SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) July 13, 1999
Centennial Cellular Corp.
(Exact Name of Registrant as Specified in Charter)
Delaware 0-19603 06-1242753
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
1305 Campus Parkway
Neptune, New Jersey 07753
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (732) 919-1000
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
Item 5. Other Events
In a press release issued July 13, 1999, Centennial Cellular Corp., a
Delaware corporation ("Centennial"), announced its earnings for the fiscal year
ended May 31, 1999. A copy of the press release issued by Centennial is attached
hereto as Exhibit 99.1 and is incorporated by reference herein in its entirety.
Item 7. Financial Statements and Exhibits
(c) Exhibits.
99.1 Press release issued by Centennial on July 13, 1999
2
<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 hereunto duly authorized.
CENTENNIAL CELLULAR CORP.
By: /s/ Peter W. Chehayl
----------------------------------------
Name: Peter W. Chehayl
Title: Senior Vice President, Treasurer and
Chief Financial Officer
Date: July 14, 1999
3
<PAGE>
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
99.1 Press release issued by Centennial on July 13, 1999
4
<PAGE>
Exhibit 99.1
CENTENNIAL
For further information, please contact:
Peter W. Chehayl
Chief Financial Officer
Centennial Communications
1305 Campus Parkway
Neptune, NJ 07753
(732) 919-1000 ext. 379
CENTENNIAL CELLULAR CORP. REPORTS
RECORD FISCAL 1999 YEAR RESULTS
Neptune, NJ - July 13, 1999 (NASDAQ: CYCL) Centennial Cellular Corp. announced
today record results for revenue, recurring EBITDA and subscriber additions for
the year ended May 31, 1999 for both domestic cellular and Puerto Rico
integrated communications services. Total Company revenues increased 57 percent
to $369.2 million, from $235.8 million for the prior fiscal year. Earnings
before interest, taxes, depreciation, amortization and recapitalization costs
(recurring EBITDA) were $183.5 million, an 85 percent increase from the prior
year.
Fiscal year recurring EBITDA for Centennial's domestic operations increased 47
percent to $127.4 million from $86.7 million in the same period last year.
Fiscal year recurring EBITDA for Centennial's Puerto Rico operations increased
more than four-fold to $56.1 million from the same period last year.
"Both of Centennial's businesses showed tremendous gains for the quarter and the
fiscal year," said Michael J. Small, president and chief executive officer. "We
now have digital technology deployed in 89 percent of our domestic markets and
100 percent of the Puerto Rico market. We are positioned well for continued
rapid growth."
The deployment of digital technology and the launch of digital rate plans
contributed to the addition of a record 67,900 new customers in the domestic
operation. Total revenue per customer remained at a domestic cellular industry
leading level of $69 per month as a result of strong roaming traffic and
increased usage.
<PAGE>
Network enhancements also supported the rapid growth of Centennial de Puerto
Rico, a fully integrated communications provider of wireless, wireline and
Internet services. The installation of a second switch and the fourth CDMA
carrier, as well as 60 new fiber route miles, fueled the addition of 64,000
wireless customers and a six-fold increase in wireline revenue during fiscal
1999. Wireless usage per customer increased to 436 minutes per month, a level
that indicates significant substitution of wireless for wireline usage.
Centennial de Puerto Rico also became the first wireless recipient of Federal
Universal Service funds, which traditionally went to wireline carriers. For the
Puerto Rico operations, fiscal 1999 total revenue per subscriber was $89,
compared to $90 in fiscal 1998.
The consolidated net loss for the year ended May 31, 1999 was $80.2 million
after recapitalization costs of $52.8 million and extraordinary loss of $35.1
million, net of tax, compared to a net loss of $31.9 million for the year ended
May 31, 1998. After dividends payable on preferred stock, the Company's basic
and diluted net loss per common share was $1.96 and $0.84 for the years ended
May 31, 1999 and 1998, respectively.
Revenue from Centennial's domestic wireless business was $241.9 million for the
year ended May 31, 1999, an increase of $60.4 million or 33 percent over revenue
of $181.5 million for the year ended May 31, 1998. Recurring EBITDA for the year
ended May 31, 1999 in Centennial's domestic wireless business was $127.4
million, an increase of $40.7 million or 47 percent above the year ended May 31,
1998.
Revenue from the Company's Puerto Rico wireless and wireline businesses for the
year ended May 31, 1999 was $127.2 million, an increase of $72.9 million above
the $54.3 million for the year ended May 31, 1998. Recurring EBITDA in the
Puerto Rico operations for the year ended May 31, 1999 was $56.1 million, an
increase of $43.6 million above the $12.5 million for the year ended May 31,
1998.
The Company's wireless subscribers at May 31, 1999 were 454,100 as compared to
322,200 at May 31, 1998, an increase of 131,900 subscribers or 41 percent.
Domestic wireless subscribers increased by 67,900 to 320,600 subscribers at May
31, 1999, due to internal growth.
Subscribers of the Company's Puerto Rico wireless system totaled 133,500 and
69,500 at May 31, 1999 and 1998, respectively. The Company's Puerto Rico
wireless subscriber growth accounted for 49 percent of the Company's total
subscriber increase.
On January 7, 1999, CCW Acquisition Corp., a Delaware corporation organized at
the direction of Welsh, Carson, Anderson & Stowe VIII, LP, merged with and into
Centennial (the "Merger"). Centennial continued as the surviving corporation in
the Merger.
Centennial is one of the largest independent wireless telecommunications service
providers in the United States and Puerto Rico with approximately 10.8 million
Net Pops. Centennial's domestic cellular operation has 5.8 million Net Pops.
Centennial de Puerto Rico is a fully integrated provider of communications
services in Puerto Rico, utilizing a PCS license that covers 3.8 million Pops in
Puerto Rico and the U.S. Virgin Islands, and a CLEC license to operate
throughout Puerto Rico. In addition, the Company owns minority shares
representing approximately 1.2 million Net Pops in certain other cellular
operations controlled and managed by other cellular operators.
<PAGE>
Welsh, Carson, Anderson & Stowe (WCAS) and an affiliate of the Blackstone Group
are controlling shareholders of Centennial. WCAS is a private investment firm
based in New York and founded in 1979. WCAS currently manages over $8 billion in
private equity capital and focuses primarily on the information services and
healthcare industries. The Blackstone Group is a New York based private
investment bank whose current corporate investment vehicle, Blackstone Capital
Partners III Merchant Banking Fund, LP, has approximately $3.8 billion in
committed capital.
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CENTENNIAL CELLULAR CORP. AND SUSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(Amounts in thousands)
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
------------------------------- -----------------------------
May 31, May 31,
1999 1998 1999 1998
------------- -------------- ----------- -------------
<S> <C> <C> <C> <C>
REVENUE:
Service revenue - Domestic $ 65,164 $ 46,737 $ 236,951 $ 177,999
Service revenue - Puerto Rico 38,528 18,245 123,950 53,098
Equipment sales - Domestic 1,758 812 4,951 3,503
Equipment sales - Puerto Rico 1,110 317 3,299 1,216
------------- -------------- ----------- -------------
106,560 66,111 369,151 235,816
------------- -------------- ----------- -------------
COSTS AND EXPENSES:
Cost of equipment sold - Domestic 4,696 3,122 18,354 15,623
Cost of equipment sold - Puerto Rico 2,933 700 4,711 1,229
Cost of services - Domestic 7,690 5,419 26,651 24,226
Cost of services - Puerto Rico 6,795 3,329 23,181 13,740
Sales and marketing - Domestic 7,257 4,878 29,560 22,561
Sales and marketing - Puerto Rico 5,977 2,828 21,978 13,313
General and administrative - Domestic 11,368 7,709 39,906 32,422
General and administrative - Puerto Rico 6,694 4,233 21,312 13,494
Depreciation and amortization - Domestic (1) 4,897 20,631 67,282 81,402
Depreciation and amortization - Puerto Rico 12,097 10,926 47,414 32,792
Recapitalization costs (2) (6,021) - 52,831 -
------------- -------------- ----------- -------------
64,383 63,775 353,180 250,802
------------- -------------- ----------- -------------
OPERATING INCOME (LOSS) 42,177 2,336 15,971 (14,986)
------------- -------------- ----------- -------------
INCOME FROM EQUITY INVESTMENTS 2,150 3,226 11,502 13,069
(LOSS) GAIN ON DISPOSITION OF ASSETS (383) (3) 8,031 5
INTEREST EXPENSE - NET 39,140 11,669 87,693 43,470
------------- -------------- ----------- -------------
INCOME (LOSS) BEFORE INCOME TAX BENEFIT,
MINORITY INTEREST AND EXTRAORDINARY ITEM 4,804 (6,110) (52,189) (45,382)
INCOME TAX LIABILITY (BENEFIT) 3,294 (70) (6,820) (13,597)
------------- -------------- ----------- -------------
INCOME (LOSS) BEFORE MINORITY INTEREST AND
AND EXTRAORDINARY ITEM 1,510 (6,040) (45,369) (31,785)
MINORITY INTEREST IN LOSS (INCOME) OF SUBSIDIARIES 139 175 281 (162)
------------- -------------- ----------- -------------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM 1,649 (5,865) (45,088) (31,947)
EXTRAORDINARY LOSS ON EARLY EXTINGUISHMENT
OF DEBT, NET OF INCOME TAXES OF (16,698) (2) 5,447 - (35,079) -
------------- -------------- ----------- -------------
NET INCOME (LOSS) $ 7,096 $ (5,865) $ (80,167) $ (31,947)
============= ============== =========== =============
<FN>
(1) Effective March 1, 1999, Centennial prospectively changed its
amortization period for cellular telephone licenses from ten years to
forty years to better reflect the period over which the economic
benefits of the cellular licenses are expected to be realized. The
Company also prospectively changed its amortization period for the
difference between the cost of its equity investments and the
underlying book value from ten years to forty years to better reflect
the period over which the economic benefits of the equity investments
are expected to be realized.
</FN>
<FN>
(2) In the fourth quarter of fiscal 1999, the Company reduced
recapitalization costs as a result of actual costs incurred being less
than those previously estimated. Also during the fourth quarter, the
Company reduced the extraordinary loss on early extinguishment of debt
due to a change in the effective tax rate of the Company.
</FN>
</TABLE>
<PAGE>
CENTENNIAL CELLULAR CORP.
STATISTICS
May 31, 1999
($000's, except per subscriber data)
<TABLE>
<CAPTION>
For the Quarter Ended For the Year Ended
5/31/99 5/31/98 5/31/99 5/31/98
------- ------- ------- -------
<S> <C> <C> <C> <C>
DOMESTIC
Subscribers 320,600 252,700 320,600 252,700
Net Gain - Subscribers 11,300 14,800 67,900 65,700
Revenue per Average Customer $70 $63 $69 $69
Penetration 5.5% 4.7% 5.5% 4.7%
Churn 2.2% 1.7% 2.0% 1.8%
MOU's per Customer 104 104 105 101
Cost to Acquire per Activation $310 $254 $302 $294
Capital Expenditures $12,778 $7,633 $37,908 $38,996
PUERTO RICO
Wireless Revenue $33,428 $16,992 $109,523 $51,483
Wireline Revenue $6,210 $1,570 $17,726 $2,831
Wireless Subscribers 133,500 69,500 133,500 69,500
Net Gain - Wireless Subscribers 16,100 8,900 64,000 52,600
Revenue per Average Wireless Customer $87 $84 $89 $90
Penetration 3.3% 1.9% 3.3% 1.9%
Churn 3.2% 5.7% 3.5% 5.0%
MOU's per Wireless Customer 446 390 436 358
Capital Expenditures $20,807 $18,480 $65,496 $90,304
Fiber Route Miles 328 268 328 268
REVENUES
Consolidated $106,560 $66,111 $369,151 $235,816
Domestic $66,922 $47,549 $241,902 $181,502
Puerto Rico $39,638 $18,562 $127,249 $54,314
RECURRING EBITDA
Consolidated $53,150 $33,893 $183,498 $99,208
Domestic $35,911 $26,421 $127,431 $86,670
Puerto Rico $17,239 $7,472 $56,067 $12,538
</TABLE>
