UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File No. 333-26055
------------------------------------------------------------
CCPR SERVICES, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3120943
- ------------------------------------ ------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
110 East 59th Street, New York, New York 10022
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(212) 355-3466
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
The number of shares outstanding of the issuer's common stock as of March 31,
1999 was 1,400.
<PAGE>
CCPR Services, Inc. and Subsidiaries
Index
PART I. FINANCIAL INFORMATION Page
- ------ --------------------- ----
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
March 31, 1999 and December 31, 1998 ........................... 2
Condensed Consolidated Statements of Income -
Three months ended March 31, 1999 and 1998 ..................... 3
Condensed Consolidated Statement of Shareholder's
(Deficiency) - Three months ended March 31, 1999 ............... 4
Condensed Consolidated Statements of Cash Flows-
Three months ended March 31, 1999 and 1998 ..................... 5
Notes to Condensed Consolidated Financial Statements ........... 6
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition ............................. 9
Item 3. Quantitative and Qualitative Disclosures About Market Risks .... 13
PART II. OTHER INFORMATION
- ------- -----------------
Item 6. Exhibits and Reports on Form 8-K ............................... 14
SIGNATURES............................................................... 15
- ----------
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CCPR Services, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
--------------------------------
(Unaudited) (See Note)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 26,963,000 $ 32,146,000
Accounts receivable - trade, less allowance for doubtful
accounts of $1,097,000 (1999) and $1,506,000 (1998) 16,103,000 17,620,000
Due from affiliates 4,534,000 4,283,000
Equipment inventory 10,245,000 7,159,000
Prepaid expenses and other current assets 4,339,000 5,295,000
--------------------------------
Total current assets 62,184,000 66,503,000
Property, plant and equipment, net 122,038,000 118,280,000
Unamortized license acquisition costs 89,745,000 90,394,000
Deferred financing costs, less accumulated amortization
of $1,732,000 (1999) and $1,446,000 (1998) 8,435,000 8,721,000
Other assets, less accumulated amortization of
$750,000 (1999) and $709,000 (1998) 892,000 944,000
--------------------------------
$ 283,294,000 $ 284,842,000
================================
LIABILITIES AND SHAREHOLDER'S (DEFICIENCY)
Current liabilities:
Accounts payable $ 12,603,000 $ 14,640,000
Accrued expenses 16,825,000 20,958,000
Due to affiliates 19,815,000 18,385,000
Deferred revenue 5,985,000 5,337,000
--------------------------------
Total current liabilities 55,228,000 59,320,000
Long-term debt 355,000,000 355,000,000
Obligation under capital lease 9,078,000 9,157,000
Commitments and contingent liabilities
Minority interest 4,806,000 4,693,000
Shareholder's (deficiency):
Common stock - $1 par value; authorized 1,500 shares;
issued and outstanding 1,400 shares 1,000 1,000
Additional paid-in capital - -
(Deficit) (140,819,000) (143,329,000)
--------------------------------
(140,818,000) (143,328,000)
--------------------------------
$ 283,294,000 $ 284,842,000
================================
</TABLE>
Note: The balance sheet at December 31, 1998 has been derived from the audited
financial statements at that date.
See accompanying notes.
2
<PAGE>
CCPR Services, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
---------------------------------
1999 1998
---------------------------------
<S> <C> <C>
REVENUES:
Service revenue $ 35,569,000 $ 29,623,000
Equipment revenue 6,632,000 4,206,000
---------------------------------
42,201,000 33,829,000
COSTS AND EXPENSES:
Cost of equipment sold 5,890,000 3,772,000
Operating expenses 3,133,000 3,458,000
Selling, general and administrative expenses 14,593,000 14,144,000
Depreciation of rental equipment 177,000 83,000
Depreciation expense 6,684,000 5,528,000
Amortization expense 945,000 769,000
---------------------------------
31,422,000 27,754,000
---------------------------------
Operating income 10,779,000 6,075,000
OTHER INCOME (EXPENSE):
Intercompany interest income 2,000 113,000
Interest income and other, net 64,000 30,000
Interest expense (8,194,000) (5,364,000)
---------------------------------
Income before income taxes and minority interest 2,651,000 854,000
Income tax provision (28,000) (67,000)
---------------------------------
Income before minority interest 2,623,000 787,000
Minority interest (113,000) (339,000)
---------------------------------
Net income $ 2,510,000 $ 448,000
=================================
</TABLE>
See accompanying notes.
3
<PAGE>
CCPR Services, Inc. and Subsidiaries
Condensed Consolidated Statement of Shareholder's (Deficiency)
(Unaudited)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
------------------ PAID-IN
SHARES AMOUNT CAPITAL (DEFICIT) TOTAL
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1998 1,400 $ 1,000 $ - $ (143,329,000) $ (143,328,000)
Net income for the three
months ended March 31, 1999 2,510,000 2,510,000
--------------------------------------------------------------------
Balance, March 31, 1999 1,400 $ 1,000 $ - $ (140,819,000) $ (140,818,000)
====================================================================
</TABLE>
See accompanying notes.
4
<PAGE>
CCPR Services, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
-------------------------------
1999 1998
-------------------------------
<S> <C> <C>
Net cash provided by operating activities $ 5,435,000 $ 7,471,000
-------------------------------
INVESTING ACTIVITIES
Purchase of cellular license interest - (8,686,000)
Proceeds from maturities of marketable securities - 235,000
Purchase of property, plant and equipment (10,546,000) (7,343,000)
-------------------------------
Net cash (used in) investing activities (10,546,000) (15,794,000)
-------------------------------
FINANCING ACTIVITIES
Due to CCPR, Inc. - 8,686,000
Principal payments of capital lease obligation (72,000) (65,000)
-------------------------------
Net cash provided by (used in) financing activities (72,000) 8,621,000
-------------------------------
Increase (decrease) in cash and cash equivalents (5,183,000) 298,000
Cash and cash equivalents at beginning of period 32,146,000 9,181,000
-------------------------------
Cash and cash equivalents at end of period $ 26,963,000 $ 9,479,000
===============================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest exclusive
of amounts capitalized $ 13,198,000 $ 10,187,000
Income taxes paid 2,000 3,000
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING ACTIVITIES:
Liabilities incurred to acquire property, plant and equipment $ 5,262,000 $ 1,938,000
Long-term debt issued to acquire cellular license interest - 8,900,000
</TABLE>
See accompanying notes.
5
<PAGE>
CCPR Services, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three months ended March 31, 1999 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 1999. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's annual
report on Form 10-K for the year ended December 31, 1998.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities," which is required to be adopted in fiscal years
beginning after June 15, 1999. Management does not anticipate that the adoption
of this new standard will have a significant effect on earnings or the financial
position of the Company.
NOTE B - MERGER AGREEMENT
On May 3, 1999, Cellular Communications of Puerto Rico, Inc. announced that it
had entered into an agreement with SBC Communications Inc. ("SBC") under which
it would be acquired in a transaction valued at $29.50 per outstanding share.
The announcement also noted that SBC had formed a joint venture with Telefonos
de Mexico S.A. de C.V. ("Telmex") to effect the acquisition.
SBC and Telmex through the joint venture will pay shareholders $29.50 per share
and assume the outstanding debt of Cellular Communications of Puerto Rico, Inc.
The companies aim to complete the merger by late third quarter, pending a vote
by the Cellular Communications of Puerto Rico, Inc. shareholders and regulatory
approvals. The Company is a wholly-owned subsidiary of CCPR, Inc., which is a
wholly-owned subsidiary of Cellular Communications of Puerto Rico, Inc.
NOTE C - UNAMORTIZED LICENSE ACQUISITION COSTS
Unamortized license acquisition costs consist of:
MARCH 31, DECEMBER 31,
1999 1998
------------------------------
(Unaudited)
Deferred cellular license costs $ 3,252,000 $ 3,252,000
Excess of purchase price paid over the fair
market value of tangible assets acquired 97,311,000 97,311,000
------------------------------
100,563,000 100,563,000
Accumulated amortization 10,818,000 10,169,000
------------------------------
$ 89,745,000 $ 90,394,000
==============================
6
<PAGE>
CCPR Services, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)
NOTE C - UNAMORTIZED LICENSE ACQUISITION COSTS (CONTINUED)
In January 1998, the San Juan Cellular Telephone Company ("SJCTC") purchased the
FCC license to own and operate the non-wireline cellular system in Puerto Rico
RSA-4 (Aibonito) and all of the assets of the system. In August 1998, the
Company purchased an additional 23.5% interest in the SJCTC. The pro forma
unaudited consolidated results of operations for the three months ended March
31, 1998 assuming consummation of the SJCTC and RSA-4 acquisitions as of January
1, 1998 are as follows:
Total revenues $ 33,829,000
Net income 557,000
NOTE D - PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of:
MARCH 31, DECEMBER 31,
1999 1998
-------------------------------
(Unaudited)
Land $ 1,928,000 $ 1,928,000
Office building 9,922,000 9,922,000
Operating equipment 140,295,000 132,961,000
Office furniture and other equipment 36,079,000 32,430,000
Rental equipment 1,733,000 1,551,000
Construction in progress 8,413,000 8,060,000
-------------------------------
198,370,000 186,852,000
Accumulated depreciation 76,332,000 68,572,000
-------------------------------
$ 122,038,000 $ 118,280,000
===============================
NOTE E - ACCRUED EXPENSES
Accrued expenses consist of:
MARCH 31, DECEMBER 31,
1999 1998
-------------------------------
(Unaudited)
Accrued franchise, property and income taxes $ 3,539,000 $ 3,353,000
Accrued equipment purchases 4,362,000 2,340,000
Interest payable 3,363,000 8,367,000
Other 5,561,000 6,898,000
-------------------------------
$ 16,825,000 $ 20,958,000
===============================
7
<PAGE>
CCPR Services, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) (continued)
NOTE F - LONG-TERM DEBT
Long-term debt consists of:
MARCH 31, DECEMBER 31,
1999 1998
-------------------------------
(Unaudited)
Senior Subordinated Notes $ 200,000,000 $ 200,000,000
Bank Loan 155,000,000 155,000,000
-------------------------------
$ 355,000,000 $ 355,000,000
===============================
NOTE G - COMMITMENTS AND CONTINGENT LIABILITIES
As of March 31, 1999, the Company was committed to purchase approximately
$2,500,000 for cellular network and other equipment and for construction
services. In addition, as of March 31, 1999, the Company had commitments to
purchase cellular telephones, pagers and accessories of approximately
$3,400,000.
In 1992, the Company entered into an agreement which in effect provides for a
twenty year license to use its service mark in Puerto Rico which is also
licensed to many of the non-wireline cellular systems in the United States. The
Company is required to pay licensing and advertising fees, and to maintain
certain service quality standards. The total fees paid for 1999 were $290,000,
which were determined by the size of the Company's markets.
8
<PAGE>
CCPR Services, Inc. and Subsidiaries
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION.
On May 3, 1999, Cellular Communications of Puerto Rico, Inc. announced that it
had entered into an agreement with SBC Communications Inc. ("SBC") under which
it would be acquired in a transaction valued at $29.50 per outstanding share.
The announcement also noted that SBC had formed a joint venture with Telefonos
de Mexico S.A. de C.V. ("Telmex") to effect the acquisition.
SBC and Telmex through the joint venture will pay shareholders $29.50 per share
and assume the outstanding debt of Cellular Communications of Puerto Rico, Inc.
The companies aim to complete the merger by late third quarter, pending a vote
by the Cellular Communications of Puerto Rico, Inc. shareholders and regulatory
approvals. The Company is a wholly-owned subsidiary of CCPR, Inc., which is a
wholly-owned subsidiary of Cellular Communications of Puerto Rico, Inc.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999 AND 1998
- ------------------------------------------
Service revenue increased to $35,569,000 from $29,623,000 as a result of
subscriber growth. Lower average revenue and minutes of use of new prepaid
subscribers and the selection by existing subscribers of alternate rate plans
resulted in a decrease in average monthly revenue per cellular subscriber. The
Company expects these trends to continue for the foreseeable future.
The income from equipment, before depreciation of rental equipment, increased to
$742,000 from $434,000 primarily because the Company is not selling telephones
below their cost to prepaid subscribers. Reductions in the cost of cellular
telephones also contributed to this change. The Company intends to continue to
sell telephones at or above cost to prepaid subscribers. The Company expects the
growth in prepaid subscribers to continue, therefore the Company expects the
trend in equipment income to continue for the foreseeable future.
Operating expenses decreased to $3,133,000 from $3,458,000 primarily due to a
reduction in interconnection expense, offset by additional costs associated with
the expanded network. Operating expenses as a percentage of service revenue
decreased to 9% in 1999 from 12% in 1998.
Selling, general and administrative expenses increased to $14,593,000 from
$14,144,000 as a result of all of the following: an increase in selling and
marketing costs, property taxes and subscriber billing expense. These increases
were partially offset by a decrease in bad debt expense.
Depreciation of rental equipment increased to $177,000 from $83,000 due to an
increase in the number of rental telephones.
9
<PAGE>
CCPR Services, Inc. and Subsidiaries
Depreciation expense increased to $6,684,000 from $5,528,000 primarily because
of an increase in property, plant and equipment.
Amortization expense increased to $945,000 from $769,000 primarily due to an
increase in deferred financing costs.
Interest income and other, net, increased to $64,000 from $30,000 primarily due
to an increase in interest income on short-term investments.
Interest expense increased to $8,194,000 from $5,364,000 as a result of the new
bank loan commencing August 1998.
The provision for income taxes decreased to $28,000 from $67,000 due to a
decrease in Puerto Rico taxable income.
LIQUIDITY AND CAPITAL RESOURCES
The Company requires capital to expand its Puerto Rico cellular system and for
debt service. The Company is currently adding cell sites and increasing capacity
throughout Puerto Rico. The Company expects to use approximately $28,000,000 in
the remainder of 1999 for contemplated additions to the Puerto Rico cellular
network and for other non-cell site related capital expenditures. The Company's
commitments at March 31, 1999 of $2,500,000 for cellular network and other
equipment and for construction services are included in the total anticipated
expenditures. The Company expects to be able to meet these requirements with
cash and cash equivalents on hand and cash from operations.
In August 1998, the Company entered into a $170,000,000 credit agreement with
various banks. The Company has $15,000,000 available under the bank loan until
September 2001. The terms include the payment of interest at least quarterly at
a floating rate, which is, at the Company's option, either (a) the greater of
the bank's prime rate or the Federal Funds Rate plus 0.5% or (b) LIBOR, plus,
based on the ratio of CCPR, Inc. ("CCPR") and subsidiaries' debt to cash flow
and the floating rate in effect, either 0% to 1.25% or 1.25% to 2.5%. The
effective rate on the Company's borrowings as of March 31, 1999 was 7.62%. The
terms also include an unused commitment fee of 0.5% per annum which is payable
quarterly. Principal payments commence on September 30, 2001 based on two
amortization schedules. One schedule is for the first $95,000,000 borrowed which
includes quarterly payments until June 2006. The other schedule is for the
remainder of the amount borrowed which includes quarterly payments until June
2005.
In connection with the bank loan, CCPR has pledged to the banks the stock of its
subsidiaries and CCPR and its subsidiaries have given the banks a security
interest in their assets. CCPR and its other subsidiaries have guaranteed the
payment in full when due of the principal, interest and fees owing under the
bank loan, which guarantee is full, joint and several. The bank loan also
includes, among other things, restrictions on CCPR and its subsidiaries (i)
dividend payments, (ii) acquisitions, (iii) investments, (iv) sales and
dispositions of assets, (v) additional
10
<PAGE>
CCPR Services, Inc. and Subsidiaries
indebtedness and (vi) liens. The bank loan requires that CCPR and subsidiaries
maintain certain ratios of indebtedness to cash flow, fixed charges to cash flow
and debt service to cash flow.
In January 1997, the Company issued $200,000,000 principal amount 10% Senior
Subordinated Notes due 2007 (the "Notes"). The Notes are unconditionally
guaranteed by CCPR, which guarantee is full, joint and several. The Notes are
due on February 1, 2007. Interest on the Notes is payable semiannually on
February 1 and August 1. The Notes are redeemable, in whole or in part, at the
option of the Company at any time on or after February 1, 2002, at a redemption
price of 105% that declines annually to 100% in 2005, in each case together with
accrued and unpaid interest to the redemption date. The Indenture contains
certain conenants with respect to the Company, CCPR and certain subsidiaries
that limit their ability to, among other things: (i) incur additional
indebtedness, (ii) pay dividends or make other distributions or restricted
payments, (iii) create liens, (iv) sell assets, (v) enter into mergers or
consolidations or (vi) sell or issue stock of subsidiaries.
The Company is highly leveraged. Such leverage could limit the Company's ability
to obtain additional financing for working capital, capital expenditures,
acquisitions or general corporate purposes, increases its vulnerability to
adverse changes in general economic conditions or increases in interest rates,
and requires that a substantial portion of cash flow from operations be
dedicated to debt service requirements. The leveraged nature of the Company and
the Company's continued compliance with the restrictions in its debt agreements
could limit its ability to respond to market conditions, meet extraordinary
capital needs or restrict other business activities such as acquisitions.
Management does not anticipate that the Company and its subsidiaries will
generate sufficient cash flow from operations to repay at maturity the entire
principal amount of the outstanding indebtedness. Accordingly, the Company may
be required to consider a number of measures, including (i) refinancing all or a
portion of such indebtedness, (ii) seeking modifications of the terms of such
indebtedness, (iii) seeking additional debt financing, which would be subject to
obtaining necessary lender consents, (iv) seeking additional equity financing or
(v) a combination of the foregoing. The particular measures the Company may
undertake and the ability of the Company to accomplish those measures will
depend on the financial condition of the Company and its subsidiaries at the
time, as well as a number of factors beyond the control of the Company. No
assurance can be given that any of the foregoing measures can be accomplished,
or can be accomplished on terms which are favorable to the Company.
Cash provided by operating activities was $5,435,000 and $7,471,000 for the
three months ended March 31, 1999 and 1998, respectively. The decrease is
primarily due to changes in operating assets and liabilities. Purchases of
property, plant and equipment of $10,546,000 in 1999 were primarily for
additional cell sites and increased capacity in the Puerto Rico cellular
network.
Write-offs of accounts receivable, net of recoveries as a percentage of service
revenue was 2.76% for the three months ended March 31, 1999 compared to 3.86%
for the year ended December 31, 1998. This percentage decreased because the
Company and its subsidiaries have increased prepaid subscribers.
11
<PAGE>
CCPR Services, Inc. and Subsidiaries
YEAR 2000
The Company has a comprehensive Year 2000 project designed to identify and
assess the risks associated with its information systems, products, operations
and infrastructure, suppliers, and customers that are not Year 2000 compliant,
and to develop, implement and test remediation and contingency plans to mitigate
these risks. The project comprises four phases: (1) identification of risks, (2)
assessment of risks, (3) development of remediation and contingency plans and
(4) implementation and testing. The Company has incurred approximately
$1,500,000 related to its Year 2000 project and estimates that it will incur
costs of $1,100,000 to complete the renovation, validation and implementation
phases and achieve year 2000 readiness.
The Company's assessment is focused on its information technology ("IT")
systems, in particular its cellular network and its billing, provisioning and
customer service system. The Company is also evaluating the readiness of
third-parties such as utility companies that the Company depends upon for the
operation of its network. The Company's leased office space and other non-IT
equipment which may have embedded technology that may be affected by the year
2000 problem is being separately assessed. The Company has completed the
assessment of its IT systems and expects to complete the remediation and testing
of its IT systems year 2000 readiness by June 1999. The evaluation of the
readiness of the major third-parties is expected to be completed by June 1999.
The Company is also reviewing its detailed contingency plans for potential
modifications to address year 2000 issues. This review is expected to be
completed by June 1999.
The Company currently believes that the most reasonably likely worst case
scenario with respect to the Year 2000 is the failure of the electric company or
the local exchange telephone company to be ready for the year 2000. This could
cause a temporary interruption in the provision of service to customers or in
the Company's ability to complete telephone calls, or both. Either or both could
have a material adverse effect on operations, although it is not possible at
this time to quantify the amount of revenues and gross profit that might be
lost, or the costs that could be incurred. The contingency plan to address some
of these risks involve utilizing back-up power supplies and alternative
interconnections, which would require time to implement and may be constrained
due to capacity and/or training limitations. The Company has had experience in
implementing its disaster recovery plan due to Hurricane Georges, which struck
Puerto Rico and the U.S. Virgin Islands in September 1998 and caused the
electric company and local exchange telephone company to experience service
interruptions.
As the Year 2000 project continues, the Company may discover additional
problems, may not be able to develop, implement or test remediation or
contingency plans, or may find that the costs of these activities exceed current
expectations. In many cases, the Company is relying on assurances from suppliers
that new and upgraded information systems and other products will be Year 2000
ready. The Company plans to test such third-party systems and products, but
cannot be sure that its tests will be adequate or that, if problems are
identified, they will be addressed by the supplier in a timely and satisfactory
way.
Because the Company uses a variety of information systems and has additional
systems embedded in its operations and infrastructure, the Company cannot be
sure that all of its systems
12
<PAGE>
CCPR Services, Inc. and Subsidiaries
will work together in a Year 2000-ready fashion. Furthermore, the Company cannot
be sure that it will not suffer business interruptions, either because of its
own Year 2000 problems or those of third-parties upon whom the Company is
reliant for services. The Company is continuing to evaluate its Year
2000-related risks and corrective actions. However, the risks associated with
the Year 2000 problem are pervasive and complex; they can be difficult to
identify and address, and can result in material adverse consequences to the
Company. Even if the Company, in a timely manner, completes all of its
assessments, identifies and test remediation plans believed to be adequate, and
develops contingency plans believed to be adequate, some problems may not be
identified or corrected in time to prevent material adverse consequences to the
Company.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Certain statements contained herein constitute "forward-looking statements" as
that term is defined under the Private Securities Litigation Reform Act of 1995.
When used herein, the words, "believe," "anticipate," "should," "intend,"
"plan," "will," "expects," "estimates," "projects," "positioned," "strategy,"
and similar expressions identify such forward-looking statements. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements of
the Company, or industry results, to be materially different from those
contemplated, projected, forecasted, estimated or budgeted, whether expressed or
implied, by such forward-looking statements. Such factors include the following:
general economic and business conditions in Puerto Rico, industry trends, the
Company's ability to continue to design and build its network, install
facilities, obtain and maintain any required government licenses or approvals
and finance construction and development, all in a timely manner, at reasonable
costs and on satisfactory terms and conditions, as well as assumptions about
customer acceptance, churn rates, overall market penetration and competition
from providers of alternative services, the impact of new business opportunities
requiring significant up-front investment, Year 2000 readiness, and
availability, terms and deployment of capital.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
There have been no material changes in the reported market risks since the end
of the most recent fiscal year.
13
<PAGE>
CCPR Services, Inc. and Subsidiaries
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27. Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the quarter
ended March 31, 1999.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CCPR SERVICES, INC.
Date: May 12, 1999 By: /s/ Stanton N. Williams
----------------------------------
Stanton N. Williams
Vice President and Chief
Financial Officer
Date: May 12, 1999 By: /s/ Gregg Gorelick
----------------------------------
Gregg Gorelick
Vice President-Controller
(Principal Accounting Officer)
15
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 26,963,000
<SECURITIES> 0
<RECEIVABLES> 17,200,000
<ALLOWANCES> (1,097,000)
<INVENTORY> 10,245,000
<CURRENT-ASSETS> 8,873,000
<PP&E> 198,370,000
<DEPRECIATION> (76,332,000)
<TOTAL-ASSETS> 283,294,000
<CURRENT-LIABILITIES> 55,228,000
<BONDS> 355,000,000
0
0
<COMMON> 1,000
<OTHER-SE> (140,819,000)
<TOTAL-LIABILITY-AND-EQUITY> 283,294,000
<SALES> 6,632,000
<TOTAL-REVENUES> 42,201,000
<CGS> 5,890,000
<TOTAL-COSTS> 9,023,000
<OTHER-EXPENSES> 14,593,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,194,000
<INCOME-PRETAX> 2,651,000
<INCOME-TAX> 28,000
<INCOME-CONTINUING> 2,623,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,510,000
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
