale of minority interests in two non-strategic cellular
entities.  See  Note  14 of  Notes  to  Consolidated  Financial  Statements  for
additional information.

   In the second  quarter  of 1997,  the  Company  sold its  competitive  access
subsidiary to Brooks in exchange for approximately 4.3 million shares of Brooks'
common  stock and  recorded a pre-tax  gain of  approximately  $71 million  ($46
million  after-tax;  $.34 per diluted share).  In November 1997 the Company sold
approximately 3.8 million shares of Brooks' stock and recorded a pre-tax gain of
approximately $108 million ($66 million after-tax; $.48 per diluted share).

Interest Expense

   Interest  expense  increased  $111.1  million in 1998  primarily due to $89.7
million of  interest  expense  on the  borrowings  used to  finance  the PTI and
Ameritech acquisitions and $23.2 million of interest expense applicable to PTI's
debt.

   Interest  expense  increased  $11.8  million  in 1997  primarily  due to $7.2
million  of  interest  expense  on  the  borrowings  used  to  finance  the  PTI
acquisition and $3.5 million of interest expense applicable to PTI's debt.

Income From Unconsolidated Cellular Entities

   Earnings from  unconsolidated  cellular entities,  net of the amortization of
associated  goodwill,  increased  $5.1 million  (18.3%) in 1998 primarily due to
$7.3 million of earnings of unconsolidated cellular entities acquired in the PTI
acquisition.  Such increase was partially  offset by a $2.5 million decrease due
to the sale of the Company's  minority  interests in two non-strategic  cellular
entities during the second quarter of 1998.

   The improvement in profitability in 1997 of most of the cellular  entities in
which the Company owns less than a majority interest was substantially offset by
a $2.4 million decrease in the Company's portion of the profits of a partnership
in which the Company has a significant ownership interest.

Minority Interest

   Minority  interest  is the  expense  recorded  by the  Company to reflect the
minority interest owners' share of the earnings of the Company's  majority-owned
and operated  cellular  entities and  majority-owned  subsidiaries.  Of the $7.3
million increase in minority  interest in 1998, $2.0 million was associated with
entities  acquired in the PTI  acquisition.  The  remainder  of the increase was
primarily due to the increased profitability of the Company's majority-owned and
operated cellular entities.

   The  decrease  in minority  interest  in 1997 of $1.2  million was due to the
effect of the Company's  acquisition,  during the second  quarter of 1996, of an
additional 25% interest in a Louisiana cellular  partnership which decreased the
minority interest percentage of such partnership.

Income Tax Expense

   The Company's  effective income tax rate was 41.0%,  37.3% and 36.6% in 1998,
1997 and 1996, respectively.  Such increase in the effective income tax rate for
1998 was primarily due to the increase in non-deductible  amortization of excess
cost of net assets acquired (goodwill) attributable to the PTI acquisition.

Acquisitions

   On  December  1,  1998,  the  Company  acquired  the  assets  of  certain  of
Ameritech's  telephone  operations and the related  telephone  directories in 19
telephone  exchanges  covering 21 communities in northern and central  Wisconsin
for  approximately  $221 million cash.  The  operations  acquired by the Company
include  the  telephone   property  and  equipment  that  serves  nearly  69,000
customers,  or  approximately  86,000 access lines,  as well as the related nine
telephone   directories.   The  Company  provided  initial  financing  for  this
acquisition  through its committed credit facilities and will ultimately finance
this transaction with proceeds from the sale of the Company's Alaska operations,
which the Company  expects to close  during the second  quarter of 1999 for $415
million cash, subject to various adjustments.

   On December 1, 1997, the Company  acquired PTI in exchange for $1.503 billion
cash. To finance the acquisition,  the Company borrowed $1.288 billion under its
committed  credit  facility and paid the  remainder  of the purchase  price with
available  cash,  most of which consisted of the proceeds of the sale of Brooks'
common stock in November 1997.  See Liquidity and Capital  Resources - Financing
Activities  for  additional  information.  As a result of the  acquisition,  the
Company  acquired  (i) over  660,000  telephone  access  lines  located  in four
midwestern  states,  seven western states and Alaska,  (ii) over 88,000 cellular
subscribers  in two  midwestern  states and Alaska and (iii)  various  wireless,
cable television and other  communications  assets. For additional  information,
see Note 2 of Notes to Consolidated Financial Statements.

Accounting Pronouncements

   In June  1997  the  Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial  Accounting  Standards No. 130 ("SFAS  130"),  "Reporting
Comprehensive  Income" and Statement of Financial  Accounting  Standards No. 131
("SFAS  131"),   "Disclosures  About  Segments  of  an  Enterprise  and  Related
Information."  SFAS 130  established  standards for reporting the  components of
comprehensive income, which is defined to include all changes in equity during a
period  except  those  resulting  from  investments  by  and   distributions  to
shareholders.  SFAS 131 established  standards for reporting  information  about
operating segments in annual financial  statements and interim financial reports
to  shareholders.  The Company  adopted both  statements in the first quarter of
1998.

   In February 1998 the FASB issued Statement of Financial  Accounting Standards
No.  132,  "Employers'  Disclosures  About  Pensions  and  Other  Postretirement
Benefits," which standardizes the disclosure requirements for pensions and other
postretirement benefits.

   In March 1998 the Accounting  Standards  Executive Committee issued Statement
of Position 98-1 ("SOP 98-1"),  "Accounting  for the Costs of Computer  Software
Developed or Obtained for Internal  Use." SOP 98-1  requires  that certain costs
related to the development or purchase of  internal-use  software be capitalized
and amortized over the estimated useful life of the software.  The impact of SOP
98-1 on the Company's results of operations is not expected to be material.  SOP
98-1 is effective for  financial  statements  issued for fiscal years  beginning
after December 15, 1998.

   In June 1998 the FASB issued Statement of Financial  Accounting Standards No.
133  ("SFAS  133"),   "Accounting   for  Derivative   Instruments   and  Hedging
Activities."  SFAS  133  established  accounting  and  reporting  standards  for
derivative  instruments  and for hedging  activities by requiring  that entities
recognize all  derivatives  as either assets or liabilities at fair value on the
balance sheet.  Based on the Company's  current use of derivatives,  SFAS 133 is
not expected to materially impact the Company's financial position or results of
operations.

Inflation

   The  effects of  increased  costs  historically  have been  mitigated  by the
ability to recover certain costs applicable to the Company's regulated telephone
operations  through  the  rate-making  process.  As  operating  expenses  in the
Company's nonregulated lines of business increase as a result of inflation,  the
Company,  to  the  extent  permitted  by  competition,  recovers  the  costs  by
increasing prices for its services and equipment.  While the rate-making process
does not permit the Company to  immediately  recover the costs of replacing  its
physical plant, the Company has historically  been able to recapture these costs
over time. Possible future regulatory changes may alter the Company's ability to
recover increased costs in its regulated operations.  For additional information
regarding the current regulatory environment, see Regulation and Competition.

Market Risk

   The Company is not exposed to material future earnings or cash flow exposures
from changes in interest rates on long-term debt obligations  since the majority
of the Company's long-debt obligations are fixed rate. At December 31, 1998, the
fair value of the  Company's  long-term  debt was  estimated  to be $2.7 billion
based on the overall  weighted  average rate of the Company's  long-term debt of
6.6% and an overall  weighted  maturity of 14 years  compared to terms and rates
currently available in long-term financing markets.  Market risk is estimated as
the potential  decrease in fair value of the Company's  long-term debt resulting
from a  hypothetical  increase of 66 basis points in interest rates (ten percent
of the Company's  overall weighted average  borrowing rate). Such an increase in
interest rates would result in  approximately a $115.3 million  decrease in fair
value of the  Company's  long-term  debt.  In early  1998 the  Company  utilized
interest  rate hedge  contracts to manage its interest  rate risk related to the
issuance  of $765.0  million of senior  notes and  debentures.  During  1998 the
Company did not enter into any derivative financial instruments and is currently
not evaluating the future use of such financial instruments.

Year 2000 Readiness Disclosure

   The Year 2000 issue  concerns the  inability of computer  systems and certain
other  equipment  to properly  recognize  and process  data that uses two digits
rather than four to designate particular years. The Company has initiated a Year
2000 Project  Plan ("the Plan") to assess  whether its systems that process date
sensitive  information  will  perform  satisfactorily  leading  up to and beyond
January 1, 2000.  The goal of the Plan is to correct,  prior to January 1, 2000,
any Year 2000-related  problem with critical systems, the failure of which could
have a material  adverse effect on the Company's  operations.  The Plan includes
steps to (i) identify  each  critical  system  element that  requires  date code
remediation,  (ii) establish a plan to remediate such systems,  (iii)  implement
all required remediations and (iv) selectively test the remediated systems.

   Thus far, the  identification  phase has  identified  Year 2000 issues in the
following  critical   Company-owned  systems:  (i)  switching  and  transmission
hardware and software used by the Company to route and deliver  telephone calls;
(ii) network  support  systems,  including  customer  service  systems and (iii)
billing and  collection  systems used by the Company to invoice and process most
of its  customer  payments.  In  addition,  the  Company (i)  receives  critical
services from providers of utilities and other services to facilities that house
employees and switching,  transmission and other equipment and (ii) is dependent
upon outside vendors for, among other things,  the provision of critical network
components and cellular billing services. The Company is also critically reliant
upon the systems of other  telecommunications  carriers with which the Company's
systems  interconnect  for the routing  and  delivery of  telephone  calls.  The
Company has also identified  potential Year 2000-related  liability with respect
to telephone equipment manufactured by unaffiliated parties that the Company has
sold or leased to its customers  ("Customer  Premises  Equipment" or "CPE"). The
identification  and planning phases of the Plan are materially  complete as they
relate to Company-owned  systems.  As they relate to third party vendors,  other
telecommunications  carriers and CPE customers,  the identification and planning
phases are on-going and are expected to be materially  complete by first quarter
1999.

   Based on work completed under the Plan to date, the Company currently intends
to  take  the  following  additional  steps  under  its  Plan  with  respect  to
Company-owned systems,  third-party vendors, other telecommunications  carriers,
and CPE customers:

o    The Company generally plans to remediate Company-owned switching, 
     transmission, billing and collection and other critical systems through the
     revision or replacement of current system components. Necessary changes to
     Company-owned systems are in process and are expected to be completed by 
     mid-year 1999.  The selective testing and verification of such changes are
     expected to be completed during 1999.  Due to the large number of system 
     components requiring remediation, the Company does not intend to test every
     remediated system but will rely upon the results of selective testing to
     determine the effectiveness of remediation efforts.

o    With respect to critical  services  provided by  utilities  and other third
     parties,  the Company has contacted all such  suppliers  during 1998.  Thus
     far, a majority of those  suppliers who have  responded have indicated that
     their systems and service  delivery  mechanisms  are Year 2000 compliant or
     can be made so through currently available modifications. The Company plans
     to continue  monitoring  all  third-party  remediation  efforts and to make
     contingency plans for the delivery of such services as necessary.

o    The Year 2000 compliance status of other  telecommunications  carriers with
     which the Company's  switching  systems  interconnect is not yet known. The
     Company  is  making  inquiries  with  these  carriers  to  determine  their
     compliance  status and  expects to obtain the results of  compliance  tests
     during first quarter 1999, although there can be no assurance that carriers
     will supply this information.

o    Finally,  the Company is in the process of obtaining  Year 2000  compliance
     information from CPE manufacturers and plans to provide this information to
     the Company's  business  customers in early 1999. The Company plans to work
     with CPE  manufacturers  to encourage the  development of remedies for Year
     2000 problems in such equipment and to continue  working with its customers
     to identify Year 2000 problems in CPE.  However,  there can be no assurance
     that CPE  manufacturers  or customers  will  cooperate  with the  Company's
     efforts to address these problems.

   While the Company  currently  believes  that it will be able to remediate and
selectively  test  Company-owned  systems in time to  minimize  any  detrimental
effect on its  operations,  there can be no  assurance  that such  steps will be
successful.  Failure  by the  Company to timely and  effectively  remediate  its
systems,   or  the  failure  of  critical   vendors  and   suppliers  and  other
telecommunications carriers to remediate affected systems, could have a material
adverse  impact on the  Company's  business,  financial  condition,  results  of
operations and prospects.  Because the impact of Year 2000 issues on the Company
is  materially  dependent  on the  mitigation  efforts  of parties  outside  the
Company's control, the Company cannot assess with certainty the magnitude of any
such  potential  adverse  impact.  However,  based  upon  risk  assessment  work
conducted thus far, the Company  believes that the most reasonably  likely worst
case   scenario  of  the  failure  by  the  Company,   its  suppliers  or  other
telecommunications carriers with which the Company interconnects to resolve Year
2000   issues   would  be  an   inability   by  the   Company   (i)  to  provide
telecommunications  services  to the  Company's  customers,  (ii) to  route  and
deliver   telephone   calls   originating   from  or   terminating   with  other
telecommunications  carriers,  (iii) to timely and  accurately  process  service
requests and (iv) to timely and accurately  bill its  customers.  In addition to
lost  earnings,  these  failures  could also result in loss of customers  due to
service  interruptions and billing errors,  substantial  claims by customers and
increased  expenses   associated  with  stabilizing   operations  and  executing
mitigation plans.

   Contingency  planning to maintain and restore service in the event of natural
disasters,  power failures and systems-related problems is a routine part of the
Company's  operations.  The Company  believes that such  contingency  plans will
assist the Company in responding to the failure by outside service  providers to
successfully  address  Year 2000 issues.  In addition,  the Company is currently
identifying  and  considering  various  Year  2000-specific  contingency  plans,
including  identification  of alternate vendors and service providers and manual
alternatives to system operations.  These Year  2000-specific  contingency plans
are expected to be materially  completed  during the first quarter of 1999,  but
their review and development will continue during 1999.

   Although the total costs to implement the Plan cannot be precisely estimated,
the  Company  incurred  costs of $4.2  million  during  1998  (none of which was
related  to  hardware   costs)  and   anticipates   spending  an   aggregate  of
approximately  $32.1  million  during  1999  (which  includes  $20.9  million of
hardware  costs.)  These costs will be expensed as incurred,  unless new systems
are purchased that should be capitalized in accordance  with generally  accepted
accounting principles. Some of the costs represent ongoing investment in systems
upgrades,  the timing of which is being  accelerated in order to facilitate Year
2000 compliance.  In some instances,  such upgrades will position the Company to
provide more and  better-quality  services to its customers  than they currently
receive.  The  Company  expects  to fund  these  costs  with  cash  provided  by
operations. Cost estimates and statements of the Company's plans discussed above
are  forward-looking  statements that are derived using numerous  assumptions of
future events,  many of which are outside the Company's  control,  including the
availability  and future cost of trained  personnel and various other resources,
third party  modification  plans, the absence of systems  requiring  remediation
that have not yet been discovered, and other factors.


                         LIQUIDITY AND CAPITAL RESOURCES

   Excluding cash used for acquisitions,  the Company relies on cash provided by
operations  to  provide  substantially  all of its  cash  needs.  The  Company's
operations  have  historically  provided a stable  source of cash flow which has
helped the Company continue its long-term program of capital improvements.

Operating activities

   Net cash provided by operating activities was $467.8 million,  $297.3 million
and  $264.7  million  in  1998,  1997  and  1996,  respectively.  The  Company's
accompanying  consolidated  statements of cash flows identify major  differences
between net income and net cash  provided by  operating  activities  for each of
those years. For additional  information  relating to the telephone  operations,
cellular  operations  and  other  operations  of the  Company,  see  Results  of
Operations.

Investing activities

   Net cash used in investing activities was $375.6 million,  $1.503 billion and
$241.8 million in 1998, 1997 and 1996, respectively.  Cash used for acquisitions
was $225.6  million during 1998 compared to $1.544 billion during 1997 and $46.3
million  during 1996.  See Results of Operations -  Acquisitions  for additional
information.  Capital  expenditures  for 1998 were $233.2  million for telephone
operations,  $49.5  million  for  cellular  operations  and  $28.2  million  for
corporate and other operations.  Capital  expenditures during 1997 and 1996 were
$181.2  million  and $222.9  million,  respectively.  Proceeds  from the sale of
assets were $132.3 million in 1998 and $202.7 million in 1997.

Financing activities

   Net cash used in financing  activities in 1998 was $112.4  million.  Net cash
provided by financing activities was $1.223 billion during 1997, of which $1.288
billion  was  related  to the  acquisition  of PTI.  Net cash used in  financing
activities  was $23.0 million  during 1996. In December 1997 the Company filed a
shelf  registration  statement  with the United States  Securities  and Exchange
Commission  registering  $1.5  billion  of  senior  unsecured  debt  securities,
preferred stock, common stock and warrants,  under which the Company issued $665
million of senior debt  securities in January 1998  concurrent with the issuance
of the remaining $100 million of senior debt  securities  under its  predecessor
shelf  registration  statement.  The net proceeds of approximately  $758 million
were used to reduce the bank indebtedness  incurred by the Company in connection
with its  December  1997  acquisition  of PTI. In  addition,  the  Company  paid
approximately  $40  million  in 1998 to  settle  numerous  interest  rate  hedge
contracts that had been entered into in anticipation of these debt issuances.

   In December 1997 after giving consideration to the PTI acquisition,  Standard
& Poor's assigned  Century's  senior unsecured debt a rating of BBB+ and Moody's
reaffirmed its rating of Baa1.

Other

   Budgeted  capital  expenditures  for 1999 total $215  million  for  telephone
operations,  $70 million for cellular  operations  and $60 million for corporate
and other operations.  The Company anticipates that capital  expenditures in its
telephone  operations  will continue to include the  installation of fiber optic
cable and the  upgrading  of its  plant and  equipment,  including  its  digital
switches,  to provide enhanced  services.  Capital  expenditures in the cellular
operations  are expected to continue to focus on  constructing  additional  cell
sites (which will provide additional capacity and expanded areas where hand-held
cellular phones may be used) and providing digital service. Capital expenditures
for corporate and other  operations  include $20 million for construction of the
Company's  fiber network in Michigan and $15 million for continued  expansion of
the Company's PCS operations.

   In April 1998 the Company  acquired 32 Local Multipoint  Distribution  System
licenses in the FCC's A and B band  auctions for an  aggregate of $9.7  million.
The licenses  acquired  cover  geographic  areas with a combined  population  of
approximately 10.6 million. The Company has not finalized capital expenditure or
deployment plans for these systems.

   The Company  continually  evaluates the  possibility of acquiring  additional
telecommunications  operations and expects to continue its long-term strategy of
pursuing the acquisition of attractive communications properties in exchange for
cash,  securities or both. Over the past few years, the amount of communications
properties available to be purchased by the Company has increased substantially.
The  Company  may  require  additional  financing  in  connection  with any such
acquisitions.  Approximately  3.8  million  shares of Century  common  stock and
200,000 shares of Century  preferred stock remain  available for future issuance
in  connection  with  acquisitions   under  an  acquisition  shelf  registration
statement.

   As of December 31, 1998, the Company's  telephone  subsidiaries had available
for use $135.1  million of  commitments  for long-term  financing from the Rural
Utilities  Service and the Company had $332.6 million of undrawn  committed bank
lines of credit. The Company also has access to debt and equity capital markets,
including its shelf registration statement mentioned above.

   The  following  table  reflects the  Company's  debt to total  capitalization
percentage  and ratio of earnings to fixed charges as of and for the years ended
December 31:

<TABLE>
<CAPTION>
                                             1998        1997        1996
---------------------------------------------------------------------------
<S>                                          <C>         <C>         <C>  

Debt to total capitalization percentage      63.0%       67.2        38.6
Ratio of earnings to fixed charges           2.25        7.80        5.10
Ratio of earnings to fixed charges
 excluding gain on sale or exchange
 of assets                                   1.96        4.87        5.09
---------------------------------------------------------------------------
</TABLE>


                           REGULATION AND COMPETITION


   The  communications   industry  continues  to  undergo  various   fundamental
regulatory,  competitive  and  technological  changes  that make it difficult to
determine the form or degree of future regulation and competition  affecting the
Company's  telephone  and  cellular   operations.   These  changes  may  have  a
significant  impact on the future  financial  performance of all  communications
companies.

Events affecting the communications industry

   In 1996 the United States Congress enacted the Telecommunications Act of 1996
(the "1996 Act"),  which  obligates LECs to permit  competitors to  interconnect
their  facilities  to the LEC's network and to take various other steps that are
designed to promote  competition.  The 1996 Act provides certain  exemptions for
rural LECs such as those  operated by the  Company.  Under the FCC's August 1996
order implementing most of the 1996 Act's interconnection provisions, rural LECs
have the burden of proving the availability of these exemptions.

   Prior to and since  the  enactment  of the 1996 Act,  the FCC and a number of
state  legislative  and  regulatory  bodies  have  taken  steps to foster  local
exchange  competition.  Coincident with this recent  movement  toward  increased
competition  has been the gradual  reduction  of  regulatory  oversight of LECs.
These cumulative  changes have led to the continued growth of various  companies
providing services that compete with LECs' services.  Wireless services entities
are also expected to increasingly compete with LECs.

   The 1996 Act  authorized  the  establishment  of federal and state  universal
service funds to provide support to eligible telecommunications carriers. In May
1997 the FCC adopted an order on universal service, as mandated by the 1996 Act.
In the order, the FCC ruled that rural telephone  companies which are designated
eligible  telecommunications carriers will continue to receive universal service
funding.  Each of the Company's  LECs has been so  designated by its  respective
state  regulatory  agency.  As a result,  the  Company's  LECs will  continue to
receive payments under the federal support mechanisms  currently in effect until
the FCC adopts funding  support  mechanisms  based on  forward-looking  economic
costs, which it is required to do, but no earlier than January 2001.

   As part of its  universal  service  order,  the FCC  also  established  a new
program  in  January  1998  to  provide  up  to  $2.25   billion  of  discounted
telecommunications  services annually to schools and libraries. In addition, the
FCC   established   a  $400   million   annual   fund  to   provide   discounted
telecommunications  services for rural health care providers. All communications
carriers  providing  interstate   telecommunications   services,  including  the
Company's  LECs and its cellular and long distance  operations,  are required to
contribute  to these  programs.  The FCC has stated that LECs will recover their
funding  contributions  in their rates for  interstate  services.  The Company's
contribution  by its cellular and long distance  operations for 1998,  which was
passed on to its customers, was approximately $3.1 million.

   In an access  charge  reform order  adopted in May 1997,  the FCC changed its
system  of  interstate   access  charges  to  make  them   compatible  with  the
deregulatory  framework  established by the 1996 Act. Such changes are primarily
applicable  to  price-cap  companies.   The  Company's  telephone   subsidiaries
determine   interstate  revenues  under  rate  of  return  regulation  and  are,
therefore,  only minimally  impacted by the access charge reform order.  In July
1998 the FCC issued a Notice of Proposed  Rulemaking  to amend the access charge
rules for rate of return companies in a manner similar to that adopted for price
cap companies,  subject to reviewing whether differences exist between price cap
companies and rate of return  companies  that would require  different  rules in
order to achieve the goal of fostering an  efficient,  competitive  marketplace.
Comments  were filed with the FCC in August  1998;  the FCC has not yet issued a
final ruling on this matter.

   In 1998 the FCC created a federal-state joint board to review  jurisdictional
separations  procedures through which the costs of regulated  telecommunications
services are allocated to the interstate and intrastate jurisdictions.

   In recent  years the FCC has  allocated  additional  frequency  spectrum  for
wireless  technologies  that compete or are  expected to compete with  cellular,
including PCS and mobile satellite services. The FCC has also authorized certain
specialized  mobile radio service  licensees to operate in a manner  competitive
with cellular systems.

   In  September  1998  the  FCC  initiated  a  proceeding  to  represcribe  the
authorized rate of return for interstate  access services  provided by LECs. The
FCC  periodically  represcribes  this rate of return to ensure  that the service
rates filed by incumbent LECs subject to rate of return  regulation  continue to
be just and reasonable. It is uncertain whether or by how much the FCC may lower
the authorized rate of return.

   Competition to provide traditional telephone or wireless services is expected
to initially  affect large urban areas to a greater extent than rural,  suburban
and small  urban  areas  such as those in which  the  Company's  operations  are
located.  The Company does not believe such  competition is likely to materially
affect it in the near term.  The Company  further  believes  that it may benefit
from having the  opportunity  to observe the  effects of these  developments  in
large urban  markets.  The Company will continue to monitor  ongoing  changes in
regulation,  competition and technology and consider which developments  provide
the most favorable opportunities for the Company to pursue.

Recent events affecting the Company

   During 1998 the Company's revenues from the USF increased approximately $62.3
million (of which $58.8 million was applicable to the PTI  properties) to $127.6
million  after  increasing  $16.1  million  during  1997.  Although  the Company
anticipates  that it may experience a reduction in its federal support  revenues
at some point in the future,  management  believes it is  premature to assess or
estimate the ultimate impact thereof.  There can be no assurance,  however, that
such impact will not be material.

   During  the  last  few  years,  several  states  in  which  the  Company  has
substantial operations took legislative or regulatory steps to further introduce
competition  into the LEC  business.  While the  Company  is aware of only a few
companies which have requested  authorization  to provide local exchange service
in the Company's  service areas,  it is  anticipated  that similar action may be
taken by others in the future.

   In June 1997 the  Louisiana  Public  Service  Commission  ("LPSC")  adopted a
Consumer Price Protection Plan (the "Consumer Plan"), effective July 1997, which
froze the local rates and access rates that can be charged by the Company's LECs
operating in Louisiana.  Although the Consumer Plan has no specified  term,  the
LPSC is required to review it by mid-2000. The Company's Louisiana LECs have the
option  to  propose  a new  plan at any  time if the  LPSC  determines  that (i)
effective  competition  exists  or (ii)  unforeseen  events  threaten  the LEC's
ability to provide  adequate  service or impair its  financial  health.  Certain
other states have implemented various forms of alternative regulation plans, the
impact of which has not been material either individually or in the aggregate to
the results of operations of the Company.

   Certain long distance  carriers  continue to request that the Company  reduce
intrastate  access tariffed rates for certain of its LECs. There is no assurance
that these requests will not result in reduced intrastate access revenues in the
future.

   The Company anticipates that regulatory changes and competitive pressures may
result in future revenue reductions in its telephone  operations.  However,  the
Company  anticipates  that such  reductions  may be  minimized  by  increases in
revenues  attributable  to the  continued  demand for enhanced  services and new
product offerings.  While the Company expects its telephone revenues to continue
to grow, its internal  telephone  revenue  growth rate may slow during  upcoming
periods.

Other matters

   The Company's regulated telephone operations are subject to the provisions of
SFAS 71, under which the Company is required to account for the economic effects
of the rate-making  process,  including the recognition of depreciation of plant
and equipment over lives approved by regulators.  The ongoing  applicability  of
SFAS 71 to the Company's regulated  telephone  operations is being monitored due
to the changing regulatory,  competitive and legislative environments.  When the
regulated  operations of the Company no longer  qualify for the  application  of
SFAS 71, the net adjustments required will result in a material,  extraordinary,
noncash  charge  against  earnings.  While the amount of such  charge  cannot be
precisely  estimated  at  this  time,  management  believes  that  the  noncash,
after-tax,  extraordinary charge would be between $350 million and $400 million.
See  Note 12 of  Notes  to  Consolidated  Financial  Statements  for  additional
information.

   The Company has certain  obligations  based on federal,  state and local laws
relating to the protection of the environment.  Costs of compliance through 1998
have not been material,  and the Company currently has no reason to believe that
such costs will become material.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

    The  Company  is not  exposed  to  material  future  earnings  or cash  flow
exposures  from  changes in interest  rates on long-term  obligations  since the
majority of the Company's long-term  obligations are fixed rate. At December 31,
1998, the Company estimates that the fair value of the Company's  long-term debt
was $2.7 billion which was determined by comparing the overall  weighted average
rate of the Company's long-term debt of 6.6% and an overall weighted maturity of
14 years to terms and rates currently  available in long-term financing markets.
Market  risk  is  estimated  as the  potential  decrease  in fair  value  of the
Company's  long-term debt  resulting  from a  hypothetical  increase of 66 basis
points in interest rates (ten percent of the Company's  overall weighted average
borrowing   rate).   Such  an  increase  in  interest   rates  would  result  in
approximately a $115.3 million decrease in fair value of the Company's long-term
debt.  In late 1997 and early  1998 the  Company  utilized  interest  rate hedge
contracts to manage its interest  rate risk related to its January 1998 issuance
of $765.0  million of senior notes and  debentures.  During 1998 the Company did
not  enter  into  any  derivative  financial  instruments  and is not  currently
evaluating the future use of such financial instruments.

Item 8.  Financial Statements and Supplementary Data


                              Report of Management

The Shareholders
Century Telephone Enterprises, Inc.:

   Management  has prepared and is  responsible  for the Company's  consolidated
financial statements.  The consolidated  financial statements have been prepared
in accordance  with generally  accepted  accounting  principles and  necessarily
include  amounts   determined  using  our  best  judgments  and  estimates  with
consideration given to materiality.

   The Company  maintains  internal  control  systems and related  policies  and
procedures designed to provide reasonable  assurance that the accounting records
accurately  reflect  business  transactions  and  that the  transactions  are in
accordance with management's authorization.  The design, monitoring and revision
of the systems of internal  control  involve,  among other things,  our judgment
with respect to the  relative  cost and  expected  benefits of specific  control
measures.  Additionally,  the Company  maintains an internal  auditing  function
which independently  evaluates the effectiveness of internal controls,  policies
and procedures and formally reports on the adequacy and effectiveness thereof.

   The Company's  consolidated  financial  statements  have been audited by KPMG
LLP, independent certified public accountants,  who have expressed their opinion
with respect to the fairness of the  consolidated  financial  statements.  Their
audit was conducted in accordance with generally  accepted  auditing  standards,
which  includes the  consideration  of the  Company's  internal  controls to the
extent necessary to form an independent  opinion on the  consolidated  financial
statements prepared by management.

   The Audit  Committee of the Board of  Directors is composed of directors  who
are not officers or employees of the Company.  The Committee meets  periodically
with  the  independent  certified  public  accountants,  internal  auditors  and
management.  The  Committee  considers  the audit scope and  discusses  internal
control,  financial and reporting  matters.  Both the  independent  and internal
auditors have free access to the Committee.

/s/ R. Stewart Ewing, Jr.
-------------------------
R. Stewart Ewing, Jr.
Senior Vice President and 
Chief Financial Officer



                          Independent Auditors' Report


The Board of Directors
Century Telephone Enterprises, Inc.:

   We have audited the consolidated  financial  statements of Century  Telephone
Enterprises,  Inc. and subsidiaries as listed in Item 14a(i). In connection with
our audits of the consolidated  financial  statements,  we also have audited the
financial  statement  schedules as listed in Item  14a(ii).  These  consolidated
financial statements and financial statement schedules are the responsibility of
the Company's  management.  Our responsibility is to express an opinion on these
consolidated financial statements and financial statement schedules based on our
audits.

   We  conducted  our audits in  accordance  with  generally  accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

   In our  opinion,  the  consolidated  financial  statements  referred to above
present  fairly,  in all material  respects,  the financial  position of Century
Telephone  Enterprises,  Inc. and subsidiaries as of December 31, 1998 and 1997,
and the results of their  operations  and their cash flows for each of the years
in the three-year  period ended December 31, 1998, in conformity  with generally
accepted  accounting  principles.  Also in our  opinion,  the related  financial
statement  schedules,  when  considered  in relation  to the basic  consolidated
financial statements taken as a whole, present fairly, in all material respects,
the information set forth therein.

/s/  KPMG LLP
-------------
KPMG LLP

Shreveport, Louisiana
January 28, 1999, except as to Note 21 which is as of February 23, 1999


                       CENTURY TELEPHONE ENTERPRISES, INC.
                        Consolidated Statements of Income
<TABLE>
<CAPTION>

                                                 Year ended December 31,
----------------------------------------------------------------------------
                                             1998         1997         1996 
----------------------------------------------------------------------------
                                             (Dollars in thousands, except
                                                  per share amounts,)
<S>                                  <C>               <C>           <C>    
                                             
OPERATING REVENUES
   Telephone                         $   1,091,610      530,597      451,538
   Cellular                                407,749      307,742      250,243
   Other                                    77,726       63,182       47,896
----------------------------------------------------------------------------
     Total operating revenues            1,577,085      901,521      749,677
----------------------------------------------------------------------------

OPERATING EXPENSES
   Cost of sales and
    operating expenses                     768,720      474,256      394,360
   Depreciation and amortization           328,554      159,495      132,021
----------------------------------------------------------------------------
     Total operating expenses            1,097,274      633,751      526,381
----------------------------------------------------------------------------

OPERATING INCOME                           479,811      267,770      223,296
----------------------------------------------------------------------------

OTHER INCOME (EXPENSE)
   Gain on sale or exchange of 
    assets, net                             49,859      169,640          815
   Interest expense                       (167,552)     (56,474)     (44,662)
   Income from unconsolidated 
    cellular entities                       32,869       27,794       26,952
   Minority interest                       (12,797)      (5,498)      (6,675)
   Other income and expense                  5,268        5,109        3,916
----------------------------------------------------------------------------
     Total other income (expense)          (92,353)     140,571      (19,654)
----------------------------------------------------------------------------

INCOME BEFORE INCOME TAX EXPENSE           387,458      408,341      203,642
   Income tax expense                      158,701      152,363       74,565
----------------------------------------------------------------------------

NET INCOME                           $     228,757      255,978      129,077
============================================================================

BASIC EARNINGS PER SHARE*            $        1.67         1.89          .96
============================================================================

DILUTED EARNINGS PER SHARE*          $        1.64         1.87          .95
============================================================================

DIVIDENDS PER COMMON SHARE*          $        .173         .164          .16
============================================================================
*Adjusted to reflect stock split in early 1999. See Note 21.

See accompanying notes to consolidated financial statements.
</TABLE>


                       CENTURY TELEPHONE ENTERPRISES, INC.
                 Consolidated Statements of Comprehensive Income

<TABLE>
<CAPTION>
                                                 Year ended December 31,
----------------------------------------------------------------------------
                                             1998         1997         1996 
----------------------------------------------------------------------------
                                                 (Dollars in thousands)
<S>                                      <C>            <C>          <C>  

Net income                               $ 228,757      255,978      129,077
----------------------------------------------------------------------------
Other comprehensive income, 
 net of tax:
   Unrealized holding gains arising
    during period, net of tax of
    $8,509 and $6,404                       15,802       11,893            -
   Reclassification adjustment for 
    gains included in net income,
    net of tax of $11,027                  (20,478)           -            -
----------------------------------------------------------------------------
   Other comprehensive income, 
    net of tax                              (4,676)      11,893            -
----------------------------------------------------------------------------

Comprehensive income                     $ 224,081      267,871      129,077
============================================================================

See accompanying notes to consolidated financial statements.
</TABLE>



                       Century Telephone Enterprises, INC.
                           Consolidated Balance Sheets
<TABLE>
<CAPTION>

                                                              December 31,  
------------------------------------------------------------------------------
                                                           1998          1997
------------------------------------------------------------------------------
                                                         (Dollars in thousands)
                                     ASSETS
<S>                                                  <C>             <C>    

CURRENT ASSETS
   Cash and cash equivalents                         $     5,742        26,017
   Accounts receivable
      Customers, less allowance of 
       $4,155 and $5,954                                 130,289       143,613
      Other                                               55,109        83,659
   Materials and supplies, at average cost                23,709        21,994
   Other                                                  11,389         8,197
------------------------------------------------------------------------------
        Total current assets                             226,238       283,480
------------------------------------------------------------------------------

NET PROPERTY, PLANT AND EQUIPMENT                      2,351,453     2,258,563
------------------------------------------------------------------------------

INVESTMENTS AND OTHER ASSETS
   Excess cost of net assets acquired, 
    less accumulated amortization 
    of $133,135 and $84,132                            1,956,701     1,767,352
   Other                                                 401,063       400,006
------------------------------------------------------------------------------
        Total investments and other assets             2,357,764     2,167,358
------------------------------------------------------------------------------
TOTAL ASSETS                                         $ 4,935,455     4,709,401
==============================================================================

                             LIABILITIES AND EQUITY

CURRENT LIABILITIES
   Current maturities of long-term debt              $    53,010        55,244
   Accounts payable                                       87,627        83,378
   Accrued expenses and other current liabilities
      Salaries and benefits                               36,900        38,225
      Taxes                                               33,411        74,898
      Interest                                            36,926        20,821
      Other                                               24,249        25,229
   Advance billings and customer deposits                 32,721        24,213
------------------------------------------------------------------------------
        Total current liabilities                        304,844       322,008
------------------------------------------------------------------------------

LONG-TERM DEBT                                         2,558,000     2,609,541
------------------------------------------------------------------------------

DEFERRED CREDITS AND OTHER LIABILITIES                   541,129       477,580
------------------------------------------------------------------------------

STOCKHOLDERS' EQUITY
   Common stock, $1.00 par value, authorized
     175,000,000 shares, issued and outstanding
     138,082,926* and 91,103,674 shares                  138,083        91,104
   Paid-in capital                                       451,535       469,586
   Unrealized holding gain on investments, 
    net of taxes                                           7,217        11,893
   Retained earnings                                     932,611       728,033
   Unearned ESOP shares                                   (6,070)       (8,450)
   Preferred stock - non-redeemable                        8,106         8,106
------------------------------------------------------------------------------
        Total stockholders' equity                     1,531,482     1,300,272
------------------------------------------------------------------------------

TOTAL LIABILITIES AND EQUITY                         $ 4,935,455     4,709,401
==============================================================================
*Adjusted to reflect stock split in early 1999. See Note 21.
See accompanying notes to consolidated financial statements.
</TABLE>



                       CENTURY TELEPHONE ENTERPRISES, INC.
                      Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>

                                                 Year ended December 31,
----------------------------------------------------------------------------
                                             1998         1997         1996 
----------------------------------------------------------------------------
                                                 (Dollars in thousands)
<S>                                    <C>           <C>            <C>   

OPERATING ACTIVITIES 
  Net income                           $   228,757      255,978      129,077
  Adjustments to reconcile net income 
   to net cash provided by 
   operating activities:
  Depreciation and amortization            328,554      159,495      132,021 
  Income from unconsolidated 
   cellular entities                       (32,869)     (27,794)     (26,952)
  Minority interest                         12,797        5,498        6,675
  Deferred income taxes                     17,713       16,230        7,935 
  Gain on sales of assets                  (49,859)    (169,640)        (815)
  Changes in current assets and 
   current liabilities: 
     Accounts receivable                   (15,227)       7,649       (4,353) 
     Accounts payable                        4,249      (25,440)       5,103   
     Other accrued taxes                   (34,908)      58,205        1,285  
     Other current assets and other 
      current liabilities, net              15,033        7,263        6,220
  Increase (decrease) in other 
   noncurrent liabilities                   (1,706)       2,173        4,305
  Other, net                                (4,760)       7,702        4,151
----------------------------------------------------------------------------
     Net cash provided by operating 
      activities                           467,774      297,319      264,652
----------------------------------------------------------------------------

INVESTING ACTIVITIES
  Acquisitions, net of cash acquired      (225,569)  (1,543,814)     (46,327)
  Payments for property, plant 
   and equipment                          (310,919)    (181,225)    (222,885)
  Proceeds from sales of assets            132,307      202,705            -  
  Investment in unconsolidated personal
   communications services entity                -            -       18,900
  Distributions from unconsolidated 
   cellular entities                        26,515       16,825       15,648
  Purchase of life insurance 
   investment, net                          (2,786)     (12,962)      (5,944) 
  Proceeds from note receivable                  -       22,500        1,667 
  Other, net                                 4,807       (7,156)      (2,850)
----------------------------------------------------------------------------
     Net cash used in investing 
      activities                          (375,645)  (1,503,127)    (241,791)
----------------------------------------------------------------------------

FINANCING ACTIVITIES
   Proceeds from issuance of 
    long-term debt                         957,668    1,312,546      59,649
   Payments of long-term debt           (1,015,015)     (79,203)    (57,021)
   Payment of hedge contracts              (40,237)           -           -
   Notes payable, net                            -            -     (14,199) 
   Proceeds from issuance of 
    common stock                            15,033       14,156      10,089  
   Payment of debt issuance costs           (6,625)           -           -
   Cash dividends                          (24,179)     (22,671)    (21,775)
   Other, net                                  951       (1,405)        258
---------------------------------------------------------------------------
     Net cash provided by (used in)
      financing activities                (112,404)   1,223,423     (22,999)
---------------------------------------------------------------------------

Net increase (decrease) in cash 
 and cash equivalents                      (20,275)      17,615        (138)
Cash and cash equivalents at 
 beginning of year                          26,017        8,402       8,540
---------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT 
 END OF YEAR                           $     5,742       26,017       8,402
===========================================================================

See accompanying notes to consolidated financial statements.
</TABLE>


                       CENTURY TELEPHONE ENTERPRISES, INC.
                 Consolidated Statements of Stockholders' Equity
<TABLE>
<CAPTION>


                                                    Year ended December 31,
-------------------------------------------------------------------------------
                                                1998         1997         1996 
-------------------------------------------------------------------------------
                                               (Dollars and shares in thousands)
<S>                                        <C>           <C>          <C>    
COMMON STOCK
  Balance at beginning of year             $   91,104       59,859       59,114
  Issuance of common stock for acquisitions        28           75          257
  Conversion of convertible securities into
   common stock                                   169          237           33
  Issuance of common stock through
   dividend reinvestment, incentive and 
   benefit plans                                  754          565          455
  Three-for-two stock split                    46,028       30,368            -
-------------------------------------------------------------------------------
      Balance at end of year                  138,083       91,104       59,859
-------------------------------------------------------------------------------

PAID-IN CAPITAL
  Balance at beginning of year                469,586      474,607      453,584
  Issuance of common stock for 
   acquisitions                                 1,059        3,241        8,201
  Conversion of convertible securities 
   into common stock                            3,131        4,998          163
  Issuance of common stock through 
   dividend reinvestment, incentive 
   and benefit plans                           14,279       13,591        9,676
  Amortization of unearned compensation 
   and other                                    9,508        3,517        2,983
  Three-for-two stock split                   (46,028)     (30,368)           -
-------------------------------------------------------------------------------
      Balance at end of year                  451,535      469,586      474,607
-------------------------------------------------------------------------------

UNREALIZED HOLDING GAIN ON 
 INVESTMENTS, NET OF TAXES
  Balance at beginning of year                 11,893            -            -
  Change in unrealized holding gain on 
   investments, net of taxes                   (4,676)      11,893            -
-------------------------------------------------------------------------------
      Balance at end of year                    7,217       11,893            -
-------------------------------------------------------------------------------

RETAINED EARNINGS
  Balance at beginning of year                728,033      494,726      387,424
  Net income                                  228,757      255,978      129,077
  Cash dividends declared
    Common stock - $.173, $.164 and
     $.16 per share*                          (23,771)     (22,211)     (21,355)
    Preferred stock                              (408)        (460)        (420)
-------------------------------------------------------------------------------
      Balance at end of year                  932,611      728,033      494,726
-------------------------------------------------------------------------------

UNEARNED ESOP SHARES
  Balance at beginning of year                 (8,450)     (11,080)     (13,960)
  Release of ESOP shares                        2,380        2,630        2,880
-------------------------------------------------------------------------------
      Balance at end of year                   (6,070)      (8,450)     (11,080)
-------------------------------------------------------------------------------

PREFERRED STOCK - NON-REDEEMABLE
  Balance at beginning of year                  8,106       10,041        2,262
  Issuance of preferred stock 
   for acquisitions                                 -            -        7,975
  Conversion of preferred stock into 
   common stock                                     -       (1,935)        (196)
-------------------------------------------------------------------------------
      Balance at end of year                    8,106        8,106       10,041
-------------------------------------------------------------------------------

TOTAL STOCKHOLDERS' EQUITY                 $1,531,482    1,300,272    1,028,153
===============================================================================

COMMON SHARES OUTSTANDING
  Balance at beginning of year                 91,104       59,859       59,114
  Issuance of common stock for
   acquisitions                                    28           75          257
  Conversion of convertible securities
   into common stock                              169          237           33
  Issuance of common stock through 
   dividend reinvestment, incentive 
   and benefit plans                              754          565          455
  Three-for-two stock split                    46,028       30,368            -
-------------------------------------------------------------------------------
      Balance at end of year                  138,083       91,104       59,859
===============================================================================
*Adjusted to reflect stock split in early 1999. See Note 21.
See accompanying notes to consolidated financial statements.
</TABLE>


                       CENTURY TELEPHONE ENTERPRISES, INC.
                   Notes to Consolidated Financial Statements
                                December 31, 1998


(1)   Summary of Significant Accounting Policies

Principles of consolidation - The consolidated  financial  statements of Century
Telephone  Enterprises,  Inc. and its subsidiaries  (the "Company")  include the
accounts  of  Century   Telephone   Enterprises,   Inc.   ("Century")   and  its
majority-owned subsidiaries and partnerships.  The Company's regulated telephone
operations  are subject to the  provisions of Statement of Financial  Accounting
Standards No. 71,  "Accounting  for the Effects of Certain Types of Regulation."
Investments  in  cellular  entities  where the  Company  does not own a majority
interest are accounted for using the equity method of accounting.

Estimates - The preparation of financial statements in conformity with generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results may differ from those estimates.

Revenue  recognition  - Revenues  are  recognized  when  earned.  Certain of the
Company's  telephone  subsidiaries  participate in revenue sharing  arrangements
with other telephone companies for interstate revenue and for certain intrastate
revenue.  Such sharing  arrangements  are funded by toll revenue  and/or  access
charges  within  state  jurisdictions  and by access  charges in the  interstate
market.  Revenues earned through the various sharing  arrangements are initially
recorded based on the Company's estimates.

Property,  plant and  equipment -  Telephone  plant is stated  substantially  at
original  cost.  Normal  retirements  of  telephone  plant are  charged  against
accumulated depreciation, along with the costs of removal, less salvage, with no
gain or loss  recognized.  Renewals and  betterments  of plant and equipment are
capitalized  while repairs,  as well as renewals of minor items,  are charged to
operating  expense.  Depreciation of telephone plant is provided on the straight
line  method,  using  class or overall  group  rates  acceptable  to  regulatory
authorities; such rates range from 1.8% to 25%.

Non-telephone  property is stated at cost and,  when sold or retired,  a gain or
loss is  recognized.  Depreciation  of such property is provided on the straight
line method over estimated service lives ranging from three to 30 years.

Impairment  of  long-lived  assets  and  excess  cost  of  net  assets  acquired
(goodwill)  - The  carrying  value of  long-lived  assets,  including  allocated
goodwill,  is reviewed for impairment at least  annually,  or whenever events or
changes  in  circumstances   indicate  that  such  carrying  value  may  not  be
recoverable,  by assessing the  recoverability  of such  carrying  value through
estimated  undiscounted  future net cash flows  expected to be  generated by the
assets or the  acquired  business.  The excess  cost of net assets  acquired  of
substantially  all of the Company's  acquisitions  accounted for as purchases is
being amortized over 40 years.

Affiliated  transactions  - Certain  service  subsidiaries  of  Century  provide
installation and maintenance services,  materials and supplies,  and managerial,
technical and accounting services to subsidiaries. In addition, Century provides
and bills  management  services to subsidiaries  and in certain  instances makes
interest  bearing  advances to finance  construction  of plant and  purchases of
equipment.   These   transactions  are  recorded  by  the  Company's   telephone
subsidiaries  at their cost to the extent  permitted by regulatory  authorities.
Intercompany  profit on transactions  with regulated  affiliates is limited to a
reasonable  return on investment and has not been  eliminated in connection with
consolidating  the  results  of  operations  of  Century  and its  subsidiaries.
Intercompany  profit  on  transactions  with  nonregulated  affiliates  has been
eliminated.

Income taxes - Century files a  consolidated  federal income tax return with its
eligible  subsidiaries.  The  Company  uses the  asset and  liability  method of
accounting for income taxes under which deferred tax assets and  liabilities are
established for the future tax consequences  attributable to differences between
the financial  statement  carrying  amounts of assets and  liabilities and their
respective  tax bases.  Investment tax credits  related to telephone  plant have
been  deferred  and are being  amortized  as a reduction  of federal  income tax
expense  over the  estimated  useful  lives  of the  assets  giving  rise to the
credits.

Derivative financial  instruments - During 1997 the Company entered into certain
interest  rate  hedge  contracts  in  anticipation  of a public  debt  issuance,
utilizing  such hedge  contracts to manage  interest  rate  exposure.  The hedge
contracts were treated as off-balance sheet financial instruments. In connection
with the settlement of these contracts, all losses related to these transactions
have been  deferred  and  amortized  as  interest  expense  over the life of the
underlying  debt  issuance.  Such contracts were settled in 1998. See Note 6 for
additional  information.  The  Company  does not  utilize  derivative  financial
instruments for trading or other speculative purposes.

Earnings  per share - During 1997 the Company  adopted  Statement  of  Financial
Accounting  Standards  No. 128 ("SFAS  128"),  "Earnings  per  Share."  SFAS 128
established  requirements  for the  computation  of basic earnings per share and
diluted earnings per share and was effective for financial statements issued for
periods  ending after  December 15, 1997.  Earnings per share  amounts for prior
periods have been restated to conform with SFAS 128.

Stock  compensation - The Company accounts for employee stock compensation plans
in accordance with Accounting  Principles Board Opinion No. 25,  "Accounting for
Stock Issued to Employees" as allowed by Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation."

Cash equivalents - The Company considers short-term  investments with a maturity
at date of purchase of three months or less to be cash equivalents.

(2)   Acquisitions

   On  December 1, 1997,  Century  acquired  Pacific  Telecom,  Inc.  ("PTI") in
exchange  for  $1.503  billion  cash.  To  finance  the  acquisition,  which was
accounted  for as a purchase,  Century  borrowed  $1.288  billion under its $1.6
billion senior  unsecured  credit facility (the "Senior Credit  Facility") dated
August  28,  1997 with  NationsBank  of Texas,  N.A.  and a  syndicate  of other
lenders.  Century paid the remainder of the PTI acquisition price with available
cash.

   As a result of the  acquisition,  the Company  acquired (i) telephone  access
lines located in four midwestern states,  seven western states and Alaska,  (ii)
cellular  subscribers  in two  midwestern  states and  Alaska and (iii)  various
wireless, cable television and other communications assets.

   The following pro forma  information  represents the consolidated  results of
operations of the Company as if the PTI acquisition  had been  consummated as of
January 1, 1997 and 1996.

<TABLE>
<CAPTION>

Year ended December 31,                               1997              1996  
--------------------------------------------------------------------------------
                                                  (Dollars in thousands, except
                                                        per share amounts)
                                                            (unaudited)
<S>                                             <C>                 <C>   
Operating revenues                              $ 1,392,268         1,245,036
Net income                                          256,992           120,632
Diluted earnings per share                             1.87               .89 
--------------------------------------------------------------------------------
</TABLE>

   The pro forma  information  is not  necessarily  indicative  of the operating
results that would have occurred if the PTI acquisition had been  consummated as
of January 1 of each  respective  period,  nor is it  necessarily  indicative of
future  operating  results.  The actual  results of  operations of PTI have been
included in the Company's  consolidated  financial statements only from the date
of acquisition.

   On  December  1, 1998,  the  Company  acquired  the  assets of certain  local
telephone  and directory  operations in parts of northern and central  Wisconsin
from  affiliates  of  Ameritech  Corporation  ("Ameritech"),   in  exchange  for
approximately  $221  million  cash.  The assets  included  (i) access  lines and
related  property  and  equipment  in  21  predominantly  rural  communities  in
Wisconsin and (ii) Ameritech's  directory  publishing  operations that relate to
nine telephone directories.

(3)   Investments and Other Assets

   Investments  and other assets at December 31, 1998 and 1997 were  composed of
the following:
<TABLE>
<CAPTION>

December 31,                                              1998          1997     
--------------------------------------------------------------------------------
                                                        (Dollars in thousands)
<S>                                                <C>              <C>    

Excess cost of net assets acquired, less 
 accumulated amortization                          $  1,956,701     1,767,352
Investments in unconsolidated cellular entities         118,016       189,363
Cash surrender value of life insurance 
 contracts, net                                          84,976        78,658
Marketable equity securities                             29,496        40,570
Deferred hedge contracts                                 38,027             -
Other                                                   130,548        91,415
--------------------------------------------------------------------------------
                                                   $  2,357,764     2,167,358
================================================================================
</TABLE>

   As a result of the purchase of PTI, the Company recorded  approximately  $1.2
billion of excess cost of net assets acquired in 1997.

   Goodwill  amortization of $47.8 million,  $16.6 million and $12.8 million for
1998,  1997  and  1996,   respectively,   is  included  in   "Depreciation   and
amortization" in the Company's Consolidated Statements of Income.

   Included in investments in  unconsolidated  cellular entities at December 31,
1997 was  approximately  $67.0  million  of costs  allocated  to  licenses  from
acquisitions   made  by  PTI  prior  to  Century's   acquisition  of  PTI.  Upon
finalization of the PTI purchase price  allocation,  such costs were assigned to
excess cost of net assets acquired.

   The Company's  investments in marketable  equity securities are classified as
available for sale and are reported at fair value with unrealized  holding gains
and losses  reported,  net of taxes,  as a separate  component of  stockholders'
equity. As of December 31, 1998, gross unrealized holding gains of the Company's
marketable equity securities were $11.1 million.

(4)   Property, Plant and Equipment

   Net property,  plant and equipment at December 31, 1998 and 1997 was composed
of the following:
<TABLE>
<CAPTION>

December 31,                                           1998         1997  
--------------------------------------------------------------------------------
                                                    (Dollars in thousands)
<S>                                              <C>            <C>    

Telephone, at original cost
   Cable and wire                                $ 2,046,638    1,843,002
   Central office                                  1,197,438    1,070,477
   General support                                   269,431      256,203
   Information origination/termination                73,984       65,304
   Construction in progress                           66,241       53,382
   Other                                               6,520        7,492
--------------------------------------------------------------------------------
                                                   3,660,252    3,295,860
   Accumulated depreciation                       (1,661,315)  (1,375,835)
--------------------------------------------------------------------------------
                                                   1,998,937    1,920,025
--------------------------------------------------------------------------------
Cellular, at cost
   Cell site                                         316,706      284,599
   General support                                    82,618       66,400
   Construction in progress                           23,733       23,664
   Other                                               5,927        5,555
--------------------------------------------------------------------------------
                                                     428,984      380,218
   Accumulated depreciation                         (178,569)    (133,357)
--------------------------------------------------------------------------------
                                                     250,415      246,861
--------------------------------------------------------------------------------
Corporate and other, at cost
   General support                                   180,359      148,883
   Other                                              20,063       20,537
--------------------------------------------------------------------------------
                                                     200,422      169,420
   Accumulated depreciation                          (98,321)     (77,743)
--------------------------------------------------------------------------------
                                                     102,101       91,677
--------------------------------------------------------------------------------
Net property, plant and equipment                $ 2,351,453    2,258,563
================================================================================
</TABLE>

   Depreciation expense was $280.5 million, $142.6 million and $118.9 million in
1998, 1997 and 1996, respectively. The composite depreciation rate for telephone
properties was 6.9% for 1998, 7.4% for 1997 and 7.5% for 1996.

(5)   Investments in Unconsolidated Cellular Entities

   The Company's  share of earnings from cellular  entities in which it does not
own a majority  interest was $34.1  million,  $29.4 million and $28.2 million in
1998, 1997 and 1996,  respectively,  and is included,  net of $1.2 million, $1.6
million  and $1.3  million of  amortization  of  goodwill  attributable  to such
investments,  in "Income from unconsolidated cellular entities" in the Company's
Consolidated   Statements   of  Income.   Over  74%  of  the  1998  income  from
unconsolidated cellular entities was attributable to the following investments.


                                                             Ownership interest
--------------------------------------------------------------------------------
Lafayette MSA Limited Partnership                                    49%
GTE Mobilnet of Austin Limited Partnership                           35%
Milwaukee SMSA Limited Partnership                                   18%
Alltel Cellular Associates of Arkansas Limited Partnership           36%
Detroit SMSA Limited Partnership                                      3%
Michigan RSA #9 Limited Partnership                                  43%
Cellular North Michigan Network General Partnership                  43%     
--------------------------------------------------------------------------------

   The following  summarizes  the unaudited  combined  assets,  liabilities  and
equity,  and the  unaudited  combined  results of  operations,  of the  cellular
entities in which the Company's  investments  (as of December 31, 1998 and 1997)
were accounted for by the equity method.

<TABLE>
<CAPTION>

December 31,                                            1998          1997 
--------------------------------------------------------------------------------
                                                      (Dollars in thousands)
                                                            (unaudited)
<S>                                               <C>             <C>   

Assets
   Current assets                                 $   293,339       322,863
   Property and other noncurrent assets               759,665       767,123
--------------------------------------------------------------------------------
                                                  $ 1,053,004     1,089,986
================================================================================
Liabilities and equity
   Current liabilities                            $   109,787       157,492
   Noncurrent liabilities                              25,099        25,413
   Equity                                             918,118       907,081
--------------------------------------------------------------------------------
                                                  $ 1,053,004     1,089,986
================================================================================
</TABLE>
<TABLE>
<CAPTION>

Year ended December 31,                            1998       1997       1996 
--------------------------------------------------------------------------------
                                                     (Dollars in thousands)
                                                          (unaudited)
<S>                                         <C>           <C>          <C> 
Results of operations
   Revenues                                 $  1,281,803  1,277,524    985,788
   Operating income                         $    430,859    419,246    338,554
   Net income                               $    435,744    395,990    339,040
--------------------------------------------------------------------------------
</TABLE>

   At December 31, 1998, $59.0 million of the Company's consolidated  retained
earnings represented undistributed earnings of unconsolidated cellular entities.


(6)   Long-Term Debt
<TABLE>
<CAPTION>

December 31,                                                 1998         1997 
--------------------------------------------------------------------------------
                                                          (Dollars in thousands)
<S>                                                    <C>            <C> 

Century
   5.61%* Senior Credit Facility, due through 2002     $   752,063    1,535,000
   6.875% senior notes, due 2028                           425,000            -
   6.30% senior notes, due 2008                            240,000            -
   6.15% senior notes, due 2005                            100,000            -
   8.25% senior notes, due 2024                            100,000      100,000
   7.20% senior notes, due 2025                            100,000      100,000
   6.39%* notes payable to banks, due 2002                  40,000       30,000
   7.75% senior notes, due 2004                             50,000       50,000
   6.55% senior notes, due 2005                             50,000       50,000
   9.38% senior notes, due through 2003                     18,900       21,200
   6.64%* Employee Stock Ownership Plan commitment,
     due in installments through 2004                        6,070        8,450
   9.85%* notes, due in installments through 2006              266          304
--------------------------------------------------------------------------------
        Total Century                                    1,882,299    1,894,954
--------------------------------------------------------------------------------

Subsidiaries
   First mortgage debt
     5.97%* notes, payable to agencies of the United
       States government and cooperative lending
       associations, due in installments through 2025      341,817      348,971
     7.98% notes, due through 2002                           5,871        5,969
   Other debt
     7.21%* unsecured medium-term notes, 
      due through 2008                                     335,667      360,678
     7.43%* notes, due in installments through 2020         29,301       40,805
     6.50% note, due in installments through 2001            9,308       12,040
     6.15%* capital lease obligations, due 
      through 2003                                           6,747        1,368
--------------------------------------------------------------------------------
        Total subsidiaries                                 728,711      769,831
--------------------------------------------------------------------------------
Total long-term debt                                     2,611,010    2,664,785
Less current maturities                                     53,010       55,244
--------------------------------------------------------------------------------
Long-term debt, excluding current maturities          $  2,558,000    2,609,541
================================================================================
* weighted average interest rate at December 31, 1998
</TABLE>

   The  approximate  annual debt  maturities  for the five years  subsequent  to
December 31, 1998 are as follows:  1999 - $53.0  million;  2000 - $62.6 million;
2001 - $144.5 million; 2002 - $735.0 million; and 2003 - $67.5 million.

   Short-term  borrowings of $40.0 million at December 31, 1998 were  classified
as long-term debt on the accompanying  balance sheet as the Company had adequate
committed amounts available under long-term revolving facilities.

   Certain of the Company's loan agreements contain various restrictions,  among
which are limitations  regarding  issuance of additional  debt,  payment of cash
dividends,  reacquisition of the Company's  capital stock and other matters.  At
December 31, 1998, all of the consolidated  retained  earnings  reflected on the
balance sheet was available for the declaration of dividends.

   The transfer of funds from certain  consolidated  subsidiaries  to Century is
restricted  by  various  loan  agreements.  Subsidiaries  which  have loans from
government agencies and cooperative lending  associations,  or have issued first
mortgage bonds,  generally may not loan or advance any funds to Century, but may
pay  dividends  if certain  financial  ratios are met.  At  December  31,  1998,
restricted  net  assets  of  subsidiaries  were  $604.4  million.  Subsidiaries'
retained  earnings in excess of amounts  restricted  by debt  covenants  totaled
$726.1 million.

   Most of the Company's telephone  property,  plant and equipment is pledged to
secure the long-term debt of subsidiaries.

   On January 15,  1998,  Century  issued $100  million of 7-year,  6.15% senior
notes  (Series E); $240 million of 10-year,  6.3% senior  notes  (Series F); and
$425  million  of  30-year,   6.875%  debentures  (Series  G)  under  its  shelf
registration  statements.   The  net  proceeds  of  approximately  $758  million
(excluding payment  obligations of approximately $40 million related to interest
rate hedging  effected in connection  with the offering) were used to reduce the
bank indebtedness  incurred under the Senior Credit Facility.  In addition,  the
Senior Credit Facility's  committed amount was reduced from $1.6 billion to $880
million in  accordance  with its terms.  This  facility  carries  floating  rate
interest based upon London InterBank Offered Rates for short-term periods.

   In  mid-January  1998  the  Company  settled  numerous  interest  rate  hedge
contracts that had been entered into in anticipation of the above-mentioned debt
issuances.  The  amounts  paid  by the  Company  upon  settlement  of the  hedge
contracts  aggregated  approximately  $40 million,  which is being  amortized as
interest  expense  over  the  lives  of the  underlying  debt  instruments.  The
effective weighted average interest rate of the debt (after giving consideration
to these  payment  obligations)  is  7.15%.  In  March  1998  the  Company  paid
approximately  $250,000 upon  settlement  of its  remaining  interest rate hedge
contracts.

   Century's  telephone   subsidiaries  had  approximately   $135.1  million  in
commitments for long-term  financing from the Rural Utilities  Service available
at December 31, 1998. Approximately $332.6 million of additional borrowings were
available to the Company through committed lines of credit with various banks.


(7)   Deferred Credits and Other Liabilities

   Deferred  credits and other  liabilities  at December  31, 1998 and 1997 were
composed of the following:

<TABLE>
<CAPTION>

December 31,                                           1998        1997 
--------------------------------------------------------------------------------
                                                    (Dollars in thousands)

<S>                                                <C>          <C>    

Deferred federal and state income taxes            $ 332,151     272,290
Accrued postretirement benefit costs                 109,000      99,429
Minority interest                                     44,970      47,695
Regulatory liability - income taxes                   17,380      22,856
Deferred investment tax credits                        3,939       6,355
Other                                                 33,689      28,955
--------------------------------------------------------------------------------
                                                   $ 541,129     477,580
================================================================================
</TABLE>

(8)   Postretirement Benefits

   The Company  sponsors  defined  benefit  health  care  plans  that  provide
postretirement benefits to substantially all retired full-time employees.

   Net periodic postretirement benefit cost for 1998, 1997 and 1996 included the
following components:

<TABLE>
<CAPTION>

Year ended December 31,                               1998     1997     1996      
--------------------------------------------------------------------------------
                                                      (Dollars in thousands)
<S>                                                <C>         <C>      <C> 
Service cost                                       $  5,519    2,578    2,354
Interest cost                                        10,744    5,047    4,212
Expected return on plan assets                       (3,250)    (458)       -
Amortization of unrecognized actuarial losses           430      292      475
Amortization of unrecognized prior service cost         121      121      121
--------------------------------------------------------------------------------
Net periodic postretirement benefit cost           $ 13,564    7,580    7,162
================================================================================
</TABLE>

   The following is a  reconciliation  for the benefit  obligation  and the plan
assets.
<TABLE>
<CAPTION>

December 31,                                          1998     1997     1996      
--------------------------------------------------------------------------------
                                                      (Dollars in thousands)
<S>                                               <C>        <C>       <C>  

Change in benefit obligation
  Benefit obligation at beginning of year         $ 152,632   59,157   60,128
  Service cost                                        5,519    2,578    2,354
  Interest cost                                      10,744    5,047    4,212
  Participant contributions                             298      119       96
  Acquisition                                             -   80,166        -
  Actuarial (gain) loss                               9,720    7,789   (5,420)
  Benefits paid                                      (6,590)  (2,224)  (2,213)
--------------------------------------------------------------------------------
  Benefit obligation at end of year               $ 172,323  152,632   59,157
================================================================================
</TABLE>
<TABLE>
<CAPTION>
December 31,                                          1998      1997     1996      
--------------------------------------------------------------------------------
                                                      (Dollars in thousands)
<S>                                            <C>            <C>          <C> 
Change in plan assets (primarily listed 
 stocks and bonds)
   Fair value of plan assets at beginning 
    of year                                    $    34,618         -        -
   Return on assets                                  4,080         -        -
   Employer contributions                              749         -        -
   Acquisition                                           -    34,618        -
  Benefits paid                                     (3,648)        -        -
--------------------------------------------------------------------------------
  Fair value of plan assets at end of year     $    35,799    34,618        -
================================================================================
</TABLE>

   The  following  table sets forth the amounts  recognized as  liabilities  for
postretirement benefits at December 31, 1998, 1997 and 1996.

<TABLE>
<CAPTION>

December 31,                                          1998      1997     1996      
--------------------------------------------------------------------------------
                                                       (Dollars in thousands)

<S>                                           <C>           <C>       <C>    
Benefit obligation                             $  (172,323) (152,632) (59,157)
Fair value of plan assets                           35,799    34,618        -
Unamortized prior service cost                       1,060     1,182    1,303
Unrecognized net actuarial loss                     23,972    14,622    6,986
--------------------------------------------------------------------------------
Accrued benefit cost                           $  (111,492) (102,210) (50,868)
================================================================================
</TABLE>

   Assumptions used in accounting for postretirement benefits as of December 31,
1998 and 1997 were:

                                                       1998         1997      
--------------------------------------------------------------------------------
Weighted average assumptions
   Discount rate                                   6.5-6.75%         7.0
   Expected return on plan assets                      10.0%        10.0
--------------------------------------------------------------------------------

   For  measurement purposes, a 6.0-7.4% annual rate in the per capita cost of
covered  health  care  benefits  was  assumed  for 1999 and  beyond.  A
one-percentage-point change in assumed health care cost rates would have the
following effects:
                                         1-Percentage          1-Percentage
                                        Point Increase        Point Decrease
--------------------------------------------------------------------------------
                                              (Dollars in thousands)

Effect on total of service and 
 interest cost components                $  1,012                   (934)
Effect on postretirement 
 benefit obligation                      $  9,884                 (9,089)   
--------------------------------------------------------------------------------


(9)   Stockholders' Equity

Common stock - At December 31, 1998, unissued shares of Century common stock
were reserved as follows:

December 31,                                                      1998  
--------------------------------------------------------------------------------
                                                             (In thousands)

Incentive compensation program                                   6,488
Acquisitions                                                     4,825
Employee stock purchase plan                                     1,016
Conversion of convertible preferred stock                          511
Other employee benefit plans                                     3,849  
--------------------------------------------------------------------------------
                                                                16,689  
================================================================================

   Under  Century's  Articles  of  Incorporation  each  share  of  common  stock
beneficially  owned continuously by the same person since May 30, 1987 generally
entitles the holder thereof to ten votes per share. All other shares entitle the
holder to one vote per share.  At December 31, 1998, the holders of 12.6 million
shares of common stock were entitled to ten votes per share.

Preferred  stock - As of December  31, 1998,  Century had 2.0 million  shares of
preferred stock, $25 par value per share,  authorized.  At December 31, 1998 and
1997,  there were 324,238  shares of  outstanding  preferred  stock.  Holders of
outstanding   Century  preferred  stock  are  entitled  to  receive   cumulative
dividends, receive preferential distributions equal to $25 per share plus unpaid
dividends upon Century's liquidation and vote as a single class with the holders
of common stock.

Shareholders'  Rights Plan - In 1996 the Board of Directors  declared a dividend
of one preference share purchase right for each common share  outstanding.  Such
rights become  exercisable if and when a potential  acquiror takes certain steps
to acquire 15% or more of Century's common stock. Upon the occurrence of such an
acquisition,  each right held by  shareholders  other than the  acquiror  may be
exercised to receive  that number of shares of common stock or other  securities
of Century (or, in certain situations,  the acquiring company) which at the time
of such  transaction will have a market value of two times the exercise price of
the right.

Stock split - On February 25,  1998,  Century's  Board of  Directors  declared a
three-for-two common stock split effected as a 50% stock dividend in March 1998.
An amount equal to the par value of the additional common shares issued pursuant
to the stock split was  reflected as a transfer from  paid-in-capital  to common
stock  on the  consolidated  financial  statements  for  1997.  See  Note 21 for
additional information concerning a stock split in early 1999.

(10)  Earnings Per Share

   Basic  earnings per share amounts are determined on the basis of the weighted
average number of common shares  outstanding  during the year.  Diluted earnings
per  share  give  effect  to all  potential  dilutive  common  shares  that were
outstanding during the period.

   The following is a  reconciliation  of the numerators and denominators of the
basic and diluted earnings per share computations:

<TABLE>
<CAPTION>
Year ended December 31,                          1998        1997         1996 
--------------------------------------------------------------------------------
                                                  (Dollars, except per share
                                               amounts, and shares in thousands)
<S>                                          <C>           <C>          <C> 
Income (Numerator):
Net income                                   $ 228,757     255,978      129,077
Dividends applicable to preferred stock           (408)       (460)        (420)
--------------------------------------------------------------------------------
Net income applicable to common stock for
 computing basic earnings per share            228,349     255,518      128,657
Dividends applicable to preferred stock            408         460          420
Interest on convertible securities, 
 net of taxes                                      372         480          579
--------------------------------------------------------------------------------
Net income as adjusted for purposes of
 computing diluted earnings per share        $ 229,129     256,458      129,656
================================================================================

Shares (Denominator):
Weighted average number of shares
  outstanding during period                    137,568     135,637      134,147
Employee Stock Ownership Plan shares
  not committed to be released                    (558)       (653)        (747)
--------------------------------------------------------------------------------
Weighted average number of  shares 
 outstanding during period for computing 
 basic earnings per share                      137,010     134,984      133,400
Incremental common shares attributable
 to dilutive securities:
   Conversion of convertible securities          1,274       1,676        1,958
   Shares issuable under stock option plan       1,821         752          622
--------------------------------------------------------------------------------
Number of shares as adjusted for purposes 
 of computing diluted earnings per share       140,105     137,412      135,980
================================================================================

Basic earnings per share*                    $    1.67        1.89          .96
================================================================================

Diluted earnings per share*                  $    1.64        1.87          .95
================================================================================
*Adjusted to reflect stock split in early 1999.
</TABLE>

   The  weighted  average  number of options to purchase  shares of common stock
that were excluded from the  computation  of diluted  earnings per share because
the exercise  price of the option was greater  than the average  market price of
the common stock was 3,000,  1,099,000 and  1,415,000  for 1998,  1997 and 1996,
respectively.

(11)  Stock Option Program

   Century  has an  incentive  compensation  program  which  allows the Board of
Directors,  through  a  subcommittee  to the  Compensation  Committee,  to grant
incentives  to employees in any one or a  combination  of the  following  forms:
incentive and non-qualified stock options; stock appreciation rights; restricted
stock; and performance shares. As of December 31, 1998, Century had reserved 6.5
million  shares  of  common  stock  which  may be  issued  under  the  incentive
compensation program.

   Under the  program,  options have been granted to employees at a price either
equal to or  exceeding  the  then-current  market  price and all of the  options
expire ten years after the date of grant.

   During 1998 the Company  granted  121,667  options  (the "1998  Options")  at
market  price.  The weighted  average fair value of each of the 1998 Options was
estimated as of the date of grant to be $8.88 using an option-pricing model with
the following  assumptions:  dividend  yield - .5%;  expected  volatility - 20%;
risk-free interest rate - 4.8%; and expected option life - seven years.

   During 1997 the Company  granted  1,293,909  options (the "1997  Options") at
market  price.  The weighted  average fair value of each of the 1997 Options was
estimated as of the date of grant to be $5.68 using an option-pricing model with
the following  assumptions:  dividend  yield - .8%;  expected  volatility - 25%;
risk-free interest rate - 6.5%; and expected option life - eight years.

   Stock option transactions during 1998, 1997 and 1996 were as follows:

<TABLE>
<CAPTION>

                                                   Number       Average
                                                 of options      price  
--------------------------------------------------------------------------------
<S>                                             <C>            <C>   

Outstanding December 31, 1995                   5,929,196      $ 11.32
   Exercised                                     (657,906)        8.32
   Forfeited                                      (28,239)       13.01
---------------------------------------------------------
Outstanding December 31, 1996                   5,243,051        12.11
   Exercised                                     (889,173)       10.18
   Granted                                      1,293,909        13.51
   Forfeited                                      (38,856)       13.39
---------------------------------------------------------
Outstanding December 31, 1997                   5,608,931        12.73
   Exercised                                     (937,985)       11.41
   Granted                                        121,667        26.25
   Forfeited                                      (12,000)       13.33
---------------------------------------------------------
Outstanding December 31, 1998                   4,780,613        13.35
=========================================================

Exercisable December 31, 1997                   4,712,532        12.59
=========================================================

Exercisable December 31, 1998                   4,188,660        13.13
=========================================================
</TABLE>

     The following tables summarize  certain  information  about Century's stock
options at December 31, 1998.

<TABLE>
<CAPTION>
                              Options outstanding                   
--------------------------------------------------------------------------------
                                        Weighted average
   Range of                          remaining contractual   Weighted average
exercise prices   Number of options     life outstanding      exercise price      
--------------------------------------------------------------------------------
<S>                  <C>                  <C>                 <C>   

$ 9.63-12.30         2,271,662            3.5 years           $  11.04
 13.33-17.64         2,391,554              7.1                  14.87
 23.03-26.05            67,133              9.1                  25.88
 26.98-31.54            50,264              9.1                  28.96
                     ---------
  9.63-31.54         4,780,613              7.3                  13.35
                     =========
</TABLE>
<TABLE>
<CAPTION>
                           Options exercisable
--------------------------------------------------------------------------------
    Range of                   Number of                 Weighted average
 exercise prices           options exercisable            exercise price      
--------------------------------------------------------------------------------
<S>                            <C>                           <C>   

$ 9.63-12.30                   2,271,662                     $  11.04
 13.33-17.64                   1,861,935                        15.27
 23.03-26.05                      31,655                        26.05
 26.98-31.54                      23,408                        28.65
                               ---------
  9.63-31.54                   4,188,660                        13.13
                               =========
</TABLE>

   The Company applies  Accounting  Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees," in accounting for its program.  Accordingly,  no
compensation cost has been recognized for the program.  If compensation cost for
Century's  program had been  determined  consistent with SFAS 123, the Company's
net income and earnings  per share on a pro forma basis for 1998,  1997 and 1996
would have been as follows:

<TABLE>
<CAPTION>

Year ended December 31,                         1998        1997         1996 
--------------------------------------------------------------------------------
                                                   (Dollars in thousands,
                                                  except per share amounts)
<S>                                       <C>            <C>          <C>   

Net income
   As reported                            $  228,757     255,978      129,077
   Pro forma                              $  227,113     252,773      129,077
Diluted earnings per share
   As reported                            $     1.64        1.87          .95
   Pro forma                              $     1.62        1.84          .95
--------------------------------------------------------------------------------
</TABLE>


(12)  Accounting for the Effects of Regulation

   The Company's regulated telephone operations are subject to the provisions of
Statement of Financial Accounting Standards No. 71 ("SFAS 71"),  "Accounting for
the Effects of Certain Types of Regulation."  Actions of a regulator can provide
reasonable assurance of the existence of an asset, reduce or eliminate the value
of an asset and impose a liability on a regulated  enterprise.  Such  regulatory
assets and liabilities are required to be recorded and,  accordingly,  reflected
in the balance sheet of an entity subject to SFAS 71.

   The  Company's  consolidated  balance  sheet as of December 31, 1998 included
regulatory  assets of approximately  $5.9 million and regulatory  liabilities of
approximately $16.0 million exclusive of (i) property, plant and equipment, (ii)
accumulated depreciation and (iii) deferred income taxes and deferred investment
tax credits associated with regulatory assets and liabilities.  The $5.9 million
of  regulatory   assets   included   assets   established  in  connection   with
postretirement benefits ($1.0 million), income taxes ($2.1 million) and deferred
financing costs ($2.7 million).  The $16.0 million of regulatory liabilities was
established in connection with the adoption of Statement of Financial Accounting
Standards No. 109, "Accounting For Income Taxes." Net deferred income tax assets
related to the  regulatory  assets and  liabilities  quantified  above were $3.5
million.

   Property, plant and equipment of the Company's regulated telephone operations
has been  depreciated  using  generally  the  straight  line  method  over lives
approved by  regulators.  Such  depreciable  lives have  generally  exceeded the
depreciable lives used by nonregulated entities. In addition, in accordance with
regulatory  accounting,  retirements of regulated  telephone  property have been
charged  to  accumulated  depreciation,  along with the costs of  removal,  less
salvage,  with no  gain  or loss  recognized.  These  accounting  policies  have
resulted  in  accumulated  depreciation  being  significantly  less  than if the
Company's telephone operations had not been regulated.

   Statement of Financial Accounting Standards No. 101 ("SFAS 101"),  "Regulated
Enterprises - Accounting for the Discontinuance of Application of FASB Statement
No. 71," specifies the accounting required when an enterprise ceases to meet the
criteria for  application  of SFAS 71. SFAS 101 requires the  elimination of the
effects of any actions of  regulators  that have been  recognized  as assets and
liabilities  in  accordance  with SFAS 71 but would not have been  recognized as
assets and  liabilities by  enterprises in general,  along with an adjustment of
certain  accumulated  depreciation  accounts to reflect the  difference  between
recorded  depreciation  and the  amount of  depreciation  that  would  have been
recorded  had the  Company's  telephone  operations  not  been  subject  to rate
regulation.  SFAS 101 further  provides  that the carrying  amounts of property,
plant and  equipment  are to be  adjusted  only to the  extent  the  assets  are
impaired  and  that  impairment  shall  be  judged  in the  same  manner  as for
enterprises in general.  Deferred tax  liabilities  and deferred  investment tax
credits will be impacted  based on the change in the temporary  differences  for
property, plant and equipment and accumulated depreciation.

   The ongoing  applicability  of SFAS 71 to the Company's  regulated  telephone
operations is being  monitored due to the changing  regulatory,  competitive and
legislative  environments,  and  it is  possible  that  changes  in  regulation,
legislation or  competition or in the demand for regulated  services or products
could result in the  Company's  telephone  operations no longer being subject to
SFAS 71 in the near  future.  When the  regulated  operations  of the Company no
longer qualify for the application of SFAS 71, the net adjustments required will
result in a material,  noncash charge against earnings which will be reported as
an  extraordinary  item.  While the  effect of  implementing  SFAS 101 cannot be
precisely  estimated  at  this  time,  management  believes  that  the  noncash,
after-tax,  extraordinary charge would be between $350 million and $400 million.
For regulatory purposes, the accounting and reporting of the Company's telephone
subsidiaries will not be affected by the discontinued application of SFAS 71.

(13)  Income Taxes

   The tax  effects of  temporary  differences  that gave rise to  significant
portions of the deferred tax assets and deferred tax liabilities at December 31,
1998 and 1997 were as follows:

<TABLE>
<CAPTION>

December 31,                                           1998        1997 
---------------------------------------------------------------------------
                                                    (Dollars in thousands)
<S>                                                <C>          <C>    

Deferred tax assets
   Postretirement benefit costs                    $  38,023      35,826
   Regulatory support                                 15,509      15,681
   Net operating loss carry forwards of an 
    acquired subsidiary                                6,716       8,013
   Regulatory liability                                6,230       8,000
   Long-term debt                                      3,382       3,957
   Other employee benefits                             8,812       8,281
   Other                                               9,609       8,788
---------------------------------------------------------------------------
     Gross deferred tax assets                        88,281      88,546
     Less valuation allowance                         (6,716)     (8,013)
---------------------------------------------------------------------------
     Net deferred tax assets                          81,565      80,533
---------------------------------------------------------------------------

Deferred tax liabilities
   Property, plant and equipment, primarily 
    due to depreciation differences                 (288,365)   (303,500)
   Excess cost of net assets acquired                 (8,500)     (7,177)
   Basis difference in assets to be sold             (66,998)     (3,382)
   Deferred debt costs                               (13,309)          -
   Customer base                                     (11,381)          -
   Marketable equity securities                       (8,928)    (11,840)
   Intercompany profits                               (3,128)     (3,112)
   Other                                             (13,107)    (23,812)
---------------------------------------------------------------------------
     Gross deferred tax liabilities                 (413,716)   (352,823)
---------------------------------------------------------------------------
Net deferred tax liability                         $(332,151)   (272,290)
===========================================================================
</TABLE>

   Income tax expense for the years ended  December 31, 1998,  1997 and 1996 was
as follows:
<TABLE>
<CAPTION>

Year ended December 31,                           1998       1997       1996 
--------------------------------------------------------------------------------
                                                    (Dollars in thousands)
<S>                                          <C>          <C>         <C>   

Federal
   Current                                   $ 117,490    122,861     60,530
   Deferred                                     18,048     14,768      7,390
State
   Current                                      25,015     13,272      6,100
   Deferred                                     (1,852)     1,462        545
--------------------------------------------------------------------------------
                                             $ 158,701    152,363     74,565
================================================================================
</TABLE>

   Income tax expense was allocated as follows:

<TABLE>
<CAPTION>

Year ended December 31,                              1998      1997       1996 
--------------------------------------------------------------------------------
                                                      (Dollars in thousands)
<S>                                             <C>         <C>         <C>  
Net tax expense in the consolidated 
 statements of income                           $ 158,701   152,363     74,565
Stockholders' equity, primarily for 
 compensation expense for tax purposes in 
 excess of amounts recognized
 for financial reporting purposes                  (6,579)   (2,554)    (1,866)
--------------------------------------------------------------------------------
                                                $ 152,122   149,809     72,699
================================================================================
</TABLE>

   The following is a reconciliation from the statutory federal income tax rate
to the Company's effective income tax rate:

<TABLE>
<CAPTION>

December 31,                                         1998      1997       1996      
--------------------------------------------------------------------------------
                                                  (Percentage of pre-tax income)

<S>                                                 <C>        <C>        <C>  

Statutory federal income tax rate                    35.0%     35.0       35.0
State income taxes, net of federal income 
 tax benefit                                          3.9       2.3        2.1
Amortization of nondeductible excess cost 
 of net assets acquired                               3.3       1.1        1.8
Amortization of investment tax credits                (.6)      (.4)      (1.1)
Amortization of regulatory liability                  (.6)      (.5)       (.9)
Other, net                                              -       (.2)       (.3)
--------------------------------------------------------------------------------
Effective income tax rate                            41.0%     37.3       36.6
================================================================================
</TABLE>


(14)  Sale or Exchange of Assets

   In  connection  with the first  quarter  1998  acquisition  of  Brooks  Fiber
Properties,  Inc. ("Brooks") by MCIWorldCom,  Inc.  ("WorldCom"),  the Company's
551,000 shares of Brooks' common stock were  converted  into  approximately  1.0
million shares of WorldCom common stock. The Company recorded such conversion at
fair value  which  resulted in a pre-tax  gain of  approximately  $22.8  million
($14.8  million  after-tax;  $.11 per diluted  share).  In the second quarter of
1998, the Company sold 750,000 shares of WorldCom common stock for $35.6 million
cash and recorded a pre-tax gain of $8.7 million  ($5.7  million after tax; $.04
per diluted share).

   In the second quarter of 1998, the Company sold its minority interests in two
non-strategic  cellular  entities  for  approximately  $31.0  million cash which
resulted in a pre-tax gain of $21.8 million ($12.3 million  after-tax;  $.09 per
diluted  share).  Additionally,  in the second quarter the Company wrote off its
minority investment in a start-up company.

   During the second  quarter  of 1998,  the  Company  also sold  various  other
properties that were acquired in the PTI acquisition, including, but not limited
to, the Company's submarine cable operations.  The Company utilized the proceeds
from these  transactions  to reduce its debt  associated with the acquisition of
PTI. In accordance with purchase  accounting,  no gain or loss was recorded upon
the disposition of these assets.

   In May 1997 the Company sold its majority-owned competitive access subsidiary
to Brooks in exchange for  approximately  4.3 million  shares of Brooks'  common
stock.  The Company  recorded a pre-tax gain of  approximately  $71 million ($46
million  after-tax;  $.34 per diluted share).  In November 1997 the Company sold
approximately 3.8 million shares of Brooks' common stock for $202.7 million cash
and  recorded  a  pre-tax  gain  of  approximately  $108  million  ($66  million
after-tax; $.48 per diluted share).

(15)  Retirement and Savings Plans

   Century  sponsors an Outside  Directors'  Retirement  Plan and a Supplemental
Executive Retirement Plan to provide directors and officers,  respectively, with
supplemental  retirement,  death and  disability  benefits.  In addition,  as of
December 31, 1998,  the  bargaining  unit employees of a subsidiary are provided
benefits  under a defined  benefit  pension  plan and  substantially  all of the
employees of PTI are covered under a separate defined benefit pension plan.

   The following  table sets forth the combined plans' funded status and amounts
recognized  in the  Company's  consolidated  balance sheet at December 31, 1998,
1997 and 1996.

<TABLE>
<CAPTION>

December 31,                                        1998        1997       1996 
--------------------------------------------------------------------------------
                                                       (Dollars in thousands)
<S>                                           <C>           <C>         <C>    
Benefit obligation                            $ (217,747)   (200,554)   (20,473)
Fair value of plan assets                        278,678     237,618     22,158
Unrecognized transition (asset)/obligation        (2,136)     (1,550)     2,519
Unamortized prior service cost                     1,053           -          -
Unrecognized net actuarial (gain)/loss           (57,981)    (37,731)         1
--------------------------------------------------------------------------------
Prepaid (accrued) benefit cost                $    1,867      (2,217)     4,205
================================================================================
</TABLE>

   Net periodic pension cost for 1998, 1997 and 1996 included the following
components:

<TABLE>
<CAPTION>

Year ended December 31,                          1998      1997      1996 
--------------------------------------------------------------------------------
                                                 (Dollars in thousands)
<S>                                          <C>         <C>       <C>  
Service cost                                 $  5,361       793       466
Interest cost                                  13,225     2,508     1,382
Expected return on plan assets                (22,925)   (5,715)   (2,273)
Recognized net gains                           (2,688)        -         -
Net amortization and deferral                    (300)    2,459       933
--------------------------------------------------------------------------------
Net periodic pension (benefit) cost          $ (7,327)       45       508
================================================================================
</TABLE>


   The following is a  reconciliation  of the beginning and ending  balances for
the benefit obligation and the plan assets for the retirement and savings plans.

<TABLE>
<CAPTION>

December 31,                                       1998        1997       1996 
--------------------------------------------------------------------------------
                                                     (Dollars in thousands)
<S>                                           <C>            <C>         <C> 
Change in benefit obligation
   Benefit obligation at beginning of year    $  200,554      20,473     19,420
   Service cost                                    5,361         793        466
   Interest cost                                  13,225       2,508      1,382
   Plan amendments                                   227           -          -
   Acquisition                                         -     175,165          -
   Actuarial loss                                  8,683       2,548         95
   Benefits paid                                 (10,303)       (933)      (890)
--------------------------------------------------------------------------------
   Benefit obligation at end of year          $  217,747     200,554     20,473
================================================================================

Change in plan assets (primarily listed 
 stocks and bonds)
   Fair value of plan assets at 
    beginning of year                         $  237,618      22,158     18,098
   Return on plan assets                          50,720       4,237      2,274
   Employer contributions                            643         807      2,676
   Acquisition                                         -     211,349          -
   Benefits paid                                 (10,303)       (933)      (890)
--------------------------------------------------------------------------------
  Fair value of plan assets at end
    of year                                   $  278,678     237,618     22,158
================================================================================
</TABLE>

   Assumptions  used in accounting for the pension plans as of December 1998 and
1997 were:

                                                            1998        1997
--------------------------------------------------------------------------------
Discount rates                                          6.5-6.75%        7.0
Expected long-term rate of return on assets             8.0-10.0%   8.0-10.0
--------------------------------------------------------------------------------

   Century  sponsors an Employee Stock Bonus Plan ("ESBP") and an Employee Stock
Ownership  Plan  ("ESOP").  These  plans cover most  employees  with one year of
service  with the  Company  and are funded by Company  contributions  determined
annually by the Board of Directors.

   The Company  contributed  $3.7 million,  $2.8 million and $1.9 million to the
ESBP during 1998,  1997 and 1996,  respectively.  At December 31, 1998, the ESBP
owned 5.9 million shares of Century common stock.

   The Company's  contributions  to the ESOP approximate the ESOP's debt service
less dividends  received by the ESOP applicable to unallocated  shares. The ESOP
shares initially were pledged as collateral for its debt. As the debt is repaid,
shares are released from collateral based on the percentage of principal payment
to outstanding debt before applying the principal payment.  As of each year end,
such released shares are allocated to active employees.

   The ESOP had  outstanding  debt of $570,000  at  December  31, 1998 which was
applicable to shares purchased prior to 1993.  Interest  incurred by the ESOP on
such  debt was  $148,000,  $274,000  and  $430,000  in  1998,  1997,  and  1996,
respectively.  The Company  contributed and expensed $1.5 million,  $1.8 million
and $2.1 million during 1998, 1997 and 1996, respectively,  with respect to such
shares.  Dividends on unallocated  ESOP shares used for debt service by the ESOP
were $69,000 in 1998,  $126,000 in 1997 and $189,000 in 1996. The number of ESOP
shares as of December 31, 1998 and 1997 which were purchased  prior to 1993 were
as follows:

December 31,                                           1998       1997  
--------------------------------------------------------------------------------
                                                        (In thousands)

Allocated shares                                       3,153     3,297
Unreleased shares                                         77       320
--------------------------------------------------------------------------------
                                                       3,230     3,617
================================================================================

   The Company accounts for shares purchased  subsequent to December 31, 1992 in
accordance with Statement of Position 93-6 ("SOP 93-6").  Accordingly, as shares
are released from collateral,  the Company reports compensation expense equal to
the current  market price of the shares and the shares  become  outstanding  for
earnings per share computations. Dividends on allocated ESOP shares are recorded
as a reduction of retained  earnings;  dividends on unallocated  ESOP shares are
recorded as a reduction of debt. ESOP compensation  expense applicable to shares
purchased  subsequent  to 1992 was $2.9 million for 1998,  $1.5 million for 1997
and $1.4 million for 1996.  The fair value of unreleased  ESOP shares  accounted
for under SOP 93-6 was $23.2 million, $13.5 million and $9.7 million at December
31, 1998, 1997 and 1996, respectively.  ESOP shares purchased subsequent to 1992
totaled 937,913,  of which 422,060 were allocated and 515,853 were unreleased as
of December 31, 1998.

   Century also  sponsors a qualified  profit  sharing plan  pursuant to Section
401(k) of the Internal  Revenue  Code (the "401(k)  Plan") which is available to
substantially all employees of the Company. The Company's matching contributions
to the  401(k)  Plan were $8.5  million in 1998,  $2.8  million in 1997 and $2.3
million in 1996.

(16)  Supplemental Cash Flow Disclosures

   The Company paid interest of $151.4 million,  $48.8 million and $45.1 million
during 1998, 1997 and 1996, respectively.  Income taxes paid were $185.9 million
in 1998, $79.3 million in 1997 and $64.1 million in 1996.

     In  addition  to the  acquisitions  of PTI  and the  Ameritech  properties,
Century has  consummated  the  acquisitions  of various  telephone  and cellular
operations,  along with  certain  other  assets,  during the three  years  ended
December 31, 1998. In connection with these  acquisitions,  the following assets
were acquired, liabilities assumed, and common and preferred stock issued:

<TABLE>
<CAPTION>

Year ended December 31,                          1998        1997      1996 
--------------------------------------------------------------------------------
                                                  (Dollars in thousands)

<S>                                         <C>          <C>          <C>   

Property, plant and equipment               $   75,043   1,106,558     4,963
Excess cost of net assets acquired             145,880   1,204,284    53,220
Other investments                                5,028     119,356         -
Notes payable                                        -    (199,824)        -
Long-term debt                                       -    (527,937)   (3,273)
Deferred credits and other liabilities               -    (246,196)     (171)
Other assets and liabilities, excluding
 cash and cash equivalents                        (382)     90,889     8,021
Common stock issued                                  -      (3,316)   (8,458)
Preferred stock issued                               -           -    (7,975)
--------------------------------------------------------------------------------
Decrease in cash due to acquisitions        $  225,569   1,543,814    46,327
================================================================================
</TABLE>

     During the second  quarter of 1998,  the Company  sold  various  properties
acquired in the PTI  acquisition;  a portion of its WorldCom stock;  and certain
cellular operations. See Note 14 for additional information.

   In May 1997 the Company sold its majority-owned competitive access subsidiary
in exchange  for  approximately  4.3 million  shares of  publicly-traded  common
stock. In November 1997  approximately  85% of such stock was sold. In addition,
the Company has  consummated  the  disposition of various  cellular  operations,
along with certain other assets, during the three years ended December 31, 1998.
In  connection  with  these  dispositions,   the  following  assets  were  sold,
liabilities eliminated, assets received and gain recognized:

<TABLE>
<CAPTION>

Year ended December 31,                             1998       1997       1996 
--------------------------------------------------------------------------------
                                                      (Dollars in thousands)
<S>                                           <C>          <C>            <C>  
Property, plant and equipment                 $        -    (38,481)       900
Excess cost of net assets acquired                     -       (597)         -
Marketable equity securities                     (21,923)    13,795          -
Other assets and liabilities,                    (60,525)    (7,782)       (85)
Gain on sale of assets                           (49,859)  (169,640)      (815)
--------------------------------------------------------------------------------
Increase in cash due to dispositions          $ (132,307)  (202,705)         -
================================================================================
</TABLE>

(17)  Fair Value of Financial Instruments

   The following  table presents the carrying  amounts and estimated fair values
of certain of the Company's financial instruments at December 31, 1998 and 1997.

<TABLE>
<CAPTION>

                                                       Carrying         Fair
                                                        amount          value  
--------------------------------------------------------------------------------
                                                       (Dollars in thousands)
<S>                                                 <C>            <C>       <C>   

December 31, 1998
-----------------

Financial assets
   Investments
     Marketable equity securities                   $    29,496       29,496 (2)
     Other                                          $    29,813       29,813 (1)

Financial liabilities
   Long-term debt (including current 
    maturities)                                     $ 2,611,010    2,708,680 (3)
   Other                                            $    32,721       32,721 (1)
--------------------------------------------------------------------------------

December 31, 1997
-----------------

Financial assets
   Investments
     Marketable equity securities                   $    40,570       40,570 (2)
     Other                                          $    22,455       24,036 (1)

Financial liabilities
   Long-term debt (including 
    current maturities)                             $ 2,664,785    2,677,348 (3)
   Other                                            $    24,213       24,213 (1)

Off-balance sheet financial instruments
   Interest rate hedge contracts                    $         -      (16,061)(4)
--------------------------------------------------------------------------------
(1) Fair value was estimated by the Company.
(2) Fair value was based on quoted market prices.
(3) Fair value was estimated by discounting the scheduled payment streams to
    present value based upon rates currently offered to the Company for 
    similar debt.
(4) Fair value represents the estimated amounts the Company would have to pay to
    settle these contracts. See Note 6 for additional information related to the
    settlement of these contracts.
</TABLE>

Cash and cash equivalents,  accounts receivable, notes payable, accounts payable
and accrued  expenses - The carrying amount  approximates  the fair value due to
the short maturity of these instruments.

(18)  Business Segments

   The  Company  has  two  reportable  segments:  telephone  and  cellular.  The
Company's  reportable segments are strategic business units that offer different
products and services.

     The Company's  telephone  operations  are conducted in rural,  suburban and
small  urban  communities  in 21  states.  Approximately  86% of  the  Company's
telephone  access  lines  are  in  Wisconsin,   Washington,   Alaska,  Michigan,
Louisiana,  Colorado, Ohio, Oregon and Montana. The Company's cellular customers
are located in Michigan, Louisiana, Wisconsin,  Mississippi, Texas, Arkansas and
Alaska.

<TABLE>
<CAPTION>
                                                    Depreciation
                                        Operating       and        Operating
                                         revenues   amortization    income 
--------------------------------------------------------------------------------
                                               (Dollars in thousands)
<S>                                    <C>             <C>          <C>    
Year ended December 31, 1998
----------------------------

Telephone                              $1,091,610      262,893      333,708
Cellular                                  407,749       62,002      130,580
Other segments                             77,726        3,659       15,523
--------------------------------------------------------------------------------
Total                                  $1,577,085      328,554      479,811
================================================================================

Year ended December 31, 1997
----------------------------

Telephone                              $  530,597      115,722     173,285
Cellular                                  307,742       41,127      88,081
Other segments                             63,182        2,646       6,404
--------------------------------------------------------------------------------
Total                                  $  901,521      159,495     267,770
================================================================================

Year ended December 31, 1996
----------------------------

Telephone                              $  451,538       95,793     155,183
Cellular                                  250,243       33,573      67,914
Other segments                             47,896        2,655         199
--------------------------------------------------------------------------------
Total                                  $  749,677      132,021     223,296
================================================================================
</TABLE>
<TABLE>
<CAPTION>

Year ended December 31,                            1998       1997       1996  
--------------------------------------------------------------------------------
                                                     (Dollars in thousands)
<S>                                           <C>           <C>        <C>    
Operating income                              $  479,811    267,770    223,296
Gain on sale or exchange of assets, net           49,859    169,640        815
Interest expense                                (167,552)   (56,474)   (44,662)
Income from unconsolidated cellular entities      32,869     27,794     26,952
Minority interest                                (12,797)    (5,498)    (6,675)
Other income and expense                           5,268      5,109      3,916
--------------------------------------------------------------------------------
Income before income tax expense              $  387,458    408,341    203,642
================================================================================

Year ended December 31,                            1998       1997       1996  
--------------------------------------------------------------------------------
                                                     (Dollars in thousands)
Capital expenditures
   Telephone                                  $  233,190    115,854    110,147
   Cellular                                       49,538     39,102     83,679
   Other segments                                 28,191     26,269     29,059
--------------------------------------------------------------------------------
Total                                         $  310,919    181,225    222,885
================================================================================

Identifiable assets
   Telephone                                  $3,674,148  3,379,376  1,174,317
   Cellular                                    1,097,789    989,729    644,587
   Other segments                                163,518    340,296    209,601
--------------------------------------------------------------------------------
Total assets                                  $4,935,455  4,709,401  2,028,505
================================================================================
</TABLE>

   Other  accounts  receivable  are  primarily  amounts  due from  various  long
distance carriers,  principally AT&T, and several large local exchange operating
companies.

(19)  Commitments and Contingencies

   Construction  expenditures  and investments in vehicles,  buildings and other
work  equipment  during 1999 are  estimated  to be $215  million  for  telephone
operations,  $70 million for cellular  operations  and $60 million for corporate
and other operations.

   The Company is involved in various  claims and legal  actions  arising in the
ordinary  course  of  business.  In the  opinion  of  management,  the  ultimate
disposition  of these  matters  will not have a material  adverse  effect on the
Company's consolidated financial position or results of operations.

(20)  Pending Dispositions

   In August 1998 the Company  entered into a  definitive  agreement to sell the
stock  of the  entities  conducting  the  Company's  Alaska  operations  to ALEC
Acquisition  Corporation for $415 million cash, subject to various  adjustments.
Proceeds  from  this  transaction  will be  used  to  reduce  debt.  The  Alaska
transaction is  anticipated  to close in the second quarter of 1999,  subject to
regulatory approvals and various closing conditions.

   In January 1999 the Company signed  definitive  asset purchase  agreements to
sell all of the  operations  of the  Brownsville  and McAllen,  Texas,  cellular
markets to Western Wireless Corporation for $95 million cash, subject to various
adjustments.  The Company is the majority owner in these markets and, therefore,
will receive its  proportionate  share of the sale proceeds  (approximately  $39
million  after-tax.)  The transaction is expected to close in the second quarter
of 1999, subject to regulatory approvals and various closing conditions.

(21)  Subsequent Event

   On February 23, 1999,  Century's Board of Directors  declared a three-for-two
common stock split effected as a 50% stock dividend in March 1999. All per share
data included in this report has been  restated to reflect this stock split.  An
amount equal to the par value of the additional common shares issued pursuant to
the stock split has been reflected as a transfer from  paid-in-capital to common
stock on the consolidated financial statements for 1998.

                       CENTURY TELEPHONE ENTERPRISES, INC.
                    Consolidated Quarterly Income Information
<TABLE>
<CAPTION>
                                   First     Second     Third    Fourth
                                  quarter    quarter   quarter   quarter      
--------------------------------------------------------------------------------
                            (Dollars in thousands, except per share amounts)
1998                                           (unaudited)            
--------------------------------------------------------------------------------
<S>                             <C>          <C>       <C>       <C>  

Operating revenues              $ 371,720    388,378   401,949   415,038
Operating income                $ 110,132    121,488   128,184   120,007
Net income                      $  57,694     64,191    54,678    52,194
Diluted earnings per share*     $     .41        .46       .39       .37

1997                                                                   
--------------------------------------------------------------------------------

Operating revenues              $ 198,985    210,576   218,351   273,609
Operating income                $  57,698     62,405    69,815    77,852
Net income                      $  33,135     83,176    41,433    98,234
Diluted earnings per share*     $     .24        .61       .30       .71
--------------------------------------------------------------------------------
*Adjusted to reflect stock split in early 1999. See Note 21 of Notes to 
 Consolidated Financial Statements.
</TABLE>

   Diluted  earnings per share for both the first quarter and second  quarter of
1998  included  $.11 of net gain on sale or exchange of assets.  See Note 14 for
additional information.

   Diluted  earnings per share for the second quarter and fourth quarter of 1997
included $.34 and $.44 per share,  respectively,  of gain on sale of assets. The
fourth  quarter of 1997  includes one month of results of  operations of Pacific
Telecom, Inc.


Item 9.  Changes in and Disagreements With Accountants on Accounting
         and Financial Disclosure.

    None.

                                    PART III

Item 10. Directors and Executive Officers of the Registrant.

   The name, age and office(s) held by each of the Registrant's executive
officers are shown below. Each of the executive  officers listed below serves at
the pleasure of the Board of Directors, except Mr. Williams who has entered into
an employment  agreement with the Registrant.  The agreement's  initial term has
lapsed,  but the agreement  remains in effect from year to year,  subject to the
right of Mr. Williams or the Company to terminate such agreement.

Name                         Age       Office(s) held with Century
----                         ---       ---------------------------

Clarke M. Williams           77        Chairman of the Board
                                         of Directors

Glen F. Post, III            46        Vice Chairman of the Board of
                                         Directors, President and 
                                         Chief Executive Officer

W. Bruce Hanks               44        Executive Vice President
                                         and Chief Operating Officer

David D. Cole                41        Senior Vice President -
                                         Operational Support

Kenneth R. Cole              51        Senior Vice President -
                                         Operations

R. Stewart Ewing, Jr.        47        Senior Vice President and 
                                         Principal Financial
                                         and Accounting Officer

Harvey P. Perry              54        Senior Vice President, General
                                         Counsel and Secretary

   Each of the Registrant's  executive  officers has served as an officer of the
Registrant and one or more of its  subsidiaries  in varying  capacities for more
than the past five years.  Mr. Hanks has served as Executive  Vice President and
Chief  Operating  Officer  since  November  1998,  as Senior  Vice  President  -
Corporate  Development  and  Strategy  from  October 1996 to October 1998 and as
President -  Telecommunications  Services or a comparable  position from 1989 to
1996. Mr. David D. Cole has served as Senior Vice President  Operational Support
since  November 1998, as President - Wireless Group from October 1996 to October
1998 and as Vice  President from 1990 to 1996. Mr. Kenneth R. Cole has served as
Senior Vice President - Operations since November 1998, as President - Telephone
Group from January 1995 to October 1998 and Vice President from 1983 to 1994.

   The  balance  of the  information  required  by  Item 10 is  incorporated  by
reference to the Registrant's  definitive  proxy statement  relating to its 1999
annual meeting of stockholders  (the "Proxy  Statement"),  which Proxy Statement
will be filed  pursuant to  Regulation  14A within 120 days after the end of the
last fiscal year.

Item 11.    Executive Compensation.

   The information required by Item 11 is incorporated by reference to the Proxy
Statement.

Item 12.    Security Ownership of Certain Beneficial Owners and Management.

   The information required by Item 12 is incorporated by reference to the Proxy
Statement.

Item 13.    Certain Relationships and Related Transactions.

   The information required by Item 13 is incorporated by reference to the Proxy
Statement.


                                     PART IV

Item 14.    Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

       a.   Financial Statements

            (i) Consolidated Financial Statements:

                  Independent Auditors' Report on Consolidated Financial
                     Statements and Financial Statement Schedules

                  Consolidated Statements of Income for the years ended
                     December 31, 1998, 1997 and 1996

                  Consolidated Statements of Comprehensive Income for the years
                     ended December 31, 1998, 1997 and 1996

                  Consolidated Balance Sheets - December 31, 1998 and 1997

                  Consolidated Statements of Cash Flows for the years
                     ended December 31, 1998, 1997 and 1996

                  Consolidated Statements of Stockholders' Equity for the
                     years ended December 31, 1998, 1997 and 1996

                  Notes to Consolidated Financial Statements

                  Consolidated Quarterly Income Information (unaudited)

            (ii)  Schedules:*

                  I    Condensed Financial Information of Registrant

                  II   Valuation and Qualifying Accounts

                  *    Those schedules not listed above are omitted as not
                         applicable or not required.

b.    Reports on Form 8-K.

(i) The following item was reported in a Form 8-K filed December 3, 1998.

                 Item 5. Other Events - News release announcing the acquisition
                         of certain of  Ameritech's  telephone operations and
                         related directories in Wisconsin.



            (ii) The following items were reported in a Form 8-K filed December
10, 1998.

                 Item 2. News release announcing third quarter result of
operations.

c.    Exhibits:

           3(i)      Amended  and   Restated   Articles  of   Incorporation   of
                     Registrant,  dated as of December 2, 1996, (incorporated by
                     reference to Exhibit 3(i) to Registrant's  Annual Report on
                     Form 10-K for the year ended December 31, 1996).

           3(ii)     Registrant's  Bylaws,  as amended  through  October 7, 1998
                     (incorporated   by  reference  to  Exhibit   3(ii)  of  the
                     Company's  Quarterly  Report on Form  10-Q for the  quarter
                     ended September 30, 1998).

           4.1       Note Purchase  Agreement,  dated September 1, 1989, between
                     Registrant,  Teachers Insurance and Annuity  Association of
                     America and the Lincoln  National  Life  Insurance  Company
                     (incorporated  by reference to Exhibit 4.23 to Registrant's
                     Quarterly  Report  on  Form  10-Q  for  the  quarter  ended
                     September 30, 1989).

           4.2       Rights  Agreement,  dated as of August  27,  1996,  between
                     Century  Telephone  Enterprises,  Inc. and Society National
                     Bank,  as  Rights  Agent,  including  the  form  of  Rights
                     Certificate  (incorporated  by  reference  to  Exhibit 1 of
                     Registrant's  Current  Report on Form 8-K filed  August 30,
                     1996).

           4.3       Form  of  common  stock   certificate   of  the  Registrant
                     (incorporated  by reference to Exhibit 4.1 to  Registrant's
                     Quarterly  Report on Form 10-Q for the  quarter  ended June
                     30, 1993).

           4.4       Indenture  dated as of March 31,  1994  between the Company
                     and Regions Bank  (formerly  First American Bank & Trust of
                     Louisiana),   as  Trustee  (incorporated  by  reference  to
                     Exhibit 4.1 of the Company's Registration Statement on Form
                     S-3, Registration No. 33-52915).

           4.5       Resolutions  designating  the terms and  conditions  of the
                     Company's  7-3/4%  Senior  Notes,  Series  A,  due 2004 and
                     8-1/4% Senior Notes,  Series B, due 2024  (incorporated  by
                     reference to Exhibit 4.1 to Registrant's  Quarterly  Report
                     on Form 10-Q for the quarter ended March 31, 1994).

           4.6       Resolutions  designating  the terms and  conditions  of the
                     Company's  6.55% Senior Notes,  Series C, due 2005 and 7.2%
                     Senior Notes, Series D, due 2025 (incorporated by reference
                     to Exhibit 4.27 to Registrant's  Annual Report on Form 10-K
                     for the year ended December 31, 1995).

           4.7       Form  of  Senior  Notes  described  in 4.5  and  4.6  above
                     (incorporated  by reference to Exhibit 4.3 of the Company's
                     Registration   Statement  on  Form  S-3,  Registration  No.
                     33-52915).

           4.8       Competitive   Advance   and   Revolving   Credit   Facility
                     Agreement,  dated as of August 28, 1997, among  Registrant,
                     the lenders named therein,  and NationsBank of Texas,  N.A.
                     (incorporated  by reference to Exhibit 4.1 to  Registrant's
                     Quarterly  Report  on  Form  10-Q  for  the  quarter  ended
                     September 30, 1997).

           4.9       Resolutions  designating  the terms and  conditions  of the
                     Company's  6.15% Senior  Notes,  Series E, due 2005;  6.30%
                     Senior Notes,  Series F, due 2008;  and 6.875%  Debentures,
                     Series G, due 2028,  (incorporated  by reference to exhibit
                     4.9 to Registrant's Annual Report on Form 10-K for the year
                     ended December 31, 1997).

           4.10      Form of  Board  Resolution  to be used in  designating  and
                     authorizing  the  terms  and  conditions  of any  series of
                     Senior Debt  Securities  issuable under the Company's shelf
                     registration   statement   (incorporated  by  reference  to
                     Exhibit 4.3 of the Company's Registration Statement on Form
                     S-3, Registration No. 333-42013).

           4.11      Form of  Senior  Debt  Securities  described  in 4.9  above
                     (incorporated  by reference to Exhibit 4.4 of the Company's
                     Registration   Statement  on  Form  S-3,  Registration  No.
                     333-42013).

           4.12      First Supplemental Indenture, dated as of November 2, 1998,
                     to Indenture between CenturyTel of the Northwest,  Inc. and
                     The  First  National  Bank  of  Chicago   (incorporated  by
                     reference to Exhibit 10.2 to Registrant's  Quarterly Report
                     on Form 10-Q for the quarter ended September 30, 1998).

           10.1      Employee Benefit Plans

                     (a) Registrant's  Employee Stock  Ownership Plan and Trust,
                         as amended and restated December 30, 1994 (incorporated
                         by reference to Exhibit 10.1 to Registrant's  Quarterly
                         Report on Form  10-Q for the  quarter  ended  March 31,
                         1995),   amendment   thereto  dated  January  26,  1996
                         (incorporated   by  reference  to  Exhibit  10.1(a)  to
                         Registrant's  Annual  Report  on Form 10-K for the year
                         ended  December 31, 1995) and  amendment  thereto dated
                         July 15, 1996  (incorporated  by  reference  to Exhibit
                         10.2 to Registrant's  Quarterly Report on Form 10-Q for
                         the quarter ended June 30, 1996), and amendment thereto
                         dated December 31, 1996  (incorporated  by reference to
                         Exhibit 10.5 to Registrant's  Quarterly  Report on Form
                         10-Q  for  the  quarter  ended  March  31,  1997),  and
                         amendment thereto dated March 18, 1997 (incorporated by
                         reference  to Exhibit  10.6 to  Registrant's  Quarterly
                         Report on Form  10-Q for the  quarter  ended  March 31,
                         1997),  and  amendments  thereto  dated January 1, 1997
                         (incorporated   by   reference   to  Exhibit   10.3  to
                         Registrant's  Quarterly  Report  on Form  10-Q  for the
                         quarter  ended June 30, 1997),  and  amendment  thereto
                         dated December 29, 1998, included elsewhere herein.

                     (b) Registrant's  Stock  Bonus Plan,  PAYSOP and Trust,  as
                         amended and restated December 30, 1994 (incorporated by
                         reference  to Exhibit  10.2 to  Registrant's  Quarterly
                         Report on Form  10-Q for the  quarter  ended  March 31,
                         1995),   amendment   thereto   dated   July  11,   1995
                         (incorporated   by   reference   to  Exhibit   10.4  to
                         Registrant's  Quarterly  Report  on Form  10-Q  for the
                         quarter ended June 30, 1995),  amendment  thereto dated
                         January 26, 1996  (incorporated by reference to Exhibit
                         10.1(b) to Registrant's  Annual Report on Form 10-K for
                         the year ended December 31, 1995) and amendment thereto
                         dated  July 15,  1996  (incorporated  by  reference  to
                         Exhibit 10.1 to Registrant's  Quarterly  Report on Form
                         10-Q  for  the  quarter  ended  June  30,  1996),   and
                         amendment thereto dated December 31, 1996 (incorporated
                         by reference to Exhibit 10.4 to Registrant's  Quarterly
                         Report on Form  10-Q for the  quarter  ended  March 31,
                         1997),  and  amendments  thereto  dated January 1, 1997
                         (incorporated   by   reference   to  Exhibit   10.2  to
                         Registrant's  Quarterly  Report  on Form  10-Q  for the
                         quarter  ended June 30, 1997),  and  amendment  thereto
                         dated December 29, 1998, included elsewhere herein.

                     (c) Registrant's Dollars & Sense Plan and Trust, as amended
                         and restated,  effective  January 1, 1998 and amendment
                         thereto   dated   December  29,  1998,   both  included
                         elsewhere herein.

                     (d) Registrant's Restated Supplemental Executive Retirement
                         Plan,  generally  effective  as of  November  16,  1995
                         (incorporated   by  reference  to  Exhibit  10.1(d)  to
                         Registrant's  Annual  Report  on Form 10-K for the year
                         ended  December 31, 1995) and  amendment  thereto dated
                         November 21, 1996 (incorporated by reference to Exhibit
                         10.1(d) to Registrant's  Annual Report on Form 10-K for
                         the year ended December 31, 1996).

                     (e) Registrant's 1983 Restricted Stock Plan, dated February
                         21,  1984,  as amended and  restated as of November 16,
                         1995  (incorporated  by reference to Exhibit 10.1(e) to
                         Registrant's  Annual  Report  on Form 10-K for the year
                         ended  December 31, 1995) and  amendment  thereto dated
                         November  21,  1996,   (incorporated  by  reference  to
                         Exhibit 10.1(e) to  Registrant's  Annual Report on Form
                         10-K  for  the  year  ended  December  31,  1996),  and
                         amendment thereto dated February 25, 1997 (incorporated
                         by reference to Exhibit 10.3 to Registrant's  Quarterly
                         Report on Form  10-Q for the  quarter  ended  March 31,
                         1997).

                     (f) Registrant's Key Employee Incentive  Compensation Plan,
                         dated  January 1, 1984,  as amended and  restated as of
                         November 16, 1995 (incorporated by reference to Exhibit
                         10.1(f) to Registrant's  Annual Report on Form 10-K for
                         the year ended December 31, 1995) and amendment thereto
                         dated November 21, 1996  (incorporated  by reference to
                         Exhibit 10.1 (f) to Registrant's  Annual Report on Form
                         10-K  for  the  year  ended  December  31,  1996),  and
                         amendment thereto dated February 25, 1997 (incorporated
                         by reference to Exhibit 10.2 to Registrant's  Quarterly
                         Report on Form  10-Q for the  quarter  ended  March 31,
                         1997).

                     (g) Registrant's  1988  Incentive  Compensation  Program as
                         amended and restated August 22, 1989  (incorporated  by
                         reference  to Exhibit  19.8 to  Registrant's  Quarterly
                         Report on Form 10-Q for the quarter ended September 30,
                         1989) and  amendment  thereto  dated  November 21, 1996
                         (incorporated   by  reference  to  Exhibit  10.1(g)  to
                         Registrant's  Annual  Report  on Form 10-K for the year
                         ended December 31, 1996).

                     (h) Form of Stock Option Agreement  entered into in 1988 by
                         the Registrant, pursuant to 1988 Incentive Compensation
                         Program, with certain of its officers  (incorporated by
                         reference  to  Exhibit  10.10  to  Registrant's  Annual
                         Report on Form  10-K for the year  ended  December  31,
                         1988) and amendment thereto  (incorporated by reference
                         to Exhibit 4.6 to Registrant's Registration No.
                         33-31314).

                     (i) Registrant's 1990 Incentive Compensation Program, dated
                         March 15, 1990  (incorporated  by  reference to Exhibit
                         19.1 to Registrant's  Quarterly Report on Form 10-Q for
                         the quarter ended June 30, 1990) and amendment  thereto
                         dated November 21, 1996  (incorporated  by reference to
                         Exhibit 10.1(i) to  Registrant's  Annual Report on Form
                         10-K for the year ended December 31, 1996).

                     (j) Form of Stock Option Agreement  entered into in 1990 by
                         the Registrant, pursuant to 1990 Incentive Compensation
                         Program, with certain of its officers  (incorporated by
                         reference  to Exhibit  19.3 to  Registrant's  Quarterly
                         Report  on Form  10-Q for the  quarter  ended  June 30,
                         1990) and  amendment  thereto  dated as of May 22, 1995
                         (incorporated   by   reference   to  Exhibit   10.1  to
                         Registrant's  Quarterly  Report  on Form  10-Q  for the
                         quarter ended September 30, 1995).

                     (k) Form of Stock Option Agreement  entered into in 1992 by
                         the Registrant, pursuant to 1990 Incentive Compensation
                         Program,  with certain of its  officers  and  employees
                         (incorporated   by  reference   to  Exhibit   10.17  to
                         Registrant's  Annual  Report  on Form 10-K for the year
                         ended December 31, 1992) and amendment thereto dated as
                         of May 22, 1995  (incorporated  by reference to Exhibit
                         10.2 to Registrant's  Quarterly Report on Form 10-Q for
                         the quarter ended September 30, 1995).

                     (l) Registrant's 1995 Incentive  Compensation Plan approved
                         by   Registrant's   shareholders   on  May   11,   1995
                         (incorporated   by   reference   to   Exhibit   4.4  to
                         Registration No. 33-60061) and amendment  thereto dated
                         November 21, 1996 (incorporated by Reference to Exhibit
                         10.1 (l) to Registrant's Annual Report on Form 10-K for
                         the  year  ended  December  31,  1996),  and  amendment
                         thereto  dated  February  25,  1997   (incorporated  by
                         reference  to Exhibit  10.1 to  Registrant's  Quarterly
                         Report on Form  10-Q for the  quarter  ended  March 31,
                         1997).

                     (m) Form  of  Stock  Option  Agreement,  pursuant  to  1995
                         Incentive  Compensation  Plan  and  dated as of May 22,
                         1995,  entered  into by  Registrant  and  its  officers
                         (incorporated   by   reference   to  Exhibit   10.5  to
                         Registrant's  Quarterly  Report  on Form  10-Q  for the
                         quarter ended June 30, 1995).

                     (n) Form  of  Stock  Option  Agreement,  pursuant  to  1995
                         Incentive  Compensation  Plan and  dated as of June 23,
                         1995,  entered  into  by  Registrant  and  certain  key
                         employees (incorporated by reference to Exhibit 10.6 to
                         Registrant's  Quarterly  Report  on Form  10-Q  for the
                         quarter ended June 30, 1995).

                     (o) Form of  Performance  Share  Agreement  Under  the 1990
                         Incentive  Compensation  Program,  entered into in 1993
                         with   certain   of   its   officers   and    employees
                         (incorporated   by   reference   to  Exhibit   28.1  to
                         Registrant's  Quarterly  Report  on Form  10-Q  for the
                         quarter  ended March 31,  1993) and  amendment  thereto
                         dated as of May 22, 1995  (incorporated by reference to
                         Exhibit 10.3 to Registrant's  Quarterly  Report on Form
                         10-Q for the quarter ended September 30, 1995).

                     (p) Registrant's Restated Supplemental Defined Contribution
                         Plan,  dated as of November 16, 1995  (incorporated  by
                         reference  to Exhibit  10.1(q) to  Registrant's  Annual
                         Report on Form  10-K for the year  ended  December  31,
                         1995),   amendment   thereto   dated   July  15,   1996
                         (incorporated   by   reference   to  Exhibit   10.4  to
                         Registrant's  Quarterly  Report  on Form  10-Q  for the
                         quarter  ended  June 30,  1996) and  amendment  thereto
                         dated November 21, 1996  (incorporated  by reference to
                         Exhibit 10.1 (p) to Registrant's  Annual Report on Form
                         10-K for the year ended December 31, 1996).

                     (q) Registrant's Amended and Restated  Supplemental Dollars
                         & Sense Plan, effective as of January 1, 1999, included
                         elsewhere herein.

                     (r) Registrant's  Amended and Restated Salary  Continuation
                         (Disability) Plan for Officers, dated November 26, 1991
                         (incorporated   by  reference   to  Exhibit   10.16  of
                         Registrant's  Annual  Report  on Form 10-K for the year
                         ended December 31, 1991).

                     (s) Registrant's  Restated  Outside  Directors'  Retirement
                         Plan,  dated as of November 16, 1995  (incorporated  by
                         reference  to Exhibit  10.1(t) to  Registrant's  Annual
                         Report on Form  10-K for the year  ended  December  31,
                         1995).

                     (t) Registrant's  Restated  Deferred  Compensation Plan for
                         Outside  Directors,  dated  as  of  November  16,  1995
                         (incorporated   by  reference  to  Exhibit  10.1(u)  to
                         Registrant's  Annual  Report  on Form 10-K for the year
                         ended December 31, 1995).

                     (u) Form  of  Stock  Option  Agreement,  pursuant  to  1995
                         Incentive  Compensation  Plan and dated as of  February
                         24, 1997,  entered into by Registrant  and its officers
                         (incorporated   by   reference   to  Exhibit   10.4  to
                         Registrant's  Quarterly  Report  on Form  10-Q  for the
                         quarter ended June 30, 1997).

                     (v) Registrant's  Chairman/Chief Executive Officer
                         Short-Term Incentive Program (incorporated by reference
                         to Exhibit  10.6 to  Registrant's  Quarterly  Report on
                         Form 10-Q for the quarter ended June 30, 1997).

                     (w) Amended and Restated  Restricted  Stock and Performance
                         Share    Agreement,    pursuant   to   1995   Incentive
                         Compensation  Plan,  dated  as  of  February  24,  1998
                         (incorporated   by   reference   to  Exhibit   10.2  to
                         Registrant's  Quarterly  Report  on Form  10-Q  for the
                         quarter ended March 31, 1998).

                     (x) Form  of  Restricted   Stock  and   Performance   Share
                         Agreement,  pursuant  to  1995  Incentive  Compensation
                         Plan,  dated as of February 24, 1998  (incorporated  by
                         reference  to Exhibit  10.3 to  Registrant's  Quarterly
                         Report on Form  10-Q for the  quarter  ended  March 31,
                         1998).

                     (y) Registrant's   Supplemental   Defined   Benefit   Plan,
                         effective  as of January 1,  1999,  included  elsewhere
                         herein.

                     (z) Registrant's  Amended  and  Restated  Retirement  Plan,
                         effective  as of January 1,  1999,  included  elsewhere
                         herein.

           10.2      Employment, Severance and Related Agreements

                     (a) Employment  Agreement,  dated  May  24,  1993,  by  and
                         between Clarke M. Williams and Registrant (incorporated
                         by reference to Exhibit 19.1 to Registrant's  Quarterly
                         Report  on Form  10-Q for the  quarter  ended  June 30,
                         1993) and  amendment  thereto  dated as of February 27,
                         1996  (incorporated  by reference to Exhibit 10.2(a) to
                         Registrant's  Annual  Report  on Form 10-K for the year
                         ended December 31, 1995).

                     (b) Form of Amended and Restated  Severance  Agreement,  by
                         and  between  Registrant  and  each  of  its  executive
                         officers  other than  Clarke M.  Williams,  dated as of
                         November 16, 1995 (incorporated by reference to Exhibit
                         10.2(b) to Registrant's  Annual Report on Form 10-K for
                         the year ended December 31, 1995).

                     (c) Form of Amended and Restated  Severance  Agreement,  by
                         and between  Registrant  and three of its  officers who
                         are not  executive  officers,  dated as of November 16,
                         1995  (incorporated  by reference to Exhibit 10.2(c) to
                         Registrant's  Annual  Report  on Form 10-K for the year
                         ended December 31, 1995).

                     (d) Agreement,  dated December 31, 1994, by and between Jim
                         D. Reppond and Registrant (incorporated by reference to
                         Exhibit  10.24 to  Registrant's  Annual  Report on Form
                         10-K for the year ended December 31, 1994).

                     (e)  Consulting Agreement, dated as of July 2, 1996, by and
                         between Century Telephone Enterprises,  Inc. and Jim D.
                         Reppond  (incorporated  by  reference  to Exhibit 10 to
                         Registrant's  Quarterly  Report  on Form  10-Q  for the
                         quarter ended September 30, 1996).

           10.3      Other Agreements

                     (a) Stock Purchase Agreement, dated as of June 11, 1997, by
                         and among PacifiCorp  Holdings, Inc., Pacific Telecom, 
                         Inc., Century Telephone  Enterprises, Inc. and Century
                         Cellunet, Inc. (incorporated by reference to Exhibit
                         2.1 to Registrant's Current Report on Form  8-K filed
                         June 24, 1997) and amendment thereto, dated November 5,
                         1997 (incorporated by reference to Exhibit 2.2 to 
                         Registrant's Current Report on Form 8-K dated December 
                         1, 1997 and filed December 11, 1997).

                     (b) Purchase   Agreement  by  and  among  ALEC  Acquisition
                         Corporation,  CenturyTel  of the  Northwest,  Inc.  and
                         CenturyTel  Wireless,   Inc.,  dated  August  14,  1998
                         (incorporated   by   reference   to  Exhibit   10.1  to
                         Registrant's  Quarterly  Report  on Form  10-Q  for the
                         quarter ended September 30, 1998).

           21        Subsidiaries of the Registrant, included elsewhere herein.

           23        Independent Auditors' Consent, included elsewhere herein.

           27        Financial Data Schedule, included elsewhere herein.



                                         SIGNATURES


     Pursuant  to the  requirements  of  Section  13 or 15(d) 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 TELEPHONE ENTERPRISES, INC.


Date:    March 15, 1999                     By: /s/ Clarke M. Williams
                                                ----------------------
                                                Clarke M. Williams
                                                Chairman of the Board

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities and on the date indicated.


/s/ Clark M. Williams 
-------------------------     Chairman of the Board
Clarke M. Williams              of Directors               March 15, 1999

                              
                              Vice Chairman of the  
/s/ Glen F. Post, III           Board of Directors,
-------------------------       President, and Chief
Glen F. Post, III               Executive Officer          March 15, 1999


                              
/s/ R. Stewart Ewing, Jr.     Senior Vice President  
-------------------------       and Principal Financial
R. Stewart Ewing, Jr            and Accounting Officer     March 15, 1999


                              
/s/ Harvey P. Perry           Senior Vice President,  
------------------------        General Counsel,
Harvey P. Perry                 Secretary and Director     March 15, 1999


                              
/s/ W. Bruce Hanks            Executive Vice President,  
------------------------        Chief Operating Officer
W. Bruce Hanks                  and Director               March 15, 1999


/s/ William R. Boles, Jr.    
------------------------      
William R. Boles, Jr.         Director                     March 15, 1999


/s/ Virginia Boulet
------------------------
Virginia Boulet               Director                     March 15,1999


/s/ Ernest Butler, Jr.        
-------------------------
Ernest Butler, Jr.            Director                     March 15, 1999


/s/ Calvin Czeschin           
------------------------
Calvin Czeschin               Director                     March 15, 1999


/s/ James B. Gardner          
------------------------
James B. Gardner              Director                     March 15, 1999


/s/ R. L. Hargrove, Jr.      
------------------------
R. L. Hargrove, Jr.           Director                     March 15, 1999


/s/ Johnny Hebert             
------------------------
Johnny Hebert                 Director                     March 15, 1999


/s/ F. Earl Hogan             
------------------------
F. Earl Hogan                 Director                     March 15, 1999


/s/ C. G. Melville, Jr.       
------------------------
C. G. Melville, Jr.           Director                     March 15, 1999


/s/ Jim D. Reppond            
------------------------
Jim D. Reppond                Director                     March 15, 1999






SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT CENTURY TELEPHONE ENTERPRISES, INC. (Parent Company) STATEMENTS OF INCOME <TABLE> <CAPTION> Year ended December 31, ------------------------------------------------------------------------------ 1998 1997 1996 ------------------------------------------------------------------------------ (Dollars in thousands) <S> <C> <C> <C> REVENUES $ 16,055 9,666 6,520 ------------------------------------------------------------------------------ EXPENSES Operating expenses 15,788 9,088 6,071 Depreciation and amortization 31,842 9,401 7,286 ------------------------------------------------------------------------------ Total expenses 47,630 18,489 13,357 ------------------------------------------------------------------------------ OPERATING LOSS (31,575) (8,823) (6,837) ------------------------------------------------------------------------------- OTHER INCOME (EXPENSE) Gain on sales of assets 28,085 172,537 - Loss on investment - - (1,100) Interest expense (131,309) (49,738) (36,709) Interest income 40,005 28,697 28,884 ------------------------------------------------------------------------------ Total other income (expense) (63,219) 151,496 (8,925) ------------------------------------------------------------------------------ INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN SUBSIDIARIES' EARNINGS (94,794) 142,673 (15,762) Income tax benefit (expense) 21,857 (55,591) 4,467 ------------------------------------------------------------------------------ INCOME (LOSS) BEFORE EQUITY IN SUBSIDIARIES' EARNINGS (72,937) 87,082 (11,295) Equity in subsidiaries' earnings 301,694 168,896 140,372 ------------------------------------------------------------------------------ NET INCOME $ 228,757 255,978 129,077 ============================================================================== </TABLE> See accompanying notes to condensed financial information of registrant. SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (continued) CENTURY TELEPHONE ENTERPRISES, INC. (Parent Company) BALANCE SHEETS <TABLE> <CAPTION> December 31, ------------------------------------------------------------------------------ 1998 1997 ------------------------------------------------------------------------------ (Dollars in thousands) <S> <C> <C> ASSETS CURRENT ASSETS Cash and cash equivalents $ 6,540 28,300 Receivables from subsidiaries 142,912 76,931 Other receivables 23,906 792 Prepayments and other 259 28 ------------------------------------------------------------------------------ Total current assets 173,617 106,051 ------------------------------------------------------------------------------ PROPERTY, PLANT AND EQUIPMENT Property and equipment 1,162 1,236 Accumulated depreciation (676) (744) ------------------------------------------------------------------------------ Net property, plant and equipment 486 492 ------------------------------------------------------------------------------ INVESTMENTS AND OTHER ASSETS Investments in subsidiaries (at equity) 3,170,861 2,706,066 Receivables from subsidiaries 514,366 655,398 Other investments 42,418 75,546 Deferred charges 58,073 5,878 ------------------------------------------------------------------------------ Total investments and other assets 3,785,718 3,442,888 ------------------------------------------------------------------------------ TOTAL ASSETS $ 3,959,821 3,549,431 ============================================================================== LIABILITIES AND EQUITY CURRENT LIABILITIES Current maturities of long-term debt $ 30,046 11,486 Payables to subsidiaries 365,517 218,993 Accrued interest 27,711 11,088 Other accrued liabilities 23,475 41,628 ------------------------------------------------------------------------------ Total current liabilities 446,749 283,195 ------------------------------------------------------------------------------ LONG-TERM DEBT 1,852,253 1,883,467 ------------------------------------------------------------------------------ PAYABLES TO SUBSIDIARIES 32,406 46,371 ------------------------------------------------------------------------------ DEFERRED CREDITS AND OTHER LIABILITIES 96,931 36,126 ------------------------------------------------------------------------------ STOCKHOLDERS' EQUITY Common stock, $1.00 par value, authorized 175,000,000 shares, issued and outstanding 138,082,926* and 91,103,674 shares 138,083 91,104 Paid-in capital 451,535 469,586 Unrealized holding gain on investments, net of taxes 7,217 11,893 Retained earnings 932,611 728,033 Unearned ESOP shares (6,070) (8,450) Preferred stock - non-redeemable 8,106 8,106 ------------------------------------------------------------------------------ Total stockholders' equity 1,531,482 1,300,272 ------------------------------------------------------------------------------ TOTAL LIABILITIES AND EQUITY $ 3,959,821 3,549,431 ============================================================================== * Adjusted to reflect stock split in early 1999. </TABLE> See accompanying notes to condensed financial information of registrant. SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (Continued) CENTURY TELEPHONE ENTERPRISES, INC. (Parent Company) STATEMENTS OF CASH FLOWS <TABLE> <CAPTION> Year ended December 31, ------------------------------------------------------------------------------ 1998 1997 1996 ------------------------------------------------------------------------------ (Dollars in thousands) <S> <C> <C> <C> OPERATING ACTIVITIES Net income $ 228,757 255,978 129,077 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 31,842 9,401 7,286 Deferred income taxes 12,902 8,068 2,934 Earnings of subsidiaries (301,694) (168,896) (140,372) Gain on sale of assets (28,085) (172,537) - Changes in current assets and current liabilities: Other receivables (23,114) 11,615 (2,639) Other accrued liabilities (40,535) 35,754 329 Other current assets and liabilities, net 37,754 8,412 3,998 Other, net 9,724 958 3,297 ------------------------------------------------------------------------------ Net cash provided by (used in) operating activities (72,449) (11,247) 3,910 ------------------------------------------------------------------------------ INVESTING ACTIVITIES Acquisitions (225,569) (1,283,291) (46,327) Capital contributions to subsidiaries - (16,634) (20,179) Dividends received from subsidiaries 116,906 117,499 473 Receivables from subsidiaries 303,221 (235,772) (45,945) Payables to subsidiaries (90,319) 9,738 97,908 Proceeds from sales of assets 40,778 202,705 - Investment in unconsolidated personal communications services entity - - 18,900 Note receivable - 22,500 1,667 Other, net (28,046) (14,959) (4,425) ------------------------------------------------------------------------------ Net cash provided by (used in) investing activities 116,971 (1,198,214) 2,072 ------------------------------------------------------------------------------ FINANCING ACTIVITIES Proceeds from issuance of long-term debt 950,000 1,297,435 47,500 Payments of long-term debt (960,274) (52,214) (42,357) Payment of hedge contracts (40,237) - - Proceeds from issuance of common stock 15,033 14,156 10,089 Payment of debt issuance costs (6,625) Cash dividends paid (24,179) (22,671) (21,775) ------------------------------------------------------------------------------ Net cash provided by (used in) financing activities (66,282) 1,236,706 (6,543) ------------------------------------------------------------------------------ Net increase (decrease) in cash and cash equivalents (21,760) 27,245 (561) Cash and cash equivalents at beginning of year 28,300 1,055 1,616 ------------------------------------------------------------------------------ CASH AND CASH EQUIVALENTS AT END OF YEAR $ 6,540 28,300 1,055 ============================================================================== See accompanying notes to condensed financial information of registrant. </TABLE> SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (continued) CENTURY TELEPHONE ENTERPRISES, INC. (Parent Company) NOTES TO CONDENSED FINANCIAL INFORMATION OF REGISTRANT (A) LONG-TERM DEBT The approximate annual debt maturities for the five years subsequent to December 31, 1998 are as follows: 1999 - $ 30.0 million 2000 - $ 37.4 million 2001 - $ 56.6 million 2002 - $ 688.8 million 2003 - $ 3.8 million (B) GUARANTEES As of December 31, 1998, Century has guaranteed a promissory note for a subsidiary of $2.0 million, as well as the applicable interest and premium. (C) DIVIDENDS FROM SUBSIDIARIES Dividends paid to Century by consolidated subsidiaries were $116.9 million, $117.5 million and $472,800 during 1998, 1997 and 1996, respectively. (D) INCOME TAXES AND INTEREST PAID Income taxes paid by Century (including amounts reimbursed from subsidiaries) were $162.0 million, $71.8 million and $56.0 million during 1998, 1997, and 1996 respectively. Interest paid by Century was $114.7 million, $42.4 million and $37.3 million during 1998, 1997 and 1996, respectively. (E) AFFILIATED TRANSACTIONS Century provides and bills management services to subsidiaries and in certain instances makes interest bearing advances to finance construction of plant and purchases of equipment. Century recorded intercompany interest income of $39.7 million, $26.6 million and $26.4 million in 1998, 1997 and 1996, respectively. (F) SUBSEQUENT EVENT On February 23, 1999, Century's Board of Directors declared a three-for-two common stock split effected as a 50% stock dividend in March 1999. An amount equal to the par value of the additional common shares issued pursuant to the stock split has been reflected as a transfer from paid-in-capital to common stock on the Condensed Financial Information of Registrant for 1998. SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS CENTURY TELEPHONE ENTERPRISES, INC. For the years ended December 31, 1998, 1997 and 1996 <TABLE> <CAPTION> Additions Balance at charged to Deductions Balance beginning costs and from Other at end Description of period expenses allowance(1) changes(2) of period -------------------------------------------------------------------------------- (Dollars in thousands) <S> <C> <C> <C> <C> <C> Year ended December 31, 1998 Allowance for doubtful accounts $ 5,954 13,951 (15,775) 25 4,155 Year ended December 31, 1997 Allowance for doubtful accounts $ 3,327 11,838 (9,975) 764 5,954 Year ended December 31, 1996 Allowance for doubtful accounts $ 2,768 10,155 (9,662) 66 3,327 (1) Customers' accounts written-off, net of recoveries. (2) Allowance for doubtful accounts at the date of acquisition of purchased subsidiaries, net of allowance for doubtful accounts at the date of disposition of subsidiaries sold. </TABLE>

                                                               Exhibit 10.1(a)

                               AMENDMENT TO THE
                      CENTURY TELEPHONE ENTERPRISES, INC.
                   EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST

STATE OF LOUISIANA

PARISH OF OUACHITA

      BE IT KNOWN, that on this 29th day of December , 1998, before me, a Notary
Public, duly commissioned and qualified in and for the Parish of Ouachita, State
of  Louisiana,  therein  residing,  and  in  the  presence  of  the  undersigned
witnesses:

      PERSONALLY CAME AND APPEARED:

      CENTURY TELEPHONE ENTERPRISES, INC., represented herein by its Senior Vice
President and Chief Financial  Officer, R. Stewart Ewing,  Jr., as Settlor and
Employer, which hereby executes the following amendment to the Century Telephone
Enterprises, Inc. Employee Stock Ownership Plan and Trust, such amendment to be
effective immediately:

      The last sentence  of Section  2.1 of the Plan is hereby  deleted and the
following is inserted in lieu thereof:

      In addition, Employees of the following are not eligible to participate 
in the Plan:

            Century Business Communications, Inc.
            Century Interactive Communications, Inc.
            CenturyTel Security Systems, Inc. (and any predecessors thereto)

      Employees of CenturyTel of Pecoco, Inc.(formerly Pecoco, Inc.) and its
subsidiaries are eligible to  participate  in the Plan as of April 27, 1997. 
Employees of CenturyTel of the Northwest, Inc.(formerly Pacific Telecom, Inc.)
and Pacific Telecom Cellular, Inc., their subsidiaries, and their Affiliates
prior to the  acquisition of Pacific  Telecom,  Inc. by Century  Telephone
Enterprises, Inc.or an Affiliate thereof are eligible to participate in the 
Plan as of January 1, 1999.

      THUS DONE AND SIGNED on the day first above shown, in the presence of the
undersigned competent witnesses, who hereunto sign their names with the said
appearer and me, Notary, after reading of the whole.

WITNESSES:                          CENTURY TELEPHONE ENTERPRISES, INC.

 /s/ Ray B. Finney                  BY:    /s/ R. Stewart Ewing, Jr.    
---------------------                   -----------------------------
                                         R. Stewart Ewing, Jr. Senior Vice
                                         President and Chief Financial Officer
 /s/ Jeffrey S. Glover  
 ---------------------  

                             /s/ Kathy Tettleton
                             -------------------
                                 NOTARY PUBLIC


                      ACCEPTANCE OF AMENDMENTS BY TRUSTEE

STATE OF LOUISIANA

PARISH OF OUACHITA

      On this 29th day of December, 1998.

      BEFORE ME, a  Notary Public, and in the  presence of the undersigned
competent witnesses, personally came and appeared:

                           REGIONS BANK OF LOUISIANA

which  declared that it is appearing  herein for the purpose of accepting and it
does hereby accept the  Amendments to the Century  Telephone  Enterprises,  Inc.
Employee  Stock  Ownership Plan and Trust adopted by the Settlor on the 29th day
of December, 1998.

      THUS  DONE AND  SIGNED  at  Monroe,  Louisiana,  on the date  first  above
      written.  THUS DONE AND  SIGNED at  Monroe,  Louisiana,  on the date first
      above written.

WITNESSES:                          REGIONS BANK OF LOUISIANA, TRUSTEE

 /s/ Twana Pulliam                  By: /s/ Kevin Rodgers        
-----------------------               -------------------------------        
                                        Kevin Rodgers, Vice President

/s/Lani Ingram-Schyard  
-----------------------

                             /s/ Lisa K. McGivney   
                             --------------------   
                                 NOTARY PUBLIC

                                                              Exhibit 10.1(b)
                               AMENDMENT TO THE
                      CENTURY TELEPHONE ENTERPRISES, INC.
                      STOCK BONUS PLAN, PAYSOP AND TRUST

STATE OF LOUISIANA

PARISH OF OUACHITA

      BE IT  KNOWN,  that on this 29th day of  December,  1998,  before  me, a
Notary  Public,  duly  commissioned  and  qualified  in and for the  Parish of
Ouachita,  State of Louisiana,  therein  residing,  and in the presence of the
undersigned witnesses:

      PERSONALLY CAME AND APPEARED:

      CENTURY TELEPHONE  ENTERPRISES,  INC.,  represented herein by its Senior
Vice President and Chief Financial Officer,  R. Stewart Ewing, Jr., as Settlor
and Employer,  which hereby  executes the  following  amendment to the Century
Telephone  Enterprises,   Inc.  Stock  Bonus  Plan,  PAYSOP  and  Trust,  such
amendment to be effective immediately:

      The last  sentence of Section 2.1 of the Plan is hereby  deleted and the
following is inserted in lieu thereof:

      In addition,  Employees of the following are not eligible to participate
in the Plan:

            Century Business Communications, Inc.

            Century Interactive Communications, Inc.

            CenturyTel Security Systems, Inc. (and any predecessors thereto)

      Employees of CenturyTel of Pecoco, Inc. (formerly Pecoco,  Inc.) and its
subsidiaries  are  eligible to  participate  in the Plan as of April 27, 1997.
Employees of CenturyTel of the Northewest,  Inc.  (formerly  Pacific  Telecom,
Inc.) and  Pacific  Telecom  Cellular,  Inc.,  their  subsidiaries,  and their
Affiliates  prior to the  acquisition  of  Pacific  Telecom,  Inc.  by Century
Telephone   Enterprises,   Inc.  or  an  Affiliate  thereof  are  eligible  to
participate in the Plan as of January 1, 1999.

     THUS DONE AND SIGNED on the day first above  shown,  in the  presence of
the undersigned  competent  witnesses,  who hereunto sign their names with the
said appearer and me, Notary, after reading of the whole.

WITNESSES:                          CENTURY TELEPHONE ENTERPRISES, INC.

 /s/ Ray B. Finney                  BY:    /s/ R. Stewart Ewing, Jr.    
----------------------                  --------------------------------    
                                      R. Stewart Ewing, Jr. Senior Vice
                                      President and Chief Financial Officer
 /s/ Jeffrey S. Glover  
----------------------  

                              /s/ Kathy Tettleton  
                              -------------------  
                                 NOTARY PUBLIC


                      ACCEPTANCE OF AMENDMENTS BY TRUSTEE

STATE OF LOUISIANA

PARISH OF OUACHITA

      On this 29th day of December, 1998.

      BEFORE  ME,  a Notary  Public, and in the presence  of the  undersigned
competent witnesses, personally came and appeared:

                           REGIONS BANK OF LOUISIANA

which declared  that it is appearing herein for the purpose of accepting and it
does hereby accept the Amendments  to the Century  Telephone  Enterprises,  Inc.
Stock  Bonus  Plan, PAYSOP and Trust adopted by the Settlor on the 29th day of
December, 1998.

      THUS DONE  AND  SIGNED  at  Monroe, Louisiana, on the date  first  above
written.


WITNESSES:                          REGIONS BANK OF LOUISIANA, TRUSTEE

 /s/ Twana Pulliam                  By: /s/ Kevin Rodgers        
-----------------------               -------------------------------        
                                        Kevin Rodgers, Vice President

/s/Lani Ingram-Schyard  
-----------------------

                             /s/ Lisa K. McGivney   
                             --------------------   
                                 NOTARY PUBLIC

                                                                 Exhibit 10.1(c)

      Century Telephone Enterprises, Inc. Dollars & Sense Plan and Trust

               As Amended and Restated Effective January 1, 1998


Century Telephone  Enterprises,  Inc. (the "Company") previously established the
Century Telephone  Enterprises,  Inc. Dollars & Sense Plan (the "Plan"), for the
exclusive  benefit of eligible  employees  of the Company and its  participating
affiliates.  The Plan is intended to constitute a qualified profit sharing plan,
as described in Code section 401(a), which includes a qualified cash or deferred
arrangement,  as described in Code section  401(k).  Effective July 1, 1993, the
San Marcos Telephone Company, Inc. and SM Telecorp Companies Retirement Plan was
merged into the Plan.  Effective  January 10, 1998, assets from the PacifiCorp K
Plus  Employee  Savings  Plan   attributable  to  participants   thereunder  who
immediately prior to the date of transfer are employees of Pacific Telecom, Inc.
were transferred to the Plan.

The  provisions  of the Plan and Trust  relating to the Trustee  constitute  the
trust  agreement  which  is  entered  into  by  and  between  Century  Telephone
Enterprises, Inc. and Merrill Lynch Trust Company, FSB. The Trust is intended to
be tax exempt, as described in Code section 501(a).

The Plan is intended to comply with the qualification  requirements of the Small
Business Job  Protection  Act of 1996 (the "SBJPA") and is intended to comply in
operation  therewith.  To the  extent  that the  Plan,  as set forth  below,  is
subsequently  determined to be insufficient to comply with such requirements and
any  regulations  issued under the SBJPA,  the Plan shall later be amended to so
comply.

The Plan  constitutes  an amendment  and  restatement  of the Century  Telephone
Enterprises,  Inc.  Dollars & Sense Plan  effective  January 1, 1998,  which was
originally  established  effective  as of May 1,  1986,  and its  related  trust
agreement.

The Century Telephone  Enterprises,  Inc. Dollars & Sense Plan and Trust, as set
forth in this document,  is hereby amended and restated  effective as of January
1, 1998. The Plan and Trust were last restated generally effective April 1, 1992
and amended five times thereafter including a change in trustee amendment.


Date:  12/31 , 1998                 Century Telephone Enterprises, Inc.
      -------------

                                    By:  /s/ R. Stewart Ewing, Jr.   
                                    ------------------------------   
                                    Title: Sr. Vice President and C.F.O.

The trust  agreement  set forth in those  provisions of the Plan and Trust which
relate to the Trustee is hereby executed.

Date:   2/25, 1999                    Merrill Lynch Trust Company, FSB
      -------------

                                      By:  /s/ Robin Hopkins             
                                      --------------------------             
                                      Title:  Assistant Vice President    


                               TABLE OF CONTENTS


1     DEFINITIONS............................................................1
      -----------

2     ELIGIBILITY...........................................................11
      -----------
      2.1    Eligibility....................................................11
      2.2    Ineligible Employees...........................................11
      2.3    Ineligible, Terminated or Former Participants..................11

3     PARTICIPANT CONTRIBUTIONS.............................................12
      -------------------------
      3.1    Employee Pre-Tax Contribution Election.........................12
      3.2    Changing a Contribution Election...............................12
      3.3    Revoking and Resuming a Contribution Election..................12
      3.4    Contribution Percentage Limits.................................12
      3.5    Refunds When Contribution Dollar Limit Exceeded................13
      3.6    Timing, Posting and Tax Considerations.........................13

4     ROLLOVER  CONTRIBUTIONS AND TRANSFERS FROM AND TO OTHER QUALIFIED 
      ------------------------------------------------------------------
      PLANS.................................................................14
      -----
      4.1    Rollover Contributions.........................................14
      4.2    Transfers From and To Other Qualified Plans....................14
      5.1    Employer Match Contributions...................................16

6     ACCOUNTING............................................................18
      ----------
      6.1    Individual Participant Accounting..............................18
      6.2    Sweep Account is Transaction Account...........................18
      6.3    Trade Date Accounting and Investment Cycle.....................18
      6.4    Accounting for Investment Funds................................18
      6.5    Payment of Fees and Expenses...................................18
      6.6    Accounting for Participant Loans...............................19
      6.7    Error Correction...............................................19
      6.8    Participant Statements.........................................20
      6.9    Special Accounting During Conversion Period....................20
      6.10   Accounts for Alternate Payees..................................20

7     INVESTMENT FUNDS AND ELECTIONS........................................21
      ------------------------------
      7.1    Investment Funds...............................................21
      7.2    Responsibility for Investment Choice...........................21
      7.3    Investment Fund Elections......................................22
      7.4    Default if No Valid Investment Election........................22
      7.5    Investment Fund Election Change Fees...........................22

8     VESTING...............................................................23
      -------
      8.1    Fully Vested Accounts..........................................23


9     PARTICIPANT LOANS.....................................................24
      -----------------
      9.1    Participant Loans Permitted....................................24
      9.2    Loan Application, Note and Security............................24
      9.3    Spousal Consent................................................24
      9.4    Loan Approval..................................................24
      9.5    Loan Funding Limits, Account Sources and Funding Order.........24
      9.6    Maximum Number of Loans........................................25
      9.7    Source and Timing of Loan Funding..............................25
      9.8    Interest Rate..................................................25
      9.9    Loan Payment...................................................25
      9.10   Loan Payment Hierarchy.........................................26
      9.11   Repayment Suspension...........................................26
      9.12   Loan Default...................................................26
      9.13   Call Feature...................................................26

10    IN-SERVICE WITHDRAWALS................................................27
      ----------------------
      10.1   In-Service Withdrawals Permitted...............................27
      10.2   In-Service Withdrawal Application and Notice...................27
      10.3   Spousal Consent................................................27
      10.4   In-Service Withdrawal Approval.................................27
      10.5   Payment Form and Medium........................................27
      10.6   Source and Timing of In-Service Withdrawal Funding.............28
      10.7   Hardship Withdrawals...........................................28
      10.8   After-Tax Account Withdrawals..................................29
      10.9   Rollover Account Withdrawals...................................30
      10.10  Disabled Participant Withdrawals...............................30
      10.11  Over Age 59 1/2Withdrawals.....................................31

11    DISTRIBUTIONS   ONCE   EMPLOYMENT   ENDS  OR  BY   REASON  OF  A  
      ------------------------------------------------------------------
      PARTICIPANT'S REQUIRED BEGINNING DATE.................................32
      -------------------------------------
      11.1   Benefit Information, Notices and Election......................32
      11.2   Spousal Consent................................................33
      11.3   Payment Form and Medium........................................33
      11.4   Distribution of Small Amounts..................................33
      11.5   Source and Timing of Distribution Funding......................33
      11.6   Latest Commencement Permitted..................................34
      11.7   Payment Within Life Expectancy.................................34
      11.8   Incidental Benefit Rule........................................35
      11.9   Payment to Beneficiary.........................................35
      11.10  Beneficiary Designation........................................35

12    ADP AND ACP TESTS.....................................................37
      -----------------
      12.1   Contribution Limitation Definitions............................37
      12.2   ADP and ACP Tests..............................................40
      12.3   Correction of ADP and ACP Tests for
             Plan Years Commencing After December 31, 1996..................40
      12.4   Multiple Use Test..............................................42
      12.5   Correction of Multiple Use Test................................42
      12.6   Adjustment for Investment Gain or Loss.........................42
      12.7   Testing Responsibilities and Required Records..................42
      12.8   Separate Testing...............................................42

13    MAXIMUM CONTRIBUTION AND BENEFIT LIMITATIONS..........................44
      --------------------------------------------
      13.1   "Annual Addition" Defined......................................44
      13.2   Maximum Annual Addition........................................44
      13.3   Avoiding an Excess Annual Addition.............................44
      13.4   Correcting an Excess Annual Addition...........................44
      13.5   Correcting a Multiple Plan Excess..............................45
      13.6   "Defined Benefit Fraction" Defined.............................45
      13.7   "Defined Contribution Fraction" Defined........................45
      13.8   Combined Plan Limits and Correction............................46

14    TOP HEAVY RULES.......................................................47
      ---------------
      14.1   Top Heavy Definitions..........................................47
      14.2   Special Contributions..........................................48
      14.3   Adjustment to Combined Limits for Different Plans..............49

15    PLAN ADMINISTRATION...................................................50
      -------------------
      15.1   Plan Delineates Authority and Responsibility...................50
      15.2   Fiduciary Standards............................................50
      15.3   Company is ERISA Plan Administrator............................50
      15.4   Administrator Duties...........................................51
      15.5   Advisors May be Retained.......................................51
      15.6   Delegation of Administrator Duties.............................52
      15.7   Committee Operating Rules......................................52

16    MANAGEMENT OF INVESTMENTS.............................................53
      -------------------------
      16.1   Trust Agreement................................................53
      16.2   Investment Funds...............................................53
      16.3   Authority to Hold Cash.........................................54
      16.4   Trustee to Act Upon Instructions...............................54
      16.5   Administrator Has Right to
             Vote Registered Investment Company Shares......................54
      16.6   Custom Fund Investment Management .............................54
      16.7   Master Custom Fund.............................................55
      16.8   Authority to Segregate Assets..................................55
      16.9   Investment in Company Stock....................................56
      16.10  Voting, Tendering and Exchanging Company Stock.................56
      16.11  Registration and Disclosure for Company Stock..................58

17    TRUST ADMINISTRATION..................................................59
      --------------------
      17.1   Trustee to Construe Trust......................................59
      17.2   Trustee To Act As Owner of Trust Assets........................59
      17.3   United States Indicia of Ownership.............................59
      17.4   Tax Withholding and Payment....................................60
      17.5   Trust Accounting...............................................60
      17.6   Valuation of Certain Assets....................................60
      17.7   Legal Counsel..................................................61
      17.8   Fees and Expenses..............................................61
      17.9   Trustee Duties and Limitations.................................61

18    RIGHTS, PROTECTION, CONSTRUCTION AND JURISDICTION.....................62
      -------------------------------------------------
      18.1   Plan Does Not Affect Employment Rights.........................62
      18.2   Compliance With USERRA.........................................62
      18.3   Limited Return of Contributions................................62
      18.4   Assignment and Alienation......................................63
      18.5   Facility of Payment............................................63
      18.6   Reallocation of Lost Participant's Accounts....................63
      18.7   Suspension  of Certain Plan  Provisions  During  Conversion
             Period.........................................................63
      18.8   Suspension of Certain Plan Provisions During Other Periods.....64
      18.9   Claims Procedure...............................................64
      18.10  Construction...................................................65
      18.11  Jurisdiction and Severability..................................65
      18.12  Indemnification by Employer....................................65

19    AMENDMENT, MERGER, DIVESTITURES AND TERMINATION.......................66
      -----------------------------------------------
      19.1   Amendment......................................................66
      19.2   Merger.........................................................66
      19.3   Divestitures...................................................66
      19.4   Plan Termination and Complete Discontinuance of
             Contributions..................................................67
      19.5   Amendment and Termination Procedures...........................67
      19.6   Termination of Employer's Participation........................68
      19.7   Replacement of the Trustee.....................................68
      19.8   Final Settlement and Accounting of Trustee.....................68

APPENDIX A - MAPPING OF ACCOUNTS............................................70

APPENDIX B - INVESTMENT FUNDS...............................................71

APPENDIX C - PAYMENT OF PLAN FEES AND EXPENSES..............................73

APPENDIX D - LOAN INTEREST RATE.............................................74


1     DEFINITIONS
      -----------

      When capitalized,  the words and phrases below have the following meanings
      unless different meanings are clearly required by the context:

      1.1    "Account".  The  records  maintained  by  the  Administrator  for
             purposes  of  accounting  for a  Participant's  interest  in  the
             Plan.  "Account"  may  refer  to one  or  all  of  the  following
             accounts  which have been created on behalf of a  Participant  to
             hold  amounts  attributable  to specific  types of  Contributions
             under the Plan,  amounts  transferred  from the ESOP and  amounts
             transferred  from  Predecessor  Plans in accordance  with Section
             4.2:

             (a)   "Employee  Pre-Tax  Account".  An  account  created  to  hold
                   amounts  attributable to Employee Pre-Tax  Contributions and,
                   if applicable, amounts transferred from the Predecessor Plans
                   as set forth on Appendix A.

             (b)   "After-Tax  Account".  An  account  created  to hold  amounts
                   attributable  to  amounts  transferred  from the  Predecessor
                   Plans as set forth on Appendix A.

             (c)   "Rollover  Account".  An  account  created  to  hold  amounts
                   attributable  to Rollover  Contributions  and, if applicable,
                   amounts  transferred from the Predecessor  Plans as set forth
                   on Appendix A.

             (d)   "ESOP Transfer  Account".  An account created to hold amounts
                   attributable to amounts  transferred  from the ESOP on behalf
                   of participants  thereunder  pursuant to the  diversification
                   requirements of Code section 401(a)(28).

             (e)   "Employer Match Account".  An account created to hold amounts
                   attributable to Employer Match  Contributions  (identified as
                   basic  Employer  Match  Contributions  in Section 5) and,  if
                   applicable, amounts transferred from the Predecessor Plans as
                   set forth on Appendix A.

             (f)   "Additional  Match  Account".  An  account  created  to  hold
                   amounts   attributable   to  Employer   Match   Contributions
                   (identified  as additional  Employer Match  Contributions  in
                   Section 5) and, if applicable,  amounts  transferred from the
                   Predecessor Plans as set forth on Appendix A.

             (g)   "Discretionary  Match  Account".  An account  created to hold
                   amounts   attributable   to  Employer   Match   Contributions
                   (identified as discretionary  Employer Match Contributions in
                   Section 5) and, if applicable,  amounts  transferred from the
                   Predecessor Plans as set forth on Appendix A.

             (h)   "Prior  Match  Account".  An account  created to hold amounts
                   attributable  to  amounts  transferred  from the  Predecessor
                   Plans as set forth on Appendix A.


      1.2    "ACP" or "Average  Contribution  Percentage". The percentage
             calculated in accordance with Section 12.1.

      1.3    "Administrator". The Company, which may delegate all or a portion
             of the duties of the Administrator under the Plan to a Committee in
             accordance with Section 15.6.

      1.4    "ADP" or "Average Deferral  Percentage".  The percentage calculated
             in accordance with Section 12.1.

      1.5    "Alternate  Payee".  Any  spouse,  former  spouse,  child  or other
             dependent (as defined in Code section 152) of a Participant  who is
             recognized  by a  domestic  relations  order  as  having a right to
             receive all, or a portion,  of the Participant's  Account under the
             Plan.

      1.6    "Beneficiary".  The  person or persons  who is to receive  benefits
             under the Plan after the death of the  Participant  pursuant to the
             "Beneficiary Designation" paragraph in Section 11.

      1.7    "Code". The Internal Revenue Code of 1986, as amended. Reference to
             any specific Code section  shall  include such  section,  any valid
             regulation promulgated thereunder,  and any comparable provision of
             any future legislation amending,  supplementing or superseding such
             section.

      1.8    "Committee".  If applicable, the committee which has been appointed
             by the  Administrator  to administer  the Plan in  accordance  with
             Section 15.6.

      1.9    "Company".  Century Telephone Enterprises,  Inc. or any successor
             by merger, purchase or otherwise.

      1.10   "Company  Stock".  Shares  of  voting  common  stock,  $1.00  par
             value, issued by the Company.

      1.11   "Compensation".  The  sum of a  Participant's  Taxable  Income  and
             salary reductions, if any, pursuant to Code section 125, 402(e)(3),
             402(h)(1)(B),  403(b),  457 or,  for Plan  Years  commencing  after
             December 31, 1996, 408(p)(2)(A)(i).

             For purposes of determining  benefits under the Plan,  Compensation
             is  limited  to  $150,000  per Plan Year (as  adjusted  for cost of
             living increases pursuant to Code sections  401(a)(17) and 415(d)).
             For Plan Years  commencing  before January 1, 1997, for purposes of
             the preceding sentence,  in the case of an HCE who is a 5% Owner or
             one of the 10 most highly compensated  Employees,  (i) such HCE and
             such HCE's  family  group (as defined  below) shall be treated as a
             single  employee and the  Compensation  of each family group member
             shall be aggregated with the Compensation of such HCE, and (ii) the
             limitation on  Compensation  shall be allocated  among such HCE and
             his or her family group members in proportion to each  individual's
             Compensation before the application of this sentence.  For purposes
             of this Section,  the term "family  group" shall mean an Employee's
             spouse and lineal  descendants  who have not attained age 19 before
             the close of the year in question.

             For purposes of  determining  HCEs and key  employees  and for Plan
             Years  commencing  after December 31, 1997, for purposes of Section
             13.2,  Compensation  for the entire  Plan Year  shall be used.  For
             purposes of determining ADP and ACP,  Compensation shall be limited
             to amounts paid to an Eligible Employee while a Participant.

      1.12   "Contribution".  An amount  contributed to the Plan by the Employer
             or an Eligible  Employee,  and  allocated by  contribution  type to
             Participants' Accounts, as described in Section 1.1.
             Specific types of contribution include:

             (a)   "Employee Pre-Tax Contribution".  An amount contributed by an
                   eligible  Participant  in  conjunction  with  his or her Code
                   section  401(k)  salary  deferral  election  which  shall  be
                   treated as made by the Employer on the eligible Participant's
                   behalf.

             (b)   "Rollover Contribution". An amount contributed by an Eligible
                   Employee  which  originated  from  another  employer's  or an
                   Employer's qualified plan.

             (c)   "Employer Match  Contribution".  An amount contributed by the
                   Employer on an eligible  Participant's  behalf based upon the
                   amount contributed by the eligible Participant.

      1.13   "Contribution  Dollar  Limit".  The  annual  limit  placed  on each
             Participant's Employee Pre-Tax Contributions, which shall be $7,000
             per  calendar  year  (as  adjusted  for  cost of  living  increases
             pursuant to Code sections  402(g)(5)  and 415(d)).  For purposes of
             this Section, a Participant's  Employee Pre-Tax Contributions shall
             include (i) any  employer  contribution  under a qualified  cash or
             deferred  arrangement  (as defined in Code  section  401(k)) to the
             extent not  includible  in gross  income for the taxable year under
             Code section 402(e)(3)  (determined  without regard to Code section
             402(g)),   (ii)  any  employer   contribution  to  the  extent  not
             includible  in gross income for the taxable year under Code section
             402(h)(1)(B)  (determined  without regard to Code section  402(g)),
             (iii) any  employer  contribution  to purchase an annuity  contract
             under  Code  section  403(b)  under a  salary  reduction  agreement
             (within the  meaning of Code  section  3121(a)(5)(D))  and (iv) for
             calendar  years  commencing  after  December 31, 1996, any elective
             employer contribution under Code section 408(p)(2)(A)(i).

      1.14   "Conversion  Period". The period of converting the prior accounting
             system of any plan and trust which is merged,  in whole or in part,
             into the Plan and Trust,  to the  accounting  system  described  in
             Section 6.

      1.15   "Direct Rollover".  An Eligible Rollover  Distribution that is paid
             by the Plan directly to an Eligible Retirement Plan for the benefit
             of a Distributee.

      1.16   "Disability"  or "Disabled".  A medical  condition  which renders a
             Participant unable to perform each of the material duties of his or
             her  regular  occupation  and which is likely to  incapacitate  the
             Participant   continuously   and   permanently   as   evidenced  by
             presentation of medical evidence satisfactory to the Administrator.

      1.17   "Disabled  Participant".  The Plan status of a Participant during
             any period he or she is Disabled.

      1.18   "Distributee".  A Participant,  a Beneficiary  (if he or she is the
             surviving  spouse of a Participant)  or an Alternate  Payee under a
             QDRO  (if  he  or  she  is  the  spouse  or  former   spouse  of  a
             Participant).

      1.19   "Effective  Date".  The date  upon  which  the  provisions  of this
             document  become  effective.  This date is January 1, 1998,  unless
             stated otherwise.  In general, the provisions of this document only
             apply to  Participants  who are Employees on or after the Effective
             Date. However,  investment and distribution provisions apply to all
             Participants  with Account  balances to be invested or  distributed
             after the Effective Date.

      1.20   "Eligible Employee".  An Employee of an Employer who is recorded as
             an Employee by the Employer's payroll records, except any Employee:

             (a)   whose  compensation  and conditions of employment are covered
                   by a collective bargaining agreement to which the Employer is
                   a  party  unless  the  agreement  calls  for  the  Employee's
                   participation in the Plan; or

             (b)   who  is a  temporary  Employee  hired  specifically  to  fill
                   temporary or occasional needs.

      1.21   "Eligible  Retirement  Plan".  An  individual   retirement  account
             described in Code section 408(a), an individual  retirement annuity
             described in Code section 408(b), an annuity plan described in Code
             section  403(a),  or a qualified  trust  described  in Code section
             401(a),   that   accepts   a   Distributee's    Eligible   Rollover
             Distribution,  except that,  if the  Distributee  is the  surviving
             spouse  of  a  Participant,  an  Eligible  Retirement  Plan  is  an
             individual retirement account or individual retirement annuity.

      1.22   "Eligible  Rollover  Distribution".  A  distribution  of all or any
             portion of the  balance to the credit of a  Distributee,  excluding
             (i) a distribution  that is one of a series of substantially  equal
             periodic  payments (not less frequently than annually) made for the
             life (or life expectancy) of the Distributee or the joint lives (or
             joint life  expectancies) of the Distributee and the  Distributee's
             designated  Beneficiary,  or for a specified period of ten years or
             more;  (ii) a  distribution  to the  extent  such  distribution  is
             required under Code section  401(a)(9);  and (iii) the portion of a
             distribution  that is not  includible  in gross income  (determined
             without  regard to the  exclusion for net  unrealized  appreciation
             with respect to Employer securities).

      1.23   "Employee".  An individual who is:

             (a)   a common-law employee of any Related Company, or

             (b)   a Leased Employee.

      1.24   "Employer".  The Company and any other Related Company which adopts
             the Plan with the approval of the Company.

      1.25   "ERISA".  The Employee  Retirement  Income Security Act of 1974, as
             amended. Reference to any specific ERISA section shall include such
             section,  any  valid  regulation  promulgated  thereunder,  and any
             comparable   provision   of  any   future   legislation   amending,
             supplementing or superseding such section.

      1.26   "ESOP".  The Century Telephone  Enterprises,  Inc. Employee Stock
             Ownership Plan.

      1.27   "Former Participant".  The Plan status of an individual after he or
             she is  determined  to be a Terminated  Participant  and his or her
             Account is distributed or forfeited.

      1.28   "HCE" or "Highly Compensated Employee".  An Employee described as a
             Highly Compensated Employee in Section 12.

      1.29   "Ineligible".  The  Plan  status  of an  individual  who  is (1) an
             Employee of a Related Company which is not then an Employer, (2) an
             Employee of an Employer,  but not an Eligible Employee,  or (3) not
             an Employee.

      1.30   "Ineligible  Participant".  The Plan status of a Participant who is
             (1) an Employee of a Related Company which is not then an Employer,
             or (2) an Employee of an Employer, but not an Eligible Employee.

      1.31   "Investment Fund". An investment fund as described in Section 16.2.
             The Investment Funds authorized by the  Administrator to be offered
             under the Plan as of the  Effective  Date are set forth in Appendix
             B.

      1.32   "Leased Employee".  An individual,  not otherwise an Employee, who,
             pursuant to an  agreement  between a Related  Company and a leasing
             organization,  has performed,  on a substantially  full-time basis,
             for  a  period  of  at  least  12  months,  services  of  any  type
             historically  performed by  Employees in the business  field of the
             Related Company, unless:


             (a)   the  individual is covered by a money  purchase  pension plan
                   maintained  by  the  leasing  organization  and  meeting  the
                   requirements of Code section 414(n)(5)(B), and

             (b)   such  individuals  do not  constitute  more  than  20% of all
                   Non-Highly  Compensated  Employees  of all Related  Companies
                   (within the meaning of Code section 414(n)(5)(C)(ii)).

             For Plan Years commencing after December 31, 1996,  "services under
             the primary  direction or control of the Related  Company" shall be
             substituted  for the  preceding  reference to "services of any type
             historically  performed by  Employees in the business  field of the
             Related Company".

      1.33   "Leave of Absence".  A period  during which an individual is deemed
             to be an Employee,  but is absent from active employment,  provided
             that the absence:

             (a)   was authorized by a Related Company; or

             (b)   was due to military service in the United States armed forces
                   and the individual  returns to active  employment  within the
                   period during which he or she retains employment rights under
                   federal law.

      1.34   "Loan  Account".  The record  maintained for purposes of accounting
             for a  Participant's  loan and payments of  principal  and interest
             thereon.

      1.35   "NHCE" or "Non-Highly  Compensated Employee". An Employee described
             as a Non-Highly Compensated Employee in Section 12.

      1.36   "Normal  Retirement  Date".  The  date  of a  Participant's  65th
             birthday.

      1.37   "Owner".  A  person  with an  ownership  interest  in the  capital,
             profits,  outstanding  stock or voting  power of a Related  Company
             within  the  meaning  of Code  section  318 or 416  (which  exclude
             indirect ownership through a qualified plan).

      1.38   "PacifiCorp  Stock".  Shares of  common  stock of  PacifiCorp,  its
             predecessor(s),  or its successors or assigns,  or any  corporation
             with or into which said corporation may be merged,  consolidated or
             reorganized, or to which a majority of its assets may be sold.

      1.39   "Participant".  The Plan status of an Eligible Employee after he or
             she completes the eligibility  requirements  and enters the Plan as
             described  in Section 2.1 and any  individual  for whom assets have
             been  transferred  from a predecessor  plan merged,  in whole or in
             part, with the Plan. A Participant's  participation continues until
             his or her  employment  with all Related  Companies ends and his or
             her Account is distributed or forfeited.

      1.40   "Pay".  The  Taxable  Income  paid to an  Eligible  Employee  by an
             Employer while he or she is a Participant during the current period
             plus  any  salary  credit  or  salary  reduction  pursuant  to Code
             sections  125  and  402(3)(e)  and  excluding  (i)  overtime,  (ii)
             completion  bonuses and Christmas  bonuses,  (iii) restricted stock
             awards  under  the  Restricted  Stock  Plan  or  the  Key  Employee
             Incentive  Compensation  Plan  and  (iv)  reimbursements  or  other
             expense  allowances,  cash and  non-cash  fringe  benefits,  moving
             expenses, deferred compensation and welfare benefits.

             Pay is limited to $150,000  per Plan Year (as  adjusted for cost of
             living increases pursuant to Code sections 401(a)(17) and 415(d)).

      1.41   "Plan".  The Century  Telephone  Enterprises,  Inc. Dollars & Sense
             Plan set forth in this document, as from time to time amended.

      1.42   "Plan  Year".  The annual  accounting  period of the Plan and Trust
             which ends on each December 31.

      1.43   "Predecessor  Plans".  Plans that have been merged,  in whole or in
             part, into the Plan, which plans, are as follows:

             (a)   San Marcos Telephone Company,  Inc. and SM Telecorp Companies
                   Retirement   Plan,  a  qualified   profit  sharing  plan,  as
                   described in Code section 401(a),  which included a qualified
                   cash or deferred  arrangement,  as  described in Code section
                   401(k), merged, in whole, herein effective July 1, 1993; and

             (b)   PacifiCorp K Plus Employee  Savings Plan, a qualified  profit
                   sharing  plan,  as described in Code  section  401(a),  which
                   includes  a  qualified  cash  or  deferred  arrangement,   as
                   described in Code section  401(k),  merged,  in part,  herein
                   effective January 10, 1998.

      1.44   "QDRO".  A domestic  relations  order which the  Administrator  has
             determined to be a qualified  domestic  relations  order within the
             meaning of Code section 414(p).

      1.45   "Related Company".  With respect to any Employer, that Employer and
             any  corporation,  trade or business  which is,  together with that
             Employer, a member of the same controlled group of corporations,  a
             trade or business under common  control,  or an affiliated  service
             group within the meaning of Code sections 414(b),  (c), (m) or (o),
             except that for  purposes of Section 13 "within the meaning of Code
             sections  414(b),  (c),  (m) or (o), as  modified  by Code  section
             415(h)" shall be substituted for the preceding reference to "within
             the meaning of Code sections 414(b), (c), (m) or (o)".

      1.46   "Required  Beginning  Date".  The latest  date  benefit  payments
             shall commence to a Participant.

             (a)   For calendar years  commencing  before January 1, 1997,  such
                   date shall mean:

                   (1)    with regard to a  Participant  who (i) attained age 70
                          1/2 in 1996,  (ii) did not terminate  employment  with
                          all  Related  Companies  before  January 1, 1997,  and
                          (iii) is or was not a 5% Owner,  the April 1 that next
                          follows  the later of (i) the  calendar  year in which
                          the  Participant  attained  age 70 1/2, or (ii) if the
                          Participant  elects to apply  this  clause  (ii),  the
                          calendar  year in  which  the  Participant  terminates
                          employment  with all Related  Companies  (and any such
                          election must be made prior to January 1, 1998); and

                   (2)    with regard to a  Participant  who attained age 70 1/2
                          before  January  1,  1996 or, in 1996 if (i) he or she
                          terminated   employment  with  all  Related  Companies
                          before  January  1, 1997 or (ii) is or was a 5% Owner,
                          the April 1 that next  follows  the  calendar  year in
                          which the Participant attains age 70 1/2.

                   A Participant shall be considered a 5% Owner for this purpose
                   if such  Participant is a 5% Owner as defined in Code section
                   416(i)  (determined  in accordance  with Code section 416 but
                   without  regard to whether the Plan is top-heavy) at any time
                   during the Plan Year ending with or within the calendar  year
                   in  which  the  Participant  attains  age  66  1/2  or in any
                   subsequent Plan Year.

             (b)   For calendar years  commencing  after December 31, 1996, such
                   date shall mean:

                   (1)    with regard to a  Participant  who attained age 70 1/2
                          in 1997 or  thereafter,  the April 1 that next follows
                          the  calendar  year in which he or she attained age 70
                          1/2,  except  that  if the  Participant  (i)  did  not
                          terminate employment with all Related Companies before
                          January 1 of the calendar year  following the calendar
                          year in which he or she attained  age 70 1/2,  (ii) is
                          not a 5% Owner, such date shall instead mean the April
                          1 that next follows the later of (i) the calendar year
                          in which the Participant  attained age 70 1/2, or (ii)
                          if the  Participant  elects to apply this clause (ii),
                          the calendar year in which the Participant  terminates
                          employment  with all Related  Companies  (and any such
                          election  must be  made  prior  to the  April 1 of the
                          calendar year  following the calendar year in which he
                          or she attained age 70 1/2); and

                   (2)    with regard to a  Participant  who is a 5% Owner,  the
                          April 1 that next follows the  calendar  year in which
                          the Participant attains age 70 1/2.

                   A Participant shall be considered a 5% Owner for this purpose
                   if such  Participant  is a 5% Owner with  respect to the Plan
                   Year  ending in the  calendar  year in which the  Participant
                   attains age 70 1/2.

      1.47   "Settlement  Date".  For each  Trade  Date,  the  Trustee's  next
             business day.

      1.48   "Spousal  Consent".  The  written  consent  given by a spouse  to a
             Participant's  Beneficiary  designation.  The spouse's consent must
             acknowledge   the  effect  on  the  spouse  of  the   Participant's
             designation,  and be duly  witnessed  by a Plan  representative  or
             notary public.  Spousal Consent shall be valid only with respect to
             the  spouse  who  signs  the  Spousal  Consent  and  only  for  the
             particular  choice made by the Participant  which requires  Spousal
             Consent. A Participant may revoke (without Spousal Consent) a prior
             designation  that  required  Spousal  Consent  at any  time  before
             payments begin.  Spousal Consent also means a determination  by the
             Administrator  that  there  is no  spouse,  the  spouse  cannot  be
             located,  or such other  circumstances as may be established  under
             Code section 417(a)(2)(B).

      1.49   "Sweep  Account".  The  subsidiary  Account  for  each  Participant
             through which all transactions are processed,  which is invested in
             interest  bearing  deposits  (which may  include  interest  bearing
             deposits of the Trustee) and/or money market type assets or funds.

      1.50   "Sweep Date". The cut off date and time for receiving  instructions
             for transactions to be processed on the next Trade Date.

      1.51   "Taxable  Income".  Compensation  in  the  amount  reported  by the
             Employer or a Related Company as "Wages,  tips, other compensation"
             on Form W-2,  or any  successor  method  of  reporting  under  Code
             section 6041(d).

      1.52   "Terminated  Participant".  The Plan status of a Participant who is
             not an  Employee  and with  respect to whom the  Administrator  has
             reported  to the  Trustee  that the  Participant's  employment  has
             terminated with all Related Companies.

      1.53   "Trade Date".  Each day the Investment  Funds are valued,  which is
             normally every day the assets of such Investment Funds are traded.

      1.54   "Trust".  The legal  entity  created  by those  provisions  of this
             document which relate to the Trustee. The Trust is part of the Plan
             and holds the Plan assets which are  comprised of the  aggregate of
             Participants'  Accounts  and  any  unallocated  funds  invested  in
             interest  bearing  deposits  (which may  include  interest  bearing
             deposits of the Trustee)  and/or money market type assets or funds,
             pending allocation to Participants' Accounts or disbursement to pay
             Plan fees and expenses.

      1.55   "Trustee".  Merrill  Lynch Trust  Company,  FSB, a federal  savings
             bank, chartered under the laws of the United States.

      1.56   "USERRA".  The Uniformed  Services  Employment  and  Reemployment
             Rights Act of 1994, as amended.

2     ELIGIBILITY

      2.1    Eligibility

             All  Participants  as of  January  1,  1998  shall  continue  their
             eligibility  to  participate.  Each other  Eligible  Employee shall
             become a Participant  on the first day of employment as an Eligible
             Employee.

      2.2    Ineligible Employees

             If an Employee completes the above eligibility requirements, but is
             Ineligible at the time  participation  would otherwise begin (if he
             or she were not  Ineligible),  he or she shall become a Participant
             on the  first  subsequent  date on which  he or she is an  Eligible
             Employee.

      2.3    Ineligible, Terminated or Former Participants

             An  Ineligible,  Terminated or Former  Participant  may not make or
             share in any Contributions, other than such Contributions due to be
             made  on his or her  behalf  after  the  date he or she  became  an
             Ineligible,  Terminated or Former  Participant for periods prior to
             such date,  nor may an  Ineligible  or  Terminated  Participant  be
             eligible for a new Plan loan (except as described in Section  9.1),
             during  the  period  he or  she  is  an  Ineligible  or  Terminated
             Participant,  but he or she shall continue to  participate  for all
             other  purposes.  An Ineligible,  Terminated or Former  Participant
             shall automatically  become an active Participant on the date he or
             she again becomes an Eligible Employee.

3     PARTICIPANT CONTRIBUTIONS

      3.1    Employee Pre-Tax Contribution Election

             Upon  becoming a  Participant,  an Eligible  Employee  may elect to
             reduce  his or her Pay by an  amount  which  does  not  exceed  the
             Contribution   Dollar   Limit  or  the  limits   described  in  the
             Contribution  Percentage  Limits  paragraph  of this Section 3, and
             have  such  amount  contributed  to the Plan by the  Employer  as a
             Employee Pre-Tax  Contribution.  The election shall be made in such
             manner  and  with  such  advance   notice  as   prescribed  by  the
             Administrator  and may be limited to a whole  percentage of Pay. In
             no event shall an Employee's  Employee Pre-Tax  Contributions under
             the Plan and comparable contributions to all other plans, contracts
             or arrangements of all Related  Companies  exceed the  Contribution
             Dollar Limit for the Employee's  taxable year beginning in the Plan
             Year.

      3.2    Changing a Contribution Election

             A  Participant  who is an Eligible  Employee  may change his or her
             Employee Pre-Tax  Contribution  election as of any January 1, April
             1, July 1 or October 1 in such manner and with such advance  notice
             as prescribed by the Administrator,  and such election change shall
             be effective  with the first payroll period  commencing  after such
             date. A Participant's Contribution election made as a percentage of
             Pay shall automatically apply to Pay increases or decreases.

      3.3    Revoking and Resuming a Contribution Election

             A Participant may revoke his or her Employee  Pre-Tax  Contribution
             election at any time in such manner and with such advance notice as
             prescribed  by the  Administrator,  and  such  revocation  shall be
             effective with the first payroll period commencing after such date.

             A  Participant  who is an  Eligible  Employee  may resume  Employee
             Pre-Tax  Contributions by making a new election at the same time in
             which a  Participant  may change his or her election in such manner
             and with such advance  notice as prescribed  by the  Administrator,
             and such election  shall be effective with the first payroll period
             commencing after such date.

      3.4    Contribution Percentage Limits

             The  Administrator  may  establish and change from time to time, in
             writing,  without the necessity of amending the Plan and Trust, the
             minimum, if applicable,  and maximum Employee Pre-Tax  Contribution
             percentages, prospectively or retrospectively (for the current Plan
             Year), for all  Participants.  In addition,  the  Administrator may
             establish  any  lower  percentage  limits  for  Highly  Compensated
             Employees as it deems  necessary to satisfy the tests  described in
             Section  12.  As  of  the  Effective  Date,  the  Employee  Pre-Tax
             Contribution minimum percentage is 1% and the maximum percentage is
             10%.

             Irrespective   of  the  limits  that  may  be  established  by  the
             Administrator  in accordance with the paragraph  above, in no event
             shall the Contributions made by or on behalf of a Participant for a
             Plan Year exceed the maximum allowable under Code section 415.

      3.5    Refunds When Contribution Dollar Limit Exceeded

             A  Participant  who  makes  Employee  Pre-Tax  Contributions  for a
             calendar year to the Plan and comparable contributions to any other
             qualified  defined  contribution plan in excess of the Contribution
             Dollar  Limit  may  notify  the  Administrator  in  writing  by the
             following  March  1 (or as  late  as  April  14 if  allowed  by the
             Administrator)  that an excess has  occurred.  In this  event,  the
             amount of the excess  specified  by the  Participant,  adjusted for
             investment  gain or loss,  shall be  refunded  to him or her by the
             April 15  following  the year of deferral and shall not be included
             as an Annual  Addition  (as  defined  in Section  13.1)  under Code
             section  415 for the year  contributed.  The excess  amounts  shall
             first be taken from unmatched  Employee Pre-Tax  Contributions  and
             then from  matched  Employee  Pre-Tax  Contributions.  Any Employer
             Match  Contributions   attributable  to  refunded  excess  Employee
             Pre-Tax  Contributions  as described in this Section,  adjusted for
             investment  gain or loss,  shall be  forfeited  and used to  reduce
             future  Contributions  to  be  made  by  an  Employer  as  soon  as
             administratively   feasible.  Refunds  and  forfeitures  shall  not
             include  investment  gain or loss for the period between the end of
             the  applicable  calendar  year  and the  date of  distribution  or
             forfeiture.

      3.6    Timing, Posting and Tax Considerations

             Participants' Contributions, other than Rollover Contributions, may
             only be made through payroll deduction.  Such amounts shall be paid
             to the Trustee in cash and posted to each Participant's  Account(s)
             as soon as such  amounts  can  reasonably  be  separated  from  the
             Employer's  general assets and balanced against the specific amount
             made on behalf of each  Participant.  In no event,  however,  shall
             such  amounts be paid to the  Trustee  more than 15  business  days
             following  the end of the month that  includes the date amounts are
             deducted from a Participant's Pay (or as that maximum period may be
             otherwise extended by ERISA).  Employee Pre-Tax Contributions shall
             be treated as Contributions  made by an Employer in determining tax
             deductions under Code section 404(a).

4     ROLLOVER CONTRIBUTIONS AND TRANSFERS FROM AND TO OTHER QUALIFIED PLANS

      4.1    Rollover Contributions

             The  Administrator  may  authorize the Trustee to accept a Rollover
             Contribution  in cash,  directly from an Eligible  Employee or as a
             Direct  Rollover  from  another  qualified  plan on  behalf  of the
             Eligible Employee.  The Employee shall be responsible for providing
             satisfactory   evidence,  in  such  manner  as  prescribed  by  the
             Administrator,  that  such  Rollover  Contribution  qualifies  as a
             rollover contribution, within the meaning of Code section 402(c) or
             408(d)(3)(A)(ii).  Such amounts received  directly from an Eligible
             Employee  must be paid to the  Trustee in cash within 60 days after
             the date received by the Eligible Employee from a qualified plan or
             conduit individual retirement account. Rollover Contributions shall
             be posted to the  Eligible  Employee's  Rollover  Account as of the
             date received by the Trustee.

             If the  Administrator  later determines that an amount  contributed
             pursuant  to the  above  paragraph  did  not in fact  qualify  as a
             rollover contribution, within the meaning of Code section 402(c) or
             408(d)(3)(A)(ii),   the  balance  credited  to  the   Participant's
             Rollover Account shall immediately be (1) segregated from all other
             Plan assets, (2) treated as a nonqualified trust established by and
             for the  benefit of the  Participant,  and (3)  distributed  to the
             Participant.  Any such amount  shall be deemed never to have been a
             part of the Plan.

      4.2    Transfers From and To Other Qualified Plans

             The  Administrator  may instruct  the Trustee to receive  assets in
             cash or in kind directly from another qualified plan or to transfer
             assets  in cash or in kind  directly  to  another  qualified  plan;
             provided that receipt of a transfer shall not be directed if:

             (a)   any amounts are not  exempted by Code  section  401(a)(11)(B)
                   from the annuity  requirements of Code section 417 unless the
                   Plan complies with such requirements; or

             (b)   any  amounts  include  benefits  protected  by  Code  section
                   411(d)(6) which would not be preserved under  applicable Plan
                   provisions.

             The Trustee may refuse to receive any such transfer if:

             (a)   the Trustee finds the in kind assets unacceptable; or

             (b)   instructions  for posting amounts to  Participants'  Accounts
                   are incomplete.

             Such  amounts  shall  be  posted  to the  appropriate  Accounts  of
             Participants as of the date received by the Trustee.  To the extent
             a receipt  of a transfer  includes  Participant  loans,  such loans
             shall  continue in effect  subject to the terms and  conditions  in
             effect as of the date of the transfer or as otherwise  agreed to by
             the Administrator.

             Such transfers  shall include  transfers from the ESOP on behalf of
             participants    thereunder    pursuant   to   the   diversification
             requirements  of Code  section  401(a)(28),  at such  times  and in
             accordance with such procedures as prescribed by the  Administrator
             and agreed to by the Trustee,  which  amounts  shall  thereafter be
             subject to the Plan's distribution provisions.

5     EMPLOYER CONTRIBUTIONS

      5.1    Employer Match Contributions

             (a)   Frequency and Eligibility.

                   Basic  Contribution:  For each period for which Participants'
                   Contributions   are  made,  the  Employer  shall  make  basic
                   Employer Match  Contributions,  as described in the following
                   Allocation  Method  paragraph,  on behalf of each Participant
                   who contributed during the period.

                   Additional Contribution: For each Plan Year, the Employer may
                   make additional Employer Match Contributions, as described in
                   the following Allocation Method paragraph,  on behalf of each
                   Participant who  contributed  during the Plan Year and was an
                   Eligible Employee on the last day of the Plan Year.

                   Discretionary Contribution:  For each Plan Year, the Employer
                   may  make  discretionary  Employer  Match  Contributions,  as
                   described in the following  Allocation Method  paragraph,  on
                   behalf of each Non-Highly  Compensated  Employee  Participant
                   who  contributed  during  the Plan  Year and was an  Eligible
                   Employee on the last day of the Plan Year.

             (b)   Allocation Method.

                   Basic  Contribution:  The basic Employer Match  Contributions
                   for  each   period   shall   total   40%  of  each   eligible
                   Participant's  Employee Pre-Tax Contributions for the period,
                   provided that no basic Employer Match  Contributions shall be
                   made based upon a Participant's Contributions in excess of 6%
                   of his or her  Pay and  except  that  "25%  of each  eligible
                   Participant's   Employee  Pre-Tax   Contributions"  shall  be
                   substituted  for  the  preceding  reference  to  "40% of each
                   eligible  Participant's  Employee Pre-Tax Contributions" with
                   regard to an eligible  Participant who is a corporate officer
                   of the Employer.  The percentage matching rate and percentage
                   of considered  Pay as stated in the preceding  sentence shall
                   continue in effect until  otherwise  changed by resolution of
                   the Employer's board of directors.

                   Additional   Contribution:   The  additional  Employer  Match
                   Contributions  for  the  Plan  Year  shall  be in  an  amount
                   determined  by the Employer and  allocated in  proportion  to
                   each   eligible    Participant's    basic    Employer   Match
                   Contributions  for the  Plan  Year to the  total  of all such
                   Contributions  for  all  other   Participants   eligible  for
                   additional Employer Match Contributions.

                   Discretionary Contribution:  The discretionary Employer Match
                   Contributions  for  the  Plan  Year  shall  be in  an  amount
                   determined  by the Employer and  allocated in  proportion  to
                   each   eligible    Participant's    basic    Employer   Match
                   Contributions  for the  Plan  Year to the  total  of all such
                   Contributions  for  all  other   Participants   eligible  for
                   discretionary Employer Match Contributions.

             (c)   Timing, Medium and Posting.

                   Basic  Contribution:  The Employer  shall make each  period's
                   basic  Employer  Match   Contribution  in  cash  as  soon  as
                   administratively feasible, and for purposes of deducting such
                   Contribution,  not  later  than the  Employer's  federal  tax
                   filing date, including extensions. Such amounts shall be paid
                   to the  Trustee  and  posted to each  Participant's  Employer
                   Match   Account   once  the  total   basic   Employer   Match
                   Contribution  received has been balanced against the specific
                   amount to be credited to each  Participant's  Employer  Match
                   Account.

                   Additional   Contribution:   If  additional   Employer  Match
                   Contributions  are made,  the  Employer  shall make each Plan
                   Year's additional Employer Match Contribution in cash as soon
                   as administratively  feasible,  and for purposes of deducting
                   such Contribution,  not later than the Employer's federal tax
                   filing date, including extensions. Such amounts shall be paid
                   to the  Trustee and posted to each  Participant's  Additional
                   Match  Account  once  the  total  additional  Employer  Match
                   Contribution  received has been balanced against the specific
                   amount to be credited to each Participant's  Additional Match
                   Account.

                   Discretionary  Contribution:  If discretionary Employer Match
                   Contributions  are made,  the  Employer  shall make each Plan
                   Year's  discretionary  Employer Match Contribution in cash as
                   soon  as  administratively  feasible,  and  for  purposes  of
                   deducting  such  Contribution,  not later than the Employer's
                   federal    tax    filing    date,    including    extensions.
                   Notwithstanding,   for  purposes  of  satisfying   the  tests
                   described  in  Section  12,   discretionary   Employer  Match
                   Contributions  shall be made  before the end of the Plan Year
                   following the Plan Year being  tested.  Such amounts shall be
                   paid  to  the  Trustee  and  posted  to  each   Participant's
                   Discretionary  Match  Account  once the  total  discretionary
                   Employer  Match  Contribution   received  has  been  balanced
                   against   the   specific   amount  to  be  credited  to  each
                   Participant's Discretionary Match Account.

6     ACCOUNTING

      6.1    Individual Participant Accounting

             The Administrator  shall maintain an individual set of Accounts for
             each Participant in order to reflect  transactions  both by type of
             Account and  investment  medium.  Financial  transactions  shall be
             accounted  for at the  individual  Account  level by  posting  each
             transaction   to  the   appropriate   Account   of  each   affected
             Participant.  Participant  Account  values shall be  maintained  in
             shares for the  Investment  Funds and in dollars  for the Sweep and
             Loan  Accounts.  At any point in time,  the Account  value shall be
             determined  using the most recent Trade Date values provided by the
             Trustee.

      6.2    Sweep Account is Transaction Account

             All  transactions  related  to  amounts  being  contributed  to  or
             distributed  from  the  Trust  shall  be  posted  to each  affected
             Participant's  Sweep Account.  Any amount held in the Sweep Account
             shall be  credited  with  interest up until the date on which it is
             removed from the Sweep Account.

      6.3    Trade Date Accounting and Investment Cycle

             Participant  Account  values shall be  determined  as of each Trade
             Date.  For any  transaction to be processed as of a Trade Date, the
             Trustee must receive  instructions for the transaction by the Sweep
             Date. Such instructions  shall apply to amounts held in the Account
             on that Sweep Date. Financial  transactions of the Investment Funds
             shall be posted to  Participants'  Accounts  as of the Trade  Date,
             based upon the Trade  Date  values  provided  by the  Trustee,  and
             settled on the Settlement Date.

      6.4    Accounting for Investment Funds

             Investments in each  Investment Fund shall be maintained in shares.
             The Trustee is responsible for determining the share values of each
             Investment  Fund as of each Trade Date. To the extent an Investment
             Fund is comprised of  collective  investment  funds  offered by the
             Trustee  or  any  other  entity   authorized  to  offer  collective
             investment   funds,   the  share  values  shall  be  determined  in
             accordance  with the rules  governing  such  collective  investment
             funds, which are incorporated herein by reference.  All other share
             values shall be determined by the Trustee.  The share value of each
             Investment  Fund  shall be based  on the fair  market  value of its
             underlying assets.

      6.5    Payment of Fees and Expenses

             Except to the  extent  Plan fees and  expenses  related  to Account
             maintenance,   transaction   and  Investment  Fund  management  and
             maintenance,  set forth below,  are paid by the Employer  directly,
             such fees and expenses shall be paid as set forth below.

             (a)   Account   Maintenance:   Account   maintenance   fees   and
                   expenses,   may   include   but   are   not   limited   to,
                   administrative,    Trustee,    government   annual   report
                   preparation,  audit, legal,  nondiscrimination  testing and
                   fees for any other special  services.  Account  maintenance
                   fees shall be charged to  Participants on a per Participant
                   basis  provided  that no fee shall  reduce a  Participant's
                   Account balance below zero.

             (b)   Transaction:  Transaction fees and expenses,  may include but
                   are not limited to, periodic installment payment,  Investment
                   Fund election change and loan fees. Transaction fees shall be
                   charged  to  the   Participant's   Account  involved  in  the
                   transaction provided that no fee shall reduce a Participant's
                   Account balance below zero.

             (c)   Investment  Fund Management and  Maintenance:  Management and
                   maintenance fees and expenses related to the Investment Funds
                   shall be charged at the  Investment  Fund level and reflected
                   in the net gain or loss of each Investment Fund.

             The Company may determine that the Employers pay a lower portion of
             the fees and expenses allocable to the Accounts of Participants who
             are no longer Employees or who are not Beneficiaries,  unless doing
             so would  result in  discrimination  prohibited  under Code section
             401(a)(4) or a  significant  detriment  prohibited  by Code section
             411(a)(11).  As of the  Effective  Date,  a breakdown of which Plan
             fees and  expenses  shall  generally  be borne  by the  Trust  (and
             charged  to  individual  Participants'  Accounts  or charged at the
             Investment Fund level and reflected in the net gain or loss of each
             Investment  Fund) and those that shall be paid by the  Employer  is
             set forth in Appendix C, which may be changed  from time to time by
             the Company, in writing, without the necessity of amending the Plan
             and Trust.

             The  Trustee  shall  have the  authority  to pay any such  fees and
             expenses, which remain unpaid by the Employer for 60 days, from the
             Trust.

      6.6    Accounting for Participant Loans

             Participant  loans shall be held in a separate  Loan Account of the
             Participant  and accounted for in dollars as an earmarked  asset of
             the borrowing Participant's Account.

      6.7    Error Correction

             The  Administrator  may  correct  any  errors or  omissions  in the
             administration of the Plan by restoring any  Participant's  Account
             balance  with the amount  that would be credited to the Account had
             no  error or  omission  been  made.  Funds  necessary  for any such
             restoration shall be provided through payment made by the Employer,
             or  by  the  Trustee  to  the  extent  the  error  or  omission  is
             attributable to actions or inactions of the Trustee.

      6.8    Participant Statements

             The  Administrator  shall provide  Participants  with statements of
             their  Accounts  as soon after the end of each  quarter of the Plan
             Year as administratively feasible.

      6.9    Special Accounting During Conversion Period

             The  Administrator  and Trustee may use any  reasonable  accounting
             methods in performing their respective duties during any Conversion
             Period.  This  includes,  but is not  limited  to,  the  method for
             allocating net investment  gains or losses and the extent,  if any,
             to which contributions  received by and distributions paid from the
             Trust during this period share in such allocation.

      6.10   Accounts for Alternate Payees

             A separate  Account  shall be  established  for an Alternate  Payee
             entitled to any portion of a Participant's  Account under a QDRO as
             of the date and in accordance with the directions  specified in the
             QDRO. In addition, a separate Account may be established during the
             period of time the Administrator, a court of competent jurisdiction
             or other  appropriate  person is  determining  whether  a  domestic
             relations order qualifies as a QDRO. Such a separate  Account shall
             be  valued  and  accounted  for in the  same  manner  as any  other
             Account.

             (a)   Distributions  Pursuant  to QDROs.  If a QDRO so  provides,
                   the  portion  of a  Participant's  Account  payable  to  an
                   Alternate Payee may be distributed,  in a form  permissible
                   under  Section  11,  to the  Alternate  Payee  at any  time
                   beginning   as  soon  as   practicable   after   the   QDRO
                   determination   is  made,   regardless   of   whether   the
                   Participant is entitled to a distribution  from the Plan at
                   such  time.  The  Alternate  Payee  shall be  provided  the
                   notice prescribed by Code section 402(f).

             (b)   Participant  Loans.  Except to the extent  required by law,
                   an Alternate  Payee, on whose behalf a separate Account has
                   been  established,  shall not be  entitled  to borrow  from
                   such Account.  If a QDRO specifies that the Alternate Payee
                   is entitled to any portion of the Account of a  Participant
                   who has an outstanding loan balance,  all outstanding loans
                   shall  generally  continue to be held in the  Participant's
                   Account and shall not be divided between the  Participant's
                   and Alternate Payee's Accounts.

             (c)   Investment  Direction.  Where a  separate  Account  has  been
                   established  on behalf of an Alternate  Payee and has not yet
                   been   distributed,   the  Alternate  Payee  may  direct  the
                   investment of such Account in the same manner as if he or she
                   were a Participant.

7     INVESTMENT FUNDS AND ELECTIONS

      7.1    Investment Funds

             Except  for   Participants'   Sweep  and  Loan   Accounts  and  any
             unallocated  funds invested in interest bearing deposits (which may
             include  interest  bearing  deposits of the  Trustee)  and/or money
             market type assets or funds,  pending  allocation to  Participants'
             Accounts or disbursement  to pay Plan fees and expenses,  the Trust
             shall be maintained in various  Investment Funds. The Administrator
             shall select the Investment  Funds offered to Participants  and may
             change the number or composition of the Investment  Funds,  subject
             to the terms and conditions  agreed to with the Trustee.  As of the
             Effective  Date, a list of the  Investment  Funds offered under the
             Plan is set forth in Appendix B, which may be changed  from time to
             time by the  Administrator,  in  writing,  and as  agreed to by the
             Trustee, without the necessity of amending the Plan and Trust.

             The  Administrator  may  set a  maximum  percentage  of  the  total
             election that a Participant may direct into any specific Investment
             Fund, which maximum,  if any, as of the Effective Date is set forth
             in  Appendix  B,  which  may be  changed  from  time to time by the
             Administrator,  in writing,  without the  necessity of amending the
             Plan and Trust.

      7.2    Responsibility for Investment Choice

             Each  Participant  shall direct the investment of all of his or her
             Accounts except for his or her Employer Match, Additional Match and
             Discretionary  Match Accounts  which shall be entirely  invested in
             the  Investment   Fund  specified  by  the   Administrator,   which
             Investment Fund as of the Effective Date is set forth in Appendix B
             and except that a  Participant  who has  attained age 55 may direct
             the  investment of the balances in these  Accounts.  Future amounts
             deposited  to his or  her  Employer  Match,  Additional  Match  and
             Discretionary Match Accounts shall continue to be entirely invested
             in  the  Investment  Fund  specified  by the  Administrator,  until
             otherwise directed by the Participant.

             Each Participant  shall be solely  responsible for the selection of
             his or her  Investment  Fund choices.  No fiduciary with respect to
             the Plan is empowered to advise a  Participant  as to the manner in
             which his or her Accounts are to be invested,  and the fact that an
             Investment  Fund  is  offered  shall  not  be  construed  to  be  a
             recommendation for investment.

             During  any  Conversion  Period,  Trust  assets  may be held in any
             investment  vehicle  permitted  by the  Plan,  as  directed  by the
             Administrator,   irrespective  of  prior   Participant   investment
             elections.

      7.3    Investment Fund Elections

             A Participant shall provide his or her initial investment  election
             upon  becoming a Participant  and may change his or her  investment
             election at any time in accordance with  procedures  established by
             the Administrator and the Trustee.  A Participant shall make his or
             her investment  election in any combination of one or any number of
             the  Investment  Funds  offered in accordance  with the  procedures
             established by the Administrator and Trustee.  Investment elections
             received by the Trustee by the Sweep Date shall be effective on the
             following Trade Date.

      7.4    Default if No Valid Investment Election

             The  Administrator   shall  specify  an  Investment  Fund  for  the
             investment of that portion of a Participant's  Account which is not
             yet held in an  Investment  Fund and for which no valid  investment
             election  is on  file.  The  Investment  Fund  specified  as of the
             Effective  Date is set forth in  Appendix  B,  which may be changed
             from time to time by the  Administrator,  in  writing,  without the
             necessity of amending the Plan and Trust.

      7.5    Investment Fund Election Change Fees

             A  reasonable   processing  fee  may  be  charged   directly  to  a
             Participant's  Account  for  Investment  Fund  election  changes in
             excess  of a  specified  number  per  year  as  determined  by  the
             Administrator.

8     VESTING

      8.1    Fully Vested Accounts

             A Participant shall be fully vested in all Accounts at all times.


9     PARTICIPANT LOANS

      9.1    Participant Loans Permitted

             Loans to Participants and Beneficiaries  are permitted  pursuant to
             the terms and conditions  set forth in this Section,  except that a
             loan shall not be  permitted to a  Participant  who is no longer an
             Employee  or  to  a   Beneficiary,   unless  such   Participant  or
             Beneficiary  is  otherwise a party in interest (as defined in ERISA
             section 3(14)).

      9.2    Loan Application, Note and Security

             A Participant shall apply for any loan in such manner and with such
             advance notice as prescribed by the Administrator.  Each loan shall
             be evidenced by a promissory  note,  secured only by the portion of
             the Participant's Account from which the loan is made, and the Plan
             shall have a lien on this portion of his or her Account.

      9.3    Spousal Consent

             A Participant is not required to obtain Spousal Consent in order to
             borrow from his or her Account under the Plan.

      9.4    Loan Approval

             The Administrator,  or the Trustee, if otherwise  authorized by the
             Administrator  and agreed to by the  Trustee,  is  responsible  for
             determining  that  a loan  request  conforms  to  the  requirements
             described in this Section and granting such request.

      9.5    Loan Funding Limits, Account Sources and Funding Order

             The loan amount must meet all of the following limits as determined
             as of the Sweep Date the loan is processed and shall be funded from
             the Participant's Accounts as follows:

             (a)   Plan  Minimum  Limit.  The  minimum  amount for any loan is
                   $1,000.

             (b)   Plan  Maximum  Limit,  Account  Sources  and  Funding  Order.
                   Subject  to the  legal  limit  described  in (c)  below,  the
                   maximum a  Participant  may borrow,  including  the aggregate
                   outstanding  balances of existing Plan loans,  is 100% of the
                   following  of the  Participant's  Accounts  which  are  fully
                   vested in the priority order as follows:

                          Employee Pre-Tax Account
                          Rollover Account
                          After-Tax Account

             (c)   Legal  Maximum  Limit.   The  maximum  a  Participant   may
                   borrow,  including  the aggregate  outstanding  balances of
                   existing  Plan loans,  is 50% of his or her vested  Account
                   balance,  not  to  exceed  $50,000.  However,  the  $50,000
                   maximum is reduced by the  Participant's  highest aggregate
                   outstanding  Plan loan balance  during the 12-month  period
                   ending on the day  before  the  Sweep  Date as of which the
                   loan  is  made.  For  purposes  of  this   paragraph,   the
                   qualified  plans of all Related  Companies shall be treated
                   as though  they are part of the Plan to the extent it would
                   decrease the maximum loan amount.

      9.6    Maximum Number of Loans

             A Participant may have only one loan outstanding at any given time,
             except that a Participant  may have more than one loan  outstanding
             if all such loans were initiated under a Predecessor Plan.

      9.7    Source and Timing of Loan Funding

             A loan to a Participant shall be made solely from the assets of his
             or her own Account.  The available assets shall be determined first
             by Account and then within  each  Account  used for funding a loan,
             amounts  shall first be taken from the Sweep Account and then taken
             by Investment Fund in direct  proportion to the market value of the
             Participant's interest in each Investment Fund as of the Trade Date
             on which the loan is processed.

             The loan shall be funded on the Settlement Date following the Trade
             Date as of which the loan is  processed.  The  Trustee  shall  make
             payment to the Participant as soon  thereafter as  administratively
             feasible.

      9.8    Interest Rate

             The  interest  rate charged on  Participant  loans shall be a fixed
             reasonable  rate of interest,  determined  from time to time by the
             Administrator,  which provides the Plan with a return  commensurate
             with  the  prevailing  interest  rate  charged  by  persons  in the
             business  of  lending  money for loans  which  would be made  under
             similar circumstances.  As of the Effective Date, the interest rate
             is determined as set forth in Appendix D, which may be changed from
             time  to  time  by  the  Administrator,  in  writing,  without  the
             necessity of amending the Plan and Trust.

      9.9    Loan Payment

             Substantially  level  amortization  shall be  required of each loan
             with  payments made at least  monthly,  generally  through  payroll
             deduction. Loans may be prepaid in full or in part at any time. The
             Participant  may choose the loan  repayment  period,  not to exceed
             five years,  except that the repayment period may be for any period
             not to exceed 10 years if the purpose of the loan is to acquire the
             Participant's principal residence.

      9.10   Loan Payment Hierarchy

             Loan  principal  payments  shall be credited  to the  Participant's
             Accounts  in the  inverse of the order used to fund the loan.  Loan
             interest shall be credited to the Participant's  Accounts in direct
             proportion to the  principal  payment.  Loan  payments  credited to
             Accounts for which the Participant  directs investment as described
             in Section 7 are  credited to the  Investment  Funds based upon the
             Participant's  current  investment  election for new Contributions.
             Loan payments  credited to Accounts for which the Participant  does
             not direct investment as described in Section 7 are credited to the
             Investment Funds specified by the Administrator for such Accounts.

      9.11   Repayment Suspension

             The Administrator may agree to a suspension of loan payments for up
             to 12 months for a Participant who is on a Leave of Absence without
             pay.  During the  suspension  period,  interest  shall  continue to
             accrue on the  outstanding  loan balance.  At the expiration of the
             suspension   period  all  outstanding  loan  payments  and  accrued
             interest  thereon shall be due unless  otherwise agreed upon by the
             Administrator.

      9.12   Loan Default

             A loan is treated as in default if a scheduled  loan payment is not
             made at the time  required.  A Participant  shall then have a grace
             period to cure the  default  before it  becomes  final.  Such grace
             period  shall be for a period that does not extend  beyond the last
             day of the calendar quarter following the calendar quarter in which
             the  scheduled  loan  payment  was due or such  lesser  or  greater
             maximum period as may later be authorized by Code section 72(p).

             In the event a default is not cured  within the grace  period,  the
             Administrator  may  direct the  Trustee  to report the  outstanding
             principal  balance of the loan and  accrued  interest  thereon as a
             taxable  distribution  to  the  Participant.  As  soon  as  a  Plan
             withdrawal or distribution to such  Participant  would otherwise be
             permitted,  the  Administrator  may instruct the Trustee to execute
             upon  its  security  interest  in  the  Participant's   Account  by
             distributing the note to the Participant.

      9.13   Call Feature

             The Administrator shall have the right to call any Participant loan
             once a  Participant's  employment  with all Related  Companies  has
             terminated,  unless he or she is  otherwise a party in interest (as
             defined in ERISA section 3(14)), or if the Plan is terminated.

10    IN-SERVICE WITHDRAWALS

      10.1   In-Service Withdrawals Permitted

             In-service  withdrawals  to a  Participant  who is an Employee  are
             permitted  pursuant to the terms and  conditions  set forth in this
             Section  and  pursuant  to the  terms and  conditions  set forth in
             Section  11  with  regard  to  an  in-service  withdrawal  made  in
             accordance with a Participant's Required Beginning Date.

      10.2   In-Service Withdrawal Application and Notice

             A  Participant  shall apply for any  in-service  withdrawal in such
             manner  and  with  such  advance   notice  as   prescribed  by  the
             Administrator.   The  Participant  shall  be  provided  the  notice
             prescribed by Code section 402(f).

             Code  sections  401(a)(11)  and  417 do  not  apply  to  in-service
             withdrawals  under the Plan. An in-service  withdrawal may commence
             less than 30 days after the aforementioned notice is provided, if:

             (a)   the  Participant  is clearly  informed that he or she has the
                   right to a period of at least 30 days  after  receipt of such
                   notice to consider  his or her option to elect or not elect a
                   Direct  Rollover for all or a portion,  if any, of his or her
                   in-service  withdrawal which constitutes an Eligible Rollover
                   Distribution; and

             (b)   the Participant  after  receiving such notice,  affirmatively
                   elects a Direct Rollover for all or a portion, if any, of his
                   or her in-service  withdrawal  which  constitutes an Eligible
                   Rollover  Distribution or alternatively elects to have all or
                   a portion  made payable  directly to him or her,  thereby not
                   electing a Direct Rollover for all or a portion thereof.

      10.3   Spousal Consent

             A Participant is not required to obtain Spousal Consent in order to
             receive an in-service withdrawal under the Plan.

      10.4   In-Service Withdrawal Approval

             The Administrator,  or the Trustee, if otherwise  authorized by the
             Administrator  and agreed to by the  Trustee,  is  responsible  for
             determining  whether an in-service  withdrawal  request conforms to
             the  requirements  described  in this  Section  and  granting  such
             request.

      10.5   Payment Form and Medium

             The form of payment for an in-service  withdrawal shall be a single
             lump sum and  payment  shall be made in cash.  With  regard  to the
             portion  of  an  in-service  withdrawal  representing  an  Eligible
             Rollover  Distribution,  a Participant  may elect a Direct Rollover
             for all or a portion of such amount.

      10.6   Source and Timing of In-Service Withdrawal Funding

             An in-service withdrawal to a Participant shall be made solely from
             the  assets  of his or her own  Account  and  shall be based on the
             Account  values as of the Trade Date the  in-service  withdrawal is
             processed.  The  available  assets  shall  be  determined  first by
             Account and then within each Account used for funding an in-service
             withdrawal, amounts shall first be taken from the Sweep Account and
             then taken by  Investment  Fund in direct  proportion to the market
             value of the Participant's  interest in each Investment Fund (which
             excludes his or her Loan  Account  balance) as of the Trade Date on
             which the in-service withdrawal is processed.

             The in-service  withdrawal  shall be funded on the Settlement  Date
             following the Trade Date as of which the  in-service  withdrawal is
             processed.  The Trustee shall make payment to the Participant or on
             behalf of the  Participant as soon  thereafter as  administratively
             feasible.

      10.7   Hardship Withdrawals

             (a)   Requirements.   A  Participant   who  is  an  Employee  may
                   request the  withdrawal  of up to the amount  necessary  to
                   satisfy a financial  need  including  amounts  necessary to
                   pay any  federal,  state or local income taxes or penalties
                   reasonably  anticipated  to  result  from  the  withdrawal.
                   Only  requests  for   withdrawals   (1)  on  account  of  a
                   Participant's  "Deemed  Financial  Need"  and (2) which are
                   "Deemed  Necessary" to satisfy the financial  need shall be
                   approved.

             (b)   "Deemed  Financial  Need".  An immediate and heavy  financial
                   need relating to:

                   (1)    the  payment of  unreimbursed  medical  care  expenses
                          (described  under Code section 213(d)) incurred (or to
                          be  incurred)  by the  Employee,  his or her spouse or
                          dependents (as defined in Code section 152);

                   (2)    the   payment   of   unreimbursed   tuition,   related
                          educational fees and room and board for up to the next
                          12  months  of   post-secondary   education   for  the
                          Employee,  his or her spouse or dependents (as defined
                          in Code section 152);

                   (3)    the  payment  of  funeral  expenses  of an  Employee's
                          family member; or

                   (4)    the payment of amounts  necessary  for the Employee to
                          prevent losing his or her principal  residence through
                          eviction or foreclosure on the mortgage.

             (c)   "Deemed  Necessary".  A withdrawal  is "Deemed  Necessary" to
                   satisfy the financial need only if the withdrawal amount does
                   not exceed the financial need and all of these conditions are
                   met:


                   (1)    the Employee  has  obtained  all possible  withdrawals
                          (other than hardship withdrawals) and nontaxable loans
                          available from the Plan and all other plans maintained
                          by Related Companies;

                   (2)    the  Administrator  shall  suspend the  Employee  from
                          making  any  contributions  to the Plan and all  other
                          qualified   and   nonqualified   plans   of   deferred
                          compensation  and all stock  option or stock  purchase
                          plans  maintained  by Related  Companies for 12 months
                          from the date the withdrawal payment is made; and

                   (3)    the Administrator shall reduce the Contribution Dollar
                          Limit for the Employee with regard to the Plan and all
                          other plans maintained by Related  Companies,  for the
                          calendar year next  following the calendar year of the
                          withdrawal  by the amount of the  Employee's  Employee
                          Pre-Tax  Contributions  for the  calendar  year of the
                          withdrawal.

             (d)   Account Sources and Funding Order. All available amounts must
                   first be withdrawn from a  Participant's  After-Tax  Account.
                   The remaining withdrawal shall come from the following of the
                   Participant's fully vested Accounts, in the priority order as
                   follows:

                          Rollover Account
                          Employee Pre-Tax Account

                   The  amount  that  may  be  withdrawn  from  a  Participant's
                   Employee  Pre-Tax  Account  shall  not  include  any  amounts
                   attributable to earnings.

             (e)   Minimum  Amount.  There is no  minimum  amount for a hardship
                   withdrawal.

             (f)   Permitted Frequency. There is no restriction on the number of
                   hardship withdrawals permitted to a Participant.

             (g)   Suspension  from  Further  Contributions.   Upon  making  a
                   hardship withdrawal,  a Participant may not make additional
                   Employee    Pre-Tax     Contributions     (or    additional
                   contributions  to  all  other  qualified  and  nonqualified
                   plans of  deferred  compensation  and all  stock  option or
                   stock purchase plans  maintained by Related  Companies) for
                   a period of 12 months from the date the withdrawal  payment
                   is made.

      10.8   After-Tax Account Withdrawals

             (a)   Requirements.  A  Participant  who is an Employee may make an
                   After-Tax Account withdrawal.

             (b)   Account Sources and Funding Order.  The withdrawal shall come
                   from a Participant's After-Tax Account.

             (c)   Minimum  Amount.  There is no minimum amount for an After-Tax
                   Account withdrawal.

             (d)   Permitted  Frequency.   There  is  no  restriction  on  the
                   number of  After-Tax  Account  withdrawals  permitted  to a
                   Participant.

             (e)   Suspension from Further  Contributions.  An After-Tax Account
                   withdrawal  shall not affect a Participant's  ability to make
                   or be eligible to receive further Contributions.

      10.9   Rollover Account Withdrawals

             (a)   Requirements.  A  Participant  who is an Employee  may make a
                   Rollover Account withdrawal.

             (b)   Account Sources and Funding Order.  The withdrawal shall come
                   from a Participant's Rollover Account.

             (c)   Minimum  Amount.  There is no  minimum  amount for a Rollover
                   Account withdrawal.

             (d)   Permitted  Frequency.   There  is  no  restriction  on  the
                   number  of  Rollover  Account  withdrawals  permitted  to a
                   Participant.

             (e)   Suspension  from Further  Contributions.  A Rollover  Account
                   withdrawal  shall not affect a Participant's  ability to make
                   or be eligible to receive further Contributions.

      10.10  Disabled Participant Withdrawals

             (a)   Requirements.  A  Participant  who  is  an  Employee  and a
                   Disabled   Participant  may  make  a  Disabled  Participant
                   withdrawal.

             (b)   Account Sources and Funding Order.  The withdrawal shall come
                   from  the  following  of  the   Participant's   fully  vested
                   Accounts,  in the priority order as follows,  except that the
                   Participant may instead choose to have amounts taken from his
                   or her After-Tax Account first:

                          Rollover Account
                          Employee Pre-Tax Account
                          Discretionary Match Account
                          Employer Match Account
                          Additional Match Account
                          Prior Match Account
                          ESOP Transfer Account
                          After-Tax Account

             (c)   Minimum  Amount.  There is no  minimum  amount for a Disabled
                   Participant withdrawal.

             (d)   Permitted   Frequency.   The   maximum   number  of  Disabled
                   Participant  withdrawals  permitted to a  Participant  in any
                   three-month period is one.

             (e)   Suspension from Further Contributions. A Disabled Participant
                   withdrawal  shall not affect a Participant's  ability to make
                   or be eligible to receive further Contributions.

      10.11  Over Age 59 1/2 Withdrawals

             (a)   Requirements.  A Participant  who is an Employee and over age
                   59 1/2 may make an Over Age 59 1/2 withdrawal.

             (b)   Account Sources and Funding Order.  The withdrawal shall come
                   from  the  following  of  the   Participant's   fully  vested
                   Accounts,  in the priority order as follows,  except that the
                   Participant may instead choose to have amounts taken from his
                   or her After-Tax Account first:

                          Rollover Account
                          Employee Pre-Tax Account
                          Discretionary Match Account
                          Employer Match Account
                          Additional Match Account
                          Prior Match Account
                          ESOP Transfer Account
                          After-Tax Account

             (c)   Minimum Amount. There is no minimum amount for an Over Age 59
                   1/2 withdrawal.

             (d)   Permitted  Frequency.  There  is  no  restriction  on  the
                   number of Over  Age  59 1/2 withdrawals permitted to a
                   Participant.

             (e)   Suspension  from  Further  Contributions.  An Over Age 59 1/2
                   withdrawal  shall not affect a Participant's  ability to make
                   or be eligible to receive further Contributions.

11    DISTRIBUTIONS  ONCE  EMPLOYMENT  ENDS OR BY REASON OF A  PARTICIPANT'S  
      REQUIRED BEGINNING DATE

      11.1   Benefit Information, Notices and Election

             A Participant,  or his or her Beneficiary in the case of his or her
             death,  shall be provided with  information  regarding all optional
             times and forms of distribution available under the Plan, including
             the notices  prescribed  by Code  sections  402(f) and  411(a)(11).
             Subject to the other  requirements of this Section,  a Participant,
             or his or her  Beneficiary  in the  case of his or her  death,  may
             elect, in such manner and with such advance notice as prescribed by
             the  Administrator,  to  have  his or her  vested  Account  balance
             distributed  beginning  upon  any  Settlement  Date  following  the
             Participant's  termination of employment with all Related Companies
             and a  reasonable  period of time  during  which the  Administrator
             shall  process,  and  inform  the  Trustee  of,  the  Participant's
             termination  or,  if  earlier,  at the  time  of the  Participant's
             Required Beginning Date.

             Notwithstanding,  if a Participant's termination of employment with
             all Related Companies does not constitute a separation from service
             for  purposes  of  Code  section  401(k)(2)(B)(i)(I)  or  otherwise
             constitute an event set forth under Code section  401(k)(10)(A)(ii)
             or  (iii)  as  described  in  Section   19.3,   the  portion  of  a
             Participant's  Account  subject to the  distribution  rules of Code
             section 401(k) may not be distributed  until such time as he or she
             separates    from    service   for   purposes   of   Code   section
             401(k)(2)(B)(i)(I)  or,  if  earlier,  upon  such  other  event  as
             described in Code section  401(k)(2)(B)  and as provided for in the
             Plan.

             Code  sections  401(a)(11)  and 417 do not  apply to  distributions
             under the Plan. A distribution may commence less than 30 days after
             the aforementioned notices are provided, if:

             (a)   the Participant is clearly  informed that he or she has the
                   right to a period  of at least  30 days  after  receipt  of
                   such  notices to  consider  the  decision  as to whether to
                   elect a distribution  and if so to elect a particular  form
                   of  distribution  and  to  elect  or  not  elect  a  Direct
                   Rollover  for  all  or a  portion,  if  any,  of his or her
                   distribution   which   constitutes  an  Eligible   Rollover
                   Distribution; and

             (b)   the Participant  after receiving such notices,  affirmatively
                   elects  a  distribution  and a Direct  Rollover  for all or a
                   portion, if any, of his or her distribution which constitutes
                   an Eligible Rollover  Distribution or alternatively elects to
                   have all or a portion  made  payable  directly to him or her,
                   thereby not  electing a Direct  Rollover for all or a portion
                   thereof.

      11.2   Spousal Consent

             A Participant is not required to obtain Spousal Consent in order to
             receive a distribution under the Plan.

      11.3   Payment Form and Medium

             Except  to  the  extent  otherwise  provided  by  Section  

             (a)   a single lump sum;

             (b)   a portion  paid in a lump sum, and the  remainder  paid later
                   (partial payment); or

             (c) periodic installments over a period not to exceed 15 years.

             Distributions  shall  be made  in  cash,  except  to the  extent  a
             distribution  consists of a loan call as described in Section 9 and
             except that a Participant may elect that a distribution in the form
             of a lump sum be made in the form of (i) whole  shares  of  Company
             Stock  and cash in lieu of  fractional  shares  to the  extent  the
             distribution consists of amounts from the Company Stock Fund and/or
             (ii)  whole  shares  of  PacifiCorp  Stock  and  cash  in  lieu  of
             fractional  shares  to the  extent  the  distribution  consists  of
             amounts from the PacifiCorp  Stock Fund. With regard to the portion
             of a distribution representing an Eligible Rollover Distribution, a
             Distributee  may elect a Direct  Rollover  for all or a portion  of
             such amount.

      11.4   Distribution of Small Amounts

             If after a  Participant's  employment  with all  Related  Companies
             ends, the  Participant's  vested Account balance is $5,000 or less,
             and  if  at  the  time  of  any  prior  in-service   withdrawal  or
             distribution  the  Participant's  vested  Account  balance  did not
             exceed $5,000, the Participant's  benefit shall be paid as a single
             lump sum as soon as  administratively  feasible in accordance  with
             procedures prescribed by the Administrator.

      11.5   Source and Timing of Distribution Funding

             A  distribution  to a  Participant  shall be made  solely  from the
             assets of his or her own  Account and shall be based on the Account
             values as of the Trade  Date the  distribution  is  processed.  The
             available  assets  shall be  determined  first by Account  and then
             within each Account used for funding a distribution,  amounts shall
             first be taken from the Sweep  Account and then taken by Investment
             Fund in direct  proportion to the market value of the Participant's
             interest in each  Investment Fund as of the Trade Date on which the
             distribution is processed.

             The  distribution  shall be funded on the Settlement Date following
             the  Trade  Date as of which the  distribution  is  processed.  The
             Trustee shall make payment to the  Participant  or on behalf of the
             Participant as soon thereafter as administratively feasible.

      11.6   Latest Commencement Permitted

             In addition to any other Plan requirements and unless a Participant
             elects otherwise, his or her benefit payments shall begin not later
             than 60 days  after  the end of the  Plan  Year in  which he or she
             attains his or her Normal Retirement Date or retires,  whichever is
             later. However, if the amount of the payment or the location of the
             Participant  (after a reasonable  search)  cannot be ascertained by
             that  deadline,  payment  shall be made no later than 60 days after
             the earliest  date on which such amount or location is  ascertained
             but in no event  later than the  Participant's  Required  Beginning
             Date. A Participant's failure to elect in such manner as prescribed
             by the  Administrator  to have his or her  vested  Account  balance
             distributed,  shall be deemed an  election  by the  Participant  to
             defer  his or her  distribution  but in no event  shall  his or her
             benefit payments commence later than his or her Required  Beginning
             Date.

             With regard to a  Participant  who is an Employee and who commenced
             benefit  payments in accordance  with Code section  401(a)(9) as in
             effect prior to January 1, 1997,  and who is not a 5% Owner,  he or
             she may, but is not required to,  discontinue such benefit payments
             until he or she is  otherwise  required to again  commence  benefit
             payments in accordance with Code section 401(a)(9) as in effect for
             calendar  years  commencing  after December 31, 1996. A Participant
             who elects to discontinue  such benefit payments in accordance with
             the preceding  sentence  shall  thereby  render his or her existing
             payment  election and, if applicable,  any Spousal  Consent to such
             election,  as void and a new  election  including,  if  applicable,
             Spousal Consent to such new election,  shall be required subject to
             the provisions of this Section 11 at the time he or she is required
             to again commence  benefit payments in accordance with Code section
             401(a)(9) as in effect for calendar years commencing after December
             31, 1996.

             If benefit  payments cannot begin at the time required  because the
             location  of  the  Participant   cannot  be  ascertained  (after  a
             reasonable search),  the Administrator may, at any time thereafter,
             treat such person's Account as forfeited  subject to the provisions
             of Section 18.6.

      11.7   Payment Within Life Expectancy

             The  Participant's  payment  election must be  consistent  with the
             requirement  of Code section  401(a)(9) that all payments are to be
             completed  within a period not to exceed the lives or the joint and
             last survivor life  expectancy  of the  Participant  and his or her
             Beneficiary.  The life expectancies of a Participant and his or her
             Beneficiary may not be recomputed annually.

      11.8   Incidental Benefit Rule

             The  Participant's  payment  election must be  consistent  with the
             requirement  that,  if the  Participant's  spouse is not his or her
             sole primary Beneficiary,  the minimum annual distribution for each
             calendar  year,  beginning  with the calendar  year  preceding  the
             calendar year that includes the  Participant's  Required  Beginning
             Date, shall not be less than the quotient  obtained by dividing (a)
             the Participant's  vested Account balance as of the last Trade Date
             of the preceding year by (b) the  applicable  divisor as determined
             under  the  incidental   benefit   requirements   of  Code  section
             401(a)(9).

      11.9   Payment to Beneficiary

             Payment to a Beneficiary must either (i) be completed by the end of
             the  calendar  year  that  contains  the fifth  anniversary  of the
             Participant's  death or (ii) begin by the end of the calendar  year
             that contains the first anniversary of the Participant's  death and
             be completed  within the period of the  Beneficiary's  life or life
             expectancy, except that:

             (a)   If the Participant  dies after his or her Required  Beginning
                   Date, payment to his or her Beneficiary must be made at least
                   as  rapidly as  provided  in the  Participant's  distribution
                   election;

             (b)   If the surviving spouse is the Beneficiary, payments need not
                   begin  until  the later of (i) the end of the  calendar  year
                   that  includes  the first  anniversary  of the  Participant's
                   death,  or (ii) the end of the  calendar  year in  which  the
                   Participant  would  have  attained  age 70 1/2  and  must  be
                   completed within the spouse's life or life expectancy; and

             (c)   If  the  Participant  and  the  surviving  spouse  who is the
                   Beneficiary  die  (i)  before  the   Participant's   Required
                   Beginning  Date and (ii)  before  payments  have begun to the
                   spouse,  the spouse  shall be treated as the  Participant  in
                   applying these rules.

      11.10  Beneficiary Designation

             Each  Participant  may  complete  a  beneficiary  designation  form
             indicating  the  Beneficiary  who is to receive  the  Participant's
             remaining  Plan  interest  at the time of his or her death and such
             designation  may be changed at any time.  However,  a Participant's
             spouse shall be the sole primary Beneficiary unless the designation
             includes  Spousal  Consent  for another  Beneficiary.  If no proper
             designation is in effect at the time of a Participant's death or if
             the Beneficiary does not survive the  Participant,  the Beneficiary
             shall be, in the order listed, the:

             (a)   Participant's surviving spouse,

             (b)   Participant's  children, in equal shares, (or if a child does
                   not survive the Participant, and that child leaves issue, the
                   issue shall be entitled to that  child's  share,  by right of
                   representation) or

             (c)   Participant's estate.

12    ADP AND ACP TESTS

      12.1   Contribution Limitation Definitions

             The following  definitions are applicable to this Section 12 (where
             a definition  is contained in both  Sections 1 and 12, for purposes
             of Section 12 the Section 12 definition shall be controlling):

             (a)   "ACP"  or  "Average  Contribution  Percentage".  The  Average
                   Percentage   calculated  using  Contributions   allocated  to
                   Participants as of a date within the Plan Year.

             (b)   "ACP  Test".  The  determination  of  whether  the  ACP is in
                   compliance  with the Basic or  Alternative  Limitation  for a
                   Plan Year (as defined in Section 12.2).

             (c)   "ADP"  or   "Average   Deferral   Percentage".   The  Average
                   Percentage    calculated   using   Deferrals   allocated   to
                   Participants as of a date within the Plan Year.

             (d)   "ADP  Test".  The  determination  of  whether  the  ADP is in
                   compliance  with the Basic or  Alternative  Limitation  for a
                   Plan Year (as defined in Section 12.2).

             (e)   "Average   Percentage".   The  average  of  the  calculated
                   percentages for  Participants  within the specified  group.
                   The calculated  percentage refers to either the "Deferrals"
                   or  "Contributions"  (as defined in this  Section)  made on
                   each  Participant's  behalf for the Plan  Year,  divided by
                   his or her Compensation.  (Employee  Pre-Tax  Contributions
                   to  the  Plan  or  comparable  contributions  to  plans  of
                   Related  Companies  which must be refunded  solely  because
                   they exceed the  Contribution  Dollar Limit are included in
                   the  percentage  for the  HCE  Group  but not for the  NHCE
                   Group.)

             (f)   "Contributions"    (i)   shall   include   Employer   Match
                   Contributions   and  (ii)  may  include   Employee  Pre-Tax
                   Contributions,  but with regard to (ii), only to the extent
                   that (1) the  Administrator  elects to use  them,  (2) they
                   are  not  used or  counted  in the ADP  Test  and (3)  they
                   otherwise  satisfy the  requirements  as  prescribed  under
                   Code section 401(m)  permitting  treatment as Contributions
                   for purposes of the ACP Test.

             (g)   "Current Year Testing Method". The use of the Plan Year's ADP
                   for the Plan Year's NHCE Group for purposes of performing the
                   Plan  Year's ADP Test  and/or the use of the Plan  Year's ACP
                   for the Plan Year's NHCE Group for purposes of performing the
                   Plan Year's ACP Test.

             (h)   "Deferrals"    (i)   shall   include    Employee    Pre-Tax
                   Contributions   and  (ii)  may   include   Employer   Match
                   Contributions,  but with regard to (ii), only to the extent
                   that (1) the  Administrator  elects to use  them,  (2) they
                   are not  used or  counted  in the ACP  Test,  (3)  they are
                   fully  vested when made,  not  withdrawable  by an Employee
                   before  he or she  attains  age 59 1/2and (4) they  otherwise
                   satisfy the  requirements as prescribed  under Code section
                   401(k)  permitting  treatment as Deferrals  for purposes of
                   the ADP Test.

             (i)   "HCE"  or  "Highly  Compensated  Employee".  For  Plan  Years
                   commencing  after  December  31,  1996,  with  respect to all
                   Related  Companies,  an Employee who (in accordance with Code
                   section 414(q)):

                   (1)    Was a more than 5% Owner  (within  the meaning of Code
                          section 414(q)(2)) at any time during the Plan Year or
                          the preceding Plan Year; or

                   (2)    Received  Compensation  during the preceding Plan Year
                          in  excess  of  $80,000  (as  adjusted  for such  Year
                          pursuant to Code sections 414(q)(1) and 415(d)) or, if
                          the Company  elects for such  preceding Plan Year, "in
                          excess of $80,000 (as adjusted for such Year  pursuant
                          to  Code  sections  414(q)(1)  and  415(d))  and was a
                          member of the "top-paid  group" (within the meaning of
                          Code section  414(q)(3)) for such preceding Plan Year"
                          shall be  substituted  for the preceding  reference to
                          "in  excess  of  $80,000  (as  adjusted  for such Year
                          pursuant to Code sections 414(q)(1) and 415(d))".

                   A  former  Employee  shall be  treated  as an HCE if (1) such
                   former  Employee  was an HCE  when he or she  separated  from
                   service, or (2) such former Employee was an HCE in service at
                   any time after attaining age 55.

                   The  determination of who is an HCE and the  determination of
                   the number and identity of  Employees  in the top-paid  group
                   shall be made in accordance with Code section 414(q).

             (j)   "HCE Group" and "NHCE  Group".  With respect to all Related
                   Companies,  the respective  group of HCEs and NHCEs who are
                   eligible to have  amounts  contributed  on their behalf for
                   the respective Plan Year,  including Employees who would be
                   eligible but for their  election not to  participate  or to
                   contribute,  or because  their Pay is greater than zero but
                   does  not   exceed  a  stated   minimum.   For  Plan  Years
                   commencing  after  December 31,  1998,  with respect to all
                   Related Companies,  if the Plan permits participation prior
                   to an Eligible  Employee's  satisfaction of the minimum age
                   and  service  requirements  of Code  section  410(a)(1)(A),
                   Eligible  Employees  who have not met the  minimum  age and
                   service  requirements of Code section  410(a)(1)(A)  may be
                   excluded in the  determination  of the NHCE Group,  but not
                   in the  determination of the HCE Group, for purposes of (i)
                   the ADP Test,  if Code section  410(b)(4)(B)  is applied in
                   determining  whether  the 401(k)  portion of the Plan meets
                   the  requirements of Code section  410(b),  or (ii) the ACP
                   Test,   if  Code   section   410(b)(4)(B)   is  applied  in
                   determining  whether  the 401(m)  portion of the Plan meets
                   the requirements of Code section 410(b).

                   (1)    If the Related  Companies  maintain  two or more plans
                          which  are  subject  to the  ADP or ACP  Test  and are
                          considered  as one plan for purposes of Code  sections
                          401(a)(4)   or  410(b),   all  such  plans   shall  be
                          aggregated  and  treated as one plan for  purposes  of
                          meeting the ADP and ACP Tests, provided that the plans
                          may only be  aggregated  if they  have  the same  plan
                          year.

                   (2)    If an HCE is covered by more than one cash or deferred
                          arrangement,  or more than one arrangement  permitting
                          employee or matching contributions,  maintained by the
                          Related Companies,  all such plans shall be aggregated
                          and  treated as one plan  (other than those plans that
                          may not be  permissively  aggregated)  for purposes of
                          calculating the separate  percentage for the HCE which
                          is  used   in  the   determination   of  the   Average
                          Percentage. For purposes of the preceding sentence, if
                          such plans have  different  plan years,  the plans are
                          aggregated  with respect to the plan years ending with
                          or within the same calendar year.

             (k)   "Multiple Use Test". The test described in Section 12.4 which
                   a Plan must meet where the Alternative  Limitation (described
                   in Section 12.2) is used to meet both the ADP and ACP Tests.

             (l)   "NHCE" or "Non-Highly  Compensated Employee". An Employee who
                   is not an HCE.

             (m)   "Prior Year Testing  Method".  The use of the preceding  Plan
                   Year's  ADP for the  preceding  Plan  Year's  NHCE  Group for
                   purposes  of  performing  the Plan Year's ADP Test and/or the
                   use of the preceding  Plan Year's ACP for the preceding  Plan
                   Year's NHCE Group for purposes of performing  the Plan Year's
                   ACP Test.

      12.2   ADP and ACP Tests

             For Plan Years  commencing  after  December 31, 1996, for each Plan
             Year,  the Prior Year Testing  Method shall be used and the ADP and
             ACP for the HCE Group  must meet  either  the Basic or  Alternative
             Limitation  when compared to the  respective  preceding Plan Year's
             ADP and ACP for the  preceding  Plan Year's NHCE Group,  defined as
             follows:

             (a)   Basic  Limitation.  The HCE Group Average  Percentage may not
                   exceed 1.25 times the NHCE Group Average Percentage.

             (b)   Alternative  Limitation.  The HCE Group Average Percentage is
                   limited by reference to the NHCE Group Average  Percentage as
                   follows:

                       If the NHCE Group             Then the Maximum HCE
                    Average Percentage is:       Group Average Percentage is:
                    ----------------------       ----------------------------
                         Less than 2%            2 times NHCE Group Average %
                           2% to 8%              NHCE Group Average % plus 2%
                         More than 8%            NA - Basic Limitation applies

             Alternatively,  the  Company  may  elect  to use the  Current  Year
             Testing  Method  and the ADP and/or ACP for the HCE Group must meet
             either the Basic or  Alternative  Limitation  as defined above when
             compared to the respective  Plan Year's ADP and/or ACP for the Plan
             Year's NHCE Group.  If a Current  Year Testing  Method  election is
             made,  such  election may not be changed  except as provided by the
             Code.

      12.3   Correction of ADP and ACP Tests  for
             Plan Years Commencing After December 31, 1996

             For Plan Years  commencing  after  December 31, 1996, for each Plan
             Year, if the ADP or ACP Tests are not met, the Administrator  shall
             determine,  no later than the end of the next Plan Year,  a maximum
             percentage to be used in place of the calculated percentage for all
             HCEs that  would  reduce  the ADP and/or ACP for the HCE Group by a
             sufficient amount to meet the ADP and ACP Tests.

             With  regard  to  each  HCE  whose   Deferral   percentage   and/or
             Contribution  percentage is in excess of the maximum percentage,  a
             dollar amount of excess Deferrals and/or excess Contributions shall
             then be determined by (i)  subtracting  the product of such maximum
             percentage  for the ADP and the HCE's  Compensation  from the HCE's
             actual  Deferrals and (ii)  subtracting the product of such maximum
             percentage  for the ACP and the HCE's  Compensation  from the HCE's
             actual  Contributions.  Such amounts  shall then be  aggregated  to
             determine the total dollar amount of excess Deferrals and/or excess
             Contributions.   ADP  and/or  ACP  corrections  shall  be  made  in
             accordance with the leveling method as described below.

             (a)   ADP  Correction.  The HCE with the highest  Deferral dollar
                   amount  shall  have  his  or  her  Deferral  dollar  amount
                   reduced  in an amount  equal to the  lesser  of the  dollar
                   amount  of  excess  Deferrals  for all  HCEs or the  dollar
                   amount that would cause his or her Deferral  dollar  amount
                   to equal  that of the HCE with  the next  highest  Deferral
                   dollar  amount.  The process  shall be  repeated  until the
                   total of the Deferral dollar amount  reductions  equals the
                   dollar amount of excess Deferrals for all HCEs.

                   To the  extent  an  HCE's  Deferrals  were  determined  to be
                   reduced as described in the paragraph above, Employee Pre-Tax
                   Contributions  shall,  by the end of the next Plan  Year,  be
                   refunded  to the HCE,  except that such amount to be refunded
                   shall be reduced by Employee Pre-Tax Contributions previously
                   refunded because they exceeded the Contribution Dollar Limit.
                   The  excess  amounts  shall  first  be taken  from  unmatched
                   Employee Pre-Tax Contributions and then from matched Employee
                   Pre-Tax  Contributions.   Any  Employer  Match  Contributions
                   attributable   to   refunded    excess    Employee    Pre-Tax
                   Contributions  as  described  in this  Section,  adjusted for
                   investment gain or loss for the Plan Year to which the excess
                   Employee Pre-Tax Contributions relate, shall be forfeited and
                   used to reduce future Contributions to be made by an Employer
                   as soon as administratively feasible.

             (b)   ACP  Correction.  The HCE  with  the  highest  Contribution
                   dollar  amount  shall have his or her  Contribution  dollar
                   amount  reduced  in an  amount  equal to the  lesser of the
                   dollar amount of excess  Contributions  for all HCEs or the
                   dollar  amount  that  would  cause his or her  Contribution
                   dollar  amount  to  equal  that of the HCE  with  the  next
                   highest  Contribution  dollar amount.  The process shall be
                   repeated until the total of the Contribution  dollar amount
                   reductions    equals   the   dollar    amount   of   excess
                   Contributions for all HCEs.

                   To the extent an HCE's  Contributions  were  determined to be
                   reduced as described in the paragraph  above,  Employer Match
                   Contributions  shall,  by the end of the next Plan  Year,  be
                   refunded to the HCE.

             (c)   Investment   Fund  Sources.   Once  the  amount  of  excess
                   Deferrals and/or  Contributions is determined,  within each
                   Account  from which  amounts  are  refunded  or  forfeited,
                   amounts  shall  first be taken from the Sweep  Account  and
                   then taken by Investment  Fund in direct  proportion to the
                   market  value  of  the   Participant's   interest  in  each
                   Investment  Fund (which  excludes  his or her Loan  Account
                   balance)  as of the Trade Date on which the  correction  is
                   processed.

      12.4   Multiple Use Test

             If the Alternative  Limitation (defined in Section 12.2) is used to
             meet both the ADP and ACP Tests,  the ADP and ACP for the HCE Group
             must also comply with the  requirements of Code section  401(m)(9).
             Such Code section  requires that the sum of the ADP and ACP for the
             HCE Group (as determined  after any corrections  needed to meet the
             ADP and ACP  Tests  have  been  made)  not  exceed  the sum  (which
             produces the most favorable result) of:

             (a)   the Basic  Limitation  (defined in Section  12.2)  applied to
                   either the ADP or ACP for the NHCE Group, and

             (b)   the  Alternative  Limitation  applied to the other NHCE Group
                   percentage.

      12.5   Correction of Multiple Use Test

             If the  multiple  use limit is exceeded,  the  Administrator  shall
             determine  a  maximum  percentage  to  be  used  in  place  of  the
             calculated percentage for all HCEs that would reduce either or both
             the ADP or ACP for the HCE Group by a sufficient amount to meet the
             multiple  use limit.  Any  excess  shall be  corrected  in the same
             manner that excess Deferrals or Contributions are corrected.

      12.6   Adjustment for Investment Gain or Loss

             Any  excess   Deferrals  or  Contributions  to  be  refunded  to  a
             Participant  in  accordance  with this Section 12 shall be adjusted
             for investment gain or loss.  Refunds shall not include  investment
             gain or loss for the period between the end of the applicable  Plan
             Year and the date of distribution.

      12.7   Testing Responsibilities and Required Records

             The  Administrator  shall be responsible for ensuring that the Plan
             meets the ADP Test,  the ACP Test and the  Multiple  Use Test,  and
             that  the   Contribution   Dollar  Limit  is  not   exceeded.   The
             Administrator  shall  maintain  records  which  are  sufficient  to
             demonstrate  that the ADP Test,  the ACP Test and the  Multiple Use
             Test,  have been met for each Plan Year for at least as long as the
             Employer's corresponding tax year is open to audit.

      12.8   Separate Testing

             (a)   Multiple Employers: The determination of HCEs, NHCEs, and the
                   performance  of the ADP Test,  the ACP Test and the  Multiple
                   Use Test,  and any  corrective  action  resulting  therefrom,
                   shall be conducted separately with regard to the Employees of
                   each  Employer  (and  its  Related  Companies)  that is not a
                   Related Company with respect to the other Employer(s).

             (b)   Collective Bargaining Units: The performance of the ADP Test,
                   and if  applicable,  the ACP Test and the  Multiple Use Test,
                   and any  corrective  action  resulting  therefrom,  shall  be
                   conducted   separately  with  regard  to  Employees  who  are
                   eligible  to  participate  in  the  Plan  as  a  result  of a
                   collective bargaining agreement.

             In addition, testing may be conducted separately, at the discretion
             of the  Administrator  and to the extent  permitted  under Treasury
             regulations,  with  regard  to any  group  of  Employees  for  whom
             separate testing is permissible under such regulations.

13    MAXIMUM CONTRIBUTION AND BENEFIT LIMITATIONS

      13.1   "Annual Addition" Defined

             The  sum  for a Plan  Year  of  all  (i)  contributions  (excluding
             rollover   contributions)   and   forfeitures   allocated   to  the
             Participant's  Account and his or her account in all other  defined
             contribution plans maintained by any Related Company,  (ii) amounts
             allocated to the Participant's  individual  medical account (within
             the meaning of Code section  415(l)(2))  which is part of a defined
             benefit plan  maintained by any Related  Company,  and (iii) if the
             Participant  is a key employee  (within the meaning of Code section
             419A(d)(3))  for the  applicable  or any prior Plan  Year,  amounts
             attributable to  post-retirement  medical benefits allocated to his
             or her separate  account  under a welfare  benefit fund (within the
             meaning of Code section 419(e))  maintained by any Related Company.
             The Plan Year refers to the year to which the allocation  pertains,
             regardless  of when it was  allocated.  The Plan Year  shall be the
             Code section 415 limitation year.

      13.2   Maximum Annual Addition

             A Participant's  Annual Addition for any Plan Year shall not exceed
             the lesser of (i) 25% of his or her  Compensation  or (ii)  $30,000
             (as adjusted for cost of living increases  pursuant to Code section
             415(d));  provided,  however,  that  clause  (i) shall not apply to
             Annual  Additions  described  in clauses  (ii) and (iii) of Section
             13.1.

      13.3   Avoiding an Excess Annual Addition

             If,  at  any  time  during  a  Plan  Year,  the  allocation  of any
             additional  Contributions  would produce an excess Annual  Addition
             for such year,  Contributions  to be made for the  remainder of the
             Plan Year shall be limited to the amount  needed for each  affected
             Participant to receive the maximum Annual Addition.

      13.4   Correcting an Excess Annual Addition

             Upon the discovery of an excess Annual  Addition to a Participant's
             Account  (resulting  from  a  reasonable  error  in  determining  a
             Participant's compensation or the maximum permissible amount of his
             or her  elective  deferrals  (within  the  meaning of Code  section
             402(g)(3)),  or other  facts and  circumstances  acceptable  to the
             Internal Revenue  Service),  the excess amount (adjusted to reflect
             investment gains) shall first be returned to the Participant to the
             extent of his or her Employee Pre-Tax Contributions (however to the
             extent Employee Pre-Tax  Contributions were matched, the applicable
             Employer  Match  Contributions  shall be forfeited in proportion to
             the  returned  matched  Employee  Pre-Tax  Contributions)  and  the
             remaining excess, if any, shall be forfeited by the Participant and
             together  used  to  reduce  future  Contributions  to be made by an
             Employer as soon as administratively feasible.

      13.5   Correcting a Multiple Plan Excess

             If a  Participant,  whose Account is credited with an excess Annual
             Addition,   received   allocations   to  more   than  one   defined
             contribution  plan,  the excess  shall be corrected by reducing the
             Annual Addition to the Plan only after all possible reductions have
             been made to the other defined contribution plans.

      13.6   "Defined Benefit Fraction" Defined

             The  fraction,  for any  Plan  Year,  where  the  numerator  is the
             "projected  annual  benefit" and the  denominator is the greater of
             125% of the "protected current accrued benefit" or the normal limit
             which is the lesser of (i) 125% of the dollar  limitation in effect
             under Code section  415(b)(1)(A)  for the Plan Year or (ii) 140% of
             the amount  which may be taken  into  account  under  Code  section
             415(b)(1)(B) for the Plan Year, where a Participant's:

             (a)   "projected  annual benefit" is the annual benefit provided by
                   the plan  determined  pursuant to Code section  415(e)(2)(A),
                   and

             (b)   "protected current accrued benefit" in a defined benefit plan
                   in existence (1) on July 1, 1982, shall be the accrued annual
                   benefit  provided  for  under  Public  Law  97-248,   section
                   235(g)(4),  as amended,  or (2) on May 6, 1986,  shall be the
                   accrued annual benefit  provided for under Public Law 99-514,
                   section 1106(i)(3).

      13.7   "Defined Contribution Fraction" Defined

             The fraction  where the  numerator is the sum of the  Participant's
             Annual  Addition for each Plan Year to date and the  denominator is
             the  sum of the  "annual  amounts"  for  each  year  in  which  the
             Participant  has  performed  service  with a Related  Company.  The
             "annual  amount" for any Plan Year is the lesser of (i) 125% of the
             dollar  limitation  in  effect  under  Code  section   415(c)(1)(A)
             (determined  without regard to subsection (c)(6)) for the Plan Year
             or (ii) 140% of the amount  which may be taken into  account  under
             Code section 415(c)(1)(B) for the Plan Year, where:

             (a)   each  Annual  Addition  is  determined  pursuant  to the Code
                   section 415(c) rules in effect for such Plan Year, and

             (b)   the  numerator  is  adjusted  pursuant  to Public Law 97-248,
                   section 235(g)(3),  as amended, or Public Law 99-514, section
                   1106(i)(4).

      13.8   Combined Plan Limits and Correction

             The sum of a  Participant's  Defined  Benefit  Fraction and Defined
             Contribution  Fraction for any Plan Year may not exceed 1.0. If the
             combined  fraction exceeds 1.0 for any Plan Year, the Participant's
             benefit  under any defined  benefit  plan (to the extent it has not
             been distributed or used to purchase an annuity  contract) shall be
             limited so that the  combined  fraction  does not exceed 1.0 before
             any defined contribution limits shall be enforced.

             For Plan Years  commencing  after December 31, 1999, the provisions
             of the preceding paragraph shall no longer be effective.

14    TOP HEAVY RULES

      14.1   Top Heavy Definitions

             When  capitalized,   the  following  words  and  phrases  have  the
             following meanings when used in this Section:

             (a)   "Aggregation   Group".   The  group   consisting   of  each
                   qualified plan of the Related  Companies (1) in which a Key
                   Employee is a participant  or was a participant  during the
                   determination  period  (regardless of whether such plan has
                   terminated),  or (2)  which  enables  another  plan  in the
                   group to meet the  requirements of Code sections  401(a)(4)
                   or  410(b).  The  Administrator  may also  treat  any other
                   qualified  plan  of the  Related  Companies  as part of the
                   group if the  resulting  group  would  continue to meet the
                   requirements  of Code  sections  401(a)(4)  and 410(b) with
                   such plan being taken into account.

             (b)   "Determination  Date". For any Plan Year, the last Trade Date
                   of the  preceding  Plan  Year or,  in the case of the  Plan's
                   first Plan Year, the last Trade Date of that Plan Year.

             (c)   "Key  Employee".  A current or former Employee (or his or her
                   Beneficiary)  who at any time  during  the five  year  period
                   ending on the Determination Date was:

                   (1)    an officer of a Related Company whose Compensation (i)
                          exceeds 50% of the amount in effect under Code section
                          415(b)(1)(A)  and (ii)  places  him or her  within the
                          following highest paid group of officers:

                            Number of Employees               Number of
                          not Excluded Under Code           Highest Paid
                             Section 414(q)(5)            Officers Included
                             -----------------            -----------------
                                Less than 30                      3
                                 30 to 500              10% of the number of
                                                       Employees not excluded
                                                         under Code section
                                                              414(q)(5)
                               More than 500                     50

                   (2)    a more than 5% Owner,

                   (3)    a  more  than  1%  Owner  whose  Compensation  exceeds
                          $150,000, or

                   (4)    a more than 0.5%  Owner who is among the 10  Employees
                          owning the largest  interest in a Related  Company and
                          whose Compensation  exceeds the amount in effect under
                          Code section 415(c)(1)(A).

             (d)   "Plan  Benefit".  The sum as of the  Determination  Date of
                   (1) an Employee's Account,  (2) the present value of his or
                   her other accrued benefits  provided by all qualified plans
                   within  the  Aggregation   Group,  and  (3)  the  aggregate
                   distributions  made within the five year  period  ending on
                   such  Date.  For this  purpose,  the  present  value of the
                   Employee's  accrued benefit in a defined benefit plan shall
                   be  determined  by the  method  that  is used  for  benefit
                   accrual  purposes  under all such plans  maintained  by the
                   Related  Companies  or, if there is no such  single  method
                   used under all such  plans,  as if the  benefit  accrues no
                   more  rapidly  than  the  slowest  rate  permitted  by  the
                   fractional  accrual  rule  in  Code  section  411(b)(1)(C).
                   Plan Benefits  shall  exclude  rollover  contributions  and
                   similar  transfers made after December 31, 1983 as provided
                   in Code section 416(g)(4)(A).

             (e)   "Top Heavy".  The Plan's  status when the Plan  Benefits of
                   Key  Employees  account  for  more  than  60% of  the  Plan
                   Benefits of all  Employees who have  performed  services at
                   any  time  during  the  five  year  period  ending  on  the
                   Determination  Date.  The Plan  Benefits of  Employees  who
                   were, but are no longer,  Key Employees  (because they have
                   not been an officer or Owner during the five year  period),
                   are excluded in the determination.

      14.2   Special Contributions

             (a)   Minimum  Contribution  Requirement.  For each  Plan Year in
                   which the Plan is Top Heavy,  the Employer  shall not allow
                   any contributions (other than a Rollover  Contribution from
                   a plan  maintained by a non Related  Company) to be made by
                   or on behalf of any Key Employee  unless the Employer makes
                   a  contribution   (other  than  contributions  made  by  an
                   Employer  in  accordance   with  a   Participant's   salary
                   deferral  election  or  contributions  made by an  Employer
                   based  upon the amount  contributed  by a  Participant)  on
                   behalf of all Participants  who were Eligible  Employees as
                   of the last day of the Plan Year in an  amount  equal to at
                   least 3% of each such Participant's Taxable Income.

             (b)   Overriding      Minimum      Benefit.      Notwithstanding,
                   contributions   shall  be   permitted   on  behalf  of  Key
                   Employees if the Employer also maintains a defined  benefit
                   plan  which   automatically   provides   a  benefit   which
                   satisfies  the  Code  section   416(c)(1)  minimum  benefit
                   requirements,  including  the  adjustment  provided in Code
                   section  416(h)(2)(A),  if applicable.  If the Plan is part
                   of an  Aggregation  Group  under  which a Key  Employee  is
                   receiving  a  benefit  and  no  minimum   contribution   is
                   provided  under any other plan, a minimum  contribution  of
                   at least 3% of  Taxable  Income  shall be  provided  to the
                   Participants  specified  in  the  preceding  paragraph.  In
                   addition,   the  Employer  may  offset  a  defined  benefit
                   minimum by contributions  (other than contributions made by
                   an  Employer  in  accordance  with a  Participant's  salary
                   deferral  election  or  contributions  made by an  Employer
                   based upon the amount  contributed by a  Participant)  made
                   to the Plan.

      14.3   Adjustment to Combined Limits for Different Plans

             For each Plan Year in which the Plan is Top  Heavy,  100%  shall be
             substituted for 125% in determining  the Defined  Benefit  Fraction
             and the Defined  Contribution  Fraction.  For Plan Years commencing
             after December 31, 1999,  the provisions of the preceding  sentence
             shall no longer be effective.

15    PLAN ADMINISTRATION

      15.1   Plan Delineates Authority and Responsibility

             Plan  fiduciaries  include  the  Company,  the  Administrator,  the
             Committee and/or the Trustee, as applicable,  whose specific duties
             are delineated in the Plan and Trust. In addition, Plan fiduciaries
             also  include  any  other  person  to  whom  fiduciary   duties  or
             responsibilities are delegated with respect to the Plan. Any person
             or group may serve in more than one fiduciary capacity with respect
             to the Plan.  To the extent  permitted  under ERISA section 405, no
             fiduciary shall be liable for a breach by another fiduciary.

      15.2   Fiduciary Standards

             Each fiduciary shall:

             (a)   discharge his or her duties in  accordance  with the Plan and
                   Trust to the extent they are consistent with ERISA;

             (b)   use that degree of care, skill, prudence and diligence that a
                   prudent  person  acting in a like  capacity and familiar with
                   such matters  would use in the conduct of an  enterprise of a
                   like character and with like aims;

             (c)   act with the  exclusive  purpose  of  providing  benefits  to
                   Participants   and   their   Beneficiaries,   and   defraying
                   reasonable expenses of administering the Plan;

             (d)   diversify Plan  investments,  to the extent such fiduciary is
                   responsible  for directing the investment of Plan assets,  so
                   as to minimize  the risk of large  losses,  unless  under the
                   circumstances it is clearly prudent not to do so; and

             (e)   treat similarly situated  Participants and Beneficiaries in a
                   uniform and nondiscriminatory manner.

      15.3   Company is ERISA Plan Administrator

             The Company is the administrator of the Plan (within the meaning of
             ERISA section  3(16)) and is responsible  for  compliance  with all
             reporting  and  disclosure  requirements,  except  those  that  are
             explicitly the  responsibility of the Trustee under applicable law.
             The  Administrator   and/or  Committee  shall  have  any  necessary
             authority  to carry out such  functions  through the actions of the
             Administrator,  duly  appointed  officers of the Company and/or the
             Committee.

      15.4   Administrator Duties

             The  Administrator  shall  have  the  discretionary   authority  to
             construe the Plan and Trust, other than the provisions which relate
             to the Trustee,  and to do all things  necessary or  convenient  to
             effect the intent and purposes thereof,  whether or not such powers
             are specifically set forth in the Plan and Trust.  Actions taken in
             good faith by the Administrator  shall be conclusive and binding on
             all  interested  parties,  and shall be given the maximum  possible
             deference  allowed  by  law.  In  addition  to  the  duties  listed
             elsewhere  in the Plan and  Trust,  the  Administrator's  authority
             shall include,  but not be limited to, the discretionary  authority
             to:

             (a)   determine who is eligible to  participate,  if a contribution
                   qualifies  as a  rollover  contribution,  the  allocation  of
                   Contributions,  and the  eligibility  for  loans,  in-service
                   withdrawals and distributions;

             (b)   provide each  Participant  with a summary plan description no
                   later than 90 days  after he or she has become a  Participant
                   (or  such  other  period   permitted   under  ERISA   section
                   104(b)(1)),  as well as  informing  each  Participant  of any
                   material modification to the Plan in a timely manner;

             (c)   make  a  copy  of  the  following   documents   available  to
                   Participants  during  normal work  hours:  the Plan and Trust
                   (including  subsequent  amendments),  all annual and  interim
                   reports of the Trustee related to the entire Plan, the latest
                   annual report and the summary plan description;

             (d)   determine  the  fact  of a  Participant's  death  and  of any
                   Beneficiary's  right to receive  the  deceased  Participant's
                   interest  based  upon  such  proof and  evidence  as it deems
                   necessary;

             (e)   establish  and  review at least  annually  a  funding  policy
                   bearing in mind both the  short-run  and  long-run  needs and
                   goals of the Plan and to the extent  Participants  may direct
                   their own  investments,  the  funding  policy  shall focus on
                   which Investment Funds are available for Participants to use;
                   and

             (f)   adjudicate claims pursuant to the claims procedure  described
                   in Section 18.

      15.5   Advisors May be Retained

             The  Administrator  may retain such agents and advisors  (including
             attorneys,  accountants,  actuaries,  consultants,  record keepers,
             investment counsel and  administrative  assistants) as it considers
             necessary  to  assist  it in the  performance  of its  duties.  The
             Administrator  shall also comply with the bonding  requirements  of
             ERISA section 412.

      15.6   Delegation of Administrator Duties

             The  Company,  as  Administrator  of  the  Plan,  has  appointed  a
             Committee to administer  the Plan on its behalf.  The Company shall
             provide the Trustee with the names and specimen  signatures  of any
             persons  authorized to serve as Committee  members and act as or on
             its behalf.  Any  Committee  member  appointed by the Company shall
             serve at the  pleasure  of the  Company,  but may resign by written
             notice  to the  Company.  Committee  members  shall  serve  without
             compensation from the Plan for such services.  Except to the extent
             that the Company  otherwise  provides,  any delegation of duties to
             the Committee shall carry with it the full discretionary  authority
             of the Administrator to complete such duties.

      15.7   Committee Operating Rules

             (a)   Actions of Majority.  Any act delegated by the Company to the
                   Committee  may be  done by a  majority  of its  members.  The
                   majority  may be  expressed  by a  vote  at a  meeting  or in
                   writing  without a meeting,  and a majority  action  shall be
                   equivalent to an action of all Committee members.

             (b)   Meetings. The Committee shall hold meetings upon such notice,
                   place and times as it  determines  necessary  to conduct  its
                   functions properly.

             (c)   Reliance by Trustee.  The  Committee  may  authorize one or
                   more of its members to execute  documents on its behalf and
                   may   authorize  one  or  more  of  its  members  or  other
                   individuals  who are not members to give written  direction
                   to the  Trustee  in the  performance  of  its  duties.  The
                   Committee  shall provide such  authorization  in writing to
                   the Trustee  with the name and specimen  signatures  of any
                   person  authorized to act on its behalf.  The Trustee shall
                   accept such  direction  and rely upon it until  notified in
                   writing that the  Committee  has revoked the  authorization
                   to give such  direction.  The  Trustee  shall not be deemed
                   to be on notice  of any  change  in the  membership  of the
                   Committee,  parties authorized to direct the Trustee in the
                   performance of its duties,  or the duties  delegated to and
                   by the Committee until notified in writing.

16    MANAGEMENT OF INVESTMENTS

      16.1   Trust Agreement

             All  Plan  assets  shall  be  held  by the  Trustee  in  trust,  in
             accordance with those provisions of the Plan and Trust which relate
             to the Trustee,  for use in providing Plan benefits and paying Plan
             fees and expenses not paid directly by the Employer.  Plan benefits
             shall be drawn  solely  from the Trust and paid by the  Trustee  as
             directed  by the  Administrator.  Notwithstanding,  the Company may
             appoint, with the approval of the Trustee,  another trustee to hold
             and administer  Plan assets which do not meet the  requirements  of
             Section 16.2.

      16.2   Investment Funds

             The Administrator is hereby granted authority to direct the Trustee
             to invest Trust assets in one or more Investment  Funds. The number
             and  composition  of  Investment  Funds may be changed from time to
             time,  without the  necessity of amending  the Plan and Trust.  The
             Trustee may establish reasonable limits on the number of Investment
             Funds as well as the  acceptable  assets  for any  such  Investment
             Fund.  Each of the Investment  Funds may be comprised of any of the
             following:

             (a)   shares of a registered investment company, whether or not the
                   Trustee or any of its  affiliates  is an advisor to, or other
                   service provider to, such company;

             (b)   collective investment funds maintained by the Trustee, or any
                   other  fiduciary  to  the  Plan,   which  are  available  for
                   investment by trusts which are qualified  under Code sections
                   401(a) and 501(a);

             (c)   individual  equity  and  fixed  income  securities  which are
                   readily tradable on the open market;

             (d)   synthetic  guaranteed  investment  contracts  and  guaranteed
                   investment  contracts  issued by an insurance  company and/or
                   synthetic guaranteed investment contracts and bank investment
                   contracts issued by a bank;

             (e)   interest bearing deposits (which may include interest bearing
                   deposits of the Trustee);

             (f)   PacifiCorp  Stock,  subject to the  conditions  described  in
                   Appendix A; and

             (g)   Company Stock.

             Any  Investment  Fund assets  invested in a  collective  investment
             fund,  shall be subject to all the  provisions  of the  instruments
             establishing and governing such fund. These instruments,  including
             any subsequent amendments, are incorporated herein by reference.

      16.3   Authority to Hold Cash

             The  Trustee  shall  have the  authority  to cause  the  investment
             manager of each Investment Fund to maintain  sufficient  deposit or
             money  market  type  assets in each  Investment  Fund to handle the
             Investment   Fund's   liquidity  and   disbursement   needs.   Each
             Participant's  and  Beneficiary's  Sweep Account,  which is used to
             hold assets pending  investment or  disbursement,  shall consist of
             interest  bearing  deposits  (which may  include  interest  bearing
             deposits of the Trustee) and/or money market type assets or funds.

      16.4   Trustee to Act Upon Instructions

             The Trustee  shall carry out  instructions  to invest assets in the
             Investment Funds as soon as practicable after such instructions are
             received from the  Administrator,  Participants  or  Beneficiaries.
             Such  instructions  shall  remain in effect  until  changed  by the
             Administrator, Participants or Beneficiaries.

      16.5   Administrator  Has Right to Vote  Registered  Investment  Company
             Shares

             The Administrator shall be entitled to vote proxies or exercise any
             shareholder rights relating to shares held on behalf of the Plan in
             a registered investment company. Notwithstanding,  the authority to
             vote proxies and exercise shareholder rights related to such shares
             held in a Custom  Fund is vested as provided  otherwise  in Section
             16.

      16.6   Custom Fund Investment Management 

             The Administrator  may designate,  with the consent of the Trustee,
             an investment  manager for any Investment  Fund  established by the
             Trustee solely for Participants of the Plan and, subject to Section
             16.7, any other  qualified plan of the Company or a Related Company
             (a "Custom Fund"). The investment manager may be the Administrator,
             Trustee or an investment  manager  pursuant to ERISA section 3(38).
             The  Administrator  shall  advise  the  Trustee  in  writing of the
             appointment of an investment manager and shall cause the investment
             manager  to   acknowledge  to  the  Trustee  in  writing  that  the
             investment manager is a fiduciary to the Plan.

             A Custom Fund shall be subject to the following:

             (a)   Guidelines.  Written  guidelines,  acceptable to the Trustee,
                   shall be  established  for a Custom  Fund.  If a Custom  Fund
                   consists solely of collective investment funds or shares of a
                   registered  investment  company  (and  sufficient  deposit or
                   money  market  type  assets  to  handle  the  Custom   Fund's
                   liquidity and disbursement needs), its underlying instruments
                   shall constitute the guidelines.

             (b)   Authority of Investment  Manager.  The  investment  manager
                   of a  Custom  Fund  shall  have  the  authority  to vote or
                   execute  proxies,   exercise  shareholder  rights,  manage,
                   acquire, and dispose of Trust assets.  Notwithstanding,  if
                   the  Company   provides  for  a  Company  Stock  Fund,  the
                   authority to vote proxies and exercise  shareholder  rights
                   related  to shares of  Company  Stock  held in the  Company
                   Stock Fund is vested as provided otherwise in Section 16.

             (c)   Custody and Trade  Settlement.  Unless  otherwise agreed to
                   by the Trustee,  the Trustee shall maintain  custody of all
                   Custom Fund assets and be  responsible  for the  settlement
                   of all Custom Fund trades.  For  purposes of this  Section,
                   shares  of  a  collective  investment  fund,  shares  of  a
                   registered  investment  company  and  synthetic  guaranteed
                   investment  contracts and guaranteed  investment  contracts
                   issued by an insurance company and/or synthetic  guaranteed
                   investment  contracts and bank investment  contracts issued
                   by a bank,  shall be  regarded  as the Custom  Fund  assets
                   instead of the underlying assets of such instruments.

             (d)   Limited    Liability   of    Co-Fiduciaries.    Neither   the
                   Administrator nor the Trustee shall be obligated to invest or
                   otherwise manage any Custom Fund assets for which the Trustee
                   or Administrator is not the investment  manager nor shall the
                   Administrator or Trustee be liable for acts or omissions with
                   regard to the  investment of such assets except to the extent
                   required by ERISA.

      16.7   Master Custom Fund

             The Trustee may establish, at the direction of the Administrator, a
             single Custom Fund (the "Master Custom  Fund"),  for the benefit of
             the Plan and any other  qualified  plan of the Company or a Related
             Company  for which the Trustee  acts as trustee  pursuant to a plan
             and  trust   document  that  contains  a  provision   substantially
             identical to this provision.  The assets of the Plan, to the extent
             invested in the Master  Custom  Fund,  shall  consist  only of that
             percentage of the assets of the Master Custom Fund  represented  by
             the shares held by the Plan.

      16.8   Authority to Segregate Assets

             The  Administrator  may direct the  Trustee to split an  Investment
             Fund  into  two or  more  funds  in the  event  any  assets  in the
             Investment   Fund  are   illiquid  or  the  value  is  not  readily
             determinable.  In the event of such segregation,  the Administrator
             shall give instructions to the Trustee on what value to use for the
             split-off  assets,  and the Trustee  shall not be  responsible  for
             confirming such value.

      16.9   Investment in Company Stock

             If the  Company  provides  for a Company  Stock  Fund,  directly or
             through a Master  Custom  Fund,  the  Company  Stock  Fund shall be
             comprised of Company Stock and  sufficient  deposit or money market
             type  assets to handle  the  Company  Stock  Fund's  liquidity  and
             disbursement  needs.  The  Company  Stock  Fund  may be as large as
             necessary   to  comply  with   Participants'   and   Beneficiaries'
             investment  elections as well the total investment of Participants'
             and   Beneficiaries'   Employer   Match,   Additional   Match   and
             Discretionary  Match  Accounts to the extent such  Accounts are not
             otherwise invested in accordance with Section 7.

      16.10  Voting, Tendering and Exchanging Company Stock

             Each Participant in the Plan (or, in the event of the Participant's
             death,  the  Participant's  Beneficiary)  is, for  purposes of this
             Section 16.10,  hereby  designated a "named  fiduciary"  within the
             meaning of ERISA section 403(a)(1).

             (a)   Instructed   Share  Voting.   Each   Participant   (or,  if
                   applicable,  Beneficiary),  as a named fiduciary,  shall be
                   entitled  to direct  the Plan and  Trustee as to the manner
                   in which Company Stock  attributable to such  Participant's
                   (or Beneficiary's)  Account in the Company Stock Fund is to
                   be  voted  on each  matter  brought  before  an  annual  or
                   special stockholders'  meeting of the Company.  Before each
                   such meeting of  stockholders,  the Trustee  shall cause to
                   be  furnished  to  each  Participant  (or,  if  applicable,
                   Beneficiary)  a copy of the  proxy  solicitation  material,
                   together with a form requesting  confidential directions on
                   how  such  shares  of  Company  Stock   allocated  to  such
                   Participant's  (or  Beneficiary's)  Account in the  Company
                   Stock  Fund  shall  be  voted  on each  such  matter.  Upon
                   timely  receipt of such  directions,  the Trustee  shall on
                   each such  matter,  vote as  directed  the  number of votes
                   attributable to such Participant (or Beneficiary).

                   The number of votes  attributable to each Participant (or, if
                   applicable, Beneficiary) shall be determined as follows:

                   (1)    first,  the  total  number  of votes  attributable  to
                          Company  Stock held in the Company Stock Fund shall be
                          determined;

                   (2)    second,  the  number of votes  determined  under  (1),
                          above, shall be attributed to each Participant (or, if
                          applicable,  Beneficiary),  in  the  ratio  which  the
                          number of shares of Company  Stock  allocated  to such
                          Participant's  Account in the Company Stock Fund as of
                          the record date bears to the total number of shares of
                          Company  Stock  held in the  Company  Stock Fund as of
                          such date.

                   Each Participant (or, if applicable, Beneficiary), as a named
                   fiduciary, shall be entitled to separately direct the vote of
                   a portion  of the  number of votes  with  respect  to which a
                   signed  voting-direction  instrument  is not timely  received
                   from other  Participants  (or, if applicable,  Beneficiaries)
                   ("Undirected  Votes").  Such  direction  with respect to each
                   Participant  (or,  if  applicable,  Beneficiary)  who  timely
                   elects  to  direct  the vote of  Undirected  Votes as a named
                   fiduciary  shall be with  respect  to a number of  Undirected
                   Votes  equal  to  the  total  number  of   Undirected   Votes
                   multiplied by a fraction, the numerator of which is the total
                   number  of  votes   attributable  to  such   Participant  (or
                   Beneficiary) and the denominator of which is the total number
                   of votes attributable to all Participants (or, if applicable,
                   Beneficiaries) who timely elect to vote Undirected Votes as a
                   named fiduciary.

             (b)   Responding   to   Tender   and   Exchange   Offers.    Each
                   Participant  (or, if applicable,  Beneficiary),  as a named
                   fiduciary,  shall  have the  right,  to the  extent  of the
                   number of  shares of  Company  Stock  attributable  to such
                   Participant's  (or  Beneficiary's)  Account in the  Company
                   Stock  Fund,  to direct  the  Trustee  in writing as to the
                   manner  in which to  respond  to such  tender  or  exchange
                   offer  with  respect  to  shares  of  Company  Stock.   The
                   Trustee shall use its best efforts to timely  distribute or
                   cause  to  be  distributed  to  each  Participant  (or,  if
                   applicable,   Beneficiary)  such  information  as  will  be
                   distributed  to  stockholders  of the Company in connection
                   with  any  such  tender  or  exchange  offer.  Upon  timely
                   receipt of such instructions,  the Trustee shall respond as
                   instructed   with  respect  to  shares  of  Company   Stock
                   allocated  to such  Participant's  Account  in the  Company
                   Stock  Fund.  If  the  Trustee  shall  not  receive  timely
                   instructions   from  a  Participant   (or,  if  applicable,
                   Beneficiary)  as to the  manner in which to respond to such
                   a tender or exchange  offer,  the Trustee  shall not tender
                   or  exchange  any shares of Company  Stock with  respect to
                   which such  Participant (or  Beneficiary)  has the right of
                   direction.  In  effecting  the  foregoing,  to  the  extent
                   possible,  the Trustee  shall tender or exchange  shares of
                   Company  Stock  entitled  to one  vote per  share  prior to
                   shares of Company  Stock  having  greater than one vote per
                   share.

             Any instructions  received by the Trustee from Participants (or, if
             applicable,  Beneficiaries) pursuant to this Section 16.10 shall be
             held by the Trustee in strict  confidence and shall not be divulged
             or released to any person,  including  officers or Employees of the
             Company or a Related Company; provided, however, that to the extent
             necessary for the operation of the Plan, such  instructions  may be
             relayed by the Trustee to a  recordkeeper,  auditor or other person
             providing  services  to the  Plan  if  such  person  (i) is not the
             Company,  a Related  Company or any  Employee,  officer or director
             thereof,  and (ii)  agrees not to divulge  such  directions  to any
             other person,  including  Employees,  officers and directors of the
             Company and its Related Companies.

      16.11  Registration and Disclosure for Company Stock

             The   Administrator   shall  be  responsible  for  determining  the
             applicability (and, if applicable, complying with) the requirements
             of the Securities Act of 1933, as amended, the California Corporate
             Securities Law of 1968, as amended,  and any other  applicable blue
             sky law. The  Administrator  shall also  specify  what  restrictive
             legend or transfer restriction, if any, is required to be set forth
             on the  certificates  for the  securities  and the  procedure to be
             followed by the Trustee to effectuate a resale of such securities.

17    TRUST ADMINISTRATION

      17.1   Trustee to Construe Trust

             The  Trustee  shall have the  discretionary  authority  to construe
             those  provisions of the Plan and Trust which relate to the Trustee
             and to do all things necessary or convenient to the  administration
             of the Trust, whether or not such powers are specifically set forth
             in the Plan and Trust.  Actions  taken in good faith by the Trustee
             shall be  conclusive  and binding on all  interested  parties,  and
             shall be given the maximum possible deference allowed by law.

      17.2   Trustee To Act As Owner of Trust Assets

             Subject to the specific conditions and limitations set forth in the
             Plan and Trust,  the Trustee  shall have all the power,  authority,
             rights and privileges of an absolute owner of the Trust assets and,
             not in limitation but in amplification of the foregoing, may:

             (a)   receive,  hold,  manage,  invest and reinvest,  sell, tender,
                   exchange,   dispose  of,   encumber,   hypothecate,   pledge,
                   mortgage,  lease, grant options  respecting,  repair,  alter,
                   insure, or distribute any and all property in the Trust;

             (b)   borrow money,  participate in reorganizations,  pay calls and
                   assessments,  vote or execute proxies,  exercise subscription
                   or conversion  privileges,  exercise options and register any
                   securities  in the  Trust  in the  name  of the  nominee,  in
                   federal  book entry form or in any other form as shall permit
                   title thereto to pass by delivery;

             (c)   renew, extend the due date,  compromise,  arbitrate,  adjust,
                   settle,  enforce or  foreclose,  by judicial  proceedings  or
                   otherwise,  or defend  against the same,  any  obligations or
                   claims in favor of or against the Trust; and

             (d)   lend,  through a collective  investment  fund, any securities
                   held in such collective  investment fund to brokers,  dealers
                   or  other  borrowers  and to  permit  such  securities  to be
                   transferred  into the name  and  custody  and be voted by the
                   borrower or others.

      17.3   United States Indicia of Ownership

             The Trustee  shall not  maintain  the indicia of  ownership  of any
             Trust assets outside the jurisdiction of the United States,  except
             as authorized under ERISA section 404(b).

      17.4   Tax Withholding and Payment

             (a)   Withholding.  The  Trustee  shall  calculate  and  withhold
                   federal  (and,  if  applicable,  state)  income  taxes with
                   regard to any Eligible  Rollover  Distribution  that is not
                   paid  as  a  Direct   Rollover  in   accordance   with  the
                   Participant's  withholding  election  or as required by law
                   if no  election  is made or the  election  is less than the
                   amount   required  by  law.  With  regard  to  any  taxable
                   distribution    that   is   not   an   Eligible    Rollover
                   Distribution,  the Trustee  shall  calculate  and  withhold
                   federal  (and,  if  applicable,   state)  income  taxes  in
                   accordance with the Participant's  withholding  election or
                   as required by law if no election is made.

             (b)   Taxes Due From Investment  Funds.  The Trustee shall pay from
                   the Investment  Fund any taxes or assessments  imposed by any
                   taxing or  governmental  authority on such Investment Fund or
                   its income, including related interest and penalties.

      17.5   Trust Accounting

             (a)   Annual Report.  Within 60 days (or other  reasonable  period)
                   following  the  close of the Plan  Year,  the  Trustee  shall
                   provide the Administrator  with an annual accounting of Trust
                   assets and information to assist the Administrator in meeting
                   ERISA's annual reporting and audit requirements.

             (b)   Periodic  Reports.  The Trustee  shall  maintain  records and
                   provide  sufficient  reporting to allow the  Administrator to
                   properly monitor the Trust's assets and activity.

             (c)   Administrator  Approval.  Approval of any Trustee  accounting
                   shall  automatically  occur 90 days after such accounting has
                   been received by the Administrator,  unless the Administrator
                   files a written  objection  with the Trustee within such time
                   period.  Such  approval  shall be final as to all matters and
                   transactions  stated or shown  therein and  binding  upon the
                   Administrator.

      17.6   Valuation of Certain Assets

             If the  Trustee  determines  the Trust holds any asset which is not
             readily  tradable  and  listed on a  national  securities  exchange
             registered  under the Securities  Exchange Act of 1934, as amended,
             the  Trustee  may  engage  a  qualified  independent  appraiser  to
             determine the fair market value of such property, and the appraisal
             fees shall be paid from the Investment Fund containing the asset.

      17.7   Legal Counsel

             The Trustee may consult with legal counsel of its choice, including
             counsel  for the  Employer  or  counsel  of the  Trustee,  upon any
             question or matter  arising  under the Plan and Trust.  When relied
             upon by the Trustee,  the opinion of such counsel shall be evidence
             that the Trustee has acted in good faith.

      17.8   Fees and Expenses

             The Trustee's fees for its services as Trustee shall be such as may
             be mutually  agreed upon by the  Company and the  Trustee.  Trustee
             fees and all reasonable  expenses of counsel and advisors  retained
             by the Trustee shall be paid in accordance with Section 6.

      17.9   Trustee Duties and Limitations

             The Trustee's  duties,  unless  otherwise agreed to by the Trustee,
             shall be confined to construing  the terms of the Plan and Trust as
             they relate to the Trustee, receiving funds on behalf of and making
             payments  from the Trust,  safeguarding  and valuing  Trust assets,
             investing and reinvesting  Trust assets in the Investment  Funds as
             directed by the Administrator,  Participants or Beneficiaries,  and
             those duties as described in this Section 17.

             The Trustee  shall have no duty or authority  to ascertain  whether
             Contributions   are  in  compliance   with  the  Plan,  to  enforce
             collection  or to compute or verify the accuracy or adequacy of any
             amount to be paid to it by the  Employer.  The Trustee shall not be
             liable  for the  proper  application  of any part of the Trust with
             respect  to  any   disbursement   made  at  the  direction  of  the
             Administrator.

18    RIGHTS, PROTECTION, CONSTRUCTION AND JURISDICTION

      18.1   Plan Does Not Affect Employment Rights

             The Plan does not provide any  employment  rights to any  Employee.
             The Employer  expressly reserves the right to discharge an Employee
             at any time,  with or without  cause,  without regard to the effect
             such discharge would have upon the Employee's interest in the Plan.

      18.2   Compliance With USERRA

             Notwithstanding  any  provision of the Plan to the  contrary,  with
             regard to an Employee who after serving in the  uniformed  services
             is  reemployed  on or after  December  12,  1994,  within  the time
             required by USERRA,  contributions  shall be made and  benefits and
             service credit shall be provided under the Plan with respect to his
             or her  qualified  military  service  (as  defined in Code  section
             414(u)(5)) in  accordance  with Code section  414(u).  Furthermore,
             notwithstanding   any  provision  of  the  Plan  to  the  contrary,
             Participant  loan  payments  may be  suspended  during a period  of
             qualified military service.

      18.3   Limited Return of Contributions

             Except as provided in this Section 18.3,  (i) Plan assets shall not
             revert to the Employer  nor be diverted for any purpose  other than
             the  exclusive   benefit  of  Participants  and  Beneficiaries  and
             defraying reasonable expenses of administering the Plan; and (ii) a
             Participant's  vested  interest shall not be subject to divestment.
             As  provided in ERISA  section  403(c)(2),  the actual  amount of a
             Contribution  or  portion  thereof  made  by the  Employer  (or the
             current value of such if a net loss has occurred) may revert to the
             Employer if:

             (a)   such  Contribution  or portion thereof is made by reason of
                   a mistake of fact;

             (b)   a determination with respect to the initial  qualification of
                   the Plan  under Code  section  401(a) is not  received  and a
                   request  for  such  determination  is made  within  the  time
                   prescribed  under Code section  401(b) (the  existence of and
                   Contributions under the Plan are hereby conditioned upon such
                   initial qualification); or

             (c)   such  Contribution or portion thereof is not deductible under
                   Code section 404 (such  Contributions are hereby  conditioned
                   upon such  deductibility) in the taxable year of the Employer
                   for which the Contribution is made.

             The  reversion to the Employer  must be made (if at all) within one
             year of the mistaken payment,  the date of denial of qualification,
             or the date of  disallowance  of  deduction,  as the case may be. A
             Participant shall have no rights under the Plan with respect to any
             such reversion.


18.4 Assignment and Alienation As provided by Code section 401(a)(13) and to the extent not otherwise required by law, no benefit provided by the Plan may be anticipated, assigned or alienated, except: (a) to create, assign or recognize a right to any benefit with respect to a Participant pursuant to a QDRO; or (b) to use a Participant's vested Account balance as security for a loan from the Plan which is permitted pursuant to Code section 4975. 18.5 Facility of Payment If a Plan benefit is due to be paid to a minor or if the Administrator reasonably believes that any payee is legally incapable of giving a valid receipt and discharge for any payment due him or her, the Administrator shall have the payment of the benefit, or any part thereof, made to the person (or persons or institution) whom it reasonably believes is caring for or supporting the payee, unless it has received due notice of claim therefor from a duly appointed guardian or conservator of the payee. Any payment shall to the extent thereof, be a complete discharge of any liability under the Plan to the payee. 18.6 Reallocation of Lost Participant's Accounts If the Administrator cannot locate a person entitled to payment of a Plan benefit after a reasonable search, the Administrator may at any time thereafter treat such person's Account as forfeited and use such amount to reduce future Contributions to be made by an Employer as soon as administratively feasible. If such person subsequently presents the Administrator with a valid claim for the benefit, such person shall be paid the amount treated as forfeited, plus the interest that would have been earned in the Sweep Account to the date of determination. The Administrator shall pay the amount through an additional amount contributed by the Employer. 18.7 Suspension of Certain Plan Provisions During Conversion Period Notwithstanding any provision of the Plan to the contrary, during any Conversion Period, in accordance with procedures established by the Administrator and the Trustee, the Administrator may temporarily suspend, in whole or in part, certain provisions under the Plan, which may include, but are not limited to, a Participant's right to change his or her Contribution election, a Participant's right to change his or her investment election and a Participant's right to borrow or withdraw from his or her Account or obtain a distribution from his or her Account. 18.8 Suspension of Certain Plan Provisions During Other Periods Notwithstanding any provision of the Plan to the contrary, in accordance with procedures established by the Administrator and the Trustee, the Administrator may temporarily suspend a Participant's right to borrow or withdraw from his or her Account or obtain a distribution from his or her Account, if (i) the Administrator receives a domestic relations order and the Participant's Account is a source of the payment for such domestic relations order, or (ii) if the Administrator receives notice that a domestic relations order is being sought by the Participant, his or her spouse, former spouse, child or other dependent (as defined in Code section 152) and the Participant's Account is a source of the payment for such domestic relations order. Such suspension may continue for a reasonable period of time (as determined by the Administrator) which may include the period of time the Administrator, a court of competent jurisdiction or other appropriate person is determining whether the domestic relations order qualifies as a QDRO. 18.9 Claims Procedure (a) Right to Make Claim. An interested party who disagrees with the Administrator's determination of his or her right to Plan benefits must submit a written claim and exhaust this claim procedure before legal recourse of any type is sought. The claim must include the important issues the interested party believes support the claim. The Administrator, pursuant to the authority provided in the Plan, shall either approve or deny the claim. (b) Process for Denying a Claim. The Administrator's partial or complete denial of an initial claim must include an understandable, written response covering (1) the specific reasons why the claim is being denied (with reference to the pertinent Plan provisions) and (2) the steps necessary to perfect the claim and obtain a final review. (c) Appeal of Denial and Final Review. The interested party may make a written appeal of the Administrator's initial decision, and the Administrator shall respond in the same manner and form as prescribed for denying a claim initially. (d) Time Frame. The initial claim, its review, appeal and final review shall be made in a timely fashion, subject to the following time table: Days to Respond Action From Last Action ------ ---------------- Administrator determines benefit NA Interested party files initial request 60 days Administrator's initial decision 90 days Interested party requests final review 60 days Administrator's final decision 60 days However, the Administrator may take up to twice the maximum response time for its initial and final review if it provides an explanation within the normal period of why an extension is needed and when its decision shall be forthcoming. 18.10 Construction Headings are included for reading convenience. The text shall control if any ambiguity or inconsistency exists between the headings and the text. The singular and plural shall be interchanged wherever appropriate. References to Participant shall include Alternate Payee and/or Beneficiary when appropriate and even if not otherwise already expressly stated. 18.11 Jurisdiction and Severability The Plan and Trust shall be construed, regulated and administered under ERISA and other applicable federal laws and, where not otherwise preempted, by the laws of the State of New Jersey. If any provision of the Plan and Trust is or becomes invalid or otherwise unenforceable, that fact shall not affect the validity or enforceability of any other provision of the Plan and Trust. All provisions of the Plan and Trust shall be so construed as to render them valid and enforceable in accordance with their intent. 18.12 Indemnification by Employer The Employers hereby agree to indemnify all Plan fiduciaries against any and all liabilities resulting from any action or inaction, (including a Plan termination in which the Company fails to apply for a favorable determination from the Internal Revenue Service with respect to the qualification of the Plan upon its termination), in relation to the Plan or Trust (i) including (without limitation) expenses reasonably incurred in the defense of any claim relating to the Plan or its assets, and amounts paid in any settlement relating to the Plan or its assets, but (ii) excluding liability resulting from actions or inactions made in bad faith, or resulting from the negligence or willful misconduct of the Trustee. The Company shall have the right, but not the obligation, to conduct the defense of any action to which this Section applies. The Plan fiduciaries are not entitled to indemnity from the Plan assets relating to any such action. 19 AMENDMENT, MERGER, DIVESTITURES AND TERMINATION 19.1 Amendment The Company reserves the right to amend the Plan and Trust at any time, to any extent and in any manner it may deem necessary or appropriate. The Company (and not the Trustee) shall be responsible for adopting any amendments necessary to maintain the qualified status of the Plan and Trust under Code sections 401(a) and 501(a). If the Committee is acting as the Administrator in accordance with Section 15.6, it shall have the authority to adopt Plan and Trust amendments which have no substantial adverse financial impact upon any Employer or the Plan. All interested parties shall be bound by any amendment, provided that no amendment shall: (a) become effective unless it has been adopted in accordance with the procedures set forth in Section 19.5; (b) except to the extent permissible under ERISA and the Code, make it possible for any portion of the Trust assets to revert to an Employer or to be used for, or diverted to, any purpose other than for the exclusive benefit of Participants and Beneficiaries entitled to Plan benefits and to defray reasonable expenses of administering the Plan; (c) decrease the rights of any Participant to benefits accrued (including the elimination of optional forms of benefits) to the date on which the amendment is adopted, or if later, the date upon which the amendment becomes effective, except to the extent permitted under ERISA and the Code; nor (d) permit a Participant to be paid any portion of his or her Account subject to the distribution rules of Code section 401(k) unless the payment would otherwise be permitted under Code section 401(k). 19.2 Merger The Plan and Trust may not be merged or consolidated with, nor may its assets or liabilities be transferred to, another plan unless each Participant and Beneficiary would, if the resulting plan were then terminated, receive a benefit just after the merger, consolidation or transfer which is at least equal to the benefit which would be received if either plan had terminated just before such event. 19.3 Divestitures In the event of a sale by an Employer which is a corporation of: (i) substantially all of the Employer's assets used in a trade or business to an unrelated corporation, or (ii) a sale of such Employer's interest in a subsidiary to an unrelated entity or individual, lump sum distributions shall be permitted from the Plan, except as provided below, to Participants with respect to Employees who continue employment with the corporation acquiring such assets or who continue employment with such subsidiary, as applicable. Notwithstanding, distributions shall not be permitted if the purchaser agrees, in connection with the sale, to be substituted as the Company as the sponsor of the Plan or to accept a transfer in a transaction subject to Code section 414(l)(1) of the assets and liabilities representing the Participants' benefits into a plan of the purchaser or a plan to be established by the purchaser. 19.4 Plan Termination and Complete Discontinuance of Contributions The Company may, at any time and for any reason, terminate the Plan in accordance with the procedures set forth in Section 19.5, or completely discontinue contributions. In the event of the Plan's termination, if no successor plan is established or maintained, lump sum distributions shall be made in accordance with the terms of the Plan as in effect at the time of the Plan's termination or as thereafter amended, provided that a post-termination amendment shall not be effective to the extent that it violates Section 19.1 unless it is required in order to maintain the qualified status of the Plan upon its termination. The Trustee's and Employer's authority shall continue beyond the Plan's termination date until all Trust assets have been liquidated and distributed. 19.5 Amendment and Termination Procedures The following procedural requirements shall govern the adoption of any amendment or termination (a "Change") of the Plan and Trust: (a) The Company may adopt any Change by action of its board of directors in accordance with its normal procedures. (b) The Committee, if acting as Administrator in accordance with Section 15.6, may adopt any Change within the scope of its authority provided under Section 19.1 and in the manner specified in Section 15.7(a). (c) Any Change must be (1) set forth in writing, and (2) signed and dated by a corporate officer of the Company or, in the case of a Change adopted by the Committee, at least one of its members. (d) If the effective date of any Change is not specified in the document setting forth the Change, it shall be effective as of the date it is signed by the last person whose signature is required under clause (2) above, except to the extent that another effective date is necessary to maintain the qualified status of the Plan and Trust under Code sections 401(a) and 501(a). (e) No Change shall become effective until it is accepted and signed by the Trustee (which acceptance shall not unreasonably be withheld). 19.6 Termination of Employer's Participation Any Employer may, at any time and for any reason, terminate its Plan participation by action of its board of directors in accordance with its normal procedures. Written notice of such action shall be signed and dated by a corporate officer of the Employer and delivered to the Company. If the effective date of such action is not specified, it shall be effective on, or as soon as reasonably practicable after, the date of delivery. Upon the Employer's request, the Company may instruct the Trustee and Administrator to spin off all affected Accounts and underlying assets into a separate qualified plan under which the Employer shall assume the powers and duties of the Company. Alternatively, the Company may continue to maintain the Accounts under the Plan. 19.7 Replacement of the Trustee The Trustee may resign as Trustee under the Plan and Trust or may be removed by the Company at any time upon at least 90 days written notice (or less if agreed to by both parties). In such event, the Company shall appoint a successor trustee by the end of the notice period. The successor trustee shall then succeed to all the powers and duties of the Trustee under the Plan and Trust. If no successor trustee has been named by the end of the notice period, the Company's chief executive officer shall become the trustee, or if he or she declines, the Trustee may petition the court for the appointment of a successor trustee. 19.8 Final Settlement and Accounting of Trustee (a) Final Settlement. As soon as administratively feasible after its resignation or removal as Trustee, the Trustee shall transfer to the successor trustee all property currently held by the Trust. However, the Trustee is authorized to reserve such sum of money as it may deem advisable for payment of its accounts and expenses in connection with the settlement of its accounts or other fees or expenses payable by the Trust. Any balance remaining after payment of such fees and expenses shall be paid to the successor trustee. (b) Final Accounting. The Trustee shall provide a final accounting to the Administrator within 90 days of the date Trust assets are transferred to the successor trustee. (c) Administrator Approval. Approval of the final accounting shall automatically occur 90 days after such accounting has been received by the Administrator, unless the Administrator files a written objection with the Trustee within such time period. Such approval shall be final as to all matters and transactions stated or shown therein and binding upon the Administrator. APPENDIX A - MAPPING OF ACCOUNTS <TABLE> <CAPTION> ------------------------------------------------------------------------------------------------- CENTURY TELEPHONE ENTERPRISES, INC. DOLLARS & SENSE PLAN AND TRUST ----------------------------------------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> <C> <C> <C> <C> <C> Predecessor Plan Name/ Date of Employee ESOP Employer Additional Discretionary Prior Name of Accounts Transfer Pre-Tax After-Tax Rollover Transfer Match Match Match Match ----------------------------------------------------------------------------------------------------------------------------- San Marcos Telephone Company,Inc. and SM 07/01/93 Telecorp Companies Retirement Plan: x |X| Pre-Tax x |X| After-Tax x |X| Rollover x |X| Prior Match ----------------------------------------------------------------------------------------------------------------------------- PacifiCorp K Plus Employee Savings Plan:1 01/10/98 |X| Pre-Tax x |X| After-Tax x |X| Rollover x |X| Company Match 2 x ----------------------------------------------------------------------------------------------------------------------------- 1 Account Names were provided by the recordkeeper and not specifically identified in plan document for the PacifiCorp K Plus Employee Savings Plan. 2 A former PacifiCorp K Plus Employee Savings Plan participant's interest in the PacifiCorp K Plus Employee Stock Ownership Plan was liquidated and deposited to his or her Company Match Account under the plan prior to the date of transfer to the Plan. </TABLE> APPENDIX B - INVESTMENT FUNDSAPPENDIX B - INVESTMENT FUNDS I. Investment Funds Available The Investment Funds offered under the Plan as of the Effective Date include this set of daily valued funds: Category Funds -------- ----- Money Market Money Market ------------ ------------ Income Bond Index ------ ---------- Balanced Asset Allocation -------- ---------------- Equity Company Stock ------ ------------- Growth Stock ------------ S&P 500 Stock ------------- Combination LifePath Series ----------- --------------- Effective January 10, 1998 assets from the PacifiCorp K Plus Employee Savings Plan shall be transferred to the Plan attributable to the account balances of certain participants thereunder who as of the date of transfer are Participants in the Plan. Such assets shall include cash and PacifiCorp Stock to the extent of each such participant's investment in the "Company Stock Fund" under such plan. A PacifiCorp Stock Fund shall be established under the Plan to hold such assets. The PacifiCorp Stock Fund shall be comprised of PacifiCorp Stock and sufficient deposit or money market type assets to handle the PacifiCorp Stock Fund's liquidity and disbursement needs. A Participant's existing investment in the PacifiCorp Stock Fund as of the date of transfer and earnings thereon may continue to be invested in the PacifiCorp Stock Fund until the Participant directs otherwise or, if earlier, the date the Fund is liquidated in accordance with the direction of the Administrator. The PacifiCorp Stock Fund is not otherwise designated as available for investment by Participants or Beneficiaries. Each Participant (or, in the event of the Participant's death, the Participant's Beneficiary) shall be entitled to instruct the Trustee as to the voting or tendering of any full or partial shares of PacifiCorp Stock held on his or her behalf in the PacifiCorp Stock Fund. Prior to such voting or tendering of PacifiCorp Stock, each Participant (or, if applicable, Beneficiary) shall receive a copy of the proxy solicitation or other material relating to such vote or tender decision and a form for the Participant (or, if applicable, Beneficiary) to complete which confidentially instructs the Trustee to vote or tender such shares in the manner indicated by the Participant (or, if applicable, Beneficiary). Upon receipt of such instructions, the Trustee shall act with respect to such shares as instructed. With regard to shares for which the Trustee receives no voting or tendering instructions from Participants (or, if applicable, Beneficiaries), the Administrator shall instruct the Trustee with respect to how to vote or tender such shares and the Trustee shall act with respect to such shares as instructed. II. Default Investment Fund The default Investment Fund as of the Effective Date is the Money Market Fund. III. Accounts For Which Investment is Restricted A Participant may direct the investment of his or her entire Account except for his or her Employer Match, Additional Match and Discretionary Match Accounts, and except as otherwise provided in Section 7, which as of the Effective Date shall be invested in the Company Stock Fund. IV. Maximum Percentage Restrictions Applicable to Certain Investment Funds As of the Effective Date, there are no maximum percentage restrictions applicable to any Investment Funds. APPENDIX C - PAYMENT OF PLAN FEES AND EXPENSES As of the Effective Date, payment of Plan fees and expenses shall be as follows: I. Investment Management Fees: These are paid by Participants in that management fees reduce the investment return reported and credited to Participants, except that the Employer shall pay the fees related to the Company Stock Fund and the PacifiCorp Stock Fund. These are paid by the Employer on a quarterly basis. II. Recordkeeping Fees: These are paid by the Employer on a quarterly basis, except that with regard to a Participant who is no longer an Employee or a Beneficiary, these are paid by the Participant and are assessed monthly and billed/collected from Accounts quarterly. III. Loan Fees: A $3.50 per month fee is assessed and billed/collected quarterly from the Account of each Participant who has an outstanding loan balance, except with regard to a Participant who has an outstanding loan balance attributable to a loan transferred from the PacifiCorp K Plus Employee Savings Plan. IV. Investment Fund Election Changes: For each Investment Fund election change by a Participant, in excess of four changes per year, a $10 fee shall be assessed and billed/collected quarterly from the Participant's Account. V. Periodic Installment Payment Fees: A $3.00 per check fee shall be assessed and billed/collected quarterly from the Account of each Participant for whom a check representing a periodic installment payment is issued. VI. Additional Fees Paid by Employer: All other Plan related fees and expenses shall be paid by the Employer. To the extent that the Administrator later elects that any such fees shall be borne by Participants, estimates of the fees shall be determined and reconciled, at least annually, and the fees shall be assessed monthly and billed/collected from Accounts quarterly. APPENDIX D - LOAN INTEREST RATE As of the Effective Date, the interest rate charged on Participant loans shall be equal to the prime rate published in The Wall Street Journal at the time the loan is processed, plus 3%. If multiple prime rates are published in The Wall Street Journal, the prime rate selected shall be the rate closest to the last prime rate used for this purpose.


                                                               Exhibit 10.1(c)
                       CENTURY TELEPHONE ENTERPRISES, INC.

                         DOLLARS & SENSE PLAN AND TRUST

                        ESTABLISHMENT OF MAXIMUM PRE-TAX
                             CONTRIBUTION PERCENTAGE

      Pursuant to Section 3.4 of the Century Telephone Enterprises, Inc. Dollars
& Sense Plan and Trust, the maximum Employee Pre-Tax Contribution percentage for
Participants is hereby changed to 12%,  effective for as of the first pay period
beginning on or about January 1, 1999.
      Thus done and signed this 29th day of December, 1998.
                                    CENTURY TELEPHONE ENTERPRISES, INC.

                                    By:       /s/ R. Stewart Ewing, Jr.
                                          R. Stewart Ewing, Jr.
                                          Senior Vice President and
                                          Chief Financial Officer

                                                                 Exhibit 10.1(q)

                       CENTURY TELEPHONE ENTERPRISES, INC.
                        SUPPLEMENTAL DOLLARS & SENSE PLAN

                                1998 RESTATEMENT

I.    Purpose of the Plan
      -------------------

      This  Supplemental  Dollars  &  Sense  Plan  was  established  by  Century
Telephone Enterprises,  Inc. (the "Company") and its subsidiaries and designated
affiliates to provide to certain select management  employees the opportunity to
defer a portion of their  compensation  in excess of the  deferrals  permissible
under the terms of the Century Telephone Enterprises,  Inc. Dollars & Sense Plan
and Trust (the  "Dollars & Sense Plan")  maintained  by the Company and to allow
the Company to make matching  contributions based on such deferrals in excess of
those  permissible  under such plan.  This Plan is not intended to  constitute a
qualified  plan under  Section  401(a) of the Internal  Revenue Code of 1986, as
amended  (the  "Code"),  and is designed  to be exempt  from the  participation,
vesting,  funding and fiduciary  responsibility rules of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA").

II.   Definitions
      -----------

      As used in  this  Plan,  the  following  terms  shall  have  the  meanings
indicated, unless the context otherwise specifies or requires:

      2.01  "ACCOUNT"  shall  mean the  account  established  under this Plan in
accordance with Section 4.01.

      2.02  "ACCOUNT BALANCE",  as of a given date,  shall mean the fair market
value of a Participant's Account, as determined by the Committee.

      2.03  "BENEFICIARY"  shall mean the person or  persons  designated  by the
Participant to receive benefits after the death of the Participant.

      2.04  "BOARD OF DIRECTORS"  shall mean not less than a quorum of the whole
Board of Directors of the Company.

      2.05  "COMMITTEE"  shall  mean  three  or more  members  of the  Board  of
Directors of the Company as described in Section 11.01 of the Plan, or the Board
if no Committee has been appointed.

      2.06 "DISABILITY"  shall mean a condition which makes a Participant unable
to perform each of the  material  duties of his regular  occupation  where he is
likely to remain thus incapacitated continuously and permanently.

      2.07  "EFFECTIVE  DATE" of this Plan shall mean the first day of the first
payroll  period  commencing on or after January 1, 1995.  The effective  date of
this Restatement shall mean the first day of the first payroll period commencing
on or after January 1, 1999.

      2.08 "EMPLOYER" shall mean the Company,  any Subsidiary  thereof,  and any
affiliate designated by the Company as a participating employer under this Plan.

      2.09 "EXCESS SALARY" shall mean the amount of a Participant's compensation
upon which the Participant can no longer make deferral  contributions  under the
Dollars & Sense Plan due to the application of either Code Section 401(a)(17) or
402(g).

      2.10 "INCENTIVE  COMPENSATION"  shall mean the stock portion of any amount
awarded to a Participant under the Company's Key Employee Incentive Compensation
Program or other executive incentive compensation  arrangement maintained by the
Company.   The  stock  portion  of  the  award  shall  be  considered  Incentive
Compensation in an amount equal to its cash equivalent at the time of conversion
of the award from cash to stock. A Participant's Incentive Compensation shall be
determined on an annual basis and shall, for purposes of this Plan, be allocated
to the year in which the award is paid to the Participant.

      2.11 "LEAVE OF ABSENCE" shall mean any extraordinary absence authorized by
the Employer under the Employer's standard personnel practices.

      2.12 "NORMAL RETIREMENT AGE" shall mean age sixty-five (65).

      2.13  "NORMAL  RETIREMENT  DATE"  shall  mean the  first  day of the month
coincident with or next following a Participant's sixty-fifth (65th) birthday.

      2.14 "PARTICIPANT"  shall mean any officer of the Company,  any Subsidiary
thereof, and any designated affiliate,  who is granted participation in the Plan
in accordance with the provisions of Article III.

      2.15  "PLAN"   shall  mean  the  Century   Telephone   Enterprises,   Inc.
Supplemental Dollars & Sense Plan, as amended and restated herein.

      2.16 "PLAN YEAR" shall mean the calendar year.

      2.17  "SUBSIDIARY"  shall mean any  corporation in which the Company owns,
directly or indirectly through subsidiaries, at least fifty percent (50%) of the
combined voting power of all classes of stock.

III.  Participation
      -------------

      3.01 Any officer who is either one of the key employees of the Employer in
a position to contribute materially to the continued growth and future financial
success of the Employer,  or one who has made a significant  contribution to the
Employer's operations,  thereby meriting special recognition,  shall be eligible
to participate provided the following requirements are met:

            a.    The  officer  is  employed  on  a  full-time  basis  by  the
                  Company,   any   Subsidiary   thereof,   or  any  designated
                  affiliate;

            b.    The  officer is  compensated  for  full-time  employment  by a
                  regular salary;

            c.    The coverage of the officer is duly approved by the Committee.

It is intended that  participation  in this Plan shall be extended only to those
officers who are members of a select group of management and highly  compensated
employees, as determined by the Committee.

IV.   Accounts and Investments
      ------------------------

      4.01 An Account shall be  established  on behalf of each  Participant  who
receives an allocation pursuant to Article VI hereof. Each Participant's Account
shall be credited  with such  allocation,  and earnings and gains on his Account
Balance,  and shall be debited  with  distributions,  losses,  and any  expenses
properly chargeable thereto.

      4.02  Each  Participant  shall  have  the  same  rights  with  respect  to
investment  of amounts in his Account  hereunder as are  available  from time to
time under the Dollars & Sense Plan, as to permissible  investment funds, except
as provided below.  Investment in the Century Stock Fund and the Stagecoach Bond
Index Fund will not be available  under the Plan. The investment  rights of each
Participant  hereunder  shall  extend to all amounts in his  Account,  including
deferral contributions and matching contributions.

      4.03 The Accounts of  Participants in the Plan shall be revalued as of the
last day of each calendar quarter,  and each Participant shall be furnished with
a statement  of his  Account,  in such form as the  Committee  shall  determine,
within a reasonable period of time after the end of each quarter.

V.    Participant Salary Deferrals
      ----------------------------

      5.01 Each Participant shall make separate written elections,  prior to the
first  day  of  each  Plan  Year  (or,  as  to  Participants  who  first  become
Participants  as of a day other  than  January 1, prior to such date) to defer a
portion of his (i) Excess Salary and/or (ii) Incentive Compensation.  The amount
of allowable deferral pursuant to each of the Participant's elections shall be a
whole  percentage,  not to exceed  twelve  percent  (12%).  An election to defer
Excess  Salary shall  provide for a deferral to be made from each  paycheck.  An
election to defer Incentive Compensation shall provide for a deferral to be made
from the bonus check representing the cash portion of such award.

      5.02  Any  agreement  made  under  the  terms  of  Section  5.01  shall be
irrevocable  until the  succeeding  January  1,  except  that a salary  deferral
election  under the terms of this Plan may be changed,  amended or  suspended at
the same time and in the same  manner  as  elections  under the  Dollars & Sense
Plan.

      5.03 If a Participant  does not make new  elections for a succeeding  Plan
Year under Section 5.01, his elections in effect for the current Plan Year shall
be deemed to  continue in force and effect as if made for such  succeeding  Plan
Year.

VI.   Allocations to Participant's Accounts
      -------------------------------------

      6.01 The Employer shall allocate to each Participant's  Account the amount
of Excess  Salary and/or  Incentive  Compensation  deferred by such  Participant
pursuant to an election made under Section 5.01. The allocation  hereunder shall
be made as of the date of the  paycheck or bonus check to which the  deferral by
the Participant relates.

      6.02  The  Employer  shall  allocate  a  matching   contribution  to  each
Participant's Account under this Plan each Plan Year equal to the total matching
percentage  (including matching and additional  matching  contributions) for the
year  provided  by the  Dollars & Sense  Plan  multiplied  by the  Participant's
deferrals under this Plan not in excess of six percent (6%) of the Participant's
Excess Salary and/or Incentive Compensation, applied to each separately.

VII.  Vesting of Account
      ------------------

      7.01 A Participant's Account Balance shall be fully vested at all times.

VIII. Time of Payment and Beneficiaries

      8.01 Except as provided in Section 8.02, a  Participant's  Account Balance
is payable upon termination of employment.

      8.02  Payment  of the  Account  Balance of a  deceased  Participant  shall
commence  within  ninety  (90) days  after his  death,  and shall be made to his
beneficiary  designated  on a  form  provided  for  such  purpose  by  the  Plan
Administrator.  If the Participant fails to designate a beneficiary, his Account
Balance shall be payable to his  surviving  spouse or, if none, to his surviving
child or children (or legal  representative  of any minor child or child who has
been declared incompetent or incapable of handling his affairs) in equal shares.
The  Account  Balance of a  Participant  who dies  leaving no spouse or children
shall be paid to his estate.

IX.   Form of Benefit Payment
      -----------------------

      9.01 The normal form of payment of a  Participant's  Account  Balance is a
lump sum cash payment.

      9.02 A Participant  may,  prior to  termination  of  employment,  elect to
receive  payment of his Account  Balance in monthly,  quarterly,  or annual cash
installments  of  approximately  equal amounts,  over a period not to exceed ten
(10) years.

X.    Additional Restrictions on Benefit Payments
      -------------------------------------------

      10.01 In no event will there be a  duplication  of benefits  payable under
the Plan because of employment by more than one participating Employer.

XI.   Administration and Interpretation
      ---------------------------------

      11.01 The Plan  shall be  administered  by the Board of  Directors  of the
Company through a Committee which shall consist of three or more members of such
Board.  No individual who is or has ever been a member of the Committee shall be
eligible to be designated as a participant or receive  payments under this Plan.
The Committee  shall have full power and  authority to interpret and  administer
the Plan and,  subject to the provisions  herein set forth, to prescribe,  amend
and rescind rules and regulations and make all other determinations necessary or
desirable for the  administration  of the Plan.  The Board may from time to time
appoint  additional  members of the Committee or remove  members and appoint new
members in  substitution  for those  previously  appointed and to fill vacancies
however caused.

      11.02 The decision of the Committee relating to any question concerning or
involving the  interpretation  or  administration of the Plan shall be final and
conclusive,  and  nothing in the Plan shall be deemed to give any  employee  any
right  to  participate  in the  Plan,  except  to such  extent,  if any,  as the
Committee  may have  determined  or approved  pursuant to the  provisions of the
Plan.

XII.  Nature of the Plan
      ------------------

      12.01  Benefits  under the Plan shall  generally be payable by the Company
from its own funds,  and such benefits shall not (i) impose any obligation  upon
the trust(s) of the other employee benefit programs of the Company; (ii) be paid
from such  trust(s);  nor (iii)  have any effect  whatsoever  upon the amount or
payment of benefits  under the other employee  benefit  programs of the Company.
Participants  have only an unsecured  right to receive  benefits  under the Plan
from the Company as general  creditors of the  Company.  The Company may deposit
amounts in a trust  established  by the  Company  for the purpose of funding the
Company's  obligations  under the Plan.  Participants  and their  beneficiaries,
however,  have no secured interest or special claim to the assets of such trust,
and the assets of the trust shall be subject to the payment of claims of general
creditors of the Company upon the  insolvency or  bankruptcy of the Company,  as
provided in the trust.

XIII. Employment Relationship
      -----------------------

      13.01 An  employee  shall be  considered  to be in the  employment  of the
Employer as long as he remains an employee of either the Company, any Subsidiary
of  the  Company,  any  designated  affiliate,   or  any  corporation  to  which
substantially  all of the  assets  and  business  of any of  such  entities  are
transferred.  Nothing in the  adoption of this Plan nor the  designation  of any
Participant  shall confer on any employee the right to continued  employment  by
the  Employer,  or affect in any way the right of the Employer to terminate  his
employment  at any time.  Any  question  as to whether and when there has been a
termination  of an  employee's  employment,  and  the  cause,  notice  or  other
circumstances  of such  termination,  shall be determined by the Board,  and its
determination shall be final.

XIV. Amendment and Termination of Plan
     ---------------------------------
 
      14.01 The Board of  Directors  of the Company in its sole  discretion  may
terminate  the Plan at any time and  shall  have the right to alter or amend the
Plan or any part thereof  from time to time,  except that the Board of Directors
shall not terminate the Plan or make any  alteration or amendment  thereto which
would impair the rights of a Participant previously accrued.

XV.   Binding Effect
      --------------

      15.01 This Plan shall be binding on the Company,  each  Subsidiary and any
designated  affiliate,  the  successors and assigns  thereof,  and any entity to
which  substantially all of the assets or business of the Company, a Subsidiary,
or a designated affiliate are transferred.

XVI.  Reimbursement of Participants
      -----------------------------

      16.01 The Company shall reimburse any Participant, or beneficiary thereof,
for all expenses, including attorney's fees, actually and reasonably incurred by
the  Participant  or  beneficiary in any proceeding to enforce any of his rights
under this Plan.

XVII.  Construction
       ------------

      17.01 The masculine  gender,  where appearing in the Plan, shall be deemed
to include the feminine gender, and the singular may indicate the plural, unless
the context  clearly  indicates  the  contrary.  The words  "hereof",  "herein",
"hereunder"  and  other  similar  compounds  of the word  "here"  shall,  unless
otherwise  specifically  stated,  mean and refer to the entire Plan,  not to any
particular  provision or Section.  Article and Section headings are included for
convenience  of reference and are not intended to add to, or subtract  from, the
terms of the Plan.

      IN WITNESS WHEREOF,  Century  Telephone  Enterprises,  Inc. has executed
this Plan this 29th day of December, 1998.

ATTEST:                             CENTURY TELEPHONE ENTERPRISES, INC.
/s/ Linda Vaughn                    By: /s/ R. Stewart Ewing, Jr. 
----------------                    ----------------------------------- 
                                    R. Stewart Ewing, Jr.
                                    Senior Vice President and
                                    Chief Financial Officer

                                                                Exhibit 10.1(y)
                       CENTURY TELEPHONE ENTERPRISES, INC.
                        SUPPLEMENTAL DEFINED BENEFIT PLAN


I.    Purpose of the Plan
      -------------------

      This Supplemental Defined Benefit Plan (the "Plan") is intended to provide
Century  Telephone  Enterprises,  Inc. (the  "Company")  and its  subsidiaries a
method for  attracting  and  retaining  key  employees;  to provide a method for
recognizing the  contributions of such personnel;  and to promote  executive and
managerial  flexibility,  thereby advancing the interests of the Company and its
stockholders.  In addition, the Plan is intended to provide to a select group of
management and highly compensated  employees a more adequate level of retirement
benefits in combination with the Company's general retirement program.  The Plan
is not  intended to  constitute  a qualified  plan under  Section  401(a) of the
Internal  Revenue Code of 1986, as amended (the  "Code"),  and is designed to be
exempt from the  participation,  vesting,  funding and fiduciary  responsibility
rules  of the  Employee  Retirement  Income  Security  Act of 1974,  as  amended
("ERISA").

II.   Definitions
      -----------

      As used in  this  Plan,  the  following  terms  shall  have  the  meanings
indicated, unless the context otherwise specifies or requires:

      2.01  "ACTUARIAL  EQUIVALENT"  shall  mean  the  amount  of  pension  of a
different type or payable at a different age that has the same value as computed
by the  Actuary on the same  basis as that  prescribed  in Section  10.09 of the
CenturyTel Retirement Plan.

      2.02  "BENEFIT  YEARS"  shall mean years of service  for  benefit  accrual
purposes as determined under Section 3.06 of the CenturyTel Retirement Plan.

      2.03 "BOARD OF  DIRECTORS"  shall mean not less than a quorum of the whole
Board of Directors of Century Telephone Enterprises, Inc.

      2.04 "CHANGE IN CONTROL" shall mean the occurrence of any of the following
(i) the  acquisition  by any "person" (as such term is used in Section 13(d) and
14(d) of the Securities  Exchange Act of 1934 (the "Exchange Act")),  other than
the Company or any employee  benefit  plan or related  trust or affiliate of the
Company or its subsidiaries,  of beneficial  ownership (as defined in Rule 13d-3
promulgated  under the Exchange Act),  directly or indirectly,  of securities of
the  Company  representing  30% or  more of the  combined  voting  power  of the
Company's then outstanding securities entitled to vote generally in the election
of directors,  but not including any acquisition directly from the Company; (ii)
the consummation of a merger, consolidation,  reorganization, share exchange, or
sale or other  disposition  of all or  substantially  all of the  assets  of the
Company unless,  immediately thereafter,  at least 50% of the outstanding voting
power of the surviving or successor corporation,  or, if applicable,  the parent
company  thereof  (the  "Surviving   Company"),   are  owned  by  the  Company's
shareholders  immediately  prior  to  such  time,  at  least a  majority  of the
directors of the  Surviving  Company  were  directors of the Company at the time
such transaction was approved,  and no person or entity  (excluding any employee
benefit plan or related  trust of the Company or the  Surviving  Company and any
person or entity that was a shareholder of the Company immediately prior to such
time)  beneficially  owns  20% or more of the  outstanding  voting  power of the
Surviving Company; (iii) during any period of two consecutive years, individuals
who at the  beginning  of such period  constitute  the Board of Directors of the
Company cease for any reason to constitute at least a majority  thereof,  unless
the election of each  director  who was not a director at the  beginning of such
period shall have been  approved in advance by directors  representing  at least
two-thirds of the directors  then in office who were  directors at the beginning
of the period; or (iv) the approval by the Company's  shareholders of a complete
liquidation or dissolution of the Company.

      2.05  "COMMITTEE"  shall  mean  three  or more  members  of the  Board  of
Directors  as  described  in  Section  13.01  of the  Plan,  or the  Board if no
Committee has been appointed.

      2.06  "COMPANY"  shall  mean  Century  Telephone  Enterprises,  Inc.,  any
Subsidiary  thereof,   and  any  affiliate   designated  by  the  Company  as  a
participating employer under this Plan.

      2.07 "EFFECTIVE DATE" of this Plan shall be January 1, 1999.

      2.08  "EMPLOYER"  shall mean  Century  Telephone  Enterprises,  Inc.,  any
Subsidiary  thereof,   and  any  affiliate   designated  by  the  Company  as  a
participating employer under this Plan.

      2.09  "FINAL  AVERAGE  PAY" shall  mean a  participant's  average  monthly
compensation  as determined  under Section 6.02-3 of the  CenturyTel  Retirement
Plan, without taking into account the limitation  contained in Section 6.02-4(e)
thereof.

      2.10  "NORMAL  RETIREMENT  DATE"  shall  mean the  first  day of the month
coincident with or next following a Participant's 65th birthday.

      2.11  "PARTICIPANT"  shall mean any officer of the Employer who is granted
participation in the Plan in accordance with the provisions of Article III.

      2.12  "PLAN"  shall  mean  the  Century  Telephone   Enterprises,   Inc.
Supplemental Defined Benefit Plan.

      2.13  "SOCIAL  SECURITY  COVERED   COMPENSATION"  shall  mean  the  amount
determined pursuant to Section 6.02-5 of the CenturyTel Retirement Plan.

      2.14  "SUBSIDIARY"  shall mean any  corporation in which the Company owns,
directly or indirectly through subsidiaries, at least fifty percent (50%) of the
combined voting power of all classes of stock.

III.  Participation
      -------------

      Any  officer  who is either one of the key  employees  of the Company in a
position to contribute  materially to the continued  growth and future financial
success of the Company,  or one who has made a significant  contribution  to the
Company's operations, thereby meriting special recognition, shall be eligible to
participate provided the following requirements are met:

            a.    The  officer  is  employed  on a  full-time  basis by  Century
                  Telephone  Enterprises,  Inc., any Subsidiary  thereof, or any
                  affiliate   designated  by  the  Company  as  a  participating
                  employer under this Plan.

            b.    The  officer is  compensated  for  full-time  employment  by a
                  regular salary;

            c.    The coverage of the officer is duly approved by the Committee.

It is intended that  participation  in this Plan shall be extended only to those
officers who are members of a select group of management and highly  compensated
employees, as determined by the Committee.

IV.   Normal Retirement
      -----------------

      4.01 The monthly retirement benefit payable to a Participant on his Normal
Retirement Date shall be the excess of an amount determined  pursuant to Section
6.02 of the CenturyTel Retirement Plan, computed without taking into account the
limitation contained in Section 6.02-4(e) thereof, over the amount so determined
taking into account such limitation.

V.    Late Retirement
      ---------------

      5.01 If a Participant  remains employed beyond his Normal Retirement Date,
his late retirement  date will be the first day of the month  coincident with or
next following his actual date of retirement.

      5.02 A  Participant's  late  retirement  benefit shall be the excess of an
amount  determined  pursuant to Section 6.04 of the CenturyTel  Retirement Plan,
computed  without  taking  into  account  the  limitation  contained  in Section
6.02-4(e)  thereof,  over the amount so  determined  taking  into  account  such
limitation.

VI.   Early Retirement
      ----------------

      6.01 A  Participant  who has attained  age 55, and who has  completed 5 or
more  Years  of  Service,   is  eligible  for  early  retirement.   An  eligible
Participant's  early  retirement  date is the first day of the month  coincident
with or next following the date he terminates employment.

      6.02 A Participant's  early  retirement  benefit shall be the excess of an
amount  determined  pursuant to Section 6.03 of the CenturyTel  Retirement Plan,
computed  without  taking  into  account  the  limitation  contained  in Section
6.02-4(e)  thereof,  over the amount so  determined  taking  into  account  such
limitation,  payable at such time as the Participant  elects pursuant to Section
6.03-2 of the CenturyTel Retirement Plan.

      6.03 A Participant may elect to receive his early retirement benefit prior
to Normal  Retirement  Date, in which event the benefit  payable will be reduced
according  to the  schedules  contained  in  Section  6.03-1  of the  CenturyTel
Retirement Plan.

VII.  Disability
      ----------
 
      7.01 A  Participant  who becomes  disabled,  as  determined  under Section
6.12-2 of the CenturyTel  Retirement Plan, prior to retirement or termination of
service  will be  entitled  to a  disability  benefit  equal to the excess of an
amount  determined  pursuant to Section 6.12 of the CenturyTel  Retirement Plan,
computed  without  taking  into  account  the  limitation  contained  in Section
6.02-4(e)  thereof,  over the amount so  determined  taking  into  account  such
limitation.

      7.02 A Participant's disability benefit will commence at his Normal
Retirement Date.

VIII. Death Benefit for Spouse
      ------------------------
  
      8.01 Upon the death of a Participant who meets the  requirements set forth
in  Section  6.11-1  of  the  CenturyTel  Retirement  Plan,  the  spouse  of the
Participant will be entitled to receive a death benefit determined in accordance
with Section 8.02.

      8.02 The  monthly  death  benefit  payable to the spouse of a  Participant
shall be the excess of an amount  determined  pursuant  to  Section  6.11 of the
CenturyTel  Retirement Plan, computed without taking into account the limitation
contained in Section  6.02-4(e)  thereof,  over the amount so determined  taking
into account such limitation.

      8.03 The death benefit shall be paid to the surviving  spouse at such time
and in such  form  as  prescribed  by  Sections  6.11-2  through  6.11-4  of the
CenturyTel Retirement Plan.

      8.04 If a  Participant  has no surviving  spouse at the date of his or her
death, no death benefit shall be paid under this Plan.

IX.   Reemployment after Retirement
      -----------------------------

      If a Participant  retires and commences receiving benefits under the Plan,
and is later  rehired by the  Company,  benefit  payments  shall be withheld and
shall  recommence in accordance  with Section 6.13 of the CenturyTel  Retirement
Plan.

X.    Termination of Service; Change in Control
      ----------------------------------------- 
      10.01 If a Participant  terminates  service prior to death,  disability or
retirement,  he shall be entitled only to vested accrued benefits at the time of
termination  and shall be vested in  accrued  benefits  in  accordance  with the
following schedule:




                  Years of Service              Vested %
                  ----------------              --------

                    less than 5                      0%
                     5 or more                     100%

      10.02 A Participant's  vested Accrued Benefit shall be equal to the excess
of an amount determined pursuant to Sections 7.02 through 7.04 of the CenturyTel
Retirement Plan,  computed without taking into account the limitation  contained
in Section 6.02-4(e) thereof,  over the amount so determined without taking into
account such limitation. The amount so determined shall be payable in the manner
prescribed in Sections 7.02 through 7.04 of the CenturyTel  Retirement Plan, and
forfeitures of nonvested  benefits shall be determined  pursuant to Section 7.04
of the CenturyTel Retirement Plan.

      10.03 (a) Notwithstanding  anything to the contrary in this Plan or in any
            applicable law or regulation, upon the earlier of (i) the occurrence
            of a Change  in  Control,  (ii) the date  that any  person or entity
            submits an offer or proposal to the Company that results in or leads
            to a Change in Control  (whether by such person or any other person)
            or (iii) the date of the public  announcement of a Change in Control
            or an offer, proposal or proxy solicitation that results in or leads
            to a Change in Control  (whether by the person or entity making such
            announcement  or any other person) (the earliest of such dates being
            hereinafter  referred  to as  the  "Effective  Date"),  the  Accrued
            Benefit  of each  Participant  (other  than  any  Participant  whose
            service as an employee was  terminated  prior to full vesting of his
            Accrued  Benefit  under  Section  10.01) and the benefits  conferred
            under this Section shall  automatically  vest and thereafter may not
            be  adversely  affected  in any  matter  without  the prior  written
            consent of the Participant. Notwithstanding anything to the contrary
            in this  Plan,  upon the  occurrence  of a  Change  in  Control  any
            Participant  who is then  employed  by Century  or its  subsidiaries
            ("Active  Participants") shall have an irrevocable right to receive,
            and the Company  shall be  irrevocably  obligated to pay, a lump sum
            cash payment in an amount determined pursuant to this Section if the
            Company  or its  successor,  during  a  period  commencing  upon the
            Effective Date and ending on the third anniversary of the occurrence
            of the Change in Control,  (i) terminates  the Active  Participant's
            employment,  (ii) reduces the Active  Participant's salary in effect
            immediately prior to the Effective Date, (iii) diminishes the Active
            Participant's duties, responsibilities or position in the management
            of the Company or (iv) requires the Active  Participant  to relocate
            involuntarily to an office outside of the city in which he performed
            his services for the Company immediately prior to the Effective Date
            (each such action being referred to as an "Effective  Termination").
            The lump sum cash payment payable to Active  Participants under this
            Section  (the  "Lump  Sum  Payment")  shall  be paid on the  date of
            Effective  Termination or as soon thereafter as is  administratively
            feasible.

            (b)   The amount of each Lump Sum  Payment  shall be  determined  as
                  follows:

                  (i)   With  respect to any  Active  Participant  who,  after
                        giving  effect  to the  terms  of  subsection  (b)(iv)
                        below,  is  eligible  as  of  the  date  of  Effective
                        Termination  to receive  benefits under Articles IV or
                        V of this Plan,  the Lump Sum Payment  shall equal the
                        Present  Value (as  defined  below)  of the  stream of
                        payments   to  which  such   participant   would  have
                        otherwise  been entitled to receive  immediately  upon
                        Effective  Termination in accordance  with Articles IV
                        or V of this Plan  (assuming such benefits are paid in
                        the  form of a  lifetime  annuity),  based  upon  such
                        participant's   Final  Average  Pay,  Social  Security
                        Covered  Compensation and Benefit Years as of the date
                        of Effective  Termination,  without  giving  effect to
                        any   salary   reductions   that  gave  rise  to  such
                        Effective Termination,  but after giving effect to the
                        terms of subsection (b)(iv) below.

                  (ii)  With  respect to any  Active  Participant  who,  after
                        giving  effect  to the  terms  of  subsection  (b)(iv)
                        below,  is not  eligible  as of the date of  Effective
                        Termination  to receive  benefits under Articles IV, V
                        or VI of this Plan,  the Lump Sum Payment  shall equal
                        the product of (A) the Present  Value,  calculated  as
                        of age 65, of the  stream of  payments  to which  such
                        participant  would have  otherwise  been  entitled  to
                        receive  at age 65 in  accordance  with  the  terms of
                        this Plan based on the same  assumptions and terms set
                        forth in  subsection  (b)(i) above,  multiplied  times
                        (B) such  discount  factor as is  necessary  to reduce
                        the  amount  determined  under  subsection  (b)(ii)(A)
                        above to its Present Value,  it being  understood that
                        in  calculating  such  discount  factor,  no  discount
                        shall be applied to reflect the possibility  that such
                        participant may die prior to attaining age 65.

                  (iii) With respect to any Active Participant who, after giving
                        effect  to the terms of  subsection  (b)(iv)  below,  is
                        eligible  as of the  date of  Effective  Termination  to
                        receive  benefits under Article VI of the Plan, the Lump
                        Sum  Payment  shall equal the greater of (A) the Present
                        Value  of  the   stream  of   payments   to  which  such
                        participant   would  have  otherwise  been  entitled  to
                        receive   immediately  upon  Effective   Termination  in
                        accordance with Article VI of this Plan,  based upon the
                        assumptions  and terms set  forth in  subsection  (b)(i)
                        above,  or (B) the Present  Value,  calculated as of age
                        65, of the stream of payments to which such  participant
                        would  otherwise  be  entitled  to  receive at age 65 in
                        accordance with this Plan, determined in the same manner
                        and subject to the same  assumptions and terms set forth
                        in subsection (b)(ii) above.

                  (iv)  In calculating  the Lump Sum Payment due to any Active
                        Participant  under this  Section,  the number of years
                        of Benefit  Years of the Active  Participant  shall be
                        deemed  to equal  the  number  of  years  determinable
                        under the  other  sections  of this  Plan  plus  three
                        years  and  the  Active  Participant's  age  shall  be
                        deemed  to equal  his  actual  age plus  three  years;
                        provided,   however,   that  in  no  event  shall  the
                        provisions  of this  subsection  be  applicable if the
                        application    thereof    will   reduce   the   Active
                        Participant's  Lump Sum  Payment  from the amount that
                        would  otherwise  be payable with the addition of less
                        than three years of service, age or both.

                  (v)   As used in this  Section  with  respect to any amount,
                        the  "Present  Value" of such  amount  shall  mean the
                        discounted  value of such amount that is determined by
                        making   customary   present  value   calculations  in
                        accordance   with   generally    accepted    actuarial
                        principles,  provided  that (A) the discount  interest
                        rate applied in connection  therewith  shall equal the
                        interest  rate quoted by the  Bloomberg  Municipal AAA
                        General  Obligation  5-Year  Index (as of the close of
                        business  on the first  business  day of the  calendar
                        quarter in which such present value  calculations  are
                        made)  or,  in  the  event  such  index  is no  longer
                        published,  any similar index for comparable municipal
                        securities  and (B) the  mortality  table  applied  in
                        connection  therewith  shall  be the  mortality  table
                        prescribed  by the  Commissioner  of Internal  Revenue
                        under  Section  417(e)(3)(A)(ii)(I)  of  the  Internal
                        Revenue  Code or any  successor  table  prescribed  by
                        such organization.

            (c)   Notwithstanding  anything to the contrary in this Plan, upon
                  the sooner of the  occurrence  of a Change in Control or the
                  approval  by the Board of  Directors  of the  Company of any
                  Change in Control,  the Company shall promptly  consult with
                  each  Participant who has already begun to receive  periodic
                  payments  under  this  Plan  ("Retired  Participants")  and,
                  following  such  consultations,  the Company  shall have the
                  option  with  respect  to each  Retired  Participant  to (i)
                  confirm in writing its  obligation to continue to provide to
                  such Retired  Participant all benefits hereunder in the same
                  manner  provided prior to the Change in Control or (ii) make
                  a lump sum cash  payment in an amount  equal to the  Present
                  Value of the  participant's  future stream of payments which
                  would  otherwise be payable  under this Plan. If the Company
                  elects to furnish  any Retired  Participant  with a lump sum
                  cash  payment,  the  Company  shall  offer  to  assist  such
                  participant  in  purchasing  at such  participant's  cost an
                  annuity for the benefit of such participant.

            (d)   Notwithstanding  anything to the contrary in this Plan, upon
                  the occurrence of Change in Control,  any Participant (other
                  than a Retired  Participant)  who is then a former  employee
                  of  Century or its  subsidiaries  whose  Accrued  Benefit is
                  vested under Section 10.01 ("Inactive  Participants")  shall
                  have an irrevocable and unconditional right to receive,  and
                  the  Company  shall  be  irrevocably   and   unconditionally
                  obligated   to  pay,  a  lump  sum   payment  in  an  amount
                  determined in the manner  provided in subsection  (b)(ii) or
                  (iii), as applicable;  provided,  however,  that no Inactive
                  Participant  will be entitled to the benefits of  subsection
                  (b)(iv).


XI.   Form of Benefit Payment
      ----------------------- 

      11.01 The normal form of benefit  payment is a monthly  lifetime  annuity,
payable in  accordance  with the  Company's  standard  payroll  practices,  with
payments  commencing  as of the first day of the  month  following  the month in
which the distributable event occurs.

      11.02 A Participant  may, prior to  commencement of  participation  in the
Plan,  elect an optional form of payment which is the Actuarial  Equivalent of a
Participant's basic monthly pension, as follows:

            Option 1: A reduced  monthly pension payable for the lifetime of the
      Participant with a minimum of sixty (60) monthly payments guaranteed.

            Option 2: A reduced  monthly pension payable for the lifetime of the
      Participant  with a minimum of one hundred  twenty (120) monthly  payments
      guaranteed.

            Option 3: A reduced  monthly pension payable for the lifetime of the
      Participant  with a minimum of one hundred  eighty (180) monthly  payments
      guaranteed.

            Option 4: A reduced monthly pension,  payable to the Participant for
      the life of the  Participant,  with monthly payments of one-half (1/2) the
      reduced amount that was payable monthly to the  Participant  payable after
      the Participant's death for the life of the Participant's spouse.

            Option 5: A reduced  monthly  pension payable to the Participant for
      the life of the  Participant,  with reduced monthly payments of two thirds
      (_) of the  reduced  amount that was  payable  monthly to the  Participant
      payable after the  Participant's  death for the life of the  Participant's
      spouse.

            Option 6: A reduced  monthly  pension payable to the Participant for
      the  life of the  Participant,  with  reduced  monthly  payments  of three
      fourths  (3/4) of the  reduced  amount  that was  payable  monthly  to the
      Participant  payable  after  the  Participant's  death for the life of the
      Participant's spouse.

            Option 7: A reduced  monthly  pension payable to the Participant for
      the life of the  Participant,  with the same monthly pension payable after
      the Participant's death for the life of the Participant's spouse.

      11.03 If a Participant  does not elect an optional form of benefit payment
under Section 11.02 prior to the commencement of participation in the Plan, such
Participant's  benefits  shall be paid in the normal  form  provided  in Section
11.01.

XII.  Additional Restrictions on Benefit Payments
      -------------------------------------------

      In no event will there be a duplication of benefits payable under the Plan
because of employment by more than one participating Employer.

XIII. Administration and Interpretation
      ---------------------------------

      13.01 The Plan shall be administered  by the Board of Directors  through a
Committee which shall consist of three or more members of the Board of Directors
of the Company.  No individual who is or has ever been a member of the Committee
shall be eligible to be designated as a participant  or receive  payments  under
this Plan.  The  Committee  shall have full power and authority to interpret and
administer  the Plan  and,  subject  to the  provisions  herein  set  forth,  to
prescribe,   amend  and  rescind  rules  and  regulations  and  make  all  other
determinations  necessary or desirable for the  administration  of the Plan. The
Board may from time to time  appoint  additional  members  of the  Committee  or
remove  members and appoint new  members in  substitution  for those  previously
appointed and to fill vacancies however caused.

      13.02 The decision of the Committee relating to any question concerning or
involving the  interpretation  or  administration of the Plan shall be final and
conclusive,  and  nothing in the Plan shall be deemed to give any  employee  any
right  to  participate  in the  Plan,  except  to such  extent,  if any,  as the
Committee  may have  determined  or approved  pursuant to the  provisions of the
Plan.

XIV.  Nature of the Plan
      ------------------
 
      Benefits under the Plan shall generally be payable by the Company from its
own  funds,  and such  benefits  shall not (i) impose  any  obligation  upon the
trust(s) of the other  employee  benefit  programs of the Company;  (ii) be paid
from such  trust(s);  nor (iii)  have any effect  whatsoever  upon the amount or
payment of benefits  under the other employee  benefit  programs of the Company.
Participants  have only an unsecured  right to receive  benefits  under the Plan
from the Company as general  creditors of the  Company.  The Company may deposit
amounts in a trust  established  by the  Company  for the purpose of funding the
Company's  obligations  under the Plan.  Participants  and their  beneficiaries,
however,  have no secured  interest or special claim to the assets of the trust,
and the assets of the trust shall be subject to the payment of claims of general
creditors of the Company upon the  insolvency or  bankruptcy of the Company,  as
provided in the trust.

XV.   Employment Relationship
      -----------------------

      An employee shall be considered to be in the employment of the Company and
its  subsidiaries  as long as he remains an employee of either the Company,  any
Subsidiary of the Company,  or any corporation to which substantially all of the
assets and business of the Company are  transferred.  Nothing in the adoption of
this Plan nor the  designation of any  Participant  shall confer on any employee
the right to continued employment by the Company or a Subsidiary of the Company,
or affect in any way the right of the Company or such  Subsidiary  to  terminate
his employment at any time. Any question as to whether and when there has been a
termination  of an  employee's  employment,  and  the  cause,  notice  or  other
circumstances  of such  termination,  shall be determined by the Board,  and its
determination shall be final.

XVI.  Amendment and Termination of Plan
      ---------------------------------

      The Board of Directors of the Company in its sole discretion may terminate
the Plan at any time, and shall have the right to alter or amend the Plan or any
part  thereof from time to time,  except that the Board of  Directors  shall not
terminate  the Plan or make any  alteration  or  amendment  thereto  which would
impair any rights or benefits of a Participant previously accrued.

      This Plan  shall be  binding  on the  Company,  each  Subsidiary,  and any
affiliate designated by the Company as a participating employer under this Plan,
the successors and assigns thereof, and any entity to which substantially all of
the  assets  or  business  of the  Company,  a  Subsidiary,  or a  participating
affiliate are transferred.

XVIII. Reimbursement to Participants
       -----------------------------

      The Company shall reimburse any Participant,  or beneficiary  thereof, for
all expenses, including attorney's fees, actually and reasonably incurred by the
Participant  or  beneficiary  in any  proceeding  to enforce any of their rights
under this Plan.

XIX.  Construction
      ------------

      The  masculine  gender,  where  appearing in the Plan,  shall be deemed to
include the feminine  gender,  and the singular may indicate the plural,  unless
the context  clearly  indicates  the  contrary.  The words  "hereof",  "herein",
"hereunder"  and  other  similar  compounds  of the word  "here"  shall,  unless
otherwise  specifically  stated,  mean and refer to the entire Plan,  not to any
particular  provision or Section.  Article and Section headings are included for
convenience  of reference and are not intended to add to, or subtract  from, the
terms of the Plan.

      IN WITNESS WHEREOF, Century Telephone Enterprises,  Inc. has executed this
Plan in its corporate  name and its corporate  seal to be hereunto  affixed this
31st day of December, 1998.

ATTEST:                             CENTURY TELEPHONE ENTERPRISES, INC.
/s/ Linda Vaughn                     By: /s/ R. Stewart Ewing, Jr. 
-----------------                    R. Stewart Ewing, Jr.
                                     Senior Vice President and
                                     Chief Financial Officer


                                                                Exhibit 10.1(z)









                           CENTURYTEL RETIREMENT PLAN

                                1999 RESTATEMENT

                                 January 1, 1999













Century Telephone Enterprises, Inc.
100 Century Park Boulevard
Monroe, Louisiana 71203                                                Company


                                   CENTURYTEL

                                 RETIREMENT PLAN

                                1999 RESTATEMENT

                                 January 1, 1999

                            (As Amended And Restated)

Century Telephone Enterprises, Inc.
100 Century Park Boulevard
Monroe, LA 71203                                                       Company


      The Company  maintains this Retirement Plan,  formerly the Pacific Telecom
Retirement  Plan,  most recently  restated  effective  January 1, 1990. The Plan
exists for the exclusive benefit of eligible employees and is intended to comply
with  Sections  401  and  501  of  the  Internal  Revenue  Code  and  applicable
regulations.

      To change the sponsoring employer of the Plan and the name of the Plan, to
make  conforming  changes to coordinate the Plan with other plans  maintained by
the Company, and to comply with other changes in applicable law and regulations,
the Company adopts this document as a complete  amendment and restatement of the
Plan as previously in effect (the Prior Plan).

                                    ARTICLE I

                          Effective Date; Qualification

                         1.01 Effective Date; Plan Year

            1.01-1 The  effective  date of this  Amendment  and  Restatement  is
January 1, 1999,  except as otherwise  indicated herein with respect to specific
provisions hereof.

            1.01-2 The rights of  participants  who do not have Hours of Service
on or after  January 1, 1999 and of their  beneficiaries  are  controlled by the
Prior  Plan,  and the  right of all other  participants  and  beneficiaries  are
controlled by this Amendment and Restatement, except as follows:

                  (a) Service  before  January 1, 1976 that would be disregarded
            due to a Break in Service rule of the Prior Plan as in effect before
            that date shall not be counted.

                  (b)  Special  increases  in benefits  payable to retirees  and
            beneficiaries  under the Prior Plan shall apply to retirees  without
            an Hour of Service on or after the effective  date of the Prior Plan
            and their beneficiaries.

                  (c) The  responsibilities of the Company and the Committee and
            the  procedures  for applying for  benefits,  processing  claims and
            withholding benefits on reemployment,  as provided in this Amendment
            and Restatement, shall apply to all participants.

            1.01-3 The Plan Year and limitation year shall be the calendar year.

      1.02  Qualification

            If  the  Commissioner  of  Internal  Revenue  determines  that  this
Amendment and Restatement  does not qualify under Section 401(a) of the Internal
Revenue Code, the Company may amend the Plan retroactively to qualify.

                              ARTICLE IIARTICLE II

                   Application to the Company and Affiliates

      2.01  Eligible Employers

            2.01-1 The Company has  adopted  and any  affiliate  approved by the
Company may adopt this Plan for its employees.

            2.01-2 "Affiliate" means a corporation,  person or other entity that
is one of the following:

                  (a) A member,  with an Employer,  of a controlled  group under
            Section 414(b) of the Internal Revenue Code.

                  (b) A  member,  with an  Employer,  of a group  of  trades  or
            businesses under common control under Section 414(c) of the Internal
            Revenue Code.

                  (c) A member, with an Employer, of an affiliated service group
            under Section 414(m) of the Internal Revenue Code.

            2.01-3 "Employer" means the Company and any adopting affiliate. This
Plan is a single plan maintained by multiple  employers in which all of the Plan
assets are available to pay benefits for all participants.

            2.01-4  Employees of the following Affiliates are not eligible to
 participate in this Plan:

            (a)   Century Business Communications, Inc.

            (b)   Century Interactive Communications, Inc.

            (c)   CenturyTel Security Systems, Inc.

            2.01-5  The Prior Plan was maintained for the benefit of employees
of Pacific Telecom,  Inc. and its affiliates.  Pacific Telecom, Inc.
was  previously the sponsoring  "Company" of this Plan.  Effective  January 1,
1999, Century Telephone Enterprises,  Inc. is the sponsoring "Company" herein,
and except as otherwise  provided in the Plan,  employees of Century Telephone
Enterprises,  Inc. and its Affiliates are eligible to participate in this Plan
effective January 1, 1999.

      2.02  Service for Affiliates

            2.02-1  Transfer of  employment  from one Affiliate to another shall
not constitute a termination of employment.

            2.02-2 Work for an Affiliate  shall be counted as Service  after the
date of  affiliation  or an earlier  date fixed by the Company in a statement of
adoption.

            2.02-3 Except as provided  below,  Years of Service shall be counted
under Article III during  employment with the Company or any Affiliate,  whether
or not an Employer, and Benefit Years shall be counted under 3.06 during Service
with  an  Employer  and  during  Service  with a  nonadopting  Affiliate  if the
obligation  to pay  benefits for such  Affiliate  Service is assumed from a plan
maintained  by the  Affiliate.  Benefit  Years shall be counted for Service with
Century Telephone Enterprises,  Inc. or any Affiliate effective January 1, 1999.
An assumption of benefit  obligation  shall be stated in writing by the Company,
filed with the Retirement Committee and announced to employees.

            2.02-4 If a business is acquired by the Company or an Affiliate  and
not continued as a separate  incorporated  entity,  Service for employees of the
acquired business who become employees of the Company or the acquiring Affiliate
shall be counted from their date of hire by the Company or the  Affiliate.  Past
service for the  acquired  business may be counted for  eligibility  or benefits
from  dates  fixed by the  Company,  filed  with the  Retirement  Committee  and
announced to affected employees.

      2.03  Adoption Procedure

            An Affiliate  may adopt this Plan by a statement in writing,  signed
by the  Affiliate and approved by the Company.  The statement  shall include the
effective date of adoption and any special  provisions that are to be applicable
only to employees of the adopting Affiliate.

                             ARTICLE IIIARTICLE III

                             Eligibility and Service

      3.01  Conditions of Eligibility

            3.01-1  Participation  shall  start the first of each month for each
person who satisfies all of the following conditions:

                  (a)   Is a qualified employee of an Employer.
                  (b)   Has completed one Year of Service.
                  (c)   Is age 21 or over.

            3.01-2  "Qualified employee" means any employee except the 
following:

                  (a) An employee covered by a collective  bargaining  agreement
            that does not provide for participation in this Plan.

                  (b) A leased  employee  treated  as an  employee  for  pension
            purposes  solely because of Section  414(n) of the Internal  Revenue
            Code.

                  (c) A "casual employee" as categorized in Employer's personnel
            policies,  including  generally  workers  who are on  call,  have no
            regular established work week and no fixed days or hours of work.

            3.01-3 Every  employee  eligible to  participate  under this Plan or
having a vested accrued  benefit shall be known as a participant.  The Committee
shall  furnish each  participant  with  information  about the Plan and benefits
under it.

      3.02  Service

            3.02-1  "Service Year" means:

                  (a) With respect to Service Years ending prior to January 1,
 1999:

                        (i) For eligibility under 3.01 and Break in Service
                  under 3.03 - an Employment Year.

                        (ii) For vesting under 7.01 - an Employment Year.

                        (iii) For accrual of benefits - an Employment Year.

                  (b) With respect to Service Years commencing on or after
            January 1, 1999:

                        (i) For eligibility under 3.01 - an Employment Year.

                        (ii)  For Break in Service under 3.03 - a Plan Year.

                        (iii) For vesting under 7.01 - a Plan Year.

                        (iv) For accrual of benefits - a Plan Year.

            3.02-2 "Employment Year" means the twelve (12) month period starting
on the date the employee  first performs an Hour of Service or an anniversary of
that date.

            3.02-3   "Year of Service" means the following:

                  (a) Each  Service  Year in which an employee has 1,000 or more
            Hours of Service is a Year of Service.

                  (b) The 1,000-hour  requirement shall be prorated (at the rate
            of 2.7 hours per calendar day) for the part year in which employment
            ends from death or retirement.

            3.02-4  "Hours" for determining Service means the following:

                  (a) Hours, whether or not worked, for which the participant is
            directly or indirectly paid or entitled to payment.

                  (b)  Regularly  scheduled  hours during leave of absence under
            3.04 or layoff under 3.05.

                  (c) Hours covered by a back pay award or agreement, regardless
            of mitigation of damages, unless already counted.

                  (d) Hours paid for at or after  termination  of employment for
            unused vacation, holiday, sick leave, disability or jury duty.

            3.02-5 The following shall apply to Hours of Service for periods not
worked:

                  (a) Hours shall be computed and attributed to Service Years in
            accordance   with   Department   of   Labor   Regulations   Sections
            2530.200b-2(b) and (c).

                  (b)  Regularly  scheduled  hours during  periods of disability
            when the  individual is receiving  payments from Employer or from an
            insurance  company under a policy  maintained  by Employer  shall be
            counted to the extent covered by 6.12.

                  (c) Hours directly or indirectly  paid for under  3.02-4(a) do
            not include  hours during  periods in which an  individual  receives
            payments   solely  under  workers'   compensation   or  unemployment
            compensation laws, regardless of the source of payment.

      3.03  Break in Service

            3.03-1   A Break in Service shall be determined as follows:

                  (a) Subject to (b), a One-Year  Break in Service is a Service
            Year in which an employee who has terminated employment has not more
            than 500 Hours of Service.

                  (b) Regardless of Hours of Service, an employee absent because
            of maternity or paternity shall not, because of such absence, have a
            One-Year  Break in Service until the second  Service Year  following
            the Service Year in which the absence begins, subject to (d) below.

                  (c)  Absence  because of  "maternity  or  paternity"  means an
            absence from Service because of one or more of the following:

                        (1)   Pregnancy.

                        (2)  Birth of the  employee's  child  or care  following
                  birth.

                        (3) Adoption of the  employee's  child or care following
                  adoption or placement for adoption.

                  (d) Paragraph  (b)  shall  not  apply  unless  the  employee
            furnishes  timely  information  satisfactory  to  the  Committee  to
            establish both of the following:

                        (1) That the absence was due to maternity or paternity.

                        (2) The length of such absence.

            3.03-2 Intermittent periods of Service shall be aggregated until the
participant has five  consecutive  One-Year  Breaks in Service.  If such a Break
occurs and the  employee has a later Year of Service,  Service  before the Break
will be counted only if:

                  (a) The employee had a vested interest before the Break.

                  (b) The number of Years of Service before the Break is greater
            than the number of consecutive One-Year Breaks in Service.

            3.03-3 If pre-Break Service is not counted under 3.03-2,  the person
shall be treated as newly hired.  In any event,  the first day of Service  after
rehire shall start a new Employment Year.

      3.04  Leaves of Absence

            3.04-1 Leaves of absence during which  regularly  scheduled Hours of
Service accrue shall mean the following:

                  (a) Leave of absence  authorized  by Employer if the  employee
            returns  within  the  time  prescribed  by  Employer  and  otherwise
            fulfills all conditions imposed by Employer.

                  (b) Absence because of disability under 6.12.

                  (c) Periods of military  service if the employee  returns with
            employment rights protected by law.

            3.04-2 In  authorizing  leaves of absence,  Employer shall treat all
employees similarly situated alike as much as possible.

            3.04-3  If a person  on leave  fails to meet the  conditions  of the
leave or fails to return to work when required,  employment  shall terminate and
accrual of Service  shall stop as of the date the leave began unless the failure
is due to death or retirement.

      3.05  Layoff

            3.05-1  Regularly  scheduled  Hours of Service  shall accrue  during
layoff subject to the rules below.  An employee shall be considered  laid off if
separated from employment because of reduction of Employer's work force.

            3.05-2  An  employee  shall  continue  as laid off,  whether  or not
employed elsewhere, until one of the following occurs:

                  (a) The employee  retires,  dies or resumes  employment at the
            request of Employer.

                  (b) Employer  notifies the employee that  employment  has been
            terminated.

                  (c)  The  employee  elects  to  terminate  employment,  or the
            employee fails to report for work when recalled.

                  (d) Twelve months have passed.

            3.05-3 Termination of a layoff under 3.05-2(b),(c) or (d) shall be
effective as of the date of the layoff.

      3.06  Benefit Years

            3.06-1  During a Year of Service, the following Hours of Service
shall be Benefit Hours:

                  (a) Hours on the payroll of Employer as a qualified employee.

                  (b) Hours during leave of absence that Employer determines, in
            its sole discretion, is primarily for the benefit of Employer.

                  (c) Hours during military service under 3.04-1(c).

                  (d) Hours during disability for participants under 6.12-1(b).

            3.06-2  For each Year of Service commencing prior to 1998, a
participant shall be credited with up to one Benefit Year calculated by dividing
Benefit Hours in the year by 2,080. For each Year of Service  commencing in 1999
and  thereafter,  a  participant  shall be credited with one Benefit Year if the
participant  completes 1000 or more Benefit Hours.  For the 1998 Plan Year, each
participant's benefit service shall be determined pursuant to 3.07-4 below.

      3.07  Short and Overlapping Computation Periods

            3.07-1  For any short  and/or  overlapping  computation  period  for
vesting,  break in service or benefit  accrual  purpose  which arises due to the
changes in Service Year under 3.02-1(b), the following rules shall apply.

            3.07-2  For vesting purposes, a participant who is credited with 
1000 Hours of Service in both the Service Year commencing in 1998 and the 
overlapping Service Year commencing January 1,1999 shall be credited with two
(2) Years of Service for vesting purposes.

            3.07-3  For Break in Service purposes, an employee who has
terminated employment will have a One-Year  Break in Service for each of the 
Service Years commencing in 1998 and commencing on January 1, 1999 if the
employee has not more than 500 Hours of Service in such Service Years, 
respectively.

            3.07-4 For benefit accrual purposes, a participant shall be credited
with a pro-rata  portion of a Benefit  Year for the Service Year  commencing  in
1998 if the participant  completes a pro-rated  portion of 1000 Hours of Service
by December 31, 1998. The pro-rated  portion of the 1000-hour  requirement shall
be  determined  by   multiplying   the  number  of  calendar  days  between  the
participant's  employment  anniversary  date and  December  31,  1998 times 2.7.
Benefit Years shall be determined  based on the Plan Year commencing  January 1,
1999.

                              ARTICLE IVARTICLE IV

                     Plan AdministrationPlan Administration

      4.01  Retirement Committee

            4.01-1 The Plan shall be administered  by a Retirement  Committee of
three or more persons appointed by the Company. The Committee shall have a chair
chosen from among its members and a secretary who need not be a member.  Minutes
shall be kept of all  proceedings of the  Committee.  The Committee may act at a
meeting  by a majority  vote of a quorum  present or without a meeting by action
recorded  in a  memorandum  signed by a majority of the  members.  A majority of
members shall constitute a quorum.

            4.01-2 Any member of the  Committee may resign on 15 days' notice to
the Company,  and the Company may remove any Committee  member  without  showing
cause.  All  vacancies on the  Committee  shall be filled as soon as  reasonably
practicable.  If a vacancy  is not so filled,  the  number of  members  shall be
reduced by the vacancy,  but not below three.  Until a new  appointment is made,
the remaining members of the Committee may act although less than a quorum.

            4.01-3 The Trustee shall be given the names and specimen  signatures
of the Committee members, the chair and the secretary.  The Trustee shall accept
and rely on the names and signatures until notified of a change.

            4.01-4  Documents may be signed for the Committee by the chair,  the
secretary or other persons designated by the Committee.

      4.02  Committee Powers and Duties

            4.02-1 The  Committee  shall  interpret  the Plan,  shall decide any
questions  about the  rights of  participants  and  their  beneficiaries  and in
general shall  administer  the Plan.  Any decision by the  Committee  within its
authority shall be final and bind all parties. The Committee shall have absolute
discretion to carry out its responsibilities.

            4.02-2 The Committee shall be the Plan  administrator  under federal
laws and  regulations  applicable to plan  administration  and shall comply with
such laws and regulations. The secretary of the Committee shall be the agent for
service of process on the Plan at the Company's address.

            4.02-3 The  Committee  shall keep records of all relevant data about
the rights of all persons  under the Plan.  The  Committee  shall  determine the
time,  manner,  amount and recipient of payment of pension  benefits and medical
benefits   and  the  Service  of  any  employee  and  instruct  the  Trustee  on
distributions. Any person having an interest under the Plan may consult a member
of the Committee at any reasonable time.

            4.02-4 The  Committee  shall  allocate  the assets of the Plan among
investment pools created under the trust described in 5.04.

            4.02-5 The Committee may delegate all or part of its  administrative
duties to one or more agents and may retain advisors to assist it. The Committee
may consult  with and rely upon the advice of counsel who may be counsel for the
Company.  The  Committee  shall  retain an enrolled  actuary and an  independent
public accountant for the Plan on behalf of the Plan.

      4.03  Claims Procedure

            4.03-1 Any person  claiming  a pension  benefit or medical  benefit,
requesting an interpretation or ruling under the Plan or requesting  information
under  the Plan  shall present the request in writing to the chair of the
Committee, who shall respond in writing as soon as practicable.

            4.03-2 If the claim or request is denied, the written notice of 
denial shall state:

                  (a) The reasons for denial, with specific reference to the
            Plan provisions on which the denial is based.

                  (b) A description  of any  additional  material or information
            required and an explanation of why it is necessary.

                  (c) An explanation of the Plan's claim review procedure.

            4.03-3  Any person whose claim or request is denied or who has not
received a response  within thirty (30) days may request  review by notice given
in writing to the chair of the Committee. The claim or request shall be reviewed
by the  Committee,  who may,  but shall not be required  to,  have the  claimant
appear before them.  On review,  the claimant may have  representation,  examine
pertinent documents and submit issues and comments in writing.

            4.03-4 The  decision on review  shall  normally be made within sixty
(60)  days.  If  an  extension  is  required  for a  hearing  or  other  special
circumstances, the claimant shall be so notified and the time limit shall be one
hundred  twenty (120) days. The decision shall be in writing and shall state the
reasons and the relevant Plan provisions. All decisions on review shall be final
and bind all parties concerned.

      4.04  Authority to Act for the Company or Employer

            4.04-1 Except as provided in 4.04-2, all authority of the Company or
any Employer under this Plan shall be exercised by the chief  executive  officer
of the corporation who may delegate all or any part of such authority.

            4.04-2 The power to amend or terminate  the Plan or to terminate the
trust  may be  exercised  only by the Board of  Directors  of the  Company  or a
designated committee thereof, except as provided in 4.04-3.

            4.04-3 The chief executive officer of the Company may amend the Plan
to make technical,  administrative  or editorial changes on advice of counsel to
comply with applicable law or to simplify or clarify the Plan.

            4.04-4 The Board of Directors of the Company or of an Employer shall
have no  administrative or investment  authority or function.  Membership on the
Board shall not make a person a fiduciary with respect to the Plan.

      4.05  Expenses.05 Expenses

            4.05-1  Members of the Committee  shall  not be  compensated  for
services. The Committee shall be reimbursed for all expenses.

            4.05-2  The Company may elect to pay any  administrative  fees or
expenses. Otherwise the expenses and fees shall be paid from the trust fund.

                                   ARTICLE V

                                    Funding

      5.01  Funding Policy

            The Committee  shall  establish the funding  policy in  consultation
with the Plan actuary and be responsible for management of assets in the fund as
provided  in  4.02-4.  The  funding  policy  shall  fix a  minimum  and  maximum
contribution for each year.

      5.02  Contributions

            5.02-1 Each Employer shall make  contributions  for its employees to
fund  pension  benefits  and may make  contributions  for its  employees to fund
medical  benefits.  The  amount  and  time of  payment  shall be  determined  in
conformance with the funding policy established by the Committee.

            5.02-2 An Employer may suspend or reduce  contributions  in any year
so long as the minimum requirements of the funding policy are satisfied.

            5.02-3  No contribution by employees shall be required or permitted.

            5.02-4  Contributions are conditioned upon deductibility under 
Section  404 of  the Internal Revenue Code. To the extent a deduction is
disallowed, 10.10 shall apply.

      5.03  Reports to Committee.03 Reports to Committee

            Each Employer shall furnish the Committee any information  requested
by it for Plan administration and funding review.

      5.04  Trust Fund

            5.04-1 Pension  benefits and medical  benefits under this Plan shall
be funded  through the  CenturyTel  Retirement  Trust,  established by agreement
between Century  Telephone  Enterprises,  Inc. and a Trustee.  The Trustee shall
receive  Employer  contributions,  hold the fund in  accordance  with the  trust
agreement and  distribute the pension  benefits and medical  benefits under this
Plan as directed by the Committee.

            5.04-2 All pension benefits and medical benefits shall be paid
solely from the trust fund to the extent the fund is sufficient.  If the fund is
not  sufficient, the Trustee shall not be liable for the unfunded pension
benefits and medical benefits.

                              ARTICLE VIARTICLE VI

                     Retirement BenefitsRetirement Benefits

      6.01  Eligibility; Retirement Dates

            6.01-1  A person  may retire with benefits under this Plan on
termination of employment on or after early, normal or deferred retirement date
as defined below.

            6.01-2  Normal retirement date is age 65.

            6.01-3  Early retirement date is any day after age 55 and 5 Years 
of Service.

            6.01-4  Deferred retirement date is any day after normal retirement
date.

      6.02  Normal Retirement Basic Benefit

            6.02-1 Except as provided in 6.02-1A and subject to 6.06,  the basic
benefit on normal  retirement for a person  retiring on or after January 1, 1990
is a monthly pension for the life of the participant equal to the greater of:

                  (a)   the sum of:

                        (i) Benefit  Years (BY) as of December 31, 1998, up to a
                  maximum of thirty (30),  times the sum of 1.3 percent of Final
                  Average  Pay (FAP) plus .65  percent of Final  Average  Pay in
                  excess of Social Security Covered Compensation
                  (SSCC) as follows:

                  BY (up to 30) X ((1.3% X FAP) + (.65 X (FAP-SSCC))), and

                        (ii) Benefit Years (BY) accrued after December 31, 1998,
                  up to a maximum of thirty (30),  taking into  account  Benefit
                  Years under clause (i), above, first in determining the thirty
                  (30)  year  maximum,  times the sum of 0.50  percent  of Final
                  Average Pay plus 0.50  percent of Final  Average Pay in excess
                  of Social Security Covered Compensation (SSCC) as follows:

                  BY (up to 30, taking into account benefit years under (i),
                  above, first) X ((0.50% X FAP) + (0.50% X (FAP - SSCC))).

                  (b) the greatest early retirement benefit the participant
            could have received.

            6.02-1A  For  participants   covered  by  a  collective   bargaining
agreement  which provides for  participation  in this Plan, and subject to 6.06,
the basic benefit on normal retirement for a person retiring on or after January
1,  1990 is a  monthly  pension  for the  life of the  participant  equal to the
greater of:

                  (a) Benefit Years (BY), up to a maximum of thirty (30),  times
            the sum of 1.3  percent of Final  Average Pay (FAP) plus .65 percent
            of  Final  Average  Pay  in  excess  of  Social   Security   Covered
            Compensation (SSCC) as follows:

            BY (up to 30) X ((1.3% X FAP + (.65% X (FAP-SSCC))).

                  (b) the  greatest  early  retirement  benefit the  participant
            could have received.


            6.02-1B If a  participant  either  becomes  covered by a  collective
bargaining  agreement which provides for participation in this Plan or ceases to
be so covered,  the participant's  basic benefit shall be determined by applying
6.02-1 above to the time period during which the participant is not covered by a
collective  bargaining  agreement which provides for participation in this Plan,
and 6.02-1A above shall apply to the time period during which the participant is
so covered.  In the event a participant's basic benefit is determined under both
6.02-1 and 6.02-1A for periods within a single Plan year, the participant  shall
not be given  duplicate  credit  under both  6.02-1 and  6.02-1A,  but each such
period  shall be  counted  only  once in  determining  the  participant's  basic
benefit.

            6.02-2 "Benefit Year" is defined in 3.06-2.

            6.02-3 "Final Average Pay" means the  participant's  average monthly
compensation  in  the  sixty  (60)   consecutive   calendar  months  of  highest
compensation  in the last 120 calendar  months of employment with the Company or
an affiliate.  Months  separated by a period when the participant is not in such
employment  shall be treated as  consecutive.  If a  participant  has fewer than
sixty (60) months of compensation, all months shall be used.

            6.02-4  "Compensation" means the sum of (a) and (b), adjusted under
(c), (d), and (e):

                  (a) All nondeferred compensation reportable on Form W-2 except
            the following:

                        (1) Overtime or premium pay.

                        (2) Imputed income from expense  reimbursement or fringe
                  benefits.

                        (3)  Prizes and awards (such as employee recognition
                  awards and safety awards).

                        (4)  Payment for termination  of  employment  (such as
                  retirement bonuses, disability benefits and severance pay).

                        (5) Long-term incentive compensation.

                  (b) Salary reduction  amounts elected by the participant under
            a qualified cash or deferred arrangement or a cafeteria plan.

                  (c) During  periods of  reduced  compensation  because of such
            causes as  illness,  disability  or leave of  absence,  compensation
            shall be figured at the last  regular  rate  before the start of the
            period.

                  (d) Full-time equivalent pay shall be used for persons working
            part time.

                  (e) The  maximum  amount of  annual  compensation  taken  into
            account for any year for a  participant  shall be $150,000  plus any
            cost-of-living  adjustment  authorized  for the  year by  applicable
            regulations.  For Plan Years  beginning  before January 1, 1997, for
            purposes of this limit, the following shall apply to any participant
            who is a highly compensated employee (as defined in Internal Revenue
            Code Section 414(q) and related Treasury  Regulations) and is either
            a five percent owner or one of the 10 highest paid employees:

                        (1) The participant's  compensation  shall be aggregated
                  with any  compensation  paid by Employer to the  participant's
                  spouse and to the participant's  lineal  descendants under age
                  19.

                        (2) If the $150,000  limit is exceeded in the aggregate,
                  pay counted for each aggregated  employee shall be reduced pro
                  rata to stay within the limit.

                  (f) The  reduction in the maximum  compensation  counted under
            (e) to  $150,000  shall be made  providing  a  participant  with the
            greater of the following (formula with extended wear-away):

                        (1) The participant's  benefit accrued under the Plan as
                  of December 31, 1993 based on  compensation  up to the maximum
                  permitted  amount of  compensation  in each earlier year, plus
                  the  benefit  accrued on the basis of service  after that date
                  and on compensation at the reduced level.

                        (2) The  participant's  benefit  accrued on the basis of
                  service before and after December 31, 1993 and on compensation
                  at the reduced level.

                  (g) A  bonus  earned  in one  calendar  year  and  paid in the
            following  calendar  year,  including  any  bonus  paid in the  year
            following employment termination,  shall be divided by the number of
            the  participant's  completed  calendar  months of  employment  with
            Employer  during  the year the bonus was  earned  and the  resulting
            amount treated as received in each of those months.

                  (h) A lump sum  payment in lieu of an  increase in base salary
            shall  not be  treated  as a bonus and  shall be  counted  as salary
            received   one-twelfth   in  each   succeeding   calendar  month  of
            employment.

            6.02-5  "Social Security Covered Compensation" means the covered
compensation amount for a person with the participant's Social Security
retirement  age, as determined in accordance with  applicable  regulations. The
Committee  may,  in its  discretion,  use a table  of  Social  Security  Covered
Compensation published by the Internal Revenue Service with rounded amounts.

            6.02-6 If an employee  becomes  entitled  to  workers'  compensation
benefits for disability, the normal retirement basic benefit shall be reduced as
follows:

                  (a) Each monthly benefit shall be reduced by the amount of any
            workers' compensation installment payment for that month.

                  (b) The total  benefit  shall be  reduced  actuarially  by the
            portion  of  any  lump  sum  workers'  compensation  award  that  is
            actuarially attributable to years after normal retirement date.

      6.03  Early Retirement

            6.03-1 On early  retirement, the basic benefit shall be the normal
retirement benefit under 6.02-1 reduced as follows.  The amount of basic benefit
attributable to the appropriate percentage of Final Average Pay determined under
Section 6.02-1 or 6.02-1A (the Base Benefit) and the amount  attributable to the
appropriate percentage of Final Average Pay in excess of Social Security Covered
Compensation  determined  under Section  6.02-1 or 6.02-1A (the Excess  Benefit)
shall be adjusted to the Benefit Starting Date by the percentages  prescribed in
the following table, interpolating between ages through the last full month.

Age at Benefit                   Base Benefit          Excess Benefit
Starting Date                    Percentage            Percentage
                      
      64                           100%                   92%
      63                           100%                   84%
      62                           100%                   76%
      61                            95%                   72%
      60                            90%                   68%
      59                            84%                   64%
      58                            78%                   60% 
      57                            72%                   56%
      56                            66%                   52%
      55                            60%                   48%
                                            

            6.03-2  Early retirement benefits shall be paid as follows:

                    (a) Benefits shall start as of the first of the month 
            after age 65 unless the participant elects to start benefits 
            earlier under (b).

                  (b) The  participant  may  elect to start  benefits  as of the
            first of any month after early  retirement  by applying for benefits
            under 6.07.

                  (c) If the participant  dies before the Benefit  Starting Date
            under (a) or (b),  benefits shall be limited to the spouse's benefit
            under 6.11.

      6.04  Deferred Retirement Basic Benefit

            6.04-1 On deferred  retirement,  the basic benefit shall be that for
normal  retirement  based on  Benefit  Years  and  Final  Average  Pay at actual
retirement.

            6.04-2  A  participant  who  works  past the  month in which  normal
retirement  benefits  would have begun shall be notified in writing  during that
month that benefits will not be started,  except for payments  under  6.10-1(a).
The  notification  shall contain the information  required by applicable law and
regulations on suspension of benefits.

            6.04-3 A participant who works past normal  retirement date shall be
paid a benefit for any month in which the  participant has fewer than forty (40)
paid Hours of Service under  3.02-4(a) and does not otherwise  receive a benefit
under  this  Plan.  The  benefit  shall  be the  amount  of the  monthly  normal
retirement basic benefit based on Service and pay to normal retirement date.

            6.04-4 If benefits  start under  6.10-1(a) to a  participant  during
employment the following shall apply:

                  (a) The  starting  date under  6.10-1(a)  shall be the Benefit
            Starting Date under 6.08-2.

                  (b) All provisions  with respect to the time,  form and amount
            of benefit shall apply as of the Benefit  Starting Date. The form of
            benefit  determined  as of that date shall be final and shall not be
            reopened at later  termination of employment.  The amount of benefit
            for  service to the  Benefit  Starting  Date shall not be changed by
            later changes in Final Average Pay.

                  (c)  Additional  accruals shall be calculated at each calendar
            year-end after the Benefit Starting Date as follows:

                        (1) The additional  benefit shall be based on additional
                  service and on Final Average Pay as of the year-end.

                        (2) Added benefits shall be in the form determined under
                  (b) above.

                        (3)  In  the  year  in  which  the  employee  terminates
                  employment  the date of termination  shall be substituted  for
                  the year-end.

                  (d) The  preretirement  death  benefit for a spouse under 6.11
            will not apply if the  participant  dies after the Benefit  Starting
            Date.

      6.05  Cost-of-Living Adjustment

            6.05-1 The amount  currently  payable to each participant who has no
Hours of Service after December 31, 1987, or to the spouse or other  beneficiary
of such a participant, shall be adjusted by the amount under 6.05-2 as follows:

                  (a) The adjustment shall be made each January 1 beginning with
            the first  January 1 that is at least  twelve (12) months  after the
            start of benefits.

                  (b) The adjustment shall be made to the benefit actually being
            paid after conversion to an optional form.

            6.05-2   The adjustment under 6.05-1 shall be the lesser of:

                  (a) The  percentage  increase in the U. S.  Consumer
            Price  Index  (all  items)  during the  twelve  (12)  months
            ending with the September  index  preceding  the  adjustment
            date; and

                  (b) Two (2) percent.

            6.05-3 If the  Consumer  Price  Index  decreases  during  the period
described in 6.05-2(a),  no downward  adjustment in retirement benefits shall be
made. Any such decrease shall offset any subsequent increases.

            6.05-4 The benefit for a participant  who has Hours of Service after
December  31, 1987 shall not be adjusted  as provided  above.  The amount of the
benefit  shall  be  at  least  as  much  as  the  actuarial  equivalent  of  the
participant's  accrued  benefit  under the Prior Plan as of December  31,  1987,
including the value of potential cost-of-living adjustments.

      6.06        Limit on Benefits

            6.06-1  Benefits  shall be limited in accordance  with the following
rules as provided in Internal Revenue Code Section 415 and related  regulations.
The following  provisions shall be applied in a manner  consistent with the Code
and regulations, which are incorporated by this reference.

            6.06-2 The actuarially  equivalent  straight life annuity benefit on
normal, early or deferred retirement expressed as an annual benefit shall be not
more than either of the following:

                  (a) $90,000  plus for any year any  cost-of-living  adjustment
            authorized by applicable regulations for that year.

                  (b) 100 percent of high three-year average compensation.

            6.06-3 "High three-year average  compensation"  shall be the average
annual W-2 compensation  during the three consecutive  calendar years of highest
compensation from an Employer.

            6.06-4  The limitations in 6.06-2 shall be adjusted as
follows:

                  (a) For an employee who has less than ten (10) years of
            participation, the limitation shall be the amount in 6.06-2(a)
            multiplied by the participant's years of participation and divided
            by ten.

                  (b) For an employee  participating  before  January 1, 1983 or
            January 1, 1987, the limitation in 6.06-2(a) shall not be lower than
            the accrued  benefit under the Plan on December 31, 1982 or December
            31, 1986, respectively.

                  (c) If the Benefit Starting Date is before the Social Security
            retirement age, the limit in 6.06-2(a) shall be actuarially reduced.
            The reduction shall be 5/9 of 1 percent for each of the first thirty
            six (36) months before Social Security  retirement age and 5/12 of 1
            percent for each further  month,  if any, above age 62. Below age 62
            the reduction  shall be to an actuarial  equivalent of the amount at
            age 62 using an interest assumption of the lesser of the following:

                        (1) Five(5) percent per annum.

                        (2) A  percentage  imputed  from the tables in 6.03-1 by
                  dividing the  participant's  early retirement basic benefit by
                  the normal retirement benefit, subtracting the result from one
                  hundred (100) percent and dividing the remainder by the number
                  of years between the Benefit Starting Date and age 65.

                  (d) If a benefit starts after the Social  Security  retirement
            age,  the limit in  6.06-2(a)  shall be  actuarially  increased in a
            manner prescribed by the Treasury Department.

            6.06-5 If the  benefit is paid in the form of a  contingent  annuity
under  6.09-3  with  payments   continued  to  the  participant's   spouse,  the
limitations  in 6.06-2  shall be applied  to the  participant's  actual  benefit
rather than the actuarially equivalent straight life annuity.

            6.06-6 If the  Employer  maintains  or has  maintained  another  tax
qualified  defined  benefit  pension  plan at any time,  the  benefits  shall be
combined for purposes of applying the above limitations.

            6.06-7 If the Employer  maintains or has  maintained one or more tax
qualified  defined  contribution  pension plans at any time, the following shall
apply:

                  (a) The  defined  contribution  fraction  under all such plans
            combined with the defined  benefit  fraction under this Plan and all
            other defined benefit plans maintained by Employer shall not for any
            individual exceed 1.0.

                  (b)  The  defined  benefit  fraction  numerator  shall  be the
            participant's   projected  annual  normal  retirement  benefit.  The
            denominator  shall be the maximum legally allowed benefit,  adjusted
            under (d).

                  (c) The defined  contribution  fraction numerator shall be the
            sum  of  all  annual  additions  since  the  Plan's  inception.  The
            denominator  shall be the sum of the maximum  legally allowed annual
            additions  for  all  years  of  the  participant's  employment  with
            Employer, adjusted under (d).

                  (d) The denominators under (b) and (c) shall be the smaller of
            the maximum  percentage limit figure times 1.4 or the maximum dollar
            limit figure times 1.25.

            6.06-8 If benefits or contributions under another pension plan
maintained  by the Employer,  when  combined with the benefits  under this Plan,
exceed the above  limitations,  the benefits under this Plan shall be reduced to
the extent of the excess, and the benefits or contributions under the other plan
shall stand.

            6.06-9 For purposes of 6.06-7,  contributions  for medical  benefits
separately accounted for on behalf of a key employee pursuant to 8.03-2 shall be
treated  as  an  annual  addition  to  a  defined   contribution  plan.  Section
415(c)(1)(B)  of  the  Internal  Revenue  Code,  limiting  annual  additions  to
twenty-five (25) percent of the participant's  compensation,  shall not apply to
any amount so treated.

            6.06-10 Cost-of-living adjustments to the dollar amount in 6.06-2(a)
shall be applied to the  accrued  benefit of a  participant  who has  retired or
otherwise  terminated  from Service.  Any  resulting  change to a benefit in pay
status  shall be made as of the  payment  for  January  of the year to which the
adjustment applies.

      6.07  Application for Benefits

            6.07-1  A participant, spouse or beneficiary eligible for benefits
must apply in writing  under 4.03 on a form  prescribed  by the  Committee.  The
Committee  may start  benefits in a proper  case  without an  application  being
filed.

            6.07-2  Application shall be made within the following time periods:

                  (a) No more than ninety (90)days before the Benefit Starting
            Date.

                  (b) No less than thirty (30) days before the Benefit Starting
            Date, unless the Committee waives the time requirement.

            6.07-3  Between  thirty (30) and ninety (90) days before the Benefit
Starting Date, the Committee shall give the participant a written explanation of
the following:

                  (a) The optional forms of benefit available under the Plan,
            including the relative value of each form.

                  (b) The terms and conditions of the survivor annuity benefit
            in 6.09-3(b), the participant's right to elect not to receive such a
            benefit, and the following with respect to each election:

                        (1) Its financial effect.

                        (2) The requirement of spouse consent.

                        (3) The participant's right to revoke.

                  (c) The right to defer payment until normal retirement age, if
            the participant is under that age.

            6.07-4  If a participant first qualifies under 6.07-3 by marrying
after the above requirements would first have been applicable, the requirements
shall be met as soon as practicable after the participant so qualifies.

      6.08  Time of Payment

            6.08-1  Benefits  shall start with the first month  beginning  after
normal retirement date or on an earlier payment date under 6.03-2(b) after early
retirement,  whichever applies. Payments shall be made for each benefit month at
the end of that month.

            6.08-2 The "Benefit  Starting Date" means the first day of the first
benefit month. If payments are delayed under 6.08-3,  the Benefit  Starting Date
shall not change.

            6.08-3  Subject to  6.10-1(a),  payment of  benefits  may be delayed
beyond the Benefit  Starting  Date because of a delay in  application  or if the
amount is not known. In that event, the following shall apply:

                  (a) Payment  shall be made or commence as soon as  practicable
            after the Benefit  Starting Date, and in any event within sixty (60)
            days after application is made or the amount becomes known.

                  (b) Back  installments from the Benefit Starting Date shall be
            paid in a lump sum with the  first  payment  or  amortized  over the
            benefit period as directed by the Committee.

      6.09  Form of Retirement Benefit.09 Form of Retirement Benefit

            6.09-1 The basic benefit on normal,  early or deferred retirement is
based on equal  payments for each month from the Benefit  Starting  Date through
the month in which the participant dies.

            6.09-2 A participant shall elect the actual  form of  distribution
from those in 6.09-3 as follows:

                  (a)  Regardless of form, the value of the benefit shall be the
            actuarial equivalent of the basic benefit.

                  (b) The  election  shall be made and any  joint or  contingent
            annuitant named in the application under 6.07.

                  (c) If the contingent  annuitant dies before the participant's
            Benefit Starting Date after retirement or termination of employment,
            the election shall be void.

                  (d) If a participant  is married at the Benefit  Starting Date
            and no valid election is in effect, the benefit shall be paid in the
            form stated in 6.09-3(b) with the spouse as contingent annuitant.

                  (e) An election by a married  participant of a form other than
            a contingent  annuity under 6.09-3(b) with the participant's  spouse
            shall not be effective unless either of the following applies:

                        (1) The spouse executes,  within ninety (90) days before
                  the  Benefit   Starting   Date,  a  consent  in  writing  that
                  acknowledges  the particular form of benefit,  the name of any
                  contingent annuitant or other non-spouse death beneficiary and
                  the effect of the  designation  and is  witnessed  by a notary
                  public or Plan representative.

                        (2) The consent  cannot be  obtained  because the spouse
                  cannot be located or because of other  circumstances  provided
                  by applicable regulations.

                  (f) A  determination  in good faith by the Committee  that (e)
            has been  complied  with shall be final and binding if the Committee
            has exercised proper fiduciary care in making the determination.

                  (g) If (d)  does not  apply,  the  form in the  absence  of an
            election shall be that stated in 6.09-3(a).

                  (h) The Committee  shall pay the  actuarial  equivalent of the
            participant's  benefit in a lump sum if the distributable amount has
            never been over $3,500 (for Plan Years  beginning  after 1998,  this
            amount shall be $5,000).

            6.09-3  Subject to 6.10, the forms of benefit shall be the
following:

                  (a) Straight life annuity.

                  (b) Life annuity with half payments  continued to a contingent
            annuitant.

                  (c) Life annuity with full payments  continued to a contingent
            annuitant.

                  (d) On early  retirement,  an annuity  under which the monthly
            payments before first  eligibility  for Social  Security  retirement
            benefits (assumed to be age 62 and 1/2) are increased by a temporary
            supplement  and the remaining  payments are reduced so as to provide
            approximately  equal payments  throughout  when combined with Social
            Security.

                  (e) Annuity for the life of the  participant,  continuing to a
            designated  beneficiary  for the  remainder of the first 120 monthly
            payments in the event the participant  dies before 120 payments have
            been made.

            6.09-4 The  Committee  shall  direct the  Trustee to pay the benefit
directly  from the trust fund or to  purchase a single  premium  nontransferable
annuity in a form and from an insurance company approved by the Committee.

            6.09-5 An eligible  recipient of an eligible  rollover  distribution
under 6.09-2(h) or 7.03 may elect before the benefit is paid to have the benefit
distributed by a direct rollover into an eligible retirement plan or IRA and the
following shall apply:

                  (a) The participant must identify the eligible retirement plan
            or IRA and the fund  holder  to whom the  direct  rollover  shall be
            paid.

                  (b)   "Eligible   retirement   plan"  is  defined  in  Section
            402(c)(8)(B) of the Internal Revenue Code.

                  (c)  "Eligible  rollover  distribution"  is defined in Section
            402(c)(4) of the Internal Revenue Code.

                  (d) "Eligible recipient" means the participant,  the spouse of
            a  deceased  participant  or a spouse  or  former  spouse  who is an
            alternate payee under a qualified domestic relations order.

      6.10  Limits on Time and Form of Payout

            6.10-1  Payment of benefits to a participant shall comply with the
following restrictions:

                  (a)  Payment shall begin no later than the April 1 following
            the calendar year in which the participant attains age 70 1/2.

                  (b)  Payment  shall be made over a period  no longer  than the
            lives or joint life expectancy of the participant and any designated
            beneficiary.

                  (c) If the  designated  beneficiary  is not the  spouse and is
            more than ten years younger than the  participant,  the benefit form
            shall  be  limited  so that  the  benefit  payable  after  death  is
            incidental  to the Plan's  primary  purpose of providing  retirement
            benefits.

            6.10-2 Payment of preretirement death benefits shall comply with the
following restrictions:

                  (a)  Payment  may be made  over a period  no  longer  than the
            spouse's life or life expectancy.

                  (b) Payment  may be  deferred  up to the date the  participant
            would have attained age 70 1/2.

                  (c) If the  beneficiary  is not a natural  person,  the entire
            benefit shall be paid within five years after death.

            6.10-3 The  restrictions of 6.10-1 and 6.10-2 shall be complied with
by distributions in accordance with Treasury  Regulations Section  1.401(a)(9)-1
and Section 1.401(a)(9)-2,  which shall override any distribution options in the
Plan inconsistent with Internal Revenue Code Section 401(a)(9).

            6.10-4 Payments to restricted employees shall be limited as follows:

                  (a) Benefit payments to a restricted employee shall not exceed
            the  periodic  amounts  payable  under a single life annuity that is
            actuarially equivalent to the employee's entire benefit.

                  (b) The limit in (a) shall not apply if either of the
            following is true:

                        (1) Immediately  after a payment  of a  benefit  to the
                  restricted  employee Plan assets equal at least 110 percent of
                  current liabilities.

                        (2) The value of the benefits  payable to the restricted
                  employee is less than one percent of current liabilities.

                  (c) "Benefits" means the accrued benefit and other benefits to
            which the restricted employee is entitled under the Plan, other than
            a social security supplement.

                  (d)  "Restricted  employee"  means a current or former  highly
            compensated  employee  with  benefits  under the Plan  whose  annual
            compensation  in the  current  or any prior  plan year is one of the
            twenty five (25) highest of such employees.

                  (e) Benefits may be paid to a restricted employee in excess of
            the limit in (a) if the  employee  agrees to repay the  excess  upon
            termination of the Plan and provides  security for such repayment in
            accordance with rulings of the Internal Revenue Service.

      6.11  Death Benefit for Spouse

            6.11-1 A benefit shall be payable to a surviving spouse on the death
of a participant if all of the following conditions are met:

                  (a) The death occurs before the Benefit Starting Date.

                  (b) The participant is legally married to the surviving spouse
            at death and was for the preceding year.

                  (c) The participant has five or more Years of Service.

            6.11-2  The spouse's benefit shall be paid as follows:

                  (a) The benefit  shall be the amount  payable to the spouse as
            contingent  annuitant  under  6.09-3(b)  determined  as  though  the
            participant had retired on the first day of the month in which death
            occurs if at death the participant is:

                        (1) Age 55 or over; or

                        (2) Actively employed by Employer and has thirty (30) or
                  more Years of Service.

                  (b) On the death of a  participant  with  thirty  (30) or more
            Years of Service before age 55, the participant  shall be assumed to
            be age 55 in determining the amount payable under (a).

                  (c) The  benefit in the case of a  participant  not covered by
            (a)  shall  be the  amount  payable  to  the  spouse  as  contingent
            annuitant under  6.09-3(b)  determined as though the participant had
            separated  from  service  on the  date  of  death,  if  not  already
            separated, and had survived until retirement at age 55.

                  (d) A benefit  determined  under (a) shall  start on the first
            day of the month after  death,  and a benefit  determined  under (c)
            shall  start on the first  day of the  month  after the later of the
            following:

                        (1) The date of death.

                        (2) The date the participant would have reached age 55.

                  (e) If the participant had elected a retirement benefit in the
            contingent  annuity form  described  in 6.09-3(c)  within the ninety
            (90) days before the  participant's  Benefit  Starting Date and dies
            with such election in effect,  the amounts under (a) or (c) shall be
            based on that form.

            6.11-3 The spouse may elect an actuarially equivalent benefit
starting at a later date. Such an election must comply with the restrictions in
6.10-2.

            6.11-4  The Committee shall pay the actuarial equivalent of the
spouse's death benefit in a lump sum if either of the following applies:

                  (a) The distributable amount is not over $3,500 (for Plan
            Years beginning after 1998, this amount shall be $5,000).

                  (b) The amount is not over  $10,000 at the date of payment and
            the spouse requests a lump sum.

            6.11-5 No  benefit  shall be payable if a  participant  dies  before
retirement unless 6.11-1 applies.

      6.12  Disability

            6.12-1 A  participant  who becomes  disabled  while  employed  shall
continue to accrue Service as follows:

                  (a) A participant who meets the criteria of 6.12-2(a) shall be
            on leave of absence under 3.04 and accrue Hours of Service.

                  (b) A participant who has ten (10) or more Years of Service
            when disability  arises and meets the criteria of both 6.12-2(a) and
            (b) shall also accrue Benefit Hours.

                  (c) Accrual of Service shall continue under (a) and (b) as
            long as the relevant criteria for disability are met.

                  (d) If the participant fails to return promptly after recovery
            and within any time limit fixed by  Employer,  unless the failure is
            due to death or retirement, accrual of Service shall stop as of the
            later of the following:

                        (1) The date the leave of absence for disability began.

                        (2) The date when 501 Hours have been counted since the
                  participant last worked.

            6.12-2 The Committee shall determine the existence of disability
under the criteria for both of the following:

                  (a) Long-term disability insurance maintained by Employer.

                  (b) Social Security disability benefits.

            6.12-3 A disabled  participant shall be retired at normal retirement
date and may retire at early  retirement  date if  eligible.  Benefits  shall be
determined on the basis of Benefit Years and Final Average Pay at retirement and
Social Security Covered Compensation at disability.

            6.12-4 If the participant notifies the Committee in writing that
benefits  after  disability  would  reduce  any other  disability  benefit,  the
Committee shall defer payments until the other benefit stops, subject to 6.10-1.

      6.13  Reemployment After Retirement

            6.13-1 Benefit payments to a retired  participant  shall be withheld
when the participant has been rehired by Employer as a qualified employee and is
expected to be reemployed for more that six (6) months.

            6.13-2 A participant  whose benefits have been withheld under 6.13-1
shall receive benefits on a later retirement determined as follows:

                  (a) The  participant  shall apply for benefits  under 6.07 and
            select a form of benefit under 6.09 for the benefits attributable to
            Service after rehire.  The benefits  attributable  to Service before
            rehire shall be in the form that applied  during the prior period of
            retirement.

                  (b) On later retirement,  the  participant's  benefit shall be
            calculated  based on all Service and then  reduced by the  actuarial
            value of benefits previously received. The monthly benefit shall not
            be less than that paid on the earlier retirement.

                  (c)  If  a  participant  who  retired  and  received  enhanced
            benefits under a voluntary  retirement incentive program is rehired,
            the benefit  calculated  under (b) shall be reduced by the  enhanced
            benefits  previously  received and shall not be less than the amount
            payable on the earlier  retirement under the incentive  program.  If
            the incentive  program  includes a Social  Security  bridge benefit,
            that  benefit  shall  resume  at  later  retirement  for any  period
            remaining before earliest Social Security retirement age.

            6.13-3 A participant  whose benefits are first withheld after normal
retirement date shall receive the notification required by 6.04-2.

            6.13-4  A  retired  participant  who is  rehired  and  does not have
benefit payments  withheld under 6.13-1 shall not accrue any additional  benefit
for the period of rehire.

                             ARTICLE VIIARTICLE VII

Benefits After Termination of EmploymentBenefits After Termination of Employment

      7.01  Vesting of Benefits

            7.01-1 A participant who terminates  employment before retirement or
death and does not later accrue  additional  Service  shall be entitled  only to
vested accrued benefits at the time of termination.

            7.01-2 A participant  shall be vested in accrued  benefits  based on
Years of Service as follows:

                        Years of Service         Percent Vested

                           Less than 5                 0

                            5 or more                 100%

      7.02  Accrued Benefit; Payment.02   Accrued Benefit; Payment

            7.02-1 A participant's  accrued benefit on termination of employment
shall be the normal retirement basic benefit under 6.02 based on Service,  Final
Average Pay and Social Security Covered Compensation at termination.

            7.02-2 Benefits for a vested terminated  participant  normally shall
start on the first day of the month after  normal  retirement  age. A terminated
participant may elect to start receiving a benefit on the first day of any month
after age 55. The  benefit  payable on such an early  start shall be the accrued
benefit,  reduced  to the  Benefit  Starting  Date  under the  following  table,
interpolating between ages through the last full month.

                        Age at Benefit             Benefit
                        Starting Date             Percentage

                              64                      88%
                              63                      78%
                              62                      68%
                              61                      61%
                              60                      54%
                              59                      48%
                              58                      43%
                              57                      38%
                              56                      34%
                              55                      30%

            7.02-3 A vested  terminated  participant  entitled to benefits  must
apply for  benefits  and elect a  distribution  option not more than ninety (90)
days nor less than thirty (30) days before benefits are to start. If application
is filed after normal retirement date, back payments shall be paid in a lump sum
with the first payment or amortized  over the benefit  period as directed by the
Committee.

      7.03  Cash Settlement

            7.03-1 The Committee shall pay a participant  whose  employment with
the Company and its affiliates has terminated the actuarial value of the vested,
accrued  benefit in cash  before the  Benefit  Starting  Date,  if either of the
following applies:

                  (a) The distributable amount is not over $3,500 (for Plan
            Years beginning after 1998, this amount shall be $5,000).

                  (b) The amount is not over $10,000 at the date of payment, the
            participant  requests a cash  settlement  and  6.09-2(e) and (f) are
            satisfied with respect to the participant's spouse, if any.

            7.03-2 If the actuarial value of the vested, accrued benefit is over
$3,500 (for Plan Years beginning  after 1998, this amount shall be $5,000),  but
not over  $10,000,  the  participant  may elect to  receive  in lieu of the cash
settlement:

                  (a) A straight life annuity if the participant is unmarried.

                  (b) A life annuity with half payments  continued to the spouse
            if the participant is married.

            7.03-3 If a cash  settlement  is made under  7.03-1 or an annuity is
elected under 7.03-2,  Benefit Years before the settlement  shall be disregarded
for determining the participant's benefit at a later time.

      7.04  Forfeiture of Nonvested Retirement Benefits

            7.04-1 A participant whose employment terminates before being vested
under 7.01 and who does not become vested because of later Service shall forfeit
all accrued benefits. A nonvested, terminated participant shall be considered to
have received a full  distribution  of the zero vested  balance when  employment
terminates. The forfeiture shall occur as of the earlier of the following:

                  (a) The date the participant receives or is considered to have
            received a cash settlement under 7.03.

                  (b)  The  date  the  participant  completes  five  consecutive
            One-Year Breaks in Service.

            7.04-2  Forfeiture of benefits shall be taken into  consideration in
establishing the funding policy under 5.01.

            7.04-3 A participant  whose benefit has been forfeited  under 7.04-1
shall have the forfeited benefit restored only when one of the following occurs:

                  (a) The  participant  completes  a Year of  Service  after the
            forfeiture  and before having five  consecutive  One-Year  Breaks in
            Service.

                  (b) The participant  returns to employment with Employer or an
            affiliate before having a One-Year Break in Service.

                                  ARTICLE VIII

                        Medical BenefitsMedical Benefits

      8.01  Eligibility

            8.01-1  Medical  benefits  under this Article shall be provided to a
participant, or the dependents of a participant, who:

                  (a) Has terminated  employment,  commenced  receiving  pension
            benefits on early, normal or deferred retirement,  and qualifies for
            post-retirement  medical  benefits under the Pacific  Telecom,  Inc.
            Welfare Benefits Plan or successor thereto.

                  (b) Retires  and  commences  benefits  on or after  January 1,
            1998.

                  (c) Is not covered by a  collective  bargaining  agreement  at
            retirement.

                  (d) Has never  been a "key  employee"  as  defined  in Section
            416(i) of the Internal Revenue Code.

            8.01-2 The term  "benefits"  used alone in this Plan shall  refer to
pension  benefits  under Article VI and Article VII and not to medical  benefits
provided under this Article.

      8.02  Medical Benefits

            8.02-1 The medical benefits provided under this Plan to participants
eligible  under  8.01 shall be all  medical  benefits,  as  defined in  Internal
Revenue Code Section  213(d)(1),  provided to such participants after retirement
under the Pacific Telecom,  Inc. Welfare Benefits Plan or successor thereto. The
provisions of such Welfare  Benefits Plan can limit medical  benefits to retired
participants who meet further eligibility requirements.  Any medical benefits to
which retired  participants  are entitled under such Welfare  Benefits Plan that
are not provided under this Plan due to  insufficiency  of funding or otherwise,
shall be paid from a welfare benefits trust  established by the Company for that
purpose or from Employer's general assets.

            8.02-2 The document  evidencing the Pacific  Telecom,  Inc.  Welfare
Benefits  Plan or successor  thereto,  including  all of the separate  documents
incorporated  into it, is  incorporated  by reference as part of this Plan. This
incorporation  by reference  shall include any amendments made from time to time
to the Pacific Telecom, Inc. Welfare Benefits Plan and any successor plan.

      8.03 Separate Medical Benefits Account



8.03-1 Subject to 8.04, each Employer may make contributions to fund the medical benefits provided in 8.02 for its employees. A separate account shall be maintained for all such contributions, and earnings on them. Medical benefits for participants shall be paid only from such account. 8.03-2 Investment earnings and losses of the trust fund shall be allocated to the accounts in 8.03-1 in proportion to the investment earnings and losses of the entire trust. 8.04 Limitation on Contributions The aggregate actual contributions (measured from January 1, 1989) to fund medical benefits shall not exceed twenty five (25) percent of the total actual contributions (measured from January 1, 1989) to the Plan, disregarding in such total any contributions to fund past service credits. 8.05 Satisfaction of Liabilities 8.05-1 Unless all obligations under 8.02 have been satisfied, no part of the medical benefits account shall be used for any purpose other than payment of either of the following: (a) Medical benefits. (b) Necessary or appropriate expenses attributable to the administration of the medical benefits account. 8.05-2 Following satisfaction of the obligations under 8.02, any amounts remaining in the medical benefits account shall be returned to the Employers on an equitable basis as determined by the Committee. 8.06 Forfeiture of Benefits If a person's interest in the medical benefits account is forfeited prior to termination of the Plan, the amount forfeited shall be applied as soon as possible to reduce Employer's contributions to fund medical benefits. ARTICLE IX Amendment and TerminationAmendment and Termination 9.01 Amendment 9.01-1 The Company may amend this Plan at any time except that no amendment shall revest any of the trust fund in an Employer or otherwise modify the Plan so that it would not be for the exclusive benefit of the eligible employees. 9.01-2 Amendments may be made retroactively to the extent permitted by applicable law and regulations. 9.02 Termination 9.02-1 The Company may wholly or partly terminate the Plan at any time. In that event, the rights of all affected participants to the benefits then accrued and funded shall fully vest and be nonforfeitable. The Company shall promptly file notice of termination with the Pension Benefit Guaranty Corporation and may request a ruling from the Internal Revenue Service on the effect of termination on the qualification of the trust. 9.02-2 Upon termination, the Company may continue the Plan to pay pension benefits and medical benefits as they mature or liquidate and distribute the trust fund. In any event, the available funds shall be allocated by the Committee as provided below. The time and method of payment shall be determined by the Committee. Pension benefits and medical benefits already distributed in cash or by purchase and delivery of an annuity contract shall not be affected. 9.02-3 On Plan termination the benefit of any current or former highly compensated employee shall be limited to a benefit that is non- discriminatory under Section 401(a)(4) of the Internal Revenue Code. 9.03 Treatment of Employers 9.03-1 All employees of all Employers, including the Company, shall be treated as though employed by one Employer for purposes of determining total or partial termination. For this purpose, this Plan shall be treated as one plan and not as a collection of separate plans of the Employers. If some or all of the employees of an Employer terminate employment, this shall be viewed in the context of the whole Plan to determine whether there has been a partial termination or curtailment and whether accelerated vesting is required. 9.03-2 An Employer may be excluded from the Plan with respect to its employees at any time by the Company. Such exclusion shall not constitute a termination or partial termination of the Plan. Employees of the excluded affiliate shall be treated as having terminated employment if the affiliate ceases to maintain its affiliated status. Unless the Internal Revenue Service rules that the exclusion constitutes a partial termination of the Plan, the rights of employees of the excluded affiliate shall not become fully vested and nonforfeitable as a result of the exclusion. If the excluded affiliate retains its affiliated status with the Company, its employees shall continue to accrue Service for the purposes of vesting and eligibility, but shall not accrue Benefit Years after the effective date of the exclusion. 9.04 Allocation of Assets on Termination 9.04-1 In the event of Plan termination, the benefit of any current or former highly compensated employee shall be limited to a benefit that is nondiscriminatory under Internal Revenue Code Section 401(a)(4). 9.04-2 Amounts allocated to the medical benefits accounts shall be used to pay medical benefits in 8.02. If all obligations to pay medical benefits are satisfied, amounts remaining in the medical benefits accounts shall be returned to Employers under 8.05-2. All amounts in the trust fund other than amounts in the medical benefits accounts shall be allocated in the order set out below based on actuarial valuation of accrued retirement benefits as of the date of termination using nondiscriminatory formulas established by the Committee. All benefits for each group shall be paid or provided for before any benefits are paid for any members of the group having the next lower priority. If the funds are insufficient to pay all of the benefits for any group, the amount available shall be allocated among the members of the group in proportion to their interests. 9.04-3 The order of priority determined as of the day before termination shall be as follows: (a) Benefits that had been in pay status for three years or more or could have been in pay status for three years if the participant had retired on the earliest opportunity and received the normal form of benefit. Allocation shall be based on the lowest benefit provided by Plan provisions in effect within the last five years. (b) Other benefits guaranteed under the Employee Retirement Income Security Act of 1974, disregarding Sections 4022(b)(5) and (6), including benefits not covered by (a) because of the exclusion of benefit increases within five years. (c) All other vested accrued benefits not covered by (b). (d) All other accrued benefits. 9.05 Merger If this Plan is merged or consolidated with or the assets or liabilities are transferred to any other plan or trust, the benefit that each participant would receive if the Plan terminated just afterwards shall be at least as much as if it terminated just before. ARTICLE X General Provisions 10.01 Information for Committee 10.01-1 The Committee may accept as correct and rely on any information furnished by the Company or an Employer. The Committee may not demand an audit, investigation or disclosure of the records of the Company or any Employer. 10.01-2 The Committee may require satisfactory proof of data from a participant, spouse, joint or contingent annuitant or beneficiary. The Committee may adjust any retirement benefit if an error in relevant data is discovered. 10.02 Indemnity and Bonding 10.02-1 The Company shall indemnify and defend any Plan fiduciary who is an officer, director or employee of an Employer from any claim or liability that arises from any action or inaction in connection with the Plan, subject to the following rules: (a) Coverage shall be limited to actions taken in good faith that the fiduciary reasonably believed were not opposed to the best interests of the Plan. (b) Negligence by the fiduciary shall be covered to the fullest extent permitted by law. (c) Coverage shall be reduced to the extent of any insurance coverage. 10.02-2 Plan fiduciaries shall be bonded to the extent required by applicable law for the protection of Plan assets. 10.03 Applicable Law This Plan shall be construed according to the laws of Louisiana except as preempted by federal law. 10.04 Plan Binding on All Parties This Plan shall be binding upon the heirs, personal representatives, successors and assigns of all present and future parties. 10.05 Not Contract of Employment This Plan shall not be a contract of employment between any Employer and any employee, and no employee may object to amendment or termination of the Plan. The Plan shall not prevent an Employer from discharging any employee at any time. 10.06 Notices Except as otherwise required or permitted under other provisions of this Plan or under applicable law, any notice under this Plan shall be in writing and shall be effective when actually delivered or, if mailed, when deposited postpaid as first-class mail. Mail shall be directed to the address stated in this Plan for the Company or in the statement of adoption of another Employer, or to such other address as a party may specify by notice to the other parties. Notices shall be sent to the Committee at the Company's address. 10.07 Benefits Not Assignable; Qualified Domestic Relations Order 10.07-1 This Plan is for the personal protection of the participants. No vested or unvested interest of any participant or beneficiary may be assigned, seized by legal process, transferred or subjected to the claims of creditors in any way, except as provided in 10.07-2. 10.07-2 Benefits may be paid in accordance with a qualified domestic relations order under procedures established by the Committee pursuant to Section 414(p) of the Internal Revenue Code. 10.08 Designation of Beneficiary 10.08-1 Each participant shall on request file with the Committee a designation of beneficiaries and may change it from time to time. The designated beneficiaries or other recipient described below shall receive any residual benefit after death of a participant if no other person is entitled to it as a contingent annuitant or spouse or in any other capacity. 10.08-2 If a beneficiary dies after the death of a participant but before distribution to the beneficiary, the benefit to which the beneficiary was entitled shall be paid to the estate of the deceased beneficiary. 10.08-3 If no beneficiary has been named or no named beneficiary is living when the participant dies, the benefit shall be paid in the following order of priority: (a) The participant's surviving spouse. (b) The participant's surviving children in equal shares. (c) The participant's estate. 10.09 Actuarial Equivalency 10.09-1 Actuarial equivalency and other actuarial valuations and adjustments shall be determined by the enrolled actuary retained for the Plan based on the following: (a) For determinations of cash amounts, interest shall be the annual rate of interest on 30-year Treasury Securities for the September preceding the year in which the cash amount is paid and mortality shall be as provided in the mortality table prescribed by the Commissioner of Internal Revenue under Section 417(e)(3)(A)(ii) (I) of the Internal Revenue Code. (b) If (a) does not apply, interest shall be eight (8) percent per annum and mortality shall be as provided in the UP-1984 Mortality Table. (c) For valuing benefits accrued on or before December 31, 1987, the Consumer Price Index shall be assumed to increase at least two (2) percent per annum. 10.09-2 If the actuarial factors for determining equivalent benefits are changed by Plan amendment, the benefit actually paid in any form shall not be less than the amount determined for the same form by applying the prior factors to the participant's accrued benefit as of the date the change is adopted or is effective, whichever is later. 10.10 Nonreversion of Assets 10.10-1 Subject to the following paragraphs, no part of the contributions or the principal or income of this Plan shall be paid to or revested in an Employer or to be used other than for the exclusive benefit of the participants and their beneficiaries. 10.10-2 A contribution may be returned to Employer to the extent that: (a) The contribution was made by mistake of fact. (b) A deduction for the contribution under 5.02-4 is disallowed. 10.10-3 Return of contributions under 10.10-2(a) and (b) shall be subject to the following: (a) Any return must occur within one year of the mistaken payment or disallowance of the deduction. (b) The returnable amount shall be reduced by any losses attributable to the contribution. 10.10-4 If after all fixed and contingent liabilities or obligations to persons entitled to benefits under the Plan shall have been paid or provided for in full any Plan assets remain because of erroneous actuarial computation, such assets shall revert to the Employers. Such a reversion shall not take place sooner than the earliest date as of which a reversion of assets would be permitted by law. 10.11 Enhanced Early Retirement Programs The 1991 Enhanced Early Retirement Program for Cencom Employees, attached hereto as Appendix A, the 1991 Enhanced Early Retirement Program for Alascom Employees, attached hereto as Appendix B, and the 1992 Enhanced Early Retirement Program, attached hereto as Appendix C, are incorporated in this Plan and made a part hereof. ARTICLE XI Special Top-Heavy Plan Rules 11.01 Application of Rules If the Plan becomes top-heavy, the rules in this Article shall apply and shall control over any other provisions with which they conflict. 11.02 Determination of Top-Heavy Status 11.02-1 The Plan shall be top-heavy for a Plan Year if, as of the determination date, the Plan's top-heavy percentage for the year exceeds sixty (60) percent. The top-heavy percentage is the present value of accrued benefits of all key employees as a percentage of the present value of accrued benefits of all key and non-key employees other than former key employees. Individuals who have not received any compensation from Employer during the five Plan Years ending on the determination date shall not be taken into account. 11.02-3 The following plans of Employers and affiliates shall be considered as one plan for determining top-heaviness: (a) Any plan in which a key employee participates. (b) Any plan that must be considered in order for a plan in (a) to meet the minimum coverage requirements for qualification under Internal Revenue Code Sections 401(a)(4) and 410. 11.02-4 "Key employee" and "non-key employee" are defined in Section 416(i) of the Internal Revenue Code. 11.02-5 For purposes of 11.02-1, the present value of a participant's accrued benefit shall be determined as follows: (a) The participant shall be regarded as terminating service with 100 percent vesting on the valuation date described in (d). (b) The benefit to be valued shall be that payable as of the first Benefit Starting Date after normal retirement date. (c) Rollovers and transfers shall be included or excluded as provided in 11.02-6 and 11.02-7. (d) The benefit shall be valued as of the most recent Plan funding valuation date falling within the Plan Year in which the determination date falls. The valuation shall be based on the Plan's assumptions for determining equivalency of benefits except that the interest rate shall be five (5) percent. 11.02-6 xcept as provided below, distributions and transfers made within the Plan Year ending on the determination date or the four preceding Plan Years shall be added back to the present value of accrued benefits as of the determination date, unless already counted. The value of a distributed annuity contract is its actuarial value as of the date of distribution. A transfer out of this Plan, or distribution that is rolled over, shall not be added back if either of the following applies: (a) It goes to a plan maintained by an Employer or an affiliate. (b) It is not initiated by the employee. 11.02-7 A rollover or transfer accepted into this Plan before 1984 shall be included in the present value of accrued benefits. A rollover or transfer accepted after 1983 shall be included only if either of the following applies: (a) It goes to a plan maintained by an Employer or an affiliate. (b) It is not initiated by the employee. 11.03 Top-Heavy Plan Restrictions 11.03-1 The following provisions shall apply, effective the first day of the first Plan Year for which the Plan is top-heavy, and shall continue in effect even if the Plan ceases to be top-heavy. 11.03-2 All benefits attributable to Employer contributions shall be 100 percent vested if the participant satisfies both of the following conditions: (a) Has at least three Years of Service. (b) Has an Hour of Service during a Plan Year for which the Plan is top-heavy. 11.03-3 The minimum benefit attributable to Employer contributions shall be the following: (a) The participant's average W-2 compensation from Employer during the five consecutive Years of Service of highest aggregate compensation, time (b) The lesser of the following: (1) 2 percent of each Benefit Year. (2) 20 percent. 11.03-4 Years of Service under 11.03-3 do not include the following: (a) Plan Years for which the Plan is not top-heavy. (b) Years of Service completed in a Plan Year beginning before 1984. 11.03-5 The minimum benefit under 11.03-3 shall be a single life annuity with no ancillary benefits, commencing at the normal retirement Benefit Starting Date. The minimum benefit shall be actuarially decreased if the actual Benefit Starting Date is earlier than the normal retirement Benefit Starting Date and actuarially increased if later. 11.03-3 The limitation in 6.06-7(d) shall be determined using 1.0 in place of 1.25. IN WITNESS WHEREOF, Century Telephone Enterprises, Inc. has executed this Plan this 31st day of December, 1998. ATTEST: CENTURY TELEPHONE ENTERPRISES, INC. /s/ Linda B. Vaughn By: /s/ R. Stewart Ewing, Jr. --------------------- ----------------------------------- APPENDIX A TO CENTURYTEL RETIREMENT PLAN 1991 ENHANCED EARLY RETIREMENT PROGRAM FOR CENCOM EMPLOYEES Enhanced early retirement benefits shall be paid from the CenturyTel Retirement Plan (the Plan) to eligible participants under the 1991 Enhanced Early Retirement Program for Cencom Employees (the Program) who terminate employment within the prescribed period, as provided below. Terms used in this Appendix and not defined in it shall have the same meaning as the Plan document. 1. Eligibility ----------- 1.1 Conditions. Benefits under the Program shall be available to all individuals who are not excluded by 1.2 and satisfy the following conditions: (a) Are employed by Cencom Inc. or Cencom of Wisconsin, Inc. or have retired from such employment since January 1, 1991. (b) Attained age fifty (50) on or before December 31, 1991. (c) Have five (5) or more Benefit Years by December 1, 1991. 1.2 Excluded Employees. An employee is excluded from participation in the Program if the employee was previously retired under the Plan, was rehired and continues to receive benefits based on the previous retirement. 1.3 Election to Participate. An individual who meets the conditions in 1.1 may elect to participate in the Program by giving written notice on a form prescribed by the Committee. To be effective, such form must be received by the Committee no later than the first of the month following notification of election. An individual who does not give such notice or who terminates employment before the date fixed under 1.4 shall not receive the enhanced benefits of the Program. 1.4 Retirement Date. November 1, 1991 is the estimated retirement date for each eligible employee who has elected to participate in the Program under 1.3 unless the Employer fixes a different date by notice to the employee. A different retirement date shall be no later than December 31, 1991. An eligible individual who has retired before the first general announcement of the Program shall be treated as having retired on the date fixed by the Employer. 1.5 Other Termination Payments. The enhanced benefits provided under the Program shall be in lieu of any severance, unemployment compensation or other payments to which an individual is entitled as a result of termination of employment. An election to participate in the Program by an individual who is entitled to receive any such payments shall be a waiver of the payment 2. Benefit Enhancement. -------------------- A participant in the Program shall receive enhanced early retirement benefits from the Plan as provided below. Any enhancement that would exceed the maximum benefit limits imposed by law shall be paid by the Employer outside the Plan. 2.1 Commencement Before Age 55. A participant in the Program who is under age 55 shall commence receiving early retirement benefits under the Plan upon termination of employment as though the participant were age 55 or over. 2.2 Benefit Formula. A participant in the Program shall have a normal retirement basic benefit equal to Benefit Years (BY) times 1.8 percent of Final Average Pay (FAP) as follows: BY x 1.8% x FAP For the purpose of this Program, Final Average Pay shall be the participant's Final Average Pay at December 31, 1990. 2.3 Five Additional Benefit Years. A participant in the program shall have a normal retirement basic benefit calculated with the addition of five (5) more Benefit Years than the number of Benefit Years otherwise credited under the terms of the Plan. 2.4 Early Retirement Reduction. A participant in the program shall receive the amount payable at normal retirement with no reduction for early retirement to age 62; reduced three (3) percent per year for early retirement before age 62. 2.5 Social Security Bridge. A participant in the Program shall be paid an additional monthly benefit from the Plan equal to fifteen (15) percent of the participant's monthly salary rate at the time of retirement, but no more than $1,000 per month. The additional monthly benefit shall commence along with the regular retirement benefit and shall be paid on the same monthly schedule. The additional benefit shall terminate with the month prior to the first month for which the participant is eligible to receive a Social Security retirement benefit, or the month of the participant's death, if earlier. 3. Death of Participant. -------------------- The surviving spouse of an eligible individual who has elected to participate in the Program and who dies before the Benefit Starting Date shall have a pre-retirement death benefit calculated without regard to the enhancements provided by the Program. On a participant's death after the Benefit Starting Date, death benefits shall be paid only in accordance with the form of benefit elected by the participant. APPENDIX B TO CENTURYTEL RETIREMENT PLAN 1991 ENHANCED EARLY RETIREMENT PROGRAM FOR ALASCOM EMPLOYEES Enhanced early retirement benefits shall be paid from the CenturyTel Retirement Plan (the Plan) to eligible participants under the 1991 Enhanced Early Retirement Program for Alascom Employees including Alascom engineering department employees located in Vancouver, Washington (the Program) who terminate employment within the prescribed period, as provided below. Terms used in this Appendix and not defined in it shall have the same meaning as the Plan document. 1. Eligibility ----------- 1.1 Conditions. Benefits under the Program shall be available to all individuals who are not excluded by 1.2 and satisfy the following conditions: (a) Are employed by Alascom, Inc. or have retired from such employment since January 1, 1991. (b) The employer shall fix the age of eligible employees by notice to employees. The attained age as of December 31, 1991 shall be the age for eligibility purposes. The employer shall not fix an eligibility age of less than fifty (50) years as of December 31, 1991. 1.2 Excluded Employees. An employee is excluded from participation in the Program if the employee was previously retired under the Plan, was rehired and continues to receive benefits based on the previous retirement. 1.3 Election to Participate. An individual who meets the conditions in 1.1 may elect to participate in the Program by giving written notice on a form prescribed by the Committee. To be effective, such form must be received by the Committee no later than December 27, 1991. An individual who does not give such notice or who terminates employment before the date fixed under 1.4 shall not receive the enhanced benefits of the Program. 1.4 Retirement Date. December 1, 1991 is the estimated retirement date for each eligible employee who has elected to participate in the Program under 1.3 unless the Employer fixes a different date by notice to the employee. A different retirement date shall be no later than December 31, 1991. An eligible individual who has retired before the first general announcement of the Program shall be treated as having retired on the date fixed by the Employer. 1.5 Other Termination Payments. The enhanced benefits provided under the Program shall be in lieu of any severance, unemployment compensation or other payments to which an individual is entitled as a result of termination of employment. An election to participate in the Program by an individual who is entitled to receive any such payments shall be a waiver of the payment 2. Benefit Enhancement ------------------- A participant in the Program shall receive enhanced early retirement benefits from the Plan as provided below. Any enhancement that would exceed the maximum benefit limits imposed by law shall be paid by the Employer outside the Plan. 2.1 Commencement. Before Age 55. A participant in the Program who is under age 55 shall commence receiving early retirement benefits under the Plan upon termination of employment as though the participant were age 55 or over. 2.2 Benefit Formula. A participant in the Program shall have a normal retirement basic benefit equal to Benefit Years (BY) times 1.8 percent of Final Average Pay (FAP) as follows: BY x 1.8% x FAP For the purpose of this Program, Final Average Pay shall be the participant's Final Average Pay at December 31, 1990. 2.3 Five Additional Benefit Years. A participant in the program shall have a normal retirement basic benefit calculated with the addition of five (5) more Benefit Years than the number of Benefit Years otherwise credited under the terms of the Plan. 2.4 Early Retirement Reduction. A participant in the program shall receive the amount payable at normal retirement with no reduction for early retirement to age 62; reduced three (3) percent per year for early retirement before age 62. 2.5 Social Security Bridge. A participant in the Program shall be paid an additional monthly benefit from the Plan equal to fifteen (15) percent of the participant's base pay as of September 1, 1991; the Social Security Bridge shall not be less than $400 per month or greater than $1,000 pre month. The additional monthly benefit shall commence along with the regular retirement benefit and shall be paid on the same monthly schedule. The additional benefit shall terminate with the month prior toe the first month for which the participant is eligible to receive a Social Security retirement benefit, or the month of the participant's death, if earlier. The Social Security level income option in 6.09-3(d) of the Retirement Plan is not available to participants who elect enhanced early retirement benefits because the Social Security Bridge Benefit is provided in lieu of this option. 3. Death of Participant. -------------------- The surviving spouse of an eligible individual who has elected to participate in the Program and who dies before the Benefit Starting Date shall have a pre-retirement death benefit calculated without regard to the enhancements provided by the Program. On a participant's death after the Benefit Starting Date, death benefits shall be paid only in accordance with the form of benefit elected by the participant. APPENDIX C TO CENTURYTEL RETIREMENT PLAN 1992 ENHANCED EARLY RETIREMENT PROGRAM Enhanced early retirement benefits shall be paid from the CenturyTel Retirement Plan (the Plan) to eligible participants under the 1992 Enhanced Early Retirement Program (the Program) who terminates employment within the prescribed period, as provided below. Terms used in this Appendix and not defined in it shall have the same meaning as the Plan document. 1. Eligibility. ------------ 1.1 Conditions. Benefits under the Program shall be available to all individuals who are not excluded by 1.2, who are described in either (a) or (b) below, and satisfy the minimum age requirement in (c) below: (a) This paragraph includes individuals who on August 19, 1992 are employed in or serve as officer of the following organizations or work locations or have returned from such employment since January 1, 1992: |X| Pacific Telecom, Inc. |X| Pacific Telecom Cable |X| Central Toll Investigation Department |X| Inter-Island Telephone Company |X| Peninsula Telecommunications, Inc. |X| Tel Com Construction Company (exempt employees only) |X| Telephone Utilities of Washington, Inc. (Long Beach only) (b) This paragraph includes individuals whose employment with Pacific Telecom, Inc. or Alascom, Inc. was terminated between January 1, 1992 and September 1, 1992 as a result of a reduction in force. (c) The Company shall fix a minimum age requirement for each organization or work location described in (a). Satisfaction of the minimum age shall be based on the employee's attained age as of December 31, 1992. The minimum ages are set forth below. |X| Pacific Telecom, Inc. - Age 52 |X| Pacific Telecom Cable - Age 50 |X| Central Toll Investigation Department - Age 52 |X| Inter-Island Telephone Company - Age 55 |X| Peninsula Telecommunications, Inc. - Age 55 |X| Tel Com Construction Company (exempt employees only) Age 52 |X| Telephone Utilities of Washington, Inc. (Long Beach only) Age 55 1.2 Excluded Employees. An employee is excluded from participation in the Program if the employee was previously retired under the Plan, was rehired and continues to receive benefits based on the previous retirement. 1.3 Election to Participate. An individual who meets the conditions in 1.1 may elect to participate in the Program by giving written notice on a form prescribed by the Committee. An individual who does not give such notice or who terminates employment before the date fixed under 1.4 shall not receive the enhanced benefits of the Program. To be effective, such form must be received by the Committee no later than the following dates: (a) October 19, 1992 shall be the due date unless (b), (c) or (d) applies. (b) An eligible individual who was not notified of the Program by October 19, 1992 shall have until close of business on December 31, 1992 to elect to participate in the Program. (c) An eligible individual who was notified of the Program but did not elect to participate by October 19, 1992 may elect to do so before close of business on April 16, 1993. (d) An officer or employee of Pacific Telecom Cable who becomes eligible as a result of reducing the eligibility age from 52 to 50 may elect to participate in the Program before close of business on May 31, 1993. 1.4 Retirement Date. The retirement date for each eligible employee who has elected to participate in the Program shall be December 1, 1992 if the election is made pursuant to 1.3(a) or (b) and shall be June 1, 1993 if the election is made pursuant to 1.3(c). However, the participant's Employer may fix a different retirement date by notice to the employee, which shall be no later than December 1, 1993. An eligible individual who has retired under 1.1(a) or been terminated in a reduction in force under 1.1(b) before the first general announcement of the Program shall be treated as having retired on December 1, 1992. 1.5 Other Termination Payments. The enhanced benefits provided under the Program shall be in lieu of any severance, unemployment compensation or other payments to which an individual is entitled as a result of termination of employment. An election to participate in the Program by an individual who is entitled to receive any such payment shall be a waiver of the payment. If an eligible individual who has already received such payments elects to participate in the Program, the individual's additional benefits under this Appendix shall be offset in full by the amount of such payments until they are entirely recovered. The individual then shall receive the full amount, free of offset. 2. Benefit Enhancement. A participant in the Program shall receive enhanced early retirement benefits from the Plan as provided below. Any enhancement that would exceed the maximum benefit limits imposed by law shall be paid by the Employer outside the Plan. 2.1 Commencement Before Age 55. A participant in the Program who is under age 55 shall commence receiving early retirement benefits under the Plan upon termination of employment as though the participant were age 55 or over. 2.2 Benefit Formula. A participant in the Program shall have a normal retirement basic benefit equal to Benefit Years (BY) times 1.8 percent of Final Average Pay (FAP) as follows: BY x 1.8% x FAP For the purpose of this Program, Final Average Pay shall be the participant's Final Average Pay at December 31, 1991. 2.3 Five Additional Benefit Years. A participant in the program shall have a normal retirement basic benefit calculated with the addition of five (5) more Benefit Years than the number of Benefit Years otherwise credited under the terms of the Plan. 2.4 Early Retirement Reduction. A participant in the program shall receive the amount payable at normal retirement with no reduction for early retirement to age 62; reduced three (3) percent per year for early retirement before age 62. 2.5 Social Security Bridge. A participant in the Program shall be paid an additional monthly benefit from the Plan equal to fifteen (15) percent of the participant's base pay as of August 1, 1992; the Social Security Bridge shall not be less than $400 per month or greater than $1,000 per month. The additional monthly benefit shall commence along with the regular retirement benefit and shall be paid on the same monthly schedule. The additional benefit shall terminate with the month prior to the first month for which the participant is eligible to receive a Social Security retirement benefit, or the month of the participant's death, if earlier. The Social Security level income option in 6.09-39d) of the Retirement Plan is not available to participants who elect enhanced early retirement benefits because the Social Security Bridge Benefit is provided in lieu of this option. 3. Death of Participant. The surviving spouse of an eligible individual who has elected to participate in the Program and who dies before the Benefit Starting Date shall have a pre-retirement death benefit calculated without regard to the enhancements provided by the Program. On a participant's death after the Benefit Starting Date, death benefits shall be paid only in accordance with the form of benefit elected by the participant. TABLE OF CONTENTS ARTICLE I....................................................................1 Effective Date; Qualification..........................................1 1.01 Effective Date; Plan Year..................................1 1.02 Qualification..............................................2 ARTICLE II...................................................................2 Application to the Company and Affiliates..............................2 2.01 Eligible Employers.........................................2 2.02 Service for Affiliates.....................................3 2.03 Adoption Procedure.........................................3 ARTICLE III..................................................................4 Eligibility and Service................................................4 3.01 Conditions of Eligibility..................................4 3.02 Service....................................................4 3.03 Break in Service...........................................6 3.04 Leaves of Absence..........................................7 3.05 Layoff.....................................................7 3.06 Benefit Years..............................................8 3.07 Short and Overlapping Computation Periods..................8 ARTICLE IV...................................................................9 Plan Administration....................................................9 4.01 Retirement Committee.......................................9 4.02 Committee Powers and Duties................................9 4.03 Claims Procedure..........................................10 4.04 Authority to Act for the Company or Employer..............11 4.05 Expenses..................................................11 ARTICLE V...................................................................11 Funding...............................................................11 5.01 Funding Policy............................................11 5.02 Contributions.............................................11 5.03 Reports to Committee......................................12 5.04 Trust Fund................................................12 ARTICLE VI..................................................................12 Retirement Benefits...................................................12 6.01 Eligibility; Retirement Dates.............................12 6.02 Normal Retirement Basic Benefit...........................12 6.03 Early Retirement..........................................16 6.04 Deferred Retirement Basic Benefit.........................17 6.05 Cost-of-Living Adjustment.................................18 6.06 ...........................................Limit on Benefits 18 6.07 Application for Benefits..................................20 6.08 Time of Payment...........................................21 6.09 Form of Retirement Benefit................................22 6.10 Limits on Time and Form of Payout.........................24 6.11 Death Benefit for Spouse..................................25 6.12 Disability................................................27 6.13 Reemployment After Retirement.............................28 ARTICLE VII.................................................................28 Benefits After Termination of Employment..............................28 7.01 Vesting of Benefits.......................................28 7.02 Accrued Benefit; Payment..................................29 7.03 Cash Settlement...........................................29 7.04 Forfeiture of Nonvested Retirement Benefits...............30 ARTICLE VIII................................................................31 Medical Benefits......................................................31 8.01 Eligibility...............................................31 8.02 Medical Benefits..........................................31 8.03 Separate Medical Benefits Account.........................32 8.04 Limitation on Contributions...............................32 8.05 Satisfaction of Liabilities...............................32 8.06 Forfeiture of Benefits....................................32 ARTICLE IX..................................................................32 Amendment and Termination.............................................32 9.01 Amendment.................................................32 9.02 Termination...............................................33 9.03 Treatment of Employers....................................33 9.04 Allocation of Assets on Termination.......................34 9.05 Merger....................................................34 ARTICLE X...................................................................35 General Provisions....................................................35 10.01 Information for Committee.................................35 10.02 Indemnity and Bonding.....................................35 10.03 Applicable Law............................................35 10.04 Plan Binding on All Parties...............................35 10.05 Not Contract of Employment................................36 10.06 Notices...................................................36 10.07 Benefits Not Assignable; Qualified Domestic Relations Order ..........................................36 10.08 Designation of Beneficiary................................36 10.09 Actuarial Equivalency.....................................37 10.10 Nonreversion of Assets....................................37 10.11 Enhanced Early Retirement Programs........................38 ARTICLE XI..................................................................38 Special Top-Heavy Plan Rules..........................................38 11.01 Application of Rules......................................38 11.02 Determination of Top-Heavy Status.........................38 11.03 Top-Heavy Plan Restrictions...............................39


                                                                   EXHIBIT 21

                            CENTURY TELEPHONE ENTERPRISES, INC.
                               SUBSIDIARIES OF THE REGISTRANT
                                  AS OF DECEMBER 31, 1998
                                                              State of
Subsidiary                                                  incorporation

Actel Corporation                                              Louisiana
Brownsville Cellular Telephone Co., Inc.                       Delaware
Cascade Autovon Company                                        Washington
Celutel of Biloxi, Inc.                                        Delaware
Celutel, Inc.                                                  Delaware
Century Business Communications, LLC                           Louisiana
Century Cellunet of Alexandria, Inc.                           Louisiana
Century Cellunet of Michigan RSA #4, Inc.                      Louisiana
Century Cellunet of Michigan RSAs, Inc.                        Louisiana
Century Cellunet of Mississippi RSA #2, Inc.                   Mississippi
Century Cellunet of Mississippi RSA #6, Inc.                   Mississippi
Century Cellunet of Mississippi RSA #7, Inc.                   Mississippi
Century Cellunet of North Arkansas, Inc.                       Louisiana
Century Cellunet of Pine Bluff, LLC                            Arkansas
Century Cellunet of Saginaw, Inc.                              Louisiana
Century Cellunet of South Arkansas, Inc.                       Louisiana
Century Cellunet of Southern Michigan, Inc.                    Delaware
Century Cellunet of Texarkana, Inc.                            Louisiana
Century Color Graphics, LLC                                    Louisiana
Century Interactive Communications, Inc.                       Louisiana
Century Interactive Fax, Inc.                                  Louisiana
CenturyTel Entertainment, Inc.                                 Washington
CenturyTel Holdings, Inc.                                      Louisiana
CenturyTel Investments, LLC                                    Louisiana
CenturyTel Long Distance, Inc.                                 Louisiana
CenturyTel Michigan Network, LLC                               Louisiana
CenturyTel Midwest - Michigan, Inc.                            Michigan
CenturyTel of Adamsville, Inc.                                 Tennessee
CenturyTel of Arkansas, Inc.                                   Arkansas
CenturyTel of Central Indiana, Inc.                            Indiana
CenturyTel of Central Louisiana, Inc.                          Louisiana
CenturyTel of Chatham, Inc.                                    Louisiana
CenturyTel of Chester, Inc.                                    Iowa
CenturyTel of Claiborne, Inc.                                  Tennessee
CenturyTel of Colorado, Inc.                                   Colorado
CenturyTel of Cowiche, Inc.                                    Washington
CenturyTel of Eagle, Inc.                                      Colorado
CenturyTel of East Louisiana, Inc.                             Louisiana
CenturyTel of Eastern Oregon, Inc.                             Oregon
CenturyTel of Evangeline, Inc.                                 Louisiana
CenturyTel of Fairwater-Brandon-Alto, Inc.                     Wisconsin
CenturyTel of Forestville, Inc.                                Wisconsin
CenturyTel of Greater Wisconsin, Inc.                          Wisconsin
CenturyTel of Idaho, Inc.                                      Delaware
CenturyTel of Inter Island, Inc.                               Washington
CenturyTel of Lake Dallas, Inc.                                Texas
CenturyTel of Larsen-Readfield, Inc.                           Wisconsin
CenturyTel of Michigan, Inc.                                   Michigan
CenturyTel of Minnesota, Inc.                                  Minnesota
CenturyTel of Monroe County, Inc.                              Wisconsin
CenturyTel of Montana, Inc.                                    Oregon
CenturyTel of Mountain Home, Inc.                              Arkansas
CenturyTel of North Louisiana, Inc.                            Louisiana
CenturyTel of North Mississippi, Inc.                          Mississippi
CenturyTel of Northern Michigan, Inc.                          Michigan
CenturyTel of Northern Wisconsin, Inc.                         Wisconsin
CenturyTel of Northwest Louisiana, Inc.                        Louisiana
CenturyTel of Northwest Wisconsin, Inc.                        Wisconsin
CenturyTel of Odon, Inc.                                       Indiana
CenturyTel of Ohio, Inc.                                       Ohio
CenturyTel of Ooltewah-Collegedale, Inc.                       Tennessee
CenturyTel of Oregon, Inc.                                     Oregon
CenturyTel of Port Aransas, Inc.                               Texas
CenturyTel of Postville, Inc.                                  Iowa
CenturyTel of Redfield, Inc.                                   Arkansas
CenturyTel of Ringgold, Inc.                                   Louisiana
CenturyTel of San Marcos, Inc.                                 Texas
CenturyTel of South Arkansas, Inc.                             Arkansas
CenturyTel of Southeast Louisiana, Inc.                        Louisiana
CenturyTel of Southern Wisconsin, Inc.                         Wisconsin
CenturyTel of Southwest Louisiana, Inc.                        Louisiana
CenturyTel of the Gem State, Inc.                              Idaho
CenturyTel of the Midwest-Kendall, Inc.                        Wisconsin
CenturyTel of the Midwest-Wisconsin, Inc.                      Wisconsin
CenturyTel of the Northwest, Inc.                              Washington
CenturyTel of the Southwest, Inc.                              New Mexico
CenturyTel of Upper Michigan, Inc.                             Michigan
CenturyTel of Washington, Inc.                                 Washington
CenturyTel of Wisconsin, Inc.                                  Wisconsin
CenturyTel of Wyoming, Inc.                                    Wyoming
CenturyTel Paging, Inc.                                        Louisiana
CenturyTel Personal Access Network, Inc.                       Louisiana
CenturyTel Security Systems, Inc.                              Louisiana
CenturyTel Service Group, LLC                                  Louisiana
CenturyTel Supply Group, Inc.                                  Louisiana
CenturyTel Telecom Service, Inc.                               Washington
CenturyTel Telecommunications, Inc.                            Texas
CenturyTel Telelink, Inc.                                      Louisiana
CenturyTel Wireless Louisiana, Inc.                            Louisiana
CenturyTel Wireless of Appleton-Oshkosh-Neenah MSA, LLC        Delaware
CenturyTel Wireless of La Crosse, LLC                          Delaware
CenturyTel Wireless of North Louisiana, LLC                    Louisiana
CenturyTel Wireless of Shreveport, LLC                         Louisiana
CenturyTel Wireless of Wisconsin RSA #1, LLC                   Delaware
CenturyTel Wireless of Wisconsin RSA #10, LLC                  Delaware
CenturyTel Wireless of Wisconsin RSA #2, LLC                   Delaware
CenturyTel Wireless of Wisconsin RSA #3, LLC                   Delaware
CenturyTel Wireless of Wisconsin RSA #6, LLC                   Delaware
CenturyTel Wireless of Wisconsin RSA #8, LLC                   Delaware
CenturyTel Wireless, Inc.                                      Louisiana
CenturyTel/Area Long Lines, Inc.                               Wisconsin
CenturyTel/Remote Access, Inc.                                 Louisiana
CenturyTel/Tele-Max, Inc.                                      Texas
CenturyTel/Teleview of Wisconsin, Inc.                         Wisconsin
CenturyTel/WORLDVOX, Inc.                                      Oregon
Eau Claire Cellular, Inc.                                      Colorado
Jackson Cellular Telephone Co., Inc.                           Delaware
MVI Corp.                                                      Oregon
North-West Cellular of Eau Claire, Inc.                        Wisconsin
Pacific Telecom Cellular of Alaska RSA #1, Inc.                Alaska
Pacific Telecom Cellular of Alaska, Inc.                       Alaska
Pacific Telecom Cellular of Michigan RSA #1, Inc.              Michigan
Pacific Telecom Cellular of Michigan RSA #2, Inc.              Michigan
Pacific Telecom Cellular of Michigan, Inc.                     Michigan
Pacific Telecom Cellular of Oregon, Inc.                       Oregon
Pacific Telecom Cellular of Washington, Inc.                   Washington
Pacific Telecom Cellular, Inc.                                 Wisconsin
Pacific Telecom of Alaska PCS, Inc.                            Alaska
Pascagoula Cellular Services, Inc.                             Mississippi
PTI Communications of Alaska, Inc.                             Alaska
Telephone Utilities of Alaska, Inc.                            Alaska
Telephone Utilities of the Northland, Inc.                     Alaska
The McAllen Cellular Telephone Co., Inc.                       Nevada

    Certain  of the  Company's  smaller  subsidiaries  have  been  intentionally
omitted from this exhibit  pursuant to rules and  regulations  of the Securities
and Exchange Commission.

                                                                    EXHIBIT 23




                               Independent Auditors' Consent



The Board of Directors
Century Telephone Enterprises, Inc.:


We  consent  to  incorporation  by  reference  in  the  Registration  Statements
(No.333-27165 and No.  333-42013) on Form S-3, the Registration  Statements (No.
33-17113,  No.  33-46562,  No.  33-60061  and No.  333-67815)  on Form S-8,  the
Registration Statements (No. 33-31314 and No. 33-46473) on combined Form S-8 and
Form S-3, and the Registration  Statements (No.  33-48956 and No.  333-17015) on
Form S-4 of Century Telephone Enterprises,  Inc. of our report dated January 28,
1999,  except as to Note 21 which is as of February  23,  1999,  relating to the
consolidated  balance  sheets  of  Century  Telephone   Enterprises,   Inc.  and
subsidiaries  as of  December  31, 1998 and 1997,  and the related  consolidated
statements of income, comprehensive income, stockholders' equity, and cash flows
and  related  financial  statement  schedules  for  each  of  the  years  in the
three-year  period ended December 31, 1998, which report appears in the December
31, 1998 annual report on Form 10-K of Century Telephone Enterprises, Inc.

/s/  KPMG LLP

KPMG LLP

Shreveport, Louisiana
March 12, 1999

<TABLE> <S> <C>

<ARTICLE>  5
<LEGEND>
    THIS SCHEDULE  CONTAINS  SUMMARY  FINANCIAL  INFORMATION  EXTRACTED FROM THE
    AUDITED  CONSOLIDATED BALANCE SHEET OF CENTURY TELEPHONE  ENTERPRISES,  INC.
    AND   SUBSIDIARIES   AS  OF  DECEMBER  31,  1998  AND  THE  RELATED  AUDITED
    CONSOLIDATED  STATEMENT OF INCOME FOR THE TWELVE MONTH PERIOD THEN ENDED AND
    IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK>         0000018926
<NAME>        CENTURY TELEPHONE ENTERPRISES, INC.
<MULTIPLIER>                                   1,000
       
<S>                             <C>
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                              DEC-31-1998
<PERIOD-START>                                 JAN-01-1998
<PERIOD-END>                                   DEC-31-1998
<CASH>                                         5,742
<SECURITIES>                                   0
<RECEIVABLES>                                  134,444
<ALLOWANCES>                                   4,155
<INVENTORY>                                    23,709
<CURRENT-ASSETS>                               226,238
<PP&E>                                         4,289,658
<DEPRECIATION>                                 1,938,205
<TOTAL-ASSETS>                                 4,935,455
<CURRENT-LIABILITIES>                          304,844
<BONDS>                                        2,558,000
<PREFERRED-MANDATORY>                          0
<PREFERRED>                                    8,106
<COMMON>                                       138,083
<OTHER-SE>                                     1,385,293
<TOTAL-LIABILITY-AND-EQUITY>                   4,935,455
<SALES>                                        0
<TOTAL-REVENUES>                               1,577,085
<CGS>                                          0
<TOTAL-COSTS>                                  1,097,274
<OTHER-EXPENSES>                               0
<LOSS-PROVISION>                               0
<INTEREST-EXPENSE>                             167,552
<INCOME-PRETAX>                                387,458
<INCOME-TAX>                                   158,701
<INCOME-CONTINUING>                            228,757
<DISCONTINUED>                                 0
<EXTRAORDINARY>                                0
<CHANGES>                                      0
<NET-INCOME>                                   228,757
<EPS-PRIMARY>                                  1.67  <F1>
<EPS-DILUTED>                                  1.64  <F1> 
<FN>
<F1>   Adjusted to reflect stock split  effective in March 1999.  Financial Data
       Schedules  for prior periods have not been restated to reflect such stock
       split.
</FN>
        

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