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 August 31, 1999
OR
[ ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
for the transition period from to
Commission file number 0-19603
Centennial Cellular Corp.
(Exact name of registrant as specified in its charter)
Delaware 06-1242753
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1305 Campus Parkway
Neptune, NJ 07753
(Address of principal executive offices, including zip code)
(732) 919-1000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.
Class A Common 31,200,961 outstanding shares as of October 8, 1999
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
CENTENNIAL CELLULAR CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
<TABLE>
<CAPTION>
August 31,
1999 May 31,
(Unaudited) 1999
---------------- -------------
<C> <C>
<S>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 48,212 $ 51,141
Restricted investments 39,261 39,480
Accounts receivable, less allowance for doubtful
accounts of $4,185 and $3,763, respectively 48,879 46,326
Inventory - phones and accessories, less allowance for
obsolescence of $1,002 and $1,315, respectively 7,987 7,631
Prepaid expenses and other current assets 1,701 737
------------- -------------
TOTAL CURRENT ASSETS 146,040 145,315
PROPERTY, PLANT AND EQUIPMENT - net 316,692 300,120
RESTRICTED INVESTMENTS, long-term - 19,038
EQUITY INVESTMENTS IN WIRELESS SYSTEMS - net 76,144 75,723
DEBT ISSUANCE COSTS, less accumulated amortization of
$4,654 and $2,905, respectively 56,731 58,307
CELLULAR TELEPHONE LICENSES, less accumulated
amortization of $300,153 and $298,725, respectively 201,171 202,599
PERSONAL COMMUNICATIONS SERVICES LICENSE, less accumulated
amortization of $4,285 and $3,893, respectively 58,474 58,866
GOODWILL, less accumulated amortization of $31,390
and $30,430, respectively 119,798 119,172
OTHER ASSETS - net 9,399 7,141
------------- -------------
TOTAL $ 984,449 $ 986,281
============= =============
</TABLE>
See notes to condensed consolidated financial statements
1
<PAGE>
CENTENNIAL CELLULAR CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(CONTINUED)
(Amounts in thousands, except share data)
<TABLE>
<CAPTION>
August 31,
1999 May 31,
(Unaudited) 1999
----------------- ---------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Current portion of long term debt $ 4,500 $ 4,500
Accounts payable 24,279 22,968
Accrued expenses and other current liabilities 76,412 102,371
Payable to affiliates 125 125
----------------- ---------------
TOTAL CURRENT LIABILITIES 105,316 129,964
LONG-TERM DEBT 1,474,902 1,459,295
COMMON STOCKHOLDERS' EQUITY (DEFICIT):
Common stock par value $.01 per share:
Class A, 1 vote per share, 50,000,000 shares authorized
issued, 31,224,462 shares;and outstanding 31,200,961 shares, 312 312
Common stock issuable 1,530 -
Additional paid-in capital 419,374 419,374
Accumulated deficit (1,015,908) (1,021,587)
----------------- ---------------
(594,692) (601,901)
Less: Cost of 23,501 Class A common shares in treasury (1,077) (1,077)
----------------- ---------------
TOTAL COMMON STOCKHOLDERS' EQUITY (DEFICIT) (595,769) (602,978)
----------------- ---------------
TOTAL $ 984,449 $ 986,281
================= ===============
</TABLE>
See notes to condensed consolidated financial statements
2
<PAGE>
CENTENNIAL CELLULAR CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(Amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended
--------------------------------------------
August 31, August 31,
1999 1998
------------------ -------------------
<S> <C> <C>
REVENUE:
Service revenue $ 112,955 $ 76,191
Equipment sales 4,317 1,255
----------------- -------------------
117,272 77,446
----------------- -------------------
COSTS AND EXPENSES:
Cost of equipment sold 7,599 4,533
Cost of services 15,705 10,382
Sales and marketing 17,774 11,031
General and administrative 18,268 12,865
Depreciation and amortization 18,984 31,804
----------------- ------------------
78,330 70,615
----------------- ------------------
OPERATING INCOME 38,942 6,831
INCOME FROM EQUITY INVESTMENTS 3,484 3,649
(LOSS) GAIN ON DISPOSITION OF ASSETS (2) 9,556
INTEREST EXPENSE - NET (35,934) (11,131)
------------------ ------------------
INCOME BEFORE INCOME TAX EXPENSE AND MINORITY INTEREST 6,490 8,905
INCOME TAX EXPENSE (856) (3,008)
INCOME BEFORE MINORITY INTEREST 5,634 5,897
MINORITY INTEREST IN LOSS (INCOME) OF SUBSIDIARIES 45 (242)
------------------ ------------------
NET INCOME $ 5,679 $ 5,655
================== ==================
DIVIDEND REQUIREMENT ON PREFERRED STOCK $ - $ (4,113)
================== ==================
INCOME APPLICABLE TO COMMON SHARES $ 5,679 $ 1,542
================== ==================
EARNINGS PER COMMON SHARE - BASIC AND DILUTED $ 0.18 $ 0.03
================== ==================
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING DURING THE PERIOD:
BASIC 31,213 55,799
================== ==================
DILUTED 32,334 57,782
================== ==================
</TABLE>
See notes to condensed consolidated financial statements
3
<PAGE>
CENTENNIAL CELLULAR CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDERS' EQUITY (DEFICIT)
(Amounts in thousands, except share data)
<TABLE>
<CAPTION>
Common Stock Additional
---------------------------------------
Class A Class B Common Paid-In Treasury Deferred Accumu-
-------------------- ----------------- Stock Compen- lated
Shares Dollars Shares Dollars Issuable Capital Stock sation Deficit Total
----------- ------- ---------- ------- ------- -------- --------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at June 1, 1998 50,150,049 $501 10,544,113 $105 $ - $357,684 $(30,614) $(3,029) $(284,238) $40,409
Common stock issued in
connection with incentive plans 1,403,823 14 - - - 4,880 - - - 4,894
Common stock issued in
connection with employee 48,880 - - - - 257 - - - 257
stock purchase plan
Deferred compensation
Employment agreement 50,003 1 - - - 749 - (750) - -
Recapitalization:
Repurchase of the class A & B
common stock (44,447,328) (444) (10,544,113) (105) - (340,336) - 2,573 (692,002)(1,030,314)
Retirement of treasury stock (4,896,627) (49) - - - - 30,614 - (30,565) -
Recapitalization costs - - - - - (16,165) - - 65,385 49,220
Capital contributions 28,915,662 289 - - - 422,211 - - - 422,500
Preferred stock dividends - - - - - (9,906) - - - (9,906)
Treasury stock purchases - - - - - - (1,077) - - (1,077)
Amortization of deferred - - - - - - - 1,206 - 1,206
compensation
Net loss - - - - - - - - (80,167) (80,167)
------------- ------ ---------- ------- ------ ------- -------- ------ --------- ---------
Balance at May 31, 1999 31,224,462 312 - - - 419,374 (1,077) - (1,021,587) (602,978)
Common stock issuable - - - - 1,530 - - - - 1,530
Net income - - - - - - - - 5,679 5,679
------------- ------ ---------- ------- ------ ------- -------- ------ ---------- --------
Balance at August 31, 1999
(unaudited) 31,224,462 $ 312 - $ - $ 1,530 $419,374 $(1,077) $ - $(1,015,908) $(595,769)
============= ====== ========== ======= ====== ======== ======== ====== ========== ========
</TABLE>
See notes to condensed consolidated financial statements
4
<PAGE>
CENTENNIAL CELLULAR CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Amounts in thousands)
<TABLE>
<CAPTION>
Three Months Ended
-------------------------------------
August 31, August 31,
1999 1998
--------------- --------------
<S> <C> <C>
OPERATING ACTIVITIES:
Cash received from subscribers and others $ 123,549 $ 83,306
Cash paid to suppliers, employees and
governmental agencies (70,526) (48,808)
Interest paid (59,307) (2,954)
--------------- --------------
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES (6,284) 31,544
--------------- --------------
INVESTING ACTIVITIES:
Proceeds from disposition of assets 3 -
Capital expenditures (32,385) (20,354)
Acquisition of other assets - (2,200)
Disposition of equity investment - 13,500
Acquisition, net of cash acquired (1,968) -
Distributions received from equity investments 2,835 3,675
Proceeds from maturity of restricted securities 19,998 -
--------------- --------------
NET CASH USED IN INVESTING ACTIVITIES (11,517) (5,379)
--------------- --------------
FINANCING ACTIVITIES:
Proceeds from the issuance of long-term debt 16,170 -
Repayment of long-term debt (1,125) (10,000)
Debt issuance costs paid (173) -
Proceeds from issuance of class A common stock - 10
Recapitalization costs paid - (1,410)
--------------- --------------
NET CASH PROVIDED BY(USED IN) FINANCING ACTIVITIES 14,872 (11,400)
--------------- --------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (2,929) 14,765
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 51,141 14,620
--------------- --------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 48,212 $ 29,385
=============== ==============
</TABLE>
See notes to condensed consolidated financial statements
5
<PAGE>
CENTENNIAL CELLULAR CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)
(Unaudited)
(Amounts in thousands)
<TABLE>
<CAPTION>
Three Months Ended
--------------------------------------
August 31, August 31,
1999 1998
--------------- ----------------
<S> <C> <C>
RECONCILIATION OF NET INCOME TO NET CASH
(USED IN)PROVIDED BY OPERATING ACTIVITIES:
Net income $ 5,679 $ 5,655
-------------- ---------------
Adjustments to reconcile net income to net cash
(used in) provided by operating activities:
Depreciation and amortization 18,984 31,804
Minority interest in (loss) income of subsidiaries (45) 242
Deferred income taxes (320) 3,008
Equity in undistributed earnings of investee companies (3,484) (3,649)
Loss (Gain) on disposition of assets 2 (9,556)
Other 1,748 746
Change in assets and liabilities net of effects of
acquisitions:
Accounts receivable - (increase) (3,075) (5,672)
Prepaid expenses and other current assets -
(increase) (1,431) (3,488)
Accounts payable, accrued expenses and
other current liabilities- (decrease) increase (24,474) 11,806
Customer deposits and prepayments -
increase 132 648
--------------- ----------------
Total adjustments (11,963) 25,889
--------------- ----------------
Net cash (used in) provided by operating activities $ (6,284) $ 31,544
=============== ================
</TABLE>
See notes to condensed consolidated financial statements
6
<PAGE>
CENTENNIAL CELLULAR CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollar amounts in thousands except share data)
Note 1. Interim Financial Statements
In the opinion of management, the accompanying interim unaudited condensed
consolidated financial statements contain all adjustments (consisting only of
normal recurring accruals) necessary to present fairly the consolidated
financial position of Centennial Cellular Corp. and Subsidiaries (the "Company")
as of August 31, 1999 and the results of its consolidated operations and cash
flows for the three months ended August 31, 1999 and 1998. These financial
statements do not include all disclosures required by generally accepted
accounting principles. The statements should be read in conjunction with the
consolidated financial statements and notes thereto included in the Company's
May 31, 1999 Annual Report on Form 10-K, which includes a summary of significant
accounting policies and other disclosures. The consolidated balance sheet at May
31, 1999 is audited.
Reclassifications
Certain prior period balances have been reclassified to conform with the current
period presentation.
Stock Split
On January 13, 1999, outstanding shares of class A common stock were split
three-for-one. All class A common share and per share amounts have been restated
to reflect the split.
Note 2. Long-Term Debt
The Company and its subsidiaries had the following debt outstanding at August
31, 1999 and May 31,1999:
<TABLE>
<CAPTION>
August 31, May 31,
1999 1999
------------ -----------
<S> <C> <C>
Centennial 8 7/8% Senior Notes due 2001.............. $ 1,388 $ 1,388
Centennial 10 1/8% Senior Notes due 2005............. 219 219
Term Loans........................................... 896,625 897,750
Revolving Credit Facility............................ 46,100 36,000
Subordinated Notes due 2009 (Mezzanine Debt)......... 165,070 158,438
Centennial 10 3/4%Senior Subordinated Notes due 2008. 370,000 370,000
---------- --------
Total Long Term Debt................................. $1,479,402 $1,463,795
Current Portion of Term Loan (4,500) (4,500)
---------- --------
Net Long Term Debt $1,474,902 $1,459,295
========== ========
</TABLE>
7
<PAGE>
The aggregate annual principal payments for the next five years and thereafter
under the Company's debt at August 31, 1999 are summarized as follows:
August 31, 2000 $ 4,500
August 31, 2001 4,500
August 31, 2002 39,638
August 31, 2003 66,375
August 31, 2004 88,875
August 31, 2005 and thereafter 1,275,514
-------------
$ 1,479,402
=============
The Company was in compliance with all covenants of their debt agreements at
August 31, 1999. Interest expense, as reflected on the financial statements has
been partially offset by interest income. The gross interest expense for the
three months ended August 31, 1999 and 1998 were $37,560 and $11,479,
respectively.
Note 3. Commitments and Contingencies
The Company acquired Integrated Systems, Inc. and Spiderlink Puerto Rico
Internet Services in August 1999. In connection with such acquisition, the
Company will issue 40,000 shares of its class A common stock. Such shares are
included in Common stock issuable in the Company's Consolidated Balance Sheet.
An additional 40,000 shares are issuable upon the resolution of certain
contingencies.
Note 4. Segment Information
The Company adopted SFAS No. 131 "Disclosures about Segments of an Enterprise
and Related Information" during fiscal 1999. The Company's consolidated
financial statements include two distinct business segments: Domestic and Puerto
Rico. The Company determines its segments based on geographic location. The
Company measures the operating performance of each segment based on EBITDA.
EBITDA is defined as earnings before income from minority cellular investment
interests, allocations to minority interests in consolidated subsidiaries,
interest expense, interest income, income taxes, depreciation and amortization,
gain on sale of assets and other non-recurring charges.
8
<PAGE>
Information about the Company's operations in its two business segments for the
three months ended August 31, 1999 and 1998 is as follows:
<TABLE>
<CAPTION>
Domestic Puerto Rico Eliminations Consolidated
----------------- ------------------ -------------------- ----- ----------------
<S> <C> <C> <C> <C>
Three months ended August 31, 1999
- ---------------------------------------------------
Total revenues $72,519 $44,753 $ - $117,272
EBITDA 38,750 19,176 - 57,926
Total assets 830,275 269,147 (114,973) (a) 984,449
Capital expenditures 10,685 21,700 - 32,385
Three months ended August 31, 1998
- ---------------------------------------------------
Total revenues $53,902 $ 23,544 $ - $ 77,446
EBITDA 29,112 9,523 - 38,635
Total assets 724,804 219,134 (93,182) (a) 850,756
Capital expenditures 8,204 12,150 - 20,354
(a) Elimination of intercompany investments
</TABLE>
Reconciliation of Income before Income Tax Expense and Minority Interest
<TABLE>
<CAPTION>
Three months ended August 31,
1999 1998
-------------- -----------------
<S> <C> <C>
EBITDA for reportable segments $ 57,926 $38,635
Interest Expense (net) (35,934) (11,131)
Depreciation and Amortization (18,984) (31,804)
Income from Equity Investments 3,484 3,649
(Loss) Gain on disposition of assets (2) 9,556
-------------- -----------------
Income before Income Tax Expense and Minority Interest $6,490 $ 8,905
======== =========
</TABLE>
<PAGE>
9
Note 5. Consolidating Financial Data
Centennial Cellular Operating Co. LLC is a wholly-owned subsidiary of
the Company and is a joint and several co-issuer on the $370,000
senior subordinated notes issued by the Company. Separate financial
statements and other disclosures concerning Centennial Cellular
Operating Co. LLC are not presented because they are not material to
investors.
CONSOLIDATING BALANCE SHEET FINANCIAL DATA
As of August 31, 1999
(Amounts in thousands)
<TABLE>
<CAPTION>
Centennial
Centennial Centennial Cellular
Cellular Operating Cellular Corp. and
Co. LLC Corp. Eliminations Subsidiaries
-------------------- ----------- ---------------- ---------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 48,212 $ - $ - $ 48,212
Restricted investments 39,261 - - 39,261
Accounts receivable - net 48,879 - - 48,879
Inventory - phones and accessories - net 7,987 - - 7,987
Prepaid expenses and other current assets 1,701 - - 1,701
-------------------- ----------- ---------------- ---------------
Total current assets 146,040 - - 146,040
Property, plant & equipment - net 316,692 - - 316,692
Equity investments - cell systems 76,144 - - 76,144
Debt issuance costs - net 56,731 - - 56,731
Cellular telephone licenses - net 201,171 - - 201,171
Personal communications services licenses - net 58,474 - - 58,474
Goodwill - net 119,798 - - 119,798
Intercompany - 2,128 (2,128) -
Other assets - net (170,601) 180,000 - 9,399
-------------------- ----------- ---------------- ---------------
Total $ 804,449 $182,128 $ (2,128) $ 984,449
==================== =========== ================ ===============
</TABLE>
10
<PAGE>
Note 5 - Continued
CONSOLIDATING BALANCE SHEET FINANCIAL DATA
(CONTINUED)
As of August 31, 1999
(Amounts in thousands)
<TABLE>
<CAPTION>
Centennial
Centennial Centennial Cellular
Cellular Operating Cellular Corp. and
Co. LLC Corp. Eliminations Subsidiaries
------------------- --------------- ----------------- -----------------
<S> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Current Portion of long term debt $ 4,500 $ - $ - $ 4,500
Accounts payable 24,279 - 24,279
Accrued expenses and other
current liabilities 76,194 218 - 76,412
Payable to affiliates 125 - - 125
------------------- --------------- ------------------ -----------------
Total current liabilities 105,098 218 - 105,316
Long-term debt 1,309,832 165,070 - 1,474,902
Intercompany 2,128 - (2,128) -
Common stockholders' equity (deficit):
Class A Common stock 296 16 - 312
Common stock issuable 1,530 - - 1,530
Additional paid-in capital 396,890 22,484 - 419,374
Accumulated deficit (1,010,248) (5,660) - (1,015,908)
------------------- --------------- ------------------ -----------------
(611,532) 16,840 - (594,692)
Less: treasury shares (1,077) - - (1,077)
------------------- --------------- ------------------ -----------------
Total common stockholders' equity (deficit) (612,609) 16,840 - (595,769)
------------------- --------------- ------------------ -----------------
Total $ 804,449 $ 182,128 $ (2,128) $ 984,449
=================== =============== ================== =================
</TABLE>
11
<PAGE>
Note 5 - Continued
CONSOLIDATING STATEMENT OF OPERATIONS FINANCIAL DATA
FOR THE THREE MONTHS ENDED AUGUST 31, 1999
(Amounts in thousands)
<TABLE>
<CAPTION>
Centennial
Centennial Centennial Cellular
Cellular Operating Cellular Corp. and
Co. LLC Corp. Subsidiaries
--------------------- ------------------ -----------------------
<S> <C> <C> <C>
Revenue $ 117,272 $ - $ 117,272
Costs and expenses:
Cost of equipment sold 7,599 - 7,599
Cost of services 15,705 - 15,705
Sales and Marketing 17,774 - 17,774
General & Administrative 18,268 - 18,268
Depreciation and amortization 18,984 - 18,984
--------------------- ------------------ -----------------------
78,330 - 78,330
--------------------- ------------------ -----------------------
Operating income 38,942 - 38,942
--------------------- ------------------ -----------------------
Income from equity investments 3,484 - 3,484
Loss on disposition of assets (2) - (2)
Interest expense - net (30,274) (5,660) (35,934)
--------------------- ------------------ -----------------------
Income (loss) before income tax expense and minority interest 12,150 (5,660) 6,490
Income tax expense (856) - (856)
--------------------- ------------------ -----------------------
Income (loss) before minority interest 11,294 (5,660) 5,634
Minority interest in loss
of subsidiaries 45 - 45
--------------------- ------------------ -----------------------
Net Income (Loss) $ 11,339 $ (5,660) $ 5,679
===================== ================== =======================
</TABLE>
12
<PAGE>
Note 5 - Continued
CONSOLIDATING STATEMENT OF CASH FLOWS FINANCIAL DATA
For the Three Months Ended August 31, 1999
(Amounts in thousands)
<TABLE>
<CAPTION>
Centennial
Centennial Centennial Cellular
Cellular Operating Cellular Corp. and
Co. LLC Corp. Eliminations Subsidiaries
------------------ ------------- --------------- ---------------
OPERATING ACTIVITIES:
<S> <C> <C> <C> <C>
Cash received from subscribers and others $ 123,549 $ - $ - $ 123,549
Cash paid to suppliers, employees and
governmental agencies (70,526) (70,526)
Interest paid (46,112) (13,195) - (59,307)
---------------- ------------- --------------- ---------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 6,911 (13,195) - (6,284)
---------------- ------------- --------------- ---------------
INVESTING ACTIVITIES:
Proceeds from disposition of assets 3 - - 3
Capital expenditures (32,385) - - (32,385)
Proceeds from maturity of restricted securities 19,998 - - 19,998
Acquisition, net of cash acquired (1,968) - - (1,968)
Distributions received from equity investments 2,835 - - 2,835
---------------- ------------- --------------- -------------
NET CASH USED IN INVESTING ACTIVITIES (11,517) - - (11,517)
---------------- ------------- --------------- -------------
FINANCING ACTIVITIES:
Proceeds from the issuance of long-term debt 10,100 6,070 - 16,170
Repayment of long-term debt (1,125) - - (1,125)
Debt issuance costs paid (173) - - (173)
Cash advances to affiliates (from parent) (7,125) 7,125 - -
------------------ ------------- --------------- -------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,677 13,195 - 14,872
------------------- ------------- --------------- -------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (2,929) - - (2,929)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 51,141 - - 51,141
------------------ ------------- --------------- -------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 48,212 $ - $ - $ 48,212
================== ============= =============== =============
</TABLE>
13
<PAGE>
Note 5 - Continued
CONSOLIDATING STATEMENT OF CASH FLOWS FINANCIAL DATA
For the Three Months Ended August 31, 1999
(CONTINUED)
(Amounts in thousands)
<TABLE>
<CAPTION>
Centennial
Centennial Centennial Cellular
Cellular Operating Cellular Corp. and
Co. LLC Corp. Eliminations Subsidiaries
---------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
RECONCILIATION OF NET INCOME (LOSS) TO NET CASH
PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Net income (loss) $ 11,339 $ (5,660) $ - $ 5,679
---------------- -------------- -------------- ---------------
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 18,422 562 - 18,984
Minority interest in loss of subsidiaries (45) - - (45)
Deferred income taxes (320) - - (320)
Equity in undistributed earnings of investee companies (3,484) - - (3,484)
Loss on disposition of assets 2 - - 2
Other 1,748 - - 1,748
Change in assets and liabilities net of effects of
acquisitions:
Accounts receivable - (increase) (3,075) - - (3,075)
Prepaid expenses and other current assets -
(increase) (1,431) - - (1,431)
Accounts payable, accrued expenses and
other current liabilities-(decrease) (16,377) (8,097) - (24,474)
Customer deposits and prepayments -
increase 132 - - 132
---------------- -------------- -------------- --------------
Total adjustments (4,428) (7,535) - (11,963)
---------------- -------------- -------------- --------------
Net cash provided by (used in) operating activities $ 6,911 $ (13,195) $ - $ (6,284)
================ ============== ============== ==============
</TABLE>
14
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information contained in this Part I, Item 2 updates, and should be read in
conjunction with, information set forth in Part II, Items 7 and 8, in the
Company's Annual Report on Form 10-K for the fiscal year ended May 31, 1999, in
addition to the interim consolidated financial statements and accompanying notes
presented in Part 1, Item 1 of this Form 10-Q.
Results of Operations (Amounts in thousands, except subscriber and share data)
Overview
The Company's results for the three months ended August 31, 1999 reflect strong
growth in the subscriber base in both the Company's Domestic Operations and
Puerto Rico Operations. The Company's wireless subscribers at August 31, 1999
were 486,300 as compared to 354,100 at August 31, 1998, an increase of 37%. The
Company reported net income of $5,679 or $0.18 per basic and diluted share
during the three months ended August 31, 1999 as compared to $5,655 or $0.03 per
share during the three months ended August 31, 1998. The table below summarizes
results of operations for each period:
Three Months Ended
8/31/99 8/31/98 % Change
--------- --------- --------
EBITDA (1) $ 57,926 $ 38,635 50%
Operating income $ 38,942 $ 6,831 470%
Net income $ 5,679 $ 5,655 0%
Earnings per common share-
Basic and Diluted $0.18 $0.03 500%
(1) Earnings before interest, taxes, depreciation, amortization, extraordinary
items, income from equity investments, gain (loss) on disposition of assets,
allocations to minority interests in consolidated subsidiaries and
recapitalization costs ("EBITDA") is presented because it is a financial
indicator used in the telecommunications industry. Our calculation of EBITDA may
or may not be consistent with the calculation of EBITDA by other companies and
should not be viewed as an alternative to generally accepted accounting
principles (GAAP) measurements such as operating income, net income or cash
flows from operations.
15
<PAGE>
Domestic Operations
Revenue
Three Months Ended
8/31/99 8/31/98 % Change
--------- --------- --------
Service revenue $ 69,409 $ 52,964 31%
Equipment sales 3,110 938 232%
-------- --------
Total revenue $ 72,519 $ 53,902 35%
======== ========
Total Domestic service revenue, excluding roaming usage, increased $5,744 to
$41,391 representing a 16% increase from the three months ended August 31, 1998,
primarily due to an increase in subscribers of $9,458, partially offset by a
decrease in retail revenue per subscriber of $3,714. The decrease in retail
revenue per subscriber was primarily due to the rollout of digital plans that
include a larger amount of included plan minutes as compared to analog rate
plans. Domestic roamer usage increased to $28,018 or 62% over roamer revenues of
$17,317 for the three months ended August 31, 1998, primarily due to an increase
in usage of $12,996 partially offset by a decrease in the rate per minute of
$2,295.
The increase in equipment sales of wireless telephones and accessories to
subscribers was due to a larger number of telephone and accessory units sold
during the current year and digital phone pricing.
Domestic had approximately 341,200 and 268,200 subscribers at August 31, 1999
and 1998, respectively. Increases from new activations of 143,000 were offset by
subscriber cancellations of 70,000. The cancellations experienced by the Company
are primarily the result of competitive factors and non-payment.
Domestic revenue per subscriber per month, based upon an average number of
subscribers, was $73 for the three months ended August 31, 1999, as compared to
$68 for the three months ended August 31, 1998. The Company expects that revenue
per subscriber will be impacted by competition and lower reciprocal per minute
roaming rates with other wireless carriers.
16
<PAGE>
Costs and expenses
Three Months Ended
8/31/99 8/31/98 % Change
--------- --------- --------
Cost of equipment sold $ 5,555 $ 3,881 43%
Cost of services $ 7,219 $ 6,104 18%
Sales and marketing $ 10,280 $ 6,048 70%
General and administrative $ 10,715 $ 8,757 22%
EBITDA $ 38,750 $ 29,112 33%
Depreciation and amortization 7,973 20,755 (62%)
-------- --------
Operating income $ 30,777 $ 8,357 268%
======== ========
Cost of equipment sold increased during the three months ended August 31, 1999,
primarily due to an increase in the number of telephone units sold.
Cost of services increased during the three months ended August 31, 1999,
primarily due to the variable costs associated with a larger revenue and
subscription base and increased wireless coverage areas resulting from the
continued expansion of the Company's network.
Sales and marketing expenses increased during the three months ended August 31,
1999, primarily due to the increase in gross subscriber additions.
General and administrative expenses increased during the three months ended
August 31, 1999, primarily due to increased costs to support the expanding
subscriber base.
EBITDA for the Domestic Operations for the three months ended August 31, 1999
was $38,750, an increase of $9,638 or 33% over the three months ended August 31,
1998.
The Company anticipates continued increases in the cost of services, sales and
marketing and general and administrative expenses as the growth of its existing
business continues. In addition, the Company expects that the continued
development of its markets will contribute to a continued increase in the level
of expenses.
Depreciation and amortization for the three months ended August 31, 1999 was
$7,973, a decrease of $12,782 or 62% over the three months ended August 31,
1998. The decrease was the result of the effect of the Company prospectively
changing the amortization period for its cellular telephone licenses and the
difference between the cost of its equity investments and the underlying book
value of such investments from ten years to forty years effective March 1, 1999.
The Company changed such amortization periods to better reflect the period over
which the economic benefits of the cellular licenses and equity investments are
expected to be realized. The effect of such changes in amortization periods was
a reduction in amortization expense of $11,891 for the three months ended August
31, 1999. The effect of this change in amortization periods (net of the related
tax effect) was to increase earnings per share-basic and diluted by $0.33 and
17
<PAGE>
$0.32, respectively. Prior to the change in amortization periods, certain
cellular licenses became fully amortized during the year ended May 31, 1999,
which also contributed to the decrease in depreciation and amortization.
Operating income for the three months ended August 31, 1999 was $30,777, an
increase of $22,420 from the operating income of $8,357 for the three months
ended August 31, 1998.
Puerto Rico Operations
Revenue
Three Months Ended
8/31/99 8/31/98 % Change
--------- --------- --------
Service revenue $ 43,546 $ 23,227 87%
Equipment sales 1,207 317 281%
-------- --------
Total revenue $ 44,753 $ 23,544 90%
======== ========
Total PCS Wireless service revenue increased $15,720 or 77% to $36,088. This
increase reflects PCS Wireless subscriber growth of $16,599, partially offset by
lower subscriber pricing of $879. Total Wireline service revenue increased by
$4,599 to $7,458.
The increase in equipment sales of wireless telephones and accessories to
subscribers was primarily due to increased phone sales to pre-paid customers
during the current year.
PCS Wireless subscribers at August 31, 1999 were approximately 145,100, an
increase of 69% from the 85,900 subscribers at August 31, 1998. Increases from
new activations of 106,500 were offset by subscriber cancellations of 47,300.
The cancellations experienced by the Company are primarily the result of
competitive factors and non-payment.
PCS Wireless revenue per subscriber per month, based upon an average number of
subscribers, was $88 for the three months ended August 31, 1999 and 1998. The
Company expects that revenue per subscriber will be impacted by competition.
Costs and expenses
Three Months Ended
8/31/99 8/31/98 % Change
--------- --------- --------
Cost of equipment sold $ 2,044 $ 652 213%
Cost of services $ 8,486 $ 4,278 98%
Sales and marketing $ 7,494 $ 4,983 50%
General and administrative $ 7,553 $ 4,108 84%
EBITDA $ 19,176 9,523 101%
Depreciation and amortization 11,011 11,049 0%
-------- -------
Operating income (loss) $ 8,165 $(1,526) N/A
======== =======
18
<PAGE>
Cost of equipment sold increased during the three months ended August 31, 1999,
primarily due to an increase in sales of handsets to new prepaid subscribers and
increased sales of accessories.
Cost of services increased during the three months ended August 31, 1999,
primarily due to the variable costs associated with a larger revenue and
subscription base and increased wireless coverage areas resulting from the
continued expansion of the Company's network.
Sales and marketing expenses increased during the three months ended August 31,
1999, primarily due to the increase in gross subscriber additions.
General and administrative expenses increased during the three months ended
August 31, 1999, primarily due to increased costs to support the expanding
subscriber base.
EBITDA for the Puerto Rico Operations for the three months ended August 31, 1999
was $19,176, an increase of $9,653 or 101% over the three months ended August
31, 1998.
The Company anticipates continued increases in the cost of services, sales and
marketing and general and administrative expenses as the growth of its existing
business continues. In addition, the Company expects that its participation in
the Puerto Rico telecommunications business will contribute to a continued
increase in the level of expenses.
Depreciation and amortization for the three months ended August 31, 1999 was
$11,011, a decrease of $38 or less than 1% over the three months ended August
31, 1998. The decrease results from PCS phones becoming fully depreciated. This
was partially offset by depreciation related to capital expenditures made during
fiscal 2000 and 1999 in connection with the development and network expansion of
the Company's wireless telephone systems and the purchase of PCS phones in
Puerto Rico.
Operating income for the three months ended August 31, 1999 was $8,165, an
increase of $9,691 from the loss of $1,526 for the three months ended August 31,
1998.
Consolidated
Other non-operating expenses
The gain on disposition of assets during the three months ended August 31, 1998
is primarily the result of the Company's sale of its investment interest in the
wireless telephone system serving the Coconino, Arizona RSA.
Net interest expense was $35,934 for the three months ended August 31, 1999, an
increase of $24,803 or 223% from the three months ended August 31, 1998. Gross
interest costs for the three months ended August 31, 1999 and 1998 were $37,560
and $11,479, respectively. The increase in interest expense reflects an increase
19
<PAGE>
in total debt of $979,402 from August 31, 1998. On January 7, 1999 the Company
utilized a portion of these additional borrowings to repay existing debt,
including the early extinguishment of 99.5% of its Senior Notes due in 2001 and
2004. The increase in long-term debt is also the result of additional borrowings
related to the recapitalization of the Company, working capital needs and
capital expenditures related to the expansion of Centennial de Puerto Rico's PCS
network infrastructure and the purchase of PCS telephones. The average debt
outstanding during the three months ended August 31, 1999 was $1,469,443, an
increase of $967,813 as compared to the average debt level of $501,630 during
the three months ended August 31, 1998. The Company's weighted average interest
rate increased to 10.2% for the three months ended August 31, 1999 from 9.2% for
the three months ended August 31, 1998.
After loss attributable to minority interests in subsidiaries for the three
months ended August 31, 1999, pretax income was $6,535, as compared to a pretax
income of $8,663 for the three months ended August 31, 1998. The income tax
expense was $856 for the three months ended August 31, 1999, as compared to
income tax expense of $3,008 for the three months ended August 31, 1998.
These factors resulted in net income of $5,679 for the three months ended August
31, 1999, which represents an increase of $24 from the net income of $5,655 for
the three months ended August 31, 1998.
Liquidity and Capital Resources
For the three months ended August 31, 1999, earnings exceeded fixed charges by
$5,030. Fixed charges consist of interest expense, including amortization of
debt issuance costs and the portion of rents deemed representative of the
interest portion of leases. The amount by which earnings exceeded fixed charges
reflects non-cash charges of $18,984 relating to depreciation and amortization.
As of August 31, 1999, the Company had $316,692 of property, plant and equipment
(net) placed in service. During the three months ended August 31, 1999, the
Company made capital expenditures of $32,385, to continue the construction of
its Centennial de Puerto Rico systems and its Domestic systems to expand the
coverage areas of existing properties and to upgrade its cell sites and call
switching equipment. Capital expenditures for Centennial de Puerto Rico were
$21,700 for the three months ended August 31, 1999, representing 67% of the
Company's total capital expenditures. Centennial de Puerto Rico's capital
expenditures included $19,832 to add capacity and services and to continue the
expansion of the Company's PCS network infrastructure and $1,868 to purchase
telephone units which remain the property of the Company while in use by
subscribers. The Company's future commitments for property and equipment include
the addition of cell sites to expand coverage and enhancements to the existing
infrastructure of its wireless telephone systems. Through the remainder of
20
<PAGE>
fiscal year 2000, the Company anticipates capital expenditures in its Domestic
systems of approximately $24,300. The Company currently estimates that the cost
to continue the expansion of its Puerto Rico network infrastructure and purchase
telephone units through fiscal 2000 will be approximately $58,300. Amounts
required to finance the Company's capital expenditures are expected to come
primarily from cash flow generated from operations with the remainder coming
from borrowings under the Company's existing revolving credit facility. The
Company may seek various sources of external financing including, but not
limited to, bank financing, joint ventures, partnerships and placement of debt
or equity securities of the Company.
In order to meet its obligations with respect to its operating needs, capital
expenditures, and debt service obligations, it is important that the Company
continue to improve operating cash flow. Increases in revenue will be dependent
upon continuing growth in the number of subscribers and maximizing revenue per
subscriber. The Company has continued the development of its managerial,
administrative and marketing functions, and is continuing the construction of
wireless systems in its existing and recently acquired markets in order to
achieve these objectives. There is no assurance that growth in subscribers or
revenue will occur. In addition, the Company's participation in the Puerto Rico
telecommunications business has been, and is expected to continue to be, capital
intensive.
The following table sets forth (in thousands), for the periods indicated, the
Company's net cash (used in) provided by operating activities before interest
payments (net cash provided), the Company's principal uses of such cash and the
cash (required from) available for financing and investing activities:
<TABLE>
<CAPTION>
Three Months Ended August 31,
-----------------------------
1999 1998
---- ----
% of net % of net
cash cash
Amount provided Amount provided
------- --------- ------ --------
<S> <C> <C> <C> <C>
Net cash (used in) provided by
operating activities $ (6,284) (12)% $31,544 91%
Interest paid 59,307 112 % 2,954 9%
-------- ----- ------- ----
Net cash provided $ 53,023 100 % $34,498 100%
======== ===== ======= ====
Principal uses of cash
Interest paid $ 59,307 112 % $ 2,954 9%
Property, plant & equipment 32,385 61 % 20,354 59%
-------- ----- ------- ----
Total $ 91,692 173 % $23,308 68%
======== ===== ======= ====
Cash (required from) available for other
financing and investing activities $ (38,669) (73)% $11,190 32%
========= ===== ======= ====
</TABLE>
Net cash used in operating activities for the three months ended August 31, 1999
was not sufficient to fund the Company's expenditures for property, plant and
equipment of $32,385.
21
<PAGE>
The following table sets forth the primary cash flows provided by (used in)
other financing and investing activities for the periods indicated:
<TABLE>
<CAPTION>
Three Months Ended August 31,
----------------------------
1999 1998
---- ----
<S> <C> <C>
Proceeds from disposition of assets $ 3 $ -
Proceeds from issuance of class A common stock - 10
Proceeds from issuance of long-term debt 16,170 -
Proceeds from maturity of restricted securities 19,998 -
Disposition of equity investment - 13,500
Distributions received from equity investments-net 2,835 3,675
--------- -------
Cash available 39,006 17,185
--------- -------
Acquisition of other assets - (2,200)
Repayment of long-term debt (1,125) (10,000)
Debt issuance costs paid (173) -
Recapitalization costs paid - (1,410)
Acquisition, net of cash acquired (1,968) -
--------- --------
Cash available for operations and capital expenditures $ 35,740 $ 3,575
========= ========
</TABLE>
Based upon current market conditions and its current capital structure, the
Company believes that cash flows from operations and funds from currently
available credit facilities will be sufficient to enable the Company to meet
required cash commitments through the next twelve month period.
Acquisitions, Exchanges and Dispositions
The Company's primary acquisition strategy is to acquire controlling ownership
interests in wireless systems serving markets contiguous or proximate to its
current markets. The Company's strategy of clustering its wireless operations in
contiguous and proximate geographic areas enables it to achieve operating and
cost efficiencies as well as joint advertising and marketing benefits.
Clustering also allows the Company to offer its subscribers more areas of
uninterrupted service as they travel. In addition to expanding its existing
clusters, the Company also may seek to acquire interests in wireless systems in
other geographic areas. The Company also may pursue other communications
businesses related to its wireless telephone and other mobile service
operations, as well as other communications businesses it determines to be
desirable. The consideration for such acquisitions may consist of shares of
stock, cash, assumption of liabilities, or a combination thereof.
22
<PAGE>
On June 28, 1999, the Company entered into an agreement to acquire 100% of the
ownership interests in a partnership owning the wireless telephone system
serving the Allegan, Michigan RSA. The Allegan market represents approximately
100,000 net pops. The Company has agreed to a purchase price of approximately
$34,000 in cash and stock, subject to adjustment. The obligation of the Company
to consummate this transaction is subject to certain closing conditions,
including the relevant regulatory approvals. The Company anticipates completing
this transaction in October 1999.
Commitments and Contingencies
The Year 2000 issue is the result of many computer programs being written
abbreviating dates by using two digits rather than four digits in the year
field. As a result, unless corrected, a computer program that has date sensitive
software may recognize a date using "00" in the year field as 1900 rather than
the year 2000. This could result in system failures and errors causing
disruptions to various aspects of our business, including computer systems,
voice and data networks and building infrastructures.
The Company began a review of its computer systems and related software in
fiscal 1998 to identify systems and software which might malfunction due to a
misidentification of the year 2000. A committee consisting of members of senior
management from various disciplines was formed and is meeting regularly to
discuss the steps to be taken, and the results of steps that have been
completed, to deal with any potential Year 2000 issues. The Company's plan to
address the Year 2000 issue consists of six phases: (i) Awareness (ii)
Assessment (iii) Remediation (iv) Testing (v) Implementation and (vi)
Contingency Planning.
For the Company's internal computer systems and software, the awareness,
assessment,remediation, testing and implementation phases have been completed.
Most of the Company's customer-related computer systems and databases, including
its billing systems, are managed by third parties under contractual
arrangements. We have taken an active role in monitoring the progress of these
third parties, including selective Year 2000 compliance testing. The Company has
been informed by these third parties that their remediation efforts are in
various stages with final completion anticipated in October 1999.
For the local equipment used in the transmission and reception of all signals,
the Company completed the awareness and assessment phases in 1998. Any
remediation efforts that were necessary have since been completed and the
Company believes this local equipment is Year 2000 compliant.
The Company's systems are interconnected with various networks and systems
operated by third parties, including landline communications networks,
long-distance networks, the networks of other wireless service providers as well
as public utilities. The operators of these networks and systems are responsible
for addressing the Year 2000 issue in their own systems. The ability of the
23
<PAGE>
Company's systems to operate, including the ability to provide wireless service,
is dependent upon these third party networks and systems being Year 2000
compliant. We have requested information from these vendors in order to
determine to what extent we may be exposed to their failure to correct their own
year 2000 problems. While many of these third parties have indicated to the
Company that they are or anticipate being Year 2000 compliant prior to December
31, 1999, the Company cannot assure that these third parties will have taken the
necessary corrective actions prior to the year 2000.
We currently believe that the Company's worst case scenario with respect to the
Year 2000 may involve the interruption of telecommunications or public utilities
services and/or interruption of customer billing. Either or both of these events
could have a material adverse effect on the Company's financial condition or
results of operations.
The Company has contingency plans in place for maintaining and restoring service
in the event of a natural disaster, power failure or software-related
interruption of service, and is working to utilize this experience in the
development and implementation of its Year 2000 contingency plans. The Company's
Year 2000 contingency plans will consist of the following: identifying teams
that will be on site at the network operating centers at the time of the date
change to monitor the networks and critical systems to react immediately to
commence repairs; developing alternate plans for critical work processes in the
event these processes experience Year 2000 disruptions; and developing alternate
processes to support critical customer functions in the event mechanized
processes experience Year 2000 disruptions. The Company anticipates having these
Year 2000 contingency plans in place before December 31, 1999.
The amounts expended to date by the Company related to Year 2000 compliance have
not been material and have been expensed as incurred. The Company does not
anticipate that future amounts to be expended related to Year 2000 compliance
will be material or have an adverse effect on the Company's financial condition
or results of operations.
24
<PAGE>
* * * * *
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR"
PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This report contains or incorporates by reference forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
Where any such forward-looking statement includes a statement of the assumptions
or bases underlying such forward-looking statement, the Company cautions that
assumed facts or bases almost always vary from actual results, and the
differences between assumed facts or bases and actual results can be material
depending upon the circumstances. Where, in any forward-looking statement, the
Company or its management expresses an expectation or belief as to future
results, there can be no assurance that the statement of expectation or belief
will result or be achieved or accomplished. The words "believe", "expect",
"estimate", "anticipate", "project" and similar expressions may identify
forward-looking statements.
Taking into account the foregoing, the following are identified as important
factors that could cause actual results to differ materially from those
expressed in any forward-looking statement made by, or on behalf of, the
Company: the Company's net losses and stockholders' equity; the capital
intensity of the wireless telephone business and the Company's debt structure;
the competitive nature of the wireless telephone industry; regulation; changes
and developments in technology; subscriber cancellations; restrictive covenants
and consequences of default contained in the Company's financing arrangements;
control by certain of the Company's stockholders and anti-takeover provisions;
the Company's opportunities for growth through acquisitions and investments;
operating hazards and uninsured risks; refinancing and interest rate exposure
risks; potential for changes in accounting standards; and capital calls
associated with the Company's Investment Interests. A more detailed discussion
of each of the foregoing factors can be found in the Company's Annual Report on
Form 10-K for the Fiscal Year ended May 31, 1999 under the heading "CAUTIONARY
STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995" in Item 7 of such Form 10-K. Other factors may be
detailed from time to time in the Company's filings with the SEC. The Company
assumes no obligation to update its forward-looking statements or to advise of
changes in the assumptions and factors on which they are based.
25
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is subject to market risks due to fluctuations in interest rates. A
majority of the Company's long-term debt has variable interest rates. The
Company utilizes interest rate swap and collar agreements to hedge variable
interest rate risk on a portion of its variable interest rate debt as part of
its interest rate risk management program.
The table below presents principal (or notional) amounts and related average
interest rate by year of maturity for the Company's long-term debt and interest
rate swap and collar agreements. Weighted average variable rates are based on
implied forward rates in the yield curve as of August 31, 1999 (based on
information provided by one of the Company's lending institutions):
Amounts in thousands:
<TABLE>
<CAPTION>
Year ended August 31,
2000 2001 2002 2003 2004 There-after Total Fair value
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Long-term debt:
Fixed rate - - $ 1,388 - - $535,289 $536,677 $551,477
Average interest rate - - 8.88% - - 10.52% 10.52% -
Variable rate $ 4,500 $ 4,500 $38,250 $66,375 $88,875 $740,225 $942,725 $942,725
Average interest rate (1) 6.04% 6.73% 7.00% 7.12% 7.25% 7.41% 7.35% -
Interest rate swaps (pay
fixed, receive variable):
Notional amount $350,000 $350,000 $150,000 - - - - $ 9,403
Average pay rate 5.40% 5.40% 5.38% - - - - -
Average receive rate 6.04% 6.73% 7.00% - - - - -
Interest rate collar:
Notional amount $100,000 $100,000 $100,000 $100,000 - - - $ 1,993
Cap 7.00% 7.00% 7.00% 7.00% - - - -
Floor 4.45% 4.45% 4.45% 4.45% - - - -
(1) Represents the average interest rate before applicable margin
</TABLE>
26
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
There are no material pending legal proceedings, other than ordinary
routine litigation incidental to the business, to which the Company or
any of its subsidiaries is a party or of which any of their property
is the subject.
ITEM 2. Changes in Securities
None
ITEM 3. Defaults Upon Senior Securities
None
ITEM 4. Submission of Matters to a Vote of Security Holders
None
ITEM 5. Other Information
None
ITEM 6. Exhibits and Report on Form 8-K
Each exhibit identified below is filed as a part of this report.
a) Exhibits
Exhibit No. Description
----------- -----------
Exhibit 27 Financial data schedule (EDGAR filing document only)
b) Reports on Form 8-K
Form 8-K dated July 14, 1999, relating to the press release of the
Company issued on July 13, 1999 announcing its earnings for the fiscal
year ended May 31, 1999
27
<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.
October 8, 1999
CENTENNIAL CELLULAR CORP.
/S/
--------------------
Peter W. Chehayl
Chief Financial Officer,
Sr. Vice President and Treasurer
(Chief Financial Officer)
/S/
--------------------
Thomas E. Bucks
Sr. Vice President-Controller
(Chief Accounting Officer)
28
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> May-31-2000
<PERIOD-END> Aug-31-1999
<CASH> 48,212
<SECURITIES> 39,261
<RECEIVABLES> 53,064
<ALLOWANCES> 4,185
<INVENTORY> 7,987
<CURRENT-ASSETS> 146,040
<PP&E> 438,336
<DEPRECIATION> 121,644
<TOTAL-ASSETS> 984,449
<CURRENT-LIABILITIES> 105,316
<BONDS> 1,474,902
0
0
<COMMON> 312
<OTHER-SE> (596,081)
<TOTAL-LIABILITY-AND-EQUITY> 984,449
<SALES> 117,272
<TOTAL-REVENUES> 117,272
<CGS> 23,304
<TOTAL-COSTS> 78,330
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 35,934
<INCOME-PRETAX> 3,006
<INCOME-TAX> 856
<INCOME-CONTINUING> 5,679
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,679
<EPS-BASIC> 0.18
<EPS-DILUTED> 0.18
</TABLE>
