##### 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 February 28, 2009
 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
    
    06-1242753(State or other jurisdiction of
    
    (IRS Employerincorporation or organization)
    
    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 þ
    
    Accelerated filer o
    
    Non-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
    40Item 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
    43EX-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)
 February 28,
    
    
    May 31,2009
    
    
    2008ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    159,202
    
    
    $
    105,161Accounts receivable, less allowance for doubtful accounts of $7,065 and $7,105, respectively
    
    
    101,080
    
    
    
    93,998Inventory  phones and accessories, net
    
    
    47,910
    
    
    
    43,242Prepaid expenses and other current assets
    
    
    32,902
    
    
    
    33,298Total Current Assets
    
    
    341,094
    
    
    
    275,699Property, plant and equipment, net
    
    
    558,500
    
    
    
    578,533Debt issuance costs, less accumulated amortization of $36,864 and $30,939, respectively
    
    
    28,683
    
    
    
    34,608Restricted cash
    
    
    5,228
    
    
    
    6,466U.S. wireless licenses
    
    
    402,395
    
    
    
    402,393Puerto Rico wireless licenses
    
    
    54,159
    
    
    
    54,159Goodwill
    
    
    10,989
    
    
    
    4,187Cable facility, net
    
    
    3,070
    
    
    
    3,250Customer lists, net
    
    
    4,972
    
    
    
    9,449Other assets
    
    
    4,905
    
    
    
    6,721TOTAL ASSETS
    
    $
    1,413,995
    
    
    $
    1,375,465LIABILITIES AND STOCKHOLDERS DEFICITCURRENT LIABILITIES:Accounts payable
    
    
    14,485
    
    
    
    25,447Accrued expenses and other current liabilities
    
    
    178,183
    
    
    
    193,527Payable to affiliates
    
    
    
    
    
    
    75Total Current Liabilities
    
    
    192,668
    
    
    
    219,049Long-term debt
    
    
    2,017,886
    
    
    
    2,010,647Deferred income taxes
    
    
    163,269
    
    
    
    151,408Other liabilities
    
    
    33,078
    
    
    
    33,950Minority interest in subsidiaries
    
    
    1,239
    
    
    
    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 110,267,206
and 107,892,406 shares, respectively; and outstanding 110,196,703 and 107,821,903 shares,
respectively
    
    
    1,103
    
    
    
    1,079Additional paid-in capital
    
    
    55,675
    
    
    
    36,787Accumulated deficit
    
    
    (1,047,970
    )
    
    
    (1,078,130
    )Accumulated other comprehensive loss
    
    
    (1,876
    )
    
    
    (3,146
    )(993,068
    )
    
    
    (1,043,410
    )Less: cost of 70,503 common shares in treasury
    
    
    (1,077
    )
    
    
    (1,077
    )Total Stockholders Deficit
    
    
    (994,145
    )
    
    
    (1,044,487
    )TOTAL LIABILITIES AND STOCKHOLDERS DEFICIT
    
    $
    1,413,995
    
    
    $
    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
    
    
    Nine Months EndedFebruary 28,
    
    
    February 29,
    
    
    February 28,
    
    
    February 29,2009
    
    
    2008
    
    
    2009
    
    
    2008REVENUE:Service revenue
    
    $
    247,415
    
    
    $
    233,361
    
    
    $
    743,669
    
    
    $
    698,457Equipment sales
    
    
    15,314
    
    
    
    17,792
    
    
    
    46,165
    
    
    
    44,234262,729
    
    
    
    251,153
    
    
    
    789,834
    
    
    
    742,691COSTS AND EXPENSES:Cost of services

(exclusive of depreciation and amortization shown below)
    
    
    46,383
    
    
    
    45,034
    
    
    
    148,300
    
    
    
    135,975Cost of equipment sold
    
    
    37,737
    
    
    
    34,047
    
    
    
    120,729
    
    
    
    95,831Sales and marketing
    
    
    24,180
    
    
    
    25,503
    
    
    
    78,698
    
    
    
    77,817General and administrative
    
    
    51,595
    
    
    
    49,573
    
    
    
    154,547
    
    
    
    149,438Depreciation and amortization
    
    
    32,366
    
    
    
    35,262
    
    
    
    103,019
    
    
    
    102,873Loss on disposition of assets
    
    
    422
    
    
    
    120
    
    
    
    456
    
    
    
    1,731192,683
    
    
    
    189,539
    
    
    
    605,749
    
    
    
    563,665Operating income
    
    
    70,046
    
    
    
    61,614
    
    
    
    184,085
    
    
    
    179,026Interest expense, net
    
    
    (42,735
    )
    
    
    (47,508
    )
    
    
    (132,163
    )
    
    
    (143,901
    )Income from continuing operations before income tax
expense and minority interest in income of subsidiaries
    
    
    27,311
    
    
    
    14,106
    
    
    
    51,922
    
    
    
    35,125Income tax expense
    
    
    (7,508
    )
    
    
    (7,302
    )
    
    
    (20,255
    )
    
    
    (20,270
    )Income from continuing operations before minority interest
in income of subsidiaries
    
    
    19,803
    
    
    
    6,804
    
    
    
    31,667
    
    
    
    14,855Minority interest in income of subsidiaries
    
    
    (284
    )
    
    
    (171
    )
    
    
    (581
    )
    
    
    (492
    )Income from continuing operations
    
    
    19,519
    
    
    
    6,633
    
    
    
    31,086
    
    
    
    14,363Net loss from discontinued operations
    
    
    (138
    )
    
    
    (1,218
    )
    
    
    (926
    )
    
    
    (2,257
    )Net income
    
    $
    19,381
    
    
    $
    5,415
    
    
    $
    30,160
    
    
    $
    12,106Earnings per share:BasicEarnings per share from continuing operations
    
    $
    0.18
    
    
    $
    0.06
    
    
    $
    0.29
    
    
    $
    0.13Loss per share from discontinued operations
    
    
    (0.00
    )
    
    
    (0.01
    )
    
    
    (0.01
    )
    
    
    (0.02
    )Net income per share
    
    $
    0.18
    
    
    $
    0.05
    
    
    $
    0.28
    
    
    $
    0.11DilutedEarnings per share from continuing operations
    
    $
    0.18
    
    
    $
    0.06
    
    
    $
    0.28
    
    
    $
    0.13Loss per share from discontinued operations
    
    
    (0.00
    )
    
    
    (0.01
    )
    
    
    (0.01
    )
    
    
    (0.02
    )Net income per share
    
    $
    0.18
    
    
    $
    0.05
    
    
    $
    0.27
    
    
    $
    0.11Weighted-average number of shares outstanding:Basic
    
    
    109,318
    
    
    
    107,755
    
    
    
    108,550
    
    
    
    107,457Diluted
    
    
    110,992
    
    
    
    109,987
    
    
    
    110,360
    
    
    
    110,240
  4




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CENTENNIAL COMMUNICATIONS CORP. AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollar amounts in thousands)
 Nine Months EndedFebruary 28,
    
    
    February 29,2009
    
    
    2008OPERATING ACTIVITIES:Net income
    
    $
    30,160
    
    
    $
    12,106Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    103,019
    
    
    
    102,873Stock-based compensation
    
    
    9,019
    
    
    
    8,548Excess tax benefits from stock-based compensation
    
    
    (1,413
    )
    
    
    (1,113
    )Minority interest in income of subsidiaries
    
    
    581
    
    
    
    492Distributions paid to minority interest
    
    
    (4,240
    )
    
    
    Loss on disposition of assets
    
    
    456
    
    
    
    3,988Changes in assets and liabilities
    
    
    (14,754
    )
    
    
    (5,000
    )Net cash provided by operating activities
    
    
    122,828
    
    
    
    121,894INVESTING ACTIVITIES:Proceeds from disposition of assets, net of cash expenses
    
    
    50
    
    
    
    91Payment for acquisition, net of cash acquired
    
    
    
    
    
    
    (12,519
    )Payments for purchase of wireless spectrum
    
    
    (2
    )
    
    
    (3,604
    )Capital expenditures
    
    
    (74,313
    )
    
    
    (75,595
    )Net cash used in investing activities
    
    
    (74,265
    )
    
    
    (91,627
    )FINANCING ACTIVITIES:Repayment of debt
    
    
    (2,219
    )
    
    
    (46,417
    )Proceeds from the exercise of stock options
    
    
    6,284
    
    
    
    4,209Proceeds from issuance of common stock under employee stock purchase plan
    
    
    
    
    
    
    296Excess tax benefits from stock-based compensation
    
    
    1,413
    
    
    
    1,113Net cash provided by (used in) financing activities
    
    
    5,478
    
    
    
    (40,799
    )Net increase (decrease) in cash and cash equivalents
    
    
    54,041
    
    
    
    (10,532
    )Cash and cash equivalents, beginning of period
    
    
    105,161
    
    
    
    94,740Cash and cash equivalents, end of period
    
    $
    159,202
    
    
    $
    84,208SUPPLEMENTAL CASH FLOW DISCLOSURE:Cash paid during the period for:Interest
    
    $
    141,340
    
    
    $
    156,340Income taxes
    
    $
    3,763
    
    
    $
    10,048NON-CASH TRANSACTION:Fixed assets acquired under capital leases
    
    $
    6,607
    
    
    $
    6,021Acquisition of fixed assets
    
    $
    
    
    
    $
    4,140
  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
       6




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NOTE 2. OTHER INTANGIBLE ASSETS AND GOODWILL
 Other Intangible Assets
  ImpairmentAs of
    
    
    Assets
    
    
    Loss
    
    
    As ofJune 1, 2008
    
    
    Acquired
    
    
    Recognized
    
    
    February 28, 2009U.S. wireless licenses
    
    $
    402,393
    
    
    $
    2
    
    
    $
    
    
    
    $
    402,395Puerto Rico wireless licenses
    
    
    54,159
    
    
    
    
    
    
    
    
    
    
    
    54,159Total
    
    $
    456,552
    
    
    $
    2
    
    
    $
    
    
    
    $
    456,554
 Goodwill and Other
Intangible Assets
  Disclosures about Segments of an Enterprise and Related Information
   As of February 28, 2009
    
    
    As of May 31, 2008Estimated
    
    
    Gross
    
    
    
    
    
    
    GrossUseful
    
    
    Carrying
    
    
    Accumulated
    
    
    Carrying
    
    
    AccumulatedLife
    
    
    Amount
    
    
    Amortization
    
    
    Amount
    
    
    AmortizationCable facility
    
    25 years
    
    
    6,000
    
    
    
    2,930
    
    
    
    6,000
    
    
    
    2,750Customer lists
    
    10 years
    
    
    6,500
    
    
    
    1,528
    
    
    
    10,295
    
    
    
    846
 7




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Goodwill
  NOTE 3. DEBT
  As of
    
    
    As ofFebruary 28, 2009
    
    
    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 $1,915 and $2,287,
respectively
    
    
    348,085
    
    
    
    347,71310% Senior Unsecured Holdco Fixed Rate Notes due 2013

(the 2013 Holdco Fixed Rate Notes)
    
    
    200,000
    
    
    
    200,000Capital Lease Obligations
    
    
    83,390
    
    
    
    76,146Financing Obligation  Tower Sale
    
    
    11,411
    
    
    
    11,788Total Long-Term Debt
    
    
    2,017,886
    
    
    
    2,010,647Current Portion of Long-Term Debt
    
    
    
    
    
    
    Net Long-Term Debt
    
    $
    2,017,886
    
    
    $
    2,010,647
 Senior Secured Credit Facility
    8




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High-Yield Notes
    Derivative Financial Instruments
  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 CCOCCollar 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
    
    
    
    4.45
    %
    
    
    
    
    
    
    
    
    
    
    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
    
    
    
    2.61
    %
    
    
    
    
    
    
    
    
    
    
    5/23/2008
    
    
    
    6/30/2008
    
    
    
    12/31/2008November 2008 CPROCCollar
    
    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
    
    
    
    2.61
    %
    
    
    
    
    
    
    
    
    
    
    5/23/2008
    
    
    
    6/30/2008
    
    
    
    12/31/2008November 2008 CCOCCollar 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
    
    
    
    2.54
    %
    
    
    
    
    
    
    
    
    
    
    5/23/2008
    
    
    
    5/31/2008
    
    
    
    11/30/2008November 2008 CCOCCollar 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
    
    
    
    2.85
    %
    
    
    
    
    
    
    
    
    
    
    5/23/2008
    
    
    
    7/1/2008
    
    
    
    4/1/2009
   9




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February 28, 2010
    
    $
    February 28, 2011
    
    
    549,512February 29, 2012
    
    
    February 28, 2013
    
    
    550,244February 28, 2014
    
    
    825,566February 28, 2015 and thereafter
    
    
    94,4792,019,801Less: unamortized discount
    
    
    (1,915
    )$
    2,017,886
  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
  10




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NOTE 5. DISCONTINUED OPERATIONS
 Accounting for the Impairment or Disposal of Long-Lived Assets
 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
 12




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NOTE 8. COMMITMENTS AND CONTINGENCIES
 Legal Proceedings:
   Guarantees:
  Lease Commitments:
   13




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##### Table of Contents



Other Commitments and Contingencies:
  NOTE 9. SEGMENT INFORMATION
    Three Months Ended
    
    
    Nine Months EndedFebruary 28,
    
    
    February 29,
    
    
    February 28,
    
    
    February 29,2009
    
    
    2008
    
    
    2009
    
    
    2008U.S. WIRELESSService revenue
    
    $
    121,792
    
    
    $
    111,619
    
    
    $
    361,727
    
    
    $
    329,756Roaming revenue
    
    
    12,899
    
    
    
    12,526
    
    
    
    43,845
    
    
    
    44,711Equipment sales
    
    
    12,399
    
    
    
    13,657
    
    
    
    33,537
    
    
    
    33,746Total revenue
    
    
    147,090
    
    
    
    137,802
    
    
    
    439,109
    
    
    
    408,213Adjusted operating income
    
    
    59,323
    
    
    
    50,497
    
    
    
    168,216
    
    
    
    155,008Total assets
    
    
    1,856,983
    
    
    
    1,795,918
    
    
    
    1,856,983
    
    
    
    1,795,918Capital expenditures
    
    
    12,279
    
    
    
    16,156
    
    
    
    29,376
    
    
    
    34,974PUERTO RICO WIRELESSService revenue
    
    $
    76,725
    
    
    $
    76,708
    
    
    $
    233,203
    
    
    $
    229,893Roaming revenue
    
    
    2,395
    
    
    
    1,838
    
    
    
    7,895
    
    
    
    4,437Equipment sales
    
    
    4,377
    
    
    
    4,135
    
    
    
    12,628
    
    
    
    10,488Total revenue
    
    
    83,497
    
    
    
    82,681
    
    
    
    253,726
    
    
    
    244,818Adjusted operating income
    
    
    27,112
    
    
    
    30,958
    
    
    
    73,576
    
    
    
    86,846Total assets
    
    
    285,773
    
    
    
    262,800
    
    
    
    285,773
    
    
    
    262,800Capital expenditures
    
    
    5,677
    
    
    
    10,264
    
    
    
    24,233
    
    
    
    27,022PUERTO RICO BROADBANDSwitched revenue
    
    $
    13,465
    
    
    $
    13,905
    
    
    $
    40,841
    
    
    $
    41,284Dedicated revenue
    
    
    19,217
    
    
    
    18,384
    
    
    
    58,000
    
    
    
    52,185Other revenue
    
    
    2,341
    
    
    
    1,630
    
    
    
    7,039
    
    
    
    5,460Total revenue
    
    
    35,023
    
    
    
    33,919
    
    
    
    105,880
    
    
    
    98,929Adjusted operating income
    
    
    19,880
    
    
    
    17,653
    
    
    
    57,789
    
    
    
    53,274Total assets
    
    
    283,358
    
    
    
    218,724
    
    
    
    283,358
    
    
    
    218,724Capital expenditures
    
    
    6,102
    
    
    
    3,753
    
    
    
    20,704
    
    
    
    13,599ELIMINATIONS/ADJUSTMENTSTotal revenue(1)
    
    $
    (2,881
    )
    
    $
    (3,249
    )
    
    $
    (8,881
    )
    
    $
    (9,269
    )Total assets(2)(3)
    
    
    (1,012,119
    )
    
    
    (936,989
    )
    
    
    (1,012,119
    )
    
    
    (936,989
    )CONSOLIDATEDTotal revenue
    
    $
    262,729
    
    
    $
    251,153
    
    
    $
    789,834
    
    
    $
    742,691Adjusted operating income
    
    
    106,315
    
    
    
    99,108
    
    
    
    299,581
    
    
    
    295,128Total assets
    
    
    1,413,995
    
    
    
    1,340,453
    
    
    
    1,413,995
    
    
    
    1,340,453Capital expenditures
    
    
    24,058
    
    
    
    30,173
    
    
    
    74,313
    
    
    
    75,595
 
 (1)
    
    Elimination of intercompany revenue, primarily from Puerto Rico broadband to Puerto Rico
wireless. 14




---



##### Table of Contents



(2)
    
    Elimination of intercompany investments.  Three Months Ended
    
    
    Nine Months EndedFebruary 28,
    
    
    February 29,
    
    
    February 28,
    
    
    February 29,2009
    
    
    2008
    
    
    2009
    
    
    2008Adjusted operating income
    
    $
    106,315
    
    
    $
    99,108
    
    
    $
    299,581
    
    
    $
    295,128Depreciation and amortization
    
    
    (32,366
    )
    
    
    (35,262
    )
    
    
    (103,019
    )
    
    
    (102,873
    )Stock-based compensation expense
    
    
    (2,815
    )
    
    
    (2,112
    )
    
    
    (9,019
    )
    
    
    (8,548
    )Transaction costs
    
    
    (666
    )
    
    
    
    
    
    
    (3,002
    )
    
    
    Litigation settlement expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,950
    )Loss on disposition of assets
    
    
    (422
    )
    
    
    (120
    )
    
    
    (456
    )
    
    
    (1,731
    )Operating income
    
    
    70,046
    
    
    
    61,614
    
    
    
    184,085
    
    
    
    179,026Interest expense, net
    
    
    (42,735
    )
    
    
    (47,508
    )
    
    
    (132,163
    )
    
    
    (143,901
    )Income tax expense
    
    
    (7,508
    )
    
    
    (7,302
    )
    
    
    (20,255
    )
    
    
    (20,270
    )Minority interest in income of subsidiaries
    
    
    (284
    )
    
    
    (171
    )
    
    
    (581
    )
    
    
    (492
    )Income from continuing operations
    
    
    19,519
    
    
    
    6,633
    
    
    
    31,086
    
    
    
    14,363Net loss from discontinued operations
    
    
    (138
    )
    
    
    (1,218
    )
    
    
    (926
    )
    
    
    (2,257
    )Net income
    
    $
    19,381
    
    
    $
    5,415
    
    
    $
    30,160
    
    
    $
    12,106
 NOTE 10. CONDENSED CONSOLIDATING FINANCIAL DATA
  15




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##### Table of Contents



CONDENSED CONSOLIDATING BALANCE SHEET FINANCIAL DATA
As of February 28, 2009
 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
    
    $
    50,083
    
    
    $
    
    
    
    $
    109,119
    
    
    $
    
    
    
    $
    
    
    
    $
    159,202Accounts receivable, net
    
    
    49,757
    
    
    
    
    
    
    
    51,323
    
    
    
    
    
    
    
    
    
    
    
    101,080Inventory  phones and
accessories, net
    
    
    15,996
    
    
    
    
    
    
    
    31,914
    
    
    
    
    
    
    
    
    
    
    
    47,910Prepaid expenses and other current
assets
    
    
    14,347
    
    
    
    
    
    
    
    18,555
    
    
    
    
    
    
    
    
    
    
    
    32,902Total current assets
    
    
    130,183
    
    
    
    
    
    
    
    210,911
    
    
    
    
    
    
    
    
    
    
    
    341,094Property, plant & equipment, net
    
    
    249,074
    
    
    
    
    
    
    
    309,426
    
    
    
    
    
    
    
    
    
    
    
    558,500Debt issuance costs, net
    
    
    10,304
    
    
    
    
    
    
    
    18,379
    
    
    
    
    
    
    
    
    
    
    
    28,683Restricted cash
    
    
    5,228
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,228U.S. wireless licenses
    
    
    
    
    
    
    
    
    
    
    402,395
    
    
    
    
    
    
    
    
    
    
    
    402,395Puerto Rico wireless licenses, net
    
    
    
    
    
    
    
    
    
    
    54,159
    
    
    
    
    
    
    
    
    
    
    
    54,159Goodwill
    
    
    10,989
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,989Investment in subsidiaries
    
    
    
    
    
    
    989,697
    
    
    
    556,294
    
    
    
    (707,942
    )
    
    
    (838,049
    )
    
    
    Other assets
    
    
    11,099
    
    
    
    
    
    
    
    1,848
    
    
    
    
    
    
    
    
    
    
    
    12,947Total
    
    $
    416,877
    
    
    $
    989,697
    
    
    $
    1,553,412
    
    
    $
    (707,942
    )
    
    $
    (838,049
    )
    
    $
    1,413,995LIABILITIES AND STOCKHOLDERS (DEFICIT) EQUITYCurrent liabilities:Accounts payable
    
    $
    8,657
    
    
    $
    
    
    
    $
    5,828
    
    
    $
    
    
    
    $
    
    
    
    $
    14,485Accrued expenses and other current
liabilities
    
    
    127,621
    
    
    
    
    
    
    
    50,562
    
    
    
    
    
    
    
    
    
    
    
    178,183Total current liabilities
    
    
    136,278
    
    
    
    
    
    
    
    56,390
    
    
    
    
    
    
    
    
    
    
    
    192,668Long-term debt
    
    
    795,139
    
    
    
    591,395
    
    
    
    83,267
    
    
    
    548,085
    
    
    
    
    
    
    
    2,017,886Deferred income taxes
    
    
    11,567
    
    
    
    
    
    
    
    151,702
    
    
    
    
    
    
    
    
    
    
    
    163,269Other liabilities
    
    
    7,895
    
    
    
    
    
    
    
    25,183
    
    
    
    
    
    
    
    
    
    
    
    33,078Intercompany
    
    
    24,127
    
    
    
    1,087,697
    
    
    
    1,071,686
    
    
    
    (263,328
    )
    
    
    (1,920,182
    )
    
    
    Minority interest in subsidiaries
    
    
    
    
    
    
    
    
    
    
    1,239
    
    
    
    
    
    
    
    
    
    
    
    1,239Redeemable preferred stock
    
    
    634,438
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (634,438
    )
    
    
    Stockholders (deficit) equity:Common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,103
    
    
    
    
    
    
    
    1,103Additional paid-in capital
    
    
    (818,464
    )
    
    
    
    
    
    
    818,464
    
    
    
    55,675
    
    
    
    
    
    
    
    55,675Accumulated (deficit) equity
    
    
    (373,170
    )
    
    
    (688,882
    )
    
    
    (654,519
    )
    
    
    (1,047,970
    )
    
    
    1,716,571
    
    
    
    (1,047,970
    )Accumulated other comprehensive loss
    
    
    (933
    )
    
    
    (513
    )
    
    
    
    
    
    
    (430
    )
    
    
    
    
    
    
    (1,876
    )(1,192,567
    )
    
    
    (689,395
    )
    
    
    163,945
    
    
    
    (991,622
    )
    
    
    1,716,571
    
    
    
    (993,068
    )Less: treasury shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,077
    )
    
    
    
    
    
    
    (1,077
    )Total stockholders (deficit) equity
    
    
    (1,192,567
    )
    
    
    (689,395
    )
    
    
    163,945
    
    
    
    (992,699
    )
    
    
    1,716,571
    
    
    
    (994,145
    )Total
    
    $
    416,877
    
    
    $
    989,697
    
    
    $
    1,553,412
    
    
    $
    (707,942
    )
    
    $
    (838,049
    )
    
    $
    1,413,995
 16




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##### Table of Contents



CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS FINANCIAL DATA
For the Three Months Ended February 28, 2009
 Centennial
    
    
    Centennial
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    CentennialPuerto Rico
    
    
    Cellular
    
    
    
    
    
    
    Centennial
    
    
    
    
    
    
    CommunicationsOperations
    
    
    Operating
    
    
    Non-
    
    
    Communications
    
    
    
    
    
    
    Corp. andCorp.
    
    
    Co. LLC
    
    
    Guarantors
    
    
    Corp.
    
    
    Eliminations
    
    
    Subsidiaries(Amounts in thousands)Revenue
    
    $
    109,507
    
    
    $
    
    
    
    $
    156,103
    
    
    $
    
    
    
    $
    (2,881
    )
    
    $
    262,729Costs and expenses:Cost of services (exclusive of
depreciation and amortization shown
below)
    
    
    19,949
    
    
    
    
    
    
    
    29,147
    
    
    
    
    
    
    
    (2,713
    )
    
    
    46,383Cost of equipment sold
    
    
    14,142
    
    
    
    
    
    
    
    23,595
    
    
    
    
    
    
    
    
    
    
    
    37,737Sales and marketing
    
    
    10,175
    
    
    
    
    
    
    
    14,005
    
    
    
    
    
    
    
    
    
    
    
    24,180General and administrative
    
    
    24,873
    
    
    
    
    
    
    
    26,890
    
    
    
    
    
    
    
    (168
    )
    
    
    51,595Depreciation and amortization
    
    
    16,385
    
    
    
    
    
    
    
    15,981
    
    
    
    
    
    
    
    
    
    
    
    32,366Loss (gain) on disposition of assets
    
    
    432
    
    
    
    
    
    
    
    (10
    )
    
    
    
    
    
    
    
    
    
    
    42285,956
    
    
    
    
    
    
    
    109,608
    
    
    
    
    
    
    
    (2,881
    )
    
    
    192,683Operating income
    
    
    23,551
    
    
    
    
    
    
    
    46,495
    
    
    
    
    
    
    
    
    
    
    
    70,046Income (loss) from investments in
subsidiaries
    
    
    
    
    
    
    19,381
    
    
    
    (6,480
    )
    
    
    19,381
    
    
    
    (32,282
    )
    
    
    Interest (expense) income, net
    
    
    (24,817
    )
    
    
    (11,008
    )
    
    
    (4,063
    )
    
    
    (12,147
    )
    
    
    9,300
    
    
    
    (42,735
    )Intercompany interest allocation
    
    
    
    
    
    
    11,008
    
    
    
    (13,855
    )
    
    
    12,147
    
    
    
    (9,300
    )
    
    
    (Loss) income from continuing operations
before income tax expense and minority
interest in income of subsidiaries
    
    
    (1,266
    )
    
    
    19,381
    
    
    
    22,097
    
    
    
    19,381
    
    
    
    (32,282
    )
    
    
    27,311Income tax expense
    
    
    (5,214
    )
    
    
    
    
    
    
    (2,294
    )
    
    
    
    
    
    
    
    
    
    
    (7,508
    )(Loss) income from continuing operations
before minority interest in income of
subsidiaries
    
    
    (6,480
    )
    
    
    19,381
    
    
    
    19,803
    
    
    
    19,381
    
    
    
    (32,282
    )
    
    
    19,803Minority interest in income of subsidiaries
    
    
    
    
    
    
    
    
    
    
    (284
    )
    
    
    
    
    
    
    
    
    
    
    (284
    )(Loss) income from continuing operations
    
    
    (6,480
    )
    
    
    19,381
    
    
    
    19,519
    
    
    
    19,381
    
    
    
    (32,282
    )
    
    
    19,519Net loss from discontinued operations
    
    
    
    
    
    
    
    
    
    
    (138
    )
    
    
    
    
    
    
    
    
    
    
    (138
    )Net (loss) income
    
    $
    (6,480
    )
    
    $
    19,381
    
    
    $
    19,381
    
    
    $
    19,381
    
    
    $
    (32,282
    )
    
    $
    19,381
 17




---



##### Table of Contents



CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS FINANCIAL DATA
For the Nine Months Ended February 28, 2009
 Centennial
    
    
    Centennial
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    CentennialPuerto Rico
    
    
    Cellular
    
    
    
    
    
    
    Centennial
    
    
    
    
    
    
    CommunicationsOperations
    
    
    Operating
    
    
    Non-
    
    
    Communications
    
    
    
    
    
    
    Corp. andCorp.
    
    
    Co. LLC
    
    
    Guarantors
    
    
    Corp.
    
    
    Eliminations
    
    
    Subsidiaries(Amounts in thousands)Revenue
    
    $
    330,762
    
    
    $
    
    
    
    $
    467,953
    
    
    $
    
    
    
    $
    (8,881
    )
    
    $
    789,834Costs and expenses:Cost of services (exclusive of
depreciation and amortization shown
below)
    
    
    65,677
    
    
    
    
    
    
    
    91,000
    
    
    
    
    
    
    
    (8,377
    )
    
    
    148,300Cost of equipment sold
    
    
    47,027
    
    
    
    
    
    
    
    73,702
    
    
    
    
    
    
    
    
    
    
    
    120,729Sales and marketing
    
    
    32,222
    
    
    
    
    
    
    
    46,476
    
    
    
    
    
    
    
    
    
    
    
    78,698General and administrative
    
    
    74,749
    
    
    
    
    
    
    
    80,302
    
    
    
    
    
    
    
    (504
    )
    
    
    154,547Depreciation and amortization
    
    
    51,012
    
    
    
    
    
    
    
    52,007
    
    
    
    
    
    
    
    
    
    
    
    103,019Loss (gain) on disposition of assets
    
    
    532
    
    
    
    
    
    
    
    (76
    )
    
    
    
    
    
    
    
    
    
    
    456271,219
    
    
    
    
    
    
    
    343,411
    
    
    
    
    
    
    
    (8,881
    )
    
    
    605,749Operating income
    
    
    59,543
    
    
    
    
    
    
    
    124,542
    
    
    
    
    
    
    
    
    
    
    
    184,085Income (loss) from investments in
subsidiaries
    
    
    
    
    
    
    30,160
    
    
    
    (30,249
    )
    
    
    30,160
    
    
    
    (30,071
    )
    
    
    Interest (expense) income, net
    
    
    (75,973
    )
    
    
    (34,303
    )
    
    
    (11,574
    )
    
    
    (38,213
    )
    
    
    27,900
    
    
    
    (132,163
    )Intercompany interest allocation
    
    
    
    
    
    
    34,303
    
    
    
    (44,616
    )
    
    
    38,213
    
    
    
    (27,900
    )
    
    
    (Loss) income from continuing
operations before income tax expense
and minority interest in income of
subsidiaries
    
    
    (16,430
    )
    
    
    30,160
    
    
    
    38,103
    
    
    
    30,160
    
    
    
    (30,071
    )
    
    
    51,922Income tax expense
    
    
    (13,819
    )
    
    
    
    
    
    
    (6,436
    )
    
    
    
    
    
    
    
    
    
    
    (20,255
    )(Loss) income from continuing
operations before minority interest in
income of subsidiaries
    
    
    (30,249
    )
    
    
    30,160
    
    
    
    31,667
    
    
    
    30,160
    
    
    
    (30,071
    )
    
    
    31,667Minority interest in income of
subsidiaries
    
    
    
    
    
    
    
    
    
    
    (581
    )
    
    
    
    
    
    
    
    
    
    
    (581
    )(Loss) income from continuing operations
    
    
    (30,249
    )
    
    
    30,160
    
    
    
    31,086
    
    
    
    30,160
    
    
    
    (30,071
    )
    
    
    31,086Net loss from discontinued operations
    
    
    
    
    
    
    
    
    
    
    (926
    )
    
    
    
    
    
    
    
    
    
    
    (926
    )Net (loss) income
    
    $
    (30,249
    )
    
    $
    30,160
    
    
    $
    30,160
    
    
    $
    30,160
    
    
    $
    (30,071
    )
    
    $
    30,160
 18




---



##### Table of Contents



CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS FINANCIAL DATA
For the Nine Months Ended February 28, 2009
 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
    
    $
    (30,249
    )
    
    $
    30,160
    
    
    $
    30,160
    
    
    $
    30,160
    
    
    $
    (30,071
    )
    
    $
    30,160Adjustments to reconcile net (loss) income to
net cash provided by (used in) operating
activities:Depreciation and amortization
    
    
    51,012
    
    
    
    
    
    
    
    52,007
    
    
    
    
    
    
    
    
    
    
    
    103,019Stock-based compensation expense
    
    
    4,612
    
    
    
    
    
    
    
    4,407
    
    
    
    
    
    
    
    
    
    
    
    9,019Excess tax benefit from stock-based
compensation
    
    
    
    
    
    
    
    
    
    
    (1,413
    )
    
    
    
    
    
    
    
    
    
    
    (1,413
    )Minority interest in income of subsidiaries
    
    
    
    
    
    
    
    
    
    
    581
    
    
    
    
    
    
    
    
    
    
    
    581Distributions paid to minority interest
    
    
    
    
    
    
    
    
    
    
    (4,240
    )
    
    
    
    
    
    
    
    
    
    
    (4,240
    )Equity in undistributed earnings (loss) of
subsidiaries
    
    
    
    
    
    
    30,160
    
    
    
    (30,249
    )
    
    
    30,160
    
    
    
    (30,071
    )
    
    
    Loss (gain) on disposition of assets
    
    
    532
    
    
    
    
    
    
    
    (76
    )
    
    
    
    
    
    
    
    
    
    
    456Changes in assets and liabilities, net of
effects of acquisitions and dispositions
and other
    
    
    29,608
    
    
    
    (30,247
    )
    
    
    (15,286
    )
    
    
    (86,871
    )
    
    
    88,042
    
    
    
    (14,754
    )NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES
    
    
    55,515
    
    
    
    30,073
    
    
    
    35,891
    
    
    
    (26,551
    )
    
    
    27,900
    
    
    
    122,828INVESTING ACTIVITIES:Proceeds from disposition of assets, net
of cash expenses
    
    
    
    
    
    
    50
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50Payments for purchase of wireless spectrum
    
    
    
    
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2
    )Capital expenditures
    
    
    (44,705
    )
    
    
    (29,608
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (74,313
    )NET CASH USED IN INVESTING ACTIVITIES
    
    
    (44,705
    )
    
    
    (29,560
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (74,265
    )FINANCING ACTIVITIES:Repayment of debt
    
    
    
    
    
    
    
    
    
    
    (2,219
    )
    
    
    
    
    
    
    
    
    
    
    (2,219
    )Proceeds from the exercise of employee
stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,284
    
    
    
    
    
    
    
    6,284Excess tax benefit from stock-based
compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,413
    
    
    
    
    
    
    
    1,413Cash received from (paid to) affiliates
    
    
    2,643
    
    
    
    (513
    )
    
    
    6,916
    
    
    
    18,854
    
    
    
    (27,900
    )
    
    
    NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES
    
    
    2,643
    
    
    
    (513
    )
    
    
    4,697
    
    
    
    26,551
    
    
    
    (27,900
    )
    
    
    5,478NET INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    13,453
    
    
    
    
    
    
    
    40,588
    
    
    
    
    
    
    
    
    
    
    
    54,041CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    
    
    36,630
    
    
    
    
    
    
    
    68,531
    
    
    
    
    
    
    
    
    
    
    
    105,161CASH AND CASH EQUIVALENTS, END OF PERIOD
    
    $
    50,083
    
    
    $
    
    
    
    $
    109,119
    
    
    $
    
    
    
    $
    
    
    
    $
    159,202
 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
    
    
    Subsidiaries(Amounts in thousands)ASSETSCurrent 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 February 29, 2008
 Centennial
    
    
    Centennial
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    CentennialPuerto Rico
    
    
    Cellular
    
    
    
    
    
    
    Centennial
    
    
    
    
    
    
    CommunicationsOperations
    
    
    Operating
    
    
    Non-
    
    
    Communications
    
    
    
    
    
    
    Corp. andCorp.
    
    
    Co. LLC
    
    
    Guarantors
    
    
    Corp.
    
    
    Eliminations
    
    
    Subsidiaries(Amounts in thousands)Revenue
    
    $
    107,789
    
    
    $
    
    
    
    $
    146,613
    
    
    $
    
    
    
    $
    (3,249
    )
    
    $
    251,153Costs and expenses:Cost of services (exclusive of
depreciation and amortization shown
below)
    
    
    20,276
    
    
    
    
    
    
    
    27,839
    
    
    
    
    
    
    
    (3,081
    )
    
    
    45,034Cost of equipment sold
    
    
    8,281
    
    
    
    
    
    
    
    25,766
    
    
    
    
    
    
    
    
    
    
    
    34,047Sales and marketing
    
    
    10,050
    
    
    
    
    
    
    
    15,453
    
    
    
    
    
    
    
    
    
    
    
    25,503General and administrative
    
    
    24,515
    
    
    
    
    
    
    
    25,226
    
    
    
    
    
    
    
    (168
    )
    
    
    49,573Depreciation and amortization
    
    
    17,764
    
    
    
    
    
    
    
    17,498
    
    
    
    
    
    
    
    
    
    
    
    35,262Loss (gain) on disposition of assets
    
    
    194
    
    
    
    
    
    
    
    (74
    )
    
    
    
    
    
    
    
    
    
    
    12081,080
    
    
    
    
    
    
    
    111,708
    
    
    
    
    
    
    
    (3,249
    )
    
    
    189,539Operating income
    
    
    26,709
    
    
    
    
    
    
    
    34,905
    
    
    
    
    
    
    
    
    
    
    
    61,614Income (loss) from investments in
subsidiaries
    
    
    
    
    
    
    5,415
    
    
    
    (1,900
    )
    
    
    5,415
    
    
    
    (8,930
    )
    
    
    Interest expense, net
    
    
    (27,374
    )
    
    
    (12,925
    )
    
    
    (5,388
    )
    
    
    (29,721
    )
    
    
    27,900
    
    
    
    (47,508
    )Intercompany interest allocation
    
    
    
    
    
    
    12,925
    
    
    
    (14,746
    )
    
    
    29,721
    
    
    
    (27,900
    )
    
    
    (Loss) income from continuing
operations before income tax expense
and minority interest in income of
subsidiaries
    
    
    (665
    )
    
    
    5,415
    
    
    
    12,871
    
    
    
    5,415
    
    
    
    (8,930
    )
    
    
    14,106Income tax expense
    
    
    (1,235
    )
    
    
    
    
    
    
    (6,067
    )
    
    
    
    
    
    
    
    
    
    
    (7,302
    )(Loss) income from continuing
operations before minority interest
in income of subsidiaries
    
    
    (1,900
    )
    
    
    5,415
    
    
    
    6,804
    
    
    
    5,415
    
    
    
    (8,930
    )
    
    
    6,804Minority interest in income of
subsidiaries
    
    
    
    
    
    
    
    
    
    
    (171
    )
    
    
    
    
    
    
    
    
    
    
    (171
    )(Loss) income from continuing
operations
    
    
    (1,900
    )
    
    
    5,415
    
    
    
    6,633
    
    
    
    5,415
    
    
    
    (8,930
    )
    
    
    6,633Net loss from discontinued operations
    
    
    
    
    
    
    
    
    
    
    (1,218
    )
    
    
    
    
    
    
    
    
    
    
    (1,218
    )Net (loss) income
    
    $
    (1,900
    )
    
    $
    5,415
    
    
    $
    5,415
    
    
    $
    5,415
    
    
    $
    (8,930
    )
    
    $
    5,415
 21




---



##### Table of Contents



CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS FINANCIAL DATA
For the Nine Months Ended February 29, 2008
 Centennial
    
    
    Centennial
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    CentennialPuerto Rico
    
    
    Cellular
    
    
    
    
    
    
    Centennial
    
    
    
    
    
    
    CommunicationsOperations
    
    
    Operating
    
    
    Non-
    
    
    Communications
    
    
    
    
    
    
    Corp. andCorp.
    
    
    Co. LLC
    
    
    Guarantors
    
    
    Corp.
    
    
    Eliminations
    
    
    Subsidiaries(Amounts in thousands)Revenue
    
    $
    315,574
    
    
    $
    
    
    
    $
    436,386
    
    
    $
    
    
    
    $
    (9,269
    )
    
    $
    742,691Costs and expenses:Cost of services (exclusive of
depreciation and amortization shown
below)
    
    
    60,500
    
    
    
    
    
    
    
    84,240
    
    
    
    
    
    
    
    (8,765
    )
    
    
    135,975Cost of equipment sold
    
    
    25,814
    
    
    
    
    
    
    
    70,017
    
    
    
    
    
    
    
    
    
    
    
    95,831Sales and marketing
    
    
    31,343
    
    
    
    
    
    
    
    46,474
    
    
    
    
    
    
    
    
    
    
    
    77,817General and administrative
    
    
    74,487
    
    
    
    
    
    
    
    75,455
    
    
    
    
    
    
    
    (504
    )
    
    
    149,438Depreciation and amortization
    
    
    51,242
    
    
    
    
    
    
    
    51,631
    
    
    
    
    
    
    
    
    
    
    
    102,873Loss on disposition of assets
    
    
    787
    
    
    
    
    
    
    
    944
    
    
    
    
    
    
    
    
    
    
    
    1,731244,173
    
    
    
    
    
    
    
    328,761
    
    
    
    
    
    
    
    (9,269
    )
    
    
    563,665Operating income
    
    
    71,401
    
    
    
    
    
    
    
    107,625
    
    
    
    
    
    
    
    
    
    
    
    179,026Income (loss) from investments in
subsidiaries
    
    
    
    
    
    
    12,106
    
    
    
    (8,497
    )
    
    
    12,106
    
    
    
    (15,715
    )
    
    
    Interest expense, net
    
    
    (79,543
    )
    
    
    (40,939
    )
    
    
    (6,822
    )
    
    
    (44,497
    )
    
    
    27,900
    
    
    
    (143,901
    )Intercompany interest allocation
    
    
    
    
    
    
    40,939
    
    
    
    (57,536
    )
    
    
    44,497
    
    
    
    (27,900
    )
    
    
    (Loss) income from continuing
operations before income tax expense
and minority interest in income of
    
    
    (8,142
    )
    
    
    12,106
    
    
    
    34,770
    
    
    
    12,106
    
    
    
    (15,715
    )
    
    
    35,125Income tax expense
    
    
    (355
    )
    
    
    
    
    
    
    (19,915
    )
    
    
    
    
    
    
    
    
    
    
    (20,270
    )(Loss) income from continuing
operations before minority interest
in income of subsidiaries
    
    
    (8,497
    )
    
    
    12,106
    
    
    
    14,855
    
    
    
    12,106
    
    
    
    (15,715
    )
    
    
    14,855Minority interest in income of
subsidiaries
    
    
    
    
    
    
    
    
    
    
    (492
    )
    
    
    
    
    
    
    
    
    
    
    (492
    )(Loss) income from continuing
operations
    
    
    (8,497
    )
    
    
    12,106
    
    
    
    14,363
    
    
    
    12,106
    
    
    
    (15,715
    )
    
    
    14,363Net loss from discontinued operations
    
    
    
    
    
    
    
    
    
    
    (2,257
    )
    
    
    
    
    
    
    
    
    
    
    (2,257
    )Net (loss) income
    
    $
    (8,497
    )
    
    $
    12,106
    
    
    $
    12,106
    
    
    $
    12,106
    
    
    $
    (15,715
    )
    
    $
    12,106
 22




---



##### Table of Contents



CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS FINANCIAL DATA
For the Nine Months Ended February 29, 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
    
    $
    (8,497
    )
    
    $
    12,106
    
    
    $
    12,106
    
    
    $
    12,106
    
    
    $
    (15,715
    )
    
    $
    12,106Adjustments to reconcile net (loss)
income to net cash provided by (used
in) operating activities:Depreciation and amortization
    
    
    51,242
    
    
    
    
    
    
    
    51,631
    
    
    
    
    
    
    
    
    
    
    
    102,873Stock-based compensation expense
    
    
    4,338
    
    
    
    
    
    
    
    4,210
    
    
    
    
    
    
    
    
    
    
    
    8,548Excess tax benefit from stock-based
compensation
    
    
    
    
    
    
    
    
    
    
    (1,113
    )
    
    
    
    
    
    
    
    
    
    
    (1,113
    )Minority interest in income of
subsidiaries
    
    
    
    
    
    
    
    
    
    
    492
    
    
    
    
    
    
    
    
    
    
    
    492Equity in undistributed earnings
(loss) of subsidiaries
    
    
    
    
    
    
    12,106
    
    
    
    (8,497
    )
    
    
    12,106
    
    
    
    (15,715
    )
    
    
    Loss on disposition of assets
    
    
    787
    
    
    
    
    
    
    
    3,201
    
    
    
    
    
    
    
    
    
    
    
    3,988Changes in assets and liabilities, net
of effects of acquisitions and
dispositions and other
    
    
    (3,276
    )
    
    
    104,991
    
    
    
    (594,404
    )
    
    
    428,359
    
    
    
    59,330
    
    
    
    (5,000
    )NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES
    
    
    44,594
    
    
    
    129,203
    
    
    
    (532,374
    )
    
    
    452,571
    
    
    
    27,900
    
    
    
    121,894INVESTING ACTIVITIES:Proceeds from disposition of assets,
net of cash expenses
    
    
    72
    
    
    
    19
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    91Payment for acquisition
    
    
    (12,519
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,519
    )Payments for purchase of wireless
spectrum
    
    
    
    
    
    
    (3,604
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,604
    )Capital expenditures
    
    
    (40,621
    )
    
    
    (34,974
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (75,595
    )NET CASH USED IN INVESTING
ACTIVITIES
    
    
    (53,068
    )
    
    
    (38,559
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (91,627
    )FINANCING ACTIVITIES:Repayment of debt
    
    
    
    
    
    
    (45,000
    )
    
    
    (1,417
    )
    
    
    
    
    
    
    
    
    
    
    (46,417
    )Proceeds from the exercise of employee
stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,209
    
    
    
    
    
    
    
    4,209Excess tax benefit from stock-based
compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,113
    
    
    
    
    
    
    
    1,113Proceeds from issuance of common stock
under employee stock purchase plan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    296
    
    
    
    
    
    
    
    296Cash received from (paid to) affiliates
    
    
    7,377
    
    
    
    (45,644
    )
    
    
    524,356
    
    
    
    (458,189
    )
    
    
    (27,900
    )
    
    
    NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES
    
    
    7,377
    
    
    
    (90,644
    )
    
    
    522,939
    
    
    
    (452,571
    )
    
    
    (27,900
    )
    
    
    (40,799
    )NET DECREASE IN CASH AND CASH
EQUIVALENTS
    
    
    (1,097
    )
    
    
    
    
    
    
    (9,435
    )
    
    
    
    
    
    
    
    
    
    
    (10,532
    )CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD
    
    
    31,157
    
    
    
    
    
    
    
    63,583
    
    
    
    
    
    
    
    
    
    
    
    94,740CASH AND CASH EQUIVALENTS, END OF
PERIOD
    
    $
    30,060
    
    
    $
    
    
    
    $
    54,148
    
    
    $
    
    
    
    $
    
    
    
    $
    84,208
 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
         24




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##### Table of Contents



Managements Summary
       
    
    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 voice subscriber
 25




---



##### Table of Contents




    
    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
        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
  27




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##### Table of Contents



Valuation of Long-Lived Assets
  Goodwill and Wireless Licenses  Valuation of Goodwill and Indefinite-Lived Intangible Assets
 Goodwill and Other
Intangible Assets
  Disclosures about Segments of an Enterprise and Related
Information
  28




---



##### Table of Contents



Stock-Based Compensation
 Share-Based Payment
   Income Taxes
     29




---



##### Table of Contents



RESULTS OF OPERATIONS
 U.S. Wireless Operations
 Three Months Ended
    
    
    
    
    
    
    
    
    
    
    Nine Months EndedFebruary
    
    
    February
    
    
    
    
    
    
    
    
    
    
    February
    
    
    February28, 2009
    
    
    29, 2008
    
    
    $ Change
    
    
    % Change
    
    
    28, 2009
    
    
    29, 2008
    
    
    $ Change
    
    
    % Change(In thousands)Revenue:Service revenue
    
    $
    121,792
    
    
    $
    111,619
    
    
    $
    10,173
    
    
    
    9
    %
    
    $
    361,727
    
    
    $
    329,756
    
    
    $
    31,971
    
    
    
    10
    %Roaming revenue
    
    
    12,899
    
    
    
    12,526
    
    
    
    373
    
    
    
    3
    
    
    
    43,845
    
    
    
    44,711
    
    
    
    (866
    )
    
    
    (2
    )Equipment sales
    
    
    12,399
    
    
    
    13,657
    
    
    
    (1,258
    )
    
    
    (9
    )
    
    
    33,537
    
    
    
    33,746
    
    
    
    (209
    )
    
    
    (1
    )Total revenue
    
    
    147,090
    
    
    
    137,802
    
    
    
    9,288
    
    
    
    7
    
    
    
    439,109
    
    
    
    408,213
    
    
    
    30,896
    
    
    
    8Costs and expenses:Cost of services
    
    
    27,140
    
    
    
    25,569
    
    
    
    1,571
    
    
    
    6
    
    
    
    84,745
    
    
    
    79,638
    
    
    
    5,107
    
    
    
    6Cost of equipment sold
    
    
    21,096
    
    
    
    22,170
    
    
    
    (1,074
    )
    
    
    (5
    )
    
    
    64,662
    
    
    
    57,508
    
    
    
    7,154
    
    
    
    12Sales and marketing
    
    
    13,825
    
    
    
    15,233
    
    
    
    (1,408
    )
    
    
    (9
    )
    
    
    45,792
    
    
    
    45,871
    
    
    
    (79
    )
    
    
    (0
    )General and administrative
    
    
    25,706
    
    
    
    24,333
    
    
    
    1,373
    
    
    
    6
    
    
    
    75,694
    
    
    
    70,188
    
    
    
    5,506
    
    
    
    8Total costs and expenses
    
    
    87,767
    
    
    
    87,305
    
    
    
    462
    
    
    
    1
    
    
    
    270,893
    
    
    
    253,205
    
    
    
    17,688
    
    
    
    7Adjusted operating income(1)
    
    $
    59,323
    
    
    $
    50,497
    
    
    $
    8,826
    
    
    
    17
    %
    
    $
    168,216
    
    
    $
    155,008
    
    
    $
    13,208
    
    
    
    9
    %
 
 (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.
     30




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##### Table of Contents



Costs and expenses.
    Puerto Rico Wireless Operations
 Three Months Ended
    
    
    
    
    
    
    
    
    
    
    Nine Months EndedFebruary
    
    
    February
    
    
    
    
    
    
    
    
    
    
    February
    
    
    February28, 2009
    
    
    29, 2008
    
    
    $ Change
    
    
    % Change
    
    
    28, 2009
    
    
    29, 2008
    
    
    $ Change
    
    
    % Change(In thousands)Revenue:Service revenue
    
    $
    76,725
    
    
    $
    76,708
    
    
    $
    17
    
    
    
    0
    %
    
    $
    233,203
    
    
    $
    229,893
    
    
    $
    3,310
    
    
    
    1
    %Roaming revenue
    
    
    2,395
    
    
    
    1,838
    
    
    
    557
    
    
    
    30
    
    
    
    7,895
    
    
    
    4,437
    
    
    
    3,458
    
    
    
    78Equipment sales
    
    
    4,377
    
    
    
    4,135
    
    
    
    242
    
    
    
    6
    
    
    
    12,628
    
    
    
    10,488
    
    
    
    2,140
    
    
    
    20Total revenue
    
    
    83,497
    
    
    
    82,681
    
    
    
    816
    
    
    
    1
    
    
    
    253,726
    
    
    
    244,818
    
    
    
    8,908
    
    
    
    4Costs and expenses:Cost of services
    
    
    13,416
    
    
    
    13,141
    
    
    
    275
    
    
    
    2
    
    
    
    43,739
    
    
    
    39,203
    
    
    
    4,536
    
    
    
    12Cost of equipment sold
    
    
    16,499
    
    
    
    11,725
    
    
    
    4,774
    
    
    
    41
    
    
    
    55,462
    
    
    
    37,862
    
    
    
    17,600
    
    
    
    46Sales and marketing
    
    
    8,248
    
    
    
    8,462
    
    
    
    (214
    )
    
    
    (3
    )
    
    
    26,630
    
    
    
    26,671
    
    
    
    (41
    )
    
    
    (0
    )General and administrative
    
    
    18,222
    
    
    
    18,395
    
    
    
    (173
    )
    
    
    (1
    )
    
    
    54,319
    
    
    
    54,236
    
    
    
    83
    
    
    
    0Total costs and expenses
    
    
    56,385
    
    
    
    51,723
    
    
    
    4,662
    
    
    
    9
    
    
    
    180,150
    
    
    
    157,972
    
    
    
    22,178
    
    
    
    14Adjusted operating income(1)
    
    $
    27,112
    
    
    $
    30,958
    
    
    $
    (3,846
    )
    
    
    (12
    )%
    
    $
    73,576
    
    
    $
    86,846
    
    
    $
    (13,270
    )
    
    
    (15
    )%
 
 (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
    31




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##### Table of Contents



Costs and expenses.
    Puerto Rico Broadband Operations
 Three Months Ended
    
    
    
    
    
    
    
    
    
    
    Nine Months EndedFebruary
    
    
    February
    
    
    
    
    
    
    
    
    
    
    February
    
    
    February28, 2009
    
    
    29, 2008
    
    
    $ Change
    
    
    % Change
    
    
    28, 2009
    
    
    29, 2008
    
    
    $ Change
    
    
    % Change(In thousands)Revenue:Switched revenue
    
    $
    13,465
    
    
    $
    13,905
    
    
    $
    (440
    )
    
    
    (3
    )%
    
    $
    40,841
    
    
    $
    41,284
    
    
    $
    (443
    )
    
    
    (1
    )%Dedicated revenue
    
    
    19,217
    
    
    
    18,384
    
    
    
    833
    
    
    
    5
    
    
    
    58,000
    
    
    
    52,185
    
    
    
    5,815
    
    
    
    11Other revenue
    
    
    2,341
    
    
    
    1,630
    
    
    
    711
    
    
    
    44
    
    
    
    7,039
    
    
    
    5,460
    
    
    
    1,579
    
    
    
    29Total revenue
    
    
    35,023
    
    
    
    33,919
    
    
    
    1,104
    
    
    
    3
    
    
    
    105,880
    
    
    
    98,929
    
    
    
    6,951
    
    
    
    7Costs and expenses:Cost of services
    
    
    8,231
    
    
    
    9,140
    
    
    
    (909
    )
    
    
    (10
    )
    
    
    27,251
    
    
    
    25,017
    
    
    
    2,234
    
    
    
    9Cost of equipment sold
    
    
    141
    
    
    
    151
    
    
    
    (10
    )
    
    
    (7
    )
    
    
    605
    
    
    
    460
    
    
    
    145
    
    
    
    32Sales and marketing
    
    
    1,949
    
    
    
    1,678
    
    
    
    271
    
    
    
    16
    
    
    
    5,785
    
    
    
    4,839
    
    
    
    946
    
    
    
    20General and
administrative
    
    
    4,822
    
    
    
    5,297
    
    
    
    (475
    )
    
    
    (9
    )
    
    
    14,450
    
    
    
    15,339
    
    
    
    (889
    )
    
    
    (6
    )Total costs and expenses
    
    
    15,143
    
    
    
    16,266
    
    
    
    (1,123
    )
    
    
    (7
    )
    
    
    48,091
    
    
    
    45,655
    
    
    
    2,436
    
    
    
    5Adjusted operating
income(1)
    
    $
    19,880
    
    
    $
    17,653
    
    
    $
    2,227
    
    
    
    13
    %
    
    $
    57,789
    
    
    $
    53,274
    
    
    $
    4,515
    
    
    
    8
    %
 
 (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. 32




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##### Table of Contents



Revenue.
    Costs and expenses.
   33




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##### Table of Contents



LIQUIDITY AND CAPITAL RESOURCES
 Weighted Average Debt Outstanding and Interest Expense
 Three Months Ended
    
    
    
    
    
    
    Nine Months EndedFebruary 28,
    
    
    February 29,
    
    
    
    
    
    
    February 28,
    
    
    February 29,2009
    
    
    2008
    
    
    Change
    
    
    2009
    
    
    2008
    
    
    Change(In millions)Weighted Average Debt Outstanding
    
    $
    2,015.90
    
    
    $
    2,006.14
    
    
    $
    9.76
    
    
    $
    2,013.60
    
    
    $
    2,024.49
    
    
    $
    (10.89
    )Weighted Average Gross Interest Rate(1)
    
    
    8.5
    %
    
    
    9.6
    %
    
    
    (1.1
    )%
    
    
    8.8
    %
    
    
    9.7
    %
    
    
    (0.9
    )%Weighted Average Gross Interest Rate(2)
    
    
    8.1
    %
    
    
    9.2
    %
    
    
    (1.1
    )%
    
    
    8.4
    %
    
    
    9.2
    %
    
    
    (0.8
    )%Gross Interest Expense(1)
    
    $
    42.77
    
    
    $
    47.96
    
    
    $
    (5.19
    )
    
    $
    132.87
    
    
    $
    146.57
    
    
    $
    (13.70
    )Interest Income
    
    $
    .04
    
    
    $
    0.45
    
    
    $
    (.41
    )
    
    $
    .87
    
    
    $
    2.67
    
    
    $
    (1.80
    )Net Interest Expense
    
    $
    42.73
    
    
    $
    47.51
    
    
    $
    (4.78
    )
    
    $
    132.00
    
    
    $
    143.90
    
    
    $
    (11.90
    )
 
 (1)
    
    Including amortization of debt issuance costs of $2.0 million and $5.9 million for the three
and nine months ended February 28, 2009, respectively, and $2.0 million and $6.3 million for
the three and nine months ended February 29, 2008, respectively.(2)
    
    Excluding amortization of debt issuance costs of $2.0 million and $5.9 million for the three
and nine months ended February 28, 2009, respectively, and $2.0 million and $6.3 million for
the three and nine months ended February 29, 2008, respectively.   Senior Secured Credit Facility
   High-Yield Notes
  34




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##### Table of Contents



Derivative Financial Instruments
   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
    
    
    
    4.45
    %
    
    
    
    
    
    
    
    
    
    
    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
    
    
    
    2.61
    %
    
    
    
    
    
    
    
    
    
    
    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
    
    
    
    2.61
    %
    
    
    
    
    
    
    
    
    
    
    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
    
    
    
    2.54
    %
    
    
    
    
    
    
    
    
    
    
    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
    
    
    
    2.85
    %
    
    
    
    
    
    
    
    
    
    
    5/23/2008
    
    
    
    7/1/2008
    
    
    
    4/1/2009
    35




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##### Table of Contents



Three Months Ended
    
    
    % of Total Capital
    
    
    Nine Months Ended
    
    
    % of Total CapitalFebruary 28, 2009
    
    
    Expenditures
    
    
    February 28, 2009
    
    
    Expenditures(Amounts in thousands)U.S. Wireless
    
    $
    12,279
    
    
    
    51.0
    %
    
    $
    29,376
    
    
    
    39.5
    %Puerto Rico Wireless
    
    
    5,677
    
    
    
    23.6
    
    
    
    24,233
    
    
    
    32.6Puerto Rico Broadband
    
    
    6,102
    
    
    
    25.4
    
    
    
    20,704
    
    
    
    27.9Total capital expenditures
    
    $
    24,058
    
    
    
    100.0
    %
    
    $
    74,313
    
    
    
    100.0
    %Property, plant and equipment, net at February 28, 2009
    
    $
    558,500
    
    
    
    
    
    
    $
    558,500
      ACQUISITIONS AND DISPOSITIONS
   36




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##### Table of Contents



COMMITMENTS AND CONTINGENCIES
    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
    
    
    $
    1,375,000
    
    
    $
    Interest on long-term debt obligations(1)
    
    
    533,287
    
    
    
    139,377
    
    
    
    275,409
    
    
    
    118,501
    
    
    
    Operating lease obligations
    
    
    248,103
    
    
    
    31,437
    
    
    
    50,369
    
    
    
    36,685
    
    
    
    129,612Capital lease obligations
    
    
    255,566
    
    
    
    8,414
    
    
    
    17,436
    
    
    
    18,573
    
    
    
    211,143Purchase obligations
    
    
    121,081
    
    
    
    11,911
    
    
    
    23,511
    
    
    
    36,069
    
    
    
    49,590Total contractual cash obligations
    
    
    3,083,037
    
    
    
    191,139
    
    
    
    916,725
    
    
    
    1,584,828
    
    
    
    390,345Sublessor agreements
    
    
    (3,204
    )
    
    
    (1,212
    )
    
    
    (1,660
    )
    
    
    (329
    )
    
    
    (3
    )Net
    
    $
    3,079,833
    
    
    $
    189,927
    
    
    $
    915,065
    
    
    $
    1,584,499
    
    
    $
    390,342
 
 (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 February 28, 2009 of $15,431 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;
 37




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##### Table of Contents




    
    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
satisfy conditions to consummate 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;
    
    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;
 38




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##### Table of Contents




    
    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;
    
    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.
  39




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##### Table of Contents



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    Fiscal Year Ended February 28(9),2010
    
    2011
    
    2012
    
    2013
    
    2014
    
    Thereafter
    
    Total
    
    Fair Value(In thousands)Long-term debt:Fixed rate
    
    $
    
    
    
    $
    (488
    )
    
    $
    (12
    )
    
    $
    200,256
    
    
    $
    825,566
    
    
    $
    94,479
    
    
    $
    1,119,801
    
    
    $
    1,154,239Average fixed
Interest rate
    
    
    0.0
    %
    
    
    10.0
    %
    
    
    10.0
    %
    
    
    10.0
    %
    
    
    9.3
    %
    
    
    10.0
    %
    
    
    9.5
    %
    
    
    Variable rate
    
    $
    
    
    
    $
    550,000
    
    
    $
    
    
    
    $
    350,000
    
    
    $
    
    
    
    $
    
    
    
    $
    900,000
    
    
    $
    898,250Average variable
Interest rate(1)
    
    
    1.3
    %
    
    
    2.7
    %
    
    
    3.5
    %
    
    
    3.8
    %
    
    
    4.0
    %
    
    
    4.1
    %
    
    
    3.1
    %
    
    
    Interest rate swap
(pay fixed, receive
variable):Notional amount
    
    $
    200,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (700
    )Average pay rate
    
    
    8.60
    %Average receive rate
    
    
    6.13
    %Interest ratecollar:Notional amount
    
    $
    550,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (2,268
    )Cap
    
    
    4.00
    %Floor
    
    
    1.76
    %
 
 (1)
    
    Represents the average interest rate before applicable margin on the Senior Secured Credit
Facility debt and the 2013 Holdco Floating Rate Notes.  
 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
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##### Table of Contents




    
    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
  
 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
    
 ITEM 5. OTHER INFORMATION
  42




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##### Table of Contents



ITEM 6. EXHIBITS
  ExhibitNo.
    
    Description31.1
    
    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.
 43




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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) 44