Centennial Cellular Corp. Reports Record Third Quarter Results.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)--April 7, 1999--Centennial Cellular Corp. ("Centennial" or the "Company") (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]. ) announced record results for the quarter ended February February: see month. 28, 1999 for both domestic cellular and 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. integrated communications services, driven by a 66% increase in total Company revenues to $98.0 million, from $58.9 million for the same quarter last year. Earnings before interest, taxes, depreciation, amortization and recapitalization Recapitalization Restructuring a company's debt and equity mixture often with the aim of making a company's capital structure more stable. Notes: Companies often want to diversify their debt-to-equity ratio to improve liquidity. costs ("Recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. 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 ") were a record $48.8 million, a 129% increase from the same quarter last year. Third quarter Recurring EBITDA for Centennial's domestic operations grew 80% to $31.3 million from $17.4 million in the same period last year. Third quarter Recurring EBITDA for Centennial's Puerto Rico operations increased more than four-fold Adj. 1. four-fold - having four units or components; "quadruple rhythm has four beats per measure"; "quadruplex wire" quadruple, quadruplex, quadruplicate, fourfold to $17.5 million from the same period last year. "We are thrilled thrill v. thrilled, thrill·ing, thrills v.tr. 1. To cause to feel a sudden intense sensation; excite greatly. 2. To give great pleasure to; delight. See Synonyms at enrapture. to report such outstanding results in our first quarter following the recapitalization of Centennial," said Michael J. Small, President and Chief Executive Officer. "Our domestic operations benefited from customer growth and exceptionally strong increases 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. traffic. Our Puerto Rico operations continued to build momentum as an integrated communications provider, offering both wireline and wireless services." "Our ability to integrate wireless and wireline services over a single network opens up significant opportunities for us in Puerto Rico," said Rudy Graf, President and Chief Executive Officer of Centennial de Puerto Rico. "Our tremendous growth has led us to begin installation of a second switch and deployment of the fourth carrier in our CDMA (Code Division Multiple Access) A method for transmitting simultaneous signals over a shared portion of the spectrum. The foremost application of CDMA is the digital cellular phone technology from QUALCOMM that operates in the 800 MHz band and 1.9 GHz PCS band. network. Centennial de Puerto Rico has the world's first deployment of the fourth CDMA carrier." Centennial de Puerto Rico has a 30 MHz (MegaHertZ) One million cycles per second. It is used to measure the transmission speed of electronic devices, including channels, buses and the computer's internal clock. A one-megahertz clock (1 MHz) means some number of bits (16, 32, 64, etc. 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 for all of Puerto Rico and a Competitive Local Exchange Carrier ("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) ") license for the entire island. It is a participant in the ARCOS ARCOS Automation of Reports and Consolidated Orders System (Drug Enforcement Administration) ARCOS Americas Region Caribbean Optical-Ring System ARCOS Automated Roster Callout System ARCOS Area Cosine (trigonometry) I undersea cable linking Puerto Rico, the U.S. mainland and Latin American countries List of American countries Nations:
The consolidated net loss for the quarter ended February 28, 1999 was $93.6 million after recapitalization costs of $58.9 million and extraordinary loss of $40.5 million, net of tax, compared to a net loss of $9.7 million for the quarter ended February 28, 1998. After dividends payable Dividends payable The declared dividend dollar amount that a company is obligated to pay. on preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. , the Company's basic and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. loss per common share was $2.31 and $0.25 for the quarters ended February 28, 1999 and 1998, respectively. Total revenue for the nine months ended February 28, 1999 was $262.6 million, up $92.9 million over revenue of $169.7 million in the nine months ended February 28, 1998. Recurring EBITDA for the nine months ended February 28, 1999 was $130.3 million, an increase of $65.0 million or 100% over the $65.3 million for the nine months ended February 28, 1998. Revenue from Centennial's domestic wireless business was $175.0 million for the nine months ended February 28, 1999, an increase of $41.0 million or 31% over revenue of $134.0 million for the nine months ended February 28, 1998. Recurring EBITDA for the nine months ended February 28, 1999 in Centennial's domestic wireless business was $91.5 million, an increase of $31.3 million or 52% above the nine months ended February 28, 1998. Revenue from the Company's Puerto Rico wireless and wireline businesses for the nine months ended February 28, 1999 was $87.6 million, an increase of $51.8 million above the $35.8 million for the nine months ended February 28, 1998. Recurring EBITDA in the Puerto Rico operations for the nine months ended February 28, 1999 was $38.8 million, an increase of $33.7 million above the $5.1 million for the nine months ended February 28, 1998. The consolidated net loss for the nine months ended February 28, 1999 was $87.3 million after recapitalization costs of $58.9 million and extraordinary loss of $40.5 million, net of tax, compared to a net loss of $26.1 million for the nine months ended February 28, 1998. After dividends payable on preferred stock, the Company's basic and diluted loss per common share was $1.90 and $0.66 for the nine months ended February 28, 1999 and 1998, respectively. The Company's wireless subscribers at February 28, 1999 were 426,700 as compared to 298,500 at February 28, 1998, an increase of 128,200 subscribers or 43%. Domestic wireless subscribers increased by 71,400 to 309,300 subscribers at February 28, 1999, due to internal growth. Subscribers of the Company's Puerto Rico wireless system totaled 117,400 and 60,600 at February 28, 1999 and 1998, respectively. The Company's Puerto Rico wireless subscribers accounted for 44% of the Company's total subscriber increase. On January 7, 1999, CCW (Continuous Composite Write) A magneto-optic disk technology that emulates a WORM (Write Once Read Many) disk. It uses firmware in the drive to ensure that data cannot be erased and rewritten. Acquisition Corp. ("Acquisition"), a Delaware corporation A Delaware corporation is a corporation chartered in the U.S. state of Delaware. Delaware is well known as a corporate haven, and thus, over 50% of US publicly-traded corporations and 58% of the Fortune 500 companies are incorporated in the state. organized at the direction of 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 VIII, L.P. ("WCAS WCAS Weinberg College of Arts and Sciences WCAS Warfighter Communication Assessment System (US DoD) VIII"), merged with and into Centennial (the "Merger"). Centennial continued as the surviving corporation in the Merger. Pursuant to the terms of the Merger Agreement, dated as of July 2, 1998 and amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. as of November 29, 1998, between Centennial and Acquisition (as amended, the "Merger Agreement"), Centennial's outstanding Class A Common Stock ("Class A Common Stock") was converted into the right to receive $13.83 per share (adjusted for a three for one stock split for holders of record on January 8, 1999) in cash or to receive common shares of Centennial representing 7.1% of Centennial shares outstanding immediately after the Merger. Holders of Class A Common Stock who elected to receive Centennial shares each received approximately 9.3% of the shares with respect to which they had made an effective election. Centennial's outstanding Class B Common Stock was converted into the right to receive $13.83 per share in cash. At the time of the Merger, all outstanding Convertible Redeemable Redeemable Eligible for redemption under the terms of an indenture. Preferred Stock and Second Series Convertible Redeemable Preferred Stock were converted into the right to receive $13.83 per share in cash on an as-converted basis. In connection with the Merger, Centennial and certain of its subsidiaries entered into an agreement with a group of lenders providing an aggregate amount of approximately $1.05 billion in the form of senior secured credit facilities credit facilities npl → facilidades fpl de crédito credit facilities npl → facilités fpl de paiement credit facilities , of which approximately $936 million was borrowed upon consummation CONSUMMATION. The completion of a thing; as the consummation of marriage; (q.v.) the consummation of a contract, and the like. 2. A contract is said to be consummated, when everything to be done in relation to it, has been accomplished. of the Merger and related transactions. Additionally, an affiliate of WCAS VIII purchased $180 million of subordinated notes and common shares of Centennial. Finally, WCAS VIII and other equity investors purchased approximately $400 million of common stock of Centennial. This funding was used to pay the cash merger consideration to holders of Centennial's common shares as described above, repay or repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. certain indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. of Centennial and pay fees and expenses in connection with the Merger and related transactions. Additionally, Centennial consummated con·sum·mate tr.v. con·sum·mat·ed, con·sum·mat·ing, con·sum·mates 1. a. To bring to completion or fruition; conclude: consummate a business transaction. b. tender offers to repurchase its two outstanding public debt issuances, its 8 7/8% Senior Notes due 2001 and its 10 1/8% Senior Notes due 2005. As part of the financing necessary to effect the Merger, Centennial and a wholly-owned subsidiary of Centennial issued $370 million of the senior subordinated notes to qualified institutional buyers In law, a Qualified Institutional Buyer is a purchaser of securities that is financially sophisticated and is legally recognized by security market regulators to need less protection from sellers than most members of the public. under a private placement offering pursuant to Rule 144A Rule 144A A Securities & Exchange Commission rule modifying a two-year holding period requirement on privately placed securities to permit qualified institutional buyers to trade these positions among themselves. and Regulation S under the Securities Act of 1933, as amended. Approximately $57.5 million of the proceeds from this offering was used to purchase a portfolio of securities that has been pledged for the benefit of holders of the senior subordinated notes to pay the first three interest payments on the notes. This is recorded in the balance sheet as restricted cash. On January 7, 1999, Centennial finalized See finalization. the Merger with Acquisition. Centennial recorded one-time recapitalization costs of $58.9 million. These costs are primarily due to the purchase by Centennial of non-qualifying disposition of stock options exercised, restricted shares and the outstanding options from employees. As part of the Merger, all outstanding options purchased were recorded as additional compensation. 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 10.8 million Net Pops. Centennial's domestic cellular operation has 5.8 million Net Pops and serves 309,300 customers. Centennial de Puerto Rico, is a fully integrated provider of communications services in Puerto Rico. These operations utilize a PCS license that covers 3.8 million Pops in Puerto Rico and the U.S. Virgin Islands, and a CLEC license to operate in 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 & Stowe (WCAS) 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 the Company's controlling shareholders. 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. -0-
CENTENNIAL CELLULAR CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(Amounts in thousands, except share data)
Three Months Ended
February 28, February 28,
1999 1998
REVENUE:
Service revenue - Domestic $ 60,876 $ 42,562
Service revenue - Puerto Rico 34,661 15,224
Equipment sales - Domestic 1,268 784
Equipment sales - Puerto Rico 1,188 371
-------- --------
97,993 58,941
COSTS AND EXPENSES:
Cost of equipment sold - Domestic 5,455 4,126
Cost of equipment sold - Puerto Rico 519 267
Cost of services - Domestic 6,471 6,674
Cost of services - Puerto Rico 6,752 4,157
Selling, general and
administrative - Domestic 18,964 15,196
Selling, general and
administrative - Puerto Rico 11,054 7,261
Depreciation and amortization - Domestic 20,886 20,548
Depreciation and amortization - Puerto Rico 12,273 9,309
Recapitalization costs 58,852 -
-------- --------
141,226 67,538
OPERATING LOSS (43,233) (8,597)
INCOME FROM EQUITY INVESTMENTS 1,862 2,391
GAIN (LOSS) ON SALE OF ASSETS (1,197) (4)
INTEREST EXPENSE - NET 26,613 11,223
LOSS BEFORE INCOME TAX BENEFIT
AND MINORITY INTEREST (69,181) (17,433)
INCOME TAX BENEFIT (15,950) (7,844)
LOSS BEFORE MINORITY INTEREST (53,231) (9,589)
MINORITY INTEREST IN LOSS (INCOME)
OF SUBSIDIARIES 151 (81)
LOSS FROM CONTINUING OPERATIONS $ (53,080) $ (9,670)
EXTRAORDINARY LOSS ON EARLY
EXTINGUISHMENT OF DEBT,
NET OF INCOME TAXES OF ($11,251) (40,526) -
NET LOSS (93,606) (9,670)
DIVIDEND ON PREFERRED STOCK $ 1,680 $ 4,112
LOSS APPLICABLE TO COMMON SHARES $ (95,286) $ (13,782)
BASIC AND DILUTED EARNINGS PER SHARE:
LOSS FROM CONTINUING OPERATIONS $ (1.33) $ (0.25)
EXTRAORDINARY LOSS ON RETIREMENT OF DEBT $ (0.98) $ -
NET LOSS APPLICABLE FOR COMMON SHARES $ (2.31) $ (0.25)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING DURING THE PERIOD 41,317,000 56,052,000
COMMON SHARES OUTSTANDING - END OF PERIOD 31,126,000 56,064,000
CENTENNIAL CELLULAR CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(Amounts in thousands, except share data)
Nine Months Ended
February 28, February 28,
1999 1998
REVENUE:
Service revenue - Domestic $ 171,787 $ 131,262
Service revenue - Puerto Rico 85,422 34,853
Equipment sales - Domestic 3,193 2,691
Equipment sales - Puerto Rico 2,189 899
-------- --------
262,591 169,705
COSTS AND EXPENSES:
Cost of equipment sold - Domestic 13,658 12,501
Cost of equipment sold - Puerto Rico 1,778 529
Cost of services - Domestic 18,961 18,807
Cost of services - Puerto Rico 16,386 10,411
Selling, general and
administrative - Domestic 50,841 42,396
Selling, general
and administrative - Puerto Rico 30,619 19,746
Depreciation and amortization - Domestic 62,385 60,771
Depreciation and amortization - Puerto Rico 35,317 21,866
Recapitalization costs 58,852 -
-------- --------
288,797 187,027
OPERATING LOSS (26,206) (17,322)
INCOME FROM EQUITY INVESTMENTS 9,352 9,843
GAIN (LOSS) ON SALE OF ASSETS 8,414 8
INTEREST EXPENSE - NET 48,553 31,801
LOSS BEFORE INCOME TAX BENEFIT
AND MINORITY INTEREST (56,993) (39,272)
INCOME TAX BENEFIT (10,114) (13,527)
LOSS BEFORE MINORITY INTEREST (46,879) (25,745)
MINORITY INTEREST IN LOSS (INCOME)
OF SUBSIDIARIES 142 (337)
LOSS FROM CONTINUING OPERATIONS $ (46,737) $ (26,082)
EXTRAORDINARY LOSS ON EARLY
EXTINGUISHMENT OF DEBT,
NET OF INCOME TAXES OF ($11,251) (40,526) -
NET LOSS (87,263) (26,082)
DIVIDEND ON PREFERRED STOCK $ 9,906 $ 12,338
LOSS APPLICABLE TO COMMON SHARES $ (97,169) $ (38,420)
BASIC AND DILUTED EARNINGS PER SHARE:
LOSS FROM CONTINUING OPERATIONS $ (1.11) $ (0.66)
EXTRAORDINARY LOSS ON RETIREMENT OF DEBT $ (0.79) $ -
NET LOSS APPLICABLE FOR COMMON SHARES $ (1.90) $ (0.66)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING DURING THE PERIOD 51,026,000 57,838,000
COMMON SHARES OUTSTANDING - END OF PERIOD 31,126,000 56,064,000
Centennial Cellular Corp.
Statistics
February 28, 1999
($000's, except per subscriber data)
For the For the
Quarter Ended Nine Months Ended
2/28/99 2/28/98 2/28/99 2/28/98
DOMESTIC
Subscribers 309,300 237,900 309,300 237,900
Net Gain -
Subscribers 24,200 20,000 57,500 50,800
Revenue per
Average Customer $68 $62 $69 $70
Penetration 5.3% 4.1% 5.3% 4.1%
Churn 2.1% 1.8% 1.9% 1.8%
MOU's per Customer 100 99 106 100
Cost to Acquire
per Activation $314 $282 $316 $307
Capital Expenditures $6,980 $13,076 $25,130 $31,363
PUERTO RICO
Wireless Revenue $30,764 $14,747 $76,092 $34,493
Wireline Revenue $5,085 $848 $11,519 $1,259
Wireless Subscribers 117,400 60,600 117,400 60,600
Net Gain - Wireless
Subscribers 19,400 9,900 48,500 43,800
Revenue per Average
Wireless Customer $95 $88 $91 $94
Penetration 3.1% 1.6% 3.1% 1.6%
Churn 3.3% 6.2% 3.5% 4.7%
MOU's per Wireless
Customer 461 355 433 326
Capital Expenditures $14,074 $18,148 $44,689 $71,824
Fiber Route Miles 314 261 314 261
REVENUES
Consolidated $97,993 $58,941 $262,591 $169,705
Domestic $62,144 $43,346 $174,980 $133,953
Puerto Rico $35,849 $15,595 $87,611 $35,752
RECURRING EBITDA
Consolidated $48,778 $21,260 $130,348 $65,315
Domestic $31,254 $17,350 $91,520 $60,249
Puerto Rico $17,524 $3,910 $38,828 $5,066
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