##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
 For the quarterly period ended November 30, 2008
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from          to
 Commission file number 0-19603
 CENTENNIAL COMMUNICATIONS CORP.
 (Exact name of registrant as specified in its charter)
 Delaware(State or other jurisdiction of 
incorporation or organization)
    
    06-1242753(IRS Employer
Identification No.)
 3349 Route 138
Wall, NJ 07719  (Address of principal executive offices,
including zip code)
 (732) 556-2200  (Registrants telephone number,
including area code)
 þ o
  Large accelerated filer þAccelerated filer oNon-accelerated filer o(Do not check if a smaller reporting company)Smaller reporting company o o þ




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##### 



TABLE OF CONTENTS
 Part I  Financial InformationItem 1.
    
    Financial Statements
    
    
    3Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    24Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    39Item 4.
    
    Controls and Procedures
    
    
    40Part II  Other InformationItem 1.
    
    Legal Proceedings
    
    
    41Item 1A.
    
    Risk Factors
    
    
    41Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    42Item 3.
    
    Defaults Upon Senior Securities
    
    
    42Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    42Item 5.
    
    Other Information
    
    
    42Item 6.
    
    Exhibits
    
    
    42EX-10.2: FORM OF AMENDED AND RESTATED EMPLOYMENT AGREEMENTEX-10.3: FORM OF AMENDED AND RESTATED CHANGE IN CONTROL SEVERANCE AGREEMENTEX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATIONEX-32.2: CERTIFICATION
  2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 CENTENNIAL COMMUNICATIONS CORP. AND SUBSIDIARIES
 CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollar amounts in thousands, except share data)
 November 30,
    
    
    May 31,2008
    
    
    2008ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    140,951
    
    
    $
    105,161Accounts receivable, less allowance for doubtful accounts of $6,766 and $7,105, respectively
    
    
    103,027
    
    
    
    93,998Inventory  phones and accessories, net
    
    
    73,279
    
    
    
    43,242Prepaid expenses and other current assets
    
    
    31,915
    
    
    
    33,298Total Current Assets
    
    
    349,172
    
    
    
    275,699Property, plant and equipment, net
    
    
    564,932
    
    
    
    578,533Debt issuance costs, less accumulated amortization of $34,887 and $30,939, respectively
    
    
    30,660
    
    
    
    34,608Restricted cash
    
    
    6,808
    
    
    
    6,466U.S. wireless licenses
    
    
    402,395
    
    
    
    402,393Puerto Rico wireless licenses
    
    
    54,159
    
    
    
    54,159Goodwill
    
    
    10,989
    
    
    
    4,187Customer lists, net
    
    
    5,049
    
    
    
    9,449Cable facility, net
    
    
    3,130
    
    
    
    3,250Other assets
    
    
    5,143
    
    
    
    6,721TOTAL ASSETS
    
    $
    1,432,437
    
    
    $
    1,375,465LIABILITIES AND STOCKHOLDERS DEFICITCURRENT LIABILITIES:Accounts payable
    
    $
    43,068
    
    
    
    25,447Accrued expenses and other current liabilities
    
    
    204,648
    
    
    
    193,527Payable to affiliates
    
    
    75
    
    
    
    75Total Current Liabilities
    
    
    247,791
    
    
    
    219,049Long-term debt
    
    
    2,015,476
    
    
    
    2,010,647Deferred income taxes
    
    
    159,815
    
    
    
    151,408Other liabilities
    
    
    30,810
    
    
    
    33,950Minority interest in subsidiaries
    
    
    955
    
    
    
    4,898Commitments and contingencies (see Note 8)STOCKHOLDERS DEFICIT:Preferred stock, $0.01 par value per share, 10,000,000 shares authorized, no shares issued
or outstanding
    
    
    
    
    
    
    Common stock, $0.01 par value per share, 240,000,000 shares authorized; issued 108,436,492
and 107,892,406 shares, respectively; and outstanding 108,365,989 and 107,821,903 shares,
respectively
    
    
    1,085
    
    
    
    1,079Additional paid-in capital
    
    
    45,348
    
    
    
    36,787Accumulated deficit
    
    
    (1,067,351
    )
    
    
    (1,078,130
    )Accumulated other comprehensive loss
    
    
    (415
    )
    
    
    (3,146
    )(1,021,333
    )
    
    
    (1,043,410
    )Less: cost of 70,503 common shares in treasury
    
    
    (1,077
    )
    
    
    (1,077
    )Total Stockholders Deficit
    
    
    (1,022,410
    )
    
    
    (1,044,487
    )TOTAL LIABILITIES AND STOCKHOLDERS DEFICIT
    
    $
    1,432,437
    
    
    $
    1,375,465
  3




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##### Table of Contents



CENTENNIAL COMMUNICATIONS CORP. AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollar amounts in thousands, except per share data)
 Three Months Ended
    
    
    Six Months EndedNovember 30,
    
    
    November 30,
    
    
    November 30,
    
    
    November 30,2008
    
    
    2007
    
    
    2008
    
    
    2007REVENUE:Service revenue
    
    $
    247,251
    
    
    $
    230,737
    
    
    $
    496,254
    
    
    $
    465,096Equipment sales
    
    
    14,641
    
    
    
    12,831
    
    
    
    30,851
    
    
    
    26,442261,892
    
    
    
    243,568
    
    
    
    527,105
    
    
    
    491,538COSTS AND EXPENSES:Cost of services (exclusive of depreciation
and amortization shown below)
    
    
    51,241
    
    
    
    44,367
    
    
    
    101,917
    
    
    
    90,941Cost of equipment sold
    
    
    40,843
    
    
    
    30,262
    
    
    
    82,992
    
    
    
    61,784Sales and marketing
    
    
    28,649
    
    
    
    26,728
    
    
    
    54,518
    
    
    
    52,314General and administrative
    
    
    54,856
    
    
    
    52,559
    
    
    
    102,952
    
    
    
    99,865Depreciation and amortization
    
    
    35,109
    
    
    
    34,255
    
    
    
    70,653
    
    
    
    67,611Loss on disposition of assets
    
    
    81
    
    
    
    1,262
    
    
    
    34
    
    
    
    1,611210,779
    
    
    
    189,433
    
    
    
    413,066
    
    
    
    374,126Operating income
    
    
    51,113
    
    
    
    54,135
    
    
    
    114,039
    
    
    
    117,412Interest expense, net
    
    
    (44,548
    )
    
    
    (47,809
    )
    
    
    (89,428
    )
    
    
    (96,393
    )Income from continuing operations before
income tax expense and minority interest in
income of subsidiaries
    
    
    6,565
    
    
    
    6,326
    
    
    
    24,611
    
    
    
    21,019Income tax expense
    
    
    (2,691
    )
    
    
    (4,707
    )
    
    
    (12,747
    )
    
    
    (12,968
    )Income from continuing operations before
minority interest in income of subsidiaries
    
    
    3,874
    
    
    
    1,619
    
    
    
    11,864
    
    
    
    8,051Minority interest in income of subsidiaries
    
    
    (130
    )
    
    
    (169
    )
    
    
    (297
    )
    
    
    (321
    )Income from continuing operations
    
    
    3,744
    
    
    
    1,450
    
    
    
    11,567
    
    
    
    7,730Net loss from discontinued operations
    
    
    (451
    )
    
    
    (525
    )
    
    
    (788
    )
    
    
    (1,039
    )Net income
    
    $
    3,293
    
    
    $
    925
    
    
    $
    10,779
    
    
    $
    6,691Earnings per share:BasicEarnings per share from continuing operations
    
    $
    0.03
    
    
    $
    0.01
    
    
    $
    0.11
    
    
    $
    0.07Loss per share from discontinued operations
    
    
    (0.00
    )
    
    
    (0.00
    )
    
    
    (0.01
    )
    
    
    (0.01
    )Net income per share
    
    $
    0.03
    
    
    $
    0.01
    
    
    $
    0.10
    
    
    $
    0.06DilutedEarnings per share from continuing operations
    
    $
    0.03
    
    
    $
    0.01
    
    
    $
    0.11
    
    
    $
    0.07Loss per share from discontinued operations
    
    
    (0.00
    )
    
    
    (0.00
    )
    
    
    (0.01
    )
    
    
    (0.01
    )Net income per share
    
    $
    0.03
    
    
    $
    0.01
    
    
    $
    0.10
    
    
    $
    0.06Weighted-average number of shares outstanding:Basic
    
    
    108,307
    
    
    
    107,556
    
    
    
    108,172
    
    
    
    107,526Diluted
    
    
    109,900
    
    
    
    110,725
    
    
    
    110,050
    
    
    
    110,585
  4




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CENTENNIAL COMMUNICATIONS CORP. AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollar amounts in thousands)
 Six Months EndedNovember 30,
    
    
    November 30,2008
    
    
    2007OPERATING ACTIVITIES:Net income
    
    $
    10,779
    
    
    $
    6,691Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    70,653
    
    
    
    67,611Stock-based compensation
    
    
    6,204
    
    
    
    6,436Excess tax benefits from stock-based compensation
    
    
    (133
    )
    
    
    (1,107
    )Minority interest in income of subsidiaries
    
    
    297
    
    
    
    321Distributions paid to minority interest
    
    
    (4,240
    )
    
    
    Loss on disposition of assets
    
    
    34
    
    
    
    2,650Changes in assets and liabilities
    
    
    2,015
    
    
    
    (2,502
    )Net cash provided by operating activities
    
    
    85,609
    
    
    
    80,100INVESTING ACTIVITIES:Proceeds from disposition of assets, net of cash expenses
    
    
    40
    
    
    
    81Payment for acquisition, net of cash acquired
    
    
    
    
    
    
    (12,519
    )Payments for purchase of wireless spectrum
    
    
    (2
    )
    
    
    (3,603
    )Capital expenditures
    
    
    (50,255
    )
    
    
    (45,422
    )Net cash used in investing activities
    
    
    (50,217
    )
    
    
    (61,463
    )FINANCING ACTIVITIES:Repayment of debt
    
    
    (1,428
    )
    
    
    (45,944
    )Proceeds from the exercise of stock options
    
    
    1,693
    
    
    
    4,114Proceeds from issuance of common stock under employee stock purchase plan
    
    
    
    
    
    
    296Excess tax benefits from stock-based compensation
    
    
    133
    
    
    
    1,107Net cash
provided by (used in) financing activities
    
    
    398
    
    
    
    (40,427
    )Net increase (decrease) in cash and cash equivalents
    
    
    35,790
    
    
    
    (21,790
    )Cash and cash equivalents, beginning of period
    
    
    105,161
    
    
    
    94,740Cash and cash equivalents, end of period
    
    $
    140,951
    
    
    $
    72,950SUPPLEMENTAL CASH FLOW DISCLOSURE:Cash paid during the period for:Interest
    
    $
    85,184
    
    
    $
    95,804Income taxes
    
    $
    1,527
    
    
    $
    6,109NON-CASH TRANSACTION:Fixed assets acquired under capital leases
    
    $
    4,397
    
    
    $
    3,004
  5




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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Dollar amounts in thousands, except per share amounts)
 NOTE 1. INTERIM FINANCIAL STATEMENTS
         NOTE 2. OTHER INTANGIBLE ASSETS AND GOODWILL
 Other Intangible Assets
  ImpairmentAs of
    
    
    Assets
    
    
    Loss
    
    
    As ofJune 1, 2008
    
    
    Acquired
    
    
    Recognized
    
    
    November 30, 2008U.S. wireless licenses
    
    $
    402,393
    
    
    $
    2
    
    
    $
    
    
    
    $
    402,395Puerto Rico wireless licenses
    
    
    54,159
    
    
    
    
    
    
    
    
    
    
    
    54,159Total
    
    $
    456,552
    
    
    $
    2
    
    
    $
    
    
    
    $
    456,554
 6




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Goodwill and Other Intangible Assets
  Disclosures about Segments of an Enterprise and Related Information
   As of November 30, 2008
    
    As of May 31, 2008Estimated
    
    Gross
    
    
    
    
    
    GrossUseful
    
    Carrying
    
    Accumulated
    
    Carrying
    
    AccumulatedLife
    
    Amount
    
    Amortization
    
    Amount
    
    AmortizationCable facility
    
    25 years
    
    
    6,000
    
    
    
    2,870
    
    
    
    6,000
    
    
    
    2,750Customer lists
    
    10 years
    
    
    6,500
    
    
    
    1,451
    
    
    
    10,295
    
    
    
    846
  Goodwill
  NOTE 3. DEBT
  7




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As of
    
    
    As ofNovember 30, 2008
    
    
    May 31, 2008Senior Secured Credit Facility  Term Loans
    
    $
    550,000
    
    
    $
    550,0008 1/8% Senior Unsecured Notes due 2014 (the 2014 Senior Notes)
    
    
    325,000
    
    
    
    325,00010 1/8% Senior Unsecured Notes due 2013 (the 2013 Senior Notes)
    
    
    500,000
    
    
    
    500,000Senior Unsecured Holdco Floating Rate Notes due 2013 (the 2013
Holdco Floating Rate Notes), net of unamortized discount of
$2,038 and $2,287, respectively
    
    
    347,962
    
    
    
    347,71310% Senior Unsecured Holdco Fixed Rate Notes due 2013 (the 2013
Holdco Fixed Rate Notes)
    
    
    200,000
    
    
    
    200,000Capital Lease Obligations
    
    
    80,972
    
    
    
    76,146Financing Obligation  Tower Sale
    
    
    11,542
    
    
    
    11,788Total Long-Term Debt
    
    
    2,015,476
    
    
    
    2,010,647Current Portion of Long-Term Debt
    
    
    
    
    
    
    Net Long-Term Debt
    
    $
    2,015,476
    
    
    $
    2,010,647
 Senior Secured Credit Facility
    High-Yield Notes
    8




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Derivative Financial Instruments
  All-In
    
    Collar
    
    CollarSwap
    
    Fixed
    
    FixedVariable Interest
    
    
    
    
    
    Fixed
    
    Interest
    
    InterestRate Loan
    
    Amount
    
    Interest
    
    Rate
    
    Rate
    
    Trade
    
    Effective
    
    ExpirationBeing Hedged
    
    Hedged
    
    Rate
    
    Floor
    
    Cap
    
    Date
    
    Date
    
    DateMay 2007 CCOC Collar
    
    Senior Secured Credit Facility
    
    $
    200,000
    
    
    
    
    
    
    
    4.24
    %
    
    
    5.35
    %
    
    
    5/1/2007
    
    
    
    12/31/2007
    
    
    
    12/31/2008November 2008 CCOC
Collar 1
    
    Senior Secured Credit Facility
    
    $
    200,000
    
    
    
    
    
    
    
    1.76
    %
    
    
    2.25
    %
    
    
    11/25/2008
    
    
    
    12/31/2008
    
    
    
    9/30/20092008 CPROC Swap
    
    Senior Secured Credit Facility
    
    $
    250,000
    
    
    
    6.45
    %
    
    
    
    
    
    
    
    
    
    
    9/18/2007
    
    
    
    3/31/2008
    
    
    
    9/30/20082008 CPROC Collar
    
    Senior Secured Credit Facility
    
    $
    250,000
    
    
    
    
    
    
    
    2.43
    %
    
    
    4.00
    %
    
    
    9/26/2008
    
    
    
    9/30/2008
    
    
    
    6/30/2009June 2008 CPROC Swap
    
    Senior Secured Credit Facility
    
    $
    35,500
    
    
    
    4.61
    %
    
    
    
    
    
    
    
    
    
    
    5/23/2008
    
    
    
    6/30/2008
    
    
    
    12/31/2008November 2008 CPROC
Collar
    
    Senior Secured Credit Facility
    
    $
    35,500
    
    
    
    
    
    
    
    1.76
    %
    
    
    2.25
    %
    
    
    11/25/2008
    
    
    
    12/31/2008
    
    
    
    9/30/2009June 2008 CCOC Swap
    
    Senior Secured Credit Facility
    
    $
    25,000
    
    
    
    4.61
    %
    
    
    
    
    
    
    
    
    
    
    5/23/2008
    
    
    
    6/30/2008
    
    
    
    12/31/2008November 2008 CCOC
Collar 2
    
    Senior Secured Credit Facility
    
    $
    25,000
    
    
    
    
    
    
    
    1.76
    %
    
    
    2.25
    %
    
    
    11/25/2008
    
    
    
    12/31/2008
    
    
    
    9/30/2009May 2008 CCOC Swap
    
    Senior Secured Credit Facility
    
    $
    39,500
    
    
    
    4.54
    %
    
    
    
    
    
    
    
    
    
    
    5/23/2008
    
    
    
    5/31/2008
    
    
    
    11/30/2008November 2008 CCOC
Collar 3
    
    Senior Secured Credit Facility
    
    $
    39,500
    
    
    
    
    
    
    
    1.81
    %
    
    
    2.25
    %
    
    
    11/25/2008
    
    
    
    11/30/2008
    
    
    
    8/31/20092008 Holdco Swap
    
    2013 Holdco Floating Rate Notes
    
    $
    200,000
    
    
    
    8.60
    %
    
    
    
    
    
    
    
    
    
    
    5/23/2008
    
    
    
    7/1/2008
    
    
    
    4/1/2009
      9




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November 30, 2009
    
    $
    November 30, 2010
    
    
    274,546November 30, 2011
    
    
    274,989November 30, 2012
    
    
    215November 30, 2013
    
    
    500,548November 30, 2014 and thereafter
    
    
    967,2162,017,514Less: unamortized discount
    
    
    (2,038
    )$
    2,015,476
  NOTE 4. TAXES
 Accounting for Income Taxes Interim Financial Reporting Accounting for Income Taxes in Interim
Periods  An Interpretation of APB Opinion No. 28
  Accounting
for Uncertainty in Income Taxes  an interpretation of FASB Statement No. 109
  NOTE 5. DISCONTINUED OPERATIONS
 Accounting for the Impairment or Disposal of Long-Lived Assets
 10




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NOTE 6. RECENT ACCOUNTING PRONOUNCEMENTS
 Determination of the
Useful Life of Intangible Assets
 Disclosures about Derivative Instruments and
Hedging Activities
 Noncontrolling Interests in Consolidated
Financial Statements  an amendment of ARB No. 51
 Business Combinations
 Accounting
for Consideration Given by a Service Provider to Manufacturers or Resellers of Equipment Necessary
for an End-Customer to Receive Service from the Service Provider
 Fair Value Measurement
  11




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Effective Date of FASB Statement No. 157 Determining the Fair Value of a Financial Asset When the Market
for That Asset Is Not Active
 NOTE 7. ACQUISITIONS AND DISPOSITIONS
  Purchase Price Allocation
 Business Combinations
  Current assets
    
    $
    561Property, plant and equipment, net
    
    
    1,663Customer lists
    
    
    6,500Deferred tax asset
    
    
    3,381Goodwill
    
    
    6,802Total Assets Acquired
    
    
    18,907Current liabilities assumed
    
    
    3,419Deferred tax liability
    
    
    2,275Net assets acquired
    
    $
    13,213
  NOTE 8. COMMITMENTS AND CONTINGENCIES
 Legal Proceedings:
  12




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Guarantees:
  Lease Commitments:
   Other Commitments and Contingencies:
  NOTE 9. SEGMENT INFORMATION
  13




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##### Table of Contents



Three Months Ended
    
    
    Six Months EndedNovember 30,
    
    
    November 30,2008
    
    
    2007
    
    
    2008
    
    
    2007U.S. WIRELESSService revenue
    
    $
    118,225
    
    
    $
    108,797
    
    
    $
    238,474
    
    
    $
    218,137Roaming revenue
    
    
    15,156
    
    
    
    14,233
    
    
    
    30,945
    
    
    
    32,185Equipment sales
    
    
    10,831
    
    
    
    9,777
    
    
    
    22,600
    
    
    
    20,089Total revenue
    
    
    144,212
    
    
    
    132,807
    
    
    
    292,019
    
    
    
    270,411Adjusted operating income
    
    
    50,305
    
    
    
    51,372
    
    
    
    108,893
    
    
    
    104,511Total assets
    
    
    1,868,184
    
    
    
    1,808,612
    
    
    
    1,868,184
    
    
    
    1,808,612Capital expenditures
    
    
    8,391
    
    
    
    11,767
    
    
    
    17,097
    
    
    
    18,818PUERTO RICO WIRELESSService revenue
    
    $
    78,782
    
    
    $
    76,281
    
    
    $
    156,478
    
    
    $
    153,185Roaming revenue
    
    
    2,806
    
    
    
    1,463
    
    
    
    5,500
    
    
    
    2,599Equipment sales
    
    
    3,809
    
    
    
    3,055
    
    
    
    8,251
    
    
    
    6,353Total revenue
    
    
    85,397
    
    
    
    80,799
    
    
    
    170,229
    
    
    
    162,137Adjusted operating income
    
    
    23,512
    
    
    
    27,195
    
    
    
    46,464
    
    
    
    55,888Total assets
    
    
    290,485
    
    
    
    269,432
    
    
    
    290,485
    
    
    
    269,432Capital expenditures
    
    
    11,826
    
    
    
    9,285
    
    
    
    18,556
    
    
    
    16,758PUERTO RICO BROADBANDSwitched revenue
    
    $
    13,441
    
    
    $
    13,777
    
    
    $
    27,376
    
    
    $
    27,379Dedicated revenue
    
    
    19,381
    
    
    
    17,527
    
    
    
    38,783
    
    
    
    33,801Other revenue
    
    
    2,368
    
    
    
    1,702
    
    
    
    4,698
    
    
    
    3,830Total revenue
    
    
    35,190
    
    
    
    33,006
    
    
    
    70,857
    
    
    
    65,010Adjusted operating income
    
    
    18,156
    
    
    
    17,416
    
    
    
    37,909
    
    
    
    35,621Total assets
    
    
    272,694
    
    
    
    217,729
    
    
    
    272,694
    
    
    
    217,729Capital expenditures
    
    
    9,374
    
    
    
    4,374
    
    
    
    14,602
    
    
    
    9,846ELIMINATIONS/ADJUSTMENTSTotal revenue(1)
    
    $
    (2,907
    )
    
    $
    (3,044
    )
    
    $
    (6,000
    )
    
    $
    (6,020
    )Total assets(2)
    
    
    (998,926
    )
    
    
    (952,588
    )
    
    
    (998,926
    )
    
    
    (952,588
    )CONSOLIDATEDTotal revenue
    
    $
    261,892
    
    
    $
    243,568
    
    
    $
    527,105
    
    
    $
    491,538Adjusted operating income
    
    
    91,973
    
    
    
    95,983
    
    
    
    193,266
    
    
    
    196,020Total assets
    
    
    1,432,437
    
    
    
    1,343,185
    
    
    
    1,432,437
    
    
    
    1,343,185Capital expenditures
    
    
    29,591
    
    
    
    25,426
    
    
    
    50,255
    
    
    
    45,422
 
 (1)
    
    Elimination of intercompany revenue, primarily from Puerto Rico
broadband to Puerto Rico wireless.(2)
    
    Elimination of intercompany investments. 14




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##### Table of Contents



Three Months Ended
    
    
    Six Months EndedNovember 30,
    
    
    November 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Adjusted operating income
    
    $
    91,973
    
    
    $
    95,983
    
    
    $
    193,266
    
    
    $
    196,020Depreciation and amortization
    
    
    (35,109
    )
    
    
    (34,255
    )
    
    
    (70,653
    )
    
    
    (67,611
    )Stock-based compensation expense
    
    
    (3,334
    )
    
    
    (3,381
    )
    
    
    (6,204
    )
    
    
    (6,436
    )Transaction costs
    
    
    (2,336
    )
    
    
    
    
    
    
    (2,336
    )
    
    
    Litigation settlement expense
    
    
    
    
    
    
    (2,950
    )
    
    
    
    
    
    
    (2,950
    )Loss on disposition of assets
    
    
    (81
    )
    
    
    (1,262
    )
    
    
    (34
    )
    
    
    (1,611
    )Operating income
    
    
    51,113
    
    
    
    54,135
    
    
    
    114,039
    
    
    
    117,412Interest expense, net
    
    
    (44,548
    )
    
    
    (47,809
    )
    
    
    (89,428
    )
    
    
    (96,393
    )Income tax expense
    
    
    (2,691
    )
    
    
    (4,707
    )
    
    
    (12,747
    )
    
    
    (12,968
    )Minority interest in income of subsidiaries
    
    
    (130
    )
    
    
    (169
    )
    
    
    (297
    )
    
    
    (321
    )Income from continuing operations
    
    
    3,744
    
    
    
    1,450
    
    
    
    11,567
    
    
    
    7,730Loss from discontinued operations
    
    
    (451
    )
    
    
    (525
    )
    
    
    (788
    )
    
    
    (1,039
    )Net income
    
    $
    3,293
    
    
    $
    925
    
    
    $
    10,779
    
    
    $
    6,691
 NOTE 10. CONDENSED CONSOLIDATING FINANCIAL DATA
  15




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##### Table of Contents



CONDENSED CONSOLIDATING BALANCE SHEET FINANCIAL DATA
As of November 30, 2008
 Centennial
    
    
    Centennial
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    CentennialPuerto Rico
    
    
    Cellular
    
    
    
    
    
    
    Centennial
    
    
    
    
    
    
    CommunicationsOperations
    
    
    Operating
    
    
    Non-
    
    
    Communications
    
    
    
    
    
    
    Corp. andCorp.
    
    
    Co. LLC
    
    
    Guarantors
    
    
    Corp.
    
    
    Eliminations
    
    
    Subsidiaries(Amounts in thousands)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    42,899
    
    
    $
    
    
    
    $
    98,052
    
    
    $
    
    
    
    $
    
    
    
    $
    140,951Accounts receivable, net
    
    
    49,401
    
    
    
    
    
    
    
    53,626
    
    
    
    
    
    
    
    
    
    
    
    103,027Inventory  phones and
accessories, net
    
    
    24,838
    
    
    
    
    
    
    
    48,441
    
    
    
    
    
    
    
    
    
    
    
    73,279Prepaid expenses and other
current assets
    
    
    14,245
    
    
    
    
    
    
    
    17,670
    
    
    
    
    
    
    
    
    
    
    
    31,915Total current assets
    
    
    131,383
    
    
    
    
    
    
    
    217,789
    
    
    
    
    
    
    
    
    
    
    
    349,172Property, plant & equipment,
net
    
    
    252,839
    
    
    
    
    
    
    
    312,093
    
    
    
    
    
    
    
    
    
    
    
    564,932Debt
issuance costs, net
    
    
    11,018
    
    
    
    
    
    
    
    19,642
    
    
    
    
    
    
    
    
    
    
    
    30,660Restricted Cash
    
    
    6,808
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,808U.S. wireless licenses
    
    
    
    
    
    
    
    
    
    
    402,395
    
    
    
    
    
    
    
    
    
    
    
    402,395Puerto Rico wireless licenses,
net
    
    
    
    
    
    
    
    
    
    
    54,159
    
    
    
    
    
    
    
    
    
    
    
    54,159Goodwill
    
    
    10,989
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,989Investment in subsidiaries
    
    
    
    
    
    
    970,316
    
    
    
    562,774
    
    
    
    (727,323
    )
    
    
    (805,767
    )
    
    
    Other assets
    
    
    11,380
    
    
    
    
    
    
    
    1,942
    
    
    
    
    
    
    
    
    
    
    
    13,322Total
    
    $
    424,417
    
    
    $
    970,316
    
    
    $
    1,570,794
    
    
    $
    (727,323
    )
    
    $
    (805,767
    )
    
    $
    1,432,437LIABILITIES AND STOCKHOLDERS (DEFICIT) EQUITYCurrent liabilities:Accounts payable
    
    $
    13,582
    
    
    $
    
    
    
    $
    29,486
    
    
    $
    
    
    
    $
    
    
    
    $
    43,068Accrued expenses and other
current liabilities
    
    
    139,374
    
    
    
    
    
    
    
    65,274
    
    
    
    
    
    
    
    
    
    
    
    204,648Payable to affiliates
    
    
    
    
    
    
    
    
    
    
    75
    
    
    
    
    
    
    
    
    
    
    
    75Total current liabilities
    
    
    152,956
    
    
    
    
    
    
    
    94,835
    
    
    
    
    
    
    
    
    
    
    
    247,791Long-term debt
    
    
    794,257
    
    
    
    591,395
    
    
    
    81,862
    
    
    
    547,962
    
    
    
    
    
    
    
    2,015,476Deferred income taxes
    
    
    9,845
    
    
    
    
    
    
    
    149,970
    
    
    
    
    
    
    
    
    
    
    
    159,815Other liabilities
    
    
    6,977
    
    
    
    
    
    
    
    23,833
    
    
    
    
    
    
    
    
    
    
    
    30,810Intercompany
    
    
    20,886
    
    
    
    1,087,347
    
    
    
    1,074,600
    
    
    
    (253,351
    )
    
    
    (1,929,482
    )
    
    
    Minority interest in
subsidiaries
    
    
    
    
    
    
    
    
    
    
    955
    
    
    
    
    
    
    
    
    
    
    
    955Redeemable preferred stock
    
    
    625,138
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (625,138
    )
    
    
    Stockholders (deficit) equity:Common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,085
    
    
    
    
    
    
    
    1,085Additional paid-in capital
    
    
    (818,490
    )
    
    
    
    
    
    
    818,490
    
    
    
    45,348
    
    
    
    
    
    
    
    45,348Accumulated (deficit) equity
    
    
    (366,690
    )
    
    
    (708,263
    )
    
    
    (673,900
    )
    
    
    (1,067,351
    )
    
    
    1,748,853
    
    
    
    (1,067,351
    )Accumulated other
comprehensive loss
    
    
    (462
    )
    
    
    (163
    )
    
    
    149
    
    
    
    61
    
    
    
    
    
    
    
    (415
    )(1,185,642
    )
    
    
    (708,426
    )
    
    
    144,739
    
    
    
    (1,020,857
    )
    
    
    1,748,853
    
    
    
    (1,021,333
    )Less: treasury shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,077
    )
    
    
    
    
    
    
    (1,077
    )Total stockholders
(deficit) equity
    
    
    (1,185,642
    )
    
    
    (708,426
    )
    
    
    144,739
    
    
    
    (1,021,934
    )
    
    
    1,748,853
    
    
    
    (1,022,410
    )Total
    
    $
    424,417
    
    
    $
    970,316
    
    
    $
    1,570,794
    
    
    $
    (727,323
    )
    
    $
    (805,767
    )
    
    $
    1,432,437
 16




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##### Table of Contents



CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS FINANCIAL DATA
For the Three Months Ended November 30, 2008
 Centennial
    
    
    Centennial
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    CentennialPuerto Rico
    
    
    Cellular
    
    
    
    
    
    
    Centennial
    
    
    
    
    
    
    CommunicationsOperations
    
    
    Operating
    
    
    Non-
    
    
    Communications
    
    
    
    
    
    
    Corp. andCorp.
    
    
    Co. LLC
    
    
    Guarantors
    
    
    Corp.
    
    
    Eliminations
    
    
    Subsidiaries(Amounts in thousands)Revenue
    
    $
    110,759
    
    
    $
    
    
    
    $
    154,040
    
    
    $
    
    
    
    $
    (2,907
    )
    
    $
    261,892Costs and expenses:Cost of services (exclusive of
depreciation and amortization shown
below)
    
    
    23,127
    
    
    
    
    
    
    
    30,853
    
    
    
    
    
    
    
    (2,739
    )
    
    
    51,241Cost of equipment sold
    
    
    16,415
    
    
    
    
    
    
    
    24,428
    
    
    
    
    
    
    
    
    
    
    
    40,843Sales and marketing
    
    
    10,566
    
    
    
    
    
    
    
    18,083
    
    
    
    
    
    
    
    
    
    
    
    28,649General and administrative
    
    
    27,066
    
    
    
    
    
    
    
    27,958
    
    
    
    
    
    
    
    (168
    )
    
    
    54,856Depreciation and amortization
    
    
    16,978
    
    
    
    
    
    
    
    18,131
    
    
    
    
    
    
    
    
    
    
    
    35,109Loss (gain) on disposition of assets
    
    
    88
    
    
    
    
    
    
    
    (7
    )
    
    
    
    
    
    
    
    
    
    
    8194,240
    
    
    
    
    
    
    
    119,446
    
    
    
    
    
    
    
    (2,907
    )
    
    
    210,779Operating income
    
    
    16,519
    
    
    
    
    
    
    
    34,594
    
    
    
    
    
    
    
    
    
    
    
    51,113Income (loss) from investments in
subsidiaries
    
    
    
    
    
    
    3,293
    
    
    
    (11,782
    )
    
    
    3,293
    
    
    
    5,196
    
    
    
    Interest expense, net
    
    
    (25,418
    )
    
    
    (11,852
    )
    
    
    (3,250
    )
    
    
    (13,328
    )
    
    
    9,300
    
    
    
    (44,548
    )Intercompany interest allocation
    
    
    
    
    
    
    11,852
    
    
    
    (15,880
    )
    
    
    13,328
    
    
    
    (9,300
    )
    
    
    (Loss) income from continuing
operations before income tax expense
and minority interest in income of
subsidiaries
    
    
    (8,899
    )
    
    
    3,293
    
    
    
    3,682
    
    
    
    3,293
    
    
    
    5,196
    
    
    
    6,565Income tax (expense) benefit
    
    
    (2,883
    )
    
    
    
    
    
    
    192
    
    
    
    
    
    
    
    
    
    
    
    (2,691
    )(Loss) income from continuing
operations before minority interest in
income of subsidiaries
    
    
    (11,782
    )
    
    
    3,293
    
    
    
    3,874
    
    
    
    3,293
    
    
    
    5,196
    
    
    
    3,874Minority interest in income of
subsidiaries
    
    
    
    
    
    
    
    
    
    
    (130
    )
    
    
    
    
    
    
    
    
    
    
    (130
    )(Loss) income from continuing
operations
    
    
    (11,782
    )
    
    
    3,293
    
    
    
    3,744
    
    
    
    3,293
    
    
    
    5,196
    
    
    
    3,744Net loss from discontinued operations
    
    
    
    
    
    
    
    
    
    
    (451
    )
    
    
    
    
    
    
    
    
    
    
    (451
    )Net (loss) income
    
    $
    (11,782
    )
    
    $
    3,293
    
    
    $
    3,293
    
    
    $
    3,293
    
    
    $
    5,196
    
    
    $
    3,293
 17




---



##### Table of Contents



CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS FINANCIAL DATA
For the Six Months Ended November 30, 2008
 Centennial
    
    
    Centennial
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    CentennialPuerto Rico
    
    
    Cellular
    
    
    
    
    
    
    Centennial
    
    
    
    
    
    
    CommunicationsOperations
    
    
    Operating
    
    
    Non-
    
    
    Communications
    
    
    
    
    
    
    Corp. andCorp.
    
    
    Co. LLC
    
    
    Guarantors
    
    
    Corp.
    
    
    Eliminations
    
    
    Subsidiaries(Amounts in thousands)Revenue
    
    $
    221,255
    
    
    $
    
    
    
    $
    311,850
    
    
    $
    
    
    
    $
    (6,000
    )
    
    $
    527,105Costs and expenses:Cost of services (exclusive of
depreciation and amortization shown
below)
    
    
    45,728
    
    
    
    
    
    
    
    61,853
    
    
    
    
    
    
    
    (5,664
    )
    
    
    101,917Cost of equipment sold
    
    
    32,885
    
    
    
    
    
    
    
    50,107
    
    
    
    
    
    
    
    
    
    
    
    82,992Sales and marketing
    
    
    22,047
    
    
    
    
    
    
    
    32,471
    
    
    
    
    
    
    
    
    
    
    
    54,518General and administrative
    
    
    49,876
    
    
    
    
    
    
    
    53,412
    
    
    
    
    
    
    
    (336
    )
    
    
    102,952Depreciation and amortization
    
    
    34,627
    
    
    
    
    
    
    
    36,026
    
    
    
    
    
    
    
    
    
    
    
    70,653Loss (gain) on disposition of assets
    
    
    100
    
    
    
    
    
    
    
    (66
    )
    
    
    
    
    
    
    
    
    
    
    34185,263
    
    
    
    
    
    
    
    233,803
    
    
    
    
    
    
    
    (6,000
    )
    
    
    413,066Operating income
    
    
    35,992
    
    
    
    
    
    
    
    78,047
    
    
    
    
    
    
    
    
    
    
    
    114,039Income (loss) from investments in
subsidiaries
    
    
    
    
    
    
    10,779
    
    
    
    (23,769
    )
    
    
    10,779
    
    
    
    2,211
    
    
    
    Interest expense, net
    
    
    (51,156
    )
    
    
    (23,295
    )
    
    
    (7,511
    )
    
    
    (26,066
    )
    
    
    18,600
    
    
    
    (89,428
    )Intercompany interest allocation
    
    
    
    
    
    
    23,295
    
    
    
    (30,761
    )
    
    
    26,066
    
    
    
    (18,600
    )
    
    
    (Loss) income from continuing
operations before income tax expense
and minority interest in income of
subsidiaries
    
    
    (15,164
    )
    
    
    10,779
    
    
    
    16,006
    
    
    
    10,779
    
    
    
    2,211
    
    
    
    24,611Income tax expense
    
    
    (8,605
    )
    
    
    
    
    
    
    (4,142
    )
    
    
    
    
    
    
    
    
    
    
    (12,747
    )(Loss) income from continuing
operations before minority interest in
income of subsidiaries
    
    
    (23,769
    )
    
    
    10,779
    
    
    
    11,864
    
    
    
    10,779
    
    
    
    2,211
    
    
    
    11,864Minority interest in income of
subsidiaries
    
    
    
    
    
    
    
    
    
    
    (297
    )
    
    
    
    
    
    
    
    
    
    
    (297
    )(Loss) income from continuing
operations
    
    
    (23,769
    )
    
    
    10,779
    
    
    
    11,567
    
    
    
    10,779
    
    
    
    2,211
    
    
    
    11,567Net loss from discontinued operations
    
    
    
    
    
    
    
    
    
    
    (788
    )
    
    
    
    
    
    
    
    
    
    
    (788
    )Net (loss) income
    
    $
    (23,769
    )
    
    $
    10,779
    
    
    $
    10,779
    
    
    $
    10,779
    
    
    $
    2,211
    
    
    $
    10,779
 18




---



##### Table of Contents



CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS FINANCIAL DATA
For the Six Months Ended November 30, 2008
 Centennial
    
    Centennial
    
    
    
    
    
    
    
    
    
    
    
    
    
    CentennialPuerto Rico
    
    Cellular
    
    
    
    
    
    Centennial
    
    
    
    
    
    CommunicationsOperations
    
    Operating
    
    Non-
    
    Communications
    
    
    
    
    
    Corp. andCorp.
    
    Co. LLC
    
    Guarantors
    
    Corp.
    
    Eliminations
    
    Subsidiaries(Amounts in thousands)OPERATING ACTIVITIES:Net (loss) income
    
    
    (23,769
    )
    
    
    10,779
    
    
    
    10,779
    
    
    
    10,779
    
    
    
    2,211
    
    
    
    10,779Adjustments to reconcile net (loss)
income to net cash provided by (used in)
operating activities:Depreciation and amortization
    
    
    34,627
    
    
    
    
    
    
    
    36,026
    
    
    
    
    
    
    
    
    
    
    
    70,653Stock-based compensation expense
    
    
    3,182
    
    
    
    
    
    
    
    3,022
    
    
    
    
    
    
    
    
    
    
    
    6,204Excess tax benefit from stock-based
compensation
    
    
    
    
    
    
    
    
    
    
    (133
    )
    
    
    
    
    
    
    
    
    
    
    (133
    )Minority interest in income of
subsidiaries
    
    
    
    
    
    
    
    
    
    
    297
    
    
    
    
    
    
    
    
    
    
    
    297Distributions paid to minority interest
    
    
    
    
    
    
    
    
    
    
    (4,240
    )
    
    
    
    
    
    
    
    
    
    
    (4,240
    )Equity in undistributed earnings
(loss) of subsidiaries
    
    
    
    
    
    
    10,779
    
    
    
    (23,769
    )
    
    
    10,779
    
    
    
    2,211
    
    
    
    Loss (gain) on disposition of assets
    
    
    100
    
    
    
    
    
    
    
    (66
    )
    
    
    
    
    
    
    
    
    
    
    34Changes in assets and liabilities, net
of effects of acquisitions and
dispositions and other
    
    
    19,276
    
    
    
    (4,209
    )
    
    
    5,031
    
    
    
    (32,261
    )
    
    
    14,178
    
    
    
    2,015NET CASH PROVIDED BY (USED
IN)OPERATING ACTIVITIES
    
    
    33,416
    
    
    
    17,349
    
    
    
    26,947
    
    
    
    (10,703
    )
    
    
    18,600
    
    
    
    85,609INVESTING ACTIVITIES:Proceeds from disposition of assets,
net of cash expenses
    
    
    
    
    
    
    40
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40Payments for purchase of wireless
spectrum
    
    
    
    
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2
    )Capital expenditures
    
    
    (33,031
    )
    
    
    (17,224
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (50,255
    )NET CASH USED IN INVESTING
ACTIVITIES
    
    
    (33,031
    )
    
    
    (17,186
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (50,217
    )FINANCING ACTIVITIES:Repayment of debt
    
    
    
    
    
    
    
    
    
    
    (1,428
    )
    
    
    
    
    
    
    
    
    
    
    (1,428
    )Proceeds
from the exercise of employee stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,693
    
    
    
    
    
    
    
    1,693Excess tax benefit from stock-based
compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    133
    
    
    
    
    
    
    
    133Cash received from (paid to) affiliates
    
    
    5,884
    
    
    
    (163
    )
    
    
    4,002
    
    
    
    8,877
    
    
    
    (18,600
    )
    
    
    NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES
    
    
    5,884
    
    
    
    (163
    )
    
    
    2,574
    
    
    
    10,703
    
    
    
    (18,600
    )
    
    
    398NET INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    6,269
    
    
    
    
    
    
    
    29,521
    
    
    
    
    
    
    
    
    
    
    
    35,790CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD
    
    
    36,630
    
    
    
    
    
    
    
    68,531
    
    
    
    
    
    
    
    
    
    
    
    105,161CASH AND CASH EQUIVALENTS, END OF PERIOD
    
    
    42,899
    
    
    
    
    
    
    
    98,052
    
    
    
    
    
    
    
    
    
    
    
    140,951
 19




---



##### Table of Contents



CONDENSED CONSOLIDATING BALANCE SHEET FINANCIAL DATA
As of May 31, 2008
(Amounts in thousands)
 Centennial
    
    
    Centennial
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    CentennialPuerto Rico
    
    
    Cellular
    
    
    
    
    
    
    Centennial
    
    
    
    
    
    
    CommunicationsOperations
    
    
    Operating
    
    
    Non-
    
    
    Communications
    
    
    
    
    
    
    Corp. andCorp.
    
    
    Co. LLC
    
    
    Guarantors
    
    
    Corp.
    
    
    Eliminations
    
    
    SubsidiariesASSETSCurrent assets:Cash and cash equivalents
    
    $
    36,630
    
    
    $
    
    
    
    $
    68,531
    
    
    $
    
    
    
    $
    
    
    
    $
    105,161Accounts receivable, net
    
    
    44,768
    
    
    
    
    
    
    
    49,230
    
    
    
    
    
    
    
    
    
    
    
    93,998Inventory  phones and accessories, net
    
    
    19,633
    
    
    
    
    
    
    
    23,609
    
    
    
    
    
    
    
    
    
    
    
    43,242Prepaid expenses and other current assets
    
    
    15,251
    
    
    
    
    
    
    
    18,047
    
    
    
    
    
    
    
    
    
    
    
    33,298Total current assets
    
    
    116,282
    
    
    
    
    
    
    
    159,417
    
    
    
    
    
    
    
    
    
    
    
    275,699Property, plant & equipment, net
    
    
    253,509
    
    
    
    
    
    
    
    325,024
    
    
    
    
    
    
    
    
    
    
    
    578,533Debt issuance costs, net
    
    
    12,444
    
    
    
    
    
    
    
    22,164
    
    
    
    
    
    
    
    
    
    
    
    34,608Restricted cash
    
    
    6,466
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,466U.S. wireless licenses
    
    
    
    
    
    
    
    
    
    
    402,393
    
    
    
    
    
    
    
    
    
    
    
    402,393Puerto Rico wireless licenses, net
    
    
    
    
    
    
    
    
    
    
    54,159
    
    
    
    
    
    
    
    
    
    
    
    54,159Goodwill
    
    
    4,187
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,187Investment in subsidiaries
    
    
    
    
    
    
    959,537
    
    
    
    586,543
    
    
    
    (738,102
    )
    
    
    (807,978
    )
    
    
    Other assets
    
    
    17,521
    
    
    
    
    
    
    
    1,899
    
    
    
    
    
    
    
    
    
    
    
    19,420Total
    
    $
    410,409
    
    
    $
    959,537
    
    
    $
    1,551,599
    
    
    $
    (738,102
    )
    
    $
    (807,978
    )
    
    $
    1,375,465LIABILITIES AND STOCKHOLDERS (DEFICIT) EQUITYCurrent liabilities:Accounts payable
    
    $
    15,332
    
    
    $
    
    
    
    $
    10,115
    
    
    $
    
    
    
    $
    
    
    
    $
    25,447Accrued expenses and other current
liabilities
    
    
    121,555
    
    
    
    
    
    
    
    71,972
    
    
    
    
    
    
    
    
    
    
    
    193,527Payable to affiliates
    
    
    
    
    
    
    
    
    
    
    75
    
    
    
    
    
    
    
    
    
    
    
    75Total current liabilities
    
    
    136,887
    
    
    
    
    
    
    
    82,162
    
    
    
    
    
    
    
    
    
    
    
    219,049Long-term debt
    
    
    793,161
    
    
    
    591,395
    
    
    
    78,378
    
    
    
    547,713
    
    
    
    
    
    
    
    2,010,647Deferred income taxes
    
    
    1,478
    
    
    
    
    
    
    
    149,930
    
    
    
    
    
    
    
    
    
    
    
    151,408Other liabilities
    
    
    8,111
    
    
    
    
    
    
    
    25,839
    
    
    
    
    
    
    
    
    
    
    
    33,950Intercompany
    
    
    26,770
    
    
    
    1,087,184
    
    
    
    1,078,602
    
    
    
    (244,474
    )
    
    
    (1,948,082
    )
    
    
    Minority interest in subsidiaries
    
    
    
    
    
    
    
    
    
    
    4,898
    
    
    
    
    
    
    
    
    
    
    
    4,898Redeemable preferred stock
    
    
    606,538
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (606,538
    )
    
    
    Stockholders (deficit) equity:Common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,079
    
    
    
    
    
    
    
    1,079Additional paid-in capital
    
    
    (818,497
    )
    
    
    
    
    
    
    818,497
    
    
    
    36,787
    
    
    
    
    
    
    
    36,787Accumulated (deficit) equity
    
    
    (342,921
    )
    
    
    (719,042
    )
    
    
    (684,679
    )
    
    
    (1,078,130
    )
    
    
    1,746,642
    
    
    
    (1,078,130
    )Accumulated other comprehensive loss
    
    
    (1,118
    )
    
    
    
    
    
    
    (2,028
    )
    
    
    
    
    
    
    
    
    
    
    (3,146
    )(1,162,536
    )
    
    
    (719,042
    )
    
    
    131,790
    
    
    
    (1,040,264
    )
    
    
    1,746,642
    
    
    
    (1,043,410
    )Less: treasury shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,077
    )
    
    
    
    
    
    
    (1,077
    )Total
stockholders (deficit) equity
    
    
    (1,162,536
    )
    
    
    (719,042
    )
    
    
    131,790
    
    
    
    (1,041,341
    )
    
    
    1,746,642
    
    
    
    (1,044,487
    )Total
    
    $
    410,409
    
    
    $
    959,537
    
    
    $
    1,551,599
    
    
    $
    (738,102
    )
    
    $
    (807,978
    )
    
    $
    1,375,465
 20




---



##### Table of Contents



CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS FINANCIAL DATA
For the Three Months Ended November 30, 2007
 Centennial
    
    
    Centennial
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    CentennialPuerto Rico
    
    
    Cellular
    
    
    
    
    
    
    Centennial
    
    
    
    
    
    
    CommunicationsOperations
    
    
    Operating
    
    
    Non-
    
    
    Communications
    
    
    
    
    
    
    Corp. andCorp.
    
    
    Co. LLC
    
    
    Guarantors
    
    
    Corp.
    
    
    Eliminations
    
    
    Subsidiaries(Amounts in thousands)Revenue
    
    $
    104,620
    
    
    $
    
    
    
    $
    111,095
    
    
    $
    
    
    
    $
    27,853
    
    
    $
    243,568Costs and expenses:Cost of services (exclusive of depreciation
and amortization shown below)
    
    
    21,417
    
    
    
    
    
    
    
    27,890
    
    
    
    
    
    
    
    (4,940
    )
    
    
    44,367Cost of equipment sold
    
    
    9,291
    
    
    
    
    
    
    
    20,971
    
    
    
    
    
    
    
    
    
    
    
    30,262Sales and marketing
    
    
    10,834
    
    
    
    
    
    
    
    15,894
    
    
    
    
    
    
    
    
    
    
    
    26,728General and administrative
    
    
    26,050
    
    
    
    
    
    
    
    (6,284
    )
    
    
    
    
    
    
    32,793
    
    
    
    52,559Depreciation and amortization
    
    
    17,092
    
    
    
    
    
    
    
    17,163
    
    
    
    
    
    
    
    
    
    
    
    34,255Loss on disposition of assets
    
    
    155
    
    
    
    
    
    
    
    1,107
    
    
    
    
    
    
    
    
    
    
    
    1,26284,839
    
    
    
    
    
    
    
    76,741
    
    
    
    
    
    
    
    27,853
    
    
    
    189,433Operating income
    
    
    19,781
    
    
    
    
    
    
    
    34,354
    
    
    
    
    
    
    
    
    
    
    
    54,135Income (loss) from investments in subsidiaries
    
    
    
    
    
    
    925
    
    
    
    (5,458
    )
    
    
    925
    
    
    
    3,608
    
    
    
    Interest expense, net
    
    
    (26,008
    )
    
    
    (42,460
    )
    
    
    20,282
    
    
    
    377
    
    
    
    
    
    
    
    (47,809
    )Intercompany interest allocation
    
    
    
    
    
    
    42,460
    
    
    
    (42,083
    )
    
    
    (377
    )
    
    
    
    
    
    
    (Loss) income from continuing operations
before income tax expense, minority interest
in income of subsidiaries and income from
equity investments
    
    
    (6,227
    )
    
    
    925
    
    
    
    7,095
    
    
    
    925
    
    
    
    3,608
    
    
    
    6,326Income tax benefit (expense)
    
    
    769
    
    
    
    
    
    
    
    (5,476
    )
    
    
    
    
    
    
    
    
    
    
    (4,707
    )(Loss) income from continuing operations
before minority interest in income of
subsidiaries and income from equity
investments
    
    
    (5,458
    )
    
    
    925
    
    
    
    1,619
    
    
    
    925
    
    
    
    3,608
    
    
    
    1,619Minority interest in income of subsidiaries
    
    
    
    
    
    
    
    
    
    
    (169
    )
    
    
    
    
    
    
    
    
    
    
    (169
    )Loss (income) from continuing operations
    
    
    (5,458
    )
    
    
    925
    
    
    
    1,450
    
    
    
    925
    
    
    
    3,608
    
    
    
    1,450Net loss from discontinued operations
    
    
    
    
    
    
    
    
    
    
    (525
    )
    
    
    
    
    
    
    
    
    
    
    (525
    )Net (loss) income
    
    $
    (5,458
    )
    
    $
    925
    
    
    $
    925
    
    
    $
    925
    
    
    $
    3,608
    
    
    $
    925
 21




---



##### Table of Contents



CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS FINANCIAL DATA
For the Six Months Ended November 30, 2007
 Centennial
    
    
    Centennial
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    CentennialPuerto Rico
    
    
    Cellular
    
    
    
    
    
    
    Centennial
    
    
    
    
    
    
    CommunicationsOperations
    
    
    Operating
    
    
    Non-
    
    
    Communications
    
    
    
    
    
    
    Corp. andCorp.
    
    
    Co. LLC
    
    
    Guarantors
    
    
    Corp.
    
    
    Eliminations
    
    
    Subsidiaries(Amounts in thousands)Revenue
    
    $
    207,785
    
    
    $
    
    
    
    $
    289,773
    
    
    $
    
    
    
    $
    (6,020
    )
    
    $
    491,538Costs and expenses:Cost of services (exclusive of depreciation
and amortization shown below)
    
    
    40,224
    
    
    
    
    
    
    
    56,401
    
    
    
    
    
    
    
    (5,684
    )
    
    
    90,941Cost of equipment sold
    
    
    17,533
    
    
    
    
    
    
    
    44,251
    
    
    
    
    
    
    
    
    
    
    
    61,784Sales and marketing
    
    
    21,293
    
    
    
    
    
    
    
    31,021
    
    
    
    
    
    
    
    
    
    
    
    52,314General and administrative
    
    
    49,972
    
    
    
    
    
    
    
    50,229
    
    
    
    
    
    
    
    (336
    )
    
    
    99,865Depreciation and amortization
    
    
    33,478
    
    
    
    
    
    
    
    34,133
    
    
    
    
    
    
    
    
    
    
    
    67,611Loss on disposition of assets
    
    
    593
    
    
    
    
    
    
    
    1,018
    
    
    
    
    
    
    
    
    
    
    
    1,611163,093
    
    
    
    
    
    
    
    217,053
    
    
    
    
    
    
    
    (6,020
    )
    
    
    374,126Operating income
    
    
    44,692
    
    
    
    
    
    
    
    72,720
    
    
    
    
    
    
    
    
    
    
    
    117,412Income (loss) from investments in subsidiaries
    
    
    
    
    
    
    6,691
    
    
    
    (6,597
    )
    
    
    6,691
    
    
    
    (6,785
    )
    
    
    Interest expense, net
    
    
    (52,169
    )
    
    
    (28,014
    )
    
    
    (1,434
    )
    
    
    (14,776
    )
    
    
    
    
    
    
    (96,393
    )Intercompany interest allocation
    
    
    
    
    
    
    28,014
    
    
    
    (42,790
    )
    
    
    14,776
    
    
    
    
    
    
    
    (Loss) income from continuing operations
before income tax expense, minority interest
in income of subsidiaries and income from
equity investments
    
    
    (7,477
    )
    
    
    6,691
    
    
    
    21,899
    
    
    
    6,691
    
    
    
    (6,785
    )
    
    
    21,019Income tax benefit (expense)
    
    
    880
    
    
    
    
    
    
    
    (13,848
    )
    
    
    
    
    
    
    
    
    
    
    (12,968
    )(Loss) income from continuing operations
before minority interest in income of
subsidiaries and income from equity
investments
    
    
    (6,597
    )
    
    
    6,691
    
    
    
    8,051
    
    
    
    6,691
    
    
    
    (6,785
    )
    
    
    8,051Minority interest in income of subsidiaries
    
    
    
    
    
    
    
    
    
    
    (321
    )
    
    
    
    
    
    
    
    
    
    
    (321
    )Loss (income) from continuing operations
    
    
    (6,597
    )
    
    
    6,691
    
    
    
    7,730
    
    
    
    6,691
    
    
    
    (6,785
    )
    
    
    7,730Net loss from discontinued operations
    
    
    
    
    
    
    
    
    
    
    (1,039
    )
    
    
    
    
    
    
    
    
    
    
    (1,039
    )Net (loss) income
    
    $
    (6,597
    )
    
    $
    6,691
    
    
    $
    6,691
    
    
    $
    6,691
    
    
    $
    (6,785
    )
    
    $
    6,691
 22




---



##### Table of Contents



CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS FINANCIAL DATA
For the Six Months Ended November 30, 2007
 Centennial
    
    
    Centennial
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    CentennialPuerto Rico
    
    
    Cellular
    
    
    
    
    
    
    Centennial
    
    
    
    
    
    
    CommunicationsOperations
    
    
    Operating
    
    
    Non-
    
    
    Communications
    
    
    
    
    
    
    Corp. andCorp.
    
    
    Co. LLC
    
    
    Guarantors
    
    
    Corp.
    
    
    Eliminations
    
    
    Subsidiaries(Amounts in thousands)OPERATING ACTIVITIES:Net (loss) income
    
    $
    (6,597
    )
    
    $
    6,691
    
    
    $
    6,691
    
    
    $
    6,691
    
    
    $
    (6,785
    )
    
    $
    6,691Adjustments to reconcile net (loss) income to net cash
provided by (used in) operating activities:Depreciation and amortization
    
    
    33,478
    
    
    
    
    
    
    
    34,133
    
    
    
    
    
    
    
    
    
    
    
    67,611Stock-based compensation expense
    
    
    3,322
    
    
    
    
    
    
    
    3,114
    
    
    
    
    
    
    
    
    
    
    
    6,436Excess tax benefit from stock-based compensation
    
    
    
    
    
    
    
    
    
    
    (1,107
    )
    
    
    
    
    
    
    
    
    
    
    (1,107
    )Minority interest in income of subsidiaries
    
    
    
    
    
    
    
    
    
    
    321
    
    
    
    
    
    
    
    
    
    
    
    321Equity in undistributed earnings (loss) of subsidiaries
    
    
    
    
    
    
    6,691
    
    
    
    (6,597
    )
    
    
    6,691
    
    
    
    (6,785
    )
    
    
    Loss on disposition of assets
    
    
    593
    
    
    
    
    
    
    
    2,057
    
    
    
    
    
    
    
    
    
    
    
    2,650Changes in assets and liabilities, net of effects of
acquisitions and dispositions and other
    
    
    17,162
    
    
    
    99,380
    
    
    
    (131,723
    )
    
    
    (28,791
    )
    
    
    41,470
    
    
    
    (2,502
    )NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
    
    
    47,958
    
    
    
    112,762
    
    
    
    (93,111
    )
    
    
    (15,409
    )
    
    
    27,900
    
    
    
    80,100INVESTING ACTIVITIES:Proceeds from disposition of assets, net of cash expenses
    
    
    72
    
    
    
    9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    81Payment for acquisition
    
    
    (12,519
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,519
    )Payments for purchase of wireless spectrum
    
    
    
    
    
    
    (3,603
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,603
    )Capital expenditures
    
    
    (26,604
    )
    
    
    (18,818
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (45,422
    )NET CASH USED IN INVESTING ACTIVITIES
    
    
    (39,051
    )
    
    
    (22,412
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (61,463
    )FINANCING ACTIVITIES:Repayment of debt
    
    
    
    
    
    
    (45,000
    )
    
    
    (944
    )
    
    
    
    
    
    
    
    
    
    
    (45,944
    )Proceeds from the exercise of employee stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,114
    
    
    
    
    
    
    
    4,114Excess tax benefit from stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,107
    
    
    
    
    
    
    
    1,107Proceeds from issuance of common stock under employee
stock purchase plan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    296
    
    
    
    
    
    
    
    296Cash (paid to) received from affiliates
    
    
    (5,949
    )
    
    
    (45,350
    )
    
    
    69,307
    
    
    
    9,892
    
    
    
    (27,900
    )
    
    
    NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES
    
    
    (5,949
    )
    
    
    (90,350
    )
    
    
    68,363
    
    
    
    15,409
    
    
    
    (27,900
    )
    
    
    (40,427
    )NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    2,958
    
    
    
    
    
    
    
    (24,748
    )
    
    
    
    
    
    
    
    
    
    
    (21,790
    )CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    
    
    31,157
    
    
    
    
    
    
    
    63,583
    
    
    
    
    
    
    
    
    
    
    
    94,740CASH AND CASH EQUIVALENTS, END OF PERIOD
    
    $
    34,115
    
    
    $
    
    
    
    $
    38,835
    
    
    $
    
    
    
    $
    
    
    
    $
    72,950
 NOTE 11. SUBSEQUENT EVENTS
   23




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 EXECUTIVE OVERVIEW
 Company Overview
           Managements Summary
  24




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##### Table of Contents




    
    Gross postpaid and prepaid wireless additions
    
    Net additions  wireless subscribers
    
    ARPU
    
    Roaming revenue
    
    Penetration  wireless
    
    Postpaid churn  wireless
    
    Average monthly minutes of use per wireless subscriber
    
    Data revenue per average wireless subscriber
    
    Fiber route miles  Puerto Rico broadband
    
    Switched access lines  Puerto Rico broadband
    
    Dedicated access line equivalents  Puerto Rico broadband
    
    On-net buildings  Puerto Rico broadband
    
    Capital expenditures
 25




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##### Table of Contents



Instant Internet
     26




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##### Table of Contents



CRITICAL ACCOUNTING POLICIES AND ESTIMATES
   
    
    it requires us to make assumptions because information was not available at the time or
it included matters that were highly uncertain at the time we were making the estimate, and
    
    changes in the estimate or different estimates that we could have selected may have had a
material effect on our consolidated financial condition or consolidated results of
operations.
 Allowance for Doubtful Accounts
  Property, Plant and Equipment  Depreciation
  Valuation of Long-Lived Assets
  Goodwill and Wireless Licenses  Valuation of Goodwill and Indefinite-Lived Intangible Assets
 27




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##### Table of Contents



Goodwill and Other
Intangible Assets
  Disclosures about Segments of an Enterprise and Related
Information
  Stock-Based Compensation
 Share-Based Payment
   28




---



##### Table of Contents



Income Taxes
        RESULTS OF OPERATIONS
 U.S. Wireless Operations
 29




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##### Table of Contents



Three Months Ended
    
    
    
    
    
    
    
    
    
    
    Six Months EndedNovember 30,
    
    
    
    
    
    
    
    
    
    
    November 30,2008
    
    
    2007
    
    
    $ Change
    
    
    % Change
    
    
    2008
    
    
    2007
    
    
    $ Change
    
    
    % Change(In thousands)Revenue:Service revenue
    
    $
    118,225
    
    
    $
    108,797
    
    
    $
    9,428
    
    
    
    9
    %
    
    $
    238,474
    
    
    $
    218,137
    
    
    $
    20,337
    
    
    
    9
    %Roaming revenue
    
    
    15,156
    
    
    
    14,233
    
    
    
    923
    
    
    
    6
    
    
    
    30,945
    
    
    
    32,185
    
    
    
    (1,240
    )
    
    
    (4
    )Equipment sales
    
    
    10,831
    
    
    
    9,777
    
    
    
    1,054
    
    
    
    11
    
    
    
    22,600
    
    
    
    20,089
    
    
    
    2,511
    
    
    
    12Total revenue
    
    
    144,212
    
    
    
    132,807
    
    
    
    11,405
    
    
    
    9
    
    
    
    292,019
    
    
    
    270,411
    
    
    
    21,608
    
    
    
    8Costs and expenses:Cost of services
    
    
    28,839
    
    
    
    25,702
    
    
    
    3,137
    
    
    
    12
    
    
    
    57,605
    
    
    
    54,069
    
    
    
    3,536
    
    
    
    7Cost of equipment sold
    
    
    21,620
    
    
    
    16,559
    
    
    
    5,061
    
    
    
    31
    
    
    
    43,566
    
    
    
    35,338
    
    
    
    8,228
    
    
    
    23Sales and marketing
    
    
    17,812
    
    
    
    15,674
    
    
    
    2,138
    
    
    
    14
    
    
    
    31,967
    
    
    
    30,638
    
    
    
    1,329
    
    
    
    4General and administrative
    
    
    25,636
    
    
    
    23,500
    
    
    
    2,136
    
    
    
    9
    
    
    
    49,988
    
    
    
    45,855
    
    
    
    4,133
    
    
    
    9Total costs and expenses
    
    
    93,907
    
    
    
    81,435
    
    
    
    12,472
    
    
    
    15
    
    
    
    183,126
    
    
    
    165,900
    
    
    
    17,226
    
    
    
    10Adjusted operating income(1)
    
    $
    50,305
    
    
    $
    51,372
    
    
    $
    (1,067
    )
    
    
    (2
    )%
    
    $
    108,893
    
    
    $
    104,511
    
    
    $
    4,382
    
    
    
    4
    %
 
 (1)
    
    Adjusted operating income represents the profitability measure of the
segment  see Note 9 to the unaudited Condensed Consolidated
Financial Statements for a reconciliation of consolidated adjusted
operating income to the appropriate GAAP measure. Revenue.
     Costs and expenses.
  30




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##### Table of Contents



Puerto Rico Wireless Operations
 Three Months Ended
    
    
    
    
    
    
    
    
    
    
    Six Months EndedNovember 30,
    
    
    
    
    
    
    
    
    
    
    November 30,2008
    
    
    2007
    
    
    $ Change
    
    
    % Change
    
    
    2008
    
    
    2007
    
    
    $ Change
    
    
    % Change(In thousands)Revenue:Service revenue
    
    $
    78,782
    
    
    $
    76,281
    
    
    $
    2,501
    
    
    
    3
    %
    
    $
    156,478
    
    
    $
    153,185
    
    
    $
    3,293
    
    
    
    2
    %Roaming revenue
    
    
    2,806
    
    
    
    1,463
    
    
    
    1,343
    
    
    
    92
    
    
    
    5,500
    
    
    
    2,599
    
    
    
    2,901
    
    
    
    *Equipment sales
    
    
    3,809
    
    
    
    3,055
    
    
    
    754
    
    
    
    25
    
    
    
    8,251
    
    
    
    6,353
    
    
    
    1,898
    
    
    
    30Total revenue
    
    
    85,397
    
    
    
    80,799
    
    
    
    4,598
    
    
    
    6
    
    
    
    170,229
    
    
    
    162,137
    
    
    
    8,092
    
    
    
    5Costs and expenses:Cost of services
    
    
    15,557
    
    
    
    12,971
    
    
    
    2,586
    
    
    
    20
    
    
    
    30,323
    
    
    
    26,062
    
    
    
    4,261
    
    
    
    16Cost of equipment sold
    
    
    19,024
    
    
    
    13,459
    
    
    
    5,565
    
    
    
    41
    
    
    
    38,963
    
    
    
    26,137
    
    
    
    12,826
    
    
    
    49Sales and marketing
    
    
    8,768
    
    
    
    9,209
    
    
    
    (441
    )
    
    
    (5
    )
    
    
    18,382
    
    
    
    18,209
    
    
    
    173
    
    
    
    1General and administrative
    
    
    18,536
    
    
    
    17,965
    
    
    
    571
    
    
    
    3
    
    
    
    36,097
    
    
    
    35,841
    
    
    
    256
    
    
    
    1Total costs and expenses
    
    
    61,885
    
    
    
    53,604
    
    
    
    8,281
    
    
    
    15
    
    
    
    123,765
    
    
    
    106,249
    
    
    
    17,516
    
    
    
    16Adjusted operating income(1)
    
    $
    23,512
    
    
    $
    27,195
    
    
    $
    (3,683
    )
    
    
    (14
    )%
    
    $
    46,464
    
    
    $
    55,888
    
    
    $
    (9,424
    )
    
    
    (17
    )%
 
 *
    
    Percentage not meaningful(1)
    
    Adjusted operating income represents the profitability measure of the
segment  see Note 9 to the unaudited Condensed Consolidated
Financial Statements for a reconciliation of consolidated adjusted
operating income to the appropriate GAAP measure. Revenue. Instant Internet
     Costs and expenses.
 31




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##### Table of Contents



Puerto Rico Broadband Operations
 Three Months Ended
    
    
    
    
    
    
    
    
    
    
    Six Months EndedNovember 30,
    
    
    
    
    
    
    
    
    
    
    November 30,2008
    
    
    2007
    
    
    $ Change
    
    
    % Change
    
    
    2008
    
    
    2007
    
    
    $ Change
    
    
    % Change(In thousands)Revenue:Switched revenue
    
    $
    13,441
    
    
    $
    13,777
    
    
    $
    (336
    )
    
    
    (2
    )%
    
    $
    27,376
    
    
    $
    27,379
    
    
    $
    (3
    )
    
    
    0
    %Dedicated revenue
    
    
    19,381
    
    
    
    17,527
    
    
    
    1,854
    
    
    
    11
    
    
    
    38,783
    
    
    
    33,801
    
    
    
    4,982
    
    
    
    15Other revenue
    
    
    2,368
    
    
    
    1,702
    
    
    
    666
    
    
    
    39
    
    
    
    4,698
    
    
    
    3,830
    
    
    
    868
    
    
    
    23Total revenue
    
    
    35,190
    
    
    
    33,006
    
    
    
    2,184
    
    
    
    7
    
    
    
    70,857
    
    
    
    65,010
    
    
    
    5,847
    
    
    
    9Costs and expenses:Cost of services
    
    
    9,266
    
    
    
    8,278
    
    
    
    988
    
    
    
    12
    
    
    
    19,020
    
    
    
    15,877
    
    
    
    3,143
    
    
    
    20Cost of equipment sold
    
    
    199
    
    
    
    244
    
    
    
    (45
    )
    
    
    (18
    )
    
    
    464
    
    
    
    309
    
    
    
    155
    
    
    
    50Sales and marketing
    
    
    1,902
    
    
    
    1,736
    
    
    
    166
    
    
    
    10
    
    
    
    3,836
    
    
    
    3,161
    
    
    
    675
    
    
    
    21General and administrative
    
    
    5,667
    
    
    
    5,332
    
    
    
    335
    
    
    
    6
    
    
    
    9,628
    
    
    
    10,042
    
    
    
    (414
    )
    
    
    (4
    )Total costs and expenses
    
    
    17,034
    
    
    
    15,590
    
    
    
    1,444
    
    
    
    9
    
    
    
    32,948
    
    
    
    29,389
    
    
    
    3,559
    
    
    
    12Adjusted operating income(1)
    
    $
    18,156
    
    
    $
    17,416
    
    
    $
    740
    
    
    
    4
    %
    
    $
    37,909
    
    
    $
    35,621
    
    
    $
    2,288
    
    
    
    6
    %
 
 (1)
    
    Adjusted operating income represents the profitability measure of the
segment  see Note 9 to the unaudited condensed consolidated
financial statements for a reconciliation of consolidated adjusted
operating income to the appropriate GAAP measure. Revenue.
  32




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##### Table of Contents



Costs and expenses.
   LIQUIDITY AND CAPITAL RESOURCES
 Weighted Average Debt Outstanding and Interest Expense
 Three Months Ended
    
    
    
    
    
    
    Six Months EndedNovember 30,
    
    
    
    
    
    
    November 30,2008
    
    
    2007
    
    
    Change
    
    
    2008
    
    
    2007
    
    
    Change(In millions)Weighted Average Debt Outstanding
    
    $
    2,013.63
    
    
    $
    2,020.26
    
    
    $
    (6.63
    )
    
    $
    2,012.47
    
    
    $
    2,033.62
    
    
    $
    (21.15
    )Weighted Average Gross Interest Rate(1)
    
    
    8.9
    %
    
    
    9.7
    %
    
    
    (0.8
    )%
    
    
    9.0
    %
    
    
    9.7
    %
    
    
    (0.7
    )%Weighted Average Gross Interest Rate(2)
    
    
    8.5
    %
    
    
    9.2
    %
    
    
    (0.7
    )%
    
    
    8.6
    %
    
    
    9.3
    %
    
    
    (0.7
    )%Gross Interest Expense(1)
    
    $
    44.90
    
    
    $
    48.87
    
    
    $
    (3.97
    )
    
    $
    90.26
    
    
    $
    98.61
    
    
    $
    (8.36
    )Interest Income
    
    $
    .35
    
    
    $
    1.06
    
    
    $
    (0.71
    )
    
    $
    .83
    
    
    $
    2.22
    
    
    $
    (1.39
    )Net Interest Expense
    
    $
    44.55
    
    
    $
    47.81
    
    
    $
    (3.26
    )
    
    $
    89.43
    
    
    $
    96.39
    
    
    $
    (6.96
    )
 
 (1)
    
    Including amortization of debt issuance costs of $2.0 million and $3.9
million for the three and six months ended November 30, 2008,
respectively, and $2.3 million and $4.3 million for the three and six
months ended November 30, 2007, respectively.(2)
    
    Excluding amortization of debt issuance costs of $2.0 million and $3.9
million for the three and six months ended November 30, 2008,
respectively, and $2.3 million and $4.3 million for the three and six
months ended November 30, 2007, respectively.   Senior Secured Credit Facility
 33




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##### Table of Contents



High-Yield Notes
    Derivative Financial Instruments
   34




---



##### Table of Contents



All-In
    
    Collar
    
    CollarSwap
    
    Fixed
    
    FixedVariable Interest
    
    
    
    
    
    Fixed
    
    Interest
    
    InterestRate Loan
    
    Amount
    
    Interest
    
    Rate
    
    Rate
    
    Trade
    
    Effective
    
    ExpirationBeing Hedged
    
    Hedged
    
    Rate
    
    Floor
    
    Cap
    
    Date
    
    Date
    
    DateMay 2007 CCOC Collar
    
    Senior Secured Credit Facility
    
    $
    200.0
    
    
    
    
    
    
    
    4.24
    %
    
    
    5.35
    %
    
    
    5/1/2007
    
    
    
    12/31/2007
    
    
    
    12/31/2008November 2008 CCOC
Collar 1
    
    Senior Secured Credit Facility
    
    $
    200.0
    
    
    
    
    
    
    
    1.76
    %
    
    
    2.25
    %
    
    
    11/25/2008
    
    
    
    12/31/2008
    
    
    
    9/30/20092008 CPROC Swap
    
    Senior Secured Credit Facility
    
    $
    250.0
    
    
    
    6.45
    %
    
    
    
    
    
    
    
    
    
    
    9/18/2007
    
    
    
    3/31/2008
    
    
    
    9/30/20082008 CPROC Collar
    
    Senior Secured Credit Facility
    
    $
    250.0
    
    
    
    
    
    
    
    2.43
    %
    
    
    4.00
    %
    
    
    9/26/2008
    
    
    
    9/30/2008
    
    
    
    6/30/2009June 2008 CPROC Swap
    
    Senior Secured Credit Facility
    
    $
    35.5
    
    
    
    4.61
    %
    
    
    
    
    
    
    
    
    
    
    5/23/2008
    
    
    
    6/30/2008
    
    
    
    12/31/2008November 2008 CPROC
Collar
    
    Senior Secured Credit Facility
    
    $
    35.5
    
    
    
    
    
    
    
    1.76
    %
    
    
    2.25
    %
    
    
    11/25/2008
    
    
    
    12/31/2008
    
    
    
    9/30/2009June 2008 CCOC Swap
    
    Senior Secured Credit Facility
    
    $
    25.0
    
    
    
    4.61
    %
    
    
    
    
    
    
    
    
    
    
    5/23/2008
    
    
    
    6/30/2008
    
    
    
    12/31/2008November 2008 CCOC
Collar 2
    
    Senior Secured Credit Facility
    
    $
    25.0
    
    
    
    
    
    
    
    1.76
    %
    
    
    2.25
    %
    
    
    11/25/2008
    
    
    
    12/31/2008
    
    
    
    9/30/2009May 2008 CCOC Swap
    
    Senior Secured Credit Facility
    
    $
    39.5
    
    
    
    4.54
    %
    
    
    
    
    
    
    
    
    
    
    5/23/2008
    
    
    
    5/31/2008
    
    
    
    11/30/2008November 2008 CCOC
Collar 3
    
    Senior Secured Credit Facility
    
    $
    39.5
    
    
    
    
    
    
    
    1.81
    %
    
    
    2.25
    %
    
    
    11/25/2008
    
    
    
    11/30/2008
    
    
    
    8/31/20092008 Holdco Swap
    
    2013 Holdco Floating Rate Notes
    
    $
    200.0
    
    
    
    8.60
    %
    
    
    
    
    
    
    
    
    
    
    5/23/2008
    
    
    
    7/1/2008
    
    
    
    4/1/2009
          Three Months Ended
    
    
    % of Total Capital
    
    
    Six Months Ended
    
    
    % of Total CapitalNovember 30, 2008
    
    
    Expenditures
    
    
    November 30, 2008
    
    
    Expenditures(Amounts in thousands)U.S. Wireless
    
    $
    8,391
    
    
    
    28
    %
    
    $
    17,097
    
    
    
    34
    %Puerto Rico Wireless
    
    
    11,826
    
    
    
    40
    
    
    
    18,556
    
    
    
    37Puerto Rico Broadband
    
    
    9,374
    
    
    
    32
    
    
    
    14,602
    
    
    
    29Total capital expenditures
    
    $
    29,591
    
    
    
    100.0
    %
    
    $
    50,255
    
    
    
    100.0
    %Property, plant and
equipment, net at
November 30, 2008
    
    $
    563,422
    
    
    
    
    
    
    $
    563,422
 35




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ACQUISITIONS AND DISPOSITIONS
   COMMITMENTS AND CONTINGENCIES
    36




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##### Table of Contents



Less than
    
    
    1-3
    
    
    3-5
    
    
    AfterContractual Obligations
    
    Total
    
    
    1 Year
    
    
    Years
    
    
    Years
    
    
    5 YearsLong-term debt obligations (net of unamortized discount)
    
    $
    1,925,000
    
    
    $
    
    
    
    $
    550,000
    
    
    $
    500,000
    
    
    $
    875,000Interest on long-term debt obligations(1)
    
    
    674,336
    
    
    
    140,182
    
    
    
    284,904
    
    
    
    238,257
    
    
    
    10,993Operating lease obligations
    
    
    271,354
    
    
    
    31,491
    
    
    
    51,299
    
    
    
    36,815
    
    
    
    151,749Capital lease obligations
    
    
    248,055
    
    
    
    8,145
    
    
    
    16,892
    
    
    
    17,950
    
    
    
    205,068Purchase obligations
    
    
    121,081
    
    
    
    11,911
    
    
    
    23,511
    
    
    
    36,069
    
    
    
    49,590Total contractual cash obligations
    
    
    3,239,826
    
    
    
    191,729
    
    
    
    926,606
    
    
    
    829,091
    
    
    
    1,292,400Sublessor agreements
    
    
    (3,204
    )
    
    
    (1,212
    )
    
    
    (1,660
    )
    
    
    (329
    )
    
    
    (3
    )Net
    
    $
    3,236,622
    
    
    $
    190,517
    
    
    $
    924,946
    
    
    $
    828,762
    
    
    $
    1,292,397
 
 (1)
    
    Interest payments are based on the Companys projected interest rates
and estimated principal amounts outstanding for the periods presented.The liability for income taxes under FIN 48 as of November 30, 2008 of
$18,072 is excluded from the contractual obligations table as the
Company is unable to make reasonably reliable estimates of the period
of cash settlement, if any with the respective taxing authority. CAUTIONARY STATEMENT FOR PURPOSES OF THE SAFE HARBOR
 PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
   
    
    the occurrence of any event, change or other circumstance that could give rise to the
termination of the Merger Agreement;
    
    the outcome of any legal proceeding that has been or may be instituted against Centennial
and others relating to the Merger Agreement;
    
    the inability to complete the Merger due to the failure to obtain stockholder approval or
the failure to satisfy other conditions to consummation of the Merger;
    
    the failure of the Merger to close for any other reason;
    
    risks that the proposed transaction disrupts current plans and operations and the
potential difficulties in employee retention as a result of the Merger;
    
    business uncertainty and contractual restrictions during the pendency of the Merger;
    
    the diversion of managements attention from ongoing business concerns;
    
    the effect of the announcement of the Merger on our customer and supplier relationships,
operating results and business generally;
    
    the amount of the costs, fees, expenses and charges related to the Merger;
 37




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##### Table of Contents




    
    the timing of the completion of the Merger or the impact of the Merger on our capital resources, cash requirements, profitability, management resources and liquidity;
    
    risks and uncertainties relating to our business (including our ability to achieve strategic goals, objectives and targets over applicable periods), industry performance and the regulatory environment;
    
    the effects of a recession in the United States and general downturn in the economy, including the illiquidity in the debt/capital markets;
    
    the effects of vigorous competition in our markets, which may make it difficult for us to attract and retain customers and to grow our customer base and revenue and which may increase churn, which could reduce our revenue and increase our costs;
    
    the fact that many of our competitors are larger than we are, have greater financial resources than we do, are less leveraged than we are, have more extensive coverage areas than we do, and may offer less expensive and more technologically advanced products and services than we do;
    
    our ability to gain access to the latest technology handsets in a timeframe and at a cost similar to our competitors;
    
    our ability to acquire, and the cost of acquiring, additional spectrum in our markets to support growth and deployment of advanced technologies, including 3G and 4G services;
    
    our ability to successfully deploy and deliver wireless data services to our customers, including next generation 3G and 4G technology;
    
    the effect of changes in the level of support provided to us by the Universal Service Fund, or USF;
    
    our ability to grow our subscriber base at a reasonable cost to acquire;
    
    our dependence on roaming agreements for a significant portion of our wireless revenue and the expected decline in roaming revenue over the long term;
    
    our ability to successfully integrate any acquired markets or businesses;
    
    the effects of higher than anticipated handset subsidy costs;
    
    our dependence on roaming agreements for our ability to offer our wireless customers competitively priced regional and nationwide rate plans that include areas for which we do not own wireless licenses;
    
    the effects of adding new subscribers with lower credit ratings;
    
    our substantial debt obligations, including restrictive covenants, which place limitations on how we conduct business;
    
    market prices for the products and services we offer may decline in the future;
    
    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 which may render certain technologies used by us obsolete;
    
    the effects of a decline in the market for our Code Division Multiple Access (CDMA) -based technology;
    
    the effects of consolidation in the telecommunications industry;
    
    general economic, business, political and social conditions in the areas in which we operate, including the effects of downturns in the economy, world events, terrorism, hurricanes, tornadoes, wind storms and other natural disasters;
 38




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##### Table of Contents




    
    our ability to generate cash and the availability and cost of additional capital to fund
our operations and our significant planned capital expenditures;
    
    our need to refinance or amend existing indebtedness prior to its stated maturity;
    
    the effects of governmental regulation of the telecommunications industry;
    
    our ability to attract and retain qualified personnel;
    
    the effects of network disruptions and system failures;
    
    our ability to manage, implement and monitor billing and operational support systems;
    
    the results of litigation filed or which may be filed against us or our vendors,
including litigation relating to wireless billing, using wireless telephones while operating
an automobile and litigation relating to infringement of patents;
    
    the effects of scientific reports that may demonstrate possible health effects of radio
frequency transmission from use of wireless telephones; and
    
    the influence on us by our significant stockholder and anti-takeover provisions.
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   39




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##### Table of Contents



Fiscal Year Ended November 30,2009
    
    2010
    
    2011
    
    2012
    
    2013
    
    Thereafter
    
    Total
    
    Fair Value(In thousands)Long-term debt:Fixed rate
    
    $
    
    
    
    $
    (454
    )
    
    $
    (11
    )
    
    $
    215
    
    
    $
    500,548
    
    
    $
    617,216
    
    
    $
    1,117,514
    
    
    $
    1,100,014Average fixed Interest rate
    
    
    0.0
    %
    
    
    10.0
    %
    
    
    10.0
    %
    
    
    10.0
    %
    
    
    10.1
    %
    
    
    9.1
    %
    
    
    9.5
    %
    
    
    Variable rate
    
    $
    
    
    
    $
    275,000
    
    
    $
    275,000
    
    
    $
    
    
    
    $
    
    
    
    $
    350,000
    
    
    $
    900,000
    
    
    $
    875,500Average variable Interest
rate(1)
    
    
    1.3
    %
    
    
    2.6
    %
    
    
    3.5
    %
    
    
    3.5
    %
    
    
    3.6
    %
    
    
    3.6
    %
    
    
    3.3
    %
    
    
    Interest rate swap (pay
fixed, receive variable):Notional amount
    
    $
    260,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    34Average pay rate
    
    
    8.37
    %Average receive rate
    
    
    6.22
    %Interest rate collar:Notional amount
    
    $
    489,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (668
    )Cap
    
    
    5.35
    %Floor
    
    
    1.76
    %
 
 (1)
    
    Represents the average interest rate before applicable margin on the
Senior Secured Credit Facility debt.  
 ITEM 4. CONTROLS AND PROCEDURES
   40




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##### Table of Contents



PART II  OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
   
 ITEM 1A. RISK FACTORS
  There are risks and uncertainties associated with our proposed acquisition by AT&T.
   Our business could be adversely impacted as a result of uncertainty related to the proposed
acquisition by AT&T.
  
    
    our employees may experience uncertainty about their future roles at the Company, which
might adversely affect our ability to retain and hire key managers and other employees;
    
    customers and suppliers may experience uncertainty about the Companys future and may
seek alternative business relationships with third parties or seek to alter their business
relationships with the Company; and
    
    the attention of our management may be directed to transaction-related considerations and
may be diverted from the day-to-day operations of our business.
  The effects of a recession in the
United States and general downturn in the global economy, including the illiquidity in the
credit markets could have a material adverse effect on our business and consolidated results of
operations
  41




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##### Table of Contents



ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
   Number of VotesDirectors
    
    For
    
    WithholdDarren C. Battistoni
    
    
    101,733,378
    
    
    
    37,182Michael R. Coltrane
    
    
    101,734,159
    
    
    
    36,401Anthony J. de Nicola
    
    
    88,291,437
    
    
    
    13,479,123Thomas E. McInerney
    
    
    89,577,978
    
    
    
    12,192,582John J. Mueller
    
    
    97,156,803
    
    
    
    4,613,757James P. Pellow
    
    
    101,258,941
    
    
    
    511,619Raymond A. Ranelli
    
    
    101,733,478
    
    
    
    37,082Scott N. Schneider
    
    
    100,293,306
    
    
    
    1,477,254Michael J. Small
    
    
    101,718,745
    
    
    
    51,815Paul H. Sunu
    
    
    101,734,159
    
    
    
    36,401J. Stephen Vanderwoude
    
    
    97,156,803
    
    
    
    4,613,757
  For
    
    Against
    
    Abstain46,981,981
    
    43,512,578
    
    10,545
  For
    
    Against
    
    Abstain101,647,566
    
    117,102
    
    5,891
 
 ITEM 5. OTHER INFORMATION
  
 ITEM 6. EXHIBITS
  ExhibitNo.
    
    Description2.1
    
    
    Agreement and Plan of Merger,
dated as of November 7, 2008, by and among Centennial Communications Corp., AT&T Inc. and
Independence Merger Sub Inc. (Incorporated by reference to exhibit 2.1 to Centennial
Communications Corp.s Form 8-K filed on November 13, 2008).10.1
    
    
    Voting Agreement, dated as of
November 7. 2008, by and among AT&T Inc., Centennial Communications Corp. and Welsh, Carson,
Anderson & Stowe VIII. L.P. (Incorporated by reference to exhibit 10.1 to Centennial
Communications Corp.s Form 8-K filed on November 13, 2008).**
    10.2
    
    

Form
of Amended and Restated Employment Agreement
between Centennial Communications Corp. and the named executive
officers.**
    10.3
    
    

Form of Amended and Restated Change In Control
Severance Agreement between Centennial Communications Corp. and the named executive officers.31.1
    
    
    Certification of Michael J. Small, Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    
    Certification of Thomas J. Fitzpatrick, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.32.1
    
    
    Certification of Michael J. Small, Chief Executive Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    
    Certification of Thomas J. Fitzpatrick, Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
 
 **
    
    Filed herewith. 42




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##### Table of Contents



SIGNATURES
   CENTENNIAL COMMUNICATIONS CORP./s/  Thomas J. FitzpatrickThomas J. FitzpatrickExecutive Vice President,
Chief Financial Officer
(Chief Financial Officer)/s/  Francis P. HuntFrancis P. HuntSenior Vice President  Controller
(Chief Accounting Officer) 43