Centennial Communications Corp. Announces Third Quarter Results.Business Editors/High-Tech Writers WALL, N.J.--(BUSINESS WIRE)--March 17, 2004 Centennial Communications Centennial Communications (NASDAQ: CYCL) and its subsidiaries (Centennial Wireless (U.S.), Centennial Dominicana and Centennial de Puerto Rico) provide wireless and broadband telecommunications services to wireless telephone subscribers in the United States, Puerto Rico, the Corp. (the "Company") (Nasdaq: CYCL CYCL - A frame language. ["Building Large Knowledge-Based Systems", Doug B. Lenat et al, A-W 1990]. ) today announced results for the quarter ended February February: see month. 29, 2004. Consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: revenues grew 14% from the same quarter last year to $207.4 million. Net loss was $30.3 million for the third quarter as compared to a net loss of $159.6 million for the same quarter last year. Adjusted operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. (previously referred to as "adjusted 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 ") was $81.3 million, a 19% increase from the same quarter last year. Adjusted operating income is net income (loss) before interest, taxes, depreciation, amortization, loss (gain) on disposition Act of disposing; transferring to the care or possession of another. The parting with, alienation of, or giving up of property. The final settlement of a matter and, with reference to decisions announced by a court, a judge's ruling is commonly referred to as disposition, regardless of of assets, minority interest in (income) loss of subsidiaries, income from equity investments, loss on impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. of assets, other income (expense) and special non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. . Please refer to Exhibit A -- "Non-GAAP Financial Measures." The Company's wireless subscribers at February 29, 2004 were 1,027,500, compared to 929,700 on the same date last year, an increase of 11%. U.S. Wireless subscribers increased by 1,600 from the quarter ended November November: see month. 30, 2003, aided by national rate plans. Caribbean Wireless subscribers increased 28,700 as compared to the quarter ended November 30, 2003, due primarily to strong growth of postpaid post·paid adj. With the postage having been paid in advance. postpaid Adverb, adj with the postage prepaid Adj. 1. subscribers. Caribbean Broadband broadband Term describing the radiation from a source that produces a broad, continuous spectrum of frequencies (contrasted with a laser, which produces a single frequency or very narrow range of frequencies). switched access lines reached 48,100 and dedicated access line equivalents were 205,300 at February 29, 2004, up 21% and 15%, respectively, from February 28, 2003. Cable television subscribers were 73,600 at February 29, 2004, down 4,900 from the same quarter last year. "Once again this quarter we are proud to report double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. growth in both revenue and adjusted operating income. We are particularly proud of the performance of our retail business in the U.S., which generated service revenue growth of 17%. This growth resulted from a 3% increase in subscribers and from an improvement in service revenue per subscriber subscriber, n the person, usually the employee, who represents the family unit in relation to the prepayment plan. Other family members are dependents. Also called certificate holders or enrollees. . Our Caribbean operations also posted noteworthy results; revenue grew by 20% and adjusted operating income by 31% versus the same quarter last year." said Michael Michael, archangel Michael (mī`kəl) [Heb.,=who is like God?], archangel prominent in Christian, Jewish, and Muslim traditions. In the Bible and early Jewish literature, Michael is one of the angels of God's presence. J. Small, chief executive officer. For the quarter, U.S. Wireless revenues were $90.3 million and U.S. Wireless adjusted operating income was $37.2 million. U.S. Wireless adjusted operating income increased by 8% from the same quarter last year despite reduced 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 of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $5.4 million. Service revenue per subscriber increased to $44 for the three months ended February 29, 2004 from $39 for the same period in the prior year, primarily due to the introduction of national rate plans. Service revenue is total revenue excluding roaming revenue and equipment sales. For the quarter, total Caribbean (consisting of the Caribbean Wireless and Caribbean Broadband segments) revenues were $117.1 million and total Caribbean adjusted operating income was $44.1 million. Total Caribbean adjusted operating income for the quarter was up 31% from the same quarter last year. Caribbean Wireless revenues for the quarter reached $78.0 million, an increase of 20% from the same quarter last year. Caribbean Wireless adjusted operating income for the quarter was $29.0 million, an increase of 21% from the same quarter last year. Caribbean Broadband revenues for the quarter were $41.9 million and Caribbean Broadband adjusted operating income reached $15.0 million, up 21% and 56% from the same quarter last year, respectively. Consolidated capital expenditures for the quarter ended February 29, 2004 were $37.6 million or 18% of revenue. Net debt at February 29, 2004 was $1,704.9 million as compared to $1,699.7 million at February 28, 2003. For the quarter, the Company's net loss of $30.3 million includes a tax provision of $6.5 million, resulting from book/tax differences and foreign taxes. Recent Financing Activity In February, Centennial Communications 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. refinancing Refinancing An extension and/or increase in amount of existing debt. transactions consisting of a new $750 million senior secured credit facility and a private placement of $325 million of 8 1/8% Senior Notes due 2014. The new senior secured credit facility is comprised of a $600 million, seven-year term loan maturing in 2011 and a $150 million, six-year revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility maturing in 2010. The new financings extend the weighted average maturities of the Company's long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. by over two years and eliminate approximately $600 million in scheduled amortization payments over the next four years. As a result of these transactions, the Company's weighted average total cost of debt has decreased from approximately 8.50% to approximately 7.75%. Term loan borrowings under the new senior secured credit facility, together with proceeds of the senior notes, were used to refinance Refinance 1. When a business or person revises their payment schedule for repaying debt. 2. Replacing an older loan with a new loan offering better terms. Notes: When a business refinances they typically extend the maturity date. and replace the Company's existing senior secured credit facilities credit facilities npl → facilidades fpl de crédito credit facilities npl → facilités fpl de paiement credit facilities ; 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. all of the Company's outstanding unsecured Unsecured A loan or equity interest that is given without any guarantee of payment, performance, satisfaction or opportunity for return from the recipient. No property, interest or security is used as collateral in either a guarantee or a pledge. subordinated Subordinated A claim ranked lower in priority than other claims. Common stock claims are always subordinated to debt. notes due 2009 accruing paid-in-kind interest at a rate of 13.0%; repurchase and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. redeem redeem v. to buy back, as when an owner who had mortgaged his/her real property pays off the debt. The term also refers to paying the amount due and all charges after a foreclosure (due to failure to make payments when due) has begun. $70 million aggregate principal amount of the Company's outstanding $370 million 10.75% senior subordinated notes due 2008 and pay related fees and expenses. Revised Fiscal 2004 Guidance The Company is raising its prior guidance to reflect positive business trends through the third quarter. We now expect adjusted operating income to grow by a minimum of 10% in fiscal 2004 over the $295.7 million result for 2003; this revises prior guidance of 5-10% growth in adjusted operating income. This increased growth in adjusted operating income is expected despite a projected reduction of approximately $25 million in the U.S. Wireless roaming revenues in 2004 from the level experienced in 2003. This updates prior guidance of an estimated $20 million reduction in U.S. Wireless roaming revenues. The Company now expects capital expenditures of approximately $135 million in fiscal 2004 versus prior guidance of approximately $125 million. The Company has not included a reconciliation of projected adjusted operating income since projections for some components of such reconciliation are not possible to project at this time. In addition to the financial results determined in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with Generally Accepted Accounting Principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ("GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). "), this press release contains a non-GAAP financial measure, adjusted operating income. This non-GAAP financial measure should be considered in addition to, but not as a substitute for, the information prepared in accordance with GAAP. Reconciliations of this non-GAAP financial measure to comparable GAAP measures are provided in Exhibit A to this press release. Conference Call Information As previously announced, the Company plans to conduct a conference call concerning the results today beginning at 8:30 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy . The conference call will be simultaneously webcast over the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the . Access to the webcast is available through the Company's website at www.centennialwireless.com, click on "Investor Relations Investor relations The process by which the corporation communicates with its investors. ." The conference call will also be available at www.streetevents.com. A replay of the call will be available at both sites through March 31, 2004. About Centennial 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 the Caribbean with approximately 17.3 million Net Pops and approximately 1,027,500 wireless subscribers. Centennial's U.S. operations have approximately 6.1 million Net Pops in small cities and rural areas. Centennial's Caribbean integrated communications operation owns and operates wireless licenses for approximately 11.2 million Net Pops in 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. , the Dominican Republic Dominican Republic (dəmĭn`ĭkən), republic (2005 est. pop. 8,950,000), 18,700 sq mi (48,442 sq km), West Indies, on the eastern two thirds of the island of Hispaniola. The capital and largest city is Santo Domingo. and the U.S. Virgin Islands, and provides voice, data, video and Internet services on broadband networks  This article or section needs copy editing for grammar, style, cohesion, tone and/or spelling.You can assist by [ editing it] now. in the region. Welsh Welsh most commonly refers to:
Places , Carson Carson, city (1990 pop. 83,995), Los Angeles co., S Calif., an industrial and residential suburb of Los Angeles; inc. 1968. Oil refining is the major industry; fabricated metals, paper, and other products are manufactured. The California State Univ. Dominguez Hills is there. , 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 Stowe (stō), resort town (1990 pop. 2,450), Lamoille co., N central Vt.; settled 1794, inc. 1896. It is surrounded by mountains, including Mt. Mansfield, Vermont's highest. and an affiliate Affiliate Relationship between two companies when one company owns substantial interest, but less than a majority of the voting stock of another company, or when two companies are both subsidiaries of a third company. See: Subsidiaries, parent company. 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. For more information regarding Centennial, please visit our websites at www.centennialwireless.com, www.centennialpr.com and www.centennialrd.com. Cautionary statement for purposes of the "safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995: Information in this release that involves Centennial's expectations, beliefs, hopes, plans, projections, estimates, intentions or strategies regarding the future are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . Such forward-looking statements are subject to a number of risks, assumptions and uncertainties that could cause the Company's actual results to differ materially from those projected in such forward-looking statements. These risks, assumptions and uncertainties include, but are not limited to: our substantial debt obligations; the availability and cost of additional capital to fund our operations, including the need to refinance and/or amend existing 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. ; restrictive covenants Restrictive covenants Provisions that place constraints on the operations of borrowers, such as restrictions on working capital, fixed assets, future borrowing, and payment of dividends. and consequences of default contained in our financing arrangements, which place limitations on how we conduct business; the competitive nature of the telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. industry in the areas in which we operate, including, without limitation, the effect of existing and new competitors, including competitors that may have a lower cost basis or greater resources than we do, competitors that may offer less expensive products than we do and competitors that may offer more technologically advanced products than we do; market prices for the products and services we offer may continue to decline in the future; general economic, business, political and social conditions in the areas in which we operate, including the less developed Caribbean region, including the effects of world events on tourism in the Caribbean; continued overbuilding by personal communications service System using radio-frequency, infrared, microwave, or other types of electromagnetic or acoustic waves in place of wires, cables, or fibre optics to transmit signals or data. industry; the effects of governmental regulation of the telecommunications industry; the capital intensity of the telecommunications industry, including our plans to make significant capital expenditures during the coming years to continue to build out and upgrade our networks and the availability of additional capital to fund these capital expenditures; declining rates for international long distance traffic; opportunities for growth through acquisitions and investments and our ability to manage this growth; changes and developments in technology, including our ability to upgrade our networks to remain competitive and our ability to anticipate and react to frequent and significant technological changes; our ability to effectively manage subscriber cancellations, particularly in light of regulations that took effect November 2003 requiring wireless companies to permit the phone numbers that they allocate To reserve a resource such as memory or disk. See memory allocation. to their customers to be portable when the customer switches to another carrier, which may increase customer churn churn: see butter. and present technological difficulties; local operating hazards
Hazards is an independent, union-friendly magazine based in Sheffield, England, which has won major international awards. and risks in the areas in which we operate, including without limitation, hurricanes, tornadoes, windstorms and other natural disasters; our ability to manage, implement and monitor billing and operational support systems; potential litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc using wireless telephones while operating an automobile automobile, self-propelled vehicle used for travel on land. The term is commonly applied to a four-wheeled vehicle designed to carry two to six passengers and a limited amount of cargo, as contrasted with a truck, which is designed primarily for the transportation of and the potential reduction of wireless usage due to legislation restricting re·strict tr.v. re·strict·ed, re·strict·ing, re·stricts To keep or confine within limits. See Synonyms at limit. [Latin restringere, restrict- : re-, usage while driving; potential litigation relating to possible health effects of radio frequency transmission; the relative illiquidity and corresponding volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the of our common stock and our ability to raise equity capital; the control of us retained by certain of our stockholders and anti-takeover provisions; and other risks referenced from time to time in the Company's filings with the Securities and Exchange Commission. All forward-looking statements included in this release are based upon information available to Centennial as of the date of the release, and we assume no obligation to update or revise any such forward-looking statements.
CENTENNIAL COMMUNICATIONS CORP.
FINANCIAL DATA AND OPERATING STATISTICS
February 29, 2004
($000's, except per subscriber data)
Three Months Ended Nine Months Ended
Feb-04 Feb-03 Feb-04 Feb-03
------------ ------------ ------------ ------------
U.S. WIRELESS
-------------
Postpaid Wireless
Subscribers 530,100 516,900 530,100 516,900
Prepaid Wireless
Subscribers 22,800 22,000 22,800 22,000
------------ ------------ ------------ ------------
Total Wireless
Subscribers 552,900 538,900 552,900 538,900
Net Gain (Loss) -
Wireless
Subscribers 1,600 8,800 12,000 (1,400)
Revenue per
Average Wireless
Customer $54 $53 $56 $55
Service Revenue
Per Average
Wireless Customer $44 $39 $44 $40
Roaming Revenue $11,194 $16,632 $40,941 $60,764
Penetration -
Total Wireless 9.0% 9.0% 9.0% 9.0%
Postpaid Churn -
Wireless 2.1% 2.2% 2.0% 2.0%
Prepaid & Postpaid
Churn - Wireless 2.5% 2.5% 2.4% 2.4%
Monthly MOU's per
Wireless Customer 291 251 293 248
Cost to Acquire $290 $284 $291 $336
Capital
Expenditures $14,393 $7,576 $38,846 $25,762
CARIBBEAN
---------
Postpaid Wireless
Subscribers 347,100 277,600 347,100 277,600
Prepaid Wireless
Subscribers 124,300 107,500 124,300 107,500
Home Phone
Wireless
Subscribers 3,200 5,700 3,200 5,700
------------ ------------ ------------ ------------
Total Wireless
Subscribers 474,600 390,800 474,600 390,800
Net Gain (Loss) -
Wireless
Subscribers (1) 28,700 24,100 76,000 24,300
Revenue per
Average Wireless
Customer $56 $57 $58 $58
Penetration -
Total Wireless 3.7% 3.0% 3.7% 3.0%
Postpaid Churn -
Wireless 2.8% 2.4% 2.4% 2.8%
Prepaid Churn -
Wireless 5.4% 5.3% 5.3% 5.1%
Prepaid & Postpaid
Churn - Wireless 3.5% 3.2% 3.2% 3.5%
Monthly MOU's per
Wireless Customer 897 741 905 695
Cable Television
Subscribers 73,600 78,500 73,600 78,500
Fiber Route Miles 1,663 1,521 1,663 1,521
Switched Access
Lines 48,114 39,756 48,114 39,756
Dedicated Access
Line Equivalents (2) 205,297 177,938 205,297 177,938
On-Net Buildings 1,114 910 1,114 910
Capital
Expenditures $23,196 $17,511 $60,574 $66,843
REVENUES
--------
U.S. Wireless $90,320 $84,713 $274,732 $264,069
------------ ------------ ------------ ------------
Caribbean -
Wireless $77,999 $65,078 $228,514 $192,350
Caribbean -
Broadband $41,923 $34,768 $120,093 $105,276
Caribbean -
Intercompany ($2,850) ($2,529) ($9,540) ($7,052)
------------ ------------ ------------ ------------
Total Caribbean $117,072 $97,317 $339,067 $290,574
------------ ------------ ------------ ------------
Consolidated $207,392 $182,030 $613,799 $554,643
============ ============ ============ ============
Adjusted Operating
Income (3)
------------------
U.S. Wireless $37,199 $34,338 $112,133 $119,007
------------ ------------ ------------ ------------
Caribbean -
Wireless $29,018 $24,054 $91,611 $67,910
Caribbean -
Broadband $15,035 $9,659 $40,592 $27,728
------------ ------------ ------------ ------------
Total Caribbean $44,053 $33,713 $132,203 $95,638
------------ ------------ ------------ ------------
Consolidated $81,252 $68,051 $244,336 $214,645
============ ============ ============ ============
NET DEBT
--------
Total Debt Less
Cash $1,704,900 $1,699,700 $1,704,900 $1,699,700
------------ ------------ ------------ ------------
(1) Includes a reduction of 30,200 subscribers in the nine months
ended February 2003 from the divested Centennial Digital Jamaica
operations.
(2) Includes a reduction of 32,000 dedicated access line equivalents
for the three months ended February 29, 2004 due to the sale of an
OC-48 in November 2003 that had been previously counted as a fully
active circuit. The correct number of dedicated access line
equivalents for the three months ended November 30, 2003 would
have been 198,000.
(3) Adjusted operating income is net income (loss) before interest,
taxes, depreciation, amortization, loss (gain) on disposition of
assets, minority interest in (income) loss of subsidiaries, income
from equity investments, loss on impairment of assets, other
income (expense) and special non-cash charge. Please refer to
Exhibit A - "Non-GAAP Financial Measures."
CENTENNIAL COMMUNICATIONS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
Three Months Ended Nine Months Ended
------------------------- -------------------------
February 29, February 28, February 29, February 28,
2004 2003 2004 2003
------------ ------------ ------------ ------------
REVENUE:
Service revenue $198,903 $173,978 $590,252 $535,216
Equipment sales 8,489 8,052 23,547 19,427
------------ ------------ ------------ ------------
207,392 182,030 613,799 554,643
------------ ------------ ------------ ------------
COSTS AND
EXPENSES:
Cost of services 40,941 36,794 122,738 116,925
Cost of equipment
sold 22,016 21,467 65,712 52,173
Sales and
marketing 23,169 24,026 69,475 71,482
General and
administrative 40,014 31,692 111,538 104,418
Depreciation and
amortization 34,640 35,855 104,702 106,982
Loss on impairment
of assets - 189,492 - 189,492
Loss (gain) on
disposition of
assets 249 (464) 211 (2,357)
------------ ------------ ------------ ------------
161,029 338,862 474,376 639,115
------------ ------------ ------------ ------------
OPERATING INCOME
(LOSS) 46,363 (156,832) 139,423 (84,472)
------------ ------------ ------------ ------------
INCOME FROM EQUITY
INVESTMENTS 24 33 52 166
INTEREST EXPENSE -
NET (41,742) (36,331) (125,367) (111,598)
LOSS ON
EXTINGUISHMENT
OF DEBT (28,625) - (36,160) -
OTHER INCOME
(EXPENSE) 232 (771) (369) (877)
------------ ------------ ------------ ------------
LOSS BEFORE
INCOME TAX
EXPENSE
AND MINORITY
INTEREST (23,748) (193,901) (22,421) (196,781)
INCOME TAX
(EXPENSE) BENEFIT (6,459) 34,324 (13,778) 23,318
------------ ------------ ------------ ------------
LOSS BEFORE
MINORITY
INTEREST (30,207) (159,577) (36,199) (173,463)
MINORITY INTEREST
IN (INCOME) LOSS
OF SUBSIDIARIES (126) - (408) 171
------------ ------------ ------------ ------------
NET LOSS $(30,333) $(159,577) $(36,607) $(173,292)
============ ============ ============ ============
LOSS PER COMMON SHARE:
BASIC AND DILUTED $(0.29) $(1.67) $(0.37) $(1.81)
============ ============ ============ ============
EXHIBIT A -- NON-GAAP FINANCIAL MEASURES Regulation G, "Conditions for Use of Non-GAAP Financial Measures," and other provisions of the Securities Exchange Act of 1934, as 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. , define and prescribe pre·scribe v. To give directions, either orally or in writing, for the preparation and administration of a remedy to be used in the treatment of a disease. the conditions for use of certain non-GAAP financial information. Throughout this press release, we present certain financial measures that are not calculated and presented in accordance with GAAP, including "adjusted operating income." We previously referred to this non-GAAP financial measure in our filings with the United States Securities and Exchange Commission ("SEC"), press releases and other communications with investors as "adjusted EBITDA." The change to "adjusted operating income" is a change in name only and we have not changed the way we calculate current or prior results with respect to this financial measure. We view adjusted operating income as an operating performance measure, and as such we believe that the GAAP financial measure most directly comparable to it is net income or net loss. In calculating adjusted operating income, we exclude from net income or net loss the financial items that we believe have less significance to the day-to-day day-to-day adj. 1. Occurring on a routine or daily basis: the day-to-day movements of the stock market. 2. operation of our business. We have outlined below the type and scope of these exclusions and the limitations on the use of this non-GAAP financial measure as a result of these exclusions. Adjusted operating income is not an alternative to net income, operating income or cash flows from operating activities as calculated and presented in accordance with GAAP. Investors and potential investors in our securities should not rely on adjusted operating income as a substitute for any GAAP financial measure. In addition, our calculation of adjusted operating income may or may not be consistent with that of other companies. We strongly urge investors and potential investors in our securities to review the reconciliation of adjusted operating income to the comparable GAAP financial measures that are included in this press release and our SEC filings and not to rely on any single financial measure to evaluate our business. Adjusted operating income is used by our management as a supplemental financial measure to evaluate the performance of our business that, when viewed with our GAAP results and the accompanying ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. reconciliations, we believe provides a more complete understanding of factors and trends affecting our business than the GAAP results alone. Management also uses this financial measure as one of several criteria criteria (krītēr´ē  ),n. to determine the achievement of performance-based cash bonuses. We also regularly communicate our adjusted operating income to the public through our earnings releases because it is the financial measure commonly used by analysts that cover our industry and our investor base to evaluate our performance. We understand that analysts and investors regularly rely on non-GAAP financial measures, such as adjusted operating income, to provide a financial measure by which to compare a company's assessment of its operating performance against that of other companies in the same industry. This non-GAAP financial measure is helpful in more clearly reflecting the sales of our products and services, as well as highlighting trends in our core businesses that may not otherwise be apparent when relying solely on GAAP financial measures, because this non-GAAP financial measure eliminates from earnings financial items that have less bearing on our performance. In addition, as our calculation of adjusted operating income is similar, but not identical, to certain financial ratios that are used in the financial covenants of our New Senior Credit Facility and the indentures governing gov·ern v. gov·erned, gov·ern·ing, gov·erns v.tr. 1. To make and administer the public policy and affairs of; exercise sovereign authority in. 2. our Senior Subordinated Notes due 2008, Senior Notes due 2013 and Senior Notes due 2014, and since we do not publicly disclose the calculations of these financial ratios, adjusted operating income is the most comparable financial measure that is readily available to investors to evaluate our compliance with our financial covenants. The term "adjusted operating income" as used in this press release refers to, for any period, net income (loss) before interest, taxes, depreciation, amortization, loss (gain) on disposition of assets, minority interest in (income) loss of subsidiaries, income from equity investments, loss on impairment of assets, other income (expense) and special non-cash charge. Set forth below are descriptions of the financial items that have been excluded from our net income (loss) to calculate adjusted operating income and the material limitations associated with using this non-GAAP financial measure as compared to the use of the most directly comparable GAAP financial measure: -- The amount of interest expense we incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. is significant and reduces the amount of funds otherwise available to use in our business and, therefore, is important for investors to consider. However, management does not consider the amount of interest expense when evaluating our core operating performance. -- Management does not consider income tax expense when considering the profitability of our core operations. Nevertheless, the amount of taxes we are required to pay reduces the amount of funds otherwise available for use in our business and thus may be useful for an investor to consider. -- Depreciation and amortization are important for investors to consider, even though they are non-cash charges, because they represent generally the wear and tear on our property, plant and equipment, which produce our revenue. We do not believe these charges are indicative indicative: see mood. of our core operating performance. -- Loss (gain) on the disposition of assets may increase or decrease the cash available to us and thus may be important for an investor to consider. We are not in the business of acquiring or disposing of assets and, therefore, the effect of the disposition of assets may not be comparable from year-to-year. We believe such gains or losses recorded on the disposition of an asset do not reflect the core operating performance of our business. -- Minority interest in (income) loss of subsidiaries relates to our minority investors' proportionate pro·por·tion·ate adj. Being in due proportion; proportional. tr.v. pro·por·tion·at·ed, pro·por·tion·at·ing, pro·por·tion·ates To make proportionate. share of income or losses in our non-wholly owned subsidiaries, which generated non-cash charges to our operating results. Operating results attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to these minority investors' investments do not necessarily result in any direct, immediate benefit or detriment Any loss or harm to a person or property; relinquishment of a legal right, benefit, or something of value. Detriment is most frequently applied to contract formation, since it is an essential element of consideration, which is a prerequisite of a legally enforceable contract. to us and, therefore, we believe it would be helpful for an investor to exclude such items to better reflect our core operating performance. -- Income from equity investments relates to our proportionate share of income or loss from the entities in which we hold minority interests. We do not control these entities and, as such, do not believe the income we receive from such entities is indicative of our core operating performance. -- Loss on impairment of assets is a non-cash charge incurred as a result of changes in the valuations of our assets. Although it is important to recognize that some of our assets have decreased in value, we do not believe it is indicative of our core operating performance. -- Other (income) expense relates to foreign currency translation losses in our operations in the Dominican Republic because some of our revenue in the Dominican Republic is collected and expenses are paid in local currency, the DR peso. Although foreign currency translation gains or losses have a cash effect on our results, because some of our costs incurred in the Dominican Republic are paid in U.S. dollars, by excluding them we are better able to evaluate the real effects of changes in our core operating performance. -- The special non-cash charge relates to disputed billings Billings, city (1990 pop. 81,151), seat of Yellowstone co., S Mont., on the Yellowstone River, in a valley surrounded by seven mountain ranges; inc. as a city 1885. that arose in prior fiscal years with the Puerto Rico Telephone Company ("PRTC PRTC Puerto Rico Telephone Company PRTC Partido Revolucionario de los Trabajadores Centroamericanos (El Salvador) PRTC PEPSU Road Transport Corporation (India) PRTC Potomac River Transportation Company "). We recorded this charge in the second quarter of fiscal 2003 as a result of developments in these disputes at that time and the protracted pro·tract tr.v. pro·tract·ed, pro·tract·ing, pro·tracts 1. To draw out or lengthen in time; prolong: disputants who needlessly protracted the negotiations. 2. negotiations with the PRTC concerning the disputed billings. While these charges reduced cash available to us, due to newly negotiated interconnection in·ter·con·nect v. in·ter·con·nect·ed, in·ter·con·nect·ing, in·ter·con·nects v.intr. To be connected with each other: The two buildings interconnect. v.tr. rates with the PRTC, we believe disputed charges will become less material in future periods. Management compensates for the above-described limitations of using a non-GAAP financial measure by using this non-GAAP financial measure only to supplement our GAAP results to provide a more complete understanding of the factors and trends affecting our business. The following table sets forth a reconciliation of net loss to adjusted operating income for our consolidated results.
RECONCILIATION OF CONSOLIDATED NET LOSS TO ADJUSTED OPERATING INCOME
THREE MONTHS ENDED NINE MONTHS ENDED
FEBRUARY 29, FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
2004 2003 2004 2003
------------ ------------ ------------ ------------
(In thousands) (Unaudited) (Unaudited)
------------------ ------------------------- -------------------------
NET LOSS $(30,333) $(159,577) $(36,607) $(173,292)
Minority interest
in income (loss)
of subsidiaries 126 - 408 (171)
Income tax expense
(benefit) 6,459 (34,324) 13,778 (23,318)
Other (income)
expense (232) 771 369 877
Interest expense,
net 70,367 36,331 161,527 111,598
Income from equity
investments (24) (33) (52) (166)
------------ ------------ ------------ ------------
Operating income
(loss) 46,363 (156,832) 139,423 (84,472)
Loss on impairment
of assets - 189,492 - 189,492
Loss (gain) on
disposition of
assets 249 (464) 211 (2,357)
Special non-cash
charge - - - 5,000
Depreciation and
amortization 34,640 35,855 104,702 106,982
------------ ------------ ------------ ------------
ADJUSTED OPERATING
INCOME $81,252 $68,051 $244,336 $214,645
============ ============ ============ ============
Our business segments were determined in accordance with GAAP. Our management measures the operating performance of each of our business segments based on adjusted operating income. Adjusted operating income is the measure of profit or loss reviewed by the chief operating decision maker when assessing the performance of each segment and making decisions about the resources to allocate to each segment. Under current SEC rules for non-GAAP financial measures, adjusted operating income as used with respect to our business segments is not required to be reconciled rec·on·cile v. rec·on·ciled, rec·on·cil·ing, rec·on·ciles v.tr. 1. To reestablish a close relationship between. 2. To settle or resolve. 3. to a GAAP financial measure. We have, however, also provided in the following tables a reconciliation of operating income to adjusted operating income for each of our business segments.
U.S. WIRELESS
RECONCILIATION OF OPERATING INCOME TO ADJUSTED OPERATING INCOME
THREE MONTHS ENDED NINE MONTHS ENDED
FEBRUARY 29, FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
2004 2003 2004 2003
------------ ------------ ------------ ------------
(In thousands) (Unaudited) (Unaudited)
------------------ ------------------------- -------------------------
Operating income $28,123 $24,987 $84,813 $91,021
(Gain) loss on
disposition of
assets (62) 105 37 102
Depreciation and
amortization 9,138 9,246 27,283 27,884
------------ ------------ ------------ ------------
ADJUSTED OPERATING
INCOME $37,199 $34,338 $112,133 $119,007
============ ============ ============ ============
CARIBBEAN WIRELESS
RECONCILIATION OF OPERATING INCOME TO ADJUSTED OPERATING INCOME
THREE MONTHS ENDED NINE MONTHS ENDED
FEBRUARY 29, FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
2004 2003 2004 2003
------------ ------------ ------------ ------------
(In thousands) (Unaudited) (Unaudited)
------------------ ------------------------- -------------------------
Operating income $15,991 $10,464 $52,178 $22,134
(Gain) loss on
disposition of
assets - (178) 53 (2,057)
Special non-cash
charge - - - 4,389
Depreciation and
amortization 13,027 13,768 39,380 43,444
------------ ------------ ------------ ------------
ADJUSTED OPERATING
INCOME $29,018 $24,054 $91,611 $67,910
============ ============ ============ ============
CARIBBEAN BROADBAND
RECONCILIATION OF OPERATING INCOME (LOSS) TO ADJUSTED OPERATING INCOME
THREE MONTHS ENDED NINE MONTHS ENDED
FEBRUARY 29, FEBRUARY 28, FEBRUARY 29, FEBRUARY 28,
2004 2003 2004 2003
------------ ------------ ------------ ------------
(In thousands) (Unaudited) (Unaudited)
------------------ ------------------------- -------------------------
Operating income
(loss) $2,249 $(192,283) $2,432 $(197,627)
Loss on impairment
of assets - 189,492 - 189,492
Loss (gain) on
disposition of
assets 311 (391) 121 (402)
Special non-cash
charge - - - 611
Depreciation and
amortization 12,475 12,841 38,039 35,654
------------ ------------ ------------ ------------
ADJUSTED OPERATING
INCOME $15,035 $9,659 $40,592 $27,728
============ ============ ============ ============
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