Centennial Communications Corp. (NASDAQ: CYCL) ("Centennial") today
reported net income of $37.1 million, or $0.33 per diluted share,
for the fiscal fourth quarter of 2009 as compared to net income of
$12.9 million, or $0.10 per diluted share, in the fiscal fourth
quarter of 2008. Consolidated adjusted operating income (AOI)(1)
was $126.2 million for the fiscal fourth quarter, as compared to
$105.6 million for the adjusted prior-year quarter. Fiscal fourth
quarter AOI benefited from $7.8 million of prior period items
largely related to Universal Service Fund (USF) support and an
intercarrier compensation settlement. For comparison, certain of
the Company's fiscal 2008 financial results have been adjusted to
reflect the discontinuation of its loaned phones program in Puerto
Rico as of June 1, 2008(2).
Centennial reported fiscal fourth-quarter consolidated revenue
of $261.8 million, which included $144.2 million from U.S. wireless
and $117.5 million from Puerto Rico operations. Consolidated
revenue grew 1 percent versus the fiscal fourth quarter of 2008.
The Company ended the quarter with 1,078,200 total wireless
subscribers, which compares to 1,092,600 for the year-ago quarter
and 1,094,900 for the previous quarter ended February 28, 2009. The
Company reported 694,900 total access lines and equivalents at the
end of the fiscal fourth quarter, which compares to 582,200 for the
year-ago quarter.
AT&T TRANSACTION
On November 7, 2008, we entered into an Agreement and Plan of
Merger with AT&T Inc. ("AT&T") providing for the
acquisition of Centennial by AT&T (the "AT&T Transaction").
Under the terms of the AT&T Transaction, our stockholders will
receive $8.50 per share in cash. The AT&T Transaction was
approved by our stockholders in February 2009. Completion of the
AT&T Transaction is not subject to a financing condition but
remains subject to (i) approval by the Federal Communications
Commission and (ii) other customary conditions. The applicable
waiting period under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, has expired; however, the parties are
still discussing the transaction with the Department of Justice.
The parties anticipate that the AT&T Transaction will be
completed during the third quarter of calendar year 2009, assuming
timely satisfaction or waiver of all remaining closing
conditions.
FULL-YEAR FISCAL 2009 RESULTS
For the full year, the Company reported net income of $67.3
million, or $0.60 per diluted share, as compared to net income of
$25.1 million, or $0.22 per diluted share, for fiscal year 2008.
Centennial reported full-year 2009 consolidated revenue of $1.1
billion, which included $583.4 million from U.S. wireless and
$468.2 million from Puerto Rico operations. The Company's fiscal
2009 consolidated AOI was $425.8 million, an increase of 10 percent
versus the adjusted 2008 fiscal year. The Company ended fiscal 2009
with net debt of $1.8 billion, a decrease of $101.8 million from
the end of fiscal 2008.
FOURTH-QUARTER SEGMENT HIGHLIGHTS
U.S. Wireless Operations
-- Revenue was $144.2 million, a 1 percent increase from last year's
fourth quarter. Retail revenue (total revenue excluding roaming revenue)
was unchanged from the year-ago period. Roaming revenue increased 16
percent from the year-ago quarter primarily because of an increase in data
roaming revenue, partially offset by a decline in voice roaming revenue due
to a 14 percent decrease in the average voice roaming rate per minute.
-- Average revenue per user (ARPU) was $73 during the fiscal fourth
quarter, a 1 percent year-over-year increase. ARPU included approximately
$8.21 of data revenue per user, which grew 31 percent from the year-ago
period.
-- AOI was $67.6 million, a 17 percent year-over-year increase,
representing an AOI margin of 47 percent. AOI benefited from solid growth
in roaming revenue and a decrease in handset expenditures.
-- U.S. wireless ended the quarter with 652,000 total subscribers, which
compares to 665,300 for the prior-year quarter and to 664,200 for the
previous quarter ended February 28, 2009. Postpaid subscribers decreased
11,300 from the fiscal third quarter of 2009 due to a 35 percent decrease
in gross additions.
-- Capital expenditures were $29.2 million for the fiscal fourth quarter.
Puerto Rico Wireless Operations
-- Revenue was $84.0 million, an increase of 1 percent from the prior-
year fourth quarter, primarily driven by increased USF support and Instant
Internet broadband data revenue, largely offset by a continued decline in
traditional voice revenue. $2.6 million of USF support related to prior
periods.
-- ARPU was $65, which was unchanged compared to the year-ago period.
ARPU included approximately $10.94 of data revenue per user, which
increased 52 percent from the year-ago period.
-- AOI totaled $34.2 million, an adjusted 23 percent year-over-year
increase, representing an AOI margin of 41 percent. AOI benefited from
increased USF support and a decrease in handset expenditures.
-- Puerto Rico wireless ended the quarter with 426,200 total subscribers,
which compares to 427,300 for the prior-year quarter and to 430,700 for the
previous quarter ended February 28, 2009. Postpaid subscribers decreased
4,300 from the fiscal third quarter of 2009 due to a continued decline in
traditional voice customers, partially offset by an increase in Instant
Internet broadband data customers. Postpaid churn rose to 2.9 percent.
-- Capital expenditures were $6.8 million for the fiscal fourth quarter.
Puerto Rico Broadband Operations
-- Revenue was $36.3 million, a 1 percent year-over-year increase.
Revenue increased primarily due to solid access line growth and increased
USF support, partially offset by a decrease in recurring revenue per line.
-- AOI was $24.5 million, a 22 percent increase from the year-ago period,
representing an AOI margin of 67 percent. AOI rose largely due to a $2.2
million intercarrier compensation settlement related to prior periods.
-- Switched access lines totaled approximately 104,200 at the end of the
fiscal fourth quarter, an increase of 9,000 lines, or 9 percent from the
prior-year quarter. Dedicated access line equivalents were 590,700 at the
end of the fiscal fourth quarter, a 21 percent year-over-year increase.
-- Capital expenditures were $10.9 million for the fiscal fourth quarter.
DEFINITIONS AND RECONCILIATION
(1) Adjusted operating income is defined as net income before
loss from discontinued operations, minority interest in income of
subsidiaries, income tax expense, loss on extinguishment of debt,
interest expense, net, loss on disposition of assets, litigation
settlement expense, transaction costs, stock-based compensation
expense and depreciation and amortization. Please refer to the
schedule below for a reconciliation of adjusted operating income to
consolidated net income and the Investor Relations website at
www.ir.centennialwireless.com for a discussion and reconciliation
of this and other non-GAAP financial measures.
Reconciliation of adjusted operating income to consolidated net
income:
Three Months Ended Twelve Months Ended
May 31, May 31,
-------------------- --------------------
2009 2008 2009 2008
--------- --------- --------- ---------
Adjusted operating income $ 126,243 $ 108,996 $ 425,824 $ 404,124
Depreciation and amortization (33,151) (36,846) (136,170) (139,719)
Stock-based compensation
expense (482) (3,463) (9,501) (12,011)
Transaction costs (9,160) (2,004) (12,162) (2,004)
Litigation settlement expense -- -- -- (2,950)
Loss on disposition of assets (17) (1,319) (473) (3,050)
--------- --------- --------- ---------
Operating income 83,433 65,364 267,518 244,390
Interest expense, net (41,111) (46,615) (173,274) (190,209)
Loss on extinguishment of debt -- -- -- (307)
Income tax expense (4,890) (4,923) (25,145) (25,193)
Minority interest in income of
subsidiaries (203) (212) (784) (704)
--------- --------- --------- ---------
Income from continuing
operations 37,229 13,614 68,315 27,977
Loss from discontinued
operations (94) (667) (1,020) (2,924)
--------- --------- --------- ---------
Net income $ 37,135 $ 12,947 $ 67,295 $ 25,053
========= ========= ========= =========
(2) Please refer to the Company's Form 10-K for the year ending
May 31, 2008 and the fiscal fourth-quarter 2008 earnings press
release for information regarding the discontinuation of the loaned
phones program.
ABOUT CENTENNIAL
Centennial Communications (NASDAQ: CYCL), based in Wall, NJ, is
a leading provider of regional wireless and integrated
communications services in the United States and Puerto Rico with
approximately 1.1 million wireless subscribers and 694,900 access
lines and equivalents. The U.S. business owns and operates wireless
networks in the Midwest and Southeast covering parts of six states.
Centennial's Puerto Rico business owns and operates wireless
networks in Puerto Rico and the U.S. Virgin Islands and provides
facilities-based integrated voice, data and Internet solutions.
Welsh, Carson, Anderson & Stowe is a significant shareholder of
Centennial. For more information regarding Centennial, please visit
our websites http://www.centennialwireless.com/ and
http://www.centennialpr.com/.
SAFE HARBOR PROVISION
Cautionary statement for purposes of the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995:
Information in this release that involves Centennial's
expectations, beliefs, hopes, plans, projections, estimates,
intentions or strategies regarding the future are forward-looking
statements. Such forward-looking statements are subject to a number
of risks, assumptions and uncertainties that could cause the
Company's actual results to differ materially from those projected
in such forward-looking statements. These risks, assumptions and
uncertainties include, but are not limited to: the occurrence of
any event, change or other circumstance that could give rise to the
termination of our agreement to be acquired by AT&T (the
"AT&T Transaction") or failure of the AT&T Transaction to
close for any other reason; the outcome of any legal proceeding
that has been or may be instituted against Centennial and others
relating to the AT&T Transaction; the inability to complete the
AT&T Transaction due to the failure to satisfy conditions to
consummate the AT&T Transaction; risks that the AT&T
Transaction disrupts current plans and operations and the potential
difficulties in employee retention as a result of the AT&T
Transaction; business uncertainty and contractual restrictions
during the pendency of the AT&T Transaction, which may
adversely affect our relationships with our employees, customers
and suppliers; the diversion of management's attention to the
AT&T Transaction from ongoing business concerns; the effect of
the announcement and pendency of the AT&T Transaction on our
customer and supplier relationships, operating results and business
generally; the amount of the costs, fees, expenses and charges
related to the AT&T Transaction; the timing of the completion
of the AT&T Transaction or the impact of the AT&T
Transaction on our capital resources, cash requirements,
profitability, management resources and liquidity; the effects of
the current recession in the United States and general downturn in
the economy, including the effects on unemployment, consumer
confidence, consumer debt levels, consumer spending and other
macroeconomic conditions that could impact the demand for the
products and services we provide and our customers' ability to pay
for them; our need to refinance or amend existing indebtedness on
or prior to its stated maturity and the difficulties and
illiquidity experienced by the debt/capital markets; the effects of
vigorous competition in our markets, which may make it difficult
for us to attract and retain customers and to grow our customer
base and revenue and which may increase churn, which could reduce
our revenue and increase our costs; the fact that many of our
competitors are larger than we are, have greater financial
resources than we do, are less leveraged than we are, have more
extensive coverage areas than we do, and may offer less expensive
and more technologically advanced products and services than we do;
our ability to gain access to the latest technology handsets in a
timeframe and at a cost similar to our competitors; our ability to
acquire, and the cost of acquiring, additional spectrum in our
markets to support growth and deployment of advanced technologies,
including 3G and 4G services; our ability to successfully deploy
and deliver wireless data services to our customers, including next
generation 3G and 4G technology; the effect of changes in the level
of support provided to us by the Universal Service Fund, or USF;
our ability to grow our subscriber base at a reasonable cost to
acquire; our dependence on roaming agreements for a significant
portion of our wireless revenue and the expected decline in roaming
revenue over the long term; our ability to successfully integrate
any acquired markets or businesses; the effects of higher than
anticipated handset subsidy costs; our dependence on roaming
agreements for our ability to offer our wireless customers
competitively priced regional and nationwide rate plans that
include areas for which we do not own wireless licenses; the
effects of adding new subscribers with lower credit ratings; our
substantial debt obligations, including restrictive covenants,
which place limitations on how we conduct business; market prices
for the products and services we offer may decline in the future;
changes and developments in technology, including our ability to
upgrade our networks to remain competitive and our ability to
anticipate and react to frequent and significant technological
changes which may render certain technologies used by us obsolete;
the effects of a decline in the market for our Code Division
Multiple Access -based technology; the effects of consolidation in
the telecommunications industry; general economic, business,
political and social conditions in the areas in which we operate,
including the effects of downturns in the economy, world events,
terrorism, hurricanes, tornadoes, wind storms and other natural
disasters; our ability to generate cash and the availability and
cost of additional capital to fund our operations and our
significant planned capital expenditures; the effects of
governmental regulation of the telecommunications industry; our
ability to attract and retain qualified personnel; the effects of
network disruptions and system failures; our ability to manage,
implement and monitor billing and operational support systems; the
results of litigation filed or which may be filed against us or our
vendors, including litigation relating to wireless billing, using
wireless telephones while operating an automobile and litigation
relating to infringement of patents; the effects of scientific
reports that may demonstrate possible health effects of radio
frequency transmission from use of wireless telephones; and the
influence on us by our significant stockholder and anti-takeover
provisions and other risks referenced from time to time in the
Company's filings with the Securities and Exchange Commission. All
forward-looking statements included in this release are based upon
information available to Centennial as of the date of the release,
and we assume no obligation to update or revise any such
forward-looking statements.
CENTENNIAL COMMUNICATIONS CORP.
FINANCIAL DATA AND OPERATING STATISTICS
05/31/2009
($000's, except per subscriber data)
Three Months Ended Twelve Months Ended
---------------------- ----------------------
May-09 May-08 May-09 May-08
---------- ---------- ---------- ----------
CONSOLIDATED
Total Wireless Subscribers 1,078,200 1,092,600 1,078,200 1,092,600
Net Gain - Total
Subscribers (16,700) 6,300 (14,400) 43,000
Revenue per Average
Wireless Customer (1) $ 70 $ 69 $ 70 $ 69
Retail Penetration (4) 8.3% 8.4% 8.3% 8.4%
Prepaid & Postpaid Churn -
Wireless (5) 2.5% 2.3% 2.6% 2.3%
Monthly MOU's per Wireless
Voice Customer 1,329 1,390 1,385 1,363
U.S. WIRELESS
Postpaid Wireless
Subscribers 638,200 646,400 638,200 646,400
Prepaid Wireless
Subscribers 13,800 18,900 13,800 18,900
---------- ---------- ---------- ----------
Total Wireless Subscribers 652,000 665,300 652,000 665,300
Total Wireless Gross Adds 30,500 44,500 178,300 199,300
Net Gain - Wireless
Subscribers (12,200) 2,600 (13,300) 22,200
GSM as a % of Retail
Subscribers 100.0% 98.7% 100.0% 98.7%
Revenue per Average
Wireless Customer (1) $ 73 $ 72 $ 74 $ 70
Retail Revenue per Average
Wireless Customer (2) $ 65 $ 65 $ 66 $ 63
Data Revenue per Average
Wireless Customer (3) $ 8.21 $ 6.26 $ 7.61 $ 5.18
Retail Revenue $ 128,459 $ 128,883 $ 523,723 $ 492,385
Roaming Revenue $ 15,786 $ 13,588 $ 59,631 $ 58,299
Penetration - Wireless (4) 7.3% 7.4% 7.3% 7.4%
Postpaid Churn - Wireless(5) 2.1% 1.8% 2.3% 2.0%
Prepaid & Postpaid Churn -
Wireless (5) 2.2% 2.1% 2.4% 2.3%
Monthly MOU's per Wireless
Voice Customer 1,046 1,100 1,091 1,069
Cost to Acquire (6) $ 304 $ 273 $ 329 $ 305
Capital Expenditures $ 29,175 $ 26,961 $ 58,551 $ 61,935
PUERTO RICO
Postpaid Wireless
Subscribers 422,700 423,600 422,700 423,600
Prepaid Wireless
Subscribers 3,500 3,700 3,500 3,700
---------- ---------- ---------- ----------
Total Wireless Subscribers 426,200 427,300 426,200 427,300
Total Wireless Gross Adds 33,200 35,800 143,400 144,100
Net Gain - Wireless
Subscribers (4,500) 3,700 (1,100) 20,800
Revenue per Average
Wireless Customer (1) $ 65 $ 65 $ 66 $ 66
Data Revenue per Average
Wireless Customer (3) $ 10.94 $ 7.20 $ 9.81 $ 6.70
Penetration - Wireless (4) 10.6% 10.7% 10.6% 10.7%
Postpaid Churn - Wireless(5) 2.9% 2.4% 2.8% 2.4%
Prepaid & Postpaid Churn -
Wireless (5) 2.9% 2.5% 2.8% 2.5%
Monthly MOU's per Wireless
Voice Customer 1,826 1,873 1,886 1,847
Fiber Route Miles 1,400 1,347 1,400 1,347
Switched Access Lines 104,200 95,200 104,200 95,200
Dedicated Access Line
Equivalents 590,700 487,000 590,700 487,000
On-Net Buildings 2,485 2,220 2,485 2,220
Capital Expenditures -
Wireless $ 6,817 $ 12,320 $ 31,050 $ 39,342
Capital Expenditures -
Broadband $ 10,911 $ 18,631 $ 31,615 $ 32,230
---------- ---------- ---------- ----------
Capital Expenditures -
Total Puerto Rico $ 17,728 $ 30,951 $ 62,665 $ 71,572
========== ========== ========== ==========
REVENUES
U.S. Wireless $ 144,245 $ 142,471 $ 583,354 $ 550,684
---------- ---------- ---------- ----------
Puerto Rico - Wireless $ 83,955 $ 83,423 $ 337,681 $ 328,241
Puerto Rico - Broadband $ 36,323 $ 35,948 $ 142,203 $ 134,877
Puerto Rico - Intercompany $ (2,767) $ (3,158) $ (11,648) $ (12,427)
---------- ---------- ---------- ----------
Total Puerto Rico $ 117,511 $ 116,213 $ 468,236 $ 450,691
---------- ---------- ---------- ----------
Consolidated $ 261,756 $ 258,684 $1,051,590 $1,001,375
========== ========== ========== ==========
ADJUSTED OPERATING INCOME(7)
U.S. Wireless $ 67,593 $ 57,760 $ 235,809 $ 212,768
---------- ---------- ---------- ----------
Puerto Rico - Wireless $ 34,198 $ 31,219 $ 107,774 $ 118,065
Puerto Rico - Broadband $ 24,452 $ 20,017 $ 82,241 $ 73,291
---------- ---------- ---------- ----------
Total Puerto Rico $ 58,650 $ 51,236 $ 190,015 $ 191,356
---------- ---------- ---------- ----------
Consolidated $ 126,243 $ 108,996 $ 425,824 $ 404,124
========== ========== ========== ==========
NET DEBT
Total Debt Less Cash and
Cash Equivalents $1,803,700 $1,905,500 $1,803,700 $1,905,500
(1) Revenue per Average Wireless Customer is determined for each period by
dividing total monthly revenue per wireless subscriber including
roaming revenue by the average customers for such period.
(2) Retail Revenue per Average Wireless Customer is determined for each
period by dividing retail revenue (total revenue excluding roaming
revenue) by the average customers for such period.
(3) Data Revenue per Average Wireless Customer is determined for each
period by dividing data revenue by the average customers for such
period.
(4) The penetration rate equals the percentage of total population in our
service areas who are subscribers to our wireless service as of
period-end.
(5) Churn is calculated by dividing the aggregate number of subscribers
who cancel service during each month in a period by the total number
of subscribers as of the beginning of the month. Churn is stated as
the average monthly churn rate for the period.
(6) Cost to Acquire a new customer is calculated by dividing the sum of
the cost of phones and marketing expenses less the related
equipment sales by the gross activations for the period. Cost to
acquire excludes costs relating to phones used for customer
retention.
(7) Adjusted operating income is defined as net income before loss from
discontinued operations, minority interest in income of subsidiaries,
income tax expense, loss on extinguishment of debt, interest expense,
net, loss on disposition of assets, litigation settlement expense,
transaction costs, stock-based compensation expense and depreciation
and amortization.
CENTENNIAL COMMUNICATIONS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
Three Months Ended Twelve Months Ended
-------------------- --------------------
May 31, May 31, May 31, May 31,
2009 2008 2009 2008
--------- --------- --------- ---------
REVENUE:
Service revenue $ 248,070 $ 243,581 $ 991,739 $ 942,038
Equipment sales 13,686 15,103 59,851 59,337
--------- --------- --------- ---------
261,756 258,684 1,051,590 1,001,375
--------- --------- --------- ---------
COSTS AND EXPENSES:
Cost of services (exclusive
of depreciation and
amortization shown below) 45,127 46,206 193,427 182,181
Cost of equipment sold 29,314 34,074 150,043 129,905
Sales and marketing 18,937 24,025 97,635 101,842
General and administrative 51,777 50,850 206,324 200,288
Depreciation and amortization 33,151 36,846 136,170 139,719
Loss on disposition of assets 17 1,319 473 3,050
--------- --------- --------- ---------
178,323 193,320 784,072 756,985
--------- --------- --------- ---------
OPERATING INCOME 83,433 65,364 267,518 244,390
--------- --------- --------- ---------
INTEREST EXPENSE, NET (41,111) (46,615) (173,274) (190,209)
LOSS ON EXTINGUISHMENT OF DEBT - - - (307)
--------- --------- --------- ---------
INCOME FROM CONTINUING
OPERATIONS BEFORE
INCOME TAX EXPENSE AND
MINORITY INTEREST
IN INCOME OF SUBSIDIARIES 42,322 18,749 94,244 53,874
INCOME TAX EXPENSE (4,890) (4,923) (25,145) (25,193)
--------- --------- --------- ---------
INCOME FROM CONTINUING
OPERATIONS BEFORE MINORITY
INTEREST IN INCOME
OF SUBSIDIARIES 37,432 13,826 69,099 28,681
MINORITY INTEREST IN INCOME OF
SUBSIDIARIES (203) (212) (784) (704)
--------- --------- --------- ---------
INCOME FROM CONTINUING
OPERATIONS 37,229 13,614 68,315 27,977
NET LOSS FROM DISCONTINUED
OPERATIONS (94) (667) (1,020) (2,924)
--------- --------- --------- ---------
NET INCOME $ 37,135 $ 12,947 $ 67,295 $ 25,053
========= ========= ========= =========
EARNINGS (LOSS) PER SHARE:
BASIC
EARNINGS PER SHARE FROM
CONTINUING OPERATIONS $ 0.34 $ 0.13 $ 0.62 $ 0.26
LOSS PER SHARE FROM
DISCONTINUED OPERATIONS $ (0.00) $ (0.02) $ (0.01) $ (0.03)
--------- --------- --------- ---------
NET INCOME PER SHARE $ 0.34 $ 0.11 $ 0.61 $ 0.23
========= ========= ========= =========
DILUTED
EARNINGS PER SHARE FROM
CONTINUING OPERATIONS $ 0.33 $ 0.12 $ 0.61 $ 0.25
LOSS PER SHARE FROM
DISCONTINUED OPERATIONS $ (0.00) $ (0.02) $ (0.01) $ (0.03)
--------- --------- --------- ---------
NET INCOME PER SHARE $ 0.33 $ 0.10 $ 0.60 $ 0.22
========= ========= ========= =========
WEIGHTED-AVERAGE SHARES
OUTSTANDING DURING THE PERIOD:
BASIC 110,556 107,802 109,055 107,544
========= ========= ========= =========
DILUTED 111,692 109,759 110,697 110,120
========= ========= ========= =========
For investor and media inquiries please contact: Steve E.
Kunszabo Executive Director, Investor Relations 732-556-2220
Centennial Communications (NASDAQ:CYCL)
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