Centennial Cellular Corp. Announces Record Second Quarter Results.Business Editors NEPTUNE Neptune, in Roman religion and mythology Neptune, in Roman religion and mythology, god of water. He was presumably an indigenous god of fertility, but in later times he was identified with the Greek Poseidon, god of the sea. , N.J.--(BUSINESS WIRE)--Dec. 22, 1999 (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : CYCL CYCL - A frame language. ["Building Large Knowledge-Based Systems", Doug B. Lenat et al, A-W 1990]. ) Centennial Cellular Corp. ("Centennial" or "the Company") announced record results for revenues and earnings for the quarter ended November November: see month. 30, 1999. Consolidated revenues grew 42% from the same quarter last year to $123.5 million, and earnings before interest, taxes, depreciation, and amortization Earnings before interest, taxes, depreciation, and amortization (EBITDA) A financial measure defined as revenues less cost of goods sold and selling, general, and administrative expenses. ("EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become ") increased 40% from the same quarter last year to $60.0 million. Diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of for the quarter were $.22. For the six months ended November 30, 1999 compared to the same period in the prior year, revenues and EBITDA increased 46% and 45%, respectively. Diluted earnings per share for the six months were $.39. The Company's wireless subscribers at November 30, 1999 were 525,100, compared to 384,600 on the same date last year, an increase of 37%. Domestic cellular subscribers increased by 22,100 during the quarter compared to an increase of 17,700 during the same quarter last year. Puerto Rico Puerto Rico (pwār`tō rē`kō), island (2005 est. pop. 3,917,000), 3,508 sq mi (9,086 sq km), West Indies, c.1,000 mi (1,610 km) SE of Miami, Fla. wireless subscribers increased 16,700 during the quarter compared to an increase of 12,800 during the same quarter last year. "We are very pleased with the performance of both our Domestic Cellular and our Puerto Rico Integrated Communications operations," said Michael J. Small, president and chief executive officer. "With strong local management teams, superior networks, and extensive distribution channels, both operations are well-positioned for the future." During the quarter, the company announced the addition to the executive team of Carlos Bofill as chief executive officer of Centennial de Puerto Rico, Richard Gasink as senior vice president and chief financial officer of Centennial de Puerto Rico, and Anthony Wolk as vice president and general counsel. All three new executives have extensive merger and acquisition experience, and their responsibilities will include the pursuit of expansion opportunities in the Caribbean. The Company announced today that it has entered into a definitive agreement to purchase the non-wireline (A-side) cellular license for the Kokomo, Indiana For the band, see . Kokomo (IPA: [ˈkoʊ.kə.moʊ]) is the county seat of Howard CountyGR6, Indiana, United States, Indiana's 13th largest city. Metropolitan Statistical Area #271 from Kokomo CellTelCo. Kokomo has a population of approximately 100,000 and is contiguous Adjacent or touching. Contrast with fragmentation. See contiguous file. with Centennial's existing service area in Indiana Indiana, state, United States Indiana, midwestern state in the N central United States. It is bordered by Lake Michigan and the state of Michigan (N), Ohio (E), Kentucky, across the Ohio R. (S), and Illinois (W). . Terms were not disclosed. In addition, during the quarter, the Company completed the previously announced acquisition of the cellular license and other assets other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately. serving Allegan County, Michigan Allegan County is a county in the U.S. state of Michigan. As of 2000 census, the population was 105,665. The county seat is Allegan6. The name was coined by Henry Rowe Schoolcraft to sound like a Native American word. an area with a population of 100,000 that is contiguous to Centennial's existing service area in Michigan Michigan (mĭsh`ĭgən), upper midwestern state of the United States. It consists of two peninsulas thrusting into the Great Lakes and has borders with Ohio and Indiana (S), Wisconsin (W), and the Canadian province of Ontario (N,E). . For the quarter, domestic operations revenues were $74.2 million and EBITDA was $38.1 million, up 26% and 22% respectively from the same quarter last year. The increases are due to subscriber growth and strong growth in roaming The ability to use a communications device such as a cellphone or PDA and be able to move from one cell or access point to another without losing the connection. revenue. Also for the quarter, Puerto Rico revenues were $49.3 million and EBITDA was $21.9 million, up 75% and 86% respectively from the same quarter last year. CLEC (Competitive Local Exchange Carrier) An organization offering local telephone service that is not one of the traditional telephone companies. The Telecommunications Act of 1996 allowed competition to the incumbent telcos (ILECs), enabling new companies (CLECs) revenues for the quarter reached $9.3 million from $3.6 million in the same quarter last year. In November, the Company received a letter from the Puerto Rico Telephone Company Puerto Rico Telephone (PRT), is the largest Puerto Rican telecommunications services company. It is headquartered in Guaynabo, Puerto Rico and has operated for almost a century offering voice, data, long distance, broadband, directory publishing and wireless services for the disputing amounts owed for ISP (1) See in-system programmable. (2) (Internet Service Provider) An organization that provides access to the Internet. Connection to the user is provided via dial-up, ISDN, cable, DSL and T1/T3 lines. traffic that terminated on Centennial's network. Centennial believes that this money is due under a valid tariff tariff, tax on imported and, more rarely, exported goods. It is also called a customs duty. Tariffs may be distinguished from other taxes in that their predominant purpose is not financial but economic—not to increase a nation's revenue but to protect domestic . Pending a resolution of this matter, the Company increased its reserve for bad debt during the quarter. Capital expenditures for the quarter were $30 million. The Company now expects capital expenditures for its 2000 fiscal year to be approximately $130 million, an increase from the previous forecast of $115 million due to a more aggressive CLEC expansion in Puerto Rico. Centennial is one of the largest independent wireless telecommunications service providers A Telecommunications Service Provider or TSP is a type of Communications Service Provider that has traditionally provided telephone and similar services. This category includes ILECs, CLECs, and mobile wireless companies. in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and Puerto Rico with approximately 10.9 million Net Pops. Centennial's domestic Rural Cellular operation has 5.9 million Net Pops and serves over 363,000 customers. Centennial de Puerto Rico, is a fully integrated provider of communications services in Puerto Rico, utilizing a PCS (1) (Personal Communications Services) Refers to wireless services that emerged after the U.S. government auctioned commercial licenses in 1994 and 1995. This radio spectrum in the 1. license that covers 3.8 million Pops in Puerto Rico and the U.S. Virgin Islands and a Competitive Local Exchange Carrier ("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. Welsh, Carson, Anderson Anderson, river, Canada Anderson, river, c.465 mi (750 km) long, rising in several lakes in N central Northwest Territories, Canada. It meanders north and west before receiving the Carnwath River and flowing north to Liverpool Bay, an arm of the Arctic & Stowe (WCAS WCAS Weinberg College of Arts and Sciences WCAS Warfighter Communication Assessment System (US DoD) ) and an affiliate of The Blackstone Group Blackstone Group L.P. (NYSE: BX) is a prominent private equity and investment management firm founded in 1985 by Peter G. Peterson and Stephen A. Schwarzman. The company is based in New York City, in River House on Park Avenue at Fifty-first Street, with offices in Atlanta, are controlling shareholders of Centennial. WCAS is a private investment firm based in New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of and founded in 1979. WCAS currently manages over $8 billion in private equity capital and focuses primarily on the information services See Information Systems. 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.
CENTENNIAL CELLULAR CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(Amounts in thousands, except per share data)
Three Months Ended Six Months Ended
------------------ ----------------
November 30, November 30,
1999 1998 1999 1998
---- ---- ---- ----
REVENUE:
Service revenue
- Domestic $ 70,483 $ 57,947 $ 139,892 $ 110,911
Service revenue
- Puerto Rico 48,092 27,534 91,638 50,761
Equipment sales
- Domestic 3,745 987 6,855 1,925
Equipment sales
- Puerto Rico 1,210 684 2,417 1,001
-------- --------- --------- ---------
123,530 87,152 240,802 164,598
-------- --------- --------- ---------
COSTS AND EXPENSES:
Cost of equipment
sold - Domestic 6,743 4,322 12,298 8,203
Cost of equipment
sold - Puerto Rico 622 607 2,666 1,259
Cost of services
- Domestic 7,773 6,386 14,992 12,490
Cost of services
- Puerto Rico 6,938 5,356 15,424 9,634
Sales and marketing
- Domestic 11,679 7,642 21,959 13,690
Sales and marketing
- Puerto Rico 7,545 5,215 15,039 10,198
General and
administrative
- Domestic 9,897 9,430 20,612 18,187
General and
administrative
- Puerto Rico 12,307 5,259 19,860 9,367
Depreciation and
amortization
- Domestic (a) 8,388 20,744 16,361 41,499
Depreciation and
amortization
- Puerto Rico 11,267 11,995 22,278 23,044
-------- --------- --------- ---------
83,159 76,956 161,489 147,571
-------- --------- --------- ---------
OPERATING INCOME 40,371 10,196 79,313 17,027
-------- --------- --------- ---------
INCOME FROM
EQUITY INVESTMENTS 3,856 3,841 7,340 7,490
GAIN ON DISPOSITION
OF ASSETS 2 55 - 9,611
INTEREST EXPENSE
- NET (36,495) (10,809) (72,429) (21,940)
-------- --------- --------- ---------
INCOME BEFORE INCOME
TAX EXPENSE
AND MINORITY INTEREST 7,734 3,283 14,224 12,188
INCOME TAX EXPENSE (700) (2,828) (1,556) (5,836)
-------- --------- --------- ---------
INCOME BEFORE
MINORITY INTEREST 7,034 455 12,668 6,352
MINORITY INTEREST
IN LOSS (INCOME)
OF SUBSIDIARIES 15 233 60 (9)
-------- --------- --------- ---------
NET INCOME 7,049 688 12,728 6,343
DIVIDEND REQUIREMENT
ON PREFERRED STOCK - (4,113) - (8,226)
-------- --------- --------- ---------
INCOME APPLICABLE
TO COMMON SHARES $ 7,049 $ (3,425) $ 12,728 $ (1,883)
======== ========= ========= =========
EARNINGS PER
COMMON SHARE:
BASIC $ 0.23 $ (0.06) $ 0.41 $ (0.03)
======== ========= ========= =========
DILUTED $ 0.22 $ (0.06) $ 0.39 $ (0.03)
======== ========= ========= =========
(a) 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.
CENTENNIAL CELLULAR CORP.
STATISTICS
November 30, 1999
($000's, except per subscriber data)
Three Months Ended Six Months Ended
DOMESTIC Nov '99 Nov '98 Nov '99 Nov '98
-------- ------------------- --------------------
Subscribers 363,300 285,900 363,300 285,900
Net Gain
- Subscribers 22,100 17,700 42,700 33,200
Revenue per
Average Customer $70 $70 $71 $69
Roaming Revenue $28,594 $20,562 $56,612 $37,879
Penetration 6.2% 5.2% 6.2% 5.2%
Monthly Churn 2.0% 1.8% 2.0% 1.8%
Monthly MOU's
per Customer 119 108 115 109
Cost to Acquire
per Activation $296 $323 $294 $307
Capital Additions $14,956 $11,019 $23,980 $16,592
PUERTO RICO
-----------
Wireless Revenue $39,963 $24,644 $76,846 $45,329
Wireline Revenue $9,339 $3,574 $17,209 $6,433
Wireless
Subscribers 161,800 98,700 161,800 98,700
Net Gain -
Subscribers 16,700 12,800 28,300 29,200
Revenue per
Average Wireless
Customer $87 $90 $88 $89
Penetration 4.2% 2.7% 4.2% 2.7%
Monthly Churn 3.5% 3.7% 3.6% 3.7%
Monthly MOU's
per Wireless
Customer 468 419 465 419
Capital Additions $15,019 $12,676 $38,499 $23,905
Fiber Route Miles 358 292 358 292
Access Lines 12,775 5,089 12,775 5,089
REVENUES
--------
Consolidated $123,530 $87,152 $240,802 $164,598
Domestic $74,228 $58,934 $146,747 $112,836
Puerto Rico $49,302 $28,218 $94,055 $51,762
EBITDA
------
Consolidated $60,026 $42,935 $117,952 $81,570
Domestic $38,136 $31,154 $76,886 $60,266
Puerto Rico $21,890 $11,781 $41,066 $21,304
LIQUIDITY
---------
Total Debt
Less Cash
Equivalents $1,430,000 $474,000 $1,430,000 $474,000
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