Centennial Communications Corp. (NASDAQ: CYCL) ("Centennial") today
reported net income of $19.5 million, or $0.17 per diluted share,
for the fiscal first quarter of 2010 as compared to net income of
$7.5 million, or $0.07 per diluted share, in the fiscal first
quarter of 2009. Consolidated adjusted operating income (AOI)(1)
was $107.2 million for the fiscal first quarter, as compared to
$101.3 million for the prior-year quarter.
Centennial reported fiscal first-quarter consolidated revenue of
$258.9 million, which included $145.9 million from U.S. wireless
and $113.0 million from Puerto Rico operations. Consolidated
revenue declined 2 percent versus the fiscal first quarter of 2009.
The Company ended the quarter with 1,057,500 total wireless
subscribers, which compares to 1,090,400 for the year-ago quarter
and 1,078,200 for the previous quarter ended May 31, 2009. The
Company reported 789,100 total access lines and equivalents at the
end of the fiscal first quarter, which compares to 596,700 for the
year-ago quarter.
AT&T TRANSACTION
-- On November 7, 2008, Centennial entered into a merger agreement with
AT&T providing for the acquisition of Centennial by AT&T (the "Merger").
On October 13, 2009, AT&T and Centennial announced that they had entered
into a consent decree with the Department of Justice, which allows the
Merger to proceed, while requiring that AT&T divest Centennial's operations
in eight service areas in Louisiana and Mississippi. The eight service
areas are Alexandria, La., Lafayette, La., LA-3 (DeSoto), LA-5
(Beauregard), LA-6 (Iberville), LA-7 (West Feliciana), MS-8 (Claiborne) and
MS-9 (Copiah). Under the terms of the merger agreement, Centennial
stockholders would receive $8.50 per share in cash. The Merger was
approved by Centennial's stockholders in February 2009, but remains subject
to approval by the Federal Communications Commission and to other customary
closing conditions. AT&T and Centennial expect that, assuming timely
satisfaction or waiver of all remaining closing conditions, the Merger will
be completed early in the fourth quarter of calendar year 2009.
CENTENNIAL SEGMENT HIGHLIGHTS
U.S. Wireless Operations
-- Revenue was $145.9 million, a 1 percent decrease from last year's
first quarter. Retail revenue (total revenue excluding roaming revenue)
declined 6 percent from the year-ago period primarily due to a 4 percent
decrease in total wireless subscribers. Roaming revenue increased 36
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 9 percent decrease in the average voice roaming rate per minute.
-- Average revenue per user (ARPU) was $76 during the fiscal first
quarter, a 3 percent year-over-year increase. ARPU included approximately
$8.70 of data revenue per user, which grew 31 percent from the year-ago
period.
-- AOI was $65.0 million, an 11 percent year-over-year increase,
representing an AOI margin of 45 percent. AOI benefited from strong growth
in roaming revenue and a decrease in handset expenditures.
-- U.S. wireless ended the quarter with 633,100 total subscribers, which
compares to 659,800 for the prior-year quarter and to 652,000 for the
previous quarter ended May 31, 2009. Postpaid subscribers decreased 22,100
from the fiscal fourth quarter of 2009 as postpaid churn rose to 2.8
percent.
-- Capital expenditures were $7.6 million for the fiscal first quarter.
Puerto Rico Wireless Operations
-- Revenue was $79.7 million, a decrease of 6 percent from the prior-year
first quarter, primarily driven by a continued decline in traditional voice
revenue, partially offset by solid growth in Instant Internet broadband
data revenue.
-- ARPU was $63, which declined 5 percent from the year-ago period. ARPU
included approximately $11.38 of data revenue per user, which increased 35
percent from the year-ago period.
-- AOI totaled $22.9 million, which was flat from the year-ago period,
representing an AOI margin of 29 percent. AOI was stable largely due to a
decrease in handset expenditures.
-- Puerto Rico wireless ended the quarter with 424,400 total subscribers,
which compares to 430,600 for the prior-year quarter and to 426,200 for the
previous quarter ended May 31, 2009. Postpaid subscribers decreased 2,300
from the fiscal fourth 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 3.3 percent.
-- Capital expenditures were $5.6 million for the fiscal first quarter.
Puerto Rico Broadband Operations
-- Revenue was $36.2 million, a 2 percent year-over-year increase.
Revenue increased primarily due to solid access line growth, partially
offset by a decrease in recurring revenue per line.
-- AOI was $19.4 million, a 2 percent decrease from the year-ago period,
representing an AOI margin of 53 percent. AOI declined primarily due to
increased bad debt expense.
-- Switched access lines totaled approximately 107,900 at the end of the
fiscal first quarter, an increase of 9,600 lines, or 10 percent from the
prior-year quarter. Dedicated access line equivalents were 681,200 at the
end of the fiscal first quarter, a 37 percent year-over-year increase.
-- Capital expenditures were $3.9 million for the fiscal first quarter.
DEFINITIONS AND RECONCILIATION
(1) Adjusted operating income is defined as net income before
net income attributable to noncontrolling interest, loss from
discontinued operations, income tax expense, interest expense, net,
(loss) gain on disposition of assets, 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
August 31,
-----------------------
2009 2008
---------- ----------
Adjusted operating income $ 107,240 $ 101,293
Depreciation and amortization (31,687) (35,544)
Stock-based compensation expense (2,029) (2,870)
Transaction costs (1,070) --
(Loss) gain on disposition of assets (122) 47
---------- ----------
Operating income 72,332 62,926
Interest expense, net (39,952) (44,880)
Income tax expense (12,692) (10,056)
---------- ----------
Income from continuing operations 19,688 7,990
Loss from discontinued operations (94) (337)
---------- ----------
Net income 19,594 7,653
Less: net income attributable to noncontrolling
interest (136) (167)
---------- ----------
Net income attributable to Centennial $ 19,458 $ 7,486
========== ==========
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 789,100 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
Centennial'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
Centennial'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
August 31, 2009
($000's, except per subscriber data)
Three Months Ended
-------------------------
Aug-09 Aug-08
----------- -----------
CONSOLIDATED
Total Wireless Subscribers 1,057,500 1,090,400
Net Gain - Total Subscribers (20,700) (2,200)
Revenue per Average Wireless Customer (1) $ 70 $ 71
Retail Penetration (4) 8.2% 8.4%
Prepaid & Postpaid Churn - Wireless (5) 3.1% 2.7%
Monthly MOU's per Wireless Voice Customer 1,340 1,415
U.S. WIRELESS
Postpaid Wireless Subscribers 616,100 642,300
Prepaid Wireless Subscribers 17,000 17,500
----------- -----------
Total Wireless Subscribers 633,100 659,800
Total Wireless Gross Adds 34,700 49,000
Net Gain - Wireless Subscribers (18,900) (5,500)
UMTS as a % of Retail Subscribers 5.3% 0.8%
Revenue per Average Wireless Customer (1) $ 76 $ 74
Retail Revenue per Average Wireless Customer (2) $ 65 $ 66
Data Revenue per Average Wireless Customer (3) $ 8.70 $ 6.62
Retail Revenue $ 124,485 $ 132,018
Roaming Revenue $ 21,449 $ 15,789
Penetration - Wireless (4) 7.1% 7.4%
Postpaid Churn - Wireless (5) 2.8% 2.6%
Prepaid & Postpaid Churn - Wireless (5) 2.8% 2.7%
Monthly MOU's per Wireless Voice Customer 1,043 1,121
Cost to Acquire (6) $ 377 $ 311
Capital Expenditures $ 7,556 $ 8,706
PUERTO RICO
Postpaid Wireless Subscribers 420,400 426,500
Prepaid Wireless Subscribers 4,000 4,100
----------- -----------
Total Wireless Subscribers 424,400 430,600
Total Wireless Gross Adds 40,800 36,400
Net Gain - Wireless Subscribers (1,800) 3,300
Revenue per Average Wireless Customer (1) $ 63 $ 66
Data Revenue per Average Wireless Customer (3) $ 11.38 $ 8.42
Penetration - Wireless (4) 10.6% 10.8%
Postpaid Churn - Wireless (5) 3.3% 2.5%
Prepaid & Postpaid Churn - Wireless (5) 3.3% 2.6%
Monthly MOU's per Wireless Voice Customer 1,866 1,906
Fiber Route Miles 1,408 1,360
Switched Access Lines 107,900 98,300
Dedicated Access Line Equivalents 681,200 498,400
On-Net Buildings 2,547 2,299
Capital Expenditures - Wireless $ 5,592 $ 6,730
Capital Expenditures - Broadband $ 3,860 $ 5,228
----------- -----------
Capital Expenditures - Total Puerto Rico $ 9,452 $ 11,958
=========== ===========
REVENUES
U.S. Wireless $ 145,934 $ 147,807
----------- -----------
Puerto Rico - Wireless $ 79,739 $ 84,832
Puerto Rico - Broadband $ 36,214 $ 35,667
Puerto Rico - Intercompany $ (2,963) $ (3,093)
----------- -----------
Total Puerto Rico $ 112,990 $ 117,406
----------- -----------
Consolidated $ 258,924 $ 265,213
=========== ===========
ADJUSTED OPERATING INCOME (7)
U.S. Wireless $ 64,989 $ 58,588
----------- -----------
Puerto Rico - Wireless $ 22,882 $ 22,952
Puerto Rico - Broadband $ 19,369 $ 19,753
----------- -----------
Total Puerto Rico $ 42,251 $ 42,705
----------- -----------
Consolidated $ 107,240 $ 101,293
=========== ===========
NET DEBT
Total Debt Less Cash and Cash Equivalents $ 1,777,900 $ 1,888,900
(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 net income
attributable to noncontrolling interest, loss from discontinued
operations, income tax expense, interest expense, net, gain (loss) on
disposition of assets, 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
-----------------------
August 31, August 31,
2009 2008
---------- ----------
REVENUE:
Service revenue $ 247,089 $ 249,003
Equipment sales 11,835 16,210
---------- ----------
258,924 265,213
---------- ----------
COSTS AND EXPENSES:
Cost of services (exclusive of depreciation
and amortization shown below) 51,923 50,676
Cost of equipment sold 31,251 42,149
Sales and marketing 23,470 25,869
General and administrative 48,139 48,096
Depreciation and amortization 31,687 35,544
(Loss) gain on disposition of assets 122 (47)
---------- ----------
186,592 202,287
---------- ----------
OPERATING INCOME 72,332 62,926
---------- ----------
INTEREST EXPENSE, NET (39,952) (44,880)
INCOME FROM CONTINUING OPERATIONS BEFORE
INCOME TAX EXPENSE 32,380 18,046
INCOME TAX EXPENSE (12,692) (10,056)
---------- ----------
INCOME FROM CONTINUING OPERATIONS 19,688 7,990
NET LOSS FROM DISCONTINUED OPERATIONS (94) (337)
---------- ----------
NET INCOME 19,594 7,653
LESS: NET INCOME ATTRIBUTABLE TO
NONCONTROLLING INTEREST (136) (167)
---------- ----------
NET INCOME ATTRIBUTABLE TO CENTENNIAL 19,458 7,486
EARNINGS PER SHARE:
BASIC
EARNINGS PER SHARE FROM CONTINUING OPERATIONS $ 0.18 $ 0.07
LOSS PER SHARE FROM DISCONTINUED OPERATIONS $ (0.00) $ (0.00)
---------- ----------
NET INCOME PER SHARE ATTRIBUTABLE TO
CENTENNIAL $ 0.18 $ 0.07
========== ==========
DILUTED
EARNINGS PER SHARE FROM CONTINUING OPERATIONS $ 0.17 $ 0.07
LOSS PER SHARE FROM DISCONTINUED OPERATIONS $ (0.00) $ (0.00)
---------- ----------
NET INCOME PER SHARE ATTRIBUTABLE TO
CENTENNIAL $ 0.17 $ 0.07
========== ==========
WEIGHTED-AVERAGE SHARES OUTSTANDING:
BASIC 111,135 108,038
========== ==========
DILUTED 112,005 110,200
========== ==========
For investor and media inquiries please contact: Steve E.
Kunszabo Executive Director, Investor Relations 732-556-2220
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